IPL TO SEEK PENALTIES FOR LINE SPACE OVERBOOKING

Canada's major crude oil pipeline will ask the National Energy Board for approval to impose financial penalties on shippers who overbook space in its system.

In other Canadian pipeline activity, Alberta's main natural gas system for domestic and export markets is seeking an 11% toll increase.

IPL SPACE

IPL Energy Inc., Edmonton, said some shippers are doubling their requests for space on its crude line from Edmonton to markets in the U.S. and eastern Canada.

Part of the problem is premium prices for Canadian crude in Chicago, where demand for such crude is strong. Crude prices in Chicago are about $1/bbl higher than in other markets such as Montana or the West Coast.

IPL has implemented more than half of a 170,000 b/d expansion to 1.4 million b/d and expects to be operating at maximum capacity by midyear. Despite the capacity increase, the apportionment level is 57% and shippers are receiving 43% of requested space.

IPL plans to ask NEB in February for approval to penalize producers or refiners that inflate nominations for space to markets in Chicago and Minnesota. IPL Vice Pres. Jim Schultz said nominations for space are more than double system capacity.

The company will ask the NEB for four measures to curb overbooking.

Producers would not be able to claim reasonable cause, such as a production breakdown, for not using booked space.

Senior company officers would be required to sign all booking requests.

IPL would fine shippers $1.50/bbl for capacity not used compared with the booking request and charge 250/bbl for nominations that are 10% greater than the company's largest shipment in the past 12 months.

Schultz said new shipping demands are about 100,000 b/d higher than companies requested in 1993 when the pipeline expansion was planned.

NOVA TOLL

Meanwhile, NOVA Gas Transmission Ltd., Calgary, filed a bid with Alberta's Public Utilities Board for an 11% toll increase. The request will be heard by the new Alberta Energy Utilities Board (AEUB), a merger of Alberta's Public Utilities Board and Energy Resources Conservation Board.

A toll hearing is expected in second half 1995, and NOVA is expected to face detailed questioning on its operations. Previously, NOVA was examined only on specific costs and hearings held only if there were complaints.

An 11% increase in tolls would increase shipper costs to 23.8/Mcf by December from 21.4/Mcf last month.

NOVA said most of the increase is needed to pay for expansion costs, including $760 million in pipelines and compressors to connect new gas supplies.

The 1995 toll request is based on a 13% return on 32.8% common equity. It compares with a 1994 return of 11.75% on 32% common equity.