Northern Pipeline Agency Quarterly Financial Report (unaudited) For the Quarter Ended June 30, 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. 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 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.

Highlights of the First Fiscal Quarter and Comparative Results

The following identifies and explains the results and significant variances between the first quarter of the current fiscal year and the first quarter of the previous fiscal year, as reported in the Statement of Authorities and the Budgetary Expenditures by Standard Objects tables at the end of this report.

Authorities Available for Use and Planned Spending for the Year

As of June 30, 2011, total authorities available for the year and planned spending for the year have increased by $6,950 compared to the same quarter of the previous year. This change is due to an increase in the Government's statutory contribution to the various employee benefit plans (the Public Service Superannuation Account, the Canada Pension Plan Account, etc).

Authorities Used and Amounts Expended During the Quarter

The increase in personnel costs from $59,604 to $104,991 is due to the addition of one and ½ FTEs on assignment with the NPA.

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

This Departmental Quarterly Financial Report (QFR) reflects the results of the current fiscal period in relation to the Main Estimates for which full supply was released on June 27, 2011.

Budget 2010 announced that the operating budgets of departments would be frozen at their 2010-11 levels for the fiscal years 2011-12 and 2012-13. Management is reviewing various options to adjust to this constraint in funding.

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 over the last fiscal year. A new Commissioner, Serge P. Dupont, was appointed in October, 2010.

Approved by:

 

August 25, 2011
Date Signed
Ottawa, Canada

Table 1: Statement of Authorities (Unaudited)

(in dollars)	Fiscal year 2011-2012			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*	Used during the quarter ended	Year-to-date used at
	March 31, 2012	June 30, 2011	quarter-end	March 31, 2011	June 30, 2010	quarter-end
Net Operating expenditures - Vote 30	1,203,000	99,982	99,982	1,203,000	61,470	61,470
Statutory Authority - Employee Benefit Plans	125,100	31,275	31,275	118,150	29,537	29,537
Total Budgetary Authorities	1,328,100	131,257	131,257	1,321,150	91,007	91,007

* Includes only Authorities available for use and granted by Parliament at quarter-end: Main Estimates

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
Budgetary Expenditures:	March 31, 2012	June 30, 2011	quarter-end	March 31, 2011	June 30, 2010	quarter-end
Personnel	820,100	104,991	104,991	813,150	59,604	59,604
Transportation and communication	130,000	15,854	15,854	130,000	20,384	20,384
Information	2,000		-	2,000	184	184
Professional and special services	313,000	4,740	4,740	313,000	5,240	5,240
Rentals	12,000	4,447	4,447	12,000	3,835	3,835
Repair and maintenance	2,000		-	2,000	-	-
Utilities, materials and supplies	4,000	1,225	1,225	4,000	1,745	1,745
Acquisition of machinery and equipment	-		-	-	-	-
Other subsidies and payments	45,000		0	45,000	15	15
Total net budgetary expenditures	1,328,100	131,257	131,257	1,321,150	91,007	91,007

* Includes only Authorities available for use and granted by Parliament at quarter-end: Main Estimates