Financial and Operating Highlights
19
Quarterly Year-Over-Year Analysis
Second Quarter (three months ended September 30)
The Corporation recorded a net loss of $25 million in the second quarter of 2025-26, compared to a net loss of $15 million in the same period in the prior year. The $10 million unfavourable result is primarily due to continued increase in operating and maintenance expenses, as highlighted in the first quarter variance analysis. Technology-related contracting costs and business support software costs continue to account for the bulk of the variance in the operating and maintenance category. The Corporation also realized higher other losses due to the write-off and cancellation of a system enhancement project. Further, recoveries on bad debt were realized in the prior year and no such recoveries were realized in the current year. Favourable transportation and storage revenue variances continued in the second quarter, having an offsetting impact on the largely unfavourable overall quarterly variance. Delivery revenue was relatively flat quarter over quarter.
Operating results typically fluctuate from quarter to quarter due to variations in economic conditions and seasonal factors. Consequently, one quarter’s results may not accurately predict future performance. Natural gas consumption exhibits distinct seasonal patterns, as customers predominantly use natural gas for heating during the cold winter months, particularly in the third and fourth quarters. The quarterly year-over-year analysis, excluding market value adjustments, is as follows:
First Quarter (three months ended June 30)
The Corporation reported net income of $11 million in the first quarter of 2025-26, compared to a net loss of $6 million in the same period in 2024-25, a $17 million year-over-year improvement. Results primarily benefited from higher customer capital contributions, which increased by $22 million year over year, as a result of higher transmission customer connection activity. Stronger realized asset optimization margins and higher transportation and storage revenue also had a favourable impact. Asset optimization margins increased by $5 million, reflecting an increase of $0.16 per gigajoule (GJ). Volumes were also higher due to increased market opportunities, largely driven by pipeline maintenance activities in Alberta. As for transportation and storage revenue, the $3 million increase is attributable to an average rate increase across all services. These favourable results were partially offset by higher operating and maintenance expenses, specifically contracts and consulting and third-party transportation. Contract and consulting costs increased due to higher technology-related contracting costs and the implementation of new business support software. Third-party transportation costs also increased, as new customer connections drove higher transportation demand, compounded by rate increases and the need for additional third-party transportation service contracts. Weather during the quarter was 11 per cent warmer than normal, compared to four per cent warmer in the first quarter of the prior year. This reduced volumes and resulted in delivery revenue remaining relatively flat year over year, despite continued customer growth.
Third Quarter (three months ended December 31)
The Corporation generated net income of $54 million in the third quarter of 2025-26, compared to $45 million in the third quarter of 2024-25. Weather in the quarter was near normal, while the prior comparable period was one per cent warmer. In contrast, December 2025 was 12 per cent colder than December 2024, supporting higher customer usage and increasing delivery revenue to $100 million from $96 million in the third quarter of the prior year. The colder weather in December also had a favourable impact on the net commodity margin variance. The commodity margin variance was also impacted by favourable average sales revenue per GJ, as low-priced excess gas, which was primarily sold in the third quarter of 2024-25, drove down the average in the prior year. Further, the asset optimization margin was significantly higher — $15 million versus $6 million — reflecting stronger spreads and effective use of transportation and storage capacity. Additionally, transportation and storage revenue continued to have a favourable impact. These gains more than offset higher operating and maintenance costs, which exhibited the same trends as in the first two quarters of the year.
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