Alberta Energy Regulator
Consolidated Financial Statements
For the Year Ended March 31, 2024

Statement of Management Responsibility
Independent Auditor's Report
Consolidated Statement of Operations
Consolidated Statement of Financial Position
Consolidated Statement of Change in Net Financial Assets
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Schedules to the Consolidated Financial Statements

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying consolidated ﬁnancial statements of the Alberta Energy Regulator and all otherinforma�on rela�ng to the AER contained in this annual report have been prepared and presented bymanagement, who is responsible for the integrity and fair presenta�on of the informa�on.
These consolidated ﬁnancial statements are prepared in accordance with Canadian public sector
accoun�ng standards. The consolidated ﬁnancial statements necessarily include some amounts that are
based on informed judgments and best es�mates of management. The ﬁnancial informa�on contained
elsewhere in this annual report is consistent with that in the consolidated ﬁnancial statements.
Management is responsible for maintaining an eﬀec�ve system of internal controls designed to provide
reasonable assurance that ﬁnancial informa�on is reliable, transac�ons are properly authorized, assets
are safeguarded and liabili�es are recognized.
The Auditor General of Alberta, the AER’s external auditor appointed under the Auditor General Act,
performed an independent external audit of these consolidated ﬁnancial statements in accordance with
Canadian generally accepted audi�ng standards, and has expressed his opinion in the accompanying
Independent Auditor’s Report.
The Board of Directors is responsible for ensuring that management fulﬁlls its responsibili�es forﬁnancial repor�ng and internal controls. The Board of Directors exercises this responsibility through the
Audit and Finance Commitee, composed of Directors who are not employees of the regulator. The Audit
and Finance Commitee meets with the internal auditors and the external auditors-both in the presence
and in the absence of management to discuss their audit, including any ﬁndings as to the integrity ofﬁnancial repor�ng processes and the adequacy of our systems of internal controls. The internal andexternal auditors have full and unrestricted access to the Audit and Finance Commitee.

[Original signed by Laurie Pushor]
President and Chief Execu�ve Oﬃcer[Original signed by Mike Dalton]
Vice-President, Finance and Chief Financial Oﬃcer

Date: May 16, 2024

Security Classiﬁca�on: Protected A

Independent Auditor’s Report
To the Board of Directors of the Alberta Energy Regulator
Report on the Consolidated Financial Statements

OpinionI have audited the consolidated financial statements of the Alberta Energy Regulator (the Group),
which comprise the consolidated statement of financial position as at March 31, 2024, and theconsolidated statements of operations, change in net financial assets, and cash flows for the year
then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies.

In my opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2024, and the results of its
operations, its changes in net financial assets, and its cash flows for the year then ended inaccordance with Canadian public sector accounting standards.

Basis for opinion
I conducted my audit in accordance with Canadian generally accepted auditing standards. My
responsibilities under those standards are further described in the Auditor's Responsibilities for the
Audit of the Consolidated Financial Statements section of my report. I am independent of the Group inaccordance with the ethical requirements that are relevant to my audit of the consolidated financial
statements in Canada, and I have fulfilled my other ethical responsibilities in accordance with theserequirements. I believe that the audit evidence I have obtained is sufficient and appropriate toprovide a basis for my opinion.

Other information
Management is responsible for the other information. The other information comprises theinformation included in the Annual Report, but does not include the consolidated financial
statements and my auditor’s report thereon. The Annual Report is expected to be made available tome after the date of this auditor’s report.
My opinion on the consolidated financial statements does not cover the other information and I do
not express any form of assurance conclusion thereon.

In connection with my audit of the consolidated financial statements, my responsibility is to readthe other information identified above and, in doing so, consider whether the other information ismaterially inconsistent with the consolidated financial statements or my knowledge obtained in theaudit, or otherwise appears to be materially misstated.
If, based on the work I will perform on this other information, I conclude that there is a material
misstatement of this other information, I am required to communicate the matter to those charged
with governance.
Classification: PublicResponsibilities of management and those charged with governance for the consolidated
financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with Canadian public sector accounting standards, and for such internal
control as management determines is necessary to enable the preparation of the consolidated
financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless an intention exists to liquidate or tocease operations, or there is no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting
process.

Auditor's responsibilities for the audit of the consolidated financial statements
My objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor's report that includes my opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with Canadian generally
accepted auditing standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, I exercise
professional judgment and maintain professional skepticism throughout the audit. I also:• Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If I conclude that a material uncertainty exists, I am required to draw attention in myauditor’s report to the related disclosures in the consolidated financial statements or, if suchdisclosures are inadequate, to modify my opinion. My conclusions are based on the audit
evidence obtained up to the date of my auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
Classification: Public•Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. I am responsible for the direction, supervision and performance of the group audit.
I remain solely responsible for my audit opinion.

I communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that I identify during my audit.
[Original signed by W. Doug Wylie FCPA, FCMA, ICD.D]
Auditor General
May 16, 2024
Edmonton, Alberta

Classification: Public

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF OPERATIONSYEAR ENDED MARCH 31, 2024

2024

2023

Budget(Note 5, Schedule 3)

Revenues
Administration fees
Orphan fund levies and transfers (Note 6)
Government of Alberta grants
Information, services and fees
Investment income$

Expenses
Energy regulation (Schedule 1)
Orphan well abandonment (Note 6)

Annual operating surplus
Accumulated surplus at beginning of year
Accumulated surplus at end of year$

217,419
135,000
12,356
1,299
2,700
368,774

Actual(in thousands)$

218,234
150,241
14,1852,701
7,223
392,584

Actual

$201,42980,294
16,7542,576
4,085
305,138

231,274
135,000
366,274

237,132
150,241
387,373

223,496
80,294
303,790

2,500
74,93577,435

5,211
74,93580,146

1,348
73,58774,935The accompanying notes and schedules are part of these consolidated financial statements.

$$

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT MARCH 31, 2024

2024

2023
(in thousands)

Financial assets
Cash and cash equivalents (Note 7)
Accounts receivable (Note 8)
Portfolio investments (Note 9)
Pension assets (Note 16)$

Liabilities
Accounts payable and other accrued liabilities (Note 10)
Payable to Orphan Well Association
Deferred revenue (Note 11)
Deferred lease incentives (Note 13)
Net financial assets

19,142
2,641
19,902
13,73755,422$

43,171
2,927
9,903
56,001

25,317
1,459
6,588
8,387
41,751
13,671

26,017
2,419
7,657
9,849
45,942
10,05957,723
8,752
66,47556,6728,204
64,876

Non-financial assets
Tangible capital assets (Note 17)
Prepaid expenses and other assets

Net assets
Accumulated surplus (Note 18)$

Asset Retirement Obligation (Note 15)
Contractual rights (Note 19)
Contingent liabilities (Note 20)
Contractual obligations (Note 21)
The accompanying notes and schedules are part of these consolidated financial statements.

80,146$74,935ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL ASSETSYEAR ENDED MARCH 31, 2024

2024

2023

Budget(Note 5, Schedule 3)

Annual operating surplus
Acquisition of tangible capital assets (Note 17)
Amortization of tangible capital assets (Note 17)
Net loss on disposal and write-down of tangible capital assets
Proceeds on disposal of tangible capital assets(Increase)/decrease in prepaid expenses and other assets
Decrease in spent deferred capital contributions (Note 11)
Increase in net financial assets
Net financial assets at beginning of year
Net financial assets at end of year

$

2,500

Actual(in thousands)
$

5,211

$

(14,114)
12,903
148
12
(548)
3,612
10,05913,671(14,500)
12,000$10,05910,059The accompanying notes and schedules are part of these consolidated financial statements.

Actual

$

1,348

$

(12,808)
13,114
418
47
438
(240)
2,317
7,742
10,059

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF CASH FLOWSYEAR ENDED MARCH 31, 2024

2024

2023
(in thousands)

Operating transactions
Annual operating surplus
Non-cash items included in annual operating surplus:
Amortization of tangible capital assets (Note 17)
Change in pension assets
Net loss on disposal and write-down of tangible capital assets (Note 17)
Bad debt expense
Amortization of deferred lease incentives (Note 13)

$

5,211

$

1,348

12,903(3,834)148
1,325(1,462)
14,291(1,039)
(548)
(700)
(960)
(1,069)
9,975

13,114(5,945)418
34(1,466)
7,503(1,277)
438
(708)
1,355
(3,705)
3,606

Capital transactions
Acquisition of tangible capital assets (Note 17)
Proceeds on disposal of tangible capital assets
Cash applied to capital transactions(14,114)12(14,102)(12,808)47(12,761)

Investing transactions
Purchase of portfolio investments (Note 9)
Cash applied to investing transactions(19,902)(19,902)

-

-

(240)
(240)

(24,029)
43,171
19,142(9,395)52,56643,171

Increase in accounts receivable(Increase)/decrease in prepaid expenses and other assets
Decrease in accounts payable and other accrued liabilities(Decrease)/increase in payable to Orphan Well Association
Decrease in deferred revenue
Cash provided by operating transactions

Financing transactions
Decrease in spent deferred capital contributions (Note 11)
Cash applied to financing transactions
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year$

The accompanying notes and schedules are part of these consolidated financial statements.

$

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 1 AUTHORITY
The Alberta Energy Regulator (AER) is an independent and quasi-judicial organization of the Government of Alberta. The AER operates under the
Responsible Energy Development Act. The AER's mandate provides for the efficient, safe, orderly and environmentally responsible development ofenergy and mineral resources in Alberta through regulatory activities. This includes allocating and conserving water resources, managing public lands,
and protecting the environment while providing economic benefits for all Albertans. The AER is exempt from income taxes under the Income Tax Act.
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES
These consolidated financial statements are prepared in accordance with Canadian Public Sector Accounting Standards (PSAS).
Reporting Entity and Method of Consolidation
The consolidated financial statements reflect the assets, liabilities, revenues and expenses of the AER, which is composed of all components controlled by
the AER. The Orphan Fund is a fund retained and administered by the AER. The AER collects an orphan fund levy and a large facility program orphan
levy, and transfers the funds to the Orphan Well Association through the orphan fund. The AER also transfers funds for first time licensee application fees,
including regulator directed transfer fees, and forfeited security deposits through the orphan fund. The AER and the orphan fund are consolidated using
the line-by-line method.
Basis of Financial Reporting
Revenues
All revenues are reported on the accrual basis of accounting.
The AER recognizes revenue from transactions with no performance obligations, such as administration fees and orphan fund levies, at their realizablevalue. Revenue from transactions with performance obligations, including information, services and fees, is recognized when the AER provides thepromised goods and/or service to a payor.
Cash received for goods and/or services not yet provided before year end is recognized as deferred revenue and recorded in accounts payable and otheraccrued liabilities.
Government of Alberta grants
Transfers from the Government of Alberta are referred to as provincial grants.
Provincial grants without stipulations for the use of the transfer are recognized as revenue when the transfer is authorized and the AER meets the eligibility
criteria (if any). Provincial grants with stipulations for the use of the transfer are recognized as deferred revenue and subsequently recognized when the
AER meets the stipulations.
Investment income
Investment income includes interest income and realized gains and losses on the sale of portfolio investments. Once realized, these gains or losses arerecognized in the Consolidated Statement of Operations.
Expenses
Expenses are reported on an accrual basis. The cost of all goods consumed and services received during the year are expensed.
Employee future benefits
The AER maintains its own defined benefit Senior Employees Pension Plan (SEPP) and two supplementary pension plans to compensate senior staff who
do not participate in the government management pension plans. Retirement benefits are based on each employee's years of service and remuneration.
Pension assets represent the sum of the accumulated cash contributions less the sum of the current and prior years' pension expense.

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (continued)
Basis of Financial Reporting (continued)
Employee future benefits (continued)
Accrued benefit obligations are actuarially determined using the projected benefit method prorated on length of service and management's best estimateof expected plan investment performance, projected employees' compensation levels and retirement age of employees.
Accrued benefit obligations and pension benefit costs for the year are calculated using the expected rate of return on plan assets as the discount rate,
which is determined using market values of plan assets.
Actuarial gains and losses are amortized over the average remaining service period of the active employees, which is 11.1 years (2023 - 11.2 years).
Past service cost arising from plan amendments is accounted for in the period of the plan amendments.
Gains and losses determined upon a plan curtailment are accounted for in the period of curtailment.
The AER participates in the Government of Alberta's multi-employer pension plans: Management Employees Pension Plan, Public Service Pension Planand Supplementary Retirement Plan for Public Service Managers. Defined contribution plan accounting is applied to these plans as the AER has
insufficient information to apply defined benefit plan accounting. Accordingly, pension expense comprises employer contributions to the plans that are
required for its employees during the year, which are calculated based on actuarially pre-determined amounts that are expected to provide the plans'
future benefits.
Valuation of financial assets and liabilities
The AER's financial assets and liabilities are generally measured as follows:
Financial Statement Component

Measurement

Cash and cash equivalents
Accounts receivable
Portfolio investments
Pension assets
Accounts payable and other accrued liabilities
Payable to the Orphan Well Association
Environmental Liabilities
Deferred lease incentives

Cost
Lower of cost or net recoverable value
Amortized cost
Lower of cost or net recoverable value
Cost
Cost
Cost
Amortized cost

The AER has not designated any financial assets or liabilities in the fair value category, does not have any significant foreign currency transactions anddoes not hold any derivative contracts. The AER has no significant remeasurement gains or losses and consequently has not presented a Consolidated
Statement of Remeasurement Gains and Losses.
Financial assets
Financial assets are assets that could be used to discharge existing liabilities or finance future operations and are not for consumption in the normal
course of operations.
Financial assets include cash and the AER's financial claims on external organizations and individuals at year end.
Cash and cash equivalents
Cash comprises cash on hand, externally restricted cash and demand deposits.
Accounts receivable
Accounts receivable are recognized at the lower of cost or net recoverable value. A valuation allowance is recognized when recovery is uncertain.

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (continued)
Basis of Financial Reporting (continued)
Portfolio investments
Portfolio investments are recognized at amortized cost. Investment premiums and discounts are amortized proportionately over the term of the respective
investments using an effective interest method. Any declines in market value below costs are considered to be temporary and therefore no write-downs
have been recorded.
Liabilities
Liabilities are present obligations of the AER to external organizations and individuals arising from past transactions or events occurring before the year
end, the settlement of which is expected to result in the future sacrifice of economic benefits. They are recognized when there is an appropriate basis ofmeasurement and management can reasonably estimate the amounts. Liabilities include all financial claims payable by the AER at fiscal year end.
Deferred lease incentives
Deferred lease incentives, consisting of leasehold improvement costs, reduced rent benefits and rent-free periods, are amortized on a straight-line basis
over the term of the leases.
Environmental liabilities
Liability for Contaminated Sites:
Contaminated sites are a result of contamination of a chemical, organic or radioactive material or live organism that exceeds an environmental standard,
being introduced into soil, water or sediment.
A liability for remediation of a contaminated site may arise from an operation that is either in productive use or no longer in productive use and may also
arise from an unexpected event resulting in contamination. The resulting liability is recognized when all of the following criteria are met:i. an environmental standard exists;
ii. contamination exceeds the environmental standard;iii. the AER is directly responsible or accepts responsibility;
iv. it is expected that future economic benefits will be given up; andv. a reasonable estimate of the amount can be made.
Contingent liabilities
A contingent liability is recognized when:i. there is an existing condition or situation;
ii. there is an expected future event that will resolve the uncertainty as to whether a present obligation to sacrifice economic benefits exists;
iii. it is likely that a future event will confirm that a liability has been incurred at the date of the financial statements; andiv. a reasonable estimate of the amount can be made.
Non-financial assets
Non-financial assets are acquired, constructed or developed assets that do not normally provide resources to discharge existing liabilities, but instead:(a) are normally employed to deliver AER services;(b) may be consumed in the normal course of operations; and(c) are not for sale in the normal course of operations.
Non-financial assets of the AER include tangible capital assets, prepaid expenses and other assets.

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (continued)
Basis of Financial Reporting (continued)
Tangible capital assets
Tangible capital assets are recognized at cost less accumulated amortization, which includes amounts that are directly related to the acquisition, design,
construction, development, improvement or betterment of the assets. Cost includes overhead directly attributable to construction and development of theasset.
The cost, less residual value, of the tangible capital assets, excluding land, is amortized over their estimated useful lives as follows:
Leasehold improvements
Straight line
Term of the lease
Furniture and equipment
Straight line
3 - 10 years
VehicleStraight line
5 - 15 years
Computer hardware
Straight line
3 - 10 years
Computer software - purchased
Straight line
3 - 10 years
Computer software - developed
Straight line
3 - 10 years
Amortization is only expensed when the tangible capital asset is put into service.
Work-in-progress, which may include developed computer software and leasehold improvements, is not amortized until a project is complete and the asset
is put into service.
Tangible capital assets are written down when conditions indicate that they no longer contribute to the AER's ability to provide goods and services, orwhen the value of future economic benefits associated with the tangible capital assets is less than their net book value. The net write-downs areaccounted for as an expense in the Consolidated Statement of Operations.
Prepaid expenses
Prepaid expenses are recognized at cost and amortized based on the terms of the agreements.
Measurement uncertainty
Measurement uncertainty exists when there is a variance between the recognized or disclosed amount and another reasonably possible amount,whenever estimates are used. The amounts recognized for amortization of tangible capital assets are based on estimates of the useful life of the related
assets. Accrued defined benefit obligations are subject to measurement uncertainty due to the use of actuarial assumptions. The resulting estimates arewithin reasonable limits of materiality and are in accordance with the AER's significant accounting policies.
Estimates of contingent liabilities for contaminated sites are subject to measurement uncertainty because the existence and extent of contamination, theresponsibility for clean-up, and the timing and costs of remediation cannot be reasonably estimated in all circumstances. The degree of measurement
uncertainty cannot be reasonably determined.
Note 3 CHANGE IN ACCOUNTING STANDARDS
Effective April 1, 2023, the AER adopted the new accounting standard PS 3400 Revenue. There were no changes to the measurement of revenues on
adoption of the new standard.
At the beginning of the same fiscal reporting period, the AER also adopted the PSG-8 Purchased Intangibles Guideline. There was no impact on theConsolidated Financial Statements as a result of adoption of the new guideline.

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 4 FUTURE CHANGES IN ACCOUNTING STANDARDSThe Public Sector Accounting Board has approved the following accounting standards, which are effective for fiscal years starting on or after April 1, 2026:
The Conceptual Framework for Financial Reporting in the Public Sector
The Conceptual Framework is the foundation for public sector financial reporting standard setting. It replaces the conceptual aspects of Section PS
1000 Financial Statement Concepts and Section PS 1100 Financial Statement Objectives. The conceptual framework highlights considerations
fundamental for the consistent application of accounting issues in the absence of specific standards.
PS 1202 Financial Statement Presentation
Section PS 1202 sets out general and specific requirements for the presentation of information in general purpose financial statements. The financial
statement presentation principles are based on the concepts within the Conceptual Framework.
Management is currently assessing the impact of the conceptual framework and the standard on the Consolidated Financial Statements.
Note 5 BUDGETThe budget and budget adjustments reflected on Schedule 3 have been approved by the Government of Alberta.
Note 6 ORPHAN WELL ABANDONMENT(in thousands)
The Government of Alberta has delegated the authority to manage the abandonment and reclamation of wells, facilities, and pipelines that are licensed to
defunct licensees to the Orphan Well Association. The AER collects an orphan fund levy and a large facility program orphan levy, and transfers the funds
to the Orphan Well Association through the orphan fund. The AER also transfers funds for first time licensee application fees, including regulator directedtransfer fees, and forfeited security deposits through the orphan fund. During the year ended March 31, 2024, the AER invoiced $135,516 (2023 - $78,090)
in levies and penalties. Additionally, the AER collected and transferred $14,260 (2023 - $1,535) in forfeited security deposits and $465 (2023 - $669) inapplication fees.
Note 7 CASH AND CASH EQUIVALENTS(in thousands, unless otherwise noted)
Cash and cash equivalents are held in an account with a Canadian chartered bank and earn interest calculated based on the average monthly cash
balance. The funds are available to be withdrawn upon request. During the year ended March 31, 2024, the AER earned interest at an annual averagerate of 5.5% (2023 - 3.5%).
Cash and cash equivalents includes restricted funds of $6,411 (2023 - $7,447), as reflected in deferred revenue (discussed in Note 11).
Note 8 ACCOUNTS RECEIVABLE(in thousands)
Accounts receivable are unsecured and non-interest bearing.
2024

Accounts receivable

Gross amount

Allowance for
doubtfulaccounts

$

$

4,091

2023
Net
recoverable
value(1,450) $

2,641

Net
recoverable
value
$

2,927

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 9 PORTFOLIO INVESTMENTS(in thousands)

Bonds
Other

2024
Book value
19,86933$
19,902$

2023

Fair value
19,621
33$
19,654

Book value$$

Fair value--$

The bonds are intended to be held long term with interest rates from 2.0% to 6.2% and maturity dates between 2026 and 2034. Any declines in market
value below costs are considered to be temporary and therefore no write-downs have been recorded.
Note 10 ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES(in thousands)
Trade and other accrued liabilities
Lease termination payable$

Accrued salaries and benefits$

2024
11,8393,716
9,762
25,317

$

$

2023
9,743
5,820
10,45426,017Note 11 DEFERRED REVENUE(in thousands)
Deferred revenue consists of the following:
Deferred contributions(1)Unearned revenue

$

2024
6,411
177

$

2023
7,447
210

$

6,588

$

7,657

(1) Deferred contributions
2024

Balance at beginning of year

Government ofAlberta$
7,134 $

2023

Other
313

$

Total
7,447

$

Total
11,159Cash contributions received/receivable during year

12,928627

13,555

13,158Less: amounts recognized as revenue(14,185)(311)(14,496)(16,870)

Less: unused amounts returned
Balance at end of year

(95)
$

5,782

$

629

(95)
$

6,411

$

7,447

Note 12 FINANCIAL INSTRUMENTS
The AER has the following financial instruments: cash and cash equivalents, accounts receivable, portfolio investments, accounts payable and otheraccrued liabilities, and payable to the Orphan Well Association.

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 12 FINANCIAL INSTRUMENTS (continued)
Financial Risk Management
The AER has exposure to the following risks from its use of financial instruments:(a) Liquidity risk
Liquidity risk is the risk that the AER will encounter difficulty in meeting obligations associated with its financial liabilities. Liquidity requirements of the AER
are met primarily through the collection of funding at the beginning of the year to fund operating expenses and capital expenditures throughout the year.
The AER manages liquidity risk by having established budget processes and regularly monitoring cash flows to ensure the necessary funds are on hand tofulfill upcoming obligations. In addition, the AER maintains a revolving line of credit which provides financial flexibility to allow the AER to meet its
obligations if funding cannot be collected on a timely basis.
(b) Credit risk
The AER is exposed to credit risk from potential non-payment of accounts receivable and from the failure of a counterparty to fully honour its financial
obligations with the AER. A substantial portion of the AER's accounts receivable include balances due from operators in the oil and gas industry, and are
subject to normal industry credit risk. The AER regularly monitors the financial status of operators and assesses the collectability of accounts receivable.
The AER's maximum exposure to credit risk is limited to the carrying amount of accounts receivable presented in the Consolidated Statement of Financial
Position at the reporting date. The AER established a valuation allowance that corresponds to the specific credit risk of operators, historical trends andeconomic circumstances.
The AER is exposed to credit risk associated with the underlying debt securities held in investment funds managed by the Canadian Imperial Bank ofCommerce (CIBC). All of the AER's investments in bonds are with counterparties considered to be investment grade (AAA to BBB-) at March 31, 2024.
(c) Interest Rate Risk
The AER is exposed to interest rate associated with the underlying interest-bearing securities held in the investment funds. Interest rate risk relates to thepossibility that the fair value of investments will change due to future fluctuations in market interest rates. In general, investment returns from bonds are
sensitive to changes in the level of interest rates, with longer term interest bearing securities being more sensitive to interest rate changes than shorterterm bonds. If interest rates increased by 1%, and all other variables are held constant, the potential loss in fair value to the AER would be approximately
6.4% of total investments.
The following table summarizes the terms to maturity of interest-bearing securities held in bond investments at March 31, 2024.

Class< 1 yearBonds-

1-5 years

Average effective market

Over 5 years
4

5

5.4%

Note 13 DEFERRED LEASE INCENTIVES(in thousands)
The AER has entered into various lease agreements which provide for lease incentives comprising reduced rent benefits, rent-free periods and leasehold
improvement costs. These amounts are amortized on a straight-line basis over the term of the lease.
2024

Balance at beginning of year
Amortization
Balance at end of year

Reduced rent
Leaseholdbenefits andimprovement
rent-free
costs
periods$
8,234 $
1,615 $
(1,133)(329)$
7,101 $
1,286 $

2023

Total
9,849 $
(1,462)
8,387 $

Total
11,315(1,466)
9,849

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 14 ENVIRONMENTAL LIABILITIES(in thousands, unless otherwise noted)
The AER has a mandate to protect public safety and the environment. As at March 31, 2024, the AER is administering 30 (2023 – 29) legacy sites onbehalf of the Government of Alberta. Of these sites, during the year ended March 31, 2024, the AER identified one (2023 – one) site as having immediate
public safety and environmental risk, and the AER needed to take appropriate action to mitigate these risks. During the year ended March 31, 2024, the
AER incurred $4 (2023 - $3) in costs to mitigate immediate public safety and environmental risks. Costs to mitigate immediate public safety or
environmental risks are costs where the AER has completed protective or remediation work at legacy sites. Costs for ongoing assessment and monitoringare included.
As at March 31, 2024, the AER is not responsible, nor has it accepted responsibility, for performing remediation and reclamation work at contaminatedsites. The AER has $nil (2023 - $nil) environmental liabilities recorded.
Note 15 ASSET RETIREMENT OBLIGATION
Tangible capital assets are assessed for asset retirement obligations annually. Asset retirement obligations are initially measured as of the date the legal
obligation was incurred, based on management's best estimate of the amount required to retire tangible capital assets and subsequently re-measured
taking into account any new information and the appropriateness of assumptions used. At March 31, 2024, the estimate of the liability is insignificant andtherefore no liability was recognized. During the year ended March 31, 2024, the AER incurred $nil (2023 - $nil) in costs to settle the obligation.
Note 16 EMPLOYEE FUTURE BENEFITS(in thousands, unless otherwise noted)
The AER participates in the Government of Alberta's multi-employer pension plans: Management Employees Pension Plan, Public Service Pension Planand Supplementary Retirement Plan for Public Service Managers. For the year ended March 31, 2024, the expense for these pension plans is equal to thecontributions of $12,357 (2023 - $12,207) and is included in salaries, wages and employee benefits on Schedule 1. The AER is not responsible for future
funding of the plan deficit other than through contribution increases.
In addition, the AER maintains its own defined benefit Senior Employees Pension Plan (SEPP) and two supplementary pension plans to compensate
senior staff who do not participate in the government management pension plans. Retirement benefits are based on each employee's years of service andremuneration.
All the information presented in the note below is related to the AER's defined benefit pension plans.
The effective date of the most recent actuarial funding valuation for SEPP was December 31, 2021. The accrued benefit obligation as at March 31, 2024 isbased on the extrapolation of the results of this valuation. The effective date of the next required funding valuation for SEPP is December 31, 2024.
Pension plan assets are valued at market values. During the year ended March 31, 2024, the weighted average actual return on plan assets was 6.6% (1.9% in 2023).
Significant weighted average actuarial and economic assumptions used to value accrued benefit obligations and pension benefit costs were as follows:
Accrued benefit obligations

2024

Discount rate
Rate of compensation increase

6.0% until March 31, 2024,
3.0% thereafterLong-term inflation ratePension benefit costs for the year
Discount rate
Expected rate of return on plan assets
Rate of compensation increase

2023
5.3%

2.0%
2024
5.4%
5.4%
6.0% until March 31, 2024,
3.0% thereafter

5.4%
4.0% until March 31, 2023,
6.0% until March 31, 2024,
3.0% thereafter
2.0%
2023
4.5%
4.5%
4.0% until March 31, 2023,
3.0% thereafter

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 16 EMPLOYEE FUTURE BENEFITS (continued)(in thousands, unless otherwise noted)
The funded status and amounts recognized in the Consolidated Statement of Financial Position were as follows:

2024
Market value of plan assets
Accrued benefit obligations
Plan surplus
Unamortized actuarial gains
Pension assets

$

$

2023

90,265 $(72,374)
17,891(4,154)
13,737 $81,577(67,126)
14,451(4,548)9,903

The pension benefit costs for the year included the following components:

2024
Current period benefit cost
Interest cost
Expected return on plan assets
Amortization of actuarial gains

$

$

2023

2,421 $
3,705
(4,549)(280)
1,297 $

3,921
3,277
(3,462)(67)
3,669

Additional information about the defined benefit pension plans is as follows:
Benefits paid
AER contributions
Employees' contributions

$

2024
2,756
5,134
850

$

2023
4,189
9,615
751

The asset allocation of the defined benefit pension plans' investments was as follows:
Equity securities
Debt securities
Alternatives
Other

2024
44.9%
24.6%
19.7%
10.8%
100.0%

2023
45.4%
24.3%
18.5%
11.8%
100.0%

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 17 TANGIBLE CAPITAL ASSETS(in thousands)

Estimated useful life
Historical cost

2024

Land

Leaseholdimprovements

Furniture andequipment

Indefinite

Term of thelease

3-10 years

(2)

2023

Vehicle (1)Computerhardware andsoftware5-15 years

3-10 years

Total

Total

(2)

(3)

Beginning of year
Additions
Disposals, including write-downs$

Accumulated amortization
Beginning of year$
Amortization expense
Effect of disposals, including writedowns
Transfers and adjustments (4)

282
282

$

47,623
1,477
49,100$12,902 $257(660)
12,499584
584$

140,256 $
11,796(4,275)
147,777

201,063 $14,114(4,935)210,242

197,386
12,808(9,131)
201,063-$

26,9892,646$

10,029941

74$

107,373
8,287$$

144,391
11,948

139,943
13,114(4,185) $379 $111,854(4,775)955
152,519
57,723-

29,635

$

(590)
576
10,95674

Net book value at March 31, 2024

$

282

$

19,465

$

1,543

$

510

$

35,923

Net book value at March 31, 2023

$

282

$

20,634

$

2,873

$

-

$

32,883$$(8,666)
144,391$

56,672(1) A new tangible capital asset class has been added effective April 1, 2023 prospectively for purchased vehicles.
(2) The estimated useful lives for furniture and equipment, and computer hardware and software have changed to 3-10 years following a policy review. These changes inaccounting estimate have been accounted for prospectively, effective April 1, 2023.
(3) Historical costs include work-in-progress at March 31, 2024 totalling $12,055 (2023 - $6,381) comprised of: computer hardware and software of $10,896 (2023 -$6,369) and leasehold improvements of $1,159 (2023 - $12).
(4) Transfers and adjustments solely relate to accounting policy alignments and reclassifications between capital asset categories.

Note 18 ACCUMULATED SURPLUS(in thousands)
Accumulated surplus is comprised of the following:
2024

2023

Net investment in tangible capital assets (1)Investments intangible capital Unrestrictedassets (1)net assets$
48,438 $26,497 $
5,211
2,184
(2,184)

Balance at end of year$

Balance at beginning of year
Annual operating surplus

50,622$

29,524(1) Excludes leasehold improvement costs received by the AER as a lease incentive and related amortization.

$

Total
74,935
5,211
80,146$$

Total
73,587
1,348
74,935ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 19 CONTRACTUAL RIGHTS(in thousands)
Contractual rights are rights of the AER to economic resources arising from contracts or agreements that will result in both assets and revenues in the
future when the terms of those contracts or agreements are met.
During the year ended March 31, the AER collected the following amounts for its contractual rights under operating subleases:
2023

2024
Contractual rights from operating subleases

$

592

$

543

$

433
439
182
1,054

As at March 31, 2024, estimated amounts that will be received or receivable for each of the next five years are as follows:
2024-252025-262026-272027-282028-29

Note 20 CONTINGENT LIABILITIES(in thousands, unless otherwise noted)
The AER is involved in legal matters where damages are being sought. These matters may give rise to contingent liabilities.
Accruals have been made in specific instances where it is likely that losses will be incurred based on a reasonable estimate. As at March 31, 2024,
accruals totalling $25 (2023 - $1,312) have been recognized as a liability. The AER has been jointly named with the Government of Alberta in Athabasca
Chipewyan First Nation claim that has a total amount claimed of $500 million in March 2024, the outcome of which is not determinable.
The AER has identified various sites where contamination may exist and the level of contamination is unknown at this time. As at March 31, 2024, noliability has been recognized for these sites as the AER is acting as an administrator on behalf of the Government of Alberta. No liability for remediation onother sites has been recognized as the AER becoming responsible for these sites is unlikely. The AER’s ongoing efforts to monitor contaminated sites
may result in environmental remediation liabilities related to newly identified sites, change in the assessment or intended use of existing sites, or change in
responsibility. Any change to the environmental liabilities will be accrued in the year in which they are assessed as likely and measurable if they are
deemed to be the AER’s responsibility.

Note 21 CONTRACTUAL OBLIGATIONS(in thousands)
As at March 31, 2024, the AER had contractual obligations totalling $146,267 (2023 - $125,189).
Contractual obligations are obligations of the AER to others that will become liabilities in the future when the terms of those contracts or agreements aremet.
As at March 31, 2024, estimated payment requirements for obligations under operating leases and contracts for each of the next five years and thereafter
are as follows:
2024-252025-262026-272027-282028-29
Thereafter$$

54,57524,762
18,23814,122
11,704
22,866146,267

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 22 ASSETS UNDER ADMINISTRATION(in thousands)
The AER administers security deposits in accordance with specified acts and regulations. Security deposits are held on behalf of depositors with no powerof appropriation and therefore are not reported in these Consolidated Financial Statements. The AER does not have any financial risk associated withsecurity collected. Security, along with any interest earned, will be returned to the depositors upon meeting specified refund criteria. Security may be
forfeited and transferred to the Orphan Well Association for the cost of suspension, abandonment, site decontamination and surface land reclamation.
As at March 31, assets under administration included the following types of security deposits:
2024
Letters ofcreditCash
Liability Management Rating
programs and landfills
Mine Financial Security program
Other programs$$

107,155
118,461
11,869237,485$$

319,472
1,007,981
13,523
1,340,976

2023

Surety Bond$$

Note 23 COMPARATIVE FIGURES
Certain 2023 figures have been reclassified, where necessary, to conform to the 2024 presentation.
Note 24 APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS
These Consolidated Financial Statements were approved by the AER Board of Directors on May 16, 2024.

561,4225,628
567,050

Total$

426,627
1,687,864
31,020$ 2,145,511

Total
$

384,328
1,559,734
21,984$ 1,966,046

ALBERTA ENERGY REGULATORENERGY REGULATION EXPENSES - DETAILED BY OBJECTYEAR ENDED MARCH 31, 2024

Schedule 1

2024

2023
(in thousands)

Salaries, wages and employee benefits
Consulting services
Computer services
Buildings
Amortization of tangible capital assets
Administrative
Travel and transportation
Equipment rent and maintenance
Loss on disposal and write-down of tangible capital assets$$

155,370
23,38020,66819,056
12,903
2,798
2,511
298
148
237,132$$

147,068
22,60817,801
18,848
13,114
1,703
1,640
296
418
223,496

ALBERTA ENERGY REGULATORSALARY AND BENEFITS DISCLOSURE
YEAR ENDED MARCH 31, 2024

Schedule 2

2023
Restated (4)

2024
Base
salary (1)Othernon-cashbenefits (3)Other cash
benefits (2)

Total

Total

(in thousands)
Position
Board Members (5)President and Chief Executive Officer
Chief Hearing Commissioner (4)Chief Operations Officer (4)Executive Vice-President, Law and General Counsel (4)Vice-President of Finance and Chief Financial Officer (4)Vice-President of People, Culture and Learning (4)

$

500
341
247
285
281
252
241

Former Executive Vice-President, Law and General Counsel

$

-

36
12
15
12
10
5
-

$

34
88
64
88
98
92
74
-

$

534
465
323
388
391
354
320

$

498
465
301
374
328
338
316

-

(1) Includes retainers and per diems for Board Directors and regular salary and acting pay for Executives.
(2) Other cash benefits include payments in lieu of vacation, pension and health benefits, as well as vehicle allowances and other cash reimbursements.
There were no bonuses paid in 2024.
(3) Other non-cash benefits include contributions to all benefits as applicable, including employer's share of all employee benefits and contributions or
payments made on behalf of employees, including pension, supplementary retirement plans, health care and payments made for professional
memberships, tuition fees, parking and other taxable benefits.
(4) The 2023 figures have been restated to include the retroactive application of salary increases.
(5) As at March 31, 2024, the Board of Directors consisted of seven members.

72

ALBERTA ENERGY REGULATORSALARY AND BENEFITS DISCLOSURE
YEAR ENDED MARCH 31, 2024

Schedule 2 (continued)

SEPP AND SRP RETIREMENT BENEFITS(in thousands)
The costs detailed below are only for those employees, included in Schedule 2, who were employed during the years ended March 31,
2023 and 2024, and participated in the SEPP and SRP maintained by the AER. The SEPP and SRP provide retirement benefits tocompensate senior staff who do not participate in the Government of Alberta's management pension plans.
2024

Position
Executive Vice-President, Law and General Counsel
Vice-President of Finance and Chief Financial Officer
Vice-President of People, Culture and Learning

Current
service cost
$
22
29
21

Prior service
and other costs
$
(5)
(2)
(2)

2023

Total
$

Total
17
27
19

$

23
32
28

The SEPP and SRP accrued obligation for each executive employed by the AER during the years ended March 31, 2023 and 2024 isoutlined in the following table:

Position
Executive Vice-President, Law and General Counsel
Vice-President of Finance and Chief Financial Officer
Vice-President of People, Culture and Learning

Accruedobligation
April 1, 2023
$
198
93
70

Changes in
accruedobligation
$
46
46
30

Accruedobligation
March 31, 2024
$
244
139
100

Accruedobligation
March 31, 2023
$
198
93
70

ALBERTA ENERGY REGULATORCONSOLIDATED ACTUAL RESULTS COMPARED WITH BUDGETYEAR ENDED MARCH 31, 2024

Schedule 3

Budget(Note 5)
Revenues
Administration fees
Orphan fund levies and transfers
Government of Alberta grants
Information, services and fees
Investment income$

Expenses
Energy regulation
Orphan well abandonment

217,419
135,000
12,356
1,299
2,700
368,774$

231,274
135,000
366,2742,500

CapitalCapital investment
Less: Amortization of tangible capital assets
Net loss on disposal and write-down of tangible capital
assetsProceeds on disposal of tangible capital assets

833
665
7,039
4,422
12,959$12,294665
12,959-14,500(12,000)

2,500

Net capital investment
Surplus(1)

Adjustments
Adjusted budget(in thousands)

$

-

$

-

218,252
135,665
19,395
1,299
7,122
381,733

Actual$243,568
135,665
379,233
2,500

237,132
150,241
387,373
5,211

14,500(12,000)

14,114(12,903)
(148)
(12)
1,051

2,500
$

218,234
150,241
14,1852,701
7,223
392,584

-

$

4,160

(1) Adjustments reflect changes to the original budget approved by the Treasury Board. The adjustments reflect the utilization of grant funding received in 2023 toaccommodate work completed in 2024 related to mandate expansion activities, higher investment income resulting from the AER issuing the levies earlier thaninitially planned and rising interest rates, adjustments to reflect administration fee penalties issued, along with projected first-time license fees which were transferredto the Orphan Well Association.

ALBERTA ENERGY REGULATORRELATED PARTY TRANSACTIONSYEAR ENDED MARCH 31, 2024

Schedule 4

The AER, in the normal course of business, entered into various transactions with entities consolidated or accounted for on the modified
equity basis in the Government of Alberta's Consolidated Financial Statements. These entities are considered to be related parties of the
AER. Related parties also include key management personnel and close family members of those individuals in the AER. In 2024, there
were no amounts or transactions, other than compensation, between the AER and its key management personnel. Key management
personnel compensation is disclosed in Schedule 2.
Related Party Transactions with Government of Alberta Entities
The AER recognized the following transactions with Government of Alberta entities in the Consolidated Statement of Operations and theConsolidated Statement of Financial Position at the amount of consideration agreed upon between the related parties:
Entities in the
Ministry of Energy
2024
2023

Other entities
2024(in thousands)
Revenues
Government of Alberta grants$

Information, services and fees$

14,185346
14,531$$(in thousands)
16,754333
17,087

$

$

$

$

414
414

Receivable from$

Prepaid expenses and other assets

700
700

$

Entities in the
Ministry of Energy
2024
2023
(in thousands)
ExpensesComputer services
Buildings
Administrative
Consulting services

2023

$

671
671

$

Other entities
2024

2023
(in thousands)

$

$

341
341

$

$

3,006
505
476
182
4,169

$

3,441
433
515
174
4,563

145

$

130

$

14

$

13

$

-

$

-

$

38

$

36

Payable to

$

-

$

-

$

1,216

$

1,987

Deferred revenue

$

5,782

$

7,134

$

133

$

200

Contractual obligations (1)

$

-

$

-

$

6,210

$

3,869

(1) Contractual obligations are obligations of the AER to related parties that will become liabilities in the future when the terms of

those contracts or agreements are met.