SASKENERGY 2017-18 ANNUAL REPORT
MANAGEMENT’S DISCUSSION & ANALYSIS
INTRODUCTION The Management’s Discussion and Analysis (MD&A) highlights the primary factors that affected SaskEnergy’s consolidated financial condition and performance for the 12 months ending March 31, 2018. Using financial and operating results as its basis, the MD&A describes the Corporation’s past performance and future prospects, enabling readers to view SaskEnergy from the perspective of management. The MD&A is presented as at May 24, 2018, and should be read in conjunction with the Corporation’s audited consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards (IFRS). The MD&A contains certain forward-looking statements that are subject to inherent uncertainties and risks. Many of these risks are described in the Risk Management and Disclosure section of the MD&A. All forward-looking statements reflect the Corporation’s best estimates and assumptions based on information available at the time the statements were made. However, actual results and events may vary significantly from those included in, contemplated by, or implied by such statements. The Corporation’s financial results are subject to variation, especially given the volatility of natural gas prices. In order to compare financial performance from period to period, the Corporation uses the following measures: income before unrealized market value adjustments, realized margin on commodity sales, and realized margin on gas marketing sales. Each measure removes the impact of fair value adjustments on financial and derivative instruments and the revaluation of natural gas in storage to the lower of cost and net realizable value. Unrealized market value adjustments vary considerably with the market prices of natural gas, drive significant changes in the Corporation’s consolidated net income and may obscure other business factors that are also important to understanding the Corporation’s financial results. The measures referred to above are non-IFRS measures, in that there is no standardized definition, and may not be comparable to similar measures presented by other entities. STRATEGIC SCORECARD MEASURES SaskEnergy’s four strategic mandates — Service Excellence, Achieving Growth, Our Team and Creating Value — as set out in the Business Plan, support the vision, mission and values of the Corporation. They also align with the Crown Sector Strategic Priorities as identified by CIC. These mandates and strategic priorities provide guidance to SaskEnergy in its business
planning process as well as its performance management and reporting. These strategic priorities and mandates also assist employees in making a link between their everyday efforts and their contribution to the Strategic Plan and the overall direction of the Corporation. The Crown Sector Strategic Priorities and the Saskatchewan Plan for Growth convey shareholder strategic direction for the Province’s Crown corporations.
The government’s strategic plan identified five strategic priorities based on the principle of Keeping Saskatchewan Strong.
Strategic Priorities: • Customer Focus
• Financial Sustainability • Infrastructure Investment • Private Sector Engagement • Labour Force In addition, the Provincial Government has issued messaging around the need for transformational change. Crown corporations are expected to consider all potential structure, administration and operational changes in order to achieve financial sustainability and the sustainability of high-quality service delivery to the people of Saskatchewan. For the 2017-18 fiscal year, SaskEnergy received three specific directives to support the Province’s priorities. • Continue to monitor and manage the time it takes to complete new connect requests for customers; • Continue to meet the needs of a growing residential, commercial and industrial customer base through upgrades to SaskEnergy’s distribution and transmission network; and, • Recommend rate adjustments that continue to take long-term return targets into consideration. During 2017-18, SaskEnergy made progress on all of these directives. The distribution utility set a target to complete the average customer connection request within the customer’s required timeline. This target was achieved in most instances and opportunities for improvement continue to be identified. With respect to transmission upgrades and expansion, the operations and system planning groups work together to ensure the safe and reliable operation of the natural gas system and strategize on how best to respond to anticipated load growth in the coming years in a timely and cost effective manner. SaskEnergy’s rate strategy continues to be driven by delivering high quality customer
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