MANAGEMENT’S DISCUSSION AND ANALYSIS
March 31, 2017. These purchase contracts outstanding at March 31, 2018 were $0.37 less than market price, resulting in a favourable fair value adjustment, while purchase contracts outstanding at the end of March 31, 2017 were $0.05 higher than market price, resulting in an unfavourable fair value adjustment in the prior year. Revaluation of Natural Gas in Storage At each reporting period, the Corporation measures the net realizable value of gas marketing natural gas in storage based on forward market prices and anticipated delivery dates. The carrying amount of natural gas in storage is adjusted to reflect the lower of weighted average cost and net realizable value. Purchases made in the low market price environment throughout the year have reduced the average cost of gas in storage; however, lower forward market prices continue to adversely affect net realizable value. Consequently, the net realizable value of gas marketing natural gas in storage was $33 million below cost at March 31, 2018, which is a $12 million decline from the revaluation adjustment at March 31, 2017.
The realized margin on gas marketing sales at March 31, 2018, which removes fair value adjustments on derivative instruments and the revaluation of natural gas in storage, was $26 million. This is $12 million higher than the $14 million margin for the period ending March 31, 2017, as market conditions created opportunities for the Corporation to transact significant volumes of purchases and sales at higher margins. Gas Marketing Fair Value Adjustments The Corporation enters into various natural gas contracts (swaps and forwards) in its gas marketing strategies, which are subject to volatility of natural gas market prices. The fair value adjustment at March 31, 2018 on gas marketing derivative instruments increased the gas marketing margin by $48 million compared to a decrease of $2 million for the same period in 2016-17. Between April 2017 and the end of March 2018, natural gas market prices were volatile, allowing the Corporation to enter into buy/sell transactions, utilizing the favourable price differential between spot prices and forward prices. The volume of purchase contracts outstanding at March 31, 2018 was 103 PJ higher than at
Revenue Delivery revenue, transportation and storage revenue, customer capital contributions and other revenue, as reported in the consolidated financial statements, were as follows:
(millions)
March 31, 2018
March 31, 2017
Change
$
271 137 21 7
$
240 134
$
31 3 (34) (3)
Delivery revenue Transportation and storage revenue Customer capital contributions Other revenue
55 10
$
436 $
Revenue
439 $
(3)
29
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