Management’s Discussion and Analysis
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Operating Environment SaskEnergy monitors a number of important external factors that could influence financial performance. The Corporation operates within a dynamic environment shaped by economic conditions, evolving energy expectations and the continued need for safe, reliable and affordable energy for Saskatchewan residents, businesses and industries. Throughout 2025-26, the Corporation focused on maintaining system integrity and reliability, supporting affordability for customers, and adapting responsibly to longer-term changes in the energy landscape. Against a backdrop of uncertainty and transition, SaskEnergy’s role as a stable and secure energy provider remained critical to the province’s economic and social well being. Economic Conditions Saskatchewan’s economy continued to demonstrate resilience during 2025-26, supported by population growth and sustained activity in key industrial sectors such as agriculture, mining, oil and gas, and electricity generation. Labour markets remained tight, contributing to heightened competition for skilled workers and continued pressure on wages and contractor costs. Inflationary pressures eased somewhat over the course of the year, but higher costs for materials, equipment and services persisted and continued to affect the cost of maintaining and expanding SaskEnergy’s infrastructure. Affordability Pressures As a provincial Crown utility, affordability remained a core consideration in SaskEnergy’s decision making. The Corporation faced the ongoing challenge of balancing rising costs associated with infrastructure investment, system maintenance and regulatory compliance while limiting the financial impact on customers. This challenge is magnified by Saskatchewan’s geography and low customer density, which results in fewer customers per kilometre of pipeline compared to many other Canadian jurisdictions. Through disciplined cost management and a continued focus on operational efficiency, SaskEnergy worked to maintain affordable, competitive rates in 2025-26. Natural Gas Prices During the fiscal year ended March 31, 2026, Western Canadian natural gas markets were characterized by continued volatility, though overall pricing remained relatively modest compared to historical highs. AECO natural gas prices were influenced by a combination of strong production levels, variable weather conditions, and storage dynamics, resulting in periods of downward pressure during the warmer months and more typical seasonal increases during the winter months.
Through 2025-26, AECO prices averaged approximately $1.55 per gigajoule (GJ), an increase from the unusually low average of $1.31 per GJ recorded in 2024-25, though prices remained well below longer term norms. Prices were lowest through the summer and early fall, driven by modest demand and elevated storage levels, before strengthening in the winter months as colder weather increased heating demand across Western Canada. Traditionally, most natural gas in Saskatchewan is priced at a differential to the AECO hub. During the year, Saskatchewan supply prices generally traded at a modest premium to AECO, reflecting transportation, balancing and regional market conditions. While short-term price volatility persisted, SaskEnergy’s customers continued to benefit from a relatively stable and competitive commodity cost environment compared to other North American regions. SaskEnergy’s natural gas price risk management program continued to play an important role in mitigating the impact of market volatility on customers. The program is designed to balance price stability with opportunities to participate in favourable market conditions. Throughout 2025-26, SaskEnergy was able to manage price risk effectively while leveraging lower cost gas available through market purchases and marketing opportunities in Western Canada, supporting the goal of providing stable and affordable energy to customers.
AECO Monthly Index Historical Prices
AECO MONTHLY INDEX HISTORICAL PRICES
$8.00
$7.00
Limited Export Capacity from Alberta 2016-Present Average Price $2.40/GJ
Forward Price at March 31, 2026 Average Price: $2.46/GJ
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
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