5. Revenue CONTINUED 5.1 Revenue from contracts with customers CONTINUED
Regulated Networks Electricity and gas distribution services
Major sources of revenue
Revenue from electricity and gas distribution services are measured at fair value, to the extent that pricing is determined by the regulator within a defined pricing path set. Revenue is recognised over time using an output method. The right to payment corresponds directly with the customers’ pattern of electricity and gas consumption. Third party contributions Third party contributions towards the construction of property, plant and equipment are recognised over time, reflecting the percentage completion of the underlying construction activity or the performance obligation if the activity is bundled with other goods or services. A contract liability is presented on the balance sheet representing the portion of consideration received from the customer on acceptance of a contract but where the performance obligation associated with the contract is not yet satisfied. Gas Trading Sale of natural gas The group receives revenue from customers for the provision of a continuous supply of natural gas over a time period. Revenue is recognised over time in line with a customer’s consumption of natural gas and measured at the transaction price of the contract. The transaction price for a gas supply contract includes variable consideration in the form of indexed pricing, volume pricing, and take or pay arrangements. The group estimates the amount of variable consideration present in each contract using the expected value method, which is the sum of probability weighted amounts in a range of possible consideration amounts. Technology Metering revenue Metering revenue earned from the provision of metering services is recognised over time as the customer simultaneously receives and consumes the benefits from operations of the group’s network of meters. Contract liabilities Of the revenue recognised this year, $29.2 million was included in the contract liability balance at the beginning of the reporting period. Contract assets Contract assets represent balances due from customers for performance obligations (or series of performance related milestones) completed but that have not been invoiced. A contract asset is reclassified to trade receivables at the point when it is invoiced to the customer.
5.2. Contract balances Policies
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