Northern Pipeline Agency Quarterly Financial Report (unaudited) For the Quarter Ended September 30, 2017

Statement outlining results, risks and significant changes in operations, personnel and programs

1. Introduction

This quarterly financial report should be read in conjunction with the Main Estimates and Supplementary Estimates (A), as well as Canada’s Budget 2017. It has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by Treasury Board. This quarterly financial report has not been subject to an external audit or review.

1.1 Authority, Mandate and Programs

The Northern Pipeline Agency (Agency) was established by the Northern Pipeline Act in 1978 and, in the context of the 1977 Agreement between Canada and the United States of America on Principles Applicable to a Northern Natural Gas Pipeline. The Agency has a mandate to carry out federal responsibilities in respect of the planning and construction of the Canadian portion of the Alaska Natural Gas Pipeline. The Agency plays a key role in supporting efficient and expeditious regulatory approval while ensuring environmental protection and social and economic benefits for Canada.

Further details on the Agency’s authority, mandate and programs are available in Part II of the 2017-2018 Main Estimates.

1.2 Basis of Presentation

This quarterly financial report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Agency’s spending authorities granted by Parliament, and those used by the Agency are consistent with the Main Estimates and Supplementary Estimates (A) for the 2017-2018 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.    

The Agency uses the full accrual method of accounting to prepare and present its annual unaudited departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

2. Highlights of the Second Fiscal Quarter and Comparative Results

This Quarterly Financial Report reflects the result as at September 30, 2017, including Main Estimates and Supplementary Estimates (A), and the details presented in this report focus on and compare the second quarter results of 2017-2018 with those of 2016-2017.

2.1 Authorities Available for Use and Planned Spending for the Year

As at September 30, 2017, the Agency has authorities available for use of $494,830 in 2017-2018 compared to $751,835 in 2016-2017, for a decrease of $257,005. This decrease reflects the fact that the Agency has scaled down its operations to align with reduced Alaska Highway Gas Pipeline (AHGP) project activities while continuing to fulfill Canada’s ongoing obligations as set out in the Northern Pipeline Act.

2.2 Authorities Used and Amounts Expended during the Second Quarter

During the second quarter in 2017-2018, the Agency spent $15,333 or 3% of the total funding available, compared to $24,337 or 3% of the total funding available for the same period in 2016-2017, for a net decrease of $9,004. The key differences are as follows:

• Expenditures on Personnel salaries decreased by $5,218 between the second quarter of 2017-2018 and second quarter of 2016-2017, due to a reduction in the Employee Benefit Plans costs associated with reduced authorities, as the Agency scaled down its operations.
• Expenditures on Professional and special services decreased by $8,461 between the second quarter of 2017-2018 and the second quarter of 2016-2017, due to a reduced level of activity.
• Expenditures on Rentals increased by $3,158 between the second quarter of 2017-2018 and second quarter of 2016-2017, due to the timing of invoicing for certain ongoing rental services incurred, as noted in the first quarter report earlier this year.
• No contribution funds were issued in the second quarter of 2017-2018, nor were there funds issued in the second quarter of 2016-2017.

3. Risks and Uncertainties

In planning for an efficient and effective review and regulation of the project, the Agency must adapt to project developments by the proponent, i.e., to carry out its responsibilities and to make the necessary preparations in concert with the pace of the project’s development.

3.1 Risk Mitigation Framework

The Agency identifies and responds to the pace of the project’s development by continual corporate-level forecasting, tracking and management of issues that could affect or require a response from the Agency. For example, on March 30, 2012, ExxonMobil, ConocoPhillips, BP and TCPL announced a work plan to assess liquefied natural gas (LNG) exports from south-central Alaska as an alternative to a natural gas pipeline through Canada. In February 2013, TCPL notified the Agency that no further work is planned on the AHGP for now, and of their intentions to maintain the AHGP assets in Canada. To align with the reduction in the AHGP project activities for the foreseeable future, the Agency has scaled down its operations, while continuing to fulfill Canada’s obligations as set out in the Act.

4. Significant Changes in Relation to Operations, Personnel and Programs

There were no significant changes to operations, personnel and programs during the second quarter of 2017-2018.

Original signed by:

Christyne Tremblay                      Commissioner November 29, 2017 Ottawa, Canada

Wayne Marshall Director of Operations November 27, 2017 Calgary, Canada

 

Table 1: Statement of Authorities ( unaudited) (in dollars)

	Fiscal year 2017-2018			Fiscal year 2016-2017
	*Total available for use for the year ending March 31, 2018	Used during the quarter ended September 30, 2017	Year-to-date used at quarter-end	*Total available for use for the year ending March 31, 2017	Used during the quarter ended September 30, 2016	Year-to-date used at quarter-end
Budgetary Authorities
Net Operating expenditures - Vote 1	465,000	7,875	14,812	701,095	11,652	25,392
Statutory Authority - Employee Benefit Plans	29,830	7,458	14,915	50,740	12,685	25,370
Total Budgetary Authorities	494,830	15,333	29,727	751,835	24,337	50,762

* Includes only Authorities available for use and granted by Parliament at quarter-end: Main Estimates and Supplementary Estimates (A).

Table 2: Budgetary Expenditures by Standard Object (unaudited) (in dollars)

	Fiscal year 2017-2018			Fiscal year 2016-2017
	*Planned expenditures for the year ending March 31, 2018	Expended during the quarter ended September 30, 2017	Year-to-date used at quarter-end	*Planned expenditures for the year ending March 31, 2017	Expended during the quarter ended September 30, 2016	Year-to-date used at quarter-end
Expenditures:
Personnel	219,830	10,597	24,334	345,740	15,815	34,758
Transportation and communications	5,000	-	-	4,000	-	-
Information	500	-	-	750	-	-
Professional and special services	248,000	-	657	379,095	8,461	13,575
Rentals	10,000	4,736	4,736	10,000	1,578	3,946
Repair and maintenance	500	-	-	250	-	-
Utilities, materials and supplies	500	-	-	2,000	-	-
Acquisition of machinery and equipment	500	-	-	-	-	-
Transfer Payments	10,000	-	-	10,000	-	-
Other subsidies and payments	-	-	-	-	(1,517)**	(1,517)
Total net budgetary expenditures	494,830	15,333	29,727	751,835	24,337	50,762

* Includes only Authorities available for use and granted by Parliament at quarter-end: Main Estimates and Supplementary Estimates (A).
** Credit rebate issued by Shared Services Canada.