Revenue Recognition (Notes)

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Nature of Revenue by Segment

Terminals Segment

We provide various types of liquid tank and bulk terminal services. These services are generally comprised of inbound, storage and outbound handling of customer products.

Our liquid tank storage and handling service contracts generally include a promised tank storage capacity provision and prepaid volume throughput of the stored product. In these contracts, we have a stand-ready obligation to perform this contracted service each day over the life of the contract. The customer pays a transaction price typically in the form of a fixed monthly charge and is obligated to pay whether or not it uses the storage capacity and throughput service (i.e., a take-or-pay payment obligation). These contracts generally include a per-unit rate for any quantities we handle at the request of the customer in excess of the prepaid volume throughput amount and also typically include per-unit rates for additional, ancillary services that may be periodically requested by the customer.

Our bulk storage and handling contracts generally include inbound handling of our customers’ dry bulk material product into our storage facility and outbound handling of these products from our storage facility. These services are provided on both a firm and non-firm basis. In our firm bulk storage and handling contracts, we are committed to handle and store on a stand-ready basis the minimum throughput quantity of bulk materials contracted by the customer. The customer is obligated to pay for its minimum volume commitment amount, regardless of whether or not it uses the storage and handling service. The customer pays a transaction price typically based on a per-unit rate for quantities handled, including amounts attributable to deficiency quantities. For non-firm storage and handling services, the customer pays a transaction price typically based on a per-unit rate for quantities handled on an as requested, non-guaranteed basis.

Pipelines Segment

We transport light hydrocarbon liquids (primarily to be used as diluent to facilitate bitumen transportation) on a firm or non-firm contractual basis, and jet fuel on a non-firm contractual basis. The regulated tariff for Cochin is designed to provide revenues sufficient to recover the costs of providing transportation to shippers, including a return on invested capital. The majority of Cochin’s transportation service is provided on a firm basis under its current contracts.

We typically promise to transport on a stand-ready basis the shipper’s minimum volume commitment amount. The shipper is obligated to pay for its volume commitment amount, regardless of whether or not it flows quantities in Cochin’s pipeline. The shipper pays a transaction price typically based on a per-unit rate for quantities transported, including amounts attributable to deficiency quantities.

Our non-firm, interruptible transportation services are provided on Cochin’s pipeline when and to the extent we determine capacity is available in this pipeline system. The shippers typically pay a per-unit rate for actual quantities of product transported.

Disaggregation of Revenues

The following table presents our revenues disaggregated by revenue source and type of revenue for each revenue source:


	Year Ended December 31, 2018
	Pipelines	Terminals	Total
(In millions of Canadian dollars)
Revenue from contracts with customers
Services
Firm services(a)	54.0	229.4	283.4
Fee-based services	1.3	79.2	80.5
Total services revenues	55.3	308.6	363.9


Other revenues(b)	6.9	13.0	19.9
Total revenues	62.2	321.6	383.8

________

a. Includes non-cancellable firm service customer contracts with take-or-pay or minimum volume commitment elements, including those contracts where both the price and quantity amount are fixed. In these arrangements, the customer is obligated to pay for the rendered service whether or not the customer chooses to utilize the service. Excludes service contracts with indexed-based pricing, which along with revenues from other contracts are reported as Fee-based services.

b. Amounts recognized as revenue under guidance prescribed in Topics of the Accounting Standards Codification other than in Topic 606 and primarily include regulatory-based adjustments and leases.

Contract Balances

Contract assets and contract liabilities are the result of timing differences between revenue recognition, billings and cash collections. We recognize contract assets in those instances where billing occurs subsequent to revenue recognition and our right to invoice the customer is conditioned on something other than the passage of time. Our contract liabilities are substantially related to (i) capital improvements paid for in advance by certain customers generally in our non-regulated businesses, which we subsequently recognize as revenue on a straight-line basis over the initial term of the related customer contracts, and (ii) consideration received from customers for temporary deficiency quantities under minimum volume contracts that we expect will be made up in a future period, which we subsequently recognize as revenue when the customer makes up the volumes or the likelihood that the customer will exercise its right for deficiency volumes becomes remote (e.g., there is insufficient capacity to make up the volumes, the deficiency makeup period expires).

The following table presents the activity in our contract assets and liabilities:



(In millions of Canadian dollars)
Contract Assets
Balance at January 1, 2018			2.1
Additions			17.9
Transfer to Accounts receivable			(18.4)
Balance at December 31, 2018(a)			1.6

Contract Liabilities
Balance at January 1, 2018			68.2
Additions			154.5
Transfer to Revenues			(143.1)
Other (b)			0.7
Balance at December 31, 2018(c)			80.3

______

a. Includes current balances reported within “Other current assets” in our accompanying consolidated balance sheets at December 31, 2018.

b. Includes 2018 foreign currency translation adjustments associated with the balances at December 31, 2017.

c. Includes current balances and non-current balances of $12.8 million and $67.5 million reported within “Other current liabilities” and “Contract liabilities,” respectively, in our accompanying consolidated balance sheets at December 31, 2018.

Revenue Allocated to Remaining Performance Obligations

The following table presents our estimated revenue allocated to remaining performance obligations for contracted revenue that has not yet been recognized, representing our “contractually committed” revenue as of December 31, 2018 that we will invoice or transfer from contract liabilities and recognize in future periods:


Year			Estimated Revenue
(In millions of Canadian dollars)
2019			313.4
2020			250.0
2021			193.3
2022			183.9
2023			171.3
Thereafter			533.1
Total			1,645.0

Our contractually committed revenue for purposes of the tabular presentation above is generally limited to service customer contracts which have fixed pricing and fixed volume terms and conditions, generally including contracts with take-or-pay or minimum volume commitment payment obligations. Our contractually committed revenue amounts generally exclude, based on the following practical expedients that we elected to apply, remaining performance obligations for: (i) contracts with index-based pricing or variable volume attributes in which such variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct service that forms part of a series of distinct services; (ii) contracts with an original expected duration of one year or less; and (iii) contracts for which we recognize revenue at the amount for which we have the right to invoice for services performed.

Major Customer

For the years ended December 31, 2018 and 2017, revenues from Imperial Oil represented 31% of our total revenue from continuing operations for each year. For the year ended December 31, 2016, revenues from Imperial Oil represented 23% of our total revenue.