SASKENERGY 2018-19 ANNUAL REPORT
Information about critical judgments in applying accounting policies that have a significant effect on the amounts recognized in the consolidated financial statements is included in Note 3 as well as the following notes: Revenue recognition related to unbilled revenue (Note 5)
Existence of decommissioning liabilities (Note 16) Designation of own-use derivative contracts (Note 17)
Information about significant management estimates and assumptions that have a risk of resulting in a significant adjustment is included in Note 3 as well as the following notes: Estimated unbilled revenue (Note 5) Net realizable value of natural gas in storage held for resale (Note 6) Fair value of financial and derivative instruments (Note 8) Useful lives and amortization rates for intangible assets (Note 10) Useful lives and depreciation rates for property, plant and equipment (Note 11) Recoverable amount of non-financial assets (Note 11) Estimated unearned customer capital contributions (Note 14) Estimated future cost of decommissioning liabilities (Note 16) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently by the Corporation and its subsidiaries to all periods presented in the consolidated financial statements. a. Change in accounting estimates During December 2018, the Corporation implemented the results of an independent third party depreciation study related to the property, plant and equipment and intangible assets of SaskEnergy’s Distribution Utility. As a change in estimate, the impact was applied prospectively commencing April 1, 2018 and resulted in an approximate reduction of $1 million in depreciation and amortization expense for the 12 months ended March 31, 2019. The reduction of useful lives for distribution meters from 32 years to 25 years is resulting in a small offsetting increase in depreciation expense for 2018-19. Effective December 31, 2018, the results of an independent third party depreciation study were implemented on the property, plant and equipment and intangible assets of TransGas Limited, the Corporation’s wholly owned subsidiary. As a change in estimate, the impact was applied prospectively commencing April 1, 2018 and resulted in an approximate $6 million decrease in depreciation and amortization expense for the 12 months ended March 31, 2019. Depreciation useful lives were extended for transmission natural gas lines from 50 years to 60 years resulting in a reduction of current year depreciation. During the year, a provision increase of $43 million was recorded with a corresponding increase to property, plant and equipment, a result of changes to the estimated future cost of decommissioning assets. b. Future changes in accounting policies IFRS 16 Leases , which supersedes IAS 17 Leases is a new standard that is not yet effective and has not yet been applied in preparing these consolidated financial statements. IFRS 16 expands the description of a lease and increases transparency regarding a Corporation’s leasing obligations. Under the new standard, an asset and liability are recognized on the consolidated statement of financial position for all material contracts that meet the definition of a lease.
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