contracts before the market slightly recovered at the end of December 31, 2017. At the end of December 2017, the volume of outstanding contracts was 104 PJs higher than at March 31, 2017.
SaskEnergy Incorporated First Quarter Report Revaluation of Natural Gas in Storage
March 31, 2011
At each reporting period, the Corporation measures the net realizable value of gas marketing natural gas in storage based on forward market prices and anticipated delivery dates. The carrying amount of natural gas in storage is adjusted to reflect the lower of weighted average cost and net realizable value. In recent years, low natural gas prices have translated to reduced prices on the forward price curve. As much of the natural gas in storage is held to meet future sales contracts, it is not unusual to see net realizable value adjustments on gas in storage offset the impact of fair value changes. The declining market price environment in the nine months ending December 31, 2017 had both favourable and unfavourable impacts on financial results. The Corporation was able to purchase lower priced natural gas and inject it into storage, reducing the average cost of gas in storage. However, the decrease in natural gas market prices at December 31, 2017 reduced the net realizable value by an additional $7 million compared to the end of March 2017.
Revenue
Three months ended December 31
Nine months ended December 31
(millions)
2017
2016 Change
2017
2016 Change
Delivery revenue
$
85 34
$
77 34
$
8
$
170 102
$
154
$
16
Transportation and storage revenue Customer capital contributions
-
99 17
3
7 2
9 2
(2)
15
(2) (2)
Other revenue
-
5
7
$
128
$
122
$
6
$
292
$
277
$
15
Delivery Revenue
Delivery Revenue is driven by the number of customers and the amount of natural gas they consume. As residential and commercial customers consume natural gas primarily as heating fuel, weather is the factor that most affects delivery revenue. Delivery revenue was $170 million and $85 million for the nine months and three months ending December 2017 respectively, $16 million and $8 million higher than the same periods in 2016. Rate increases effective November 1, 2016 and 2017 contributed to the higher revenues. The rate increases were a response to rising operating costs related to expanding natural gas infrastructure and continued focus on safety and integrity programs that address the aging infrastructure and increasing regulatory requirements.
Weather
1, 200
1, 000
YTD 2017-18 - 2% colder than normal YTD 2016-17 - 8% warmer than normal
800
600
400
200
-
Apr May Jun Jul
Aug Sep Oc t Nov Dec Jan Feb Mar
2017-18 Act ual
2016-17 Act ual
2017-18 Budget
Transportation and Storage Revenue
The Corporation generates transportation revenue by taking delivery of gas from customers at various receipt points in Saskatchewan and Alberta, and delivering natural gas to customers at various delivery points in the Province. The transportation toll structure consists of a receipt service charge that customers pay when they put gas onto the pipeline transportation system, and a delivery service charge, which customers pay when they take delivery off of the pipeline transportation system. Gas delivered to the system by customers is considered to be part of the TransGas Energy Pool (a notional point where producers, marketers and end-users can match supplies to demand) until it is delivered to the end-use customer. For receipt and delivery services, the Corporation offers both firm and interruptible transportation. Under a firm service contract, the customer has a right to deliver or receive a specified quantity of gas on each day of the contract. With a firm contract, customers pay for the amount of capacity they have contracted for whether they use it or not. Under an interruptible contract, customers may deliver or receive gas only when there is available capacity on the system and pay receipt and delivery tolls when they deliver or receive gas. Transportation and storage revenue was $102 million for the nine months ending December 31, 2017, $3 million higher than the same period in 2016, while revenue was $34 million for the three months ending December 31, 2017 and equaled the same period in 2016. Industrial customer and power generation related load growth continues to increase demand for natural gas within the province and is driving higher transportation revenue.
7
2017-18 THIRD QUARTER REPORT
Made with FlippingBook Ebook Creator