Management’s Discussion and Analysis
which was $5 million greater than the same period ending June 30, 2024. During 2025, the average margin on realized asset optimization sales was $0.25 per GJ, which was greater than the same three-month period in 2024 which saw a margin of only $0.09 per GJ. Opportunities in the market saw volumes increase by 9 petajoules year over year, in addition to the improved margins realized year to date. The Corporation was also able to leverage unutilized transportation capacity through the first quarter to recover a portion of third-party transportation costs. Asset Optimization Fair Value Adjustments Through asset optimization strategies, the Corporation enters into various natural gas contracts which are subject to volatility of natural gas market prices until the natural gas contracts are realized. The unrealized fair value adjustment on outstanding asset optimization derivative instruments had a favourable impact of $1 million on the asset optimization margin. Declining natural gas market prices through 2025 resulted in the differential between contract prices and market prices on future asset optimization sales contracts improving $0.24 per GJ, resulting in a $4 million favourable fair value adjustment, offset by a $3 million unfavourable fair value adjustment on asset optimization purchase contracts, which had a $0.16 per GJ margin reduction since the fiscal year end. Revaluation of Natural Gas in Storage The carrying amount of natural gas in storage is adjusted to reflect the lower of weighted average cost and net realizable value. At each reporting period, the Corporation measures net realizable value of natural gas in storage held for asset optimization transactions based on forward market prices and anticipated delivery dates. For the quarter ended June 30, 2025, there was no revaluation on natural gas in storage inventory. 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 June 30,
(millions)
2025
2024
Change
Delivery revenue
$
61 65 25
$
61 62
$
-
Transportation and storage revenue Customer capital contributions
3
3
22 25
Revenue
$
151 $
126
$
Delivery Revenue SaskEnergy provides reliable energy and competitive rates to customers, as they value low delivery charges. 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 and earn a return for its shareholders. 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 the financial impacts of these 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. SaskEnergy continues to focus on items within the Corporation’s control to embed efficiency into processes, such as identifying opportunities for standardization, simplification, and the elimination of waste from processes. SaskEnergy will continue to strive to provide customers with access to low-cost energy sources compared to alternatives and delivery charges that are among the lowest in Canada. 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 of $61 million through the three months ended June 30, 2025, equaled the prior year results. While weather was seven per cent warmer than the prior year, resulting in less natural gas used as a heat source in homes around the province, the resulting reduction in revenues was offset by more customers served by the Corporation year-over-year.
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