Management’s Discussion and Analysis
Financing Activities Cash provided by financing activities decreased $8 million in 2022 compared to 2021, primarily due to higher dividends paid to the Corporation’s shareholder in 2022. The Corporation used $31 million for interest payments, $17 million for dividend payments and $17 million to repay short-term debt. In addition, the Corporation borrowed an additional $100 million of long-term debt in two increments to support its capital investment requirements. In the first quarter of the fiscal year, $50 million of long-term debt was borrowed at a discount of $12 million, with an interest rate of 2.8 per cent and maturity date of 2053. A second $50 million of long-term debt was borrowed in the second quarter, at par, with an interest rate of 4.3 per cent and maturity date of 2042.
CAPITAL ADDITIONS Capital additions, as reported in the condensed consolidated financial statements, were as follows:
Three months ended September 30,
Six months ended September 30,
(millions)
2022
2021 Change 2022
2021 Change
Strategic Customer growth System expansion
$
34
28 $
43 $
$
6
$
12 $
31
3
5
59 65
(56) (28)
68 80
(63) (32)
37
48
Operational Risk management
23
34 10
20
3 3
34
-
7 1
Reliability of natural gas service
4 1
6 2
4
2
Business and technology optimization
-
-
31
46
25 90
6
42
4
$
68 $
$
94 $
Capital additions
$
(22)
122
$
(28)
Capital additions through the six months ended September 30, 2022 were $28 million lower than the investment made in 2021, primarily due to decreasing expenditures in system expansion projects, which were partially offset by higher investment in customer growth projects. Investment in customer growth projects increased $31 million in 2022 as the Corporation began work on the transmission and distribution system’s sections of the Moose Jaw supply project. There are three components to this 2022 project, consisting of the construction of a 30.5-kilometre NPS 16 gas line, Belle Plaine meter station modifications and new distribution meter/regulating station facilities. System expansion capital projects provide incremental capacity for the transmission and distribution systems, through the installation of new or expanded gas line or facility assets, thus enabling demand growth and the addition of new customers. Lower investment in system expansion projects through 2022 are a result of higher spending in 2021 on the Pierceland supply project and the 86-kilometre gas line from Rosetown to Vanscoy — which increases the Corporation’s gas line capacity from Rosetown to the Saskatoon Bypass gas line and east of the city. Both these projects were in-service in 2021-22. Risk is the likelihood of a negative consequence, such as damage or loss of gas containment, occurring on the SaskEnergy system. These consequences typically include damage to infrastructure, environment and potential harm to or loss of human life. Risk management spending of $34 million is approximately one-third of the Corporation’s 2022 capital additions and equals 2021 spending. Risk management efforts ensure safe and reliable service and rely on the Corporation’s inline inspection programs, which determine where the Corporation conducts system integrity digs the following year. Over many years of conducting inline inspection and integrity digs, the Corporation is realizing cost savings from balancing cost and re-inspection intervals while still actively managing and monitoring risk. The Corporation is able to focus integrity program investments on appropriate components of the system and still maintain a high level of natural gas deliverability to its customers.
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