Notes to the Consolidated Financial Statements
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. The fair value of long-term debt is determined for disclosure purposes only using an income approach. Fair values are estimated using the present value of future cash flows discounted at the market rate of interest for the equivalent Province of Saskatchewan debt instruments. Notional values are an approximation of future undiscounted net cash flows. For physical natural gas contracts, the notional value is based on the contract price. Where contract prices are referenced to an index price that has not yet been fixed, the market price is used to estimate the contract price. As at March 31, 2020, natural gas derivative instruments had the following fair values, notional values and maturities in the next five fiscal years:
(millions)
2021
2022
2023
2024
2025
Total
$ $
$ $
(5)
Fair value
(12)
$
3 $
2 $
2 $
-
(15)
Notional value
(29)
$
6 $
3 $
4 $
1
Fair value - increase (decrease) in net income Notional value - estimated undiscounted net cash (outflow) inflow
Financial assets and liabilities are offset within the consolidated statement of financial position if the Corporation has the legal right to offset and intends to settle on a net basis. When natural gas contracts settle or become realized, the amount due to or from counterparties is recorded within trade payables or trade receivables, respectively. The Corporation offsets these amounts when the counterparty and timing of settlement are the same, which reflects the expected future cash flows from settling its natural gas contracts. The following amounts were netted within the consolidated statement of financial position:
(millions)
2020
2019
TRADE AND OTHER RECEIVABLES Gross amount recognized
$
19
$
17
(12)
Amount offset
(13)
$
7
Net amount presented in the consolidated statement of financial position
$
4
TRADE AND OTHER PAYABLES Gross amount recognized
$
23 12 11
$
39
Amount offset
(13)
$
Net amount presented in the consolidated statement of financial position
$
26
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