Quarterly Financial Report (unaudited) For the Quarter Ended June 30, 2016

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 2016. 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 Ltd.(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 2016-2017 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 and Supplementary Estimates (A) for the 2016-2017 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 First Fiscal Quarter and Comparative Results

This Quarterly Financial Report reflects the result as at June 30, 2016, including Main Estimates and Supplementary Estimates (A), and the details presented in this report focus on and compare the first quarter results of 2016-2017 with those of 2015-2016.

2.1 Authorities Available for Use and Planned Spending for the Year

As at June 30, 2016, the Agency has authorities available for use of $751,835 in 2016-2017 compared to $750,775 in 2015-2016, for a slight increase of $1,060. This increase is mainly due to the increased cost of the employee benefits plan.

In 2016–2017, 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 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 First Quarter

During the first quarter in 2016-2017, the Agency spent $26,425 or 4% of the total funding available, compared to $ 69,739 or 9% of the total funding available the same period in 2015-2016, for a net decrease of $43,314.The key differences are as follows:

  • Expenditures on Personnel salaries decreased by $46,709 between the first quarter of 2016-2017 and first quarter of 2015-2016, due to a reduction in the number of staff.
  • Expenditures on Professional and special services increased by $1,115 between the first quarter of 2016-2017 and the first quarter of 2015-2016, as the Agency incurred additional services from the Department of Justice.
  • Expenditures on Rentals increased by $2,279 between the first quarter of 2016-2017 and the first quarter of 2015-2016, as unlike last fiscal year, the Agency was invoiced for certain ongoing rental services incurred in the first quarter.
  • No contribution funds were issued in the first quarter of 2016-2017, nor were there funds issued in the first quarter of 2015-2016.

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

During the first quarter of 2016-17, Prime Minister Trudeau announced that effective August 1, 2016 Christyne Tremblay would become Deputy Minister of Natural Resources Canada, and as a result, the Commissioner for the Agency.

There were no other significant changes to operations, personnel and programs during the first quarter of 2016-2017.

Original signed by:

Christyne Tremblay                     
Commissioner

August 25 2016
Ottawa, Canada
Wayne Marshall
Director of Operations

August 15,2016
Calgary, Canada

 

Table 1: Statement of Authorities (unaudited) (in dollars)
  Fiscal year 2016-2017 Fiscal year 2015-2016
*Total available for use for the year ending
March 31,  2017
Used during the quarter ended
June 30, 2016
Year-to-date used at quarter-end *Total available for use for the year ending
March 31, 2016
Used during the quarter ended
June 30, 2015
Year-to-date used at
quarter-
end
Budgetary Authorities
Net Operating expenditures - Vote 1 701,095 13,740 13,740 701,215 57,349 57,349
Statutory Authority - Employee Benefit Plans 50,740 12,685 12,685 49,560 12,390 12,390
Total Budgetary Authorities 751,835 26,425   26,425 750,775   69,739 69,739

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

Table2: Budgetary Expenditures by Standard Object (unaudited) (in dollars)

  Fiscal year 2016-2017 Fiscal year 2015-2016
*Planned expenditures for the year ending
March 31, 2017
Expended during the quarter ended
June 30,
2016
Year-to-date used at
quarter-end
*Planned expenditures for the year ending
March 31, 2016
Expended during the quarter ended
June 30,
2015
Year-to-date used at
quarter-
end
Expenditures:
Personnel 345,740 18,943 18,943 344,560 65,652 65,652
Transportation and communications 4,000 - - 30,000 - -
Information 750 - - 1,000 - -
Professional and special services 379,095 5,114 5,114 298,215 3,999 3,999
Rentals 10,000 2,368 2,368 60,000 89 89
Repair and maintenance 250 - - 1,000 - -
Utilities, materials and supplies 2,000 - - 5,000 - -
Acquisition of machinery and equipment - - - 1,000 - -
Transfer Payments 10,000 - - 10,000 - -
Other subsidies and payments - - - - - -
Total net budgetary expenditures 751,835 26,425 26,425 750,775 69,739 69,739

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