transported and over greater distances. Rate increases on these third party transportation systems are also increasing transportation expenditures. SaskEnergy continues to mitigate the impact of higher transportation and safety and integrity ex enditures through continued efficiency efforts and cost saving measures.
SaskEnergy Incorporated First Quarter Report
March 31, 2011
Operating and maintenance expenses of $41 million for the three months ending December 31, 2019 were $1 million higher than the same period in 2018-19. This is also due to increasing third party transportation expenditures.
Depreciation and Amortization
Balancing safety and system integrity with the growing demand for service continues through 2019-20. Strategic capital investments required to ensure the necessary infrastructure is in place to meet increasing load growth, has increased the capital asset base, resulting in increasing depreciation and amortization. The Corporation implemented an external depreciation study, decreasing depreciation rates and offsetting increased depreciation resulting from an increasing asset base. In 2019-20, depreciation and amortization was $81 million, $7 million higher than the same period in 2018-19.
Depreciation and amortization expenses of $28 million for the three months ending December 31, 2019 were $7 million higher than the same period in 2018-19, also due to an increasing capital asset base.
Net Finance Expense
Net finance expenses of $41 million and $14 million for the nine and three months ending December 31, 2019 were $3 million and $1 million higher than the same periods in 2018-19. The increase in finance expenses that resulted from increased investment was partly offset by lower interest rates. The low interest rate environment has allowed the Corporation to replace maturing long-term debt with lower cost debt.
LIQUIDITY AND CAPITAL RESOURCES
As a Crown corporation, SaskEnergy’s primary sources of capital are cash from operations, debt — which is borrowed through the province’s General Revenue Fund — and equity advances from CIC, the Province’s Crown corporation holding company. Equity advances are rarely used to finance Crown corporations as CIC prefers to use its Subsidiary Crown Dividend Policy to manage its equity interests in its commercial enterprises. Cash from operations is SaskEnergy’s most important source of capital. As a utility, cash from operations is relatively stable and the Corporation relies upon it to fund its investment in natural gas facilities, including new construction to support provincial growth and integrity spending on existing infrastructure. Long and short-term debt can be borrowed through the Province of Saskatchewan to meet any long or short-term incremental capital requirements, and to repay debt as it matures. Sources of liquidity include Order in Council authority to borrow up to $500 million in short-term loans, and a $35 million uncommitted line of credit with the Toronto-Dominion Bank. By borrowing through the Province, SaskEnergy has access to the Province’s borrowing capacity and North American capital markets. The SaskEnergy Act allows the Corporation to borrow up to $2,500 million.
Three months ended
Nine months ended December 31
December 31
(millions)
2019
2018 Change
2019
2018 Change
Cash provided by operating activities Cash used in investing activities Cash provided by financing activities (Decrease)/increase in cash and cash equivalents
$
58
$
63
$
(5)
$
167
$
154
$
13
(97)
(85)
(12)
(258)
(204)
(54)
37
23
14
84
55
29
$
(2)
$
1
$
(3)
$
(7)
$
5
$
(12)
11
2019-20 THIRD QUARTER REPORT
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