Management’s Discussion and Analysis
The asset optimization margin, as reported in the condensed consolidated financial statements, was as follows:
Three months ended December 31,
Nine months ended December 31,
(millions)
2024
2023 Change 2024
2023 Change
$
27 21
$
54 45
Asset optimization sales
$
26 22
$
1
$
101
$
(47) (46)
Asset optimization purchases
(1)
91 10
9
6
(1)
Realized margin on asset optimization sales
4
2
(1)
(1)
Unrealized fair value adjustments Margin on asset optimization sales
-
(1)
(3)
2 1
$
5
$
8
$
4
$
1
$
7
$
The realized margin on asset optimization sales for the nine months ended December 31, 2024, which removes fair value adjustments on derivative instruments and the revaluation of natural gas in storage, was $1 million lower than in 2023. During 2024, the average margin on realized asset optimization sales was $0.23 per GJ, which was $0.03 per GJ lower than the $0.25 per GJ margin in 2023. Declining natural gas market prices from $2.32 per GJ in 2023 to $1.06 per GJ in 2024 and less volatility through 2024 compared to 2023, resulted in $47 million lower sales and $46 million lower purchases in 2024 compared to 2023. This was partially offset by the impact of an additional volume of 2.6 petajoules (PJ) of asset optimization opportunities realized by the Corporation. Asset Optimization Fair Value Adjustments Through asset optimization strategies, the Corporation enters into various natural gas contracts which are subject to volatility of natural gas market prices until the natural gas contracts are realized. The unrealized fair value adjustment on outstanding asset optimization derivative instruments had an unfavourable impact of $1 million on the asset optimization margin. The declining natural gas market prices through 2024 resulted in the differential between contract prices and market prices on future asset optimization sales contracts declining $0.03 per GJ, resulting in a $1 million unfavourable fair value adjustment. Revenue Delivery revenue, transportation and storage revenue, and customer capital contributions, as reported in the condensed consolidated financial statements, were as follows:
Three months ended December 31,
Nine months ended December 31,
(millions)
2024
2023 Change 2024
2023 Change
$
96 64 12
$
205 $
Delivery revenue
$
90 60
$
6 4 5
190 177
$
15 10
187
Transportation and storage revenue Customer capital contributions
27
7
18
9
$
172 $
$
419 $
Revenue
157
$
15
385
$
34
Delivery Revenue SaskEnergy provides reliable energy and competitive rates to customers, as they value low delivery charges. Natural gas delivery rates are designed to recoup all distribution facility and operating costs necessary for delivery of natural gas to customers throughout the year and earn a return for its shareholders. Natural gas storage and transportation costs — as well as ongoing investments related to safety, system integrity and growing infrastructure — are factored into delivery rates. Other considerations impacting natural gas delivery services include regulatory code compliance and industry best practices regarding safety. To minimize the financial impacts of these on delivery service customers, the Corporation strives to make the most effective use of resources and technology, and to collaborate with other Crown corporations and executive government. SaskEnergy continues to focus on items within the Corporation’s control to embed efficiency into processes, such as identifying opportunities for standardization, simplification, and the elimination of waste from processes. SaskEnergy remains committed to providing customers with access to cost-effective energy sources and maintaining delivery charges that are among the lowest in Canada.
9
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