Northern Pipeline Agency Quarterly Financial Report (unaudited) For the Quarter Ended December 31, 2011

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

Introduction

This quarterly financial report should be read in conjunction with the Main Estimates, Supplementary Estimates B and previous quarterly financial reports for the current year.  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.

Authority, Mandate and Program Activities

The Northern Pipeline Agency (hereinafter referred to as “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 by Foothills Pipe Lines Limited.  The pipeline is to carry natural gas from Prudhoe Bay, Alaska, to the lower 48 states.  Foothills Ltd. is now owned by TransCanada PipeLines.

Further details on the Agency’s authority, mandate and program activities are available in Part II of the Main Estimates.

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 B and Operating Budget Carry Forward for the 2011-2012 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 moneys 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

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

Highlights of the First Fiscal Quarter and Comparative Results

This Quarterly Financial Report should be read in conjunction with the first quarter and second quarter reports.  This report reflects and compares the results of the third quarter of 2011-2012 and 2010-11.

Authorities Available for Use and Planned Spending for the Year

Total authorities available for use for the year and planned spending for the current year have increased by $1,700,000 compared to the same quarter of the previous year. In 2011-12, the increase occurred  as follow:

• new authority for Contributions funding of $1,530,000 to conduct consultations, primarily with Aboriginal groups who may be affected by the Foothills PipeLines project.
• an increase in operating funds of $170,000 to support the consultation activities.

Authorities Used and Amounts Expended During the Quarter

Year-to-date spending in 2011-12 represents $1,029,560 (33.34%) of total funding available compared to $468,290 (35.13%) spent at the same time last year, a net increase of $561,270. 

During the third quarter in 2011-12, the Agency spent $585,114 or 18.95% of the total funding available, compared to $216,674 or 16.25%, the same period in 2010-11, for a net increase of $368,440, which are primarily as a result of personnel cost, professional and special services and transfer payment.

• Personnel expenditures increased by $139,008 between the third quarter of 2010-11 ($152,051) and 2011-12 ($291,059) due to increased number of employees on assignment with the Agency and the accrual of related salary costs to reflect NPA’s personnel costs accurately and on a timely basis. 
• The expense of professional and special services increased by $36,775 between the third quarters of 2010-11 ($42,512) and 2011-12 ($79,287) due to increased services rendered from Department of Justice and the use of temporary help. 
• Contribution funds of $184,800 were issued in the third quarter of 2011-12 to conduct consultations with Aboriginal groups.            

The Agency’s activities are dictated by the timing and pace of the planning and construction of the pipeline.  In concert with other federal government departments, the Agency continued to develop regulatory processes which accommodate modern environmental practices and takes into account the interests of Aboriginal communities, and territorial and provincial governments.

Risks and Uncertainties

The challenge for the Agency is to plan for an efficient and effective review and regulation of the project taking into account changes since the Northern Pipeline Act came into force and the pipeline was certificated in the late 1970s. Some of the changes in Yukon include new environmental legislation, devolution of some federal responsibilities, and settlement of most of the First Nations land claims along the pipeline route.

The Agency also faces the ongoing challenge of keeping pace with project development, i.e., to carry out its responsibilities and to make the necessary preparations.

Failure to make timely preparations could jeopardize the Government of Canada’s performance of its responsibilities under the 1977 Canada-US Agreement and the Northern Pipeline Act, and pursuant to TransCanada’s rights related to its existing certificates of Public Convenience and Necessity, and its existing pipeline easement in the Yukon.

Risk Mitigation Framework

The Agency identifies and responds to the pace of the project’s development by continuous corporate-level forecasting, tracking and management of issues that could affect or require a response from the Agency.  For example, the Agency will ramp up activities and human resource levels in anticipation of Stage Two of the Project in Canada. 

Significant Changes in Relation to Operations, Personnel and Programs

There have been no significant changes in relation to operations and programs during this quarter. Four additional FTEs were seconded to NPA to enhance consultation and technical capacity.

Approved by:

 

 

February 20, 2011
Date Signed
Ottawa, Canada

Table 1: Statement of Authorities ( Unaudited )

1 (in dollars)	Fiscal year 2011-2012			4 Fiscal year 2010-2011
	Total available for use for the year ending *	Used during the quarter ended	Year-to-date used at	Total available for use for the year ending*	5 Used during the quarter ended	Year-to-date used at
2 Budgetary Authorities	March 31, 2012	December 31, 2011	quarter-end	March 31, 2011	6 December 31, 2010	quarter-end
3 Net Operating expenditures - Vote 30	2,963,150	585,114	935,735	1,215,200	177,291	379,678
Statutory Authority - Employee Benefit Plans	125,100	-	93,825	118,150	39,383	88,612
Total Budgetary Authorities	3,088,250	585,114	1,029,560	1,333,350	216,674	468,290

 

Table 2: Budgetary Expenditures by Standard Object ( Unaudited )

(in dollars)	Fiscal year 2011-2012			Fiscal year 2010-2011
	Planned expenditures for the year ending*	Expended during the quarter ended	Year-to-date used at	Planned expenditures for the year ending*	Expended during the quarter ended	Year-to-date used at
Expenditures:	March 31, 2012	December 31, 2011	quarter-end	March 31, 2011	December 31, 2010	quarter-end
Personnel	820,100	291,059	679,434	813,150	152,051	344,648
Transportation and communication	188,897	17,599	56,037	133,122	16,899	59,447
Information	2,906	79	79	2,048		283
Professional and special services	454,805	79,287	85,353	320,517	42,512	48,375
Rentals	17,437	4,711	15,203	12,288	3,717	11,947
Repair and maintenance	2,906	-	-	2,048		-
Utilities, materials and supplies	5,813	6,592	7,667	4,096	1,483	3,564
Acquisition of machinery and equipment	-	987	987	-	-	-
Transfer payments	1,530,000	184,800	184,800	-	-	-
Other subsidies and payments	65,386	-	-	46,081	12	26
Total net budgetary expenditures	3,088,250	585,114	1,029,560	1,333,350	216,674	468,290

 * Includes only Authorities available for use and granted by Parliament at quarter-end: Main Estimates, Supplementary Estimates B and Operating Budget Carry Forward.