Notes to the Consolidated Financial Statements
iv. 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 natural gas line quality gas. Processing is considered a single performance obligation and is recognized at the point of transaction for single performance obligation. 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. With the Corporation selling its natural gas processing facilities during this fiscal year, gas processing fees will no longer be collected from customers. 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 at the point of transaction for single performance obligation, which is separate from the actual processing of the gas. These services are generally invoiced in the month following when the sales occur. With the Corporation selling its natural gas processing facilities during this fiscal year, revenue from natural gas liquid sales will no longer be collected from the customer. Government grants Government grants are recognized at fair value as deferred revenue when the Corporation meets the criteria specified in the grant and the grant is deemed receivable from the government entity. Grants relating to expenses are recognized in net income on a systematic basis in the same periods the expenses are incurred. Grants relating to the Corporation’s assets are recognized into net income on a straight-line basis over the useful life of the related asset. v. Unbilled revenue Unbilled revenue is estimated monthly for services provided but not yet billed using management’s judgments and assumptions. vi. 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. 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.
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