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 $139 million for the nine months ended December 31, 2020, $2 million lower than the same period in 2019. Contracted demand and interruptible volumes relating to export sales decreased by $4 million as demand for natural gas in eastern Canada declined. This is partially offset by increased delivery service revenue of $2 million, as Industrial customer and power generation related load growth increased demand for natural gas within the province and is driving higher contract demand transportation revenue. Included in transportation and storage revenue is storage revenue of $7 million for the nine months ended December 31, 2020, which equals the previous year. The apparent abundance of natural gas, coupled with small or even negative differentials between current and forward natural 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.
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. Customer capital contribution revenue of $18 million for the nine months ended December 31, 2020 was $10 million lower than 2019-20 due to distribution customer connections decreasing by $5 million and transmission system customer connections also decreasing by $5 million in the current period. 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.
2020-21 Third Quarter Report
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