On July 31, 2003,
the National Energy Board (NEB) issued its decision
on TransCanada's 2003 Mainline tolls and tariff application.
The NEB's decision is an essential step towards ensuring
the long-term sustainability of our Canadian Mainline
System, to the benefit of all stakeholders. TransCanada
is appreciative of the timeliness and comprehensiveness
of the NEB's decision. Highlights of the decision include:
- An increase in the bid floor price for Interruptible
Transportation (IT) Service from 80 per cent to 110
per cent of 100 per cent load factor Firm Transportation
toll
- An increase in depreciation rates from 2.89 per
cent to 3.42 per cent
- The continuation of the Fuel Gas Incentive Program
- The establishment of a new Southwest Tolling Zone
that will encompass the existing Southwest Delivery
Area that is currently part of the Eastern Zone
- Approval of a net revenue requirement of $1.9 billion,
an increase of $17 million over the 2002 net revenue
requirement
- Disallowance of some operations, maintenance and
administration costs totaling approximately $13.5
million
Background
On September 16, 2002 TransCanada filed its 2003 Tolls
and Tariff application for the Canadian Mainline natural
gas transmission system with the NEB. TransCanada requested
approval of tolls for the period January 1 to December
31, 2003. The application was the subject of an oral
hearing that ran February 26 through May 16, 2003.
In the tolls application, TransCanada sought approval
of a new Southwest tolling zone to enhance the competitiveness
of tolls to this market area. We also requested an increase
in the bid floor price for IT Service to address migration
from Firm Transportation (FT) Service to lower priced
IT Service and an increase in depreciation rates. As
well, this increase will better reflect the value of
IT relative to FT given the significant excess capacity
on the system.
In addition, the continuation of two agreed upon 2001-2002
incentives that provide financial and operational benefits
to TransCanada and our customers was pursued.
During the hearing, TransCanada's intent to renew capacity
on the Great Lakes Gas Transmission system for 2005
was raised by shippers and became an issue for the NEB's
consideration. The issue was debated extensively with
shippers requesting TransCanada be permitted to renew
only a portion of its capacity.
Moving Forward
Based on the NEB's decision, TransCanada will file
revised interim tolls with the NEB in a compliance filing
by August 15, 2003. The NEB has determined that the
tolls will remain interim pending the disposition of
TransCanada's appeal of the Review of the RH-4-2001
Fair Return Decision (RH-R-1-2002) to the Federal Court
of Appeal.
For more information, please check out our latest News
Release on the NEB's Mainline Tolls Decision.
