Management’s Discussion and Analysis
Other expenses, loss (recovery) on trade and other receivables, net finance expenses and other net losses, as reported in the condensed consolidated financial statements are as follows:
Three months ended December 31,
Nine months ended December 31,
(millions)
2024
2023 Change 2024
2023 Change
$
30 55 35
$
90
Employee benefits
$
28 53 35
$
(2) (2)
$
82
$
(8) (9)
157 104
Operating and maintenance Depreciation and amortization
148 105
- -
1
4 2
15
Saskatchewan taxes
4
15
-
-
(3)
(5) (9)
(2)
(2)
Loss (recovery) on trade and other receivables
$ $ $
126 $
$ $ $
366 $
117
$ $ $
348
$ $ $
(18)
19
57
Net finance expenses
$ $
21
2 3
$ $
59
2
-
2
Other net losses
3
2
-
Employee Benefits Employee benefit costs were $8 million higher in 2024 than in 2023 as the new Collective Bargaining Agreement was effective February 2024, resulting in increased employee compensation in 2024. In addition, full-time equivalents are trending higher, as the Corporation strategically filled previously vacant construction and engineering positions to support growing customer demand for natural gas service and digital, technology and security positions to facilitate the Corporations commitment to innovation and digital transformation enabled by technology. These were partially offset by higher labour costs allocated to capital projects than the same nine months ended December 31, 2023, which decreased employee benefit costs. Operating and Maintenance Operating and maintenance expenses were $9 million higher than in 2023, primarily due to inflationary impacts and third-party transportation costs increasing. The Corporation utilizes third-party transportation to serve customer needs when it is more cost effective than developing new assets. With growing system requirements — resulting from customers continuing to choose natural gas as their energy source — transportation costs are increasing as additional demand service contracts have been placed with third-party transportation providers. In addition, the Corporation’s energy efficiency programs saw increased customer activity compared to prior year, a result partially attributable to the Corporation’s three new programs, which are the First Nations Furnace Replacement Rebate, Home Efficiency Retrofit Rebate and Homes Beyond Code programs. Additionally, the Residential Equipment Replacement Rebate is experiencing a surge of activity in recent months, with December seeing the second highest monthly customer participation since the program was introduced in 2019. Depreciation and Amortization Depreciation and amortization were $1 million lower than the same period in 2023, as a major information system asset was fully depreciated in 2023-24, resulting in reduced depreciation. This was partially offset by increased depreciation on asset additions geared toward balancing safety and system integrity with the growing demand for natural gas services. Strategic capital investments required the necessary infrastructure be placed into service to meet this growing customer demand. Net Finance Expenses The Corporation continues to adapt to an interest rate environment that has receded in recent months but is still elevated to levels that provide economic challenges. Net finance expenses were $2 million lower for 2024 compared to the same nine months ended December 31, 2023, which is primarily resulting from the impact of higher debt retirement earnings, as interest rates declined through 2024. In addition, interest income earned is higher than the prior year as cash from operations was held in the bank through most of the first quarter in 2024, until short-term debt maturities were reached. Higher interest allocations to capital projects also created a favourable impact as investment in capital projects increased $11 million in 2024 compared to 2023. These favourable results were partially offset by additional interest on the $195 million of net long-term debt issuances made during the first two quarters. These debt issues will fund a portion of the current year’s capital investment in the Corporation’s natural gas line infrastructure — which benefits Saskatchewan customers in the short and long term.
11
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