Integrated Information Systems As SaskEnergy increasingly relies on integrated information systems to meet its business requirements, the reliability, security and effectiveness of those systems becomes more important. External threats such as phishing, whaling attempts, spam, and malware may disrupt the reliable operation of information systems. These threats are addressed through security processes and controls. Internally, the Corporation’s various information systems are becoming increasingly integrated, which increases the risk that a failure in one system could lead to a failure in another system and harm the Corporation’s ability to meet operational requirements. The Corporation mitigates this risk by applying an information technology project prioritization process and project management methodology for developing and integrating new systems. The Corporation also has up-to-date business continuity and disaster recovery plans for critical information technology operations processes. Social Licence to Operate Increasingly, society’s expectation of corporations is that their operations must exceed compliance with legislation, regulations, codes and standards. Complying with this standard of operation requires additional effort and costs, while failure to meet these expectations brings additional regulation and compliance costs. To manage the risks of maintaining its social licence, SaskEnergy has implemented a series of internal processes, standards and compliance monitoring exercises to ensure that current rules, regulations, and standards are maintained in its operations. Emerging Strategic Business Landscape Inadequate assessment and response to the emerging strategic business landscape, including disruptive change, significant economic volatility, stakeholder and customer expectations, can significantly affect the Corporation’s future success. Recent transformations in the natural gas business landscape present both uncertainties and opportunities that affect SaskEnergy’s short- and long-term plans. If business conditions are not well understood, SaskEnergy risks making strategic investments in short- term initiatives that do not advance its long-term goals, and could harm financial performance. Through its strategic and business planning processes, the Corporation develops integrated strategies to mitigate business risks using information acquired through customer consultation, and relationships with industry associations. The Corporation’s strategic plans identify and evaluate emerging risks, advances in technology and changing customer expectations. Strategies now rely less on historical data and there is an increasing focus on strategic risk factors that may deter the Corporation from its ability to realize strategic objectives. Commodity and Delivery Rate Pressure The rates SaskEnergy charges to customers for the sale and delivery of natural gas is subject to review by the SRRP and the Provincial Cabinet of the Government of Saskatchewan. Delivery and commodity rates are designed to recover the actual costs SaskEnergy incurs to provide these services to customers. In evaluating SaskEnergy’s commodity and delivery rates, the SRRP considers not only the cost of providing service to customers but also the impact that the proposed rates have on customers. Significant increases to rates create more hardship for customers and increase the risk of the SRRP not supporting the proposed rate increases. Consequently, it is incumbent upon SaskEnergy to effectively manage costs and manage gas purchases costs to emphasize price stability and minimize the potential for significant increases. To mitigate the risk of having rate requests rejected or rolled back, SaskEnergy takes a long-term perspective when buying natural gas to mitigate short-term market price movements and promotes natural gas as a reliable and relatively low cost source of energy. In addition, SaskEnergy works cooperatively with the SRRP and closely follows regulatory principles through the commodity rate application process. To assist customers in managing their energy costs, SaskEnergy offers a number of energy efficiency programs. Business Plan Execution Successfully implementing business plan targets depends on capturing business revenue opportunities, realizing efficiency and productivity gains, and appropriately managing cost pressures. The risk of not meeting efficiency and productivity targets has financial and performance implications. SaskEnergy stresses accountability of results, whether it’s managing vacant positions, collaborating with other Saskatchewan Crown corporations or actively managing transportation cost pressures. In order to meet business plan targets, employees are engaged in compiling the business plan, while a leadership network reinforces accountability for efficiency and productivity targets by keeping them at the forefront of daily management of the Corporation. The result is a strong performance management system with the entire organization working toward business plan targets. Employer/Employee Relationship The Corporation’s relationship with its employees is important to the continued safe operation of its transmission, storage and distribution systems. Possible consequences of a deteriorating relationship with employees include loss of productivity and labour disruption. SaskEnergy maintains open dialogue with its union through joint union-management committees, the collective bargaining process, a focus on safety and providing an environment that offers employees a healthy work/life balance.
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Management’s Discussion & Analysis
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