Management’s Discussion and Analysis
Customer Capital Contributions The Corporation receives capital contributions from customers to 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 contribution revenue can vary significantly period-over-period, as numerous factors influence their receipt and recognition as revenue. Customer capital contributions were $19 million higher in 2025, resulting from the completion of several significant transmission utility customers’ connections early in the year. Other Expenses SaskEnergy’s expenses are driven to a large degree by its investment in its transmission, distribution and storage systems. Depreciation and amortization expense, net finance expenses and Saskatchewan taxes are directly tied to the investment in facilities. As the level of investment in facilities increases, these expenses also increase. Employee benefit expenses, and operating and maintenance expenses, are also driven by the Corporation’s investment in facilities, although less directly. As the number of customers increases, infrastructure to serve those customers grows, and the costs to operate and maintain the system rise in correlation with the increasing kilometres of gas lines, number of service connections and amount of compression equipment. Additional regulatory requirements and changing public perceptions have resulted in accelerated prevention, detection and mitigation initiatives – adding pressure to transmission and storage, and delivery service rates. Other expenses, 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)
2025
2024
Change
2025
2024
Change
Employee benefits
$
33 58 38
$
30 55 35
$
(3) (3) (3)
$
95
$
90
$
(5)
Operating and maintenance Depreciation and amortization
174 109
157 104
(17)
(5) (1) (1)
Saskatchewan taxes
4 1
4 2
-
16
15
1
1
-
Loss on trade and other receivables
$ $ $
134 $
126
$ $ $
(8) (1) (1)
$ $ $
395 $
366
$ $ $
(29)
Net finance expenses
20
$ $
19
58
$ $
57
(1) (4)
Other net losses
1
-
6
2
Employee Benefits Employee benefit costs are trending higher in 2025 than 2024 levels as a result of inflationary wage and salary increases. Operating and Maintenance Operating and maintenance expenses were $17 million higher than in 2024, primarily driven by higher system licensing and hosting costs, implementation of new business support software, and increased third-party transportation costs. As the Corporation continues to leverage technology to improve the customer’s experience while also implementing business process improvements, the costs of implementing and hosting these applications continue to rise as more applications are transitioned from owned to subscription models. In addition, the Corporation utilizes third-party transportation to serve customer needs when it is more cost effective than developing new assets. Growing system requirements — driven by continued customer growth and conversions to natural gas as a primary energy source — have resulted in higher transportation costs. These increases reflect both higher transportation rates and the need for additional demand service contracts with third-party providers. Depreciation and Amortization Depreciation and amortization were $5 million higher than the same period in 2024, as the Corporation continues to balance the safety and system integrity of its natural gas infrastructure with the demand of its residential, commercial and industrial customer base. Strategic capital investments required that necessary infrastructure be put into service to meet this growing customer demand.
8
Made with FlippingBook Ebook Creator