Quarterly Financial Report (unaudited) For the Quarter Ended December 31, 2015

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, Supplementary Estimates (A), and Supplementary Estimates (B). 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 (“the Agency”) was created by legislation in 1978 to carry out federal responsibilities in relation to the planning and construction in Canada of the Alaska Highway Gas Pipeline (AHGP) project by Foothills Pipe Lines Limited (Foothills). The pipeline is to carry natural gas from Prudhoe Bay, Alaska, to the lower 48 states. Foothills is now owned by TransCanada PipeLines Limited (TCPL).

Further details on the Agency’s authority, mandate and programs are available in Part II of the 2015-2016 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 authorities used by the Agency are consistent with the Main Estimates, Supplementary Estimates (A), and Supplementary Estimates (B) for the 2015-2016 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework.

The authority of Parliament is required before monies 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. As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year.

Although the Agency uses the full accrual method of accounting to prepare and present its annual unaudited financial statements that are part of the Departmental Performance Report and its Annual Report, the spending authorities voted by Parliament remain on an expenditure basis.

2. Highlights of the Third Fiscal Quarter and Comparative Results

This Quarterly Financial Report reflects the result as at December 31, 2015, including Main Estimates, Supplementary Estimates (A), and Supplementary Estimates (B), and the details presented in this report focus on and compare the third quarter results of 2015-2016 with those of 2014-2015.

2.1 Authorities Available for Use and Planned Spending for the Year

As at December 31, 2015, the Agency has authorities available for use of $750,775 in 2015-2016 compared to $750,000 in 2014-2015, for a slight increase of $775. This is mainly due to the increased cost of the employee benefits plan.

In 2015–2016, and to align with reduced AHGP project activities in the foreseeable future, the Agency has scaled down its operations while continuing to fulfil Canada’s ongoing obligations as set out in the Northern Pipeline Act (the Act) and the Agreement under the Act.

2.2 Authorities Used and Amounts Expended during the Third Quarter

During the third quarter in 2015-2016, the Agency spent $157,951 or 21% of the total funding available, compared to $152,589 or 20% of the total funding available the same period in 2014-2015, for a net increase of $5,362. The key differences are as follows:

  • Expenditures on Personnel salaries decreased by $11,176 between the third quarter of 2015-2016 and third quarter of 2014-2015, as the Agency has scaled down its personnel costs.
  • Expenditures on Professional and special services increased by $17,727 between the third quarter of 2015-2016 and the third quarter of 2014-2015, as the Agency was invoiced for services associated with web publishing, which it was not invoiced for in 2014-2015. In addition, legal services received from the Department of Justice, internal services received from Natural Resources Canada, and information technology services received from Shared Services Canada were invoiced in the third quarter of 2015-2016, whereas these services were invoiced in the fourth quarter of 2014-2015. 
  • Expenditures on Transportation and communications decreased by $1,104 between the third quarter of 2015-2016 and the third quarter of 2014-2015, as the Agency was invoiced for teleconferencing services in the third quarter of 2014-2015, whereas these services were not invoiced yet for 2015-2016.
  • No contribution funds were issued in the third quarter of 2015-2016, nor were there funds issued in the third quarter of 2014-2015.

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 ongoing obligations as set out in the Act.

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

The appointment of the Honourable Jim Carr as Minister of Natural Resources and responsible for the management and direction of the Agency occurred in the third quarter of 2015-2016.


Original signed by:

 

Table 1: Statement of Authorities (unaudited) (in dollars)
Budgetary Authorities Fiscal year 2015-2016 Fiscal year 2014-2015
*Total available for use for the year ending March 31,  2016 Used during the quarter ended December 31, 2015 Year-to-date used at quarter-end **Total available for use for the year ending March 31,
2015
Used during the quarter ended December 31, 2014 Year-to-date used at quarter-
end
Net Operating expenditures - Vote 30 701,215 145,561   253,563 701,325   140,420   294,529
Statutory Authority - Employee Benefit Plans   49,560 12,390 37,170  48,675 12,169   36,506
Total Budgetary Authorities 750,775 157,951   290,733 750,000   152,589 331,035

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

Table 2: Budgetary Expenditures by Standard Object (unaudited) (in dollars)
 Expenditures: Fiscal year 2015-2016 Fiscal year 2014-2015
*Planned expenditures for the year ending March 31, 2016 Expended during the quarter ended December 31, 2015 Year-to-date used at quarter-end **Planned expenditures for the year ending March 31, 2015 Expended during the quarter ended December 31, 2014 Year-to-date used at quarter-end
Personnel 344,560 55,692 176,538 343,675 66,868 232,923
Transportation and communications 30,000 - - 59,925 1,104 1,104
Information 1,000 - - 1,100 - -
Professional and special services 298,215 99,506 107,106 285,400 81,779 89,076
Rentals 60,000 2,715 6,935 35,525 2,710 7,962
Repair and maintenance 1,000 - - 100 - -
Utilities, materials and supplies 5,000 38 154 5,285 161 387
Acquisition of machinery and equipment 1,000 - - 8,990 - -
Transfer Payments 10,000 - - 10,000 - -
Other subsidies and payments - - - - (33)*** (417)***
Total net budgetary expenditures 750,775 157,951 290,733 750,000 152,589 331,035

* Includes only Authorities available for use and granted by Parliament at quarter-end: Main Estimates, Supplementary Estimates (A), and Supplementary Estimates (B).
** Includes only Authorities available for use and granted by Parliament at quarter-end: Main Estimates, Supplementary Estimates (A), and Supplementary Estimates (B).
*** Credit rebate issued by the Bank of Montreal MasterCard Service.