SASKENERGY 2018-19 ANNUAL REPORT
Operating Activities Cash provided by operating activities was $280 million for the 12 months ending March 31, 2019, a decrease of $32 million from 2017-18. This was due to an unfavourable change in non-cash working capital, partially offset by the impact of a higher commodity margin and transportation revenue, and the cash flow impact of a colder winter that resulted in higher delivery revenue. Investing Activities Cash used in investing activities totalled $271 million for the 12 months ending March 31, 2019, $13 million more than the 12-month period ending March 31, 2018. Capital investment levels increased in 2018-19 due to higher system growth and customer connection spending requirements combined with higher system integrity spending compared to 2017-18. The majority of capital investment to the end of March 2019 focused on $156 million of customer growth and system expansion projects. This was a result of Saskatchewan residential and industrial growth, as well as safety and system integrity programming of
$98 million — a sign of the Corporation’s ongoing commitment to a safe, reliable system. The cash used for capital spending activity was partially offset by the proceeds received from the sale of non-core assets. Financing Activities Cash used in financing activities net to zero through the 12 months ending March 31, 2019, compared to $58 million used in financing activities in 2017- 18. The Corporation used $55 million for interest payments, $40 million for dividends, and $54 million to pay debt and debt retirement fund obligations. The Corporation borrowed an additional $149 million in long-term debt to support its capital investment requirements. SaskEnergy’s debt-to-equity ratio at the end of March 31, 2019 of 55 per cent debt and 45 per cent equity improved from 56 per cent debt and 44 per cent equity at the end of 2017-18. This is slightly better than the Corporation’s long-term target range of 58 to 63 per cent debt. Subsequent to March 31, 2019, the Corporation confirmed the issuance of $100 million of debt, which SaskEnergy will receive in the first quarter of 2019-20.
CAPITAL EXPENDITURES Capital expenditures, as reported in the consolidated financial statements, were as follows:
(millions)
March 31, 2019
March 31, 2018
Change
$
156 98 17 28
$
138 93 13 11
$
18 5 17 44
Customer growth and system expansion Safety and system integrity Information systems Vehicle & equipment, buildings, furniture
4
$
299 $
255 $
Capital expenditures of $299 million in 2018-19 were higher than in the prior year in order to meet the increasing load growth in the province. Capital expenditures of $156 million for customer growth and system expansion were $18 million higher than the prior year. Of the current year expenditures, $10 million was spent at the Bayhurst Compressor Station to mitigate the impact of low operating pressures on the Foothills gas line and provide contingency for compressor unit outages, which restrict either Alberta receipt capacity or storage production. In addition, the increasing demand and
lower Saskatchewan production required additional Alberta supply to be brought on to SaskEnergy’s transmission system. Currently, the most cost effective solution for the Corporation to receive this additional supply is on the Loomis to Herbert gas line, which is owned by the Many Islands Pipe Lines (Canada) Limited subsidiary, with the gas being sourced from TCPL Mainline or Foothills Pipelines. Installing compression at the Rush Lake interconnect at a current year cost of $14 million will help mitigate the requirement for additional Alberta supply.
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