SASKENERGY 2018-19 ANNUAL REPORT
Interruptible service usually costs less than firm service as interruptible service is less reliable. The entire interruptible service contract is variable based on customer flow of an unknown quantity of natural gas contracted at a predetermined rate. Transaction prices published in the Corporation’s tariffs are allocated to the performance obligation based on the measured volumes transported with the customer. Interruptible services may have a term as short as one month. Interruptible transportation services are recognized as revenue at the point in time that the Corporation completes the transportation services to the customer. These services are generally invoiced in the month following when the services are performed as this is when the service performance obligation is complete. There are no significant financing components, nor any non-cash consideration. Storage Service The contracts for storage services provide customers with operational flexibility to store natural gas during periods of low demand to ensure that sufficient supply is available during periods of high demand. Storage services are contracted independently of transportation services and are considered one performance obligation recognized over time. The Corporation’s Tariff, as well as associated Service Agreements and Schedules of Service, are applicable to each customer and their services requested. The customer receives the benefit of storage services and the Corporation has the right to invoice the customer for the services provided. Customers are invoiced in the month following the receipt of service, payable within 30 days of invoicing. The transaction prices published in the Corporation’s tariffs are allocated to the single performance obligation based on the volumes contracted with the customer. There is no significant financing components, nor any non-cash consideration. iii. Other revenue Gas Processing Fees Gas processing revenues are earned through contracts with customers when raw natural gas is processed at a natural gas processing facility to separate the liquids and other impurities, creating natural gas line quality gas. Processing is considered a single performance obligation and is recognized as revenue over time as the customer gas is processed. The method of revenue recognition is an output method, which is based on the volume of gas processed in a particular facility. These services are generally invoiced in the month following when the services are performed. With the Corporation selling its natural gas processing facilities during this fiscal year, gas processing fees will no longer be collected from customers. Natural Gas Liquid Sales Natural gas liquids sales contracts provide revenue for the Corporation through the sales of gas processing byproducts separated at specific natural gas processing facilities. The method of revenue recognition is an output method based on the type and volume of natural gas liquid transferred to the customer. The sale of processed gas liquids is a single performance obligation recognized over time as the natural gas liquids are sold, which is separate from the actual processing of the gas. These services are generally invoiced in the month following when the sales occur. With the Corporation selling its natural gas processing facilities during this fiscal year, natural gas liquid sales will no longer be collected from customers. Government grants Government grants are recognized at fair value as deferred revenue when the Corporation meets the criteria specified in the grant and the grant is deemed receivable from the government entity. Grants relating to expenses are recognized in net income on a systematic basis in the same periods the expenses are incurred. Grants relating to the Corporation’s assets are recognized into net income on a straight line basis over the useful life of the related asset. There is no change in policy for revenue recognition of government grants as a result of the implementation of IFRS 15 iv. Unbilled Revenue Unbilled revenue is estimated monthly for services provided but not yet billed using management’s judgments and assumptions.
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