5. Financial and derivative instruments (continued)
Notional values are an approximation of future undiscounted net cash flows. For physical natural gas contracts, the notional value is based on the contract price. For natural gas price swaps, the notional value is the difference between the contract price and the market price. Where contract prices are referenced to an index price that has not yet been fixed, the market price is used to estimate the contract price. As at September 30, 2016 natural gas derivative instruments had the following fair values, notional values, and maturities:
(millions)
2017
2018
2019
2020
2021
Total
Physical natural gas contracts Fair value
$
(20)
$
(12) (41)
$
(4)
$
1 6
$
- -
$
(35)
Notional value
(124)
(13)
(172)
Natural gas price swaps Fair value
(10) (10)
(1) (1)
- -
- -
- -
(11) (11)
Notional value
Total Fair value
$
(30)
$
(13)
$
(4)
$
1
$
-
$
(46)
Notional value
$
(134)
$
(42)
$
(13)
$
6
$
-
$
(183)
Fair value - increase (decrease) in net income Notional value - estimated undiscounted net cash inflow (outflow)
The fair value of the Corporation’s outstanding natural gas contracts is presented in the condensed consolidated statement of financial position as follows:
As at September 30, 2016
As at March 31, 2016
(millions)
Fair value of derivative instrument assets Fair value of derivative instrument liabilities
$
7
$
11
(53)
(109)
$
(46)
$
(98)
6. Long-term debt
During the first half of 2016-17, the Corporation issued $38 million in long-term debt, $22 million in the first quarter with an effective interest rate of 3.2% and $16 million in the second quarter with an effective interest rate of 2.9%. Subsequent to the end of the reporting period, the Corporation issued $100 million in long-term debt with an effective interest rate of 3.0%.
During the period, the Corporation also repaid $83 million in long-term debt, in increments of $22 million, $16 million and $45 million, with effective interest rates of 4.8%, 4.9%, and 4.4%, respectively.
7. Commitments and contingencies
At period end, the Corporation forecasted to spend an additional $170 million on capital projects during the remainder of the 2016-17 fiscal year, and the Corporation had $71 million of outstanding contractual commitments for the procurement of goods and services in the future.
The Corporation is involved in litigation resulting from the 2014 natural gas incident in the community of Regina Beach, Saskatchewan. The Corporation does not expect the outcomes to result in any material financial impact.
21
2016-17 SECOND QUARTER REPORT
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