MANAGEMENT’S DISCUSSION AND ANALYSIS
To address increased load forecasted in the northern part of its system, SaskEnergy is also investing in gas lines and compressor facilities to provide up to 40 terajoules (TJ) per day of incremental firm Alberta receipt capacity at Unity, Saskatchewan. Unity represents an attractive location for incremental supply as it offsets the third-party transportation requirements from the Foothills and TCPL systems needed to meet the significant growth in the northern part of the system. The growth in this area has been driven mainly by enhanced oil recovery and new gas-fired power generation, with 100 TJ per day of growth over the past five years. Growth in and around the city of Saskatoon has resulted in a multi-year initiative that will address increased natural gas capacity and move high pressure transmission lines further away from populated areas. The first phase of this project was completed in 2018-19 at a cost of $28 million. The Corporation also purchased a new service centre building near White City during 2018-19 to replace the old OUTLOOK Factors that are expected to affect SaskEnergy in the near future include the continued growth of the provincial economy, resulting in increased reliance on imported natural gas, and higher customer expectations for safe, reliable natural gas services. Assuming normal weather conditions through 2019-20, net income before market value adjustments is expected to be approximately $64 million, a decrease of $70 million from the 2018-19 actual result. The decrease is primarily due to the return to normal weather, as 2018-19 was 10 per cent colder than normal, and a commodity rate decrease effective April 1, 2019. While SaskEnergy continues to effectively manage expenses, increased transportation costs to move natural gas into and throughout the province will continue to create cost pressure. While SaskEnergy’s customer base expands every year, the growth of the industrial sector is contributing the most to this increased usage, driven by higher demand for natural gas from
service centre building in Regina that needed to be vacated due to structural issues. This is the primary driver of the $17 million increase in the vehicles & equipment, buildings and furniture category. CAPITAL EXPENDITURES
$325 $225 $250 $275 $300 $200 $125 $175 $150 $100
$75 $50 $25 $0
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the enhanced oil recovery, power generation and mining sectors. SaskEnergy plans years in advance where natural gas infrastructure will be needed to secure supply and increase gas line capacity. SaskEnergy plans to invest more than $976 million over the next three years. This investment will be primarily funded through long-term debt, with an additional $533 million planned over the next three years. The additional load growth will generate more revenue for the Corporation; however, the investment in infrastructure will also increase operating costs and put pressure on delivery and transportation rates. The Corporation continues to work with other Crown corporations, and other business enterprises, to implement technological and process solutions to more efficiently serve customers and maintain facilities. Since 2009, SaskEnergy has achieved $52 million in operating efficiency savings and another $4 million has been targeted for 2019-20.
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