Management’s Discussion and Analysis
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Other Expenses SaskEnergy’s expenses are significantly driven by its investment in the Corporation’s transmission, distribution and storage systems. Depreciation and amortization expenses, net finance expense and Saskatchewan taxes are directly tied to the investment in these facilities. As the level of investment in facilities increases, these expenses also increase. Employee benefit expenses and operating and maintenance expenses are also driven by the Corporation’s investment in facilities, although less directly. As the number of customers increases, infrastructure to serve those customers grows, and the costs to operate and maintain the system rise in correlation with the increasing kilometres of gas lines, number of service connections and amount of compression equipment. Additional regulatory requirements and changing public expectations have resulted in accelerated prevention, detection and mitigation initiatives, as well as decommissioning activities at the asset’s end of life — adding pressure to transportation, storage and delivery service rates. To mitigate these cost pressures, SaskEnergy continues to proactively target efficiencies and other savings to provide cost-effective delivery of natural gas to its customers. (millions) March 31, 2026 March 31, 2025 Change Employee benefits $ 133 $ 126 $ 7 Operating and maintenance 246 226 20 Depreciation and amortization 146 141 5 Saskatchewan taxes 21 19 2 Loss (recovery) on trade and other receivables 1 (1) 2 $ 547 $ 511 $ 36 Net finance expenses $ 77 $ 76 $ 1 Other net losses $ 8 $ 9 $ (1)
Employee Benefits Employee benefit costs are $7 million higher in 2025-26 than in 2024-25, primarily as a result of inflation-driven wage and salary increases. Operating and Maintenance Operating and maintenance expenses increased by $20 million compared to the 2024-25 fiscal year, reflecting inflation-related cost pressures, continued system growth, and strategic investments to support SaskEnergy’s long-term operational efficiency and customer service objectives. Broad based inflationary impacts contributed to higher costs across most operating areas, including labour, materials, contractor services and information technology. In particular, software licensing, maintenance and support costs increased by $3 million year over year due to vendor price adjustments and the expanding technology environment required to support operations and regulatory compliance. A significant contributor to the increase in operating and maintenance expenses was the continued
implementation of new enterprise software, most notably SaskEnergy’s new enterprise resource planning (ERP) system. ERP-related operating costs were approximately $6 million higher than the prior year, reflecting implementation activities, consulting support, and training required to successfully transition to the new platform. This investment is intended to enhance financial reporting, asset management, project planning and execution, procurement, and overall operational efficiency in future periods. Third-party transportation and storage costs also increased by nearly $4 million during the year. Continued customer growth, including new residential and commercial connections, drove higher transportation demand. These increases were compounded by higher third-party transportation rates and the need for additional demand service contracts to ensure reliable supply during peak periods. The Corporation continues to utilize storage and third-party transportation, rather than constructing new assets, where doing so provides a more cost-effective means of balancing reliability, flexibility and capital efficiency.
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