Notes to the Consolidated Financial Statements
6. Debt Retirement Funds (millions)
2025
2024
$
179 $
Balance, beginning of year
160
16
Installments Redemptions
16
(10)
-
6 6
Earnings
4
Change in fair value through OCI
(1)
197
Balance, end of year
179
(45)
Less: Current portion of debt retirement funds
(11)
$
152 $
168
OCI - Other Comprehensive Income
The investments held in debt retirement funds are primarily Federal and Provincial Government debt instruments. The average return on these investments is 3.4 per cent for the period (2024 - 1.8 per cent). As at March 31, 2025, scheduled installment payments are as follows for the next five fiscal years: (millions) 2026 2027 2028 2029 2030 Installments $ 19 $ 18 $ 18 $ 18 $ 17 Unrealized market value adjustments through OCI represent the income impact of measuring debt retirement funds at fair value subsequent to initial recognition. The adjustment represents the change in the carrying amount of debt retirement funds during the period and is dependent on the market prices of the financial instruments held in the Debt Retirement Funds at the end of the reporting period. 7. Financial and Derivative Instruments For recurring and non-recurring fair value measurements, the Corporation estimates the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the reporting date under current market conditions. This requires the Corporation to make certain assumptions, including the principal (or most advantageous) market, the most appropriate valuation technique and the most appropriate valuation premise. The Corporation’s own credit risk and the credit risk of the counterparty are taken into account in determining the fair value of financial assets and liabilities, including derivative instruments. In measuring fair value, the Corporation classifies items according to the fair value hierarchy based on the amount of observable inputs. Level 1 valuations use quoted prices (unadjusted) that are available in active markets for identical assets or liabilities as at the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide ongoing pricing information. Level 2 valuations are based on inputs that are either directly or indirectly observable for the asset or liability as at the reporting date. Inputs include quoted market prices, time, volatility factors and broker quotations which can be substantially observed or corroborated in the marketplace.
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