Natural Gas – Toll Settlement
In this decision, the NEB considered an application (the “Application”) from Maritimes & Northeast Pipeline Management Ltd. (“M&NP”) pursuant to Part IV of the National Energy Board Act and the Board’s Revised Guidelines for Negotiated Settlements of Traffic, Tolls and Tariffs (“Settlement Guidelines”), for approval of a toll settlement for tolls over the period of 1 December 2019 through December 31, 2021 (the “2020-2021 Toll Settlement”). The NEB approved the 2020-2021 Toll Settlement and Application as filed.
M&NP submitted that its system is faced with the unique challenge of essentially losing its domestic gas supply, as well as losing 95 percent of its firm contract determinants all at one time. The contract commitments currently held by ExxonMobil Canada Properties, the lead operator of the permanently shut-in Sable Offshore Project, expire on November 30, 2019. M&NP stated that it engaged with its shipper group in the first half of 2018 to collaborate on solutions to the toll uncertainty resulting from these challenges. The 2020-2021 Toll Settlement was the result of negotiations with the M&NP Tolls and Tariff Working Group, which is comprised of representatives of M&NP and other parties interested in M&NP’s tolls and tariff matters.
Views of the Board
The NEB found that the 2020-2021 Toll Settlement was an acceptable negotiated response to significant change on the M&NP system. While confronted with the expiry of contract commitments resulting from the termination of production, M&NP had taken steps to keep tolls at reasonable levels. This included accelerating depreciation in the 2017-2019 Toll Settlement, as well as measures taken in the 2020-2021 Toll Settlement such as reducing the revenue requirement by 59 percent, the introduction of the new Interruptible Transportation Minimum Revenue (“MNITMR”) service to ensure minimum interruptible revenues of $37.5 million over the settlement term, and the restructuring of existing services.
The Board found that the 2020-2021 Toll Settlement complied with the Settlement Guidelines and provided interested parties with a fair opportunity to participate and have their interests recognized and weighed.
The NEB was not persuaded by the Notices of Opposition submitted by Emera Energy Limited Partnership and New Brunswick Power Corporation. The Board found that the MNITMR service was an acceptable negotiated service, and that fundamental risk had not materialized on the M&NP system at this time. In the Board’s view, the objections raised by Emera and New Brunswick Energy Marketing did not warrant rejection of the 2020-2021 Toll Settlement as a whole and did not require additional process to adjudicate.
The NEB found that the 2020-2021 Toll Settlement would result in tolls that are just and reasonable, tolls and services that are not unjustly discriminatory, and that the 2020-2021 Toll Settlement met the requirements of the Settlement Guidelines. As such, the NEB approved the 2020-2021 Toll Settlement and Application as filed and issued Toll order TG-007-2019 to give effect to the decision.