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. Additional 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, as reported in the condensed consolidated financial statements, were as follows:
Three months ended December 31,
Nine months ended December 31,
2020
2019 Change
2020
2019 Change
(millions)
$
24 43 29
$
71
Employee benefits
$
25 40 28
$
1
$
68
$
(3) (4) (5)
120
Operating and maintenance Depreciation and amortization
(3) (1)
116
86 12
81 12
3 2
Saskatchewan taxes
3 1
-
-
4
Impairment loss
(1) (4)
2
(2)
$
101
$
293
$
97
$
$
279
$
(14)
$
14
$
41
Net finance expenses
$
14
$
-
$
41
$
-
$
(2)
$
-
$
$
2
-
$
$
-
Other gains
-
Employee Benefits
Employee benefit costs of $71 million were $3 million higher for nine months ended December 31, 2020 compared to the same period in the prior year, as vacant positions in strategic areas of the business have been filled to continue to meet the Corporation’s current and future business needs. Ongoing efficiency efforts and management of overtime and planned vacancies resulted in a reduction of full time equivalents in other areas partially offsetting these increases.
Operating and Maintenance
Operating and maintenance costs of $120 million for the nine months ended December 31, 2020 are $4 million higher than the same period in 2019-20. Higher transportation contracted by the Corporation on TC Energy’s transportation system increased operating and maintenance expenses by $4 million in 2020-21 compared to 2019- 20. Growing demand for imported natural gas from Alberta is resulting in more natural gas being transported and over greater distances. In addition, the provision for bad debts increased $2 million and carbon tax payments are $1 million higher in 2020 compared to 2019. The provision for bad debt increased in 2020 as Saskatchewan’s unemployment rate increased, a result of the impact of COVID-19 and a subsequent economic downturn causing higher expected credit losses. SaskEnergy was able to partially mitigate the impact of these increased costs through reductions of $3 million in contracts and consulting, sustenance and training costs in 2020 compared to 2019.
2020-21 Third Quarter Report
13
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