Notes to the Consolidated Financial Statements
The Corporation is also subject to interest rate risk related to debt retirement funds and provisions, as the recorded values are driven by market prices which are largely determined by interest rates. Fluctuations in the interest rates of debt retirement funds and provisions can have an impact on the Corporation. The estimated impact of a 1.0 per cent change in interest rates, assuming no change in the amount of debt retirement funds, would increase or decrease the market value of the debt retirement funds recorded through Other Comprehensive Income (OCI) by approximately $10 million (2019 - $10 million). The estimated impact of a 1.0 per cent increase in interest rates, assuming no change in the amount of provisions, would have decreased the value of the provision by approximately $85 million (2019 - $65 million). Conversely, a 1.0 per cent decrease in interest rates, assuming no change in the amount of provisions, would have increased the value of the provision by approximately $133 million (2019 - $73 million). c. Liquidity risk Liquidity risk is the risk that the Corporation is unable to meet its financial obligations as they become due. The Corporation has credit facilities available to refinance maturities in excess of anticipated operating cash flows. The contractual maturities of the Corporation’s financial obligations, including interest payments and the impact of netting agreements, as at March 31, 2020 were as follows:
Contractual Maturities
Carrying Amount
Less Than 1 Year
More Than 5 Years
(millions)
1 - 2 Years 3 - 5 Years
Short-term debt
$
279 $
279 $
- $
- $
- - -
Trade and other payables
120
120
- -
- -
Dividends payable Long-term debt
2
2
1,359
87 29
52
254
1,979
Derivative instruments
21
(6)
(8)
- -
Commitments
144
144
-
-
$
1,925 $
661 $
46 $
246 $
1,979
As at March 31, 2020, the Corporation’s borrowing capacity, together with relatively stable operating cash flows, provide sufficient liquidity to fund these contractual obligations. Interest rates used in calculating financial obligations are effective March 31, 2020. In addition to the above, the Corporation has posted a $15 million (2019 - $15 million) letter of credit with ICE NGX as security for natural gas purchases and sales conducted by the Corporation on the ICE NGX natural gas exchange in Alberta. ICE NGX may draw upon the letter of credit if the Corporation fails to make timely payment for, or delivery of, natural gas as per the related contract. COVID-19 (Coronavirus) impact assessment The COVID-19 pandemic has caused material disruption to businesses and has resulted in an economic slowdown. The Corporation has assessed and continues to monitor the impact of COVID-19 on its operations. The magnitude and duration of COVID-19 is uncertain and, if it causes significant disruption for an extended period of time, the impacts to the Corporation will increase. Potential impacts include loss of revenue, supply chain disruption, challenges associated with a remote or unavailable workforce and potential asset impairment. On March 18, 2020, SaskEnergy announced that it would provide financial relief to customers by waiving late payment charges, offering payment deferrals and suspending collection activities for six months. d. Credit risk Credit risk is the risk of financial loss if a customer or counterparty to a financial or derivative instrument fails to meet its contractual obligations. The Corporation is exposed to credit risk through cash, trade and other receivables, debt retirement funds and derivative instrument assets. Credit risk related to cash and debt retirement funds is minimized by dealing with institutions that have strong credit ratings and holding highly-rated financial securities.
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