Management’s Discussion and Analysis
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. Receipt and delivery service revenues combined for an $8 million increase in 2022 compared to 2021, due to rate increases effective April 1, 2022 on receipt and delivery services as the Corporation addresses increasing third party transportation expenses. Domestic customers also increased firm transportation contracting in 2022 compared to 2021, which contributed to increasing transportation revenue in 2022. Included in transportation and storage revenue for the three months ended June 30, 2022 is $3 million of storage revenue, which equaled 2021. 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. Customer Capital Contributions The Corporation receives capital contributions from customers to partially offset the cost of constructing facilities to connect them to the transmission and distribution systems. Generally, contributions related to transmission system projects tend to be larger but less frequent than contributions related to the distribution system. The volume and magnitude of contribution revenue can vary significantly period-over-period as various factors influence their receipt and recognition as revenue. Customer capital contributions in 2022 were $1 million higher than 2021, due to increasing distribution system customer capital contributions. Other Expenses SaskEnergy’s expenses are driven to a large degree by its investment in its transmission, distribution and storage systems. Depreciation and amortization expense, net finance expense and Saskatchewan taxes are directly tied to the investment in facilities. As the level of investment in facilities increases, these expenses also increase. Employee benefit expenses and operating and maintenance expenses are also driven by the Corporation’s investment in facilities, although less directly. As the number of customers increases, and infrastructure to serve those customers grows, the costs to operate and maintain the system increases. These expenses increase primarily because the amount of work to service and maintain the natural gas system grows as the kilometres of gas lines, number of service connections, and amount of compression equipment increases. Additional regulatory requirements and changing public perceptions have resulted in accelerated prevention, detection and mitigation initiatives, adding pressure to transmission, distribution and storage rates. Other expenses, net finance expenses and other (gains) losses, as reported in the condensed consolidated financial statements are as follows:
Three months ended June 30,
(millions)
2022
2021 Change
$
27 45 31
Employee benefits
$
27 41 30
$
-
Operating and maintenance Depreciation and amortization
( 4) ( 1) ( 1) (2) (8)
4
Saskatchewan taxes
3
-
Recovery on trade and other receivables
(2)
$
107
$
99
$
$
17
Net finance expenses
$
15
$
(2)
10
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