Customer Capital Contributions
SaskEnergy Incorporated First Quarter Report The Corporation receives capital contributions from customers to partially offset the cost of constructing facilities to connect them to the transmission and distribution systems. Generally, contributions related to transmission system projects tend to be larger but less frequent than contributions related to distribution system projects. The volume and magnitude of customer contribution revenue can vary significantly period-over-period as their receipt and recognition as revenue is primarily driven by customer activity. The contributions received, less potential refunds, are recognized as revenue once the related property, plant and equipment is available for use. The Corporation may refund a customer for some or all of the contributions they make depending on how much gas they consume or transport through the system. The amount of contributions expected to be refunded is estimated and recorded in deferred revenue until the eligible refund period expires or a refund is earned by the customer. Customer capital contribution revenue for the six months and three months ending September 30, 2018 are $1 million and $2 million below the same periods in 2017 as there are fewer distribution customer contributions. March 31, 2011
Other Revenue
Other revenue primarily consists of gas processing fees and natural gas liquid sales from two natural gas liquid extraction plants. Compression and gathering service revenue comprise the remaining balance of other revenue. Other revenue of $4 million and $2 million for the six and three month periods ending September 30, 2018 approximated revenues for the same periods in 2017. The Corporation has entered into an agreement for the sale of the two natural gas liquid extraction plants effective October 1, 2018. The sale closed on October 1, 2018 as intended.
Other Expenses and Net Finance Expense
Three months ended
Six months ended September 30
September 30
(millions)
2018
2017 Change
2018
2017 Change
Employee benefits
$
20 38 28
$
20 33 25
$
-
$
42 70 53
$
41 68 49
$
1 2 4
Operating and maintenance Depreciation and amortization
5 3
Saskatchewan taxes
5
6
(1)
8
8
-
Other Expenses
$
91
$
84
$
7
$
173
$
166
$
7
Net finance expense
$
13
$
12
$
1
$
25
$
24
$
1
Other gains (losses)
$
13
$
14
$
(1)
$
13
$
8
$
5
Expenditures on safety and integrity initiatives, strong customer growth, and the need to import more natural gas from Alberta as Saskatchewan natural gas production declines are key factors contributing to rising cost pressures. Employee benefits expense of $42 million for the six months ending September 30, 2018 were $1 million higher than the same period in 2017, a result of lower allocations to capital in 2018. The Corporation continues to manage vacant positions and overtime costs through productivity and efficiency initiatives. Operating and maintenance expense of $70 million and $38 million are $2 million and $5 million higher than the same six month and three month periods in 2017, due to small increases across several expense categories as the Corporation continues to focus on cost management initiatives in a period of rising costs. Depreciation and amortization of $53 million and $28 million for the six and three month periods ending September 30, 2018 are $4 million and $3 million higher than the same periods in 2017 as capital additions increase the asset base. Net finance expenses approximated the same six month and three month periods in 2017. During the first quarter ending June 30, 2018, SaskEnergy issued $101 million of long term debt while in the second quarter, the Corporation issued another $50 million of long-term debt with both issues receiving extended terms of 30 and 40 years respectively. Both issuances were used to fund capital asset requirements and reduce short term debt balances. Other gains (losses) through the six months ending September 30, 2018 were $13 million, compared to an $8 million gain the same period in 2017. The current period gain relates to the impairment recovery on two natural gas liquid extraction plants that were classified as assets held for sale. The prior year gain relates to insurance proceeds received relating to a wellhead fire in 2014 and an impairment recovery relating to a natural gas storage facility. The current period recoveries were partially offset by impairment on other storage assets.
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2018-19 SECOND QUARTER REPORT
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