Société en commandite Gaz Métro
Cause tarifaire 2010, R-3690-2009
Topic: New Canadian Pipeline Projects
1.10 References:
Preamble:
(i)
(ii)
Written Evidence of CAPP, Dr. Safir, p. 9, lines 2-3
Written Evidence of TQM, Appendix 1: Fair Return, p. 22,
lines 22-23
Reference (i) states that "Canadian pipeline companies have not
been afraid to develop new projects, despite a formula driven
ROE."
Reference (ii) states that "TQM notes that no significant new
pipeline project has been proposed in the last ten years that would
utilize the 1994 ROE Formula."
Request:
Please clarify whether, or the extent to which, CAPP and/or Dr.
Safir believe that new pipeline projects are being or have been
developed based on ROEs set at the formula levels. Please provide
support for your response.
Response:
Since 1994 and in the last ten years substantial investments have
been made and continue to be made by pipelines and utilities
subject to returns set by formulae. All expansions built or proposed
by TQM over that time frame were built under the NEB ROE
formula including the PNGTS extension and the proposed
extension to the Gros Cacouna LNG terminal. All TCPL Mainline
expansions in that time frame were or are being built under the
NEB ROE formula including the Eastern Mainline projects.
Anything built by the TCPL Mainline to the end of the current
settlement will be at the RH-2-94 formula ROE. TCPL’s Alberta
system currently has plans for very large expenditure on facilities
including the roughly $1 Billion North Central Corridor project
that are subject to the Alberta formula ROE which is similar to the
NEB formula ROE. Westcoast Transmission pipeline expansions
have been and continue to be at the NEB formula. TransCanada’s
NEB authorized West Path expansion was under the NEB formula.
Expansions by Union in 2006, 2007 and proposals for 2008 and
2009 are all subject to the OEB ROE formula that is similar to the
NEB ROE formula ROE (CAPP’s evidence, page 15, A.13).
In response to CAPP 131, where the question linked to a $200
Million threshold, Mr. Engen only identifies the North Central
Corridor pipeline project and the Alberta North/South 500 KV line
as subject to the Alberta ROE formula. Later in response to CAPP
253, Mr. Engen added the GH-3-98 TCPL Mainline expansion and
Union’s 2006 and 2007 expansions to his response to CAPP 131.
Original : 2009.06.30
Gaz Métro - 7, Document 12.11
Annexe - Réponse 9.4 (2 pages)
In response to CAPP 220, TQM explains that Ontario uses an ROE
formula for some two dozen electric distribution companies in the
province including Hydro One and that BCTC, the transmission
arm of BC Hydro, which is subject to a formula ROE, has a 5.1
Billion ten year investment plan for its system.
Large sums have been expended on oil pipeline facilities since
1995 under the Non Routine Adjustment provisions of incentive
agreements. NRAs apply to future items after the incentive
agreement has become effective that are to be on a cost of service
basis including the formula return.
The point to be clear is simply that the TQM claim about
investments not being made at formula ROEs is not correct.
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