2014 SaskEnergy Annual Report
2021-22 Statement of Corporate Governance Practices
Statement of Corporate Governance Practices 2021-22
Board of Directors SaskEnergy’s Board of Directors is led by Board Chair, Susan Barber (Q.C., C.Dir.) and Vice Chair, Nola Joorisity (FCPA, FCA, CMA, C.Dir.). Board member biographies can be viewed at https://www.saskenergy.com/about-us/ our-company/board-directors. Executive Committee SaskEnergy has an eight-member Executive Team led by Acting President and CEO, Mark H. J. Guillet (Q.C., CIC.C, ICD.D). Executive biographies can be found at https://www.saskenergy.com/about-us/our-company/ SaskEnergy is a Saskatchewan Crown corporation governed by The SaskEnergy Act (“SaskEnergy” or the “Corporation”). It is a designated subsidiary of Crown Investments Corporation (“CIC”). CIC operates as a holding company for commercial Crown corporations and commercial investments owned by the Government of Saskatchewan. The Government of Saskatchewan owns SaskEnergy (“Owner”). Our Approach to Governance We are committed to high standards of governance that are consistent with regulatory expectations and evolving best practices. We believe that good governance and being clear about our expectations around governance supports ethical conduct, and it allows us to do a better job running our business and complying with the laws and standards that apply to us. executive-leadership. Corporate Profile As a Crown corporation, SaskEnergy is not legally obligated to comply with the Canadian Securities Administrators (CSA) Governance Guidelines as we do not have share capital and we are not a reporting issuer. However, we benchmark against these governance practices, including National Policy 58-201 and National Instrument 58-101, the guidelines of the Chartered Professional Accountants of Canada, and observations of the Office of the Auditor General of Canada, Treasury Board of Canada Secretariat and Conference Board of Canada. We apply those guidelines that are applicable. The practices of SaskEnergy are substantially consistent with these standards as published. Board Composition SaskEnergy’s Board of Directors (the “Board”) is representative of the Saskatchewan community and industry. According to The SaskEnergy Act , the Lieutenant Governor in Council may appoint up to twelve (12) members and designate a Chair and a Vice Chair. Members represent community/stakeholder diversity, and they possess various attributes, including industry
expertise, strategic leadership, entrepreneurial and communication skills, integrity, flexibility, initiative, and sound judgment. Members are appointed to a fixed term by the Lieutenant Governor in Council, who may renew the term. There are currently eleven (11) people appointed to SaskEnergy’s Board of Directors. These same eleven (11) people sit as members on the Boards of Directors for each of SaskEnergy’s four (4) subsidiary companies. Independence Good governance provides that board members should be independent. A Director is independent if they have no direct or indirect material relationship with the company. In this reporting period, none of the Directors have direct material contracts or relationships with the Corporation or have received remuneration from the Corporation except the fees and compensation concerning their role as Directors and Committee members or as Directors of subsidiaries of the Corporation as outlined below. They have not been employees of the Corporation, and the President and CEO does not have a vote on the Board. However, the Board Chair, Ms. Susan Barber, Q.C., is a partner in a law firm that has performed legal services for the Corporation in the 12-month reporting period. Another Board member, Milad Alishahi, is also a partner in a different law firm that has performed legal services for the Corporation in the 12-month reporting period. Each of them is deemed to have a material indirect relationship with the Corporation. CIC addresses this independence issue through a Protocol Regarding Lawyers Serving on Subsidiary Crown corporation Boards of Directors (the “Protocol”). The Protocol adopts the principle that for a Director to be independent, they must be free from a direct or indirect material relationship to the Corporation and not in a position to influence the choice of law firms. Given the smaller local market in Saskatchewan for legal services, while the Protocol restricts Directors from any direct material relationship, it allows a limited indirect relationship subject to parameters set out in the Protocol. These parameters include pre-approval of legal services by a Board Committee, declarations of conflict, no direct benefit to the Director, and restriction of information to that Director. The Environmental, Social and Governance Committee of the Board (“ESG”), which consists of independent non-lawyer Board members, reviews and approves the Corporation’s external legal service providers following the Protocol on an as-required basis and reviews the services these law firms provide.
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Statement of Corporate Governance Practices 2021-22
The Board Chair, Ms. Susan Barber, Q.C., and board member, Milad Alishahi, are lawyers subject to this Protocol. Throughout this disclosure, the asterisk by their names reflect that they are not independent due to the deemed material indirect relationship. All other Directors, including the Vice Chair of the Board, are independent of management. Board Mandate Good governance starts with the Board. The SaskEnergy Board provides stewardship, including direction setting and general oversight of the Corporation’s operations management, and oversees and closely monitors the Corporation’s adherence to The SaskEnergy Act and its Regulations. The Directors serve on committees that specialize in key areas: audit, finance and risk review; environment, social and governance; and, human resources and safety. The Board’s mandate is outlined in the Board’s Terms of Reference, which defines its roles and responsibilities. It sets the strategic direction, ensures the integrity and adequacy of the Corporation’s systems and management practices, recommends the appointment or termination of the President and Chief Executive Officer (“CEO”), and regularly examines the objectives and mandates of its structure. The Board promotes a culture of integrity; oversees the management of the Corporation, strategic plan, and material and corporate risks; evaluates the Corporation’s performance; and monitors financial results. Board Renewal and Appointment Appointment of the Directors is ultimately made by the Government by Order in Council, upon the recommendation of CIC and the Board. Through the ESG, the Board also undertakes an evergreen approach in analyzing the skills and experience necessary for the composite blend and full functioning of the Board and its Committees, and makes nomination recommendations to the Minister of Crown Investments. If required by the Owner or directed by Government, the ESG is charged with leading the process to identify, recruit and recommend qualified candidates for appointment to the Board. The ESG assesses the skills and competencies of the Board and its Committees to support the strategic direction and operational needs of the Corporation. The Board has approved and adopted a Skills Matrix of those skills desired or required of board members. The ESG performs a skills gap analysis intended to assist in achieving a balance of board members' skills through the recruitment/appointment of new members. The ESG may meet with potential candidates to assess the overall fit with the blend of skills and experience of the current Board, time availability, or any potential conflicts that could limit their full participation. The ESG also makes annual
recommendations to the Board regarding the appropriate structure, size and composition of the Board and its Committees and the required qualifications. Position Descriptions Written position descriptions, posted on SaskEnergy’s website, set out the roles and responsibilities of the Chair, Committee Chairs, and individual Directors. The role of the Chair is to provide leadership in Board organization, processes, effectiveness and renewal. The Chair’s role is to balance the roles of the Board and management in the course of the Board discharging its fiduciary and legal responsibilities. The position description for Directors sets out their roles and responsibilities, including legal requirements, accountability, stewardship, knowledge and education, conflicts, confidentiality, and expectations for attendance and review of materials in preparation for meetings. The CEO’s Mandate sets out the principal duties and responsibilities for the CEO. This Mandate forms the basis for the goals and objectives of the CEO, and it is incorporated into the annual performance objectives against which the Human Resources and Safety Committee measures the CEO’s performance. Orientation and Continuing Education The Board has approved and adopted a Board of Directors Training Policy (the “Training Policy”). The Training Policy has a comprehensive orientation curriculum, including specific training sessions to ensure that new and continuing Directors develop a strong understanding of SaskEnergy’s business and current challenges, as well as the roles of the Board and Committees and the individual contributions Directors are expected to make. Board members also participate in continuing education on industry issues, financial reporting, business operations, procedural issues and ethical obligations to enhance their skills and knowledge. This year, Board training occurred in September 2021. At that meeting, the agenda included an in-depth review of financial statements governance and internal controls over financial reporting, the Enterprise Risk Management system and analysis of residual risk tolerances. In addition, the Board members typically interact with management and employees through attending functions such as the employee Service Achievement Awards or through touring corporate offices, facilities sites or business units as part of Board meetings. In view of COVID-19 there were no in-person events or field visits, but some sites were attended by video conference.
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Statement of Corporate Governance Practices 2021-22
CIC also facilitates additional Director training as part of its Subsidiary Crown Directors Training Program. This year, CIC held two (2) Director training sessions: 1) Exploring Environmental, Social and Governance and Diversity, Equity and Inclusion, and 2) Strategy, Strategic Thinking/Planning and the Role of the Board. CIC also hosts meetings periodically throughout the year for the Chair of the Board and the Chairs of each of the Committees to discuss issues with the Chairs from the other Saskatchewan Crown corporations. These meetings serve as forums to look at matters such as best practices and efficiencies, and to receive messaging from the Owner. Board and Director Performance Assessment To ensure adequate Board performance, the ESG conducts annual performance reviews of the Board, the Board Committees, Chairs and individual Directors. It arranges a survey of the Directors to obtain their individual feedback on the effectiveness and contribution of the Board, the Committees, Chairs and individual Directors on a rotational, triennial basis. The ESG may utilize the assistance of an external consultant to conduct the survey task. The ESG conducted an evaluation of all Board Committees and Committee Chairs for the 2021-22 reporting period. Integrity and Ethics SaskEnergy promotes a strong culture of ethical business conduct at all levels of the Corporation. The Board has approved and adopted a written Code of Business Conduct and Ethics (the “Code”) that applies to employees, contractors, officers, and Directors of SaskEnergy. The Code, designed to promote integrity and deter wrongdoing, is based on fairness, honesty, equal treatment and accountability. It provides guidelines on handling information and protecting or using corporate assets, confidentiality, conduct with suppliers and customers, business hosting, international business, conflicts of interest, compliance with laws and policies, and reporting. To further promote public confidence in the integrity of SaskEnergy and its employees, the Board has approved and adopted a Whistleblower Policy, which sets out a formal process for the reporting, investigation and appropriate follow-up for actual or potential complaints of wrongdoing. Compliance with the Code is reinforced through annual mandatory training for all employees, conducted by way of an online tool. In addition, The Public Interest Disclosure Act provides employees with an additional mechanism to disclose wrongdoing, and there is a policy on Reporting of Losses
that requires disclosure of all losses greater than five hundred dollars ($500.00) to the police, the Board, CIC Board and Minister. The Code, Whistleblower and Reporting of Losses policies (the “Ethics Policies”) are posted on the SaskEnergy intranet site for employees. The Code and Whistleblower policies are also posted on SaskEnergy’s website for public access. A process is also posted on the website for the public to contact the Chair of ESG, in confidence, to report a perceived violation of the Code or Whistleblower Policy. The ESG is responsible for monitoring compliance with the Ethics Policies. Management receives and monitors any reports arising under the Code, the Whistleblower Policy, and the Policy for Reporting Losses. There is a protocol outlined for management on how to address complaints under the Ethics Policies. Depending on the issue, management will either report to the ESG immediately, or at least annually for matters relating to the Code, semi-annually for issues relating to the Whistleblower Policy, and quarterly for issues relating to the Reporting of Losses Policy. In addition to the Code, SaskEnergy’s Directors abide by the CIC’s Directors' Code of Conduct. The ESG is the Ethics Advisor for this purpose. The Ethics Advisor administers, monitors and enforces the Directors' Code of Conduct, including reporting annually to the Board concerning compliance. Upon appointment, a Director declares (“Declarations”) to the ESG the number of other Boards on which they sit as Directors and any material interests in any SaskEnergy business and/or any material contract with SaskEnergy or its subsidiaries. This is meant to proactively address each member’s ability to perform their role, and potential conflicts of interest. It is also standard procedure to commence all Board and Committee meetings with an in-camera agenda where Board members are asked to declare any conflicts of interest or changes to outside employment or directorships that may create a potential or perceived conflict of interest. Management reviews the meeting Agenda against the Board member Declarations before each Board and Board Committee meeting, and the material relating to a matter where a conflict has been declared is not distributed to that Director. Likewise, any Director subject to CIC’s Protocol Regarding Lawyers Serving on Subsidiary Crown corporation Boards of Directors, will recuse themselves from consideration of any item creating a potential conflict of interest. During this reporting period, no waivers were granted by the Board to any Director or Officer authorizing non-compliance with the Ethics Policies.
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Statement of Corporate Governance Practices 2021-22
Board Committees The Board delegates some of its oversight responsibilities to Board Committees. The Committee mandates are set out in corresponding Terms of Reference, which are reviewed annually and updated as required. The Terms of Reference for each Committee establish the constitution, operations, and areas of responsibility for which that Committee makes recommendations to the Board. Full details of the Terms of Reference for each Committee are on SaskEnergy’s corporate website at https://www. saskenergy.com/about-us/our-company/board-directors/ board-roles-and-responsibilities. Each Committee has also adopted a work calendar to schedule and fulfill specific tasks and assigned responsibilities. Each Committee has the authority to engage and compensate outside advisors when it deems necessary to assist with its Terms of Reference. The Board Committee structure and composition are listed below. Audit and Finance Committee Chair: Nola Joorisity (FCPA, FCA, CMA, C.Dir.) Members: Susan Barber, Q.C. (C.Dir)*, Grant Greenslade, Tina Svedahl (CPA, CMA, ICD.D) The Audit and Finance Committee oversees SaskEnergy’s financial performance and ensures the adequacy and effectiveness of financial reporting, internal controls, management information systems, risk management, and audit functions. The Committee ensures that the Board receives financial plans and proposals consistent with SaskEnergy’s annual Corporate Plan and public policy objectives. The Committee meets regularly outside the presence of management with the appointed external auditor, the Provincial Auditor, and internal auditors. Except as qualified previously, all Audit and Finance Committee members are independent of management. All Committee members are financially literate, according to CSA Multilateral Instrument 52-110. Their education and experience are in their biographies on the SaskEnergy website: https://www.saskenergy.com/about-us/our- company/board-directors. The Committee had seven (7) meetings this fiscal year, which included review and approvals of financial statements, commodity strategies, payee disclosure report, economic impact on SaskEnergy, Audit Services reports, Audit Services’ Three (3) Year Audit Plan, Business Plan, budget and financial targets, review and updates to Capital Budget and capital spend review, review and approval of significant contracts, risk management activities and monitoring of corporate risks, and mitigation strategies, policies and review of the Enterprise security monitoring. *Non-independent Board Member
Environmental, Social and Governance Committee Chair: Linda Moulin (ICD.D, CLU, CH.F.C., CSC) Members: Curt Chickoski, Doug Shaw The Environmental, Social and Governance Committee (“ESG”) provides strategic leadership on corporate environmental and sustainability initiatives, social issues, Indigenous relations, human rights, community investment, and corporate governance processes and policies. The Corporation considers ESG to include conducting business in a safe, socially responsible, ethical and transparent manner, protecting the environment affected by its activities, listening and responding to community or stakeholder concerns, supporting human rights, and engaging, learning from, respecting and supporting the communities and culture with which SaskEnergy works. The Committee Terms of Reference includes effective oversight to ensure that adequate and effective controls are in place to assess and monitor ESG risk and required disclosures and compliance with regulatory requirements. This Committee has input into the selection criteria for board members and committee chair candidates, and creates profiles of the desired skills, experience and competencies required of the Directors. The Committee monitors compliance with the Corporation’s Code of Business Conduct and Ethics Policy, including waivers of it, the Corporation’s Whistleblower Policy, and the Reporting of Losses Policy. The Committee is charged with planning orientation and education programs to keep Directors informed and current with business, social, environmental and ethical requirements. The Committee had five (5) meetings this fiscal year. Critical work of the Committee included reviewing and updating the CEO’s Mandate, customer satisfaction survey results, evaluation of Board of Directors including committee structures, key ESG policies, complaints under the Corporation’s Whistleblower Policy, business/industry training for Directors, legal services, Indigenous engagement activities, community investment initiatives, corporate branding strategies, the Corporation’s environmental management system compliance, the Corporation’s annual environment initiatives including the Sustainability Report and framework, Corporate Environmental Risk Management Site Assessments and Remediation Program that outlines related Corporate environmental impact and liabilities, including decommissioning liabilities, the Corporation’s emissions management program, and management’s update on corporate system integrity.
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Statement of Corporate Governance Practices 2021-22
Human Resources and Safety Committee Chair: Alice Wong, (ICD.D) Members: Milad Alishahi*, Veronique Loewen, Bradley Sylvester (C.Dir.) The Human Resources and Safety Committee is responsible for and assists the Board in overseeing the employment environment for SaskEnergy, and is responsible for overall human resource, compensation and succession planning strategies and programs. The Committee also has the Mandate to address safety matters or safety risks proactively, and assist the Corporation to ensure safety is a priority and critical focus of the organization. The Committee also sets the CEO’s performance goals and objectives and conducts a semi-annual assessment of the CEO’s performance through the Committee Chair and Board Chair. The Committee reports on the CEO evaluations and then reports to the Board on any recommended changes to the CEO’s compensation. The Committee also makes recommendations to the Board on employee and Executive compensation, including metrics and targets to be utilized. It receives direction on its Terms of Reference (both in and out of scope) through communication with CIC. An ad hoc Board Committee can be created to identify and recommend candidates for the CEO position. At the same time, the Human Resources and Safety Committee oversees that the incumbent fulfills the role set out in the CEO Mandate. The Committee had seven (7) meetings this fiscal year. Important issues included management and Executive compensation plans, succession planning updates, review of health and safety performance indicators, diversity and inclusion updates, annual work plan status updates, review of key policies, and compliance with legislation updates. *Non-independent Board Member Strategic Planning and Reporting One of the Board’s principal duties is to provide leadership in setting the long-range strategic direction and approve SaskEnergy’s Corporate Plan. This comprehensive strategic planning process results in the Board’s review and approval of the Corporate Plan and annual operating and capital budgets. The previous five-year (5) Strategic Plan served the organization through a period of steady growth, including expanding its natural gas system to meet the demand of customers, businesses and industries. SaskEnergy has moved toward a more agile planning process to help achieve its Corporate Vision. The new Corporate Plan always focuses on the ensuing next three (3) years, as a living document. As such, this allows SaskEnergy to adjust the plan as the operating environment evolves quickly.
The Board of Directors, together with Executive management, identify and set long-term goals for SaskEnergy through the corporate planning process. The Corporate Plan involves a three (3) year rolling projection, which is updated annually. The Board oversees this process, provides input, guidance, validation and critical evaluation of the Corporate Plan and its initiatives. The Board provides oversight and support in implementing the Corporate Plan and initiatives and measuring management’s success against it. Each year, the Board and senior management meet jointly to identify strategic risks and review strategies and measurable targets to gauge performance in managing those risks. Public Policy Role SaskEnergy is a statutory Crown corporation governed by The SaskEnergy Act and Regulations. By legislation, CIC is the statutory holding Corporation for all of Saskatchewan’s commercial Crown corporations, and CIC has the authority to establish direction for SaskEnergy related to matters set out in legislation. As a provincial Crown corporation, SaskEnergy serves a public policy role. SaskEnergy delivers natural gas and energy solutions responsibly to Saskatchewan’s residents, businesses, and industries. SaskEnergy and its subsidiaries fulfill this mission by operating systems for natural gas distribution, transmission, storage, line locating and other related activities to promote the conservation and safe use of natural gas while contributing to and promoting the province’s economy. CIC approves SaskEnergy’s Corporate Plan annually and sets any other strategic priorities against which CIC and the Owner will measure the Corporation’s performance. SaskEnergy collaborates with other Saskatchewan Crown corporations to further CIC’s stated priorities of enhancing efficiency gains through joint initiatives, procurements and promoting an open business environment. Risk Identification and Management SaskEnergy has a formal Enterprise Risk Management Policy and process, which is developed by management, and reviewed and approved by the Board of Directors. SaskEnergy’s risk management process is designed to identify potential events that may impact SaskEnergy and manage the risk presented within accepted risk tolerance levels. Senior management holds primary responsibility for identifying inherent risks and designing and implementing mitigation strategies. Each year, the Board and senior management independently follow a process led by Strategic Planning to identify and prioritize significant inherent risks.
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Statement of Corporate Governance Practices 2021-22
The Director prepares a report summarizing the independent risk assessments completed by the Board and management. This report is discussed at a Board meeting where senior management and the Board align on the key corporate risks and the plans to mitigate or manage the residual risks. The Corporation then implements the mitigation strategies through the Corporate Plan. The Board monitors the risk management programs and oversees the implementation of appropriate systems to manage the identified risks either directly or through the Audit and Finance Committee. This year, the sale of a 'non-core' asset to streamline and focus corporate activity has also led to the transfer of some environmental liabilities and risk mitigation. The Audit and Finance Committee regularly reviews the Audit Services reports and discusses significant risk areas with the internal and external auditors. Environment & Sustainability Environmental sustainability is critical in meeting Saskatchewan’s demand for safe and reliable energy. It’s also important to customers and the communities where SaskEnergy operates. The Corporation encourages and promotes environmental responsibility and stewardship through collaboration with stakeholders, including industry and customers, and by supporting community organizations. SaskEnergy assists its customers in reducing their impacts to the environment and meeting their environmental goals. For more than 20 years, SaskEnergy has offered energy efficiency programs to help its residential and commercial customers install more efficient natural gas appliances. SaskEnergy is committed to protecting the environment as it delivers safe and reliable energy to its customers. From project planning and design through to construction, operation and reclamation, SaskEnergy strives to reduce its impact on all aspects of the environment. This includes plant life, wildlife, wetlands, native prairie, and species at risk. As an energy company, SaskEnergy recognizes its role – and the role of its industry – in reducing greenhouse gas emissions. The Corporation does its part to manage its GHG emissions and contribute to a lower-carbon energy future by meeting and exceeding regulatory requirements. Through collaboration within its industry and with its network of local contractors, SaskEnergy creates innovative solutions to help reduce the environmental impact of natural gas. These solutions assist customers in achieving energy efficiency goals, lowering emissions and reducing costs.
In December of 2021, the Board approved and adopted a Sustainability Report prepared by management. Sustainability for SaskEnergy means providing safe, reliable and affordable energy to its customers today and for years to come. At the same time, SaskEnergy also acknowledges the desire for a cleaner energy future. Sustainability is also about strengthening relationships with customers, communities and Indigenous groups while providing an inclusive, safe working environment for employees. The 2020-21 Sustainability Report provides an overview of SaskEnergy’s continued progress on ESG principles such as stewardship, community collaboration and socially conscious business practices. It also provides an outlook on the Corporation's long-term goals and objectives. SaskEnergy’s 2020-21 Sustainability Report can be found at: https://www.saskenergy.com/about-us/ commitment-sustainability. In addition, at the time of this report, the CSA is developing new guidance on Climate Related disclosures in proposed “National Instrument 51-107 Disclosure of Climate Related Matters” and the Board, where applicable, will adopt the recommended disclosures when National Instrument 51-107 comes into force. It is anticipated that it will come into force by the end of 2022 and companies will have a year to transition. Cyber Security Risk SaskEnergy relies on its information and operations technology systems to operate corporate assets and protect corporate data and personal information safely and efficiently. These systems are subject to cyber security risks. Cyber security risks include, but are not limited to, targeted attacks, exposure to computer viruses, and breaches of corporate and personal information within technology systems managed by internal and external parties. A cyber security event could expose the Corporation to loss or misuse of critical data and information, leading to property damage, disruptions to its operations, privacy breaches, loss of confidentiality, and financial or reputational losses. SaskEnergy proactively and continuously monitors its systems to identify and address malicious activity and potential or emerging threats. Business continuity exercises are also conducted regularly. SaskEnergy has developed a cyber security strategy whereby the Corporation tests its systems, builds controls, and conducts investigations to manage cyber security risk. This strategy is partly enshrined in the Enterprise Security Policy and the Acceptable Use of Technology Policy. In addition, the Corporation has added incremental resources to manage and evaluate cyber risks and privacy processes related to the growing adoption of cloud migration, data analytics, and mobile technology.
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Statement of Corporate Governance Practices 2021-22
Integrity of Internal Controls and Management Systems
is current through an evergreen process, responds to human resource developments, focuses on continuous employee development, and the mitigation of succession and knowledge transfer risks. The Executive considers various strategic options to address short-term needs (emergency or unforeseen personal circumstances) and long-term needs (structural business changes and planned retirements). The Human Resources and Safety Committee receives a succession plan update semi-annually and reports to the Board on the succession management process. The Board of Directors and CEO directly oversee the succession plans for the CEO and the Executive management team. Communications (with the Shareholder and Stakeholders) SaskEnergy is committed to the principles of transparency, openness, and timeliness in communication with its Owner, CIC, employees, stakeholders, and the public. The board is accountable to the Minister Responsible for SaskEnergy through the Board Chair. The Minister functions as a communication liaison among the Corporation, CIC, Cabinet, the Provincial Legislature, and the public. The Corporation follows a Board-approved external communications policy and complies with the communication requirements set by CIC and by its governing statute. SaskEnergy regularly surveys employees and external stakeholders for feedback on its corporate activities. More information on these communications is set out in the Management’s Discussion & Analysis. SaskEnergy strives to balance transparency and maintain customer confidentiality in its communications and disclosure as an entity subject to The Freedom of Information and Protection of Privacy Act . The Corporation is subject to annual disclosure requirements of the Legislative Committee regarding Crown Payee Disclosure on all payments greater than $50,000 to employees and suppliers and for all grants, donations and sponsorships greater than five thousand dollars ($5,000.00). All significant public disclosures of corporate performance of the Corporation are subject to prior approval of the Board. Senior Executive members of SaskEnergy also appear before Legislative Committees to answer questions relating to the business of the Corporation in preceding years. To facilitate feedback to and from the Owner, the Board Chair communicates with CIC and participates in a CIC Chairs forum where communication and feedback are provided on the Owner’s expectations of all Saskatchewan Crown corporations. SaskEnergy’s CEO regularly provides briefings to the Minister Responsible for SaskEnergy.
SaskEnergy’s financial statements are prepared following International Financial Reporting Standards (IFRS). As part of the March 31 year-end audit, the external auditors have stated that the Corporation’s financial statements have been prepared following IFRS. As part of SaskEnergy’s commitment to accountability, the Audit and Finance Committee reviews the financial performance of the Corporation quarterly. Natural gas purchase transactions and credit risk are reported by management and actively monitored by the Committee. In addition, the Board and the Audit and Finance Committee receive reports from and work closely with internal and external auditors to promote financial transparency and ensure the integrity, effectiveness, and adequacy of SaskEnergy’s internal controls and management systems, including its Unified Management System (UMS). The UMS aligns corporate pipeline activities, public and worker safety, and environmental protection to achieve compliance. The Board sets out limits of authority for expenditures of the Corporation. The expenditures are managed through a series of execution and expenditure authorization policies, which are reviewed regularly by the Board. Some of the limits on authorities are imposed upon both management and the Board through legislation including Orders in Council, compliance with investment requirements, or changes to legislation through The SaskEnergy Act . The Board has also validated and approved a Bright Line Mandate, which is a decision- making matrix that defines the ultimate decision-making body on key matters. According to the directive of CIC, SaskEnergy has a process in place regarding internal controls certification by the CEO and Chief Financial Officer (CFO). This process is designed to provide reasonable assurance regarding the effectiveness of SaskEnergy’s internal controls over financial reporting. The Board oversees the annual external audit plan of the appointed external auditor for the audit of the Corporation’s annual financial statements and the annual internal audit plan carried out by SaskEnergy’s internal audit group. To preserve the independence of the role of the external auditors, the Audit and Finance Committee must pre-approve all non-audit services undertaken by the external auditor following the Corporation’s Non-Audit Services Policy. Robust Succession Process The SaskEnergy Executive team uses a semi-annual review process to address strategic management succession. It evaluates positions and ensures the succession plan
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Statement of Corporate Governance Practices 2021-22
Director Remuneration Under The Crown Corporations Act, 1993 , CIC has the authority to set the compensation to be paid to the Directors. The Human Resources and Safety Committee has the authority to recommend to the Board (and the Board to CIC) adjustments to such compensation. The Audit and Finance Committee receives quarterly reports concerning Directors' remuneration and accounts for any anomalies to the Board. The Committee reviews the annual payee disclosure report, including total remuneration paid to the Directors. Directors are paid a yearly retainer for their services on SaskEnergy’s Board, as well as a set per diem fee for travel time and attendance at Committee and Board meetings, as follows: • Chair of the Board: annual retainer of $40,000; • Other Directors: annual retainer of $25,000; • Chair of Audit and Finance Committee: annual retainer of $3,500; • Chairs of other Committees: annual retainer of $2,500; • Committee members: $750 per day meeting fee; and • Directors also receive reimbursement for their reasonable out-of-pocket expenses, including travel, meals, and accommodations while performing their duties.
Board members each sit on one of the three (3) Committees. There were nine (9) Board meetings and nineteen (19) Committee meetings this reporting period. The total remuneration paid to Directors (annual retainers, pro-rated for the portion of the fiscal year each Director was a member of or chaired a Committee, plus Committee per diems) was $357,460.91* compared to $355,168.74 ** in 2020-21. The total business travel and meeting expenses paid to members of the Board was $2,810.52* compared to $5,270.14** in 2020-21. *This amount was for the 12-month reporting period of April 1, 2021, to March 31, 2022. **This amount was for the 12 months from April 1, 2020, to March 31, 2021.
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Statement of Corporate Governance Practices 2021-22
MEMBERSHIP AND ATTENDANCE AT MEETINGS OF THE BOARD AND BOARD COMMITTEES FROM APRIL 1, 2021 TO MARCH 31, 2022
Board (9 mtgs)
Audit (7 mtgs)
ESG (5 mtgs)
HRS (7 mtgs)
Legal Serv. (0)
Total Possible
Total Attended
Member
%
Barber (Chair)
9 7 1 9 8 3 7 9 8 1 9 9 9 9
6
16 13
15 12
94 92
Alishahi Barsi++ Chickoski
5
2 5
3
3
100 100
14 16
14 15
Greenslade
7
94 56 88
Hopkins+ Joorisity Loewen
2
9
5
7
16 16 14
14 16 13
7
100
Moulin
5
93
Revet++
1
2
2
100 100 100 100 100
Shaw
5
14 16 16 16
14 16 16 16
Svedahl
7
Sylvester
7 7
Wong
+ Mr. John Hopkins fell ill during this reporting period and passed away on February 2, 2022. ++ Ron Barsi and Annette Revet’s terms on the Board of Directors ended early in 2021-22. For purposes of this report, Directors who attended meetings in part are considered present.
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Statement of Corporate Governance Practices 2021-22
Policies Regarding the Representation of Women on the Board and Executive The Corporation has an informal policy or target regarding the representation of women on the Board and in Executive officer positions. SaskEnergy is committed to equality of opportunity and has taken steps to increase the representation of women in management and underrepresented roles within the Corporation. These steps include: proactively identifying talented female individuals for leadership training programs and encouraging them to apply for more senior positions; tracking and reporting on diversity metrics; managing the succession plan process; identifying top talent and implementing formal personal development plans; and, establishing mentorship relationships for women aspiring
to management positions. There are currently four (4) women in Executive management positions, which represents fifty per cent (50%). Six (6) Board members are women, representing fifty per cent (50%) of the Board. This is ahead of the Utility and Oil and Gas Sector general diversity targets for the representation of women on Boards as outlined in the Canadian Securities Administrators (CSA) Multilateral Staff Notice 58-310. The Board Chair is Ms. Susan Barber, Q.C., and the Vice Chair is Ms. Nola Joorisity. The following table illustrates the diversity statistics for the number of women represented on SaskEnergy’s Board of Directors and Executive over the past three (3) fiscal years:
2019-20*
2020-21*
2021-22
Total Positions
# of Women
Total Positions
# of Women
Total Positions
# of Women
%
%
%
Number of Women represented on Board Number of Women represented on Executive Number of Women in Board Leadership Roles (Chair, Vice Chair)
12
7
58
12
7
58
12
6
50
8
3
38
8
3
38
8
4
50
2
2
100
2
2
100
2
2
100
*Data collected from previous Annual Reports.
CEO Assessment, Executive Compensation and Executive Diversity The Human Resources and Safety Committee assesses the CEO’s performance semi-annually against previously approved objectives aligned with the CEO Position Description, Shareholder public policy objectives and the Corporate Plan. The CSA governance guidelines outlines that Executive compensation disclosure should contain detailed formulas and the metrics used for how the Executive performed against those formulas. In the case of SaskEnergy, the mandate for Executive compensation for Saskatchewan Crown corporations is established and monitored by the Owner and CIC. As such, Executive compensation aligns with the guidelines established by CIC. In addition, the Board and senior management conduct their own analysis of what is considered market compensation and provide the information to the Owner. Any adjustments to Executive management compensation must fit within the parameters established by the Owner. The philosophy of offering market-based compensation is applicable throughout the Corporation, from Executive management down: to set performance objectives and
expectations at an individual, departmental and corporate levels, and work toward and measure the achievement of these performance objectives. A fundamental principle in SaskEnergy’s compensation strategy is to provide fair and equitable pay representative of the individual performance with a target at the 50th percentile of the Western Canadian marketplace. The Human Resources and Safety Committee receives and reviews this information, then makes recommendations to the Board respecting CEO and Executive compensation. The CEO’s direct reports, including all Executive members, are required by legislation to file and report to the Clerk of the Saskatchewan Legislative their compensation, benefits, and any changes in compensation. In addition, the Crown and Central Agencies Committee of the Legislative Assembly of Saskatchewan has, by policy, required Crown corporations, including SaskEnergy, to file an annual payee list which includes the total compensation of Executive members. The report is available on CIC’s website at www.cicorp.sk.ca in the News section. The Human Resources and Safety Committee annually reviews the details of these compensation payment reports and reports its review to the Board.
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Communication and Engagement
The Corporation is committed to timely, open and transparent communication with its customers, the public, Indigenous groups, employees and other stakeholders. Customer and Public Communications SaskEnergy uses a variety of communication methods with its more than 400,000 customers, including print and online media, direct contact through the telephone, and in-person contact. The Corporation also invests in digital technology to make it easier for customers to access the information they want or need. This includes online access to customer accounts and the ability to report meter readings online. SaskEnergy is continually looking at ways to make it easier and more efficient for customers to contact the company. For example, recently, the Corporation launched new and modern websites for SaskEnergy and TransGas. These websites offer additional self-service options for customers. In addition, the Corporation introduced a text messaging service to keep customers up to date on their SaskEnergy appointments. Sask 1st Call is the initial customer contact for those who intend to dig, to request gas line locates before any work takes place. It provides a screening and ticket notification service on behalf of 116 companies including SaskEnergy and TransGas. Customer line locate ticket volumes increased by six per cent in 2021-22 compared to 2020-21, with 68 per cent of those requests coming from online services — an increase of four per cent from the previous fiscal year. The ‘one call’ service also provides Sask 1st Call members with more targeted notifications to ensure only those who own underground infrastructure in the specific area where work is being contemplated are notified of the need for line locates. Sask 1st Call continues to promote the importance of ‘Click’ or ‘Call’ Before You Dig to increase awareness of this service and safety initiative within the province. TransGas has 130 transportation and storage customers managed through dedicated account representatives to meet each customer’s needs. It also promotes communication through TransGas Customer Dialogue — a process in which TransGas and participating customers meet to openly discuss a wide array of topics ranging from services and policies to financial results and rates. TransGas uses the Customer Dialogue process as an input to its decision-making process. SaskEnergy works closely with independent plumbing and heating professionals as part of the SaskEnergy Network. There are 199 residential Network Member contractors in 58 Saskatchewan communities and 77 commercial Network Member contractors in 20 communities. SaskEnergy Network Members support the natural gas
industry and SaskEnergy by delivering downstream services and assisting customers in accessing natural gas solutions for their homes, businesses and farms. Critical corporate initiatives, such as creating public awareness around energy efficiency and public safety (“Click Before You Dig”), are also promoted through multimedia advertising and communications campaigns, as well as direct-contact programs such as contractor safety breakfasts, first responder training sessions and landowner mail-outs. SaskEnergy has a strong commitment to providing safe and reliable service to customers, ensuring they understand how to use natural gas safely and that the Corporation responds in a timely manner. This includes public awareness about what customers should do if they smell natural gas and how to protect themselves from carbon monoxide poisoning. Major corporate initiatives, such as changes to the Corporation’s delivery or commodity rates, are communicated through news conferences and public events, and are supported through information distributed on SaskEnergy’s website and on customer bills. Tools, such as e-billing and equalized payment plans, give customers greater control over the management of their natural gas bills. The Corporation continues to analyze the usage of social media tools in its utility business context. The SaskEnergy website also provides access to corporate information, such as quarterly financial updates and annual reports, energy efficiency and safety-related information, as well as career opportunities and the ability for charities and non-profits to request financial support through the Corporation’s community investment program. SaskEnergy’s annual customer satisfaction surveys indicate that there is a high level of efficacy and support for the Corporation’s approach to customer communications. Shareholder Communications As a Crown corporation, SaskEnergy complies with the communications requirements of its Owner and by statute, in accordance with a Board-approved external communications policy. Through the Board Chair, the Board is accountable to the Minister Responsible for SaskEnergy. The Minister functions as a communications liaison among the Corporation, CIC, Cabinet, the Provincial Legislature and the public. SaskEnergy complies with its statutory obligations for the approval and disclosure of information. These responsibilities include: • Annual approval of the Corporation’s business/ performance management plan, including capital expenditures.
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Communication and Engagement
• Annual disclosure through Crown and Central Agencies of all payments greater than $50,000 to employees and suppliers, and of all grants, donations and sponsorships greater than $5,000. • Appearances before public committees of the legislature, including Crown and Central Agencies, by senior Executives to answer questions relating to the business of the Corporation in preceding years. • Compliance with public requests for information, balancing the interests of The Freedom of Information and Protection of Privacy Act . SaskEnergy also works co-operatively with CIC, the office of the Minister Responsible for SaskEnergy and Executive Council Communications to generate dialogue, understanding and support for corporate initiatives that affect stakeholders. These communications tools include briefing notes, face-to-face meetings and other information packages to ensure elected officials are able to represent the Corporation in the public and through the media when speaking on issues regarding the business operations of SaskEnergy. The Corporation is also expected to respond expediently to correspondence and queries submitted by the office of the Minister Responsible for SaskEnergy. Project-Based Communications SaskEnergy’s distribution, transmission and storage projects can impact the communities in which they are occurring. In addition to fully complying with all legal and regulatory considerations, SaskEnergy will typically hold consultations with affected stakeholders and potentially impacted communities in areas where projects are of significant duration. Such communications initiatives include public open houses and meetings with local municipal councils, First Nations representatives and others who may be impacted. These initiatives allow company officials to explain the environmental impacts of proposed activities, including proposed mitigation plans. They also provide opportunities to enhance general understanding of the project’s economic benefits and of natural gas as a heating source. Because Saskatchewan has approximately 75 First Nations Bands and 12 Métis Regions, a dedicated Indigenous Engagement group exists to better foster consultation, dialogue and relations. Regulatory Communications SaskEnergy is required to file any applications for delivery and commodity rate changes with the Saskatchewan Rate Review Panel (SRRP), an advisory panel that provides formal recommendations to the Provincial Cabinet. The applications are available to the public.
Typically, the SRRP will ask for additional information to assist in its review, and a public interaction component is provided through public meetings. SaskEnergy increased its commodity rate on November 1, 2021 — the first increase in seven years after four consecutive decreases. Its current commodity rate is $3.20 per GJ. As of March 31, 2022, SaskEnergy’s residential customers have the lowest average total natural gas bills across Canada. TransGas’ proposed rate changes are discussed through the TransGas Customer Dialogue, a proxy with representatives from the producer, industrial end-user and gas marketer communities. After rate changes are discussed through Dialogue, they are provided to the Provincial Cabinet for approval. TransGas changed its rates for transportation and storage services, effective April 1, 2022. Rates increased between 8.8 per cent and nine per cent, with an average increase of 8.9 per cent across all rate classes. Including a previous rate increase on April 1, 2021, annual rate increases average 3.8 per cent since 2017. Rate changes are due to increased costs incurred by TransGas to meet increased customer demand and continue to provide high quality, safe and reliable service while focusing on system integrity and facility infrastructure. Employee Communications SaskEnergy regularly communicates with its workforce of more than 1,100 employees to provide prompt and accurate information. Communication focuses on initiatives and updates related to SaskEnergy’s Corporate Plan and aims to increase employee understanding of the delivery of essential energy to customers, enhance understanding of the natural gas industry as a whole, increase knowledge of SaskEnergy’s safety practices and environmental stewardship, and prepare employees to better engage in meaningful discussions about the natural gas industry with friends, family and acquaintances. Recognizing the value of face-to-face communication, SaskEnergy also relies on senior leaders, managers and supervisors to share messages within and across work teams in regular meetings and discussions. Other communication methods include company-wide email messages (InfoFlashes) and a corporate intranet site (Innergy), which allows employees to access information related to the Corporation, stay informed on upcoming events and initiatives, comment on and ‘like’ articles, and visit sites for specific department related information. SaskEnergy also produces corporate videos that serve as informative, educational tools to keep employees up to date on major projects and initiatives that are taking place within the Corporation.
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