Management’s Discussion and Analysis
The return on equity targets measure effectiveness in cost management and the ability to deliver a fair return to its 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 2023-24 reflected its proven commitment to safely deliver natural gas to customers while maintaining financial sustainability. Net income before unrealized market value adjustments was $55 million in 2023-24, $71 million lower than the $126 million realized in the previous year. Despite the lower income, SaskEnergy’s consolidated debt-to-equity ratio remained stable at 59 per cent debt and 41 per cent equity, which is within the target range of 58 to 63 per cent debt. The regulated return on equity for distribution for the period ending March 31, 2024 was 2.2 per cent compared to the target of 4.0 per cent. A significantly warmer than normal winter heating season contributed to lower delivery revenue than anticipated. A delayed implementation of the increase to the delivery rate also resulted in reduced revenue.
These impacts to delivery revenues were the most significant contributor to the lower than targeted return from the distribution utility, as the organization was able to mostly offset rising amortization and interest costs with lower than planned employee operating expenses. The regulated return on equity for transmission was 8.1 per cent, which is above the target of 7.8 per cent. Higher contract demand for transmission services was not enough to offset the revenue loss resulting from a deferral of a planned rate increase. However, lower employee costs and reduced abandonment expenses were among the factors driving the higher than anticipated return. Also contributing to the improved results was lower carbon tax charges from the early 2023 transition to the provincial Output Based Performance Standard Program, from the federal program for Saskatchewan industrial emitters that had previously been in effect. The long-term return on equity targets for distribution and transmission services 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.
Customer Residential and business customers use natural gas primarily for heating. The Corporation strives to have customers consider SaskEnergy as the best energy value choice for them, including seamless service and easy access when needed. Large industrial customers use natural gas primarily in their production processes, and SaskEnergy aims to deliver reliable and affordable energy that allows these customers to operate efficiently and contribute to Saskatchewan’s economy.
Customer Strategic Measures For the years ended March 31
2023 Actual
2024 Actual
2024 Target
2025 Forecast
2026 Forecast
2027 Forecast
2028 Forecast
2029 Forecast
SaskEnergy Customer Satisfaction TransGas Customer Satisfaction
86%
85%
86% 86% 86% 86% 86% 86%
87%
85%
86% 86% 86% 86% 86% 86%
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