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Northern Pipeline Agency Quarterly Financial Report (unaudited) For the Quarter Ended September 30, 2020

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 any Supplementary Estimates approved in a given year by the date of this report. 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 the 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 (AHGP). 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 2020-2021 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 for the 2020-2021 fiscal year for which interim supply has been released by Parliament. 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 results as at September 30, 2020, including Main Estimates, and the details presented in this report focus on and compare the second quarter results of 2020-2021 with those of 2019-2020.

2.1 Authorities Available for Use and Planned Spending for the Year

As at September 30, 2020, the Agency has $819,370 in authorities available for use in 2020-2021 compared to $1,084,070 in 2019-2020, representing a decrease of $264,700 mainly due to the reduced supply of the Main Estimates. Due to the COVID-19 pandemic and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the study period into the Fall 2020. The Agency is expected to receive full supply for the 2020-2021 Main Estimates in December 2020.

2.2 Authorities Used and Amounts Expended during the Second Quarter

During the second quarter of 2020-2021, the Agency spent $22,521 or 3% of the total funding available, compared to $24,217 or 2% of the total funding available the same period in 2019-2020, for a net decrease of $1,696. This net decrease was primarily due to the timing of invoicing for certain expenditures compared to the second quarter last year, despite increased salary costs compared to the second quarter last year.

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 TransCanada PipeLines Limited (now TC Energy) 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, TC Energy notified the Agency that no further work is planned on the AHGP for now, and of their intent 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

During the second quarter of 2020-2021, Prime Minister Trudeau announced that effective September 21, 2020, Mr. Jean-François Tremblay would become Deputy Minister of Natural Resources Canada, and as a result, the Commissioner for the Agency.

There were no significant impacts arising from the outbreak of the COVID-19 pandemic during the second quarter of 2020-2021.

Approved by:
Original signed by:

Jean-François Tremblay
Commissioner

November 18, 2020
Ottawa, Canada

Wayne Marshall
Director of Operations

November 3, 2020
Calgary, Canada

Table 1: Statement of Authorities (unaudited)

(in dollars)
Budgetary Authorities Fiscal year 2020-2021 Fiscal year 2019-2020
*Total available for use for the year ending March 31, 2021 Used during the quarter ended September 30, 2020 Year-to-date used at quarter-end *Total available for use for the year ending March 31, 2020 Used during the quarter ended September 30, 2019 Year-to-date used at quarter-end
Operating expenditures - Vote 1 791,250 15,491 38,209 1,055,000 16,950 25,382
Statutory Authority - Employee Benefit Plans 28,120 7,030 14,060 29,070 7,267 14,535
Total Budgetary Authorities 819,370 22,521 52,269 1,084,070 24,217 39,917

* Includes only Authorities available for use and granted by Parliament at quarter-end: interim supply of Main Estimates in 2020-2021; full Supply of Main Estimates in 2019-2020.

Table 2: Budgetary Expenditures by Standard Object (unaudited)

(in dollars)
Expenditures: Fiscal year 2020-2021 Fiscal year 2019-2020
* Planned expenditures for the year ending March 31, 2021 Expended during the quarter ended September 30, 2020 Year-to-date used at quarter-end * Planned expenditures for the year ending March 31, 2020 Expended during the quarter ended September 30, 2019 Year-to-date used at quarter-end
Personnel 170,620 17,785 37,533 219,070 10,584 24,484
Transportation and communication 18,750 - 25,000 -
Information 750 - 1,000 -
Professional and special services 210,000 10,000 285,000 10,477 10,698
Rentals 9,000 4,736 4,736 11,000 3,156 4,735
Repair and maintenance 750 - 1,000 -
Utilities, materials and supplies 750 - 1,000 -
Acquisition of machinery and equipment 3,750 - 1,000 -
Transfer Payments 405,000 - 540,000 -
Total net budgetary expenditures 819,370 22,521 52,269 1,084,070 24,217 39,917

* Includes only Authorities available for use and granted by Parliament at quarter-end: interim supply of Main Estimates in 2020-2021; full Supply of Main Estimates in 2019-2020.

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