2023-24 SaskEnergy Annual Report

Annual Report 2023-24

Community Aspiration Environmental sustainability and economic prosperity for future generations of Saskatchewan. Vision Providing critical energy to support a greener Saskatchewan. Mission SaskEnergy delivers natural gas and energy solutions responsibly to the residents, businesses and industries of Saskatchewan.

Values

Safety We commit to our personal safety, the safety of our team and the public.

Integrity We are accountable for our decisions, our actions, and the results.

Stewardship We align resources towards the greatest and most responsible impact.

Teamwork We collaborate, respect, and trust

one another. We are diverse and inclusive.

Contents As SaskEnergy delivers safe and reliable energy to the residents, businesses and industries of Saskatchewan, we are committed to providing competitive rates and positive experiences to our customers. Our commitment to reducing the environmental impact of our natural gas system also extends to our customers, as we support them in achieving their energy efficiency goals.

5 Our Business 6 Corporate Profile 7 Letter of Transmittal 8 Chair’s Message 9 President’s Message 12 Looking Back at 2023-24 15 Our Sustainability Framework 16 Financial and Operating Highlights 22 Management’s Discussion and Analysis

51 Consolidated Financial Statements 60 Notes to the Consolidated Financial Statements 92 Corporate Governance 94 Supplementary Information 96 Glossary of Key Success Measures 99 Saskatchewan Natural Gas Transmission Lines

SaskEnergy’s new mobile app is providing our customers with more self-serve options — ranging from checking their natural gas usage, to enrolling in paperless billing, to booking their own meter exchange appointments up to two months ahead of time. For added convenience, we now offer two-hour arrival windows for meter exchanges, and text or call to alert that a technician is on their way. These enhancements make it easier for customers to do business with us on their own schedules.

Our Business

Customers throughout Saskatchewan have relied on SaskEnergy’s natural gas system for more than 70 years. As a provincial Crown corporation, we provide safe, reliable and affordable energy to households, businesses, farms and industries. We reach communities across Saskatchewan through our 15,338 kilometres of transmission lines and 72,232 kilometres of distribution lines. With more than 1,200 employees throughout the province, SaskEnergy strives to provide the best possible experience for each of our more than 411,000 customers. We recognize our role in meeting the energy needs of the province, and continue to provide our customers with among the lowest average natural gas bills in Canada. Environmental sustainability is a core focus of SaskEnergy’s business. As we contribute to the economic prosperity of Saskatchewan people and communities, we are committed to reducing emissions from our operations and supporting our customers in making their homes and businesses more energy efficient.

Delivering Value to our Customers SaskEnergy exists to serve the people of Saskatchewan. Our customers include:

Residential • Urban • Rural

Commercial • Retail businesses • Restaurants • Small hospitals • Curling rinks • Hotels • Warehouse buildings

Industrial • Potash mines • Power generation • Value-added agricultural sector • Enhanced oil recovery • Manufacturing • Large hospitals • Universities

As we work toward our vision of providing critical energy to support a greener Saskatchewan, we are guided by our two strategic imperatives.

Environmental Responsibility • Responsible energy company • Reduce our operational emissions by 35 per cent by 2030 • Support customers in reducing emissions by 170,000 T/CO 2 e by 2030

Affordability • Lowest cost energy source in Saskatchewan • Stable and competitive rates • Top quartile of the lowest delivery rates across the country

Corporate Profile

Crown Investments Corporation of Saskatchewan

SaskEnergy Incorporated

Many Islands Pipe Lines (Canada) Limited

TransGas Limited

Bayhurst Gas Limited

Transmission and Storage

Natural Gas in Storage

Interprovincial Transmission

BG Storage Inc.

Storage Joint Arrangement

SaskEnergy Incorporated (SaskEnergy or the Corporation) is a Saskatchewan Crown corporation governed by The SaskEnergy Act . It is a designated subsidiary of Crown Investments Corporation of Saskatchewan (CIC). CIC is also a Crown corporation and effectively operates as the Province’s holding company for commercial Crown corporations (such as SaskPower, SaskTel and SGI) and various commercial investments. SaskEnergy’s main business is the natural gas distribution utility. SaskEnergy operates the distribution utility, which distributes natural gas within the province of Saskatchewan. The Provincial Cabinet regulates SaskEnergy’s delivery service and commodity rates. All rate changes are subject to review by the Saskatchewan Rate Review Panel, an independent body, prior to receiving Provincial Cabinet approval. SaskEnergy’s corporate structure includes three wholly owned subsidiaries and one indirect wholly owned operating subsidiary, as follows: TransGas Limited (TransGas) owns and operates the transmission utility and has the exclusive legislative franchise to transport natural gas within the province of Saskatchewan. It also owns and operates a natural gas storage business, which is integrated with the transmission gas line system. Bayhurst Gas Limited (Bayhurst) owns a natural gas storage facility in the northwestern area of Saskatchewan. BG Storage Inc. (BGSI) is a wholly owned subsidiary of Bayhurst Gas Limited and owns a 50 per cent interest in a natural gas storage business, which is operated through a joint arrangement with Faro Energy Ventures Ltd. Many Islands Pipe Lines (Canada) Limited (MIPL) is a federally regulated transmission company that owns eight transmission gas line interconnections to Alberta, two into the United States, one into Manitoba, and one interconnect between the MIPL system and the federally regulated Foothills Saskatchewan system. MIPL is regulated by the Canada Energy Regulator.

Letter of Transmittal

Regina, Saskatchewan July 2024

To His Honour The Honourable Russ Mirasty, S.O.M., M.S.M. Lieutenant Governor of Saskatchewan Province of Saskatchewan

May it please Your Honour: I have the honour to submit herewith the annual report of SaskEnergy Incorporated for the fiscal year ending March 31, 2024, in accordance with The SaskEnergy Act. The Financial Statements included in this annual report are in the form approved by Crown Investments Corporation of Saskatchewan as required by The Financial Administration Act, 1993 and have been reported on by the auditors. Respectfully submitted,

Honourable Dustin Duncan Minister Responsible for SaskEnergy Incorporated

Chair’s Message

On behalf of the SaskEnergy Board of Directors, it is my pleasure to join the Minister Responsible for SaskEnergy, the Honourable Dustin Duncan, in presenting SaskEnergy’s 2023-24 Annual Report. Each day, SaskEnergy’s leadership team, management and employees demonstrate their commitment to the residents and businesses of Saskatchewan, recognizing the important role that this organization plays in meeting current and future energy needs. The Corporation’s sound management and operational practices contribute to a fiscally responsible company that operates with the province’s prosperity in mind.

With affordability being top of mind for many Saskatchewan residents, the Board is pleased with SaskEnergy's continued efforts around financial stewardship and the identification of operational efficiencies, as well as its commitment to factoring sustainability into its operational decision making. As a Board, we will continue to align SaskEnergy with the Government of Saskatchewan’s Crown Sector Strategic Priorities. This includes supporting economic growth and Saskatchewan’s quality of life, strong financial management, and acting in the best interests of the province. I would like to welcome Lee Braaten and Leanne Gailey to the SaskEnergy Board of Directors, and express appreciation for the contributions of Tina Svedahl and Alice Wong, whose terms ended in 2023-24. I value each Director’s commitment to the effective oversight of SaskEnergy. Thank you to SaskEnergy’s Executive team and employees for their commitment to the company and to the province of Saskatchewan this past year. The Board looks forward to another year of success.

Susan Barber, K.C. Chair, SaskEnergy Board of Directors

President’s Message

Our mission at SaskEnergy is to serve the people of Saskatchewan with the energy they need year-round. At the same time, we strive to provide our customers with a positive experience in all of their interactions with us. Despite a warmer than normal season, it wouldn’t be winter in Saskatchewan without at least one cold snap. On January 12, homes, businesses and industries across the province set a new SaskEnergy record for natural gas usage, consuming 1.70 petajoules of energy. With a system that is more than 99.99 per cent reliable, our customers were able to count on SaskEnergy to heat their homes and run their businesses throughout this severe weather.

Throughout 2023-24, we continued our efforts to make it easier for customers to engage with us in a variety of areas. Building upon last year’s work to rejuvenate our Online Account for customers, we now have a mobile app that allows customers to easily view their account information anywhere and at any time. We also introduced online appointment booking, so customers can easily schedule their own meter exchanges without needing to phone us. For these appointments, we narrowed our arrival window to two hours — down from eight hours — across Saskatchewan. We know our customers value affordability, and so do we. At SaskEnergy, we aim to provide our customers with among the lowest rates across the country. In 2023-24, after a year of market volatility, we were able to decrease our commodity rate in October. More efficient procurement, Crown collaboration and continuous improvement projects all contribute to our ability to keep our rates competitive. At year-end, our residential customers had the second-lowest average total natural gas bills in Canada. Affordability is also a focus of our energy efficiency programs, which supported thousands of customers in minimizing their carbon footprint last year and provided them with nearly $4 million in rebates. In 2023-24, we introduced new programs to further assist our customers, including a new rebate that supports First Nations across Saskatchewan to enhance their energy efficiency. We also introduced our Homes Beyond Code program to assist customers and developers in building more efficient new homes, which will inherently use less energy. These programs also align with our company’s focus on environmental responsibility. As we assist customers in reducing their emissions, our commitment to reducing our operational emissions remains a priority and I am pleased to share that we are halfway to meeting our emissions reduction goal of 35 per cent by 2030. Various projects in 2023-24 helped our progress toward this target, including new large-scale solar panel installations at three of our sites, and new technology systems to reduce the gas that is vented from our compressor stations. Through our own operations, assisting our customers, and supporting various environmental community initiatives, we demonstrate SaskEnergy’s value of stewardship. We continue to expand our system to serve our 411,000-strong customer base. In 2023-24, we completed construction on large-scale transmission gas lines in the Melfort area, and advanced planning on new gas line projects for the years to come. Investments in system capacity equip us to meet customer demand now and into the future, including the industries that help Saskatchewan thrive. As we continue to provide safe and reliable energy to support Saskatchewan, it is SaskEnergy’s 1,200 employees who are instrumental in fostering relationships with our customers, our stakeholders and the communities we serve. I thank each and every one of them for their dedication, as it is their skill, innovation and diligence that drive our success. I also want to thank our Board members for their support, strategic governance and oversight this past year.

Mark Guillet, K.C. President and Chief Executive Officer

”

For years, the issue of furnaces needing replacement has been a concern for our community. This SaskEnergy rebate really helped. Now every gas-powered furnace on Yellow Quill First Nation will be up to date and more energy efficient. This helps our community because high-efficiency furnaces are a lot cheaper on the budget, so the families and elderly people that live in these homes will see a decrease on their monthly bills. And, as First Nations people, it’s a way of doing our part to take care of the land and reduce our carbon footprint.”

Darrell Natawcappo, Housing Coordinator

Yellow Quill First Nation in east-central Saskatchewan is saving money and lowering energy usage through the installation of new high-efficiency natural gas furnaces at 43 homes in the community. Through SaskEnergy’s First Nations Furnace Replacement Rebate program, we are assisting gasified First Nations across the province in reducing emissions and costs. This is one of three brand new programs SaskEnergy introduced in 2023-24 to increase energy efficiency, reduce emissions and save customers money on their bills. Nearly 8,000 customers benefited from our energy efficiency incentives this year, to the tune of $3.9 million.

Pictured from left: Housing Coordinator Darrell Natawcappo, Housing Director Mike Peequaquat, Band Councillor Terry Moose and Band Councillor Brandon Peequaquat.

Looking Back at 2023-24

2,579 new distribution customers added to our system

86% and 87% customer satisfaction rating for SaskEnergy and TransGas, respectively

A Top Employer for 2024

second consecutive year being recognized as one of Canada’s Top 100 Employers and one of Saskatchewan’s Top Employers

8,000 tonnes carbon dioxide equivalent (CO 2 e) year-over-year reductions in greenhouse gas (GHG) emissions from operations Progress on our roadmap to 35% by 2030 halfway toward achieving SaskEnergy’s emissions from operations reduction target

Enhancing customer experience • new mobile app • online appointment booking • two-hour arrival windows for meter exchanges

1.70 petajoules highest daily gas usage by customers, on January 12

19,200 tonnes CO 2 e reduction in residential and commercial customer GHG emissions through natural gas conservation programs

$119 million dedicated to system reliability and integrity initiatives

Expanding renewable electricity three new ground-mounted solar arrays installed this year, now generating power for facilities in Swift Current, Success and Regina

Affordable energy second-lowest average total natural gas bills in Canada for residential customers 1,020 income-qualified homeowners assisted with free furnace maintenance through the Tune-Up Assistance Program $3.4 million in rebates to Saskatchewan residents who made energy-efficiency improvements to their homes, including through the purchase of new high-efficiency natural gas appliances $500,000 in rebates to commercial customers to install new energy efficient appliances and improve the efficiency of their existing heating systems

$5.6 million in cost savings through more efficient procurement practices, including negotiation and collaboration with other Crown corporations and government agencies

$258 million in goods and services

$31.7 million in contracts awarded to businesses with Indigenous ownership or providing Indigenous labour

purchased from Saskatchewan vendors, making up 65 per cent of all corporate purchase orders

Investing in our communities • supported 871 programs and events in 360 communities across Saskatchewan • celebrated 10 years of Goals for KidSport, a Saskatchewan Junior Hockey League partnership that helps reduce financial barriers for youth accessing sport

SaskEnergy continues to expand our natural gas system to meet the increasing energy needs of Saskatchewan, so our customers can rely on us for years to come. With construction in 2023-24 focused in the Melfort area, our two new transmission gas lines and meter station upgrades mean that customers in Choiceland, Tisdale, St. Brieux and beyond can continue to count on SaskEnergy to reliably heat their homes and run their businesses. And, for the second consecutive year, gas line construction in west Regina sets us up to better support residents, businesses and industries now and into the future. We hosted ceremonies for both projects, and welcomed First Nations Elders and Indigenous monitors during construction. Engaging with Indigenous people, communities and businesses is important to SaskEnergy, as we seek to build respectful relationships and apply cultural knowledge throughout our infrastructure projects.

Our Sustainability Framework Sustainability for SaskEnergy means providing safe, reliable and affordable energy to our customers while acknowledging their desire for energy efficiency and a cleaner energy future. Our commitment to environmental responsibility includes reducing our emissions from operations while assisting our customers to minimize their own carbon footprints. As we strengthen relationships with customers, communities and Indigenous groups in support of prosperity for future generations, our diverse workforce is key to our sustainability. As one of Canada’s Top 100 Employers, we provide a rewarding and inclusive work environment. SaskEnergy’s sustainability framework includes three pillars — Environment, Prosperity, and People — which set a foundation for our future as a sustainable energy provider for Saskatchewan.

Pillar One: Environment At SaskEnergy, we have a strong focus on reducing the impact of our business on the environment. Our environmental sustainability efforts are aimed at reducing emissions from our operations, supporting customers in reducing end-use emissions, and protecting the local environment — including plant life, wildlife, native prairie, water bodies and species at risk.

Pillar Two: Prosperity SaskEnergy’s success is aligned with our community aspiration of environmental sustainability and economic prosperity for future generations. Our focus on prosperity means we invest in the rural, urban and Indigenous communities where we live and work — through community

Pillar Three: People We take pride in our employees as they drive our success and play a pivotal role in our future sustainability. SaskEnergy strives to provide a safe and engaging workplace where people want to build their careers. We support diversity and inclusion, recognize the value of our employees, and invest in a workforce to meet customer needs and expectations.

grants and sponsorships, local procurement, public education and Indigenous engagement. We support

Saskatchewan’s economy and create meaningful relationships as we deliver safe and reliable energy and provide competitive rates to our customers.

Financial and Operating Highlights

CONSOLIDATED FINANCIAL INFORMATION ($ millions)

2023-24

2022-23

2021-22

304 236

Delivery

313 235

288 206

Transportation and storage Realized commodity margin

42 12 28

45 29 57

23 11 25

Realized asset optimization margin Customer capital contributions

Total revenue and margins

622 119 206 140

679 109 198 146

553 106 183 126

Employee benefits

Operating and maintenance Depreciation and amortization

Saskatchewan taxes

Loss (recovery) on trade and other receivables

(2)

Net finance expenses Other net losses (gains)

(19)

Total expenses

567

553 126

471

Income before unrealized market value adjustments

82 76

(34)

Market value adjustments CONSOLIDATED NET INCOME

(66)

21 21

60 45

158

Dividends declared

3,633

Total assets

3,580

3,517

345

Cash provided by operating activities Cash used in investing activities

304

238

(225)

(237)

(269)

Cash (used in) provided by financing activities Property, plant and equipment additions

(75)

(62)

246

207

230

1,826 59/41 4.4%

Total net debt

1,802 59/41 10.2%

1,748 59/41 5.4%

Debt/Equity ratio

Rate of return on equity

OPERATING STATISTICS Distribution energy (petajoules) Residential/Farm

35 31

40 34

38 34

Commercial

192 258

Industrial

181 255

178 250

TOTAL

Transmission energy (petajoules) Domestic

389

381

371

Export

TOTAL

400

432

397

Number of customers Distribution

411,077

408,498

405,672

135

Transmission

141

130

Financial and Operating Highlights

Operating Summary – Distribution

2023-24

2022-23

2021-22

6,513 2,565 5,103 8.7%

Sales in million cubic metres 1

6,474 2,641 5,954 (6.8%)

6,329 2,677 5,724 (3.0%)

Residential annual average usage (cubic metres)

Degree days 2

Percentage warmer (colder) than normal NATURAL GAS LINE (kilometres) SaskEnergy Incorporated

72,232

71,936

71,581

1 Retail, industrial and asset optimization.

2 A unit measuring the extent to which the temperature falls below 18° Celsius. Normal weather for the 12 months ending March 31, 2024 would have been 5,590 degree days.

Operating Summary – Transmission

2023-24

2022-23

2021-22

1.70

Peak day natural gas flows (petajoules)

1.63

1.65

Jan. 12

Date of peak day flow Storage cavern sites Storage caverns Storage field sites 1 Producing field sites 1

Dec. 22

Jan. 5

2 2

3 1

0 3

NATURAL GAS LINE (kilometres) TransGas Limited Transmission

14,676

14,674

14,653

167 473

Gathering

167 473

167 475

Many Islands Pipe Lines (Canada) Limited

Bayhurst Gas Limited

TOTAL

15,338

15,336

15,317

SYSTEM COMPRESSION TransGas Limited stations

22 4

2 0

Many Islands Pipe Lines (Canada) Limited stations

2 1

Bayhurst Gas Limited stations Mobile compressor units COMPRESSION HORSEPOWER TransGas Limited

0 3

73,068 5 11,760 84,828

76,068 11,760 87,828

Many Islands Pipe Lines (Canada) Limited

TOTAL

1 Includes Bayhurst Gas Limited and Bayhurst Gas Storage Inc. 2 Reduction due to Totnes Field compression sale and abandonment. 3 Reduction due to the sale of Mannville site.

4 Reduction due to no available compression at South Bayhurst and Beacon Hill. 5 Reduction due to a decrease in the number of available compressor units.

Financial and Operating Highlights

Quarterly Financial and Operating Highlights

2023-24 CONSOLIDATED FINANCIAL INFORMATION ($ millions)

March 31, 2024

114 $

304 236

57 $

43 $

90 $

Delivery

59 15

59 14

Transportation and storage Realized commodity margin

42 12 28

5 5 7

8 4 7

1 4

Realized asset optimization margin Customer capital contributions

136

118

169

199

622 119 206 140

Total revenue and margins

28 48 35

26 47 35

28 53 35

37 58 35

Employee benefits

Operating and maintenance Depreciation and amortization

6 1

4 2

Saskatchewan taxes

(3)

Loss (recovery) on trade and other receivables

Net finance expenses Other net losses (gains)

(2)

136

132

141

158

567

Total expenses

CONSOLIDATED INCOME (LOSS) before unrealized market value adjustments

- $ 4 $

(14) $

28 $

41 $

55 21

$ $

6 $

5 $

Dividends declared

345

136

Cash provided by operating activities Cash used in investing activities Cash used in financing activities Property, plant and equipment additions

(269)

(32) (33)

(79)

(85) (14)

(73) (15)

(62)

246

OPERATING STATISTICS Distribution energy (petajoules) Residential/Farm

35 31

5 5

2 2

11 10 49 70

17 14 53 84

Commercial

192 258

45 55

45 49

Industrial

TOTAL

9% warmer

13% warmer 33% warmer 15% warmer 1% warmer

Weather (compared to last 30 years) Transmission energy (petajoules) Domestic

389

104

118

Export

106

118

400

TOTAL

Financial and Operating Highlights

Quarterly Financial and Operating Highlights

2022-23 CONSOLIDATED FINANCIAL INFORMATION ($ millions)

March 31, 2023

111 $

313 235

57 $

43 $

102 $

Delivery

59 22

58 14

Transportation and storage Realized commodity margin

45 29 57

2 6 5

8 8

Realized asset optimization margin Customer capital contributions

127

131

199

222

679 109 198 146

Total revenue and margins

27 45 31

24 44 31

27 52 32

31 57 52

Employee benefits

Operating and maintenance Depreciation and amortization

7 1

3 4

4 2

Saskatchewan taxes

Loss on trade and other receivables

Net finance expenses Other net (gains) losses

(1)

124

137

168

553

Total expenses

CONSOLIDATED INCOME before unrealized market value adjustments

3 $ 6 $

7 $

62 $ 19 $

54 $

126

$ $

7 $

13 $

Dividends declared

304

142

Cash provided by operating activities Cash used in investing activities

(225)

(28) (36)

(71)

(62)

(64) (85)

(75)

47 68

(1)

Cash (used in) provided by financing activities Property, plant and equipment additions

207

OPERATING STATISTICS Distribution energy (petajoules) Residential/Farm

40 34

5 6

2 2

16 12 48 76

17 14 51 82

Commercial

181 255

43 54

39 43

Industrial

TOTAL

7% colder

8% colder 36% warmer

12% colder

7% colder

Weather (compared to last 30 years) Transmission energy (petajoules) Domestic

381

82 14 96

75 25

109

115

Export

100

119

117

TOTAL

432

Financial and Operating Highlights

Quarterly Year-Over-Year Analysis Operating results generally vary from quarter to quarter as a result of changes in general economic conditions and seasonal fluctuations. Results in one quarter are not necessarily indicative of how the Corporation will perform in a future quarter. Natural gas consumption has unique seasonal aspects as customers typically use natural gas as heating fuel during cold winter months through the third and fourth quarters. First Quarter (three months ending June 30)

Third Quarter (three months ending December 31) Income before unrealized market value

Income before unrealized market value adjustments was $nil in 2023, $3 million unfavourable compared to net income of $3 million in 2022. This primarily resulted from lower asset optimization margins, as lower natural gas market prices and less market volatility limited the Corporation’s asset optimization opportunities. In addition, hosting fees increased in 2023 to support the additional functionality implemented relating to the customer Online Account. Higher transportation and storage expenses also contributed to the unfavourable results as third-party transportation service providers implemented rate increases. Further, short-term debt financing costs increased as short-term interest rates continued to rise. These unfavourable impacts were partially offset by a higher commodity margin in 2023, a result of natural gas market prices that significantly decreased the cost of gas relative to an August 2022 commodity rate increase. Second Quarter (three months ending September 30) A net loss of $14 million before unrealized market value adjustments in 2023 was $21 million unfavourable compared to net income of $7 million in 2022. The unfavourable impacts identified in the first quarter continued through the second quarter of 2023. The unfavourable quarter-over-quarter asset optimization margins in 2023 widened in the second quarter, as significant market opportunities available in 2022 remained absent in 2023. Modernizing technology solutions also contributed to higher costs in 2023.

adjustments was $28 million in the third quarter of 2023, $34 million unfavourable compared to income of $62 million in 2022. Unusually warm weather through the third quarter of 2023 — 27 per cent warmer than 2022 — significantly reduced delivery revenue and commodity margins. A commodity rate decrease to $3.20 per gigajoule effective October 1, 2023 also contributed to lower commodity margins in the current year, which was partially offset by the favourable impact of lower market prices resulting in lower cost of gas sold in 2023. Asset optimization margins continued to decline in the third quarter, while higher leak survey, environmental monitoring and cathodic protection costs due to growing natural gas infrastructure contributed to the unfavourable results in 2023. In addition, vacant positions in 2022 were filled in 2023, contributing to higher employee benefit costs in 2023. Fourth Quarter (three months ending March 31) Income before unrealized market value adjustments was $41 million, $13 million unfavourable compared to income of $54 million in the final quarter of fiscal 2022-23. This is primarily due to a large transmission system project being finalized and the related customer capital contribution being recognized in 2022-23. In addition, employee benefits expenses were higher in 2023-24 as salary and wage increases were recognized in the fourth quarter. These were retroactive to earlier in the fiscal year and coincided with implementation of a new three-year Collective Bargaining Agreement.

Our family-owned company builds about a half dozen houses per year in Saskatoon. Having the same technician, Adam, respond to our last few requests for gas service, we’ve built a rapport and getting a new gas meter is a smooth process. Adam makes my job a lot easier by being organized and letting me know what’s going to happen and when.” SaskEnergy aims to provide a positive experience for the thousands of new customers who connect to our natural gas system each year. After a simple online application process, our technicians meet customers at the site of their new home or business. From there, customers don’t have to wonder about the status of their service — regular updates are provided until their new gas meter is connected, so they know what to expect and when. These are just some of the many ways we are improving convenience for our customers. ” Stephanie Baliski, Capilano Developments Pictured with SaskEnergy technician Adam Colvine

Management’s Discussion and Analysis

Introduction The Management’s Discussion and Analysis (MD&A) highlights the primary factors that affected SaskEnergy’s consolidated financial performance for the 12 months ending March 31, 2024. Using financial and operating results as its basis, the MD&A describes the Corporation’s past performance and future prospects, enabling readers to view SaskEnergy from the perspective of management. The MD&A is presented as at May 23, 2024 and should be read in conjunction with the Corporation’s audited consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards (IFRS). The MD&A contains certain forward-looking statements that are subject to inherent uncertainties and risks. Many of these risks are described in the Risk Management and Disclosure section of the MD&A. All forward-looking statements reflect the Corporation’s best estimates and assumptions based on information available at the time the statements were made. However, actual results and events may vary significantly from those included in, contemplated by, or implied by such statements.

The Corporation’s financial results are subject to variation, especially given the volatility of natural gas prices. In order to compare financial performance from period to period, the Corporation uses the following measures: income before unrealized market value adjustments; realized margin on commodity sales; and, realized margin on asset optimization sales. Each measure removes the impact of fair value adjustments on financial and derivative instruments and the revaluation of natural gas in storage to the lower of cost and net realizable value. Unrealized market value adjustments vary considerably with the market prices of natural gas, drive significant changes in the Corporation’s consolidated net income, and may obscure other business factors that are also important to understanding the Corporation’s financial results. The measures referred to above are non-IFRS measures, in that there is no standardized definition, and may not be comparable to similar measures presented by other entities. The discussion of the Corporation’s results in the MD&A, set out on the following pages, is a comparison of the results for the 12 months ending March 31, 2024, to the results for the 12 months ending March 31, 2023, unless otherwise noted.

Management’s Discussion and Analysis Contents 22 Introduction 23 Strategic Scorecard Measures 33 Operating Environment

44 Outlook 45 Risk Management and Disclosure 49 Critical Accounting Policies and Estimates 50 Accounting Policy Changes

34 Consolidated Financial Results 42 Liquidity and Capital Resources 43 Capital Additions

Management’s Discussion and Analysis

Strategic Scorecard Measures Natural gas plays a critical role in Saskatchewan’s energy and economic systems, and demand for it continues to grow. Safe, reliable and convenient service continue to be the hallmark of SaskEnergy’s natural gas delivery to the people, businesses and industries of Saskatchewan. These efforts are a critical part of core work and SaskEnergy has built a strong foundation to meet the increasing demand for energy in Saskatchewan. Recognizing its role in meeting Saskatchewan’s current and future needs, the ability to affordably provide energy is something that remains a focus for SaskEnergy. At the same time, there is a growing focus on decarbonization and a shift toward lower emitting energy sources. Moving forward, SaskEnergy will continue to meet the increasing energy needs of the province while focusing on financial stewardship, emissions reductions goals, and assisting customers with programs that lower their energy usage. SaskEnergy also recognizes that affordability continues to drive the demand for natural gas as the dominant energy source for Saskatchewan. These hallmarks are represented in our strategic imperatives, which are highlighted in the refreshed strategy that SaskEnergy introduced in late 2023-24. SaskEnergy’s strategy is anchored by the Crown Sector Strategic Priorities, which provide direction and outline the shareholder’s expectations to allow for the alignment of goals. SaskEnergy utilizes a Balanced Scorecard approach in organizing its strategic objectives and in measuring overall corporate performance. To support the achievement of its strategic imperatives, SaskEnergy has identified a mix of key objectives and outcomes among four quadrants — Organizational, Operational, Financial and Customer. To monitor success in each quadrant, a number of measures have been identified. Targets for each measure have been set to benchmark success in achieving SaskEnergy’s strategic goals. Efforts to bring forward the new strategy resulted in updates to a few of the success measures that are discussed in the following section.

The final scorecard, including metrics and targets for the five-year planning horizon, is presented to SaskEnergy’s Board of Directors as part of the annual Corporate Plan approval. The Crown Investments Corporation (CIC) Board reviews the plan and confirms alignment with the Crown Sector Strategic Priorities prior to its approval. Progress toward these targets is monitored and reported throughout the year, allowing management to take any corrective action to achieve the targets. The following discussion outlines the Corporation’s 2023-24 performance relative to its strategic scorecard targets for the 12 months ending March 31, 2024, which are further defined in the Glossary of Key Success Measures.

Community Aspiration

Environmental sustainability and economic prosperity for future generations of Saskatchewan.

Vision Providing critical energy to support a greener Saskatchewan.

Mission SaskEnergy delivers natural gas and energy solutions responsibly to the residents, businesses and industries of Saskatchewan.

Strategic Imperatives

Affordability • Top quartile of the lowest delivery rates across the country

Environmental Responsibility • Reduce operational emissions by 35 per cent by 2030 • Support customers in reducing emissions by 170,000 T/CO 2 e by 2030

Quadrant

Strategic Action

• Organizational Culture • Safety • Workforce Development • Digital Transformation

We strive for organizational excellence with specific emphasis on:

Organizational

• Reliability • Operational Excellence • Environment and Energy Solutions • Customer Centric Service

We strive for efficiency with specific emphasis on:

Operational

Outcomes

• Responsible Debt Management • Regulated Return on Equity – Distribution • Regulated Return on Equity – Transmission & Storage • Residential and Business – ”SaskEnergy is the best energy value choice for me. Service is seamless and easy to access when I need it.” • Industrial – ”Natural gas service is reliable and affordable. It allows our company to operate efficiently and contribute to the economy.”

We ensure accountability and financial sustainability through:

Financial

Our success comes from serving:

Customer

Management’s Discussion and Analysis

Organizational The right organizational structure, technology and a talented workforce are crucial to SaskEnergy’s ability to continue to deliver value to customers. The Corporation’s organizational design enables SaskEnergy to optimize the organization today and build the team, and skills, for the future. SaskEnergy continues to focus on long-term sustainability and advancing the organization through workforce development and technology.

Organizational Strategic Measures For the years ended March 31 Safety Culture Total Recordable Injury Frequency Rate Injury Severity Rate Safety Index (new measure for 2024-25) Workforce Development

2023 Actual

2024 Actual

2024 Target

2025 Forecast

2026 Forecast

2027 Forecast

2028 Forecast

2029 Forecast

1.7

1.73

1.8

N/A

100% Composite Score

N/A

Below Public Sector Average

Above Public Sector Average

Non- Survey Year

Public Sector Average

Non- Survey Year

Employee Experience

Vacancies Filled by Internal Applicants (new measure for 2024-25) Representative Workforce Women in Management Roles

N/A

N/A 52.0% 54.0% 56.0% 58.0% 60.0%

38.5%

38.9%

41.0% 40.0% 41.0% 42.0% 43.0% 44.0%

Indigenous Employment

12.8%

13.3%

14.5% 13.5% 14.0% 14.5% 15.0% 15.5%

Management’s Discussion and Analysis

Safety Culture SaskEnergy is committed to personal safety, the safety of its people and the safety of the public. Success is achieved when a strong safety culture instills safe practices, and the individual and collective decisions of employees and contractors bear safety in mind. Hazard identification, risk assessment and mitigation, and sharing learnings to promote awareness and continuous improvement, are safety priorities throughout the organization and demonstrate the Corporation’s commitment to worker and public safety. At the end of the 2023-24 fiscal year, SaskEnergy achieved a Total Recordable Injury Frequency Rate (TRIF) of 1.7, meaning there were 1.7 recordable injuries for every 100 full-time employees. This is a slight decrease from the 2022-23 TRIF of 1.73 and is lower than the 2023-24 target of 1.8. The Injury Severity Rate at the end of 2023-24 was 29 against an annual target of 21. This is an increase from the 2022-23 injury severity rate of 28. This metric measures the severity of an injury based on the number of lost workdays. Two injuries resulted in extended medical absences accounting for 43 per cent of the lost time days in 2023-24. Both injuries were related to slips, trips and falls. In 2024-25, a new measure will be introduced to measure SaskEnergy’s safety culture. The Safety Index is an equal weighted measure of the Corporation’s performance across two leading and two lagging safety indicators. The outcome in each of the four measures is granted a weighting of 25 per cent and the sum of the weighted results determines the overall index score on a 100-point scale. As SaskEnergy’s work involves safety hazards, the Corporation shows its commitment to enhancing safety performance through key safety initiatives. Prioritizing opportunities and developing action plans to address items from the latest staff safety culture survey completed late in 2023-24 will be a priority initiative to drive improvement in the upcoming year.

Workforce Development SaskEnergy takes pride in its people, recognizing employees drive the success of the organization. With more than 1,200 employees across Saskatchewan, the Corporation’s goal is to provide a workplace that offers challenging opportunities for growth and provides a safe, inclusive and engaging environment where all ideas are valued, respected and welcomed. SaskEnergy was named one of Canada’s Top 100 Employers for 2023 and 2024. Employee Experience SaskEnergy is committed to the attraction, retention and engagement of employees. Employee experience is primarily dependent on a positive corporate culture, supportive managers/supervisors, trust in leadership and opportunities to perform meaningful work. SaskEnergy’s commitment to employee training and development prepares its workforce for the future, allows for stronger business outcomes, and enhances the ability to recruit and retain talented individuals. SaskEnergy conducts an employee engagement survey every second year, with the next survey planned for 2024-25. The survey gauges SaskEnergy’s employee perceptions of various workplace dimensions. Results are compared against data from other public sector companies in Canada. The last survey was conducted in March 2023 and the resulting action plans maintain a focus on the identified key drivers of employee engagement at SaskEnergy — Organizational Culture, Growth and Development, Senior Leadership, and Organizational Vision.

Management’s Discussion and Analysis

Vacancies Filled by Internal Applicants In 2024-25, a new measure will be introduced to evaluate the number of vacancies filled by existing in-scope and out-of-scope employees. This is a benchmark of mobility and career opportunity inside the organization. Hiring internally helps improve employee retention and engagement, as internal candidates feel valued and motivated by the opportunity to grow and advance within the company. Hiring internally also reduces time and costs given existing employees’ knowledge and experience, including their familiarity with people and processes. Representative Workforce SaskEnergy’s goal is to continue to foster an inclusive work environment rooted in the belief that, through varying perspectives, better decisions are made and better outcomes are achieved. The communities that SaskEnergy serves include people from diverse backgrounds, and the Corporation aspires to obtain a workforce reflective of that same diversity. This includes Indigenous peoples, who represent a large portion of Saskatchewan’s current and future labour force. Women in Management Roles was reported as 38.5 per cent in 2023-24, lower than the 2022-23 results of 38.9 per cent and the 2023-24 target of 41.0 per cent. The below-target results are an area of focus in developing a diverse and inclusive workforce.

The percentage of Indigenous employees decreased slightly in 2023-24 to 12.8 per cent, as compared to 13.3 per cent in 2022-23 and the 2023-24 target of 14.5 per cent. The Saskatchewan Human Rights Commission’s recommended target is 14 per cent provincially, but SaskEnergy also recognizes that this demographic is trending higher in the province. SaskEnergy aims to provide opportunities to qualified people, and is committed to the attraction, retention and engagement of its employees. Diversity and inclusion will continue to be a priority as the recruiters and hiring managers, with support from all levels of the organization, remain committed to increasing diversity and inclusiveness in the workforce. The members of UNIFOR Local 649 ratified a new three-year Collective Bargaining Agreement, retroactively effective February 1, 2023, and expiring January 31, 2026.

Management’s Discussion and Analysis

Operational SaskEnergy strives to pair effective processes with optimized resources to meet customer expectations for affordable, reliable service and deliver on its sustainability commitments.

Operational Strategic Measures For the years ended March 31

2023 Actual

2024 Actual

2024 Target

2025 Forecast

2026 Forecast

2027 Forecast

2028 Forecast

2029 Forecast

Operational Excellence

Change equal to or below Sask. Consumer Price Index Change equal to or below Sask. Consumer Price Index

Distribution – Operating and Maintenance Costs per Customer

$382

$376

$400

Transmission – Operating and

Maintenance Costs per Book Value of Assets Managed Residential Delivery Rates Reliability Unplanned Distribution Customer Outage Events Greener Energy Provider Cumulative GHG Emissions Reduction Relative to 2019 Baseline (Tonnes CO 2 e)

7.4%

7.1%

7.4%

Competitive Competitive

Competitive Competitive Competitive Competitive Competitive Competitive

2.5% reduction (19.5% cumulative)

3.0% reduction

17.0%

11.5%

15.5%

Customer GHG Savings (Tonnes CO 2 e/year) from Natural Gas Conservation Programs 19,225

19,200

26,000 22,000 23,000 24,000 26,000 26,000

Operational Excellence Operational excellence includes standardization, simplicity and ease of use in the delivery of services. It is about delivering services in a way that reduces costs, thereby keeping rates reasonable, but also delivering an enhanced customer experience. Processes are viewed through the lens of customer value, and resources are allocated to those functions that support it.

Despite lower than anticipated customer additions in the year, Distribution Operating and Maintenance Costs per Customer were lower than expected in 2023-24. Efficiency initiatives in operating and maintenance activities resulted in cost savings and contributed to SaskEnergy exceeding its target by year end. Projects focused on enhancing customer service and providing efficiency through technology adoption were a focus in 2023-24 and helped to deliver this positive result.

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