3. Summary of significant accounting policies (continued)
b. Change in accounting policy (continued)
ii. Transportation and Storage Services (continued)
generally invoiced in the month following when the services are performed, there are no significant financing components, no non-cash consideration and the right to invoice practical expedient is applied.
Storage Service The contracts for storage services provide customers with operational flexibility to store natural gas during periods of low demand to ensure that sufficient supply is available during periods of high demand. Storage services are contracted independently of transportation services and are considered one performance obligation recognized over time. The Corporation’s Tariff, as well as associated Service Agreements and Schedules of Service, are applicable to each customer and their services requested. The customer receives the benefit of storage services and the Corporation has the right to invoice the customer for the services provided. Customers are invoiced in the month following the receipt of service, payable within 30 days of invoicing. The transaction prices published in the Corporation’s tariffs are allocated to the single performance obligation based on the volumes contracted with the customer. There is no significant financing component and no non-cash consideration.
iii. 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 pipeline quality gas. Processing is considered a single performance obligation and is recognized as revenue over time as the customer gas is processed. 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 and the right to invoice practical expedient is applied, 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 over time as the natural gas liquids are sold, which is separate from the actual processing of the gas. These services are generally invoiced in the month following when the sales occur and the right to invoice practical expedient is applied,
iv. Unbilled Revenue
Unbilled revenue is estimated monthly for services provided but not yet billed using management’s judgments and assumptions.
v. Customer Contributions
The Corporation builds customer requested distribution and transmission facilities and the title and risks/rewards of these facilities remain with the Corporation at all times including during construction as backed by the SaskEnergy Act. Any use or benefit that the customer obtains is not during the construction period, but thereafter when the connection is made to the customer’s property, and at that point the customer can use and benefit from the readily available gas. Performance obligations are 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. The performance obligation would be satisfied at the in-service date of the distribution and transmission customer specific facilities and revenue recognized. Customer contributions received in advance of construction are initially recorded as deferred revenue as they are generally paid prior to construction commencing. These balances are considered variable consideration and are fully constrained. The transaction prices included in the contract with the customer are allocated to the performance obligation based on the specific facility requests by the customer being made available for use. Distribution service customer contributions With respect to distribution customer specific facilities, customers agree to pay at the in-service date, to the Corporation, the sum detailed on the contract with regard to the capital cost of assets which provide distribution services to the contributing customer. Some larger contracts may require the customer to pay a portion of the contract cost in advance, in which case the Corporation records the deposit as deferred revenue until the point in time that the related assets are available for use. The Corporation may refund to a customer a portion of the contributions depending on the volume of gas the customer may consume over a specific period of time.
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2018-19 SECOND QUARTER REPORT
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