Management’s Discussion and Analysis
Revenue Delivery revenue, transportation and storage revenue and customer capital contributions, as reported in the condensed consolidated financial statements, were as follows:
Three months ended June 30,
(millions)
2023
2022 Change
$
57 59
Delivery revenue
$
57 57
$
-
Transportation and storage revenue Customer capital contributions
2
4
5
(1)
$
120 $
Revenue
119
$
1
Delivery Revenue Natural gas delivery rates are designed to recoup all distribution facility and operating costs necessary for delivery of natural gas to customers throughout the year. Natural gas storage and transportation costs — as well as ongoing investments related to safety, system integrity and growing infrastructure — are factored into delivery rates. Other considerations impacting natural gas delivery services include regulatory code compliance and industry best practices regarding safety. To minimize these impacts on delivery service customers, the Corporation strives to make the most effective use of resources and technology and to collaborate with other Crown corporations and executive government. Delivery revenue is primarily driven by the number of customers and the amount of natural gas they consume. Weather is the most significant external factor affecting delivery revenue, as residential and commercial customers consume natural gas primarily as heating fuel. Delivery revenue of $57 million through the three months ended June 30, 2023 equaled the prior year results. Rate increases effective August 1, 2022 for all delivery services increased delivery revenue year-over-year, which was equally offset by the impact of lower consumption compared to the prior year as weather was The Corporation generates transportation revenue by receiving gas from customers at various receipt points in Saskatchewan and Alberta and delivering natural gas to customers at various delivery points in the province. The transportation toll structure consists of a receipt service charge, which customers pay when they put gas onto the natural gas transportation system and a delivery service charge that customers pay when they take delivery off the natural gas transportation system. For receipt and delivery services, the Corporation offers both firm and interruptible transportation contracts. Under a firm service contract, the customer has a right to deliver or receive a specified quantity of gas on each day of the contract. With a firm contract, customers either pay for the amount of capacity they have contracted for, whether they use it or not. Under an interruptible contract, customers may deliver or receive gas only when there is available capacity on the system and only pay receipt and delivery tolls when they deliver or receive gas. Integral to the Corporation’s transmission system are several strategically located natural gas storage sites, which have the capacity to provide operational flexibility along with a reliable and competitive natural gas storage service. 21 per cent warmer than the prior year. Transportation and Storage Revenue Transportation and Storage revenue was $2 million higher for the three months ended June 30, 2023 compared to the same period in 2022, as higher delivery service revenues are resulting from industrial customers executing higher contract demand and interruptible transportation services to meet their operating requirements. This was partially offset by customers decreasing export transportation service contracts in 2023 compared to 2022. High natural gas market prices in Canada through 2022 created incentives for customer to increase export services and supply Eastern Canada with natural gas as the region was experiencing higher natural gas market prices than Western Canada. Storage revenue of $3 million for the three months ended June 30, 2023 equaled the prior year results. Customers leverage storage services for balancing their transportation account and inject natural gas into storage in the summer to meet higher loads and demands in the winter.
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