Background

Fuel ratios are determined by forecasting the amount of flow on the system for a specific month and using this forecast to determine the total fuel requirement for the month in question.

An adjustment is made to the fuel requirement based on the under or over collected fuel position on the system known at that time, with an effort made to keep variations to a minimum in each month.

A further adjustment is made for Lost or Unaccounted For (LUF) gas. The fuel under/over collected position and the LUF are both calculated based on the information available when setting the fuel ratios; that is, actual data to the end of the previous month (i.e. May data is available in June and then able to be applied to July fuel ratios). Fuel ratios are typically based on information available around the middle of the month, and are posted before the tariff deadline of the 25th of the month.

Events Leading Up to the Increase

At the end of June 2005, the Mainline was in a cumulative under collected fuel position. The majority of that under collection was within the month of June itself, largely in the latter half of the month. The large under-recovery of fuel was primarily due to actual flows being greater than forecast. The flow forecast used in the June fuel ratio calculation was 5.74 Bcf/d through the west and 2.99 Bcf/d through the north. For the first half of June, actual flows were very similar to the flow forecast. For the latter half of June, actual flows averaged around 300 Mmcf/d higher than forecast.

As per the usual fuel ratio setting process, the July fuel ratios were set based on information available around the middle of June. The flow forecast used in the July fuel ratio calculation was 5.74 Bcf/d through the west and 3.17 Bcf/d through the north, similar to the actual flows occurring on the system at the time the fuel ratios were set.

The higher flows in the latter half of June (after the July fuel ratios were set) continued into July. As of the end of July, actual flows averaged around 400 Mmcf/d higher than forecast through the west and around 300 Mmcf/d higher through the north. The higher than forecasted flows further contributed to the under collected fuel position.

Recovery of the under collected fuel position is planned for the remainder of the summer months.

Moving Forward

With September and October flows forecasted to remain high, TransCanada expects fuel ratios to correspond accordingly and remain high.

In addition, TransCanada is reviewing our processes to ensure fuel requirements continue to be based upon the best available information and align with the requirements of the system and our customers.

More information

For more information or any questions you may have, please contact your Eastern Sales Representative.