Management Discussion and Analysis
specified quantity of gas on each day of the contract. With a firm contract, customers 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. Receipt and delivery service revenues combined for a $7 million increase in 2021 compared to 2020, due to rate increases effective April 1, 2021 on receipt and delivery services as the Corporation addresses increasing third party transportation expenses. Domestic customers also increased firm transportation contracting in 2021 compared to 2020, which contributed to increasing transportation revenue in 2021. Storage revenue in 2021 of $5 million equaled 2020 as the abundant supply of natural gas, coupled with small or even negative differentials between current and forward natural gas market prices, limits the demand for natural gas storage to customers with relatively low load factors who use the service to mitigate receipt transportation charges. Customer Capital Contributions 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 the distribution system. The volume and magnitude of customer capital contributions can vary significantly across reporting periods as various factors influence their receipt and recognition as revenue. Customer capital contributions in 2021 were $3 million lower than 2020. Transmission system customer capital contributions recognized in 2021 are $nil while contributions of $4 million recognized in 2020 relate to a third party customer growth capital project that was finalized in 2020. This decline was partially offset by distribution system customer capital contributions increasing $1 million in 2021 compared to 2020, due to increased customer activity. Expenses SaskEnergy’s expenses are driven to a large degree by its investment in the Corporation’s transmission, distribution and storage systems. Depreciation and amortization, net finance expenses and Saskatchewan taxes are directly tied to the investment in facilities. As the level of investment in facilities increases, these expenses also increase. Employee benefits and operating and maintenance expenses are also driven by the Corporation’s investment in facilities, although less directly. Work to service and maintain the natural gas system grows as infrastructure, specifically the kilometres of gas lines, number of service connections, and amount of compression equipment, to serve an increasing number of customers grows. Additional regulatory requirements and changing public perceptions are accelerating prevention, detection and mitigation initiatives, adding pressure to transmission, distribution and storage rates.
Three months ended September 30,
Six months ended
September 30,
(millions)
2021
2020 Change 2021
2020 Change
$
24 44 31
$
51 85 61 10
Employee benefits
$
22 39 28
$
(2) (5) (3) (1)
$
47 77 57
$
(4) (8) (4) (1)
Operating and maintenance Depreciation and amortization
7
Saskatchewan taxes
6
9 2
-
(2)
Impairment loss on trade and other receivables
-
-
4
$
106
$
205
$
95
$
(11)
$
192
$
(13)
$
14
$
29
Net finance expenses
14
-
$
27
$
(2)
$
(1)
$
(1)
Other gains
$
-
$
1
$
(2)
$
(1)
p.8
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