Management Discussion and Analysis
OUTLOOK SaskEnergy began its return to a “new normal” operating environment in the first half of 2021-22 as the Province continued to monitor and remove COVID-19 pandemic restrictions. The Corporation continues to promote and maintain the health and safety of personnel and the public while maintaining its ability to deliver core services. In addition to the pandemic, the volatility of global oil prices continues to create uncertainty for natural gas production. More than 70 per cent of the production of natural gas in Saskatchewan is associated with oil production; hence, as oil producers face price instability and uncertain capital markets, variable oil production contributes to variable natural gas production. The reduction in Saskatchewan gas supply will need to be met by increased imports from Alberta. As SaskEnergy adapts to flat or declining customer demand, there will be an increased focus on core operations and operational excellence to safeguard its financial strength into the future. In 2021-22, income from operations is forecasted to be $34 million, which is a decrease of $25 million from the 2020-21 result. The decrease is primarily due to large transmission customer connections that were completed in the prior year resulting in higher customer contribution revenue. The number of residential customers connecting to SaskEnergy’s distribution system is expected to remain level compared to 2020-21, with 3,000 new customers forecasted in 2021-22. Energy efficiency programs offered by the Corporation and implemented by SaskEnergy customers continue to influence the amount of natural gas they use. Initiatives targeted to support a greener energy strategy, increasing Government policy and regulations, and increasing needs for business and technology support create cost pressure for SaskEnergy. To offset the decline in revenue and increased costs, SaskEnergy will continue to focus on operational excellence, achieving cost savings through business process improvements, leveraging technology and collaboration with other Crown corporations and Executive government. SaskEnergy is committed to providing solutions and service that benefit customers and Saskatchewan by leveraging the Corporation’s expertise and the province’s private sector. Throughout 2021-22, SaskEnergy will make $251 million in net capital investments in the province, including maintaining the safety and reliability of the natural gas transmission and distribution systems, meeting regulatory compliance, and optimizing the Corporation’s business systems.
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