2022 23
Annual Report

01

OUR MANDATEAN ACKNOWLEDGEMENTTo ensure the safe, efficient, orderly, andIn the spirit of reconciliation, the AER

environmentally responsible development

acknowledges that our head office is locatedof oil, oil sands, natural gas, coal resources,on the Treaty 7 traditional territory of thegeothermal, and brine-hosted mineral

Blackfoot Confederacy (Kainai, Piikani, andresources over their entire life cycle. This

Siksika Nations), the Tsuut’ina Nation, theincludes allocating and conserving water

Stoney Nakoda Nation, and the Métis Nation

resources, managing public lands, andRegion 3. We are situated on land where theprotecting the environment while providing

Bow River meets the Elbow River, and theeconomic benefits for all Albertans.

traditional name of this place is “Mohkinstsis,”which we now call the City of Calgary.

OUR VISION
The AER is a trusted regulator that

We also have field centres on the traditionaldelivers effective and efficient oversightterritories of Treaty 6 and Treaty 8, and all02of resource development.

other regions of the Métis Nation of Alberta.

CONTENTS

About Us

Messages

01 07

Highlights

11

Looking Ahead

Financials

17 18
03

WHAT WE
DON’T

WHAT WE REGULATE

over

over

over

over

over

440 000

156 000

27 000440

18 000kilometresof pipelines*

operating natural gas
and oil wells

oil facilities

operatinggas processing plants

gas facilities

gasoline

pipelines thatcross borders
over

over

210

154

26

8

5

operating oilfield waste
management facilities

primary/enhanced
recovery in situ projects

thermal recovery
in situ projects

operatingoil sands mines

operatingbitumen upgraders
electricity

5

4

1

operatingcoal mines

decommissioning
coal mines

decommissioning coalprocessing plant

04*Operating, permitted, abandoned, and discontinued. We also provide inspection and incident response
support for 12 000 kilometres of pipelines regulated by the Alberta Utilities Commission.

geothermalbrine-hosted minerals

regulatednatural gas rate

April 2023

ABOUT US
Alberta’s energy sector is vast and complex: it includes
crude oil, natural gas, oil sands, coal resources, emerging
resources like geothermal, and an extensive pipeline
network that moves these resources to markets. Enter
the AER, the primary regulator for energy resource
development in Alberta. Few organizations anywhere areresponsible for as large and varied a mix of energy resources.
We oversee extensive remaining established reserves:• 1.7 billion barrels of conventional oil• 159 billion barrels of bitumen• 24.3 trillion cubic feet of natural gas• 36 billion tons of coal
In 2022, the production value of Alberta’s energy sector
totalled $167 billion.
Our mandate officially expanded in 2022/23. And with
that, new rules and requirements were released tosupport the life-cycle regulation of deep geothermal
resource development and brine-hosted mineral resources(minerals, such as lithium, extracted through well infrastructure). In 2023, we began planning the next phaseof regulation to support the development of mineable
minerals known as hard-rock minerals (e.g., limestone).
To produce and move energy resources to market
requires more than 156 000 natural gas and oil wells, over
444 000 kilometres of pipelines (about half of Canada’s
entire pipeline network), over 45 000 oil and gas facilities,
five operating oil upgraders, and five operating coal mines.
We are a full-life-cycle regulator, responsible for all stagesof development – from exploration and production to
closure and reclamation.

The Government of Alberta created the AER in 2013 when
it proclaimed the Responsible Energy Development Act.
We are accountable to the ministers of Alberta Energy
and Alberta Environment and Protected Areas. We also
work closely with other government departments on
regulatory and policy issues, including Alberta Municipal
Affairs, Alberta Indigenous Relations, and the Aboriginal
Consultation Office.

AROUND THE PROVINCE

Wood Buffalo
National Park

Treaty 8

While our statutory powers, mandate, and functions aregoverned under two ministries, we also have a collaborative relationship with the government. They establish
policies that we implement, and we also assist themwith policy development, providing analysis, advice, andtechnical expertise as required.
Through legislation, the Government of Alberta gives us
the authority to ensure the province’s energy resources
are developed safely and in an environmentally responsible manner and without waste. We’re involved at every
stage of an energy resource development’s life cycle.
Since 1938, Alberta has relied on strong regulation toensure its energy resources are developed responsibly.
Our regulatory decisions are always based on evidence
and supported by science, and we strive to balance theneeds of many Indigenous communities and stakeholders.
The AER works to protect what matters to Albertans –public safety, the environment, orderly energy resource
development, and providing economic benefit for
Albertans and all Canadians.

Fort McMurray
Regional OfficeGrande Prairie
Field Centre

Slave Lake
Regional Office
Bonnyville
Field Centre

Edmonton Regional Office &Alberta Geological Survey
Drayton Valley
Field Centre

JasperNational
Park

Treaty 6
Red Deer
Field Centre

Banff
National
ParkCore Research Centre
Calgary Head Office

Treaty 7
Medicine Hat
Field Centre

10

locations1180

employees

01

ALBERTA ENERGY OUTLOOK IN 2022

CRUDE OIL

NATURAL GASCRUDE BITUMEN

Total crude oil
production

Marketable gas
production

Mineable
production

EMERGINGRESOURCES

EthaneHydrogenproduction

11%

7%

4%

1%

(77.3 103 m3/d)(309.1 106 m3/d)(257.1 103 m3/d)(35.2 103 m3/d)(2.5 106 t)

Wells placedon production

Wells placedon production

In situ
production

PropaneGeothermal
electricity generation

2%

4%

96%

18%

(3466)(950)

WTI crude
oil price

2%

NATURAL GASLIQUIDS

463%(270.0 10 m /d)

3(37.7 10 m /d)(92.5 GWh)

AECO-Cnatural gas price

Number ofoperating mines

ButaneLithium
production

39%

51%

8

(US $94.23/bbl)(Cdn $5.10/GJ)

02

3

3

Number of operating
thermal in situ schemes

26

3

7%

0%

(23.2 103 m3/d)(0.0 103 t)

Pentanes plus

Helium production

6%

46%

(58.3 103 m3/d)(2.1 103 m3/d)

ALBERTA ENERGY OUTLOOK IN 2022
CAPITAL
EXPENDITURES

ENERGY PRODUCTION FORECAST
Production(petajoules)

Oil sands
investment

Production(million barrels per day of lightmedium crude oil equivalent)

20 000

Historical

18 00015%

16 000(Cdn $10.0 billion)

14 0008.0

Forecast

7.0
6.0

12 000

5.0

10 000

4.0

8 000
Oil & gas
investment

73%(Cdn $16.0 billion)

3.0

6 000

2.0

4 000

1.0

3 000

0

0
2012

2014

2016

Coal
Crude oil
Upgraded bitumen

Total
investment

2018

2020

2022

Natural gas
Natural gas liquids

2024

2026

2028

2030

2032

Nonupgraded bitumen
Wind, geothermal, and other renewables

44%(Cdn $26.6 billion)

DELIVERIES

Total oil (including bitumen)

Gas

86%
Total value of production

54%(Cdn $167 billion)

37%

Removals from Alberta
Remains in Alberta

14%

63%

03

BOARD OF DIRECTORSDAVID GOLDIE
BOARD CHAIR

CORRINA BRYSONBOARD DIRECTORJUDE DANIELS
BOARD DIRECTORGEORGETTE HABIB
BOARD DIRECTORDavid Goldie is a director and independent consultant
with over 35 years of experience in the energy industry.
He holds a B.Sc. in Geophysics from the University ofWaterloo, a MBA from the University of Calgary, is amember of the Institute of Corporate Directors (ICD)and holds the designation of ICD, Director (ICD.D.).

GARY LEACH

Corrina Bryson has over 25 years of experience in theenergy industry and currently serves on the Boards of theCanada-Nova Scotia Offshore Petroleum Board and theAlberta Petroleum Marketing Commission.

TRACEY McCRIMMON

Jude Daniels has extensive experience as an oil and gas
lawyer, Aboriginal consultation advisor, and has worked
in the oil and gas sector since 1998. Ms. Daniels has her
own consulting company, which specializes in mediation,
employment, and regulatory matters.
Georgette Habib has a long record of public service andbrings over 30 years of experience in the regulation of
the energy industry. Ms. Habib currently serves as anindependent corporate director of the Alberta Electric
System Operator.

BOARD DIRECTOR

BOARD CHAIR

KASHA PIQUETTE
BOARD DIRECTOR

ALLISON RIPPIN
ARMSTRONG
BOARD DIRECTOR

04

Gary Leach has over 25 years of senior executive level
experience in the oil and gas industry, including serving
as president of The Explorers and Producers Associationof Canada (EPAC). His background in law supports a
deep understanding of regulatory issues affecting theenergy industry.
Tracey McCrimmon has over 25 years of experience
working in the Alberta oil and gas industry. After obtaining
her designation in Petroleum Land Management, Ms.
McCrimmon’s career began in the land industry, where
she worked as a surface landman for several years. This
led her into fields such as public consultation, aboriginal
affairs, and stakeholder engagement.
Kasha Piquette serves as a Deputy Minister, Environment
and Protected Areas for the Government of Alberta. She
was entrusted with leading the work on Alberta Emission
Reduction and Energy Development Plan alongside
Alberta ESG Secretariat.
Allison Rippin Armstrong is a biologist and environmental
scientist with over 25 years of experience in permitting,regulatory processes and environmental compliance,
working with indigenous organizations, resource companies,
regulatory agencies, indigenous, territorial, and federal
governments.

EXECUTIVE LEADERSHIP TEAMLAURIE PUSHORPRESIDENT AND CHIEF
EXECUTIVE OFFICER

Prior to joining the AER, Laurie Pushor served as Deputy
Minister for the Saskatchewan Ministry of Energy andResources, from 2018 until 2020. He served as the Deputy
Minister for the former Ministry of the Economy from 2014
to 2018, and served four years as Chief of Staff for several
government departments in Saskatchewan, including
Social Services, Energy, and Health.

MIKE DALTON
VICE PRESIDENT,FINANCE AND CHIEF
FINANCIAL OFFICER

ERIN KURCHINA
VICE PRESIDENT, PEOPLE,MARTIN FOY
CHIEF OPERATIONS OFFICERSEAN SEXTONEXECUTIVE VICE PRESIDENT,LAW BRANCH, AND AER
COUNSEL GENERALIn June 2020, Martin Foy became the AER’s Chief Operations Officer, having previously served in this role on aninterim basis since October 2019. He has 30 years’ experience leading people and managing natural resources. The
division is responsible for regulating the full life cycle ofenergy resource development, from issuing approvals tomanaging closure and liability.

CULTURE AND LEARNING

Mike Dalton joined the AER in 2020, and is responsible forfinancial management, supply chain and real estate.
Mike’s former employers include ATCO, Raytheon Canada,
Canadian Natural Resources and PricewaterhouseCoopers.
Mike served 24 years with the Canadian Armed Forces.
Erin Kurchina joined the AER in 2020 as the Vice President, People, Culture and Learning. In this role, she isaccountable for aligning business and people strategies,
adding value, and fostering corporate performance.
Through human-centric leadership and strategic partnership, she oversees the development of talent programs
and creates a safe, inclusive, and empowering cultureso that all employees can reach their full potential andcontribute to AER’s success.

In May 2022, Sean Sexton became the executive vicepresident of the Law Branch and general counsel of the
AER. He was previously the vice president of the Law
Branch, starting in 2018. He has extensive knowledgeof the AER’s legal and regulatory environment.

05

MESSAGES

06

HELLO,On behalf of the Board of Directors, I wish toacknowledge the progress made on several
critical pieces of work that the AER has achieved
this past year.
Once again, we released new and updated requirements
to implement the Government of Alberta’s liability
management framework and to ensure the oil and gas
industry meets its end-of-life obligations.
Among the new requirements, was an increase in theindustry-wide closure spend for liabilities in 2023 from$422 to $700 million. We also released forecast targets
through 2027, which we anticipate increasing by nine
per cent annually. These new requirements contributed
to a reduction of almost 16 000 from the inactive well
population from 97 000 at the end of 2020 down to
81 000 today reversing historical growth we’ve seen inthis area.
Although these were important steps for us to takeconcerning liability, we know we have more work to do.
We take the March 2023 recommendations by the Officeof the Auditor General seriously, and we’ll continue towork to reduce inactive energy sites.

the Alberta government moves forward with its plan todiversify the economy and accelerate growth in these newand emerging sectors.
We’ve responded to concerns surrounding the Imperial
Oil Kearl incidents with an approach that is true to ourvalues of accountability, transparency, trust and respect,and collaboration. These values will anchor our decisions
going forward, regardless of the issues or work thatemerges for the AER. Recognizing that our response to
the incidents did not meet public expectations, the Boardof Directors commissioned an independent review of the
AER’s actions. The board will publicly share the review’s
findings once completed and we have considered therecommendations and follow-up actions.
As I look to the year ahead, I’m excited for what’s to comefor the AER. Our goal is to be a more collaborative, responsive regulator that Albertans, Indigenous communities,
industry, and government, can trust, respect, and haveconfidence in—every single day.
We’re up for the challenge.

DAVID GOLDIEThe AER’s work to advance new regulations on emerging
energy and mineral resources is another source ofpride for the Board of Directors. Our role is pivotal as

CHAIR, BOARD OF DIRECTORS

07

08

GREETINGS,A special thank you to the AER team that has
made many contributions over the past year.
We have been on a multi-year path to establish amore efficient way of regulating while strengthening our culture, and meeting the expectationsof Albertans, Indigenous communities, and our
stakeholders.
It’s an important learning journey for us.
This fiscal year ended in a challenging way with the Environmental Protection Order we filed against Imperial Oil’s
Kearl Lake project pertaining to two separate releases
from tailings ponds. The concerns expressed about how
the AER handled these issues, especially as it relates
to when and how we communicated with Indigenous
communities in the region, other levels of government,
and Albertans are being thoroughly and independently
reviewed. The AER is committed to learning and growing
from any findings.
We continue to actively engage with Indigenous peoples
and Albertans on a range of topics. Strengthening theseimportant relationships through listening, conversation,and consultation has helped to inform our decisions andfoster better understanding of our approach to responsible energy resource development.

Implementing our expanded mandate continues to be a
key focus. This means working closely with government todevelop new regulations, rules, and directives for emerging
energy and mineral resources.
This past year, our geoscience experts analyzed data,
provided information about Alberta’s mineral potential
with insight into areas of the province where explorationand development for various minerals may responsibly occur.
Internally, we’ve been focused on our culture andcontinuing to make the AER a respectful, safe, diverse,
and inclusive place to work. Our culture is who we are,what we do, why we do it, and how we do it, and ourvalues of accountability, transparency, collaboration,
trust, and respect are foundational to delivering on
our mandate. We’ve made progress in 2022/23 with aframework to infuse diversity, equity, and inclusion into
all we do at the AER. We believe this will help support
our team in our work, empower everyone to voice theiropinions, and enable them to achieve their best.
Thank you for following our journey, and rest assured that weare committed to working every day to earn your confidence.

LAURIE PUSHORPRESIDENT & CEO

09

HIGHLIGHTS

010

To keep Albertans informed, we report on how well industry complies with our requirements, our management ofliabilities and inventory reduction, and our application
processing metrics.

Overseeing Industry Compliance
Inspections and Compliance Rate
We regularly monitor and inspect thousands of wells,
production and processing facilities, pipelines, and coaland oil sands mines annually to ensure that companies
follow our requirements and safely develop energy
resources in a manner that protects the environment. We
do this by visiting energy sites to inspect a company’s
activities and auditing the information they provide.

completed and if there is a finding of noncompliance,
an appropriate enforcement action is selected. Enforcement tools range from warning letters to prosecution.
The tools we use vary depending on the significance ofthe noncompliance.
In 2022/23, fines from creative sentences and penalties
totalled $307 200.
Regardless of the compliance and enforcement action
we take, our goal is to work with companies to bring themback into compliance. We publicly report on energy incidents and enforcement actions through our Compliance
Dashboard on aer.ca.

Emergency Management
In 2022/23, we conducted 8128 inspections, of which 73%
resulted in a satisfactory compliance finding. In addition,
we audit all aspects of energy resource development toconfirm that the industry follows specific operational andreporting requirements. In 2022/23, we performed 6535
audits and issued 1038 notices of noncompliance.

Investigations and Enforcement
If we find a company is not following our requirements, we’ll apply one or more of our compliance andenforcement tools to educate the company and correct
the noncompliance. These tools range from notices ofnoncompliance to orders. Orders are important tools toprevent, stop, or minimize environmental effects or risks
to public safety. During 2022/23, we issued 209 orders.
Major investigations are formal evidence collection
processes that must follow established legal procedures
to ensure the integrity of the investigation. Investigations
can take anywhere from three months to two years tocomplete. When noncompliance is deemed serious, it
is triaged for investigation. When an investigation is

We maintain a 24-hours, 7-days-a-week, 365 days-a-year
on-call schedule to support incident response. We rankemergencies as an alert or level 1, 2, or 3 based on therisk level to members of the public or the environment.
In 2022/23, 93 energy-related incidents were reported
to the AER: 66 alerts, 16 level 1, 10 level 2, and 1 level 3.
Emergency response staff are deployed to some level 1
emergencies but to all level 2 and 3 emergencies. Emergency response staff were deployed to 19 emergencies in
2022/23.
Also, in 2022/23, we evaluated 38 emergency response
plan exercises and completed 66 emergency response
plan audits, resulting in 34 notices of noncompliance.
INVESTIGATION RESULTS 2022/23
Of the 38 investigations,
19 enforcement actions were taken.

8 administrative penalties
2 prosecutions
9 warning letters

Methane Emission Reduction
We introduced requirements in 2020 to help reduce
methane emissions in the upstream oil and gas industry.
We use industry-reported information and emission
estimates to evaluate the reductions achieved, andour modelling predicts Alberta is on track to meet theGovernment of Alberta’s 45% reduction policy target by2025. Reported and estimated emissions from 2021 show
a 44% reduction in methane emissions from 2014 levels.
In 2022/23, we achieved the following:• Conducted aerial surveillance of 1200 facilities.
(That makes a total of 6300 facilities surveyed since
the start of the aerial surveillance program.)• Inspected 1161 facilities, of which 70% were compliant.
• Conducted 890 methane audits, of which 91%
were compliant.

Managing Energy Liabilities
Energy companies in Alberta are responsible for ensuring
their infrastructure and sites are safely closed and cleaned
up. The closure work required to meet end-of-life obligations and the costs associated with it are called “liability.”
We continue to implement the Government of Alberta’s
liability management framework and update its requirements
to ensure the oil and gas industry meets its end-of-life

In addition, the AER referred
three files to the Alberta Crown
Prosecution Service and managed
four creative sentencing projects.

34

to the Alberta Crown
Prosecution Service
creative sentencing
projects

11obligations. This includes the following:• Directive 067: Eligibility Requirements for Acquiringand Holding Energy Licences and Approvals includes
financial requirements that allow us to assess the capabilities of oil and gas operators to meet their regulatory
and liability obligations throughout the energy resource
development life cycle.
• Directive 088: Licensee Life-Cycle Management
introduced the licensee management program, theinventory reduction program, and the holistic licensee
assessment, including the licensee capability assessment that considers more than 40 different factors,
including the company’s financial and liability risk; thecompany’s administrative, operational, and closure
performance; and the remaining lifespan of the resource.
• Manual 023: Licensee Life-Cycle Management wasdeveloped alongside Directive 088 to provide details
and clarity around the new programs.
• Manual 024: A Guide to the Mine Financial Security
Program was released in May 2022 with explanations on
how to comply with security and reporting requirements.
Throughout 2022/23, we actively engaged with key
stakeholders to educate them on the liability management framework, related directives, and manuals. We also
updated processes and tools and provided preapplication
meetings and guidance to licensees to help them navigate
the changes. These efforts were critical to implementing
the framework into our day-to-day business, especiallylicence transfer applications and security refund requests.

12

Reducing Inactive Inventory
In 2022, we introduced a minimum mandatory closure
spend for all oil and gas companies with inactive liability
as part of Directive 088 and the inventory reduction
program to facilitate the closure of inactive wells, pipelines, and facilities. This program increases the amountof closure work occurring in Alberta, reduces liability,and ensures more timely land restoration to original or
alternative uses.
All licensees with inactive inventory must meet an annual
minimum mandatory closure spend. The minimum closure
spend specifies the minimum amount of money thatlicensees are required to spend on oil and gas closure
work each year. Companies are encouraged to collaborateusing an area-based closure approach to increase theefficiency of development closure and complete moreclosure work.
The industry-wide minimum mandatory closure spend for2023 is $700 million, up from $422 million in 2022.

of commingled wells. Other notable closure activities in
2022/23 include:• The largest reclamation certificate we’ve ever issued
for the Whitewood coal mine in northern Alberta.
• Approved the first dam cessation project to abandon
and reclaim the Swan Hills dam and reservoir.

Orphaning and Insolvency
A company is insolvent when it cannot meet its obligations or its liabilities exceed the value of its assets,
including oil and gas infrastructure. Our primary focus
when a company enters insolvency is to protect the
public and the environment.
In 2022, we were involved in 18 insolvency-related files.
By the end of 2022, 5321 assets (3013 wells, 242 facilities,
and 2066 pipeline segments) were associated with licensees in active insolvency proceedings. This is a significant
decrease from 2021, which saw the AER involved in
26 insolvency-related files representing about 12 720
total assets.

Processing Applications

Closure Activities
Completing closure activities is the primary method of
reducing liability from inactive infrastructure and involves
decommissioning infrastructure and site remediation andreclamation. Wells, pipelines, and facilities are plugged
and decommissioned or abandoned when companies
stop using them for oil and gas production.
There has been a significant increase in decommissioning
activity during the past two years. In 2021, 11 885 wells
were decommissioned and 10 986 in 2022. Comparedwith an average of 5000 to 6000 decommissioned wells
in previous years, this is a significant increase in activity.
The increased closure activity is partly attributable tothe new AER minimum mandatory closure spend, theGovernment of Alberta’s site rehabilitation program,and AER changes to allow some routine abandonment

We have established application processing targets toensure we review applications in a timely and diligent
manner. We review over 90 different types of applications, where each type receives a target that reflects thecomplexity of the application process. Of the 36 464
applications processed in 2022/23, 28 094 were classified
routine and 8370 nonroutine (high risk or more complex).
We met our processing targets for 99% of routine
applications and almost 97% of nonroutine applications.
In 2022/23, we received nearly 2600 applications related
to the subsurface requirements specified in the Oil and
Gas Conservation Act and the Oil Sands Conservation Act.
We met our application timelines even though volumes
increased by relying on process improvements, collaborative support, and enhanced data usage.

ACTIVITY BREAKDOWN BY APPLICATION TYPE
IN 2022/23

Received 7661 RoSC submissions.
Of these, 1934 required a review.
Reviewed 6100 public land applications.
Inspected 8 coal mines.
Issued 1 geothermal public land disposition(the AER’s first).
Conducted 62 waste management andstorage audits.
Reviewed 122 waste management andstorage applications (achieved 100%
target timelines for routine and 95%
for nonroutine).
Responded to over 300 requests to the
Helpline within the 72-hour deadline.
Reviewed over 250 Oil Sands Conservation
Act and Environment Protection andEnhancement Act applications.
Over 500 manual Public Lands Act
applications completed.

2022–2023 HEARING FILES
The hearing commissioners’ office may hold public
hearings on applications, regulatory appeals of
AER decisions, and reconsiderations of previous
AER decisions.
12
regulatory appeals

4applications

1
reconsideration

Our regulatory oversight includes ensuring contaminatedsites are adequately understood and that remedial
measures are satisfactory. We received 7661 record ofsite condition (RoSC) submissions in 2022/23. The RoSC
enables effective delivery of risk-based oversight, with
1934 (25%) of submissions requiring additional review(75% only required a baseline review). We made processenhancements to improve intake efficiency, data quality,and baseline responses through OneStop.
We also enhanced our regulatory framework for carbon
capture, utilization, and storage (CCUS), including
Directive 065 application requirement updates. All CCUS
projects must meet our regulatory requirements before
being allowed to inject CO2 into the deep subsurface.

Municipal Property Taxes
Near the end of our fiscal year on March 20, 2023, theMinister of Energy directed the AER to receive evidence
from energy companies that confirms that they have paid
any outstanding municipal property taxes above a set
threshold amount prior to us approving applications for
new well licences or well transfers. The AER developedand implemented a process to meet that direction by
April 30, 2023.

Hearings
We may refer files to the Hearing Commissioners’ Office
to decide on disputed energy resource activities. The
Hearing Commissioners’ Office includes nine commissioners, acting as independent decision makers operating
at arms-length from the AER. Commissioners comefrom many backgrounds and are appointed by Orders
in Council by the Lieutenant Governor of Alberta. In
2022/23, the Hearing Commissioners’ Office welcomed
three new commissioners now actively working on hearing
and alternative dispute resolution (ADR) files. The Hearing

Services team supports commissioners as they performtheir work.
The Hearing Commissioners’ Office may hold public
hearings on applications, regulatory appeals of AER
decisions, and reconsiderations of previous AER
decisions. A hearing is quasi-judicial and can feel like aformal court proceeding. It involves hearing evidence andlegal arguments for and against proposed and approved
energy resource activities, and disputed AER enforcement
actions. But not all disputed activities or regulatory
appeals require a hearing. Hearing commissioners canalso use ADR processes to help parties resolve disputes.
A hearing may be cancelled if the participants withdraw
their statement of concern or request for regulatory
appeal or the proponent withdraws its application. The
Hearing Commissioners’ Office may also issue a costs
order requiring a company to pay for some expenses
incurred by hearing participants.
In 2022/23, ten new files were referred to the Hearing
Commissioners’ Office, while seven proceedings continued from previous years. Two hearings were held, andthree were cancelled. Hearing commissioners issued two
hearing decisions and one costs order. As of March 31,
2023, eight proceedings were ongoing, and four wereadjourned. One ADR file was completed, and four
remain active.
More information on hearings, the hearing process,decisions, and the ADR process is available on aer.ca.

13

BUILDING RELATIONSHIPS
We are seeking new opportunities to improve ourengagement with First Nations and Métis communities
and consider their values, interests, and concerns. Oneof our foundational approaches is the Voices of Understanding, a book coauthored in 2017 by the AER and an
Indigenous elder. We use it to guide our understandingof Indigenous worldviews, how they intersect with
Western worldviews, and how we initiate and engage inrespectful decision-making processes.
We are influenced by an elders circle advisory group
comprising representatives from Indigenous communities
committed to building understanding and better relationships. Our resident elder guides us with and demonstrates
how oral and written systems could work together.

14

While we recognize that we must do more to earn trustfrom First Nation and Métis communities, drawing on what
we learned in 2022, we have taken the following actions:• Launched Indigenous cultural competencies tocomplement organizational values, attributes, andbehaviours for all employees.
• Deepened our employee’s understandings andapproaches to engagement and communications
with Indigenous leaders, First Nations, and Métis
communities.
• Increased engagement of our leaders with Indigenous
leaders, First Nations and Métis communities, andIndigenous organizations.
• Created a reconciliation subcommittee within our
diversity, equity, and inclusion advisory group to
support employee learning and understanding.
• Developed a new learning program to advance progress on the Truth and Reconciliation Commission’s,
Call to Action 57.
• Ensured ninety-eight per cent of employees
completed foundational training course in First
Nations and Métis worldviews within Western worldviews from an Indigenous lens.

• Created opportunities for increased participation ofFirst Nations and Métis peoples to participate in joint
inspections of energy developments.
• Created new processes and regulatory data collection
tools to incorporate Indigenous knowledge andtraditional land use analysis to help us decide onenergy applications.
• Implemented recommendations to enhance recording
and reporting of Indigenous interests and concerns
to strengthen understanding and inform regulatory
decision making.
In 2022/23, we created an Indigenous Relations Plan
to guide our efforts through 2026. This plan provides
context, scope, and an approach for enterprise-wide
collaboration. It also aligns with our Strategic Plan andcore values of accountability, transparency, collaboration,
trust, and respect. The plan celebrates what we learned
and acknowledges where we need to improve.
We will continue to build on what we learned to support
informed decision making, demonstrate our approachto responsible energy resource development, and help
strengthen relationships and understanding with First
Nations and the Métis within their interaction withenergy resource development.
As we renew our relationship with First Nations andMetis communities, we will also approach things
differently. We will take every opportunity to learn andgrow from the two incidents that led to the February
2023 filing of an Environmental Protection Order against
Imperial Oil pertaining to its Kearl Lake tailings ponds.
The AER board is conducting an independent review ofour handling of these events. The results of that review
will be made public, and we will work to incorporate anynecessary changes to our approach and processes basedon any findings.

A Modern Regulator
As Alberta’s energy regulator, we contribute to Alberta’s
competitiveness by ensuring our system is modern
and efficient while working to protect the environment
and keep Albertans safe. Our work to modernize theregulatory system involves ensuring our systems, tools,
and requirements are current with today’s technology. It
also involves removing duplication, making our processes
more efficient, and contributing to the Government ofAlberta’s red tape reduction initiative.

Updating our Requirements
Our red tape reduction initiative was formed in May 2019
in response to the Government of Alberta’s Red Tape
Reduction Act. The government set a goal to reduce regulatory requirements by one-third, cut costs and inefficient
processes, and speed up approvals.
During 2022/23, we reduced regulatory requirements andrevised more regulatory instruments, such as directives,forms, and manuals, than in any previous year. At thesame time, we have upheld our environmental and public
safety mandate and conducted Indigenous, stakeholder,and public engagement where appropriate.
When the red tape initiative launched, we had about
41 200 requirements across 219 regulatory instruments.
In 2022/23, we updated 62 regulatory instruments andreduced the total number of requirements by 1442, which
REGULATORY REQUIREMENT REDUCTION
Since 2019, we have reduced requirements by 17%,
while maintaining oversight.

7004 reduced
41 20034 196 current

helps Indigenous communities, energy companies, andstakeholders understand our requirements and moreeasily navigate our regulatory instruments.

Emerging Resources
In 2020, the Government of Alberta announced theopportunity to develop emerging energy and mineral
resources in Alberta. This work was part of the government’s economic recovery effort to relaunch and diversify
Alberta’s economy. Since then, the government has
provided grants and developed legislation to establish
the AER as the primary regulator for these emerging
resources.
Our mandate officially expanded in 2022/23. And with
that, new rules and requirements were released to support
the life-cycle regulation of deep geothermal resource
development and brine-hosted mineral resources (minerals, such as lithium, extracted through well infrastructure).
In 2023, we began planning the next phase of regulation
to support the development of mineable minerals known
as hard-rock minerals (e.g., limestone).
We are now accepting applications for deep geothermal resource development and brine-hosted mineral
resources. We expect to accept hard-rock mineral
resource applications in 2024 once the final portion of theMinerals Resources Development Act is proclaimed.

Mineral Mapping
To help us understand Alberta’s mineral potential, theAlberta Geological Survey (AGS), AER, and the Government of Alberta have partnered on one of the largest
mineral-mapping programs in Alberta’s history.
This data collaboration is part of a multiyear mapping
program to provide critical information on mineralcharacterization and potential throughout the province.
This data will inform future regulatory decisions regarding
mineral applications; and unlock critical information to
inform industry operations.

Additionally, this data will support information sharing
with non-industry stakeholders on areas where minerals
are present in Alberta. It will also inform discussions on
where future mineral development may occur. In March
2023, the AGS initiated the release of the first data setsfrom this extensive collection.
Mineral resource development is part of the Governmentof Alberta’s strategy to diversify the energy and resource
sector. The Government of Alberta supported this workwith a $25-million grant.

Alberta Geological Survey
Groundwater Inventory
The AGS’s groundwater team provided key information
about groundwater quality, quantity, and availability at
local and regional scales in strategic locations across theprovince, including 14 formation maps highlighting water
quality and groundwater flow.

Seismic Monitoring
The AGS continues to expand and maintain its seismic
monitoring network and added one station to its
inventory in 2022 (a total of 61 stations, 24 of which itowns). Our experts observe and characterize earthquakes
throughout the province with the goal of earthquake
forensics, mitigation, and industry compliance.
MINERAL DEVELOPMENT DATA
The AGS has collected data related to:

groundwater inventory

seismic (earthquake)
monitoring

15

Socioeconomics
In 2022, we provided a standard and consistent economic
and socioeconomic approach when reviewing regulatory
applications and statements of concern. We developed
and rolled out a socioeconomic impact assessment tocomplement our existing regulatory impact assessment,
enabling us to make more informed decisions andconsider all Albertans when reviewing proposed projects.

Statements of Concern
Anyone who believes they may be directly or adversely
affected by a proposed energy development project – beit a well on their land or a pipeline running through theircommunity – may file a Statement of Concern (SOC).
SOCs help the AER understand the concerns of Albertans
and Indigenous communities potentially impacted byenergy development, and where possible, provide an
opportunity for the AER to mitigate those concerns.
SOC filers can submit the form and supporting documents
STATEMENT OF CONCERN APPLICATION REVIEWFILES COMPLETED IN 2022/23

26 SOCARS were completed with no hearing

1

12
8

16

SOCs were withdrawn
applications were closed or withdrawn
SOCARS were completed with a hearing
recommendation

online through aer.ca, by email, or regular mail. The AER
also offers dispute resolution services at any time overthe energy development life cycle to support relationshipbuilding between involved parties and assist in resolving
concerns outside of the SOC process.

Disclosure
In 2022/23, we did not receive any disclosures of wrongdoing under our Whistleblower Protection Policy.

Cloud Migration
We recognize the critical role that technology plays
in improving processes and data. During 2022/23, we
continued to migrate our technology infrastructure to
cloud technologies, enabling us to share data more effectively across our organization and accelerate innovative
solutions, such as OneStop.

Technical Solutions in Integrated Decision
Approach and OneStop
We introduced the Integrated Decision Approach andthe OneStop technology platform in 2014. Since then,our audit, inspection, and application review processes
have become more efficient, ensuring the public andenvironment remain protected. OneStop uses a complex
set of rules to automate routine (low risk) applications
VALUE
Cloud migration led to cost avoidance and savingsof $800 000 along with improved operational
efficiency in 2022/23.

and forward nonroutine (high risk or more complex)
applications to technical experts for review.
We continue to add new functionality to OneStop. In
2022/23, the platform was updated to provide information
on hyperspectral data for mineral exploration. We also
updated liability management, the Land Use Reservation
Program, public lands objections and cancellations, andgeothermal and brine-hosted mineral wells.

Data Transparency
To improve access to our data, we developed a central
access point to key metrics about Alberta’s upstream
oil and gas industry and our work to oversee resource
development. The Data Hub is always accessible to Albertans
for up-to-date information. The online platform is one way
we are working to increase and simplify access to our data.
We will continue to add to the Data Hub over time.
In addition, we have increased the amount of data available from OneStop to improve transparency. In 2022/23,
we responded to 300 requests for data or reports throughthe AER’s Products and Services Catalogue.
ONESTOP TECHNOLOGY PLATFORM
Through OneStop, we received:

286 567

submissions

26 932applications

20 875

notifications

LOOKING
AHEAD

We are well-positioned for the challenges and opportunities
in the constantly evolving energy industry.
Our path forward is anchored in our 2023/26 StrategicPlan, a blueprint to guide our work in the years ahead infour key focus areas:• Taking care of people• Enabling our operational effectiveness and innovation• Enhancing our regulatory framework• Strengthening our credibility and trust.
Over the coming year (2023/24), we will continue toprioritize these focus areas to establish a more efficient
way of regulating, strengthening a safe and inclusive
culture, and ensuring we meet the expectations ofAlbertans, Indigenous communities, and stakeholders.
We will also take every opportunity to learn from theImperial Kearl incidents that led to us issuing an environmental protection order earlier this year. We acknowledge
that we fell short of public expectations and will work toreestablish trust. A robust investigation is underway, andour organization will share all findings from the independent review of our internal processes. We will engage
consistently with Indigenous peoples, seek counsel fromour resident elder, and continue to show how we’re doing
and what we’re doing to improve.

• Advancing our culture. We will continue to develop
and empower our people with a framework that helps
us retain engaged, diverse, and contributing employees
who align with our values and culture and feel comfortable voicing their opinions.
• Long-term reductions in the liabilities of AER-regulated
assets. We will continue to implement the liability
management framework and Directive 088: Licensee
Life-Cycle Management to hold the industry
accountable for end-of-life closure activities, suchas reclamation and remediation and address therecommendations provided in the Office of the Auditor
General’s “Liability Management of (Non-Oil Sands)
Oil and Gas Infrastructure” report.
• Emerging resources. We will advance new regulations
on emerging energy and mineral resources. We arealso in partnership with the Government of Alberta andthe Alberta Geological Survey on one of the largest
mineral-mapping programs in the province’s history.
Above all, as we look ahead to the coming year, we
remain focused on what matters most: protecting the
public and the environment while ensuring responsible
resource development.

We will also focus on several important pieces of work:• Technology enablement. Our data management
strategies will support improved access to informationand seamlessly share information with our Governmentof Alberta partners through cloud-based technologies.

17

CONSOLIDATED FINANCIAL HIGHLIGHTS
2023

CONSOLIDATED SUMMARY OF ANNUAL HIGHLIGHTS

Budget2022
AdjustedbudgetAdjustments

ActualActual(in thousands)
Revenues
Administration fees$

200 730$640$

201 370$

201 429$

207 92 1

Orphan fund levies and transfers

78 500-78 50080 29477 824Government of Alberta grant

12 8 1 1

10 80023 61 116 75416 988Other revenue

1 974

3 380

5 354

6 661

2 820

294 01 5

14 820308 835

305 138

305 553

Energy regulation

219 01 5

1 5 320234 335

223 496

221 629

Orphan well abandonment

78 500-78 50080 29477 824297 5 1 5

1 5 320312 835

303 790299 453(3 500)(500)(4 000)

1 348

6 100

Capital investment

14 500(5 500)9 000

1 2 808

1 2 950

Less: Amortization of tangible capital assets(1 8 000)

5 000(13 000)(13 1 14)

(1 3 92 1)(41 8)

(663)

(47)

-

(77 1)(1 634)

Expenses

Operating surplus (deficit)
Capital

Net loss on disposal and write-down of tangible capital assets
Proceeds on disposal of tangible capital assets(3 500)Net capital investment018
Surplus$-(4 000)

(500)
$

-

$

-

$

2 1 19$7 734

All amounts are expressed in thousands of Canadian dollars.

All amounts are expressed in thousands of Canadian dollars.

We are an industry-funded regulator accountable to
the Government of Alberta. Our operating expenses
and capital investment are from the following revenue
sources: administration fees (referred to as the administrative levy), government grants, and other revenue (e.g.,
the sale of products). We collect orphan fund levies fortransfer of the Orphan Well Association (OWA).
The previous table summarizes the results of our operations and net capital investment for the fiscal year ended
March 31, 2023.
Administration fees
Alberta’s Responsible Energy Development Act authorizes
the AER to levy an administration fee on the following
regulated sectors—the province’s oil and gas, oil sands,
coal, pipeline sectors and facilities. The funds collectedfrom administration fees are used to fulfil the AER’s
mandate to ensure the safe, efficient, orderly, andenvironmentally responsible development of hydrocarbon
resources over their entire life cycle. For the year ended
March 31, 2023, administration fees decreased by $6492
or 3.1% due to the completion of Government approved
deficit recovery in 2022. In 2023, the AER collected 70.8%(2022 – 72.1%) of industry levies from oil and gas, 22.4%(2022 – 24.5%) from oil sands, 4.3% (2022 – 3.4%) fromcoal operations, 1.7% (2022 – nil) from pipelines, and 0.8%(2022 – nil) from facilities in the form of administration
fees. Administration fees for the 2023 fiscal year include$54 (2022 – $134) collected in late payment penalties.

will be carried over into 2024 to support the continued
development and operationalization of the various
mandate expansion workstreams.
Orphan fund levy and transfers
Under Part 11 of the Oil and Gas Conservation Act, the
AER is required to prescribe an orphan fund levy. Thislevy is based on the revenue requirements identified by
the OWA board and approved by the Government ofAlberta. In 2023, the AER issued and collected an orphan
fund levy of $72 000, an increase of $2000 compared
to 2022. This increase was required to address theincreasing volume of orphan wells. The AER also issued aLarge Facility Program orphan levy to active large facility
licensees in the amount of $6000, which is $2500 morethan 2022. Active large facility licensees are collectively
responsible for covering closure costs of insolvent large
facility licensees, as outlined in Directive 024. Additionally,
AER collected $669 (2022 – $436) in first-time licensee
and application fees, $90 (2022 – $288) in penalties, andtransferred $1535 (2022 – $3600) of forfeited security
deposits. All amounts collected were transferred to the OWA.
Other revenue
Other revenue consists of data subscriptions, enforcement
revenue, electronic data and publications sales, revenue
from projects performed on a cost-recovery basis, andinvestment income. In 2023, other revenue increased by$3841 or 136.2%, primarily driven by higher investment
income due to rising interest rates.

Government of Alberta grant

Energy regulation

The AER received $12 811 in grant funding to support
the AER’s mandate expansion work related to mineral
resource regulation. The Grant revenue is recognized
as expenses pertaining to the agreement are incurred,and unspent funds are carried over from year to year
and expensed in accordance with accounting standards.
For the year ended March 31, 2023, the AER recognized$16 754, of which $10 982 was related to carryover work
related to the Public Geoscience Mineral Mapping; $7039

Expenses increased slightly by $1867 or 0.8% in 2023 dueto the AER’s continued mandate expansion initiatives on
Geothermal Regulatory Frameworks, Mineral Regulatory
Frameworks, and Public Geoscience Mineral Mapping
initiatives ($16 514); increased salary costs and inflationarypressures, offset by reduced building expenses due toan early termination fee of partial office space in 2022.
Overall, the AER continues to exercise financial prudence
and seeks opportunities to reduce costs where possible.

Capital Investment
Developing and acquiring tangible capital assets,
predominately investments in information technology,
is critical in helping the AER achieve its mandate at
the lowest possible cost. Investments in information
technology ensures that the AER remains relevant
and responsive.
In 2023, the AER made capital investments of $12 808.
Capital investment projects in 2023 focused on continued
IT infrastructure improvement, safety-related building
improvements at the Core Research Centre, and OneStop,
the AER’s Integrated Decision Approach (IDA) technology.
OneStop provides an efficient and streamlined process
for companies to submit one integrated application thatcovers activities over the life of the development and toreceive decisions in a single approval document.
Budget Management
In 2023, the AER planned for a balanced budget, andthroughout the year, despite being challenged with
non-discretionary pressures, continued to forecast abalanced position. Non-discretionary pressures weremore than offset by increased investment revenue andeffective cost management, including prioritizing funding
initiatives and focusing on savings opportunities. Consequently, the AER completed the year with a surplus of$2119 (2021 – $7734), 0.7% of total revenues.

19Alberta Energy Regulator
Consolidated Financial Statements
For the Year Ended March 31, 2023

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 (Net Debt)
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 otherinformation relating to the AER contained in this annual report have been prepared and presented bymanagement, who is responsible for the integrity and fair presentation of the information.
These consolidated financial statements are prepared in accordance with Canadian public sector
accounting standards. The consolidated financial statements necessarily include some amounts thatare based on informed judgments and best estimates of management. The financial information
contained elsewhere in this annual report is consistent with that in the consolidated financial
statements.
Management is responsible for maintaining an effective system of internal controls designed toprovide reasonable assurance that financial information is reliable, transactions are properly
authorized, assets are safeguarded and liabilities 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 accordancewith Canadian generally accepted auditing standards, and has expressed his opinion in theaccompanying Independent Auditor’s Report.
The Board of Directors is responsible for ensuring that management fulfills its responsibilities forfinancial reporting and internal controls. The Board of Directors exercises this responsibility throughthe Audit and Finance Committee, composed of Directors who are not employees of the regulator.
The Audit and Finance Committee 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 tothe integrity of financial reporting processes and the adequacy of our systems of internal controls.
The internal and external auditors have full and unrestricted access to the Audit and FinanceCommittee.

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

Date: May 18, 2023

2

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, 2023, and theconsolidated statements of operations, change in net financial assets (net debt), and cash flows forthe year then ended, and notes to the consolidated financial statements, including a summary ofsignificant 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, 2023, 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

3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

4•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 18, 2023
Edmonton, Alberta

Classification: Public

5

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF OPERATIONSYEAR ENDED MARCH 31, 2023

2023

2022

Budget(Note 5, Schedule 3)

ActualActual(in thousands)
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 (deficit)
Accumulated surplus at beginning of year
Accumulated surplus at end of year$

200,730
78,50012,811
1,299
675
294,015$

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

207,92177,824
16,9882,247
573
305,553

219,015
78,500297,515

223,496
80,294
303,790

221,629
77,824299,453(3,500)73,58770,087

1,348
73,58774,935

6,100
67,48773,587$$

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

6

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT MARCH 31, 2023

2023

2022
(in thousands)

Financial assets
Cash and cash equivalents (Note 7)
Accounts receivable (Note 8)
Pension assets (Note 15)$

Liabilities
Accounts payable and other accrued liabilities (Note 9)
Payable to Orphan Well Association
Deferred revenue (Note 10)
Deferred lease incentives (Note 12)
Net financial assets
Non-financial assets
Tangible capital assets (Note 16)
Prepaid expenses and other assets

Net assets before spent deferred capital contributions
Spent deferred capital contributions (Note 10)
Net assets
Accumulated surplus (Note 17)$

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

52,566
1,684
3,958
58,20826,017
2,419
7,657
9,849
45,942
10,05926,725
1,064
11,362
11,31550,466
7,742

56,6728,204
64,87657,443
8,642
66,08574,93573,827-240

74,935$73,587

Asset Retirement Obligation (Note 14)
Contractual rights (Note 18)
Contingent liabilities (Note 19)
Contractual obligations (Note 20)
The accompanying notes and schedules are part of these consolidated financial statements.

7

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL ASSETS (NET DEBT)YEAR ENDED MARCH 31, 2023

2023

2022

Budget(Note 5, Schedule 3)

Annual operating surplus (deficit)$

Acquisition of tangible capital assets (Note 16)
Amortization of tangible capital assets (Note 16)
Net loss on disposal and write-down of tangible capital assets
Proceeds on disposal of tangible capital assets
Write-off of leasehold improvements (Note 12)
Decrease in prepaid expenses and other assets
Net (decrease)/increase in spent deferred capital contributions (Note 10)
Decrease in net debt
Net financial assets (net debt) at beginning of year
Net financial assets at end of year$

(3,500)

Actual(in thousands)
$

1,348

$

(12,808)
13,114
418
47
438
(240)
2,317
7,742
10,059(14,500)
18,000

7,742
7,742

Actual

$

6,100

$

(12,950)
13,921
663
1,056
743
240
9,773
(2,031)
7,742

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

8

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF CASH FLOWSYEAR ENDED MARCH 31, 2023

2023

2022
(in thousands)

Operating transactions
Annual operating surplus
Non-cash items included in annual operating surplus:
Amortization of tangible capital assets (Note 16)
Write-off of leasehold improvements (Note 12)
Change in pension assets
Net loss on disposal and write-down of tangible capital assets (Note 16)
Bad debt expense (recovery)
Write-off of deferred lease incentives (Note 12)
Amortization of deferred lease incentives (Note 12)$

Increase in accounts receivable
Decrease in prepaid expenses and other assets(Decrease)/increase in accounts payable and other accrued liabilities
Increase/(decrease) in payable to Orphan Well Association(Decrease)/increase in deferred revenue
Cash provided by operating transactions
Capital transactions
Acquisition of tangible capital assets (Note 16)
Proceeds on disposal of tangible capital assets
Cash applied to capital transactions
Financing transactions(Decrease)/Increase in spent deferred capital contributions (Note 10)
Cash (applied to) provided by financing transactions(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

$

1,348

$

6,100

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

13,921
1,056
965
663
(16)
(1,450)(1,567)
19,672
(212)
743
8,688
(878)
11,03739,050(12,808)47(12,761)(12,950)(12,950)

(240)
(240)

240
240

(9,395)52,56643,171

26,34026,22652,566$

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

9

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
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 safe, efficient, orderly andenvironmentally responsible development of hydrocarbon resources over their entire life cycle. This includes allocating andconserving 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 allcomponents 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 administration fees at their realizablevalue. Cash received for which services have not been provided by year end is recognized as deferred revenue.
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.
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 tocompensate 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.
Accrued benefit obligations are actuarially determined using the projected benefit method prorated on length of service andmanagement's best estimate of 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.

10

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (continued)
Basis of Financial Reporting (continued)
Employee future benefits (continued)
Actuarial gains and losses are amortized over the average remaining service period of the active employees, which is 11.2 years(2022 - 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, PublicService Pension Plan and Supplementary Retirement Plan for Public Service Managers. Defined contribution plan accounting isapplied to these plans as the AER has insufficient information to apply defined benefit plan accounting. Accordingly, pension expensecomprises 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
Cash and cash equivalents
Accounts receivable
Pension assets
Accounts payable and other accrued liabilities
Payable to the Orphan Well Association

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

Environmental Liabilities
Deferred lease incentives

Cost
Amortized cost

The AER has not designated any financial assets or liabilities in the fair value category, does not have any significant foreign currencytransactions and does not hold any derivative contracts. The AER has no significant remeasurement gains or losses andconsequently 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.

11

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (continued)
Basis of Financial Reporting (continued)
Liabilities
Liabilities are present obligations of the AER to external organizations and individuals arising from past transactions or eventsoccurring before the year end, the settlement of which is expected to result in the future sacrifice of economic benefits. They arerecognized when there is an appropriate basis of measurement 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 astraight-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 anenvironmental 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 thefollowing 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.

12

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
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 theacquisition, design, construction, development, improvement or betterment of the assets. Cost includes overhead directly attributable
to construction and development of the asset.
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
5 - 12 years
Computer hardware
Straight line
4 years
Computer software - purchased
Straight line
4 years
Computer software - developed
Declining balance
5 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 iscomplete 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, or when the value of future economic benefits associated with the tangible capital assets is less than their net bookvalue. The net write-downs are accounted 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 tothe use of actuarial assumptions. The resulting estimates are within 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 ofcontamination, the responsibility 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, 2022, the AER adopted the new accounting standards PS 3280 Asset Retirement Obligations. There was no material
impact on the AER’s consolidated financial statements, as discussed in Note 14.

13

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
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, 2023:
PS 3400 Revenue (effective April 1, 2023)
This standard provides guidance on how to account for and report on revenue, and specifically, it differentiates between revenue
arising from exchange and non-exchange transactions.
PS 3160 Public Private Partnerships (effecitve April 1, 2023)
This standard provides guidance on how to account for public private partnerships between public and private sector entities, where
the public sector entity procures infrastructure using a private sector partner.
Management is currently assessing the impact of these standards on the consolidated financial statements. These standards are notexpected to have a significant impact on the AER's 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 pipelinesthat 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 directed transfer fees, and forfeited security deposits through theOrphan Fund. During the year ended March 31, 2023, the AER collected and transferred $78,090 (2022 - $73,788) in levies, $669
(2022 - $436) in application fees and $1,535 (2022 - $3,600) in forfeited security deposits.
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 averagemonthly cash balance. The funds are available to be withdrawn upon request. During the year ended March 31, 2023, the AER
earned interest at an annual average rate of 3.5% (2022 - 0.8%).
Cash and cash equivalents includes restricted funds of $7,447 (2022 - $11,159), as reflected in deferred revenue (discussed in Note
10).
Note 8 ACCOUNTS RECEIVABLE(in thousands)
Accounts receivable are unsecured and non-interest bearing.
2023

Accounts receivable

2022

Gross amount

Allowancefor doubtful
accounts

$

$

3,187

Net
recoverable
value(260) $

2,927

Net
recoverable
value
$

1,684

14

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
Note 9 ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES(in thousands)
2023
Trade and other accrued liabilities
Lease termination payable$

Accrued salaries and benefits
$

2022

9,743
5,820
10,45426,017$

12,481
7,376
6,868
26,725$Note 10 DEFERRED REVENUE(in thousands)
Deferred revenue consists of the following:
2023
Deferred contributions
Unearned revenue

(1)

$
$

2022

7,447
210
7,657

Spent deferred capital contributions$

11,159203
11,362

$

$

240

7,657

$

11,602(1) Deferred contributions
2023

Balance at beginning of year

Government ofAlberta$
10,837

2022

Other
$

Total

322

$

Total

11,159$143

Cash contributions received/receivable during year

12,811347

13,15828,369Less: amounts recognized as revenue(16,514)(356)(16,870)(17,113)

-

-

-

(240)

Transferred to spent deferred capital contributions
Balance at end of year

$

7,134

$

313

$

7,447

$

11,159Note 11 FINANCIAL INSTRUMENTS
The AER has the following financial instruments: cash and cash equivalents, accounts receivable, accounts payable and otheraccrued liabilities, and payable to the Orphan Well Association.
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 to fulfill upcoming obligations. In addition, the AER maintains arevolving line of credit which provides financial flexibility to allow the AER to meet its obligations if funding cannot be collected on atimely basis.

15

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
Note 11 FINANCIAL INSTRUMENTS (continued)(b) Credit risk
The AER is exposed to credit risk from potential non-payment of accounts receivable. 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 and economic circumstances.
Note 12 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.
2023

Balance at beginning of year
Write-off of lease incentives(1)Amortization
Balance at end of year

ReducedLeaseholdrent benefits
improvement and rent-free
costs
periods$
9,370 $
1,945 $
(1,136)(330)$
8,234 $
1,615 $

2022

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

Total
14,332(1,450)(1,567)
11,315(1) In 2022, the AER exited a portion of the lease for its Calgary Head Office. As a result, the AER wrote off the related leasehold improvements

and lease incentives pertaining to this office space.

Note 13 ENVIRONMENTAL LIABILITIES(in thousands, unless otherwise noted)
The AER has a mandate to protect public safety and the environment. As at March 31, 2023, the AER is not responsible, nor has it
accepted responsibility, for performing remediation and reclamation work at contaminated sites. The AER has $nil (2022 - $nil)
environmental liabilities recorded.
As at March 31, 2023, the AER is administering 29 (2022 – 29) legacy sites. Of these sites, during the year ended March 31, 2023,
the AER identified one (2022 – two) site as having immediate public safety and environmental risk, and the AER needed to takeappropriate action to mitigate these risks. During the year ended March 31, 2023, the AER incurred $3 (2022 - $9) 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 monitoring are included.

16

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
Note 14 ASSET RETIREMENT OBLIGATION
Tangible capital assets are assessed for asset retirement obligations annually. Asset retirement obligations are initially measured asof 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, 2023, the estimate of the liability is insignificant and therefore no liability was recognized. During the year ended March 31,
2023, the AER incurred $nil (2022 - $nil) in costs to settle the obligation.
Note 15 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, PublicService Pension Plan and Supplementary Retirement Plan for Public Service Managers. For the year ended March 31, 2023, theexpense for these pension plans is equal to the contributions of $12,207 (2022 - $12,253) and is included in salaries, wages andemployee 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 oneach employee's years of service and remuneration.
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, 2023 is based 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, 2023, the weighted average actual return on plan
assets was -1.9% (5.2% in 2022).
Significant weighted average actuarial and economic assumptions used to value accrued benefit obligations and pension benefit costs
were as follows:
Accrued benefit obligations
Discount rate
Rate of compensation increaseLong-term inflation ratePension benefit costs for the year
Discount rate
Expected rate of return on plan assets
Rate of compensation increase

2023
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

2022
4.5%
4.0% until March 31, 2023,
3.0% thereafter
2.0%
2022
4.4%
4.4%
0% until March 31, 2022,
3.0% thereafter

17

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
Note 15 EMPLOYEE FUTURE BENEFITS (continued)
The funded status and amounts recognized in the Consolidated Statement of Financial Position were as follows:

2023
Market value of plan assets
Accrued benefit obligations
Plan surplus
Unamortized actuarial gains
Pension assets

$

$

2022

81,577 $(67,126)
14,451(4,548)9,903 $

76,893(70,739)
6,154(2,196)
3,958(in thousands, unless otherwise noted)
The pension benefit costs for the year included the following components:

2023
Current period benefit cost
Interest cost
Expected return on plan assets
Amortization of actuarial (gains)/losses

$

$

2022

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

4,045
3,197
(3,227)251
4,266

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

$

2023
4,189
9,615
751

$

2022
5,009
3,298
684

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

2023
45.4%
24.3%
18.5%
11.8%
100.0%

2022
44.1%
23.4%
20.0%
12.5%
100.0%

18

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
Note 16 TANGIBLE CAPITAL ASSETS(in thousands)

Estimated useful life

2023

2022

Land

Leaseholdimprovements

Furniture andequipment (1)Computerhardwareand software

Indefinite

Term of thelease

5-12 years

4-5 years

Total

Total

Historical cost (2)Beginning of year
Additions
Disposals, including write-downs
Accumulated amortization
Beginning of year
Amortization expense
Effect of disposals, including
write-downs

$

282
-

$

282
$

-

46,366
1,398

$

(141)
47,623$-24,3842,737

12,400
803

$

(301)
12,902$(132)
26,9899,529
770

138,338
10,607

197,386
12,808(8,689)140,256$(270)
10,029106,030
9,607

282

$

20,634

$

2,873

$

32,883

Net book value at March 31, 2022 $282$

21,982

$

2,871

$

32,308$(9,131)
201,063$

139,943
13,114(8,264)
107,373

Net book value at March 31, 2023 $(1)$(23,968)
197,386$(8,666)
144,391$

208,404
12,950148,271
13,921(22,249)
139,943

56,672$57,443

Furniture and equipment includes organization-owned vehicles, office equipment, furniture and other equipment.

(2) Historical costs includes work-in-progress at March 31, 2023 totalling $6,381 (2022 -$2,297) comprised of: computer hardware and software

includes work-in-progress totalling $6,369 (2022 - $2,297) and leasehold improvements $12 (2022 - $nil).

Note 17 ACCUMULATED SURPLUS(in thousands)
The accumulated surplus of the AER is calculated as the sum of the AER's net debt and its non-financial assets. The accumulated
surplus represents the net assets of the AER and comprises the following:
2023

2022

Net investment in tangible capital assets (1)Investments intangible capital
assets (1)$48,073365

Unrestricted
net assets$
25,514 $
1,348
(365)

Balance at end of year$$

Balance at beginning of year
Annual operating surplus

48,43826,497$

Total
73,587
1,348
74,935$$

Total
67,487
6,100
73,587(1) Excludes leasehold improvement costs received by the AER as a lease incentive and related amortization.

19

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
Note 18 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 andrevenues 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:
2022

2023
Contractual rights from operating subleases

$

543

$

316

As at March 31, 2023, estimated amounts that will be received or receivable for each of the next five years are as follows:
2023-242024-252025-262026-272027-28

550
433
439
182
-

$

1,604

Note 19 CONTINGENT LIABILITIES(in thousands)
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, 2023, accruals totalling $1,312 (2022 - $1,359) have been recognized as a liability.
The AER has identified various sites where contamination may exist and the level of contamination is unknown at this time. As at
March 31, 2023, no liability has been recognized for these sites as further testing and evaluation is required to determine the extent ofimmediate actions necessary. No liability for remediation on other sites has been recognized as the AER becoming responsible forthese sites is not determinable; the AER does not expect to give up any future economic benefits; no reasonable estimate of theamount can be made; or a combination of these factors. The AER’s ongoing efforts to assess contaminated sites may result inenvironmental remediation liabilities related to newly identified sites, or change in the assessment or intended use of existing sites.
Any change to the environmental liabilities will be accrued in the year in which they are assessed as likely and measurable.

20

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
Note 20 CONTRACTUAL OBLIGATIONS(in thousands)
As at March 31, 2023, the AER had contractual obligations totalling $125,189 (2022 - $146,445).
Contractual obligations are obligations of the AER to others that will become liabilities in the future when the terms of those contracts
or agreements are met.
As at March 31, 2023, estimated payment requirements for obligations under operating leases and contracts for each of the next five
years and thereafter are as follows:
2023-242024-252025-262026-272027-28
Thereafter$

50,733
16,824
10,891
10,116
9,675
26,950$125,189

Note 21 ASSETS UNDER ADMINISTRATION(in thousands)
The AER administers security deposits in accordance with specified acts and regulations. Security deposits are held on behalf ofdepositors with no power of appropriation and therefore are not reported in these consolidated financial statements. The AER does
not have any financial risk associated with security collected. Security, along with any interest earned, will be returned to thedepositors upon meeting specified refund criteria. Security may be forfeited and transferred to the Orphan Well Association for thecost of suspension, abandonment, site decontamination and surface land reclamation.
As at March 31, 2023, assets under administration included the following types of security deposits:
2023
Letters ofcreditCash
Liability Management Rating
programs and landfills
Mine Financial Security program
Other programs$$

102,539
67,07911,061
180,679$$

281,789
1,245,343
10,923
1,538,055

2022
Surety Bond$$

247,312247,312

Total$

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

Total
$

368,1031,520,516
21,134$ 1,909,753

Note 22 COMPARATIVE FIGURES
Certain 2022 figures have been reclassified, where necessary, to conform to the 2023 presentation.
Note 23 APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS
These consolidated financial statements were approved by the AER Board of Directors on May 18, 2023.

21

ALBERTA ENERGY REGULATORENERGY REGULATION EXPENSES - DETAILED BY OBJECTYEAR ENDED MARCH 31, 2023

Schedule 1

2023

2022
(in thousands)

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

147,068
22,60818,84817,801
13,114
1,703
1,640
418
296
223,496$$

132,71226,53927,305
17,71013,921
1,274
1,292
663
205
8
221,629

22

ALBERTA ENERGY REGULATORSALARY AND BENEFITS DISCLOSURE
YEAR ENDED MARCH 31, 2023

Schedule 2

2022
Restated (4)

2023
Base
salaryOther
non-cash(2)
benefits

Other cash
(1)
benefits

Total

Total

(in thousands)
Position
Board Members (3)President and Chief Executive Officer(4)
Chief Hearing Commissioner
Chief Operations Officer(5)
Executive Vice-President, Law and General Counsel
Vice-President of Finance and Chief Financial Officer(6)Vice-President of People, Culture and Learning

$

460
342
224
271
230
239
225

Former Executive Vice-President, Law and General Counsel (7)

41

$

40
11
15
11
9
14
19

$

38
83
59
84
84
87
74
12

$

498
465
294
370
325
335
313

$

468
464
276
347
327
-

72

346

(1) Other cash benefits include payments in lieu of vacation, pension and health benefits, as well as vehicle allowances and other cash reimbursements.
(2) 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.
(3) The incumbent Board of Directors consists of eight members. Seven Board Members are remunerated with monthly honoraria as per rates prescribedin the Orders in Council, one Board Member is unpaid. Two new Board Members were appopointed on August 22, 2022 and March 14, 2023, andone member was rescinded on October 24, 2022.
(4) The 2022 figures have been restated to include the two individuals who occupied this position during 2022. In October 2021, an incumbent wasappointed as acting Chief Hearing Commissioner and held the position until April 14, 2022.
(5) The incumbent held the position effective May 23, 2022.
(6) Effective April 6, 2022 the position became a voting member of the Executive Leadership Team.
(7) The incumbent retired on May 24, 2022.

23

ALBERTA ENERGY REGULATORSALARY AND BENEFITS DISCLOSURE
YEAR ENDED MARCH 31, 2023

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, 2022
and 2023, and participated in the SEPP and SRP maintained by the AER. The SEPP and SRP provide retirement benefits to compensate
senior staff who do not participate in the Government of Alberta's management pension plans.
2023

Position(5)
Executive Vice-President, Law and General Counsel
Vice-President of Finance and Chief Financial Officer
Vice-President of People, Culture and Learning(6)Current
service cost
$
24
33
28

Prior service
and other costs
$
(1)
(1)
-

2022

Total
$

Total
23
32
28

$

39
-

The SEPP and SRP accrued obligation for each executive employed by the AER during the years ended March 31, 2022 and 2023 isoutlined in the following table:

Position
Executive Vice-President, Law and General Counsel(5)Vice-President of Finance and Chief Financial Officer
Vice-President of People, Culture and Learning(6)Accruedobligation
April 1, 2022
$
185
57
46

Changes in
accruedobligation
$
13
36
24

Accruedobligation
March 31, 2023
$
198
93
70

Accruedobligation
March 31, 2022
$
185
57
46

24

ALBERTA ENERGY REGULATORCONSOLIDATED ACTUAL RESULTS COMPARED WITH BUDGETYEAR ENDED MARCH 31, 2023

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

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
Net capital investment
Surplus$(1)

Adjustments
Adjusted budget(in thousands)

200,730
78,50012,811
1,299
675
294,015$640
10,800203
3,177
14,820$201,370
78,50023,611
1,502
3,852
308,835

Actual

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

219,015
78,500297,515(3,500)15,32015,320(500)

234,335
78,500312,835(4,000)223,496
80,294
303,790
1,348

14,500(18,000)(5,500)
5,000

9,000
(13,000)(3,500)(500)(4,000)12,808(13,114)
(418)
(47)
(771)

-

$

-

$

-

$

2,119

(1) Adjustments reflect changes to the original budget approved by the Treasury Board. These adjustments reflect an extension of grant funding to accommodate work
completed in 2023 for the Public Geoscience grant received in 2022, higher investment income, a reduction to amortization expense and capital spending, and higher
energy regulation expenses to address inflationary increases for certain expenditures.

25

ALBERTA ENERGY REGULATORRELATED PARTY TRANSACTIONSYEAR ENDED MARCH 31, 2023

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 2023, 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
2023
2022

Other entities
2023(in thousands)
Revenues
Government of Alberta grants$

Information, services and fees$

16,754333
17,087(in thousands)$

16,988334
17,322

$

$

671
671

$

Entities in the
Ministry of Energy
2023

$

2022

$

$

341
341

Receivable from$

Prepaid expenses and other assets

$

485
485

$

Other entities
2023(in thousands)
ExpensesComputer services
Buildings
Administrative
Consulting services

2022

2022
(in thousands)

$

$

386
386

$

$

3,441
433
515
174
4,563

$

3,573
400
370
187
4,530

130

$

137

$

13

$

6

$

-

$

-

$

36

$

36

Payable to

$

-

$

-

$

1,987

$

1,307

Deferred revenue

$

7,134

$

10,837

$

200

$

259

Contractual obligations (a)

$

-

$

-

$

3,869

$

4,850

(a) 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.

26

LET’S CONNECT
ALBERTA ENERGY REGULATORHead Office
Suite 1000, 250 – 5 Street SW
Calgary, Alberta T2P 0R4

aer.ca@aer_news

inquiries
1-855-297-8311

ABEnergyRegulator

ABEnergyRegulator

Alberta-Energy-Regulator

media@aer.ca

inquiries@aer.ca
24-hour emergency
1-800-222-6514

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