SASKENERGY 2017-18 ANNUAL REPORT
Other expenses, net finance expenses before market value adjustments (MVA) and other (losses) gains, as reported in the consolidated financial statements, were as follows:
(millions)
March 31, 2018
March 31, 2017
Change
$
86 127 100 14 5
Employee benefits Operating and maintenance Depreciation and amortization Saskatchewan taxes Impairment loss on trade and other receivables
$
87 129
$
1 2
96 12 5
(4) (2) - (1) (2)
$ $
330 $ 48 $ (13) $
329 $ 46 $ (33) $
Net finance expenses (before FVA)
$
Other (losses) gains
(20)
Depreciation and Amortization Balancing safety and system integrity with the growing demand for service continued through 2017-18. Strategic capital investments to meet increasing load growth and transportation requirements, plus replacing aging infrastructure, has increased the capital asset base, resulting in increased depreciation and amortization. In 2017-18, depreciation and amortization was $100 million, $4 million higher than the same period in 2016-17. Net Finance Expense Net finance expenses before the impact of fair value adjustments were $48 million in 2017-18 compared to $46 million in 2016-17. The increase in finance expenses that resulted from increased investment was partly offset by lower interest rates. The low interest rate environment has allowed the Corporation to replace maturing long-term debt with lower cost debt. Effective April 1, 2017, the Corporation early adopted IFRS 9 Financial Instruments. Under the new financial instruments standard, debt retirement funds are classified as fair value through other comprehensive income. As a result any market value adjustments associated with debt retirement funds no longer impact net income as they are recorded in other comprehensive income.
Employee Benefits Investments in technology, productivity and efficiency initiatives such as the customer service information system, AMI and work management systems, as well as streamlining business process helped to reduce staffing levels, resulting in an overall reduction in employee benefit costs. In 2014, SaskEnergy began implementing AMI technology, which collects customer consumption information electronically, thereby eliminating the need to manually read customer meters and estimate customer consumption for the purpose of billing. Throughout 2017-18, nearly 32,000 AMI meters were installed, bringing the total to 373,000 AMI customers or approximately 94 per cent of total distribution customers. Ongoing efficiency efforts, and a significant effort to manage with fewer people in support of aggressive cost management, resulted in employee benefit costs of $86 million, which was Safety and integrity expenditures increased in 2017- 18, compared to the prior year, to address an aging infrastructure. This was fully offset by lower transportation charges on the TCPL transportation system, resulting in an overall decrease in operating and maintenance expenses to $127 million in 2017-18, $2 million lower than in 2016-17. SaskEnergy was also able to mitigate the impact of higher safety and integrity expenditures through continued efficiency efforts and cost saving measures. This resulted in reduced costs for operating materials and supplies and communication charges. $1 million lower than in 2016-17. Operating and Maintenance
32
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