June 17, 2015 (Regina) June 18, 2015 (Saskatoon) SaskEnergy 2015 Rate Application

Agenda 2 SaskEnergy Services Commodity Service 2 2 Delivery Service Customer Bill Impact 1 1

Commodity Rate Pass through of natural gas costs (no mark up) Reduction in Commodity Rate to $4.30/GJ from $4.84/GJ effective November 1, 2015 (14% decrease) Reflects lower natural gas prices; includes protection against higher natural gas prices in future Increased transportation costs Lower natural gas costs are accelerating recovery of Gas Cost Variance Account (GCVA) – projected balance to be $5 million owing from customers on October 31, 2015 Delivery Service Rates Average 4.5% increase to Delivery Service Rates - $1.75 per month for Residential customers Elevated investment in safety and integrity Effective date of November 1, 2015 to align with commodity rate decrease Combined Commodity / Delivery Rate Application Results in Overall Customer Bill Decrease typical Residential customer $53/year Combined Commodity and Delivery Service Rate Application 3

Underground Storage Town Border Station Natural Gas Wells High Pressure Pipeline Delivery Service Commodity Distribution Facilities TransGas Energy Pool (TEP) 381,000 customers 68,600 kms of pipeline 800 employees Facility Operation, Maintenance & Public Safety Customer Service Connecting New Customers 4 SaskEnergy Services

5 Customer Bills SaskEnergy Bill Gas Delivery Service Basic Monthly Charge (Dollars per Month) Service Line Meter Meter Reading Customer Account Management Delivery Charge (Cents per Cubic Metre) Transportation Storage Distribution Maintenance Commodity Rate Gas Consumption Charge (Cents per Cubic Metre) Commodity Rate represents cost of natural gas No profit or margin - pass through cost of gas Gas Cost Variance Account (GCVA) Gas Supply Commodity Service Approximately 50% of a Residential customer bill is commodity service and 50% is delivery service Gas Supply is not an exclusive franchise – customers have the option to purchase natural gas from a Gas Retailer

Reduce commodity rate to $4.30/GJ ($0.1596/m 3 ) from $4.84/GJ ($0.1863/m 3 ) Reflects lower forward pricing and future gas costs Accelerated recovery of the GCVA 6 Commodity Rate Recommendation Market Prices as of May 7, 2015 Customers owe SaskEnergy SaskEnergy owes Customers Millions Forecasted GCVA in 2014 Rate Application Projected GCVA based on market prices

Buy approximately 56 million gigajoules annually SaskEnergy now buys 60% of gas supply from Alberta Higher costs to import natural gas from Alberta Contract additional transportation in case of colder than normal winter weather (insurance policy) Fully utilized the additional transport in 2013/2014 winter Forward natural gas prices have declined on record natural gas supply -U.S. Production continues to set new records Saskatchewan gas priced at a premium to AECO price Price Risk Management Strategy will provide commodity rate stability through upcoming winter and summer of 2016 Commodity Service Managing Gas Supply 7

8 Storage AECO (NIT) Security of Supply 45% of Winter Supply Alberta Saskatchewan TEP 60% Alberta Supply 40% Sask Supply Saskatchewan base load purchases 22.7 AECO plus $0.18/GJ Alberta base load purchases 32.9 AECO plus $0.005/GJ plus $0.35/GJ transport Incremental contracted transport for security of supply $7.5 Million Raw Cost of Natural Gas Purchases 8 Raw Cost of Gas Saskatchewan Premium$0.07/GJ Alberta Premium$0.21/GJ Transport Insurance$0.14/GJ Total Premium to AECO$0.42/GJ SaskEnergy now pays AECO plus $0.42/GJ on its base load natural gas purchases

Objective – Rate Stability and Competitiveness Board approved strategy that focuses on locking in price in low price environment Primarily fixed price physical gas purchases Customer surveying conducted in the spring of 2013 indicates that the majority of Saskatchewan residents and commercial customers prefer stability related to natural gas commodity rates Approved 2016 Strategy heavily weighted toward stability; recognizing existing low price environment Approximately 80% of Application period purchases are fixed price Goal is to provide stability during winter months of high consumption when price spikes can occur 9 Commodity Price Risk Management Competitive Stability Market Volatility

Rate Class Current Basic Monthly Charge $ Current Delivery Charge $/ m 3 Proposed Delivery Charge $/ m 3 Basic Monthly Charge $ Delivery Charge $/ m 3 Residential no change Commercial Small no change Commercial Large no change Small Industrial *no change ** 10 Delivery Service Rate Recommendation Average 4.5% Delivery Service Rate increase effective November 01, 2015 Increase to the BMC for Residential and Commercial Small customers Increase to the volumetric Delivery Charge component for Commercial Large and Small Industrial customers * First 40,000 m 3 per month, thereafter $0.0333/m 3 ** First 40,000 m 3 per month, thereafter $0.0346/m 3

11 Distribution Pipe vs. Number of Customers * Customers per Kilometre of Pipe * Based on publicly available information for SaskEnergy information is for Delivery Service – Extensive Distribution System

12 Customer Activity Increasing customer safety response (line locates) Safety Patrol program expanded Critical Line Supervision Operations Geotechnical challenges - enhanced program Enhanced risk-based leak survey process Above ground infrastructure Capital Expenditures Elevated system integrity programming -Distribution main replacement -Service upgrades -Station upgrades and replacements Delivery Service Forecast

13 Investment in Safety & Integrity Stressed Continue to proactively upgrade infrastructure using risk based approach Capital investment increased to $47.5 in 2016 from $7.4 million in 2010 Increased regulatory standards are critical to safe and reliable system but this investment does not generate any new revenue Expansion Loop Installation for Mains

From 2009 to 2014 SaskEnergy realized $32 million in efficiencies through a combination of crown and private sector collaboration, business process changes and leveraging new technologies Forecasting $5.9 million in 2015 Efficiency execution opportunities, including process improvement, technology integration and Crown collaboration, are helping the corporation manage cost pressures. Efficiency execution opportunities, including process improvement, technology integration and Crown collaboration, are helping the corporation manage cost pressures. Joint Servicing Collaboration Continued Efficiency Focus 14

Joint Servicing / Trenching Safety Patrols Line Locating 15 Efficiency AMI Work Management System Service Card Scanning 15 Process Improvement Efficiencies Collaboration Technology Integration Customer Connection Process Cashiering Consolidation Customer Service Area Responsibilities

16 RATE CLASS Commodity Rate Decrease ($4.84/GJ to $4.30/GJ) Delivery Service Rate Increase Total Bill Impact $/Month Annual Bill % Decrease Residential($6.17) *$1.75($4.42)(5.4%) Commercial Small($29.57) *$4.25($25.32)(8.0%) Commercial Large($416) *$47 *($369)(9.4%) Small Industrial($2,999) *$154 *($2,845)(11.7%) Average(6.7%) Customer Bill Impact * The average monthly increase (decrease) is based on an average customer’s annual consumption and will vary depending on customer usage. Residential customers will save an average of $53 annually SaskEnergy Residential customers will continue to have the lowest delivery service rate across Canada Price Risk Management Strategy will provide commodity rate stability through upcoming winter and summer of 2016 Second lowest commodity rate in 15 years

Based on annual consumption of 2,800 m 3 17 Residential Commodity and Delivery Service Rates April 2014 – March 2015

Typical Annual Residential Customer Bill Forecast 10-Year Average $1,052 18