3. Summary of significant accounting policies (continued)
c. Revenue (continued)
2) Transportation and storage services (continued)
Firm transportation service contracts Transportation service is offered on a guaranteed basis, where the Corporation warrants service will be available every day of the contract unless prevented by Force Majeure. Customers will generally pay a demand fee and a commodity charge for firm service, which has a higher priority than other transportation services. Firm service contracts may have a term as short as one month, but generally are contracted on a longer term basis, they do not have a significant financing component and there is no non- cash consideration. Over the term of the contract, customers receive access to transportation services on a daily basis and the customer benefits as the service is provided. Transaction prices published in the Corporation’s tariffs are allocated to the performance obligation based on the volumes contracted with the customer. The performance obligation is satisfied at the point in time that the transportation services are complete and billed monthly based on the right to invoice practical expedient with collection generally occurring in the following month. Interruptible transportation service contracts Transportation service that is not provided on a guaranteed basis. The Corporation can generally interrupt service performance with short or no notice. The Corporation may curtail an interruptible customer’s service if the service is required to serve a higher priority customer. Curtailment of interruptible service may occur to protect the operational integrity of the natural gas system and ensure delivery to their firm transportation contract holders. Curtailment generally will restrict service to customers that have interruptible transportation contracts. Interruptible customers will be curtailed in order of priority to ensure firm deliveries are met first. Interruptible service may be priced higher or lower than firm service and it is less reliable. The entire interruptible service contract is variable based on customer flow of an unknown quantity of natural gas contracted at a predetermined rate. Transaction prices published in the Corporation’s tariffs are allocated to the performance obligation based on the measured volumes transported with the customer. Interruptible services may have a term as short as one month. Interruptible transportation services are recognized as revenue at the point in time that the Corporation completes the transportation services to the customer. These services are generally invoiced in the month following when the services are performed as this is when the service performance obligation is complete. There are no significant financing components, nor any non-cash consideration. Storage Service The contracts for storage services provide customers with operational flexibility to store natural gas during periods of low demand to ensure that sufficient supply is available during periods of high demand. Storage services are contracted independently of transportation services and are considered one performance obligation recognized over time. The Corporation’s Tariff, as well as associated Service Agreements and Schedules of Service, are applicable to each customer and their services requested. The customer receives the benefit of storage services and the Corporation has the right to invoice the customer for the services provided. Customers are invoiced in the month following the receipt of service, payable within 30 days of invoicing. The transaction prices published in the Corporation’s tariffs are allocated to the single performance obligation based on the volumes contracted with the customer. There are no significant financing components, nor any non-cash consideration.
3) Other revenue
Gas processing fees Gas processing revenues are earned through contracts with customers when raw natural gas is processed at a natural gas processing facility to separate the liquids and other impurities, creating natural gas line quality gas. Processing is considered a single performance obligation and is recognized as revenue over time as the customer gas is processed. The method of revenue recognition is an output method, which is based on the volume of gas processed in a particular facility. These services are generally invoiced in the month following when the services are performed. The Corporation sold its natural gas processing facilities last fiscal year, therefore gas processing fees are no longer collected from customers.
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2019-20 FIRST QUARTER REPORT
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