Management’s Discussion and Analysis
Operating Activities Cash provided by operating activities increased $9 million through the three months ended June 30, 2022 compared to the same period in 2021. Cash flows from operations increased in 2022, driven by the impact of a higher asset optimization margin, higher delivery revenue, transportation and storage revenue and customer capital contributions. These increased cash flows were partially offset by higher operating and maintenance expenses along with higher financing costs. Investing Activities Cash used in investing activities decreased $5 million compared to 2021, primarily due to capital investment required for system expansion projects declining in 2022 as investment in 2021 included the Pierceland expansion project, which was placed into service in 2021-22. Financing Activities Cash used in financing activities increased $6 million in 2022 compared to 2021, primarily due to higher dividends paid to the Corporation’s shareholder and lower net borrowing in 2022. The Corporation used $23 million for interest payments, $11 million for dividend payments and $29 million to repay short-term debt. In addition, during the first quarter of the fiscal year, the Corporation borrowed an additional $50 million of long-term debt at a discount of $12 million to support its capital investment requirements. The debt has an interest rate of 2.8 per cent and matures in 2052. SaskEnergy’s debt-to- equity ratio at the end of June 30, 2022 of 59 per cent debt and 41 per cent equity is within the Corporation’s long-term target range of 58 to 63 per cent debt.
CAPITAL ADDITIONS Capital additions, as reported in the condensed consolidated financial statements, were as follows:
Three months ended June 30,
(millions)
2022
2021 Change
Strategic Customer growth System expansion
$
9 2
$
6 9
$
3
(7) (4)
11
15
Operational Risk management
11
14
(3)
3 1
Reliability of natural gas service Business and technology optimization
2 1
1
-
15
17 32
(2) (6)
$
26 $
Capital additions
$
Capital additions through the three months ended June 30, 2022, were $6 million lower than the investment made in 2021, primarily due to a decrease in system expansion investment. Investment in customer growth projects increased $3 million in 2022 as the Corporation began work on the transmission and distribution system’s sections of the Moose Jaw supply project. There are three components to the project such as the construction of 30.5-kilometre NPS 16 gas line, Belle Plain meter station modifications and new distribution meter/regulating station. System expansion capital projects provide incremental capacity for the transmission/distribution systems, through the installation of new or expanded gas line or facility assets, thus enabling demand growth and the addition of new customers. Lower system expansion capital additions in 2022 are primarily a result of spending in 2021 on the Pierceland Supply project that was put into service in 2021-22.
12
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