Management’s Discussion and Analysis
Revenue Delivery revenue, transportation and storage revenue and customer capital contributions, 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
$
43 61
$
100 118
Delivery revenue
$
40 51
$
3
$
94
$
6
Transportation and storage revenue Customer capital contributions
10
100
18
5
10
3
2
7
3
$
109
$
228 $
Revenue
$
94
$
15
201
$
27
Delivery Revenue Natural gas delivery rates are designed to recoup all distribution facility and operating costs necessary for delivery of natural gas to customers throughout the year. Natural gas storage and transportation costs — as well as ongoing investments related to safety, system integrity and growing infrastructure — are factored into delivery rates. Other considerations impacting natural gas delivery services include regulatory code compliance and industry best practices regarding safety. To minimize these impacts on delivery service customers, the Corporation strives to make the most effective use of resources and technology and to collaborate with other Crown corporations and executive government. Delivery revenue is primarily driven by the number of customers and the amount of natural gas they consume. Weather is the most significant external factor affecting delivery revenue, as residential and commercial customers consume natural gas primarily as heating fuel. Delivery revenue was $6 million higher than in 2022, primarily due to weather being three per cent colder than normal through the six months ended September 30, 2022 compared the same period in 2021. The effect of increasing costs related to safety, system integrity and infrastructure maintenance are contributing to delivery rate increases needed for the Corporation to continue to deliver safe and reliable service to customers. Transportation and Storage Revenue The Corporation generates transportation revenue by receiving gas from customers at various receipt points in Saskatchewan and Alberta and delivering natural gas to customers at various delivery points in the province. The transportation toll structure consists of a receipt service charge, which customers pay when they put gas onto the natural gas transportation system and a delivery service charge that customers pay when they take delivery off the natural gas transportation system. For receipt and delivery services, the Corporation offers both firm and interruptible transportation contracts. Under a firm service contract, the customer has a right to deliver or receive a specified quantity of gas on each day of the contract. With a firm contract, customers pay for the amount of capacity they have contracted for, whether they use it or not. Under an interruptible contract, customers may deliver or receive gas only when there is available capacity on the system and only pay receipt and delivery tolls when they deliver or receive gas. Integral to the Corporation’s transmission system are several strategically located natural gas storage sites, which have the capacity to provide operational flexibility along with a reliable and competitive natural gas storage service. Transportation and Storage revenue was $18 million higher in 2022 than in 2021, consisting of a $17 million increase in transportation revenue and a $1 million increase in storage revenue. Receipt and delivery service revenues combined for $8 million of the $17 million increase in transportation revenue, primarily due to rate increases effective April 1, 2022 as the Corporation addresses increasing third-party transportation expenses. Transportation customers also increased firm and interruptible contracting in 2022 compared to 2021 across all services, which contributed to the remaining transportation revenue increases in 2022. Included in transportation and storage revenue for the six months ended September 30, 2022 is $6 million of storage revenue, which is $1 million higher than in 2021, primarily due to rate increases effective April 1, 2022. The abundance of natural gas limits the demand for natural gas storage to those customers with relatively low load factors who use the service to mitigate receipt transportation charges.
9
Made with FlippingBook Ebook Creator