Management’s Discussion and Analysis
Net Finance Expenses Consumers and businesses are continuing to adapt to an interest rate environment elevated to levels not seen for well over a decade, challenging the Corporation and customers. Net finance expenses for 2024 were equal to 2023, primarily resulting from additional interest on net long-term debt issuances of $145 million during the first quarter. These debt issues will fund a portion of the current year’s capital investment in the Corporation’s natural gas line infrastructure — which benefits Saskatchewan customers in the short and long term. The additional long-term debt interest was offset by the impact of interest income earned, as cash from operations was held in the bank through most of the first quarter in 2024, until short-term debt maturities were reached and were paid. The debt-to-equity ratio at June 30, 2024, is 59 per cent, which falls within the long-term target range of 58 to 63 per cent debt. Liquidity and Capital Resources As a Crown corporation, SaskEnergy’s primary sources of capital are cash from operations and debt — which is borrowed through the Province’s General Revenue Fund. Cash from operations is SaskEnergy’s most important source of capital. As a utility, cash from operations is relatively stable and the Corporation relies on it to fund a significant proportion of its investment in its natural gas facilities, and the debt servicing costs on those investments. Long- and short-term debt can be borrowed through the Province of Saskatchewan to meet any long- or short-term incremental capital requirements, and to repay debt as it matures. Sources of liquidity include Order in Council authority to borrow up to $500 million in short-term loans, and a $35 million line of credit with the Toronto-Dominion Bank. Under The SaskEnergy Act, the Corporation may borrow up to $2,500 million of debt upon approval of the Lieutenant Governor in Council.
Three months ended June 30,
(millions)
2024
2023 Change
$
79
Cash provided by operating activities Cash used in investing activities Cash used in financing activities Increase in cash and cash equivalents
$
86
(7) (4)
$
(36) (61) (18)
(32) (35)
(26) (37)
$
19
$
$
Operating Activities Cash provided by operating activities decreased $7 million through the three months ended June 30, 2024, compared to the same period in 2023. A lower commodity margin and higher employee benefit costs are contributing to the decrease, a result of a commodity rate decrease from $4.20 per GJ to $3.20 per GJ effective October 1, 2023. Employee benefit costs grew in 2024, due to the implementation of the new Collective Bargaining Agreement, salary increases and full-time equivalents trending higher due to the Corporation filling previously vacant positions. Investing Activities Cash used in investing activities increased $4 million compared to 2023, primarily due to earlier capital investment in customer growth and risk management projects. Financing Activities Cash used in financing activities grew $26 million in 2024 compared to 2023, primarily due to higher net debt repayments in 2024 compared to 2023. During the first quarter of 2024-25, the Corporation borrowed an additional $150 million of long-term debt at a discount of $5 million and paid a long-term debt maturity of $100 million and $70 million of short- term debt. In addition, the Corporation used $29 million for interest payments and $6 million for dividend payments.
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