Management’s Discussion and Analysis
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 several factors influence their receipt and recognition as revenue. Customer capital contributions were $1 million higher in 2023, resulting from more gas line installations in the distribution utility compared to the six months ended September 30, 2022. Other Expenses 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:
Three months ended September 30,
Six months ended September 30,
(millions)
2023
2022 Change 2023
2022 Change
$
26 47 35
$
54 95 70 11
Employee benefits
$
24 44 31
$
(2) (3) (4)
$
51 89 62 11
$
(3) (6) (8)
Operating and maintenance Depreciation and amortization
6 1
Saskatchewan taxes
7 1
1
-
1
-
1
-
Impairment loss on trade and other receivables
$
115 $
$
231 $
107
$
(8)
214
$
(17)
$
19
$
38
Net finance expenses
$
18
$
(1)
$
35
$
(3)
$
(2)
$
(1)
Other gains
$
(1)
1
$
$
$
(1)
-
Employee Benefits Full-time equivalents are trending higher in 2023 than 2022 levels, resulting in employee benefit costs increasing $3 million compared to 2022 as the Corporation was able to fill previously vacant positions. Operating and Maintenance With SaskEnergy’s continued focus on core operations, while striving for efficiencies to support its continued financial strength, the Corporation’s Operational Effectiveness team has completed 27 continuous improvement initiatives and has 76 underway. SaskEnergy continues its focus on operational excellence to achieve cost savings through business process improvements.
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