15. Provisions (millions)
2017
2016
Balance, beginning of period
$ 95
$ 130
Provisions made Provisions settled
7
6
(3)
(4) (7)
Change in discount rate Unwinding of discount
28
3
2
Balance, end of period
$ 130
$ 127
The Corporation has estimated the future cost of decommissioning certain natural gas facilities. For the purposes of estimating the fair value of these decommissioning obligations, it was assumed that the costs will be incurred between April 1, 2017 and March 31, 2109. The undiscounted cash flows required to settle the obligations total $294 million (2016 – $276 million). Discount rates between 1.1% and 2.4% were used to calculate the carrying amount of the obligation (2016 – 0.9% and 2.1%). No funds have been set aside by the Corporation to settle these obligations.
16. Commitments and contingencies
a. Commitments As at March 31, 2017, the Corporation had $77 million (2016 – $136 million) of outstanding contractual commitments for the procurement of goods and services in the future. During the period, the Corporation entered into commodity contracts for the physical purchase of natural gas that qualify as own-use contracts. As at March 31, 2017 own-use natural gas derivative instruments had the following notional values and maturities for the next five fiscal years: (millions) 2018 2019 2020 2021 2022 Total OWN-USE PHYSICAL NATURAL GAS CONTRACTS Notional value $ (17) $ (9) $ (21) $ (25) $ (16) $ (88) Notional value - estimated undiscounted cash outflow b. Contingencies The Corporation is involved in litigation in relation to a natural gas incident during 2014 in the community of Regina Beach, Saskatchewan. The Corporation does not expect the outcomes to result in any material financial impact.
17. Unrealized market value adjustments
12 Months
15 Months
Ended March
Ended March
(millions)
31, 2017
31, 2016
Change in fair value of debt retirement funds
$ (2)
$
–
Change in fair value of natural gas derivative instruments
(11) (11)
63 13
Change in revaluation of natural gas in storage to net realizable value
$ (24)
$ 76
Unrealized market value adjustments represent the net income impact of measuring certain financial and derivative instruments at fair value subsequent to initial recognition (Note 8) and measuring natural gas in storage at the lower of weighted average cost and net realizable value (Note 6). These adjustments represent the change in the carrying amount of the related item during the period and are dependent on the market prices and expected delivery dates at the end of the reporting period.
67
2016-17 ANNUAL REPORT SASKENERGY
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