Management’s Discussion and Analysis
Transportation and Storage revenue was $24 million higher in 2022 than in 2021, consisting of a $23 million increase in transportation revenue and a $1 million increase in storage revenue. Receipt and delivery service revenues combined for a $10 million increase in transportation revenue, primarily due to rate increases effective April 1, 2022 as the Corporation addresses increasing third-party transportation expenses. Existing transportation customers also increased firm contracting in 2022 compared to 2021 across all services, as the Corporation assisted customers in reducing their reliance on interruptible transportation services in 2022-23, which may not be available. In addition, industrial customer growth, combined with customers increasing their reliance on interruptible export services, which were highly utilized in 2022, contributed to the remaining transportation revenue increases in 2022. Storage revenue of $9 million for the nine months ended December 31, 2022 is $1 million higher than in 2021, primarily due to rate increases effective April 1, 2022. Customers leverage storage services for balancing their transportation account and inject natural gas into storage in the summer to meet higher loads/demands in the winter. Customer Capital Contributions The Corporation receives capital contributions from customers to partially offset the cost of constructing facilities to connect them to the transmission and distribution systems. Generally, contributions related to transmission system projects tend to be larger but less frequent than contributions related to the distribution system. The volume and magnitude of contribution revenue can significantly vary period-over-period, as various factors influence their receipt and recognition as revenue. Customer capital contributions were $2 million higher in 2022, resulting from developers in Saskatoon and Regina requiring more gas line installations in the distribution utility than in the nine months ended SaskEnergy’s expenses are driven to a large degree by its investment in its transmission, distribution and storage systems. Depreciation and amortization expense, net finance expense and Saskatchewan taxes are directly tied to the investment in 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 and infrastructure to serve those customers grows, the costs to operate and maintain the system increases. These expenses increase primarily because the amount of work to service and maintain the natural gas system grows as the kilometres of gas lines, number of service connections and amount of compression equipment increases. Additional regulatory requirements and changing public perceptions have resulted in accelerated prevention, detection and mitigation initiatives, adding pressure to transmission, distribution and storage rates. Other expenses, net finance expenses and other (gains) losses, as reported in the condensed consolidated financial statements are as follows: December 31, 2021. Other Expenses
Three months ended December 31,
Nine months ended December 31,
(millions)
2022
2021 Change 2022
2021 Change
$
27 $
$
78 $
Employee benefits
24 46 31
$
(3) (6) (1)
75
$
(3)
52 32
141
Operating and maintenance Depreciation and amortization
131
(10)
94 14
92 14
(2)
3 4
Saskatchewan taxes
4 2
1
-
5
Impairment loss on trade and other receivables
(2)
-
(5)
$
118 $
$
332 $
107
$
(11)
312
$
(20)
$
19 $
$
54 $
Net finance expenses
14
$
(5)
43
$
(11)
$
-
$
(1)
Other (gains) losses
$
1
$
1
$
-
$
1
10
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