Delivery Revenue
SaskEnergy Incorporated First Quarter Report Delivery revenue is driven by the number of customers and the amount of natural gas they consume. As residential and commercial customers consume natural gas primarily as heating fuel, weather is the external factor that most affects delivery revenue. The weather for the six months ending September 30, 2019 was 5 per cent colder than normal, compared to 15 percent colder than normal for the same period in 2018-19. Delivery revenue of $95 million for the six months ending September 30, 2019, equaled the prior year. A 3.4 per cent rate increase effective April 1, 2019 contributed to higher delivery revenue, which was offset by warmer weather for the six month period year over year. Delivery rate increases are implemented to address growing capital and operating costs incurred to continue providing high quality, safe and reliable service to customers. In alignment with the Crown Sector Strategic Priorities, the Corporation continues to focus on providing the province’s growing population with efficient and timely access to natural gas service while keeping rates competitive. Delivery revenue of $41 million for the three months ending September 30, 2019 was $2 million lower than the same period in 2018-19. This is due to the weather being 38 per cent warmer for the three months of 2019-20 compared to 2018-19.
March 31, 2011
Transportation and Storage Revenue
The Corporation generates transportation revenue by receiving gas from customers at various receipt points in Saskatchewan and Alberta, and delivering natural gas to customers at various delivery points in the province. The transportation toll structure consists of a receipt service charge that customers pay when they put gas on to the natural gas transportation system, and a delivery service charge, which customers pay when they take delivery off the natural gas transportation system. Gas delivered to the system by customers is considered to be part of the TransGas Energy Pool (a notional point where producers, marketers and end users can match supplies to demand) until it is delivered to the end-use customer. For receipt and delivery services, the Corporation offers both firm and interruptible transportation. Under a firm service contract, the customer has a right to deliver or receive a specified quantity of gas on each day of the contract. With a firm contract, customers pay for the amount of capacity they have contracted for whether they use it or not. Under an interruptible contract, customers may deliver or receive gas only when there is available capacity on the system and pay receipt and delivery tolls when they deliver or receive gas.
Integral to the Corporation’s transmission system are several strategically located natural gas storage sites, which have the capacity to provide operational flexibility along with a reliable and competitive natural gas storage service.
Transportation and storage revenue was $94 million for the six months ending September 30, 2019, $21 million higher than in 2018-19. Industrial customer and power generation related load growth continues to increase demand for natural gas within the province and is driving higher transportation revenue. Storage revenue is comparable with the previous year as the decline in contracted demand for storage services has stabilized. The apparent abundance of natural gas, coupled with small or even negative differentials between current and forward gas prices, limits the demand for natural gas storage to those customers with relatively low load factors who use the service to mitigate receipt transportation charges. Transportation revenue for the three months ending September 30, 2019 was $12 million higher than the same period in 2018-19. This is also due to increasing load growth, resulting from increasing demand for natural gas within the province.
Customer Capital Contributions
The Corporation receives capital contributions from customers to partially offset the cost of constructing facilities to connect them to the transmission and distribution systems. Generally, contributions related to transmission system projects tend to be larger but less frequent than contributions related to the distribution system. The volume and magnitude of customer contribution revenue can vary significantly period-over-period as various factors influence their receipt and recognition as revenue. The contributions received, less potential refunds, are recognized as revenue once the related property, plant and equipment is available for use. The Corporation may refund a customer for some or all of the contributions they make depending on how much gas the customer consumes or transports through the system. Many of the customer contributions are received in advance of construction and are initially recorded as a contract liability in the statement of financial position. The amount of contributions expected to be refunded is estimated and recorded as a refund liability until the eligible refund period expires or a refund is earned by the customer. Customer capital contribution revenue for the six months and three months ending September 30, 2019 was $13 million and $7 million above 2018-19 due to higher transmission customer connections.
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2019-20 SECOND QUARTER REPORT
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