Alberta Energy Regulator
Financial Statements
For the Year Ended March 31, 2016

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

Independent Auditor’s Report
To the Board of Directors of the Alberta Energy Regulator
Report on the Financial Statements
I have audited the accompanying financial statements of the Alberta Energy Regulator, which comprise thestatement of financial position as at March 31, 2016, and the statements of operations, change in net debt andcash flows for the year then ended, and a summary of significant accounting policies and other explanatory
information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordancewith Canadian public sector accounting standards, and for such internal control as management determines isnecessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
Auditor’s Responsibility
My responsibility is to express an opinion on these financial statements based on my audit. I conducted myaudit in accordance with Canadian generally accepted auditing standards. Those standards require that I
comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making thoserisk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentationof the financial statements in order to design audit procedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit
opinion.
OpinionIn my opinion, the financial statements present fairly, in all material respects, the financial position of theAlberta Energy Regulator as at March 31, 2016, and the results of its operations, its remeasurement gains andlosses, its changes in net debt, and its cash flows for the year then ended in accordance with Canadian public
sector accounting standards.
[Original signed by Merwan N. Saher FCPA, FCA]
Auditor General
May 11, 2016
Edmonton, Alberta

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying financial statements of the Alberta Energy Regulator (AER) and all other information relating to the AER
contained in this annual report have been prepared and presented by management, who is responsible for the integrity and fairpresentation of the information.
These financial statements are prepared in accordance with Canadian Public Sector accounting standards. The financial
statements necessarily include some amounts that are based on informed judgments and best estimates of management. The
financial information contained elsewhere in this annual report is consistent with that in the financial statements.
Management is responsible for maintaining an effective system of internal controls designed to provide 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 financial statements in accordance with Canadian generally accepted auditing standards, and has
expressed his opinion in the accompanying Independent Auditor’s Report.
The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal
controls. The Board of Directors exercises this responsibility through the 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 to the integrityof financial reporting processes and the adequacy of our systems of internal controls. The internal and external auditors have fulland unrestricted access to the Audit and Finance Committee.

[Originally signed by Jim Ellis]
President and Chief Executive Officer[Originally signed by Rick Brown]
Executive Vice President, Corporate Services[Originally signed by Tom Heywood]
Vice President, Finance and Chief Financial Officer

Date: May 11, 2016

ALBERTA ENERGY REGULATORSTATEMENT OF OPERATIONSYear Ended March 31(in thousands)

2015

2016
Budget(Note 3)
Revenues
Industry levies and assessments
Provincial grant
Information, services and fees
Investment$

Expenses
Energy regulation (Schedule 1)
Orphan abandonment (Note 4)

270,093

Actual$Actual6,859
1,300
278,252

270,335
6,867
1,278
278,480

253,252
30,500283,752

249,113
31,111
280,224

256,827
15,760272,587
15,405

Annual operating (deficit) surplus(5,500)(1,744)

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

63,85558,35563,855
62,111$$$$

258,278
19,8008,260
1,654
287,992

48,45063,855The accompanying notes and schedules are an integral part of these financial statements.

2

ALBERTA ENERGY REGULATORSTATEMENT OF FINANCIAL POSITION
As at March 31(in thousands)

2016
Financial assets
Cash and cash equivalents (Note 5)
Security deposits (Note 7)
Accounts receivable$

Liabilities
Accounts payable and accrued liabilities
Grant payable to Orphan Well Association
Security deposits (Note 7)
Deferred revenue (Note 9)
Deferred lease incentives (Note 10)
Pension obligations (Note 12)
Net debt
Non-financial assets
Tangible capital assets (Note 13)
Prepaid expenses and other assets

Accumulated operating surplus (Note 14)

$

2015

24,851138,125
18,149181,125$

54,040122,835
12,245
189,120

16,64315,093
138,125
1,604
22,264692
194,421(13,296)

33,511
15,055
122,835
2,056
23,023
2,349
198,829(9,709)64,43010,97775,407

63,211
10,35373,564

62,111$

63,855Contractual obligations (Note 16)
The accompanying notes and schedules are an integral part of these financial statements.

3

ALBERTA ENERGY REGULATORSTATEMENT OF CHANGE IN NET DEBT
Year Ended March 31(in thousands)

2015

2016
Budget(Note 3)
Annual operating (deficit) surplus$(5,500)Acquisition of tangible capital assets (Note 13)
Amortization of tangible capital assets (Note 13)
Loss on disposal and write-down of tangible capital assets
Increase in prepaid expenses and other assets(Increase) decrease in net debt
Net debt at beginning of year
Net debt at end of year$

(9,000)11,500(3,000)(9,709)(12,709)

ActualActual

$(1,744)$(14,196)
12,645332(624)(3,587)(9,709)(13,296)$

15,405$(20,854)
11,836
779
(693)
6,473
(16,182)(9,709)The accompanying notes and schedules are an integral part of these financial statements.

4

ALBERTA ENERGY REGULATORSTATEMENT OF CASH FLOWS
Year Ended March 31(in thousands)

2016
Operating transactions
Annual operating (deficit) surplus
Non-cash items included in net operating results
Amortization of tangible capital assets (Note 13)
Loss on disposal and write-down of tangible capital assets
Change in pension obligations
Amortization of deferred lease incentives (Note 10)

$

2015

(1,744)$

15,405

12,645332(1,657)(1,522)
8,054(5,904)(624)(16,868)
38
(452)
763
(14,993)

11,836779(942)(1,430)25,648(8,353)(693)
11,929
4,305
(915)
918
32,839

Capital transactions
Acquisition of tangible capital assets (Note 13)
Cash applied to capital transactions(14,196)(14,196)(20,854)(20,854)(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

(29,189)
54,04024,851

11,98542,05554,040(Increase) in accounts receivable(Increase) in prepaid expenses and other assets(Decrease) increase in accounts payable and accrued liabilities
Increase in grant payable to Orphan Well Association(Decrease) in deferred revenue
Additions to deferred lease incentives (Note 10)
Cash (used) provided by operating transactions$$

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

5

ALBERTA ENERGY REGULATORNOTES TO THE FINANCIAL STATEMENTS
March 31, 2016
(in thousands)
Note 1

Authority and purpose
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.

Note 2

Summary of significant accounting policies and reporting practices
These financial statements are prepared in accordance with Canadian Public Sector Accounting Standards (PSAS).
(a)

Revenues
All revenues are reported on the accrual basis of accounting. Cash received for which services have not been provided byyear end is recorded as deferred revenue.
Government transfers
Transfers from the Government of Alberta are referred to as provincial grants.
Provincial grants, without terms for the use of the transfer, are recorded as revenue when the transfer is authorized andthe AER is eligible to receive the funds.

(b)

Expenses
Expenses are reported on an accrual basis. The cost of all goods consumed and services received during the year isexpensed.

(c)

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
Security deposits
Accounts payable and accrued liabilities
Grant payable to the Orphan Well Association

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

The AER has not designated any financial assets or liabilities in the fair value category, has no significant foreign currencytransactions and does not hold any derivative contracts. The AER has no significant remeasurement gains or losses andconsequently has not presented a statement of remeasurement gains and losses.
(d)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 of the AER are limited to cash and cash equivalents, security deposits and financial claims on otherorganizations.

6

ALBERTA ENERGY REGULATORNOTES TO THE FINANCIAL STATEMENTS
March 31, 2016
(in thousands)
Note 2

Summary of significant accounting policies and reporting practices (continued)(e) Liabilities
Liabilities are present obligations of the AER to others arising from past transactions or events, the settlement of which is
expected to result in the future sacrifice of economic benefits.
PensionAccrued benefit obligations are actuarially determined using the projected benefit method prorated on length of service
and management's best estimate of expected plan investment performance, projected employees' compensation levels
and retirement age of employees.
The expected return on plan assets is determined using market values of plan assets.
Actuarial gains and losses are amortized over the average remaining service period of the active employees, which is 9.6
years.
Past service cost arising from plan amendments is accounted for in the period of the plan amendments.
Defined contribution plan accounting is applied to the Government of Alberta multi-employer defined benefit pension plans
as the AER has insufficient information to apply defined benefit plan accounting. The AER is not responsible for future
funding of the plan deficit other than through contribution increases.
Deferred lease incentives
Deferred lease incentives, consisting of leasehold improvement costs, reduced rent benefits and rent-free periods, areamortized on a straight-line basis over the term of the lease.
Liability for contaminated sites
Contaminated sites are a result of contamination of a chemical, organic or radioactive material or live organism thatexceeds an environmental standard, being introduced into soil, water or sediment. The liability is recorded net of any
expected recoveries. A liability for remediation of contaminated sites is recognized when all of the following criteria aremet:- an environmental standard exists;- contamination exceeds the environmental standard;- the AER is directly responsible or accepts responsibility;- it is expected that future economic benefits will be given up; and- a reasonable estimate of the amount can be made.
(f)

Non-financial assets
Non-financial assets are acquired, constructed or developed assets that do not normally provide resources to discharge
existing liabilities, but instead:- are normally employed to deliver AER services;- may be consumed in the normal course of operations; and- are not for sale in the normal course of operations.
Non-financial assets of the AER are limited to tangible capital assets and prepaid expenses and other assets.

7

ALBERTA ENERGY REGULATORNOTES TO THE FINANCIAL STATEMENTS
March 31, 2016
(in thousands)
Note 2

Summary of significant accounting policies and reporting practices (continued)(f) Non-financial assets (continued)
Tangible capital assets
Tangible capital assets are recorded at historical cost, which includes amounts that are directly related to the acquisition,
design, construction, development, improvement or betterment of the assets and are amortized over their estimateduseful lives using the following methods:
Leasehold improvements
Furniture and equipment
Computer hardware
Computer software - purchased
Computer software - developed

Straight line
Straight line
Straight line
Straight line
Declining balanceTerm of the lease5 - 12 years
4 - 5 years
4 - 5 years
5 years

Amortization is only charged if the tangible capital asset is put into service.
Work-in-progress, which includes developed computer software and leasehold improvements, is not amortized until aproject is complete and the asset is put into service.
Tangible capital assets are written down when conditions indicate that they no longer contribute to the AER's ability toprovide goods and services, or when the value of future economic benefits associated with the tangible capital assets isless than their net book value. The net write-downs are accounted for as expense in the Statement of Operations.
(g)Measurement uncertainty
Measurement uncertainty exists when there is a variance between the recognized or disclosed amount and anotherreasonably possible amount. The amounts recorded for amortization of tangible capital assets are based on estimates of
the useful life of the related assets. Accrued defined benefit obligations are subject to measurement uncertainty due to theuse of actuarial assumptions. The resulting estimates are within reasonable limits of materiality and are in accordancewith the AER's significant accounting policies.

(h)Change in accounting policy
Adoption of net debt presentation
The net debt presentation with reclassification of comparatives has been adopted for the presentation of financial
statements. Net debt or net financial assets is measured as the difference between the AER's financial assets andliabilities.
The effect of this change results in changing the presentation of the Statement of Financial Position and adding theStatement of Change in Net Debt.

(i)

Future accounting changes
In March 2015 the Public Sector Accounting Board (PSAB) issued the following accounting standards:
PS 2200 Related Party Disclosure and PS 3420 Inter-entity Transactions (effective April 1, 2017)
PS 2200 defines a related party and establishes disclosures required for related party transactions; PS 3420
establishes guidance on how to account for and report transactions between public sector entities that comprise agovernment's reporting entity from both a provider and recipient perspective. Management is currently assessing theimpact of these standards on the financial statements.

8

ALBERTA ENERGY REGULATORNOTES TO THE FINANCIAL STATEMENTS
March 31, 2016
(in thousands)
Note 2

Summary of significant accounting policies and reporting practices (continued)(i) Future accounting changes (continued)
In June 2015 the PSAB issued the following accounting standards:
PS 3210 Assets, PS 3320 Contingent Assets and PS 3380 Contractual Rights (effective April 1, 2017)
PS 3210 provides guidance for applying the definition of assets set out in Financial Statement Concepts, PS 1000, andestablishes general disclosure standards for assets; PS 3320 defines and establishes disclosure standards oncontingent assets; PS 3380 defines and establishes disclosure standards on contractual rights. Management iscurrently assessing the impact of these standards on the financial statements.
PS 3430 Restructuring Transactions (effective April 1, 2018)
This standard provides guidance on how to account for and report restructuring transactions by both transferors andrecipients of assets and/or liabilities, together with related programs or operating responsibilities. Management iscurrently assessing the impact of these standards on the financial statements.

Note 3

Budget
The Budget is based on the AER Business Plan for the year ended March 31, 2016. The Budget has been approved by theGovernment of Alberta.

Note 4Orphan abandonment
The AER has delegated the authority to manage the abandonment and reclamation of wells, facilities and pipelines that arelicensed to defunct licensees to the Alberta Oil and Gas Orphan Abandonment and Reclamation Association (Orphan Well
Association). The AER grants all of its orphan abandonment revenues (levy and application fees) to the Orphan Well
Association. During the year ended March 31, 2016, the AER collected $30,167 (2015 - $15,000) in levies and $944 (2015 $760) in application fees.

Note 5

Cash and cash equivalents
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, 2016,
the AER earned interest at the rate of 1.1% (2015 - 1.3%).

Note 6

Financial instruments
The AER has the following financial instruments: accounts receivable, accounts payable and accrued liabilities, grant payable to
the Orphan Well Association and security deposits.
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 financial liabilities. The AER
does not consider this to be a significant risk as the AER collects funding at the beginning of the year to meet all obligations thatarise during the year. In addition, the available credit facility provides financial flexibility to allow the AER to meet its obligations if
funding cannot be collected on a timely basis.
(b) Credit risk
The AER is exposed to credit risk from potential non-payment of accounts receivable. As at March 31, 2016, the amount offinancial assets that were past due was not significant and there were no material uncollectible receivable balances.
9

ALBERTA ENERGY REGULATORNOTES TO THE FINANCIAL STATEMENTS
March 31, 2016
(in thousands)
Note 7

Security deposits
The AER collects financial security under a number of different programs to protect the public from paying costs associated withabandonment and reclamation of upstream wells, facilities, pipelines, mines, mine sites and oilfield waste management facilities.
The security deposits are held on behalf of licensees. The AER administers the programs in accordance with specified acts andregulations and does not have any financial risk associated with security collected. At March 31, 2016, the AER held $138,125(2015 - $122,835) in cash and an additional $1,528,339 (2015 - $1,707,241) in letters of credit. Security, along with any interest
earned, will be returned to the depositors upon meeting specified refund criteria.

Note 8

Revolving line of credit
During 2016, the AER had an unsecured $50,000 revolving line of credit. Amounts borrowed can only be applied to general
corporate purposes and exclude the funding of operating deficits and/or capital expenditures. Bank advances on the line ofcredit are payable on demand and bear interest at prime less 0.5%. As at March 31, 2016, the outstanding balance for the
revolving line of credit was $nil (2015 -$nil).

Note 9Deferred revenue
2016
Balance at beginning of year
Received during year
Less amounts recognized as revenue
Balance at end of year

$

$

2015

2,056 $
395
(847)
1,604 $

2,971
347
(1,262)2,056

Note 10 Deferred lease incentives
The AER has entered into various lease agreements which provide for lease incentives comprised of reduced rent benefits, rentfree periods and leasehold improvement costs. These amounts are included in deferred lease incentives and are amortized on astraight line basis over the term of the lease.
2016

Balance at beginning of year
Additions during the year
Amortization
Balance at end of year

Reducedrent benefits
Leaseholdimprovement and rent-free
periods
costs$
18,331 $4,692 $
763
(1,195)(327)$
17,899 $4,365 $

2015

Total
Total
23,023 $23,535763
918(1,522)(1,430)22,264 $23,023Note 11 Liability for contaminated sites
As at March 31, 2016, the AER is not responsible, nor has it accepted responsibility, for performing remediation work at
contaminated sites. As at March 31, 2016, the AER's liability for contaminated sites was $nil (2015 - $nil).
Note 12 Pension
The AER participates in the Government of Alberta's multi-employer pension plans: Management Employees Pension Plan,
Public Service Pension Plan and Supplementary Retirement Plan for Public Service Managers. For the year ended March 31,
2016, the expense for these pension plans is equal to the contribution of $18,026 (2015 - $17,325). Pension expense recorded
is comprised of employer contributions to the plans that are required for its employees during the year, which are calculated
based on actuarially determined amounts that are expected to provide the plans' future benefits.
10

ALBERTA ENERGY REGULATORNOTES TO THE FINANCIAL STATEMENTS
March 31, 2016
(in thousands)
Note 12 Pension (continued)
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.
The effective date of the most recent actuarial funding valuation for SEPP was December 31, 2014. The accrued benefit
obligation as at March 31, 2016 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, 2017.
Pension plan assets are valued at market values. During the year ended March 31, 2016 the weighted average actual return onplan assets was -3.4% ( 11.7% in 2015).
Significant weighted average actuarial and economic assumptions used to value accrued benefit obligations and pension benefit
costs are as follows:
March 31,2016

Accrued benefit obligations
Discount rate

Rate of compensation increaseLong-term inflation rate

4.7%
4.9%
0% for 2 years, 0% for 1 year,
3.5%
3.5%
thereafter
thereafter
2.0%
2.0%
2016
4.9%
4.9%

2015
5.3%
5.3%

0% for 1 year,
3.5% thereafter

3.8%

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

March 31,2015

The funded status and amounts recognized in the Statement of Financial Position are as follows:
March 31,2016
Market value of plan assets
Accrued benefit obligations
Plan (deficit)
Unamortized actuarial loss
Pension obligations$$

March 31,2015

47,853 $54,639(6,786)6,094(692) $

45,08749,510(4,423)
2,074(2,349)The pension benefit costs for the year include the following components:
Current period benefit cost
Interest cost
Expected return on plan assets
Amortization of actuarial losses

$

$

2016
2015
4,375 $
3,625
2,573
2,394
(2,330)(2,110)436
396
5,054 $
4,305
11

ALBERTA ENERGY REGULATORNOTES TO THE FINANCIAL STATEMENTS
March 31, 2016
(in thousands)
Note 12 Pension (continued)
Additional information about the defined benefit pension plans is as follows:
AER contribution
Employees' contribution
Benefits paid

$

2016
6,711
861
3,216

$

2015
5,247
731
3,350

The asset allocation of the defined benefit pension plans' investments is as follows:
March 31,2016
Equity securities
Debt securities
Other

March 31,
2015

47.9%
37.7%
14.4%
100.0%

49.9%
38.4%
11.7%
100.0%

Note 13 Tangible capital assets
2016

Estimated useful life

2015

Land

Leaseholdimprovements

Furniture andequipment

Computerhardware andsoftwareIndefinite

Term of thelease

5-12 years

4-5 years

Total

Total

Historical cost
Beginning of year

$

282

$

36,055$

16,154$

123,999$

176,490$

157,359

Additions

-

2,870

759

10,567

14,196

20,854

Disposals, including write-downs

-

(218)

(1,664)(7,698)(9,580)(1,723)282

38,707

15,249126,868

181,106

176,490

Accumulated amortization
Beginning of year

$

-

$

7,740

$

9,227

$

96,312$

113,279$

102,387

Amortization expense

-

2,266

1,066

9,313

12,645

11,836

Disposals, including write-downs

-

(86)

(1,489)(7,673)(9,248)

(944)

-

9,920

8,804

97,952

116,676

113,279

Net book value at March 31, 2016

$

282

$

28,787

$

6,445

$

28,916

Net book value at March 31, 2015

$

282

$

28,315

$

6,927

$

27,687$64,430$63,211

Historical cost includes work-in-progress at March 31, 2016 totaling $3,767 (March 31, 2015 - $454) comprised of: computer
hardware and software $3,767 (March 31, 2015 - $321) and leasehold improvements $nil (March 31, 2015 - $133).

12

ALBERTA ENERGY REGULATORNOTES TO THE FINANCIAL STATEMENTS
March 31, 2016
(in thousands)
Note 14 Accumulated operating surplus
The accumulated operating surplus of the AER is calculated as the sum of the net debt of the AER and its non-financial assets.
The accumulated operating surplus represents the net assets of the AER. Accumulated operating surplus is comprised of thefollowing:
2016

Balance at beginning of year
Annual operating (deficit) surplus
Net investment in capital assets
Balance at end of year
(a)

2015
Accumulated Accumulated
Investments intangible capital Unrestricted
operatingoperating
net assets
assets (a)surplussurplus$44,880 $18,975 $63,855 $48,450(1,744)(1,744)
15,405
1,651(1,651)
15,580 $62,111 $63,855$46,531 $Excludes leasehold improvement costs received by the AER as a lease incentive.

Note 15 Contingent liabilities
The AER, in the conduct of its normal activities, is a defendant in a number of legal proceedings. While the ultimate outcome
and liability of these proceedings cannot be reasonably determined at this time, the AER believes that any settlement will nothave a material adverse effect on the financial position or the results of operations of the AER. Based on legal advice,
management has concluded that none of the claims meet the criteria for recording an accrued liability under PSAS.
Note 16 Contractual obligations
Contractual obligations are obligations of the AER to others that will become liabilities in the future when the terms of thosecontracts or agreements are met.
Estimated payment requirements for obligations under operating leases and contracts for each of the next five years andthereafter are as follows:
2017
2018
2019
2020
2021
Thereafter$$

25,352
20,16016,304
12,506
12,296
109,521
196,139

13

ALBERTA ENERGY REGULATORNOTES TO THE FINANCIAL STATEMENTS
March 31, 2016
(in thousands)
Note 17 Related party transactions
Related parties are those entities consolidated or accounted for on the modified equity basis in the Province of Alberta's financial
statements.
The AER had the following transactions with related parties recorded in the Statement of Operations and the Statement of
Financial Position at the amount of consideration agreed upon between the related parties:
Entities in the Ministry
2016
2015
Revenues
Provincial grant
Information, services and fees

$
$

153
153

$
$

Other entities
2016
2015

19,875150
20,025$$

Entities in the Ministry
2016
2015
ExpensesComputer services
Buildings
Administrative
Consulting services

$

$

$

2,124
2,124

Receivable from$

Payable to

$

176
176

$
$

136
136

Other entities
2016
2015
$

$

2,122
82
2,204

$

$

1,714
846
1,143
290
3,993

$

1,167
600
933
321
3,021

91

$

10

$

6

$

4

-

$

4,460

$

588

$

669

Note 18 Comparative figures
Certain 2015 figures have been reclassified to conform to the 2016 presentation.
Note 19 Approval of financial statements
These financial statements were approved by the AER Board of Directors on May 11, 2016.

14

ALBERTA ENERGY REGULATORSCHEDULE TO THE FINANCIAL STATEMENTS
Energy Regulation Expenses
Year Ended March 31, 2016

Schedule 1(in thousands)

2016
Salaries, wages and employee benefits
Computer services
Buildings
Consulting services
Amortization of tangible capital assets
Travel and transportation
Administrative
Equipment rent and maintenance
Abandonment and enforcement
Loss on disposal and write-down of tangible capital assets

$

$

2015
180,705
15,71915,198
13,692
12,645
4,832
4,373
936
681
332
249,113$$

178,148
15,91218,01619,99011,836
5,582
4,133
1,173
1,258
779
256,827

15

ALBERTA ENERGY REGULATORSCHEDULE TO THE FINANCIAL STATEMENTS
Salaries and Benefits Disclosure
Year Ended March 31, 2016
(in thousands)

Schedule 2

2015

2016
Base
salary (a)Position
Board of Directors
Chairman
Board Director
Board Director
Board Director
Board Director
Board Director(e)Board Director(f)Board Director(g)Board Director(h)Executives
President and Chief Executive Officer (i)Chief Hearing Commissioner(j)Executive Vice-President, Corporate Services
Executive Vice-President and General Counsel (k)Executive Vice-President, Operations(k)Executive Vice-President, Stakeholder & Government Relations
Executive Vice-President, Strategy & Regulatory(k)

(a)
(b)
(c)

$

269
114
117
107
105
72
60
24
-

529
210
275
275
317
275
275

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

$

-

48
17
90
90
99
99
73

$

7
6
1
10
1
5
7
4
-

148
60
75
88
108
77
38

Total (d)

$

276
120
118
117
106
77
67
28
-

725
287
440
453
524
451
386

Total

$

291
119
117
129
108
127
131
29

710
261
411
418
449
432
414

Includes retainers and per diems for Board Directors. Members of the Board of Directors do not participate in the AER's pension plans. Includes pensionablebase pay for Executives.
Payments in lieu of vacation and health benefits, vehicle allowances, and short term incentive payments for Executive Vice-Presidents.
Contributions to all benefits as applicable including employer's share of Employment Insurance, Canada Pension Plan, Alberta and AER pension plans, healthbenefits or payments made for professional memberships and tuition fees.

(d)
(e)
(f)
(g)
(h)
(i)

Salaries and benefits for the Board of Directors are presented in descending order.
The incumbent held the position effective August 1, 2015.
The incumbent left the position effective September 30, 2015.
The incumbent left the position effective June 16, 2015.
The incumbent left the position effective June 26, 2014.
Automobiles provided, no dollar amount included in other non-cash benefits. During 2016, a relocation expense, related to home equity loss due to a required
transfer of location, was paid in the amount of $127. Relocation expenses are a normal business expense and are not considered to be compensation.

(j)

The position was held by two individuals in 2015.

16

ALBERTA ENERGY REGULATORSCHEDULE TO THE FINANCIAL STATEMENTS
Salaries and Benefits Disclosure
Year Ended March 31, 2016
(in thousands)

Schedule 2 (continued)(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 actuariallydetermined using the projected benefit method pro-rated on service, a market interest rate, and management's best estimate of expected costs and theperiod of benefit coverage. Net actuarial gains and losses of the benefit obligations are amortized over the average remaining service life of theemployee 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. The costs detailed below are
only for those employees included in Schedule 2 who participate in the SEPP and SRP maintained by the AER to compensate senior staff who do notparticipate in the government management pension plans.

2016

Position
Executive Vice-President and General Counsel
Executive Vice-President, Operations
Executive Vice-President, Strategy & Regulatory

Position
Executive Vice-President and General Counsel
Executive Vice-President, Operations
Executive Vice-President, Strategy & Regulatory

2015

Current service
Prior service and other
cost
costs
$
39
$
8
54
2
5
22

$

Accrued obligation
April 1, 2015
$
403
125
1,108

Accrued obligation
March 31, 2016
$
475
204
1,175

Changes in accrued
obligation
$
72
79
67

Total

Total
47
56
27

$

42
52
40

2015
$

403
125
1,108

17

ALBERTA ENERGY REGULATOR

Schedule 3

SCHEDULE TO THE FINANCIAL STATEMENTS
Actual Results Compared with Budget
Year Ended March 31, 2016
(in thousands)

2016
Budget(Note 3)
Revenues
Industry levies and assessments
Provincial grant
Information, services and fees
Investment$

Expenses
Energy regulation
Orphan abandonment
Annual operating (deficit)

270,093

Actual

$

6,859
1,300
278,252

270,335
6,867
1,278
278,480

253,252
30,500283,752(5,500)249,113
31,111
280,224(1,744)

9,000(11,500)

14,196(12,645)
(332)
1,219

CapitalCapital investment
Less: Amortization
Loss on disposal and write-down of tangible capital assets
Net capital investment(2,500)$(3,000)$(2,963)18