Management’s Discussion and Analysis
Operating and maintenance expenses were $6 million higher than in 2022, as the Corporation continues to leverage technology and enhance customer services. Modernizing and adding additional functionality to the Corporation’s online customer-portal is resulting in additional hosting fees in 2023 compared to 2022. SaskEnergy’s digital presence continues to grow with the launch of a mobile application for Apple and Android devices. In addition, favourable summer weather conditions in 2023 permitted work on leak survey programs to be completed ahead of the same period in 2022, increasing costs in 2023. Lastly, growing demand and increasing natural gas imports from Alberta are resulting in more natural gas being transported and over greater distances, thus increasing transportation expenses. Third party rate increases on transportation services are also contributing to the higher transportation expenses in 2023. Depreciation and Amortization Balancing safety and system integrity with demand for service continued through 2023. Strategic capital investments required the necessary distribution and transmission infrastructure be put in-service to meet current customer demand, resulting in increased depreciation and amortization — which was $8 million higher than the same period in 2022. Changes made to depreciation rates, based on an external depreciation study, as well as a change in management assumptions for amortization of intangible and compression assets also contributed to higher depreciation in 2023. Net Finance Expenses Net finance expenses for 2023 were $3 million higher than in 2022, a result of increasing short-term market interest rates, as the Corporation’s average short-term debt interest costs climbed to 4.9 per cent through the six months ending September 31, 2023 compared to 1.9 per cent through the same period in 2022. Additional long-term debt issuances of $125 million in 2023, also contributed to the higher financing costs in 2023. LIQUIDITY AND CAPITAL RESOURCES As a Crown corporation, SaskEnergy’s primary sources of capital are cash from operations and debt — which is borrowed through the Province’s General Revenue Fund. Cash from operations is SaskEnergy’s most important source of capital. As a utility, cash from operations is relatively stable and the Corporation relies on it to fund a significant proportion of its investment in its natural gas facilities and the debt servicing costs on those investments. Long- and short-term debt can be borrowed through the Province of Saskatchewan to meet any long- or short-term incremental capital requirements and to repay debt as it matures. Sources of liquidity include Order in Council authority to borrow up to $500 million in short-term loans and a $35 million line of credit with the Toronto-Dominion Bank. Under The SaskEnergy Act , the Corporation may borrow up to $2,500 million of debt upon approval of the Lieutenant Governor in Council. Cash provided by and used in activities, 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
$
58
$
142
Cash provided by operating activities Cash used in investing activities
$
23
$
35
$
96
$
46
(79)
( 111)
(71)
(8)
(99)
(12) (44) (10)
-
(33)
Cash (used in) provided by financing activities (Decrease) increase in cash and cash equivalents
47
(47) (20)
11
$
(21)
$
(2)
$
(1)
$
$
8
$
11
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