Management’s Discussion and Analysis
The following chart shows AECO natural gas prices:
AECO MONTHLY INDEX HISTORICAL PRICES
CAD/GJ
$14.00
Conventional Natural Gas Production
2003-2008 Average Price $6.90/GJ
$12.00
$10.00
Shale Gas Revolution
Low Demand for Western Canadian Gas
2009-2014 Average Price $3.45/GJ
$8.00
2015-Present Average Price $1.89/GJ
$6.00
$4.00
Forward Price at March 31, 2020
$2.00
$0.00
2005
2007 2011 2013 2015 2017 2019 2021 2023 2025
CONSOLIDATED FINANCIAL RESULTS Consolidated Net Income
March 31, 2020
March 31, 2019
(millions)
Change
$
66
Income before unrealized market value adjustments
$
134 $
(68) (43) (12)
(30)
Impact of fair value adjustments Revaluation of natural gas in storage
13 19
7
Consolidated net income
$
43
$
166 $
(123)
to realize favourable physical swap contract values, both of which helped to offset the decreasing commodity margin. Weather was two per cent colder than normal through 2019-20, compared to 10 per cent colder through 2018-19. The warmer weather decreased distribution volumes by 24 petajoules (PJs), resulting in lower delivery revenue, which was partially offset by the effects of a rate increase effective April 1, 2019. Other losses were recorded in 2019-20 compared to gains in 2018-19 as the Corporation wrote off storage cavern exploration costs and natural gas inventory at one of its storage facilities. This compares to the realized gains of the prior fiscal year on the sale of natural gas liquid
Excluding market value adjustments, income for 2019-20 was $66 million, which slightly exceeds expectation but is $68 million lower than the prior year. This was a result of a lower commodity margin, lower delivery revenue and losses incurred due to the write-off of assets determined to provide no future value to the Corporation. Offsetting these unfavourable results were increased transportation revenues. On April 1, 2019, in its continual efforts to support its customers, the Corporation decreased its commodity rate as the low natural gas price environment continued. The low natural gas price environment also decreased the commodity cost of gas sold and allowed the Corporation
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