Management Discussion and Analysis
Operating Activities Cash provided by operating activities increased $5 million in 2021 compared to 2020, driven by a higher commodity margin and higher transportation and storage revenue as the province returns to a more normal business environment in 2021. These increased cash flows were partially offset by lower delivery revenue and small increases in other expense categories. Investing Activities Cash used in investing activities increased $6 million compared to 2020, primarily due to capital investment required for system expansion, as the Corporation completes projects to meet natural gas demand. This was partially offset by decreasing investment in customer growth initiatives and business and technology optimization. Financing Activities Cash provided by financing activities decreased $11 million in 2021 compared to 2020, primarily due to higher dividends paid to the Corporation’s shareholder and lower net borrowing in 2021. The Corporation used $51 million for interest payments and $13 million for dividend payments. This was offset by the Corporation increasing short-term debt by $96 million to fund operations through the warmer summer months. In addition, during the first quarter of the fiscal year, the Corporation borrowed an additional $50 million of long-term debt to support its capital investment requirements. The debt has an interest rate of 2.8 per cent and matures in 2052. SaskEnergy’s debt-to-equity ratio at the end of December 31, 2021 of 60 per cent debt and 40 per cent equity is within the Corporation’s long-term target range of 58 to 63 per cent debt. CAPITAL ADDITIONS SaskEnergy ensures that responsive customer service and safe and reliable natural gas delivery are priorities of its capital management governance.
Three months ended December 31,
Nine months ended
December 31,
(millions)
2021
2020 Change 2021
2020 Change
Strategic Customer growth System expansion
$
14 24 38
$
26 92
$
29 20 49
$
(15)
$
50 54
$
(24)
4
38 14
118
(11)
104
Operational Risk management
18
52 14
18
- -
47 19
5
8 5
Reliability of natural gas service
8 4
(5) (1) (1)
7
Business and technology optimization
1 1
8
31 69
73
30 79
74
$
$
191
Capital additions
$
$
(10)
$
178
$
13
Capital additions of $191 million through 2021 were $13 million higher than the Corporation’s 2020 investment. This is primarily due to higher system expansion spending in the current year on the 85-kilometre gas line from Rosetown to Vanscoy. The project was initiated in 2019-20 but was deferred through 2020-21 due to the COVID-19 pandemic changing priorities of the Corporation’s capital investment requirements. The project resumed in 2021 and will increase gas line capacity from Rosetown to the Saskatoon Bypass gas line. Investment in customer growth projects declined $24 million in 2021 as transportation service customers continue to defer projects requiring transmission system investment. Risk management spending on the distribution system increased $5 million in 2021 as the Corporation’s service upgrade program returned to normal levels year over year as the prior year’s approach limited public interactions with customers, while still addressing key risk areas. Reliability of natural gas service spending decreased in 2021 by $5 million as the Corporation reduced spending on building and leasehold improvements compared to 2020.
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