SaskEnergy blames drop in profit on gas prices

SaskEnergy’s annual report released on Monday shows the Crown corporation made $70 million in profit, which is down $16 million from the year prior.

Low natural gas prices and less money from selling stored gas are largely the reason for the decrease.

The Crown corporation declared $29 million in dividends over the past fiscal year to Saskatchewan’s holding company, the Crown Investments Corporation.

About 4,000 new customers for the Crown helped offset some of the lost revenue, as the company is now servicing more than 390,000 customers.

Dustin Duncan, the minister responsible for the Crown corporation, who was joined by SaskEnergy CEO and president Ken From at a news conference Monday, boasted the company continues to offer “among the lowest residential delivery rates in Canada in 201617.” From added the delivery rates are the second cheapest overall in Canada and the most affordable of the Prairie provinces.

Earlier this month the province’s natural gas distributor applied for a delivery service fee increase to kick in Nov. 1. If approved, the average residential customer will be paying about $1.65 more per month. The increase would help fund $100 million in capital growth.

It would also work to offset increased operating expenses seen this fiscal year. Much of that increase is due to the need for SaskEnergy to add more transportation capacity to bring gas into the province from Alberta. Because Saskatchewan’s gas production is not keeping up with provincial demand for the resource, it is now a net importer of natural gas. Slightly more than 60 per cent of gas consumed in Saskatchewan is coming from Alberta.

Transportation and storage revenue was $134 million this fiscal year, which is $13 million more than it was in 2015-16. Growth in industrial demand drove much of that increase, as did a 2.5-per-cent transportation rate increase kicking in at the start of 2016.

Storage revenue alone, however, was down because of less demand for storage services.

“With respect to the revenue generated from storage, this past year has seen a period of time where the future gas prices are relatively flat to current day, so that asset is not able to generate the income it has in the past,” said From. “The asset remains extremely valuable, and as the price conditions go back to more normal, I think we can see an uptick in revenue generated by that storage”

A $91-million profit is being forecast next year for SaskEnergy. SaskWater’s annual report, also released Monday, showed it made $8.3 over the 2016-17 fiscal year.