Notes to the Consolidated Financial Statements (unaudited)
5.
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 value, volatility factors and broker quotations which can be substantially observed or corroborated in the marketplace.
Level 3 inputs are unobservable for the particular assets and liabilities as at the reporting date. The Corporation did not classify any of its fair value measurements within Level 3.
As at December 31,
As at March 31,
2023
2023
Fair Value Carrying Fair Carrying Fair
(millions)
Classification Hierarchy Amount Value Amount Value
Financial and derivative assets Cash Trade and other receivables
$
-
$
-
FVTPL
Level 1 Level 2 Level 2 Level 2
$
6
$
6
167 179
167 179
AC
248 160
248 160
Debt retirement funds
FVOCI FVTPL
9
9
Fair value of derivative instruments
55
55
Financial and derivative liabilities Short-term debt
268 114
268 114
AC AC AC AC
Level 2 Level 2 Level 2 Level 2 Level 2
311 145
311 145
Trade and other payables
4
4
Dividends payable Long-term debt
6
6
1,767 1,654
1,647
1,508
28
28
Fair value of derivative instruments
FVTPL
36
36
Classification details:
AC - amortized cost
FVTPL - fair value through profit or loss
FVOCI - fair value through other comprehensive income
The fair value of debt retirement funds is determined by Saskatchewan’s Ministry of Finance using a market approach with information provided by investment dealers. To the extent possible, valuations reflect indicative secondary pricing for these securities. In all other circumstances, valuations are determined with reference to similar actively traded instruments. The fair value of natural gas derivative instruments is determined using a market approach. The Corporation obtains quoted market prices from sources such as the Canadian Gas Price Reporter and the Natural Gas Exchange, independent price publications and over-the-counter broker quotes.
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