A major split is developing among Canadian producers at National Energy Board hearings on how to finance gas pipeline expansions to serve U.S. markets.
NEB is considering a $2.6 billion expansion project by TransCanada PipeLines Ltd. to serve markets in the U.S. Northeast via the proposed Iroquois pipeline. The board also is reviewing its toll policy under which expansion costs are rolled into the rate base and shared by all users.
The Canadian Petroleum Association, representing major producers, supports incremental tolls under which the cost of new facilities would be paid by buyers and sellers involved in exports. The CPA plan would be a compromise between rolled-in and user-pay tolls.
The Independent Petroleum Association of Canada, representing small and medium sized producers, supports the current rolled-in toll system. The Alberta government also favors the existing system.
WHAT USERS WANT
The Industrial Gas Users Association (IGUA), representing major gas buyers, and the Ontario government also want a user-pay system to replace the current toll structure.
Major Ontario gas buyers figure rolled-in tolls would cost them another $150 million/year. They earlier won a court ruling requiring the NEB to review its toll procedures. They said rolled-in tolls are a subsidy to U.S. buyers and Canadian producers who would benefit from exports to the U.S.
Meanwhile, NEB Chairman Roland Priddle removed himself as chairman of the board hearing the TransCanada application.
The board said Priddle made the decision over concerns raised about a February meeting between Priddle and George Hugh, chief operating officer of TransCanada.
Board member J.G. Fredette said Hugh had simply informed Priddle the company was prepared to go ahead with the hearing Mar. 5, the starting date originally scheduled. He said Hugh also suggested a timetable to present evidence on the toll issue.
IGUA had expressed concern that Priddle held preconceived views on the issue.
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