Management’s Discussion and Analysis
Consolidated Financial Results Consolidated Net Income (millions) Income before unrealized market value adjustments
March 31, 2024 March 31, 2023
Change
$
55 $
126 $
(71)
(34)
Impact of fair value adjustments
(66)
32
$
21 $
Consolidated net income
60 $
(39)
Income before unrealized market value adjustments was $55 million in 2023-24, $71 million unfavourable compared to $126 million in 2022-23. This is resulting from year-over-year decreases in asset optimization margins, delivery revenues, and customer capital contributions, combined with higher employee benefit costs and higher operating and maintenance expenses. Through the 12 months ending March 31, 2023, the Corporation was able to achieve significant earnings from optimizing unutilized transportation capacity as natural gas line expansion projects continued to be delayed in Alberta. In combination with increased maintenance projects, which limited transportation capacity on Alberta systems throughout the summer, higher-than-normal asset optimization margins were realized in the prior year. The Alberta natural gas line projects that had experienced delays were operationalized in early 2023. This removed the transportation capacity constraints experienced in 2022 and contributed to lower natural gas market prices and decreased market price volatility — both limiting the Corporation’s asset optimization opportunities through 2023-24. Warmer than normal weather of nine per cent through the 12 months ending March 31, 2024 was a significant departure from the seven per cent colder-than-normal weather through 2022-23, resulting in lower customer demand and delivery revenues. Customer capital contributions decreased in 2023-24 compared to the prior year, as the fourth quarter of 2022-23 included recognition of revenue from a large capital project completed for an industrial customer.
In 2023-24, employee benefit costs increased as vacant positions were filled, and settlement of the organization’s Collective Bargaining Agreement resulted in implementation of economic wage increases. Operating and maintenance expenses were $8 million higher than 2022-23, as the Corporation focused on the modernization of technology solutions and enhancing customer service offerings, combined with increasing leak survey, post-project environmental monitoring and cathodic protection costs. In addition, overall global inflation, increasing transportation costs and higher regulator fees also contributed to the higher costs in 2023-24. At March 31, 2024, fair value adjustments, primarily on commodity purchase transactions, decreased consolidated net income by $34 million. With natural gas market prices declining, the price differential between the average contract and market price on the commodity purchase contracts outstanding at March 31, 2024 was $0.59 per GJ less favourable than the prior year.
Consolidated Financial Results
34
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