Management’s Discussion and Analysis
The Corporation has been actively working to enhance digital experiences for both customers and employees. As part of its focus on leveraging technology and improving customer service offerings, the modernization of technology solutions to cloud computing arrangements typically involves ongoing licensing and hosting fees, as opposed to historical purchase models and consequently, operating costs have increased. Notably, the organization started efforts to implement a modern cloud-based enterprise resource planning system in 2024-25 which contributed to the increased operating expenses compared to the prior year. The increasing costs in this area were partially offset by the Corporation’s efforts to enhance more cost-effective digital experiences through various campaigns in the year. Throughout 2024-25, the number of customers who signed up for a SaskEnergy Online Account, which provides self-service options and added convenience, grew significantly. In addition, the increase in customers utilizing paperless billing has streamlined processes and promoted environmental sustainability by reducing paper consumption. These initiatives have resulted in annual savings of direct expenses relating to postage and printing costs, while also improving overall service delivery to customers. Overall, customers adopting Online Account access and paperless billing provides financial, environmental, and customer service benefits. In addition, the Corporation paid $5 million to customers for energy efficiency programs over the prior year. In particular, program rebates rose in 2024-25 as the programs saw increased customer activity compared to prior year. The rise is primarily attributable to the Corporation’s three new programs, which are the First Nations Furnace Replacement Rebate, Home Efficiency Retrofit Rebate and Homes Beyond Code programs. Additionally, the Residential Equipment Replacement Rebate experienced an increase of activity, with December seeing the second highest monthly customer participation since the program was introduced in 2019. These cost increases were partially offset by the impact of higher construction and engineering costs being allocated to capital projects than in 2023-24, as the Corporation increases capital investment in system integrity of the natural gas infrastructure and addressed system expansion requirements driven by customers increasing requirement for natural gas services. Depreciation and Amortization To balance safety and system integrity with the increasing demand for natural gas services, strategic capital investment is essential to ensure the necessary infrastructure is in place to meet growing customer needs. Depreciation and amortization expenses were $1 million higher than the same period in 2023-24,
primarily due to an expanding asset base to serve customer requirements, along with higher depreciation pertaining to decommissioning assets. The latter was primarily driven by higher estimates pertaining to decommissioning storage facilities and the impact from lower interest rates. Additionally, vehicle and equipment depreciation increased as the Corporation acquired more equipment throughout 2024-25. These depreciation expense increases were partially offset following a major information system asset being fully depreciated in 2023-24, leading to lower expenses in 2024-25. Recovery on Trade and Other Receivables The recovery on trade and other receivables was $1 million in 2024-25 compared to $nil in 2023-24. During the high inflation and interest rate environment that followed the COVID-19 pandemic, there was significant economic uncertainty surrounding collections, leading to a conservative approach regarding collection of outstanding customer account balances. However, actual bad debts written off over a 24-month period have remained below projected figures as the anticipated write-offs have not materialized. Consequently, collection estimates have been adjusted to align more closely with pre-pandemic levels. Net Finance Expenses Net finance expenses for 2024-25 were $2 million lower than the previous year, primarily due to higher debt retirement fund earnings resulting from the declining interest rates throughout 2024-25. Additionally, interest income increased compared to the prior year, as cash from operations was held in the bank through most of the first quarter of 2024-25 until short-term debt maturities were reached. Higher interest allocations to capital projects also had a favorable impact, driven by the investment in capital projects increasing by $81 million in 2024-25 compared to 2023-24. These positive results were partially offset by additional interest on the $95 million of net long-term debt issuances made during the first two quarters. These debt issues funded a portion of the current year’s capital investment in the Corporation’s natural gas line infrastructure, benefiting Saskatchewan customers both in the short and long term. Other Net Losses The Corporation reported other net losses of $9 million for the fiscal year 2024-25, which represents a $4 million increase compared to the $5 million recorded in 2023-24. This rise is primarily attributed to decommissioning expenses related to non-operational assets for Bayhurst as the Corporation remains faithful in its commitment to environmental sustainability.
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