Management’s Discussion and Analysis
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Financial SaskEnergy is committed to the long-term financial sustainability of the Corporation, measured through its debt-to-equity ratio, and its regulated return on equity in both the distribution and transmission business. Financial Strategic Measures For the years ended March 31 2025 Actual 2026 Actual 2026 Target 2027 Forecast 2028 Forecast 2029 Forecast 2030 Forecast 2031 Forecast Debt/Equity Ratio 59/41 60/40 62/38 58/42 58/42 57/43 56/44 56/44 Regulated Return on Equity – Distribution 5.5% 1.0% 2.5% 2.9% 4.8% 5.9% 7.0% 8.3%
Regulated Return on Equity – Transmission & Storage
11.3%
8.7%
8.57% 8.57% 8.57% 8.57% 8.57% 8.57%
SaskEnergy’s financial outcomes are organized around financial sustainability and profitability through the returns provided to its shareholder. SaskEnergy operates a capital-intensive business with large investments in long-life infrastructure, so maintaining financial sustainability through responsible debt management is important to its financial health. Managing capital spending is a priority in delivering on financial sustainability as SaskEnergy maintains standards of safe and reliable service, meets customer growth demands, and enables long-term productivity and efficiency savings. The return on equity targets measure effectiveness in cost management and the ability to deliver a fair return to the Corporation’s shareholder. SaskEnergy’s ability to attain its regulated return while maintaining customer affordability is incumbent on responsible spending and operational excellence. SaskEnergy’s financial performance in 2025-26 reflected its proven commitment to safely delivering natural gas to customers while maintaining financial sustainability. Net income before unrealized market value adjustments was $96 million in 2025-26, which was a better-than- expected result. Despite an increase in capital spending from the prior year, there was only a slight increase to
SaskEnergy’s debt-to-equity ratio for 2025-26 due to greater earnings and a reduction in capital spending from planned. The debt-to-equity ratio of 60 per cent debt and 40 per cent equity exceeded the target ratio of 62 per cent and 38 per cent, respectively. The long-term targets for return on equity for distribution and transmission utilities are 8.3 per cent and 8.57 per cent respectively. These rates are benchmarked to other similar utility providers across the country and provide shareholder profitability targets for the organization to strive to achieve. For the period ending March 31, 2026, the regulated return on equity for distribution was 1.0 per cent compared to the expected return of 2.5 per cent. Rising operating costs and warmer-than-normal weather, combined with stable delivery rates, resulted in a return that was lower than planned and far below the long- term target. The regulated return on equity for transmission was 11.3 per cent, which is above the expected return of 8.57 per cent. The better than anticipated return was primarily due to returns received from optimizing excess transportation capacity in off-peak periods.
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