Management’s Discussion and Analysis
Employee Benefits Employee benefit costs in 2022 equaled 2021, as wages and salaries were slightly lower in 2022 and were equally offset by lower allocations to capital projects. Operating and Maintenance Operating and maintenance expenses were $4 million higher than 2021, as growing demand and increasing natural gas imports from Alberta are resulting in more natural gas being transported, and over greater distances. Higher vehicle and equipment operating costs, a result of increasing fuel prices, also contributed to higher costs. Depreciation and Amortization Balancing safety and system integrity with the demand for service continued through 2022. Strategic capital investments required the necessary infrastructure be put in service to meet current customer demand, resulting in increased depreciation and amortization. Depreciation and amortization was $1 million higher than the same period in 2021. Recovery on Trade and Other Receivables No adjustment on trade and other receivables was required through the three months ended June 30, 2022 compared to a recovery of $2 million in 2021, as the allowance for expected credit loss estimate was reduced, a result of the provincial economic outlook beginning to improve in the prior year. Net Finance Expenses Net finance expenses for 2022 were $2 million higher than 2021. Higher long- and short-term debt interest costs due to the Corporation borrowing additional debt to support its capital investment requirements, along with declining debt retirement fund earnings contributed to the higher net finance expenses year over year. Debt retirement funds are monies set aside, typically 1 per cent of a debt issuance, to retire the long-term debt upon maturity. The Corporation makes regular contributions to the funds, which are held and invested by the Saskatchewan Ministry of Finance and can be impacted inversely by interest rate movements. 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 uncommitted 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)
2022
2021 Change
$
73
Cash provided by operating activities Cash used in investing activities Cash used in financing activities Increase in cash and cash equivalents
$
64
$
9 5
(28) (36)
(33) (30)
(6)
$
9
$
1
$
8
11
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