Management’s Discussion and Analysis
Financial SaskEnergy is committed to the long-term financial sustainability of the Corporation, measured through its debt-to-equity ratio, and its regulated return on equity in both the distribution and transmission business. Financial Strategic Measures For the year ended March 31 2024 Actual 2025 Actual 2025 Target 2026 Forecast 2027 Forecast 2028 Forecast 2029 Forecast 2030 Forecast Debt/Equity Ratio 59/41 59/41 62/38 62/38 62/38 63/37 62/38 61/39 Regulated Return on Equity – Distribution 2.2% 5.5% 2.0% 2.5% 4.0% 4.0% 5.4% 6.5%
Regulated Return on Equity – Transmission & Storage
8.7%
8.1%
7.3% 8.57% 8.57% 8.57% 8.57% 8.57%
SaskEnergy’s financial outcomes are organized around financial sustainability and profitability through the returns provided to its shareholder. SaskEnergy operates a capital-intensive business with large investments in long-life infrastructure, so maintaining financial sustainability through responsible debt management is important to its financial health. Managing its capital spending is a priority in delivering on financial sustainability as SaskEnergy maintains standards of safe and reliable service, meets customer growth demands, and enables long-term productivity and efficiency savings. The return on equity targets measure effectiveness in cost management and the ability to deliver a fair return to its shareholder. SaskEnergy’s ability to attain its regulated return while maintaining customer affordability is incumbent on responsible spending and operational excellence. SaskEnergy’s financial performance in 2024-25 reflected its proven commitment to safely deliver natural gas to customers while maintaining financial sustainability. Net income before unrealized market value adjustments was $82 million in 2024-25, which was a better-than-expected result. This, combined with prudent capital spending, resulted in SaskEnergy’s consolidated debt-to-equity
ratio remaining stable at 59 per cent debt and 41 per cent equity, which is well within the target range of 58 to 63 per cent debt. The regulated return on equity for distribution for the period ending March 31, 2025, was 5.5 per cent compared to the expected return of 2.0 per cent. A combination of more customers than expected and slightly colder than normal weather helped provide additional distribution revenue. In addition, operating expenses were lower than budget, while lower than planned capital spending resulted in lower borrowing costs and less capital taxes than were expected. The regulated return on equity for transmission was 8.7 per cent, which is above the expected return of 7.3 per cent. The better than anticipated return was primarily due to returns received from optimizing excess transportation capacity in off-peak periods. The long-term return on equity targets for distribution and transmission utilities are 8.3 per cent and 8.57 per cent respectively. These rates are benchmarked to other similar utility providers across the country and provide shareholder profitability targets for the organization to strive to achieve.
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