3. Summary of significant accounting policies (continued)
c. Change in accounting policy (continued)
ii. Transportation and Storage Services (continued)
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 guaranteed. 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 usually costs less than firm service as interruptible service 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, there are no significant financing components, no non-cash consideration and the right to invoice practical expedient is applied. 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 is no significant financing component and no non-cash consideration.
iii. 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 pipeline 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 and the right to invoice practical expedient is applied. Natural Gas Liquid Sales Natural gas liquids sales contracts provide revenue for the Corporation through the sales of gas processing byproducts separated at specific natural gas processing facilities. The method of revenue recognition is an output method based on the type and volume of natural gas liquid transferred to the customer. The sale of processed gas liquids is a single performance obligation recognized over time as the natural gas liquids are sold, which is separate from the actual processing of the gas. These services are generally invoiced in the month following when the sales occur and the right to invoice practical expedient is applied.
iv. Unbilled Revenue
Unbilled revenue is estimated monthly for services provided but not yet billed using management’s judgments and assumptions.
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2018-19 THIRD QUARTER REPORT
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