MANAGEMENT’S DISCUSSION AND ANALYSIS
Integral to the Corporation’s transmission system are several strategically located natural gas storage sites, which have the capacity to provide operational flexibility along with a reliable and competitive natural gas storage service. Transportation and storage revenue was $163 million for the 12 months ending March 31, 2019, $26 million higher than in 2017-18. Industrial customer and power generation related load growth continues to increase demand for natural gas within the province and is driving higher transportation revenue. A rate increase effective May 1, 2018 also contributed to higher revenue and helped address increasing costs required to provide safe and reliable service to customers. Storage revenue is comparable with the previous year as the decline in contracted demand for storage Customer Capital Contributions The Corporation receives capital contributions from customers to partially offset the cost of constructing facilities to connect them to the transmission and distribution systems. Generally, contributions related to transmission system projects tend to be larger but less frequent than contributions related to the distribution system. The volume and magnitude of customer contribution revenue can vary significantly period-over- period as various factors influence their receipt and recognition as revenue. The contributions received, less potential refunds, are recognized as revenue once the related property, plant and equipment is available for use. The Corporation may refund a customer for some or all of the contributions they make depending on how much gas the customer consumes or transports through the system. Many of the customer contributions are received in advance of construction and are initially recorded as a contract liability in the statement of financial position. The amount of contributions expected to be refunded is estimated and recorded as a refund liability until the eligible refund period expires or a refund is earned by the customer. Customer capital contribution revenue for the 12 months ending March 31, 2019 was $8 million above 2017-18 with higher distribution and transmission customer connections year-over-year.
services has stabilized. The apparent abundance of natural gas, coupled with small or even negative differentials between current and forward gas prices, limits the demand for natural gas storage to those customers with relatively low load factors who use the service to mitigate receipt transportation charges. Adopting IFRS 15 resulted in a reallocation of transportation revenue. The effect of adopting IFRS 15 created a decrease of $2 million in transportation revenue for the period ending March 31, 2019 due to a higher amount of the SaskEnergy customer capital contribution discount being allocated to the specific transportation revenue contract components. Refer to consolidated financial statement Note 3 for additional details.
Adopting IFRS 15 resulted in a reallocation of customer contribution revenue due to a lower amount of the SaskEnergy customer capital contribution discount being allocated to the specific contract components. The effect of adopting IFRS 15 created an additional $3 million in customer capital contribution revenue for the period ending March 31, 2019. Refer to consolidated financial statement Note 3 for additional details.
CUSTOMER CONTRIBUTION REVENUE
$70
$60 $50
$40
$30
$20
$10
$0
Mar 2016 Mar 2017 Mar 2018 Mar 2019 12 months ending
Dec 2014
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