Management’s Discussion and Analysis
Supply Reliability As natural gas production within Saskatchewan continues to decline, SaskEnergy becomes increasingly reliant on importing natural gas from outside the province. This creates a reliance on interconnecting gas lines, which becomes more critical as the amount of imported gas increases. It also increases the complexity of supply planning, increases operating costs, and has potentially negative impacts on Saskatchewan end-users. SaskEnergy manages this risk through long-term supply and demand forecasting, and consultation with both large existing and potential customers as well as the interconnecting gas line companies. For the distribution utility, declining provincial natural gas production adds complexity to the supply planning process that is managed through the natural gas procurement strategy. Specific strategic initiatives undertaken to mitigate this risk include an operations risk management oversight process, utilization of storage facilities to support transmission capabilities, and utilization of trailers of compressed natural gas to meet peak demand. System Capacity Changes in the volume and location of customer demand, particularly from large industrial and commercial customers, and the high seasonal variability from other customer classes places increased demands on the existing infrastructure. Effective capacity planning is based on a clear understanding of how business plans and customer load growth affect processes, and the infrastructure components that support them. The unknown nature of when and where this growth will occur, and the timeline associated with adding new infrastructure to address it, poses a risk to the organization. The Corporation’s facility planning department and the business work together to plan for growth and other variables to ensure predictable results may be achieved. They rely on historical data and customer information and forecasts to predict expected load growth and use it to plan and build infrastructure to meet future demands. Public Acceptance The use of fossil fuels, including natural gas, as a source of energy and its impact on the environment has been a topic of increasing public discussion in recent years. It has resulted in a varying amount of proposed public policy initiatives both globally and within Canada. The most significant example impacting the Corporation has been the implementation of the carbon tax. The long term impact of both policy changes and changes in the public’s concerns is unknown, but poses a potential risk to the long-term growth and system
utilization of SaskEnergy’s natural gas infrastructure. To address public acceptance risk, the Corporation is very invested in stakeholder engagement when planning new facilities and is regularly involved with updates to Acts and Regulations. The Corporation also conducts environmental assessments in project planning phases and environmental field audits during construction. SaskEnergy has a strong brand within the province and is committed to collaborating with its customers and the public to meet their environmental goals. Recruitment, Development and Retention of Skilled Employees With Saskatchewan’s changing economy, competition to attract and retain skilled employees has changed. It is extremely important to have the right people, in the right place at the right time; however, how this risk is managed and the effort required by management has also changed. The Corporation has effective processes in place to manage turnover and is able to attract and retain a sufficient number of appropriately skilled, diverse and engaged people through its recruitment, hiring and training processes. The Corporation also conducts a semi-annual succession planning assessment, utilizes a cross-training strategy, conducts employee engagement surveys and utilizes a leadership network. In addition, SaskEnergy monitors, and adjusts when appropriate, compensation and benefits as part of the job evaluation process, based on industry comparisons. Climate Change Climate change is considered a global, community and corporate concern. Climate change also poses a significant risk to many governments, resulting in the passing of new climate change legislation. The legislation may result in additional costs and reduced profits for corporations as guidelines relating to emission levels and energy efficiency become more stringent. In the electricity industry, new climate change guidelines are creating a trend towards a transition from coal- fired electricity units to natural gas-fired units and renewable generation. With respect to SaskEnergy, increasing construction of natural gas facilities will affect the Corporation and will generate an opportunity to provide incremental natural gas transmission service. Recent developments surrounding the implementation of a carbon tax in the province of Saskatchewan took effect April 1, 2019. The Corporation itself has limited exposure to the tax as internal charges related to the tax are recovered through rates charged to customers. The Corporation does, however, calculate consumption from customer meter points and apply the tax to
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