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Enbridge Pipelines Inc. (Enbridge) Mainline Open Season (CER September 27, 2019 Letter Decision)

Link to letter decision

Oil – Open Season – Firm Transportation


In this decision, the CER considered submissions from Suncor Energy Inc. (“Suncor”), Shell Canada Limited (“Shell”), the Explorers and Producers Association of Canada (“EPAC”), and Canadian Natural Resources Limited (“CNRL”) seeking relief regarding Enbridge Pipelines Inc.(“Enbridge”)’s ongoing open season process for firm service on its Mainline. The CER found Enbridge could not offer firm service to prospective shippers on the Mainline until such firm service has been approved by the CER.

Background

Between August 23 and 26, 2019, the National Energy Board (“NEB”, the CER’s predecessor) received four submissions regarding Enbridge’s current open season for firm service on its Mainline. Suncor requested an order of the NEB declaring that Enbridge may not offer firm service on the Enbridge Mainline until such firm service is approved by the NEB and included in the Mainline tariff. Shell, EPAC, and CNRL each requested that the open season be extended or stayed until the NEB had reviewed certain aspects of the open season process or offering, or firm service on the Mainline in general.

Views of the Commission

The CER indicated it had concerns regarding the fairness of Enbridge’s open season process and the perception of abuse of Enbridge’s market power. The CER noted that Enbridge controls over 70 percent of oil transportation capacity out of the Western Canadian Sedimentary Basin. There is a lack of alternative transportation options for potential shippers. Therefore, the open season does not provide an accurate reflection of market support for Enbridge’s firm service offering. Additionally, Enbridge had not indicated that it planned to use the open season to demonstrate the economic feasibility of new pipeline capacity.

The CER stated that potential shippers would benefit from a regulatory review of the terms and conditions of firm service on the Mainline before being required to make contracting decisions. This would provide more certainty and transparency to potential shippers, and would contribute to the efficient functioning of markets.

The CER found that it would not be in industry’s best interest for the CER to dictate the terms and processes for open seasons, unless it was necessary in the circumstances. In the CER’s view, intervention was necessary in the specific and unique circumstances of Enbridge’s current open season, which are distinct from previous cases.

The CER granted the relief requested by Suncor. The CER ordered that Enbridge may not offer firm service to prospective shippers on the Mainline until such firm service, including all associated tolls and terms and conditions of service, has been approved by the CER. The CER noted that such an approach is consistent with the NEB’s long-standing principles of transparency, fairness, and preventing abuse of market power.

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