2021 22
Annual Report01

AN ACKNOWLEDGEMENT
In the spirit of reconciliation, the AER
acknowledges that our head office is locatedOUR MANDATE

on the Treaty 7 traditional territory of the

To ensure the safe, efficient, orderly, andBlackfoot Confederacy (Kainai, Piikani, andenvironmentally responsible development ofSiksika Nations), the Tsuut’ina Nation, theoil, oil sands, natural gas, and coal over their

Stoney Nakoda Nation, and the Métis Nation

entire life cycle. This includes allocating andRegion 3. We are situated on land where theconserving water resources, managing public

Bow River meets the Elbow River, and thelands, and protecting the environment while

traditional name of this place is “Mohkinstsis,”providing economic benefits for all Albertans.

which we now call the City of Calgary.

OUR VISIONWe also have field centres located on the

The AER is a trusted regulator that delivers

traditional territories of Treaty 6 and Treaty 8,

effective and efficient oversight of resource

and all other regions of the Métis Nation

02

development.

of Alberta.

CONTENTS

About Us

Messages

Highlights

Looking Ahead

Consolidated
Financials

01 03 07 13 14

03

WHAT WE
DON’T

WHAT WE REGULATE

over

over

over

over

over

440 000

156 000

28 000460

19 000kilometresof pipelines*

operating natural gas& oil wells

oil facilities

operatinggas processing plants

gas facilities

gasoline

pipelines thatcross borders
over

over

230

145

25

8

5

operating oilfield waste
management facilities

primary/enhanced
recovery in situ projects

thermal recovery
in situ projects

operatingoil sands mines

operatingbitumen upgraders
electricity

9

2

3

1

operatingcoal mines

suspendedcoal mines

decommissioning
coal mines

decommissioning coalprocessing plant*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.

geothermal, brine-hosted& hard rock minerals

regulatednatural gas rate

April 2022

ABOUT US
Alberta’s energy sector is vast and complex: it includes
crude oil, natural gas, oil sands, coal resources, and an
extensive pipeline network that moves these resources
to markets. Ensuring that companies operate in a safe,
efficient, orderly, and environmentally responsible manner
is no simple task. Enter the AER, the primary regulator forenergy development in the province.
Few organizations anywhere are responsible for as large
and varied a mix of energy resources. We oversee
extensive established reserves:• 1.6 billion barrels of conventional oil• 160 billion barrels of bitumen• 25.2 trillion cubic feet of natural gas• 36 billion tonnes of coal
In 2021, the production value of Alberta’s energy sector
totalled $108 billion.
Under the direction of the Government of Alberta, the
AER’s mandate is expanding from oil, oil sands, naturalgas, and coal to include additional areas of resource
development, such as geothermal and metallic andindustrial minerals. We are in the process of developing
the rules and directives to regulate each new area of
resource development. The directives will ensure thatdevelopment is carried out to protect public safety
and the environment while ensuring that the regulatory
system is as efficient as possible.
To produce and move energy to market requires morethan 156 000 natural gas and oil wells, over 444 000 kilometres of pipelines (about half of Canada’s entire pipeline

network), over 47 000 oil and gas facilities, 5 operating
oil upgraders, as well as 9 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 Parks and work closely witha number of government departments on regulatory andpolicy issues, including Alberta Municipal Affairs, Alberta
Indigenous Relations, and the Aboriginal Consultation
Office. Our role is to take the policy direction set bygovernment and apply it to how we regulate energy
development in a way that is modern and efficient, while
protecting the environment and keeping Albertans safe.
We also assist government during the policy development
process, providing analysis, advice, and technical expertise.

balance the needs of a multitude of diverse stakeholders.
The 992 talented and dedicated employees of the AER
work to protect what matters to Albertans – public safety,
the environment, orderly energy development, andproviding economic benefit for Albertans and all Canadians.

AROUND THE PROVINCE
Wood Buffalo
National Park

Treaty 8Fort McMurray
Regional OfficeGrande Prairie
Field Centre

Slave Lake
Regional Office
Bonnyville
Field Centre

Edmonton Regional Office &Alberta Geological Survey

The AER holds high standards for responsible developmentof resources and prioritizes the accountability of industry
across the province. The Government of Alberta, throughlegislation, gives us the authority to ensure the province’s
energy resources are developed in a safe and environmentally responsible manner and without waste. We’re
involved at every stage of an energy project’s life cycle.

Drayton Valley
Field Centre

JasperNational
Park

Treaty 6
Red Deer
Field Centre

Banff
National
Park

10Core Research Centre
Calgary Head Office

Treaty 7
Medicine Hat
Field Centre

locations
Since 1938, Alberta has relied on strong regulation toensure that our energy resources are developed responsibly.
The AER’s regulatory decisions are always based onevidence and supported by science, and we strive to992

employees

01

MESSAGES

02

HELLO,As I look back on 2021/22, I feel incredibly proud of
how well the AER team delivered during anotheryear of significant change and challenge. We’ve
learned to regulate during a worldwide pandemic.
We’ve solidified our strategic direction in supportof the Government of Alberta’s priorities for energy
development. But, more than anything, I’m proudof the job our employees and leadership continue
to do every day to ensure that Alberta’s energy
resources are developed safely and responsibly.
On behalf of the Board of Directors, I would like tothank the entire AER team for their contributions
during this past year.
As you know, we’ve spent considerable time in recent
years reflecting on the future and how best to position
the AER for what’s next. In March, we publicly released an
updated mission, vision, and values as well as the AER’s
2022–25 strategic plan. This multiyear strategy focuses
on establishing a more efficient way of regulating whilestrengthening the AER’s culture and ensuring that we meetthe expectations of Albertans, Indigenous communities,
and stakeholders.

The strategy is foundational to our support of Alberta
government priorities for energy development as well as
meeting the expectations of all Albertans. We know how
important it is to provide a predictable and streamlined
regulatory environment. We also know the value of a regulatory environment that balances the overall environmental,
economic, and social outcomes for the benefit of all.
Throughout this report, you will see real examples of how
we’re achieving these priorities while continuing to build our
reputation as a credible, reliable, and innovative organization.
As I look to the year ahead, I’m excited for what’s to comefor the AER. We are ready and well positioned for theincrease in energy development that is expected withhigher commodity prices in a post-pandemic future. We
also look forward to fulfilling our expanded mandate thisyear, which includes regulating new emerging energy andmineral resources, such as geothermal and metallic andindustrial minerals.

DAVID GOLDIECHAIR, AER BOARD OF DIRECTORS

03

04

GREETINGS,Over the past year change has been a constanttheme for us here at the AER. And we havemanaged through that change, leaving us
well positioned for the future!
Our 84-year history has included different names anddifferent people but our mandate – the ‘what’ we do –has remained largely unchanged: ensure the safe, efficient,orderly, and environmentally responsible development ofenergy resources.
Today we are moving forward as a team to implementchanges that empower our teams and deploy our
resources well to attend to our priorities.
Additionally, we have completed significant regulatory
enhancement projects that will support and hold industry
to account in complying with the expectations of Albertans.
All of this while continuing to meet our core business expectations in areas such as licensing and compliance. And ofcourse, managing the impact of Covid on our operations.
We’ve also moved the needle on digitization. We are now
fully in the cloud environment, and many of our processes
and forms can be managed online.
Over the past year, we’ve developed a new strategic planthat looks out to 2025. We updated our mission, vision,and values. And we continue to explore how we can
improve our culture at the AER. A big piece of that work

has been prioritizing building a more inclusive, innovative,and empowered environment, including a more engaged
presence with Indigenous and Métis communities.
Last year, the Government of Alberta announced that the
AER would also regulate emerging energy and mineral
resources – geothermal and metallic and industrial minerals.
This is exciting news and affirms that our organization ishonouring our mandate to offer high-quality, efficient, andeffective regulatory service to Albertans. It also shows thatwhile our historical responsibilities remain the same, how
we achieve that can – and will – evolve.
And none of these things are possible without the passion,
involvement, and voice of everyone at the AER. A special
thank you to our employees and our many stakeholders
and partners. Your adaptability and determination toaccelerate positive change is inspiring.  
One can’t help but feel energized as we step into new
responsibilities and new ways of supporting Alberta’s
energy diversification. No matter what type of resource
we regulate, we are committed to working every day toearn the confidence of those we serve.

LAURIE PUSHORPRESIDENT & CEO

05

HIGHLIGHTS

06

Over the past year, the AER has focused heavily on
regulatory change, with particular attention to efficiency
initiatives, technology enablement, and meaningful
engagement with Albertans, Indigenous communities,
and industry stakeholders.

Industry Compliance
Inspections and Compliance Rate
The AER regularly monitors and inspects thousands ofwells, production and processing facilities, pipelines,
and coal and oil sands mines each year to ensure thatcompanies are following our requirements and developing
energy resources in a manner that is safe and protects
the environment. We do this by visiting energy sites
to inspect a company’s activities and by auditing theinformation they provide.
In 2021/22, the AER conducted 7825 inspections, ofwhich 5891 (75.3%) resulted in a satisfactory compliancefinding. In addition, the AER audits all aspects of energy
development to confirm that industry follows specificoperational and reporting requirements. In 2021/22
the AER performed 6168 audits and issued 1176 notices
of noncompliance.

Investigations and Enforcement

Emergency Management

If we find that 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 providing a
notice of noncompliance to issuing orders. Orders are an
important tool to prevent, stop, or minimize environmental
impacts or risks to public safety. During the last fiscal
year, the AER issued about 85 orders.

Depending on the size and severity of the incident,
emergencies are ranked as an Alert or Level 1, 2, or 3.
In 2021/22, 81 energy-related emergencies were reported
to the AER, with 56 being ranked as alerts, 20 as Level 1,
and the remaining 5 as Level 2. No Level 3 incidents werereported. Emergency response staff are deployed to someLevel 1 and all Level 2 and Level 3 emergencies. In 2021/22,
AER’s emergency response staff were deployed to 17 emergencies.

Major investigations are formal processes that must withstand a court challenge. Investigations can take anywherefrom three months to two years to complete.
When a noncompliance is deemed to be serious, it istriaged for investigation. When an investigation is completed,an enforcement action is selected. Enforcement tools
range from issuing warning letters to initiating prosecution.
The tools we use vary depending on the significance ofthe noncompliance.
In 2021/22, we opened 31 investigations, which resulted in
16 enforcement actions taken, including 9 warning letters,
5 administrative penalties, and 1 prosecution.
Since 2017, AER fines have totalled $3.6 million.

INSPECTIONSThe AER conducted 7825 inspections in 2021/22.

5891

1934

75.3%

satisfactorycompliance24.7% noncompliant

Regardless of the compliance and enforcement action
we take, our goal is to work with companies to bringthem back into compliance. The AER publicly reports onenergy incidents and enforcement actions through ourCompliance Dashboard available on aer.ca.
ENFORCEMENT ACTION
In the 2021/22 fiscal year, AER fines, creative sentences,and penalties totalled $110 250.

$110 250

In 2021/22, the AER completed 73 emergency response
plan audits, resulting in 39 notices of noncompliance, andevaluated 21 emergency response plan exercises, of which
all were deemed satisfactory.

Methane Reduction
The AER introduced requirements in 2020 to help reduce
methane in the upstream oil and gas industry. The newrequirements support the Government of Alberta’s target
to achieve a 45 per cent reduction in oil and gas methane
emissions from a 2014 baseline by 2025.
METHANE REDUCTION
45% reduction from 2014 baseline, by 2025.
As of January 2020, industry has reduced by 34%.
CO2 equivalent (tonnes)
25

11%

to go
0

2014

2025

07

The AER uses reported information and emission
estimates to evaluate the reductions achieved to date.
AER modelling predicts Alberta is on track to meet the
government’s 45 per cent reduction policy target by 2025.
In 2021, the AER did the following:• Completed aerial surveillance on 1065 facilities. Thatmakes a total of 5181 facilities surveyed since theinception of the aerial surveillance program.
• Field inspected 902 facilities, finding 224 noncompliances.
• Conducted 188 methane audits, finding 61 noncompliances.

assess the capabilities of oil and gas operators to meettheir regulatory and liability obligations throughout theenergy development life cycle. Meanwhile, Directive 088:
Licensee Life-cycle Management introduces programs
that will apply throughout a project’s life cycle, including
mandatory closure spend targets for oil and gas operators. Directive 088 also provides a holistic assessment,
considering more than 40 different factors, including
the company’s financial and liability risk; the company’s
administrative, operational, and closure performance; andthe remaining lifespan of the resource.

Liability Management

Inventory Reduction

Energy companies in Alberta are responsible for ensuring
their infrastructure and sites are safely closed and cleaned
up. The costs associated with this closure work — also
known as end-of-life obligations — are what is called“liability.” Over the past few years, Alberta has experienced a growing inventory of inactive infrastructure due
to a prolonged economic downturn, low oil prices, andincreased insolvencies.
In 2021, the AER 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. Our holistic
approach applies at all phases of energy development
rather than focusing late in the life cycle.
The updates to Directive 067: Eligibility Requirements for
Acquiring and Holding Energy Licences and Approvals
include requirements that allow the AER to better

082021 was the last year of the area-based closure (ABC)
program in that form. The voluntary program was developed by the AER, the Canadian Association of Petroleum
Producers, the Explorers and Producers Associationof Canada, and the Petroleum Services Association of
Canada to encourage companies to work together inproject areas to close oil and gas infrastructure and sites
more efficiently and effectively.
In 2021, 65 companies committed to spend nearly$355.2 million to decommission, remediate, and reclaim
oil and gas infrastructure and sites.
Effective January 2022, the AER has introduced mandatory and voluntary closure spend targets for all oil and gas
companies with inactive liability as part of Directive 088
and the inventory reduction program. This program
increases the amount of closure work occurring in Alberta,
reduces liability, and ensures more timely restoration ofland back to original or alternative uses.
Starting in 2022, all licensees with inactive inventory are
required to meet an annual mandatory closure spend
target. Companies are encouraged to collaborate using
the area-based closure approach to increase efficiency
of projects and complete more closure work. Incentives
focused on efficiency are available for those companies
who choose to commit to a voluntary closure spend
target in addition to their mandatory target.

Closure Activities
The primary method of reducing liability from inactive
infrastructure is by completing closure activities, which
involves decommissioning and reclamation activities.
In 2021/22, 11 816 wells were decommissioned. This is asignificant increase compared to previous years, which
can in part be attributed to the Government of Alberta’ssite rehabilitation program and AER changes to allow
some routine abandonment of commingled wells.
Approximately 2230 reclamation certificates were issued
during 2021/22, slightly lower than the 2564 reclamation
certificates issued in 2020/21.

Orphaning and Insolvency
Insolvency is when a company is unable to meet their
obligations, or their liabilities are greater than the value of
their assets, including oil and gas infrastructure. The AER’s
main focus when a company enters into insolvency is toprotect the public and the environment. In 2021, the AER
was involved in 26 insolvency-related files. At the end of2021, about 12 723 assets (6050 wells, 572 facilities, and6101 pipeline segments) were associated with licensees in
active insolvency proceedings.
CLOSURE ACTIVITIESIn 2021/22, well decommissioning significantly increased
and reclamation certificates issued slightly decreased.
Decommissioned wells

Reclamation certificates

12 0000

11 8162230
2017/18

2021/22

ORPHANING & INSOLVENCY
By the end of 2021, about 6050 wells were in active
insolvency proceedings.
Wells$ Oil (WCS)

14 000

0

90

2012

2021

0

BUILDING BETTER RELATIONSHIPSThe AER formed an Elders’ Circle to help the organization understand Indigenous culture and foster
better dialogue with Indigenous communities.
Doreen Healy isn’t one to take credit. As the AER’s
Resident Elder, Doreen loves to talk about the work
the organization has done to increase engagementwith Indigenous and Métis communities across theprovince. But you won’t hear much about her own
role in that.
Instead, you’ll hear this member of the Kainai
First Nation talk a lot about what others within
the AER have done to foster better relationships
with communities.
“From our CEO right through to our field staff –everyone cares about these relationships, and I
can’t take credit for any of that,” says Doreen.
“These are the people who do the work day-afterday to open doors and to keep these doors open
so we can have meaningful dialogue with Indigenous and Métis communities.”
But there’s no denying Doreen’s influence at the AER.
Since her start at the Energy and Utilities Board(the AER’s predecessor) in 2000, her list ofaccomplishments is impressive. Doreen and others
built the first Indigenous relations team in 2002.

In 2017, Doreen, along with many other AER staff,
developed Voices of Understanding with Dr. Reg
Crowshoe, a Blackfoot elder, to explain Indigenous
and western decision-making models and explore
the ways they could be brought together.
The latest initiative may be the most ambitious
and forward-thinking yet: the creation of an Elders’Circle with representation from First Nations andMétis communities across the province. “At AER,
we are creating this Elder advisory group with Dr.
Crowshoe’s guidance as a way to further build
relationships and understanding,” explains Doreen.
“We would like these Elders to share their wisdomand guide us so the AER can do an even better job
working with Indigenous communities.”
The Elders’ Circle has six members – three men andthree women and all respected members of theircommunities. “This is about helping AER understand treaty rights better and foster connections
with these communities built on trust and mutual
respect,” says Doreen.
While Doreen will pass on any accolades forstarting this innovative advisory group, there is noquestion that her influence will leave a legacy ofalways striving for more common ground between
Indigenous communities and the regulator – andalways looking for new ways of doing that.

09AN EYE ON CULTURE
Organizations that get culture right are aligned from
top to bottom and left to right on their purpose andhow things are done.
Let’s start with a bit of a riddle. What is invisible,
yet its own effects are very much seen and felt?
If you answered wind, you’re right. And if you
answered company culture, you also win.
When it’s blowing in your direction, wind – andculture – can make things feel like smooth sailing.
And when it’s gusting against you, it makes things
a lot more difficult.
Another riddle: how can you change the course ofculture wind at an organization?
“We’ve all heard the quote that culture eats strategy for breakfast – and that is the truth,” explains
Erin Kurchina, AER’s vice-president of People,
Culture, and Learning. “Culture is something you
have to have your eye on at all times.”
And at the AER, that means more than simply
talking about it. In the last year, the organization
has started to move the culture needle.
The first thing they did was listen to what
their employees had to say. “We launched an

10Engagement and Diversity, Equity, and Inclusion(DEI) survey – with the most recent one completed
in January 2022,” says Erin. “These surveys allowed
us as an organization to really understand whatmattered most to employees.”
The next undertaking was creating both cultural
and DEI advisory groups. Each 12-member advisory group assessed the areas of importance for
employees and recommended a number of ways
our organization could address them.
That work formed the foundation of AER’s culture
shift. The organization has a new employee value
proposition, a commitment to evolve DEI in ourorganization, and several activities underway tomove the culture headwinds in employees’ favour.
The organization is building a three-year planthat includes a review of policies, processes, andprograms to ensure alignment with enterprisevalues and follows through on the AER’s commitment to creating a safe, inclusive, and empowering
work environment.
“It’s clear that our culture and our commitment to DEI
matters to our employees, says Erin. “There’s a lot oforganic work being done.” It’s a really exciting time.

Application Processing
The AER has established application processing targets
to ensure we review applications in a timely manner.
There are more than 100 different types of applications
that we review, and each application type receives atarget that reflects the complexity of the application
process. Of the 37 150 applications processed in 2021/22,
there were 29 703 routine applications and 7447 nonroutine (high-risk and more-complex) applications. We met
our processing targets for 99 per cent of routine applications and almost 98 per cent of nonroutine applications.

Modernization
As Alberta’s energy regulator, we contribute to Alberta’s
competitiveness by ensuring our system is modern andefficient, while protecting the environment and keeping
Albertans safe. Our work to modernize the regulatory
system involves making sure the systems, tools, andrequirements we have in place are current with today’s
technology. It also involves removing duplication, making
our processes more efficient, minimizing risks to the
public and environment, and contributing to the Government of Alberta’s red tape reduction initiative.

In the past fiscal year, the AER has revised more regulatory
instruments, such as directives, forms, and manuals, thanany previous year on record. At the same time, we haveupheld our environmental and public safety mandateand conducted stakeholder and public engagement
where appropriate.
When the red tape initiative launched, the AER had
approximately 41 200 requirements across 219 regulatory
instruments such as directives, forms, and manuals. In
2021/22, the AER updated 37 regulatory documents
and reduced the total number of our requirements by
13 per cent. That’s 2832 requirements that were obsoleteor redundant, which helps oil and gas companies andstakeholders to better understand AER requirements andmore easily navigate our regulatory instruments.

At the AER, we recognize the critical role technology
plays in improving both processes and data.
In 2021, we continued to migrate AER technology
infrastructure to the cloud, which enables us to share data
more effectively across our organization and is accelerating innovative solutions, such as OneStop.

IDA/OneStop

The AER’s 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 andinefficient processes, and speed up approvals.

In 2014, we introduced the Integrated Decision Approach(IDA) and the OneStop technology platform. Since then,our audit, inspection, and application review processes
have become more efficient while ensuring the public andenvironment remain protected. OneStop uses a complex
set of rules to automate routine (low-risk) applications

2832 reduced
41 200 total

In the past fiscal year, the AER• received 28 249 applications via OneStop,• received 266 715 notifications and submissions
via OneStop,• enhanced site selection for inspections as informed byrisk, and• continued to add new functionality to OneStop.

New Statement of Concern FormIn the last half of 2021, we released a new statement ofconcern (SOC) form. We updated it to make the submission
process more user friendly. This new form will help us
better understand the concerns of SOC filers and theirprior engagement with applicants.

Cloud Migration

Updating Our Requirements

REGULATORY REQUIREMENT REDUCTION
To date, we have reduced by 13 per cent.

and forward nonroutine (high-risk and more-complex)
applications to technical experts for review.

• SOC filers can now submit the form and supporting
documents online, as well as by email or regular mail.
• Detailed instructions help to identify concerns andappropriate documentation.
• Additional resources are available to resolve concerns
through dispute resolution.
STATEMENT OF CONCERN FORM
Our new form will help us better understand theconcerns of SOC filers and their prior engagementwith applicants.

ONESTOP TECHNOLOGY PLATFORM
In the fiscal year, through OneStop the AER received:

28 249 applications
266 715 notifications and submissions

11

New Levy Methodology
The AER is funded by industry through administration
fees levied to operators in the province. After extensive
feedback with industry stakeholders and a review offunding mechanisms from other jurisdictions, in 2021, theAER changed how it calculates the administration fees
levied on energy development projects and activities.
Moving forward, the total levy amount will be allocatedon a sector-specific basis to more accurately reflect
where the AER spends staff time and effort. This includes
applying the levy to inactive wells and adding two sectors
not previously levied – pipeline operators and large
conventional oil and gas facilities, such as gas plants andoil sands processing plants not directly tied to production.
To enable these and future changes, the AER established a
new levy system technology to more efficiently accommodate new regulatory sectors as the AER’s mandate expands.

Hearings

Proceedings Resulting from Regulatory Appeals

The AER may hold a public hearing to inform a decision
on a disputed energy development activity. A hearing
is conducted by a panel of hearing commissioners,
who are independent decision makers appointed by theGovernment of Alberta. The decisions made by hearing
commissioners can pertain to applications made to
the AER for a new activity such as an oil and gas wellor mining project, the AER’s issuance of a reclamation
certificate, or any other activity regulated by the AER.

In 2021/22, hearing commissioners commenced sevenproceedings to confirm, vary, suspend, or revoke AER
decisions, and continued one proceeding that began
in a previous year. These are situations where a party
requested a regulatory appeal of an AER decision, such as
issuing a reclamation certificate or approving an energy
development application, and the request is granted.
Five proceedings flowing from regulatory appeal wereadjourned or cancelled at the request of the participants,
one remains in progress, and two resulted in public hearings
being held.

Proceedings for New Energy Development
Applications
In 2021/22, hearing commissioners commenced two
proceedings to consider new development applications
and continued six proceedings that began in previous
years. A decision was issued for one proceeding thatwent to a hearing.

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 the AER’s work to oversee resource
development. The Data Hub is available for all Albertans
to access up-to-date information when they need it.
The online platform is one way we are working to increase
and simplify access to our data. We’ll continue to add tothe Data Hub over time.

Disclosure
In 2021/22, the AER did not receive any disclosures of wrongdoing under the AER’s Whistleblower Protection Policy.

12

The joint provincial-federal review panel for the Benga
Mining Limited Grassy Mountain Coal Project issued its
report and decisions on the applications to construct,
operate, and reclaim a new open-pit metallurgical coalmine following a six-week public hearing in late 2020.
The panel determined the project was not in the public
interest and denied the applications.
The remaining proceedings for new development applications are pending a decision or have been adjournedor cancelled at the request of the participants.
JOINT PROVINCIAL-FEDERAL REVIEW PANEL
The review panel for the Benga Mining Limited Grassy
Mountain Coal Project issued its report and decisions.

Cost Orders
Hearing commissioners also issued three cost orders in
2020/21 where parties were awarded funds in relation totheir involvement in a proceeding.
Alternative dispute resolution by hearing commissioners
supported resolution on four proceedings in 2021/22.
In 2021/22, COVID-19 and associated health restrictions
continued to necessitate the use of virtual formats, rather
than in-person interactions between those involved inhearings and alternative dispute resolution processes.
This approach supported effective interactions between
the participants and hearing commissioners and supported
the public’s ability to view hearings.
HEARING COMMISSIONER ACTIVITIESIn 2021/22 activites included:

8 application-related proceedings
8 proceedings flowing from regulatory appeals

6-week hearing

4 ADR supported resolutions

23 participants

3 cost orders680-page decision

LOOKING
AHEAD

The AER is well positioned for the challenges and opportunities that await us in the constantly evolving energy
industry. In March 2022, the AER introduced our 2022–25
strategic plan, a blueprint that guides our work in theyears ahead. The plan includes a new mission, vision, andvalues, as well as four focus areas that are foundational to
our efforts:• Taking care of our people• Enabling our operational effectiveness & innovation• Enhancing our regulatory framework• Strengthening our credibility and trust
Establishing a more efficient way of regulating whilestrengthening the AER’s culture and ensuring we meetthe expectations of Albertans, Indigenous communities,
and stakeholders are significant drivers of this multiyear
strategy.
A major piece of work for us continues to be theimplementation of our expanded mandate. In 2020, theGovernment of Alberta announced their intent to develop
emerging energy and mineral resources as part of theireconomic recovery efforts to relaunch and diversify
Alberta’s economy. Later, the Government of Alberta

expanded the AER’s mandate to include the regulationof deep geothermal and critical and rare earth mineral
types (such as lithium, uranium, rare earth elements, anddiamonds). The AER is working closely with government
to develop new regulations, rules, and directives forthese emerging energy and mineral resources. The AER
is engaging Albertans and Indigenous peoples to foster
better understanding and build confidence in the regulation of these emerging resources.
Also, in 2022/23, the AER’s geoscience experts will spend
time analyzing data and providing information about
Alberta’s mineral potential and insight into areas of theprovince where exploration and development for various
minerals may responsibly occur. ​
Stepping into these new responsibilities for emerging
energy and mineral resources while supporting traditional
oil and gas development requires us to remain agile andmaintain our focus on protecting the environment andkeeping Albertans safe. It’s another big opportunity for us,
but the AER is ready.

13

CONSOLIDATED FINANCIAL HIGHLIGHTS
2022

CONSOLIDATED SUMMARY OF ANNUAL HIGHLIGHTS

Budget2021

AdjustedbudgetAdjustments

ActualActual(in thousands)
Revenues
Administration fees$

206 592

$

1 431

$

208 023$207 92 1$

1 14 240

Orphan fund levies and transfers

74 000-74 00077 82466 952Government of Alberta grant

3 065

25 00028 06516 988

1 13 000

Other revenue

2 612

(403)

2 209

2 820

3 090

286 269

26 028312 297

305 553297 282

208 269

33 01 7241 286

22 1 629

203 753

74 000-74 00077 82466 952282 269

33 01 7315 286

299 453

270 705

4 000(6 989)(2 989)6 100

26 577

Capital investment

14 500(489)

14 01 1

12 95013 697

Less: Amortization of tangible capital assets(17 000)(17 000)( 13 92 1)(15 686)

(663)

(983)

(1 634)(2 972)

Expenses
Energy regulation
Orphan well abandonment

Capital-Loss on disposal and write-down of tangible capital assets(2 500)Net capital investment
Surplus (Deficit)

014

$

6 500

(2 989)(489)$(6 500)

$

-

$

7 734

$

29 549All amounts are expressed in thousands of Canadian dollars.

All amounts are expressed in thousands of Canadian dollars.

The AER is an industry-funded regulator that is accountable
to the Government of Alberta. The AER provides for its
operating expenses and capital investment through two
separate revenue sources: administration fees, also referred
to as the administrative levy, and other revenue. The AER
also collects orphan fund levies, which are paid directly to
the Orphan Well Association (OWA).
The previous table summarizes the results of the AER’s
operations and net capital investment for the year ended
March 31. The complete audited consolidated financial
statements begin on the following page.
Administration fees
Alberta’s Responsible Energy Development Act authorizes
the AER to levy an administration fee on the sectorsthat it regulates. The AER is responsible for regulating
the province’s oil and gas, oil sands, and coal sectors.
The funds collected from administration fees are used tosupport the AER’s operation and fulfil the AER’s mandate
to ensure the safe, efficient, orderly, and environmentally
responsible development of hydrocarbon resources overtheir entire life cycle. For the year ending March 31, 2022,
administration fees increased by $93 681, or 82% offset bya reduction in government grant funding of $113 000. The
remainder of the administration fees decrease of $19 319,
is related to a $10 000 reduction in deficit recovery
and budget reductions directed by the Government ofAlberta. In 2022, the AER collected 72% (2021 – 73%) ofindustry levies from oil and gas, 25% (2021 – 25%) fromoil sands and 3% (2021 – 2%) from coal operations in theform of administration fees. Administration fees for the2022 fiscal year includes $134 (2021 - $125) collected inlate payment penalties.
Government of Alberta grant
The AER received $28 065 in grant funding to support
the AER’s mandate expansion work related to Geothermal
Regulatory Framework, Mineral Regulatory Framework,and Public Geoscience Mineral Mapping. The grants

were placed within deferred revenue, and the AER only
releases funds from deferred revenue as expenses thatpertain to the agreement are incurred. For the year
ending March 31, 2022, the AER recognized $16 988. In
the prior fiscal, the Government of Alberta provided relief
for the energy sector by funding the AER’s administration
fees for the first six months of fiscal 2020-21. The AER
received the grant in six monthly installments between
April and September 2020 for a total of $113 million.
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 2022, the AER issued and collected an orphan
fund levy of $70 000, which is $5 000 more than 2021.
The increase in orphan fund levy was required to address
the increasing volume of orphan wells. The AER also
issued a Large Facility Program orphan levy to active
large facility licencees in the amount of $3 500 for the
first time. Active large facility licensees are collectively
responsible for covering closure costs of insolvent large
facility licensees, as outlined in Directive 024. Additionally,
the AER transferred $3 600 (2021 - $1 254) in forfeited
security deposits, collected $289 in penalties, and $436 in
first time licensee application fees. All amounts collected
were paid directly to the OWA.
Other revenue
Other revenue consists of data subscriptions, enforcement revenue, sales of electronic data and publications,revenue from projects performed on a cost-recovery
basis, and investment income. In 2022, other revenue
decreased by $270 or 9%. In 2022, the AER recognized
reduced revenue of $484 from creative sentencing,
jointly funded projects, and non-compliance volumetric
reporting. In addition, the AER recognized $214 more in
investment income earned on cash and cash equivalents
held with a Canadian chartered bank.

Energy regulation
Expenses increased in 2022, mainly to support the AER’s
mandate expansion work on Geothermal Regulatory
Frameworks, Mineral Regulatory Frameworks, and Public
Geoscience Mineral Mapping initiatives. Energy Regulation expenses outside of mandate expansion initiatives
remained consistent year-over-year. The AER reviewed
office space needs, which resulted in an early leasetermination of one of the AER’s office floors that was nolonger required after staff reductions in 2020; resulting insavings of $6M to 2031.
Capital Investment
Developing and acquiring tangible capital assets,
predominately investments in information technology,
plays a critical role in helping the AER achieve outcomesat the lowest possible cost. Investments in information
technology enable the AER remain relevant and responsive.
In 2022, the AER made capital investments of $12 950.
Capital investment projects in 2022 focused on thecontinued improvement IT Infrastructure, development of
the Administration Fees application, and the AER’s Integrated Decision Approach (IDA). IDA allows companies
to submit one integrated application that covers activities
over the life of the project and to receive decisions in asingle approval document.
Budget Management
During 2022, the AER’s initially budgeted surplus of$6 500 was reduced due to GoA approval of AER
identified initiatives, such as Core
Research Centre roof repairs and head
office 19th-floor early lease termination.
However, the AER demonstrated effective
budget management by reviewing all of
its expenditure areas, prioritized savings,
minimized cost escalations, and ensured
appropriately funded initiatives. As aresult, the AER completed the year witha $7 734 surplus.

15

Alberta Energy Regulator
Consolidated Financial Statements
For the Year Ended March 31, 2022

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

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, 2022, 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, 2022, and the results of its
operations, its change from net debt to net financial assets, and its cash flows for the year thenended in accordance 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.
4

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF OPERATIONSYEAR ENDED MARCH 31, 2022

2022

2021

Budget(Note 4, Schedule 3)

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

208,023
74,00028,065
1,642
567
312,297

Expenses
Energy regulation (Schedule 1)
Orphan well abandonment (Note 5)

Annual operating surplus (deficit)
Accumulated surplus at beginning of year
Accumulated surplus at end of year$

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

114,240
66,952
113,000
2,731
359
297,282

241,286
74,000315,286

221,629
77,824299,453

203,753
66,952
270,705(2,989)67,48764,498

6,100
67,48773,587

26,57740,91067,487

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

6

$

$

$

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT MARCH 31, 2022

2022

2021
(in thousands)

Financial assets
Cash and cash equivalents (Note 6)
Accounts receivable (Note 7)
Pension assets (Note 14)$

Liabilities
Accounts payable and other accrued liabilities (Note 8)
Payable to Orphan Well Association
Deferred revenue (Note 9)
Deferred lease incentives (Note 12)
Net financial assets (net debt)
Non-financial assets
Tangible capital assets (Note 15)
Prepaid expenses and other assets

Net assets before spent deferred capital contributions
Spent deferred capital contributions (Note 9)
Net assets
Accumulated surplus (Note 16)$

Contractual rights (Note 17)
Contingent liabilities (Note 18)
Contractual obligations (Note 19)
The accompanying notes and schedules are part of these consolidated financial statements.

[Original signed by Martin Foy]
Acting President and Chief Executive Officer[Original signed by Mike Dalton]
Vice-President Finance and Chief Financial Officer
Date: May 19, 2022
7

52,566
1,684
3,958
58,208$26,226
1,456
4,923
32,60526,725
1,064
11,362
11,31550,466
7,742

18,037
1,942
325
14,332
34,636(2,031)

57,443
8,642
66,08560,133
9,385
69,51873,827

67,487240-

73,587$

67,487

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL ASSETS (NET DEBT)YEAR ENDED MARCH 31, 2022

2022

2021

Budget(Note 4, Schedule 3)

Annual operating surplus (deficit)$(2,989)Acquisition of tangible capital assets (Note 15)
Amortization of tangible capital assets (Note 15)
Write-off of leasehold improvements (Note 12)
Decrease in prepaid expenses and other assets
Net loss on disposal and write-down of tangible capital assets
Net increase in spent deferred capital contributions (Note 9)
Decrease in net debt
Net debt at beginning of year
Net financial assets (net debt) at end of year

Actual(in thousands)
$

6,100

$

(12,950)
13,921
1,056
743
663
240
9,773
(2,031)
7,742(14,011)17,000(2,031)(2,031)$

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

8

Actual

$26,577$(13,697)
15,686
320
983
29,869(31,900)(2,031)

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF CASH FLOWSYEAR ENDED MARCH 31, 2022

2022

2021
(in thousands)

Operating transactions
Annual operating surplus
Non-cash items included in annual operating surplus:
Amortization of tangible capital assets (Note 15)
Write-off of leasehold improvements (Note 12)
Change in pension assets
Net loss on disposal and write-down of tangible capital assets
Bad debt expense (recovery)
Write-off of deferred lease incentives (Note 12)
Amortization of deferred lease incentives (Note 12)$(Increase)/decrease in accounts receivable
Decrease in prepaid expenses and other assets
Increase in accounts payable and other accrued liabilities(Decrease)/increase in payable to Orphan Well Association
Increase/(decrease) in deferred revenue
Cash provided by operating transactions
Capital transactions
Acquisition of tangible capital assets (Note 15)
Cash applied to capital transactions
Financing transactions
Increase in spent deferred capital contributions (Note 9)
Proceeds from line of credit
Debt repayment
Cash provided by (applied to) financing transactions
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year$

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

9

6,100

$

26,577

13,921
1,056
965
663
(16)
(1,450)(1,567)
19,672
(212)
743
8,688
(878)
11,03739,05015,686(3,418)983(518)(1,617)
37,693
982
320
808
1,333
(401)
40,735(12,950)(12,950)(13,697)(13,697)

240
240

9,855
(10,667)(812)

26,34026,22652,566

26,226
26,226$

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
Note 1AUTHORITY
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 2SUMMARY 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 theirrealizable value. 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 oneach 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, 2022
Note 2SUMMARY 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 (2021 - 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
expense comprises employer contributions to the plans that are required for its employees during the year, which are calculated
based on actuarially pre-determined amounts that are expected to provide the plans' future benefits.
Valuation of financial assets and liabilities
The AER's financial assets and liabilities are generally measured as follows:
Measurement
Cost
Lower of cost or net recoverable value
Lower of cost or net recoverable value
Cost
Cost
Cost
Amortized cost

Financial Statement Component
Cash and cash equivalents
Accounts receivable
Pension assets
Bank indebtedness
Accounts payable and other accrued liabilities
Payable to the Orphan Well Association
Deferred lease incentives

The AER has not designated any financial assets or liabilities in the fair value category, does not have any significant foreign
currency transactions 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 whenrecovery is uncertain.

11

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
Note 2SUMMARY 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.

Bank indebtedness
Bank indebtedness comprises the amount outstanding (if any) for a revolving line of credit.
Deferred lease incentives
Deferred lease incentives, consisting of leasehold improvement costs, reduced rent benefits and rent-free periods, are amortized ona straight-line basis over the term of the leases.
Environmental Liabilities
Liability for Contaminated Sites:
Contaminated sites are a result of contamination of a chemical, organic or radioactive material or live organism that exceeds 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 inproductive use and may also arise from an unexpected event resulting in contamination. The resulting liability is recognized when allof the following criteria are met:i. an environmental standard exists;
ii. contamination exceeds the environmental standard;iii. the AER is directly responsible or accepts responsibility;
iv. it is expected that future economic benefits will be given up; andv. a reasonable estimate of the amount can be made.
Contingent Liabilities
A contingent liability is recognized when:i. there is an existing condition or situation;
ii. there is an expected future event that will resolve the uncertainty as to whether a present obligation to sacrifice economic
benefits exists;
iii. it is likely that a future event will confirm that a liability has been incurred at the date of the financial statements; andiv. a reasonable estimate of the amount can be made.
Non-financial assets
Non-financial assets are acquired, constructed or developed assets that do not normally provide resources to discharge existing
liabilities, but instead:(a) are normally employed to deliver AER services;(b) may be consumed in the normal course of operations; and(c) are not for sale in the normal course of operations.
Non-financial assets of the AER include tangible capital assets, prepaid expenses and other assets.

12

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
Note 2SUMMARY 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

FUTURE CHANGES IN ACCOUNTING STANDARDS
During the fiscal year 2022-23, the AER will adopt the following new accounting standard of the Public Sector Accounting Board:
PS 3280 Asset Retirement Obligations (effective April 1, 2022)
This standard provides guidance on how to account for and report liabilities for retirement of tangible capital assets. The AER plansto adopt this accounting standard on a modified retroactive basis, consistent with the transitional provisions in PS 3280, andinformation presented for comparative purposes will be restated. The impact of the adoption of this accounting standard on the
consolidated financial statements is currently being analyzed.

13

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
Note 3

FUTURE CHANGES IN ACCOUNTING STANDARDS (continued)
In addition to the above, the 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 (effective 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.
The AER has not yet adopted these two standards. Management is currently assessing the impact of these standards on the
consolidated financial statements.

Note 4BUDGET
The budget and budget adjustments reflected on Schedule 3 have been approved by the Government of Alberta.

Note 5

ORPHAN WELL ABANDONMENT(in thousands)
The Government of Alberta has delegated the authority to manage the abandonment and reclamation of wells, facilities, andpipelines that are licensed to defunct licensees to the Orphan Well Association. The AER collects an Orphan Fund Levy and a Large
Facility Program Orphan Levy, and transfers the funds to the Orphan Well Association through the Orphan Fund. The AER alsotransfers funds for first time licensee application fees, including regulator directed transfer fees, and forfeited security deposits
through the Orphan Fund. During the year ended March 31, 2022, the AER collected and transferred $73,788 (2021 - $65,225) inlevies, $436 (2021 - $473) in application fees and $3,600 (2021 - $1,254) in forfeited security deposits.

Note 6

CASH AND CASH EQUIVALENTS(in thousands, unless otherwise noted)
Cash and cash equivalents are held in an account with a Canadian chartered bank and earn interest calculated based on the
average monthly cash balance. The funds are available to be withdrawn upon request. During the year ended March 31, 2022, theAER earned interest at an annual average rate of 0.8% (2021 - 0.7%).
Cash and cash equivalents includes restricted funds of $10,837 (2021 - $nil), as reflected in deferred revenue (discussed in Note 9),
which is to be used primarily for future expenditures related to the Government of Alberta's Minerals Strategy - Public Geoscience
program.

Note 7

ACCOUNTS RECEIVABLE(in thousands)
Accounts receivable are unsecured and non-interest bearing.
2021

2022

Accounts receivable

14

Gross amount

Allowancefor doubtful
accounts

$

$

2,416

Net
recoverable
value(732) $

1,684

Net
recoverable
value
$

1,456

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
Note 8ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES(in thousands)
2021

2022
Trade and other accrued liabilities
Lease termination payable$

Accrued salaries and benefits
Trade accounts payable$
Note 9

9,991
7,376
6,868
2,490
26,725

$

$

8,518
7,204
2,315
18,037

DEFERRED REVENUE(in thousands)
Deferred revenue consists of the following:
As atMarch 31, 2022

Year ended
March 31, 2022
Total Revenue
Received

ActualRevenue
Recognized

As atMarch 31, 2021

Deferred Revenue

ProgramPublic Geoscience(1)Mineral Regulatory Framework
Geothermal Regulatory Framework
Total Grant Revenue
Other

$

Spent deferred capital contributions(1)$24,7602,000
1,065
27,825538
28,363

$

240

$

$

14,013
1,910
1,065
16,988338
17,326$-$$

10,74790
10,837525
11,362

$

$

325
325

$

240

$

-

(1) During 2022, the AER purchased capital assets of $240 with funds from the Public Geoscience grant. Revenue has not beenrecognized for these funds as amortization has not been recorded for these capital assets at March 31, 2022.

Note 10 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, 2022
Note 10 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 11 REVOLVING LINE OF CREDIT(in thousands, unless otherwise noted)
The AER has an unsecured $50 million (2021 - $75 million) revolving line of credit. Amounts borrowed can only be applied togeneral corporate purposes and exclude the funding of capital expenditures.
Bank advances on the line of credit are payable on demand and bear interest at a rate of prime less 0.75%. For the year ended
March 31, 2022, interest expense on the revolving line of credit was $nil (2021 - $4).
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.
2021

2022
Reducedrent benefits
Leaseholdimprovement and rent-free
periods
costs$
11,639 $2,693 $
(1,056)(394)(1,213)(354)$
9,370 $
1,945 $

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

Total
14,332 $(1,450)(1,567)
11,315 $Total
15,949(1,617)
14,332(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, 2022, the AER is not responsible, nor has it
accepted responsibility, for performing remediation and reclamation work at contaminated sites. The AER has $nil (2021 - $nil)
environmental liabilities recorded.
As at March 31, 2022, the AER is administering 29 (2021 – 28) legacy sites. Of these sites, during the year ended March 31, 2022,
the AER identified two (2021 – five) sites 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, 2022, the AER incurred $9 (2021 - $906) in costs tomitigate 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, 2022
Note 14 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, 2022, theexpense for these pension plans is equal to the contributions of $12,253 (2021 - $12,539) 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 on each 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, 2018. The accrued benefit obligation
as at March 31, 2022 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, 2021. The actuarial funding valuation for December 31, 2021 is expected to be completed in thefirst half of 2022.
Pension plan assets are valued at market values. During the year ended March 31, 2022, the weighted average actual return onplan assets was 5.2% (2021 - 14.7%).
Significant weighted average actuarial and economic assumptions used to value accrued benefit obligations and pension benefit
costs were as follows:
2022

Accrued benefit obligations
Discount rate

2021

4.5%
4.0% until March 31, 2023,
3.0% thereafter
2.0%

Rate of compensation increaseLong-term inflation rate

4.4%
0% until March 31, 2022,
3.0% thereafter
2.0%

2022
4.4%
4.4%
0% until March 31, 2022,
3.0% thereafter

Pension benefit costs for the year
Discount rate
Expected rate of return on plan assets
Rate of compensation increase

2021

4.8%
4.8%
0% until March 31, 2021,
3.5% thereafter

The funded status and amounts recognized in the Consolidated Statement of Financial Position were as follows:

2022
Market value of plan assets
Accrued benefit obligations
Plan surplus
Unamortized actuarial (gains)/losses
Pension assets

$

$

17

76,893 $(70,739)
6,154(2,196)
3,958 $

2021
74,119(70,954)
3,165
1,758
4,923

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
Note 14 EMPLOYEE FUTURE BENEFITS (continued)(in thousands, unless otherwise noted)
The pension benefit costs for the year included the following components:

2022
Current period benefit cost
Interest cost
Expected return on plan assets
Amortization of actuarial losses

$

$

2021

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

3,976
3,442
(3,039)804
5,183

Additional information about the defined benefit pension plans is as follows:

Benefits paid
AER contributions
Employees' contributions

$

2022
4,636
3,163
663

$

2021
10,171
8,600
683

The asset allocation of the defined benefit pension plans' investments was as follows:
2022
44.1%
23.4%
20.0%
12.5%
100.0%

Equity securities
Debt securities
Alternatives
Other

18

2021
48.2%
22.2%
17.3%
12.3%
100.0%

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
Note 15 TANGIBLE CAPITAL ASSETS(in thousands)

Estimated useful life

2022

2021

Land

Leaseholdimprovements

Furniture andequipment (1)Computerhardware andsoftwareIndefinite

Term of thelease

5-12 years

4-5 years

Total

Total

Historical cost (2)Beginning of year$

282

Additions
Disposals, including write-downs$

46,500$13,060$148,562$

208,404$

202,549

-

2,168

580

10,202

12,95013,697-(2,302)(1,240)(20,426)(23,968)(7,842)282

46,366

12,400138,338

197,386

208,404(3)

Accumulated amortization
Beginning of year

(1)

$

-

$

22,913

$

9,906

$

115,452$

148,271$

139,444

Amortization expense

-

2,717

823

10,381

13,921

15,686

Effect of disposals, including writedowns(3)-(1,246)(1,200)(19,803)(22,249)(6,859)-24,384

9,529

106,030

139,943

148,271

Net book value at March 31, 2022

$

282

$

21,982

$

2,871

$

32,308Net book value at March 31, 2021

$

282

$

23,587

$

3,154

$

33,110$57,443$60,133

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

(2) As at March 31, 2022, historical cost of computer hardware and software includes work-in-progress totalling $2,297 (2021 - $6,630).
(3)

In October 2021, the AER exited a portion of the lease for its Calgary Head Office, resulting in a reduction of $2,302 in leasehold improvements
and $1,246 in accumulated amortization. No loss was recognized as the write-off of the leasehold improvements was offset by the write-off of therelated lease incentive.

Note 16 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:
2022

Net investment in tangible capital assets (a)Investments intangible capital Unrestricted
net assets
assets (a)$48,494 $18,993
6,100
(421)
421

Balance at end of year$

Balance at beginning of year
Annual operating surplus

48,073$25,514

2021

$

$

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

19

$

$

Total
40,91026,577
67,487

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
Note 17 CONTRACTUAL RIGHTS(in thousands)
Contractual rights are rights of the AER to economic resources arising from contracts or agreements that will result in both assets
and revenues in the future when the terms of those contracts or agreements are met.
During the year ended March 31, the AER collected the following amounts for its contractual rights under operating subleases:
2021

2022
Contractual rights from operating subleases

$

316

$

As at March 31, 2022, estimated amounts that will be received or receivable for each of the next five years are as follows:
2022-23$2023-242024-252025-262026-27
$

110

555
565
433
440
182
2,175

Note 18 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, 2022, accruals totalling $1,359 (2021 - $125) 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, 2022, no liability has been recognized for these sites as further testing and evaluation is required to determine the extent
of immediate actions necessary. No liability for remediation on other sites has been recognized as the AER becoming responsible
for these 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, 2022
Note 19 CONTRACTUAL OBLIGATIONS(in thousands)
As at March 31, 2022, the AER had contractual obligations totalling $146,445 (2021 - $162,248).
Contractual obligations are obligations of the AER to others that will become liabilities in the future when the terms of those contracts
or agreements are met.
As at March 31, 2022, estimated payment requirements for obligations under operating leases and contracts for each of the next five
years and thereafter are as follows:
2022-232023-242024-252025-262026-27
Thereafter$

48,94330,071
11,577
10,0599,443
36,352$

146,445

Note 20 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, 2022, assets under administration included the following types of security deposits:
2022

Liability Management Rating programs and landfills
Mine Financial Security program
Other programs

$

$

Cash
89,27741,064
10,629140,970

2021

2022

2021

Cash
$
90,431
39,342
10,446$ 140,219

Letters ofcredit$278,826
1,479,452
10,505$ 1,768,783

Letters ofcredit$225,418
1,447,447
7,714$ 1,680,579

Note 21 COMPARATIVE FIGURES

Certain 2021 figures have been reclassified, where necessary, to conform to the 2022 presentation.
Note 22 APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS

These consolidated financial statements were approved by the AER Board of Directors on May 19, 2022.

21

ALBERTA ENERGY REGULATORENERGY REGULATION EXPENSES - DETAILED BY OBJECTYEAR ENDED MARCH 31, 2022

Schedule 1

2022

2021
(in thousands)

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

$

$

22

132,71227,30526,53917,71013,921
1,292
1,274
663
205
8
221,629$$

131,598
20,354
14,634
17,112
15,686
1,382
915
983
323
766
203,753

Schedule 2

ALBERTA ENERGY REGULATORSALARY AND BENEFITS DISCLOSURE
YEAR ENDED MARCH 31, 2022

2022
Base
salary (a)

2021
Other
non-cashbenefits (c)Other cash
benefits (b)

Total

Total

(in thousands)
Position
Board of Directors
Chair (d)Members (e)

$

130
306

$

-

$

15
17

$

145
323

$

138
354

Executives
President and Chief Executive Officer (f)Chief Hearing Commissioner
Chief Operations Officer (g)Executive Vice-President, Law and General Counsel
Vice-President of Finance and Chief Financial Officer (h,k)

334
218
264
276
233

39
30
21
8
9

91
48
62
62
85

464
296
347
346
327

422
289
340
343
191

Former President and Chief Executive Officer (i)Former Executive Vice-President, Corporate Services (j,k)

-

-

-

-

23
504

(a)
(b)
(c)

Base salary includes retainers and per diems for Board Directors and regular base salary for Executives.
Other cash benefits includes payments in lieu of vacation, pension and health benefits, as well as vehicle allowances and other cash reimbursements.
Other non-cash benefits includes 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.

(d)

The current Chair was appointed on April 15, 2020, and is remunerated with a monthly honorarium as per rates prescribed in the Orders in Council.
Prior to the current Chair's appointment, the previous Chair's remuneration was set at $nil while this individual occupied the position from September 6,
2019 until April 15, 2020.

(e)

The incumbent Board of Directors consists of six members. Five Board members are remunerated with monthly honoraria as per rates prescribed in
the Orders in Council. Remuneration for one Board member is set at $nil. As at April 1, 2020, the Board of Directors consisted of four members. On
April 15, 2020, one member resigned and four new members were appointed. On June 5, 2020, one member was rescinded.

(f)
(g)

The incumbent held the position effective April 15, 2020.
The incumbent held the position of Executive Vice- President, Operations until February 24, 2021, at which time the incumbent was appointed to theposition of Chief Operations Officer.

(h)

The incumbent held the position effective September 8, 2020, at this time the position became a voting member of the Executive Leadership Team.
Prior to this appointment, the position was a non-voting member of the Executive Leadership Team.

(i)
(j)

The incumbent held the position until April 15, 2020, at which time the incumbent's contract ended.
The incumbent held the position until February 24, 2021, at which time the position was eliminated and the incumbent was terminated. Other cash
benefits include $170 of severance pay.

(k)

Under the terms of the AER's defined benefit SEPP and two supplementary retirement plans (SRP), employees may receive supplemental retirement
payments. Retirement arrangement costs as detailed below are not cash payments in the period but are the period expense for rights to futurecompensation. Costs shown reflect the total estimated cost to provide annual pension income over an actuarially determined post-employment period.
The SEPP and SRP provide future pension benefits to participants based on years of service and remuneration. The cost of these benefits is
actuarially determined using the projected benefit method pro-rated on service, a market interest rate and management's best estimate of expected
costs and period of benefit coverage. Net actuarial gains and losses of the benefit obligations are amortized over the average remaining service life of
the employee group. Current service cost is the actuarial present value of the benefits earned in the fiscal year. Prior service and other costs include
amortization of past service costs, amortization of actuarial gains and losses, and interest accruing on the actuarial liability.

23

Schedule 2 (continued)

ALBERTA ENERGY REGULATORSALARY AND BENEFITS DISCLOSURE
YEAR ENDED MARCH 31, 2022

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, 2021
and 2022, 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.
2022

PositionVice-President of Finance and Chief Financial Officer
Former Executive Vice-President, Corporate Services

Current
service cost$
39-

Prior service
and other costs
$
-

2021

Total
$

Total
39
-

$

23
34

The SEPP and SRP accrued obligation for each executive employed by the AER during the years ended March 31, 2021 and 2022 isoutlined in the following table:

PositionVice-President of Finance and Chief Financial Officer
Former Executive Vice-President, Corporate Services

Accruedobligation
April 1, 2021
$
25
187

24

Changes in
accruedobligation
$
32
(187)

Accruedobligation
March 31, 2022$
57-

Accruedobligation
March 31, 2021
$
25
187

ALBERTA ENERGY REGULATORCONSOLIDATED ACTUAL RESULTS COMPARED WITH BUDGETYEAR ENDED MARCH 31, 2022

Schedule 3

Budget(Note 4)
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
Loss on disposal and write-down of tangible capital assets

206,592
74,000
3,065
1,745
867
286,269$

1,431
25,000(103)(300)
26,028$208,023
74,00028,065
1,642
567
312,297

Actual

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

208,269
74,000282,269
4,000

33,01733,017(6,989)241,286
74,000315,286(2,989)221,629
77,824299,453
6,100

14,500(17,000)(489)-

14,011(17,000)(2,500)(489)(2,989)12,950(13,921)(663)(1,634)

Net capital investment
Surplus (deficit)(a)Adjustments
Adjusted budget(in thousands)

$

6,500

$

(6,500)

$

-

$

7,734

(a) Adjustments reflect changes to the original budget submitted by the AER during the fiscal year. Budget and adjustments were approved by the Treasury Board of theGovernment of Alberta, and were mainly due to provincial grants announced for its Minerals Strategy, and related expenditures, as well as expenses recognized by
the AER as a result of exiting a portion of its Calgary Head Office lease.

25

Schedule 4

ALBERTA ENERGY REGULATORRELATED PARTY TRANSACTIONSYEAR ENDED MARCH 31, 2022

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 2022, 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
2022
2021
(in thousands)
Revenues
Government of Alberta grants$

Information, services and fees$

16,988334
17,322$$Other entities
2022(in thousands)

113,000366
113,366

$

485
485

$

Entities in the
Ministry of Energy
2022

2021

$

$

386
386

Receivable from$

Prepaid expenses and other assets

361
361

$

2022

2021
(in thousands)

$

$

418
418

137

$

$

-

Payable to$Deferred revenue
Contractual obligations (a)
(a)

$

$

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

2021

$

$

3,573
400
370
187
4,530

$

2,975
528
396
310
4,209

108

$

6

$

33

$

-

$

36

$

36

-

$

209

$

1,307

$

641

$

10,837

$

1

$

259

$

-

$

-

$

-

$

4,850

$

7,069

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

www.aer.ca

ABEnergyRegulator

inquiries
1-855-297-8311@aer_news

Alberta Energy Regulator (AER)

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

016