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 2021-22 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 2021-2022 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, 2021, including Main Estimates, and the details presented in this report focus on and compare the second quarter results of 2021-2022 with those of 2020-2021.

2.1 Authorities Available for Use and Planned Spending for the Year

As at September 30, 2021, the Agency has $571,820 in authorities available for use in 2021-2022 compared to $819,370 in 2020-2021, representing a decrease of $247,550 mainly due to two factors:  

• a reduction of the Main Estimates from $1,083,120 to $571,820 as a result of the transfer program ending as of March 31, 2021; and
• offset by the full release of supply of the 2021-2022 Main Estimates as of June 30, 2021 compared to a reduced supply of the Main Estimates in 2020-2021, due to the COVID-19 pandemic and limited sessions in the Spring 2020 for Parliament to study supply.

2.2 Authorities Used and Amounts Expended during the Second Quarter

During the second quarter of 2021-2022, the Agency spent $20,780 or 4% of the total funding available, compared to $22,521 or 3% of the total funding available the same period in 2020-2021, for a net decrease of $1,741.  This net decrease compared to the second quarter last year was primarily due to two factors:

• a slight decrease in salary costs due to a change in staffing levels; and
• offset by a slight increase in rental costs.

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

Subsequent to quarter end, Prime Minister Justin Trudeau appointed the Honourable Jonathan Wilkinson as Minister of Natural Resources.

No other significant change in relation to operations, personnel or programs occurred during the second quarter of 2021-2022. However, there has been an impact on how the Agency delivers its operations and programs, with all of its employees continuing to work from home due to COVID-19 pandemic.

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

Budgetary Authorities	Fiscal year 2021-2022			Fiscal year 2020-2021
	Footnote *Total available for use for the year ending March 31, 2022	Used during the quarter ended September 30, 2021	Year-to-date used at quarter-end	Footnote *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
Net Operating expenditures - Vote 1	540,000	12,825	26,915	791,250	15,491	38,209
Statutory Authority - Employee Benefit Plans	31,820	7,955	15,910	28,120	7,030	14,060
Total Budgetary Authorities	571,820	20,780	42,825	819,370	22,521	52,269

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

Expenditures:	Fiscal year 2021-2022			Fiscal year 2020-2021
	Footnote *Planned expenditures for the year ending March 31, 2022	Expended during the quarter ended September 30, 2021	Year-to-date used at quarter-end	Footnote *Planned expenditures for the year ending March 31, 2021	Expended during the quarter ended September 30, 2020	Year-to-date used at quarter-end
Personnel	246,820	15,589	37,634	170,620	17,785	37,533
Transportation and communication	25,000	-	-	18,750	-	-
Information	1,000	-	-	750	-	-
Professional and special services	280,000	-	-	210,000	-	10,000
Rentals	12,000	5,191	5,191	9,000	4,736	4,736
Repair and maintenance	1,000	-	-	750	-	-
Utilities, materials and supplies	1,000	-	-	750	-	-
Acquisition of machinery and equipment	5,000	-	-	3,750	-	-
Transfer Payments	-	-	-	405,000	-	-
Total net budgetary expenditures	571,820	20,780	42,825	819,370	22,521	52,269