Notes to the Consolidated Financial Statements
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 15 days of invoicing. The transaction prices published in the Corporation’s tariff are allocated to the single performance obligation based on the volumes contracted with the customer. Revenues are recognized at the point in time that the Corporation completes the storage service to the customer. There are no significant financing components, nor any non-cash consideration. iv. Unbilled revenue Unbilled revenue is estimated monthly for services provided but not yet billed using management’s judgments and assumptions. v. Customer contributions The Corporation builds customer-requested distribution and transmission facilities and the title, risks and rewards of these facilities remain with the Corporation at all times during and after construction, as permitted by The SaskEnergy Act . Any use or benefit that the customer obtains does not occur during the construction period, but thereafter when the connection is made to the customer’s property. It is at that point that the customer may use and benefit from the readily available natural gas service. Therefore, the performance obligation is satisfied at the point in time when the customer-specific facility connection is available for use by the Corporation and the service lines are available for the customer’s operations. Customer contributions received in advance of construction are initially recorded as a contract liability as they are generally paid at contract inception prior to construction commencing. When the construction of a customer connection reaches its in-service date, the customer contribution paid by the customer is removed from contract liabilities and is generally recognized into customer contribution revenue. There are cases when a refund is paid to the customer based on the customer contribution billed in advance exceeding actual construction costs. The transaction prices included in the contract with the customer are allocated to performance obligations based on the specific customer facility requests being made available for use. Customer contribution consideration is considered variable due to refunds issued to customers. Distribution service customer contributions With respect to distribution customer-specific facilities, customers agree to pay, to the Corporation, the sum detailed in the contract with regard to the capital cost of assets which provide distribution services to the contributing customer. The contracts generally require the customer to pay all or a portion of the contract cost in advance of construction, in which case the Corporation records the deposit as contract liabilities until the point in time that the related assets are available for use. At this point, the Corporation reduces the contract liability and records customer contribution revenue. For some contract types, the Corporation may refund to a customer a portion of the contributions, depending on the volume of gas the customer consumes over a five-year period of time. The potential refund amount is removed from the contract liability and reported as a refund liability. At the in-service date, the difference between the customer capital contribution revenue recognized and the associated amount cumulatively billed to the customer is recognized as an account receivable. The account receivable is then recognized as a reduction of revenue over the term of the delivery service contract.
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