Sempra Atlantic seeks to reopen Nova Scotia gas deal

Nova Scotia will not support an application by Sempra Atlantic Gas, a unit of Sempra Energy, to make fundamental changes to its provincial gas distribution franchise, said Gordon Balser, minister of the Petroleum Directorate. In a recent application to regulators, Sempra Atlantic asked for support to make major changes to its agreement.


By the OGJ Online Staff

HOUSTON, June 5 -- Nova Scotia will not support an application by Sempra Atlantic Gas to make fundamental changes to its provincial gas distribution franchise, said Gordon Balser, minister of the Petroleum Directorate.

Sempra Atlantic won the right to distribute gas in Nova Scotia by agreeing to exceed government requirements at the time, Balser said, but the company now is seeking to change the terms of the deal. Sempra Atlantic Gas, a unit of Sempra Energy, San Diego, Calif., won Nova Scotia�s gas distribution franchise in December 1999, following public hearings at the Utility and Review Board (UARB).

Balser said Sempra Atlantic agreed to distribute gas across the province within 7 years, absorbing the financial risk. But on Apr. 25, the company notified the government it wanted to delay construction of a distribution network because of high gas prices, and because it was not allowed to lay the pipeline on the shoulders of provincial roadways.

In a recent application to the UARB, Sempra Atlantic requested the government�s "unequivocal" support for changes that included the following:

� Reduce the distribution network to areas deemed economical.

� Limit distribution unless there is a good rate of return to shareholders.

� Allow unlimited time for construction.

� Include provisions to limit financial risk to Sempra.

Balser said if evidence shows the economic challenges of today�s gas market require changes to Nova Scotia�s regulatory regime, that information should be presented to the UARB. However, he said, the government does not believe Sempra should have the exclusive right to pursue a franchise if fundamental changes are made.

"Sempra currently has an exclusive franchise to distribute gas under an existing set of conditions. It�s now Sempra�s choice as to what they do with that franchise," Balser said. He said if Sempra believes changes need to be made it should submit a plan to a public review before the UARB, recognizing that other parties may wish to pursue the franchise in its revised form.

Nova Scotia recognizes that Sempra can also choose to surrender the franchise, Balser said. Should it choose to do so, he said, the government will respond on the appropriate terms under which that surrender takes place.

"Our primary responsibility is to look out for the interests of Nova Scotians, not Sempra," Balser said.

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