SaskEnergy Incorporated First Quarter Report Transportation and storage revenue was $118 million and $45 million for the nine months and three months ending December 31, 2018, $16 million and $11 million higher than the same periods in 2017. Industrial customer and power generation related load growth continues to increase demand for natural gas within the province and is driving higher transport tion revenue. A rate increase effective May 1, 2018 also contributed to higher revenue and helped address increasing costs to continue providing high quality, safe and reliable service to customers. March 31, 2011
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 distribution system projects. The volume and magnitude of customer contribution revenue can vary significantly period-over-period as their receipt and recognition as revenue is primarily driven by customer activity. The contributions received, less potential refunds, are recognized as revenue once the related property, plant and equipment is available for use. The Corporation may refund a customer for some or all of the contributions they make depending on how much gas they consume or transport through the system. The amount of contributions expected to be refunded is estimated and recorded as a refund liability until the eligible refund period expires or a refund is earned by the customer. Customer capital contribution revenue for the nine months and three months ending December 31, 2018 are $5 million and $6 million above the same periods in 2017 as economic activity continues to be positive for the distribution utility.
Other Revenue
Other revenue primarily consisted of gas processing fees and natural gas liquid sales from two natural gas liquid extraction plants. Compression and gathering service revenue comprised the remaining balance of other revenue. Other revenue of $4 million for the nine month period ending December 31, 2018 approximated revenues for the same period in 2017. The Corporation sold these two natural gas liquid extraction plants effective October 1, 2018.
Other Expenses and Net Finance Expense
Three months ended
Nine months ended December 31
December 31
(millions)
2018
2017 Change
2018
2017 Change
Employee benefits
$
22 42 21
$
20 33 25
$
2 9
$
64
$
60
$
4
Operating and maintenance Depreciation and amortization
112
100
12
(4)
74 11
74 10
-
Saskatchewan taxes
3
2
1
1
Other Expenses
$
88
$
80
$
8
$
261
$
244
$
17
Net finance expense
$
13
$
12
$
1
$
38
$
36
$
2
Other gains
$
-
$
-
$
-
$
13
$
8
$
5
Expenditures on safety and integrity initiatives, strong customer growth, and the need to import more natural gas from Alberta are key factors contributing to rising cost pressures. Employee benefits expense of $64 million for the nine months ending December 31, 2018 were $4 million higher than the same period in 2017, a result of higher wages, salaries and benefits and lower allocations to capital in 2018. The Corporation continues to manage vacant positions and overtime costs through productivity and efficiency initiatives. Operating and maintenance expense of $112 million and $42 million are $12 million and $9 million higher than the same nine month and three month periods in 2017, due to higher third party transportation and storage costs. The Corporation continues to focus on cost management initiatives in an effort to minimize the impact of increasing costs in other areas. Depreciation and amortization of $74 million and $21 million are equal to and $4 million lower than the same periods in 2017. Lower depreciation is the result of changes made to depreciation rates based on the recommendations from an external depreciation study. Net finance expenses of $38 million and $13 million for the nine month and three month periods are $2 million and $1 million higher than the same periods in 2017. During the first quarter ending June 30, 2018, SaskEnergy issued $101 million of long term debt while in the second quarter, the Corporation issued another $50 million of long-term debt with both issues receiving extended terms of 30 and 40 years respectively. Both issuances were used to fund capital asset requirements and reduce short term debt balances. The Corporation has been able to take advantage of low long term rates while managing its exposure to increasing short term rates.
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2018-19 THIRD QUARTER REPORT
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