8. Financial and derivative instruments (continued) 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. For natural gas price swaps, the notional value is the difference between the contract price and the market 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, 2017 natural gas derivative instruments had the following fair values, notional values and maturities in the next five fiscal years: (millions) 2018 2019 2020 2021 2022 Total PHYSICAL NATURAL GAS CONTRACTS Fair value $ (17) $ (10) $ (2) $ – $ – $ (29) Notional value (67) (27) (2) – – (96)
NATURAL GAS PRICE SWAPS Fair value
(6) (6)
– –
– –
– –
– –
(6) (6)
Notional value
TOTAL
Fair value
$ (23)
$ (10)
$ (2)
$ –
$
–
$ (35)
Notional value
$ (73)
$ (27)
$ (2)
$ –
$
–
$ (102)
Fair value – decrease in net income Notional value – estimated undiscounted net cash outflow
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 Corporation records the amount due to or from counterparties 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 Corporation’s expected future cash flows from settling its natural gas contracts. The following amounts were netted within the consolidated statement of financial position: (millions) 2017 2016 TRADE AND OTHER RECEIVABLES Gross amount recognized $ 15 $ 10 Amount offset (10) (7) Net amount presented in the consolidated statement of financial position $ 5 $ 3
TRADE AND OTHER PAYABLES
Gross amount recognized
$ 29
$ 27
Amount offset
(7)
(10)
Net amount presented in the consolidated statement of financial position
$ 22
$ 17
9. Financial risk management Through the normal course of business, the Corporation has exposure to market risk (natural gas price risk and interest rate risk), liquidity risk and credit risk related to its financial and derivative instruments. The Board of Directors, through the Audit and Finance Committee, has the overall responsibility for the establishment and oversight of the Corporation's risk management efforts. The Corporation’s risk management policies and strategies, approved by the Board of Directors and reviewed regularly by the Audit and Finance Committee, provide the framework within which the Corporation may use financial and derivative instruments to manage its risks. The Corporation’s significant risk management policies include the Corporate Derivatives Policy, the Commodity Risk Management Policy, the Corporate Debt and Interest Rate Risk Management Policy and the Corporate Credit Risk Management Policy. The objectives, policies and processes for managing risk were consistent with the prior period.
60
Consolidated Financial Statements
Made with FlippingBook Ebook Creator