SASKENERGY 2018-19 ANNUAL REPORT
INDUSTRY OVERVIEW SaskEnergy monitors a number of important factors that could influence financial performance. Natural Gas Prices The price of natural gas is set in the open market and influenced by a number of factors including production, demand, natural gas storage levels, take-away capacity and economic conditions. Given the high demand for natural gas to heat homes and businesses during the cold winter months, and the demand for natural gas to produce electricity for air conditioning during the summer months, weather typically has the greatest impact on price in the near term. Due to the high degree of uncertainty associated with weather and Alberta pipeline maintenance and infrastructure issues, natural gas prices in both Alberta and Saskatchewan have been very volatile in recent years. Natural gas market fundamentals remain in a strong supply position relative to demand. The Alberta Energy Company (AECO) weighted average spot price was $1.55 per gigajoule (GJ) throughout the 12 months ending March 30, 2019 compared to $1.91 per GJ the year prior. Cold North American temperatures combined with low storage levels in 2018-19 saw price spikes over $5.00 per GJ at AECO in the late winter while Business & Technology Optimization These measures were developed during 2018-19 and will be reported against in 2019-20. To better align with its updated strategic mandates, SaskEnergy will be measuring the success of its business and technology optimization initiatives through its efficiency measures. These measures were reported in the Fuel of Choice strategic mandate for 2018-19. Throughout 2018-19, SaskEnergy continued to develop strategies to improve business processes and enhance the customer and employee experience. In addition to the implementation of a new distribution work management system and
takeaway capacity constraints and Alberta natural gas line maintenance created negative prices in the summer of 2018. The Alberta infrastructure deficit continues to be evident by the decreased average daily settlement prices at AECO and elevated prices at TransGas Energy Pool (TEP) in Saskatchewan and Empress, which is the hub to eastern gas markets. This low priced AECO gas environment is expected to continue until at least November of 2021 when infrastructure is scheduled to start coming online. The following chart shows AECO natural gas prices: are being developed to streamline processes and use technology to create efficienies for customers and employees. Examples include SaskEnergy’s website redesign initiative to enhance customer experience and the Human Resources Service Transformation project, which will introduce self-serve functionality and integration with payroll functions. an upgrade to its customer information system, SaskEnergy has identified areas for improvement to its information technology infrastructure. Technical architecture development is needed to support business solutions so that high quality service delivery is both adaptable and sustainable. Strategies
AECO MONTHLY INDEX HISTORICAL PRICES
CAD/GJ
$14.00
Conventional Natural Gas Production
$12.00
$10.00 $8.00
Shale Gas Revolution 2009-2014 Average Price $3.45/GJ
Low Demand for Canadian Gas 2015-Present Average Price $2.06/GJ
$6.00 $4.00 $2.00 $0.00
Forward Price at March 31, 2019
2003-2008 Average Price $6.90/GJ
2005 2007 2011 2013 2015 2017 2019 2021 2023
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