SaskEnergy 2018-19 Annual Report

SaskEnergy 2018-19 Annual Report

2018-19 Annual Report

MISSION

Deliver natural gas in a safe, reliable, affordable way.

VISION

Create customer value through safe, innovative energy solutions.

VALUES

SAFETY We are always committed to our safety, the safety of our team and the public. ACCOUNTABILITY We are accountable for our decisions, our actions and the results. SPIRIT We create a positive and dynamic work environment that recognizes achievement and balance while supporting business success. COLLABORATION

We succeed through strong internal and external relationships, trust and open communication.

OUR STORY In 1952, Saskatchewan Power Corporation (SaskPower) was given the authority to supply natural gas within Saskatchewan and the company’s natural gas division engaged in natural gas development, production, transmission and distribution from 1952 to 1988. In April of 1988, Saskatchewan Energy Corporation was incorporated and on June 1, 1988, it commenced operations and acquired the natural gas transmission and distribution assets then owned by SaskPower. In December 1990, the Corporation’s name was changed to Saskatchewan Energy Holdings Ltd. (SaskEnergy) and in May of 1992, Saskatchewan Energy Holdings was amalgamated with its subsidiary, SaskEnergy Incorporated, and continued under the name of SaskEnergy Incorporated. On October 5, 1992, SaskEnergy became a Crown corporation. For 30 years, SaskEnergy Incorporated has been Saskatchewan’s natural gas distribution and transportation company, providing safe and reliable natural gas service to residential, farm, commercial and industrial customers. Today, SaskEnergy has a strong and vibrant workforce of approximately 1,100 employees who work in more than 50 locations across the province. We are responsible for serving more than 397,000 customers in 93 per cent of Saskatchewan communities. Gas is purchased and transported through our more than 70,000 kilometres of distribution lines and 15,000 kilometres of transmission gas lines. Through our subsidiary, TransGas Limited, SaskEnergy owns and operates natural gas gathering, treatment, compression, storage and transmission facilities within Saskatchewan. TransGas transports natural gas for producers, industrial and commercial customers, as well as SaskEnergy. Another subsidiary, Many Islands Pipe Lines (Canada) Limited (MIPL), owns a large diameter low-kilometre transmission gas line system that transports natural gas over the Alberta, Manitoba and United States borders. Our number one priority at SaskEnergy is to maintain a safe and reliable natural gas line system and we are proud to say that we have a 99.9 per cent reliability rating. Thanks to our comprehensive and well-coordinated gas line safety and integrity program, and our dedicated employee team, most customers never experience an unplanned outage. Through our values of Safety, Accountability, Spirit and Collaboration, the SaskEnergy team continues to rise to the challenge of a changing industry and the increased demand for natural gas in Saskatchewan.

TABLE OF CONTENTS

CORPORATE GOVERNANCE 78 BOARD OF DIRECTORS 85 EXECUTIVE COMMITTEE 87 CORPORATE GOVERNANCE DISCLOSURE 96 STAKEHOLDER ENGAGEMENT 78 CONSOLIDATED FINANCIAL STATEMENTS 40 MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS 41 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING 42 INDEPENDENT AUDITOR’S REPORT 44 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 45 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 46 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 47 CONSOLIDATED STATEMENT OF CASH FLOWS 48 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 39

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CORPORATE PROFILE LETTER OF TRANSMITTAL MINISTER’S MESSAGE CHAIR’S MESSAGE PRESIDENT’S MESSAGE

FINANCIAL AND OPERATING HIGHLIGHTS

11 2018-19 HIGHLIGHTS

13

MANAGEMENT’S DISCUSSION AND ANALYSIS 13 INTRODUCTION 13 STRATEGIC SCORECARD MEASURES 21 INDUSTRY OVERVIEW 22 CONSOLIDATED FINANCIAL RESULTS 30 LIQUIDITY AND CAPITAL RESOURCES 31 CAPITAL EXPENDITURES 32 OUTLOOK 34 RISK MANAGEMENT AND DISCLOSURE 37 CRITICAL ACCOUNTING POLICIES AND ESTIMATES 38 ACCOUNTING POLICY CHANGES

99

SUPPLEMENTARY INFORMATION

101

GLOSSARY OF KEY SUCCCESS MEASURES

SASKENERGY 2018-19 ANNUAL REPORT

CORPORATE PROFILE

Crown Investments Corporation of Saskatchewan

SaskEnergy Incorporated

TransGas Limited

Bayhurst Gas Limited

Many Islands Pipe Lines (Canada) Limited Interprovincial Transmission

Saskatchewan First Call Corporation Underground Facility Screening & Notification Service

Transmission and Storage

Natural Gas In Storage

BG Storage Inc.

Storage Joint Arrangements

SaskEnergy Incorporated (SaskEnergy or the Corporation) is a Saskatchewan Crown corporation governed by The SaskEnergy Act . It is a designated subsidiary of Crown Investments Corporation of Saskatchewan (CIC). CIC is also a Crown corporation and effectively operates as the Province’s holding company for commercial Crown corporations (such as SaskPower, SaskTel and SGI) and various commercial investments. SaskEnergy’s main business is the natural gas distribution utility. SaskEnergy owns and operates the distribution utility, which has the exclusive legislated franchise to distribute natural gas within the province of Saskatchewan. The Provincial Cabinet regulates SaskEnergy’s delivery service and commodity rates. All rate changes are subject to review by the Saskatchewan Rate Review Panel, an independent body, prior to receiving Provincial Cabinet approval. SaskEnergy’s corporate structure includes four wholly owned and one indirect wholly owned operating subsidiaries, as follows: Bayhurst Gas Limited (Bayhurst) owns, produces and sells natural gas from its two storage facilities in the western area of Saskatchewan. BG Storage Inc. (BGSI) is a wholly owned subsidiary of Bayhurst Gas Limited and owns a 50 per cent interest in a natural gas storage business, which is operated through a joint arrangement with Faro Energy Ventures Ltd.

Many Islands Pipe Lines (Canada) Limited (MIPL) is a transmission company that owns eight transmission gas line interconnections to Alberta, two into the United States, and one into Manitoba, all of which connect to the TransGas system. MIPL is regulated by the National Energy Board. Saskatchewan First Call Corporation (Sask 1 st Call) provides a centralized “Click Before You Dig” underground facility screening and notification service. Sask 1 st Call was established primarily for safety reasons to maintain a >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108 Page 109 Page 110

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