The following chart shows AECO natural gas prices:
AECO Monthly Index Historical Prices
$14.00
Conventional Natural Gas
2003-2008 Average Price $6.90/GJ
$12.00
$10.00
Shale Gas Revolution 2009-2014 Average Price $3.45/GJ
$8.00
Low Demand for Western Canadian Gas
$6.00
2015-Present Average Price $1.97/GJ
$4.00
Forward Price at June 30, 2020
$2.00
$0.00
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025
CONSOLIDATED FINANCIAL RESULTS Consolidated Net Income
Three months ended June 30,
(millions)
2020
2019
Change
(Loss) income before unrealized market value adjustments
$
(4)
$
12
$
(16)
Impact of fair value adjustments Revaluation of natural gas in storage
8 4
(10)
18
(2)
6
Consolidated net income
$
8
$
-
$
8
Excluding market value adjustments, financial results for three months ended June 30, 2020 are $16 million lower than the same period in 2019. The decrease in net income is due to a lower asset optimization margin and lower customer contribution revenues while operating and maintenance costs increased compared to 2019-20. Reduced natural gas market price volatility has limited the Corporation’s opportunities and profitability of asset optimization contracts. In addition, as natural gas production continues to decline, Saskatchewan increasingly relies on gas production in Alberta to meet its delivery requirements. This results in increased transportation utilization with TC Energy’s system to import natural gas from Alberta. These increasing requirements have resulted in higher overall operating and maintenance costs as well as lower asset optimization margins as some transport capacity was secured through asset optimization contracts. Customer contribution revenue is also lower than prior year as
2020-21 First Quarter Report
7
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