Other Revenue
SaskEnergy Incorporated First Quarter Report In the previous year, other revenue primarily consisted of gas processing fees and natural gas liquid sales from two natural gas liquid extraction plants. Compression and gathering service revenue relating to these plants comprised the remaining balance of other revenue. The Corporation sold the two natural gas liquid extraction plants effective October 1, 2018.
March 31, 2011
Other Expenses
SaskEnergy’s expenses are driven to a large degree by its investment in its transmission, distribution and storage systems. Depreciation expense, net finance expense and Saskatchewan taxes are directly tied to the investment in facilities. As the level of investment in these facilities increase, these expenses also increase. Employee benefit costs and operating and maintenance costs are also driven by the investment in assets, although less directly. As the number of customers increases, and infrastructure to serve those customers grows, the costs to operate and maintain the system increases. These expenses increase primarily because the amount of work to service and maintain the natural gas system increases as the kilometres of gas line, number of service connections, and amount of compression equipment increases. Increased regulatory requirements and changing public perceptions have resulted in accelerated prevention, detection and mitigation initiatives, adding pressure to transmission, distribution and storage rates.
Other expenses, net finance expenses and other gains (losses), as reported in the consolidated financial statements, were as follows:
Three months ended
Six months ended September 30
September 30
(millions)
2019
2018 Change
2019
2018 Change
Employee benefits
$
19 40 27
$
20 38 28
$
1
$
43 77 53
$
42 70 53
$
(1) (7)
Operating and maintenance Depreciation and amortization
(2)
1
-
Saskatchewan taxes
6
5
(1) (1)
9
8
(1) (9)
$
92
$
91
$
$
182
$
173
$
Net finance expense
$
14
$
13
$
(1)
$
27
$
25
$
(2)
Other gains (losses)
$
-
$
13
$
(13)
$
-
$
13
$
(13)
Employee Benefits
Operational and business reviews have identified moderate full time equivalent increases in key strategic areas as part of the Corporation’s success in meeting current and future business needs. Ongoing efficiency efforts and management of planned overtime and vacancies resulted in a reduction of full time equivalents in other areas, however employee benefit costs of $43 million were $1 million higher than 2018-19. This is due to contractor positions being transitioned into full-time equivalent positions in the later part of 2018-19.
Employee benefits costs of $19 million for the three months ending September 30, 2019 approximated the same period in 2018-19.
Operating and Maintenance
Higher transportation on the TC Energy mainline transportation system increased operating and maintenance expenses to $77 million in 2019-20, $7 million higher than in 2018-19. With the growing demand for natural gas, the Corporation’s increase reliance on gas receipts from Alberta is resulting in more natural gas being 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 expenditures through continued efficiency efforts and cost saving measures. Operating and maintenance expenses of $40 million for the three months ending September 30, 2019 were $2 million higher than the same period in 2018-19. This is also due to increasing third party transportation expenditures.
9
2019-20 SECOND QUARTER REPORT
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