TransCanada and ATCO Pipelines Asset Exchange

TransCanada, through its subsidiary NOVA Gas Transmission Ltd. (NGTL), and ATCO Pipelines have entered into an agreement to exchange ownership of approximately 3,100 km of natural gas pipelines and related facilities in Alberta. Now that the exchange of facilities has been agreed to, we are providing this information so that interested parties can understand how this change might affect them.

Currently, both TransCanada and ATCO Pipelines construct, own and operate pipeline facilities and maintain buildings, equipment and staff in many of the same areas of Alberta. TransCanada and ATCO Pipelines plan to exchange ownership of facilities in certain areas to reduce the overlap of field resources and to achieve operational and cost efficiencies.

To initiate the asset exchange, in 2009, TransCanada and ATCO Pipelines entered into the Alberta System Integration Agreement, which integrated commercial service on the two pipeline systems and proposed the exchange of pipeline facilities. Over the past two years, TransCanada and ATCO Pipelines completed a detailed review of their pipeline systems and recently entered into the Asset Swap Agreement, which identifies the specific pipeline facilities to be exchanged between the two companies. As a result, pipeline facilities being transferred from TransCanada to ATCO Pipelines will shift from the National Energy Board (NEB) regulatory framework to the Alberta Utilities Commission (AUC) regulatory framework that governs the ATCO Pipelines system. Those facilities being transferred to TransCanada from ATCO Pipelines will shift to the NEB, which regulates TransCanada's Alberta System.

The asset exchange will require the approval of both the NEB and AUC. Separate applications will be filed by ATCO Pipelines and TransCanada, through its subsidiary, NGTL, with the AUC and NEB to acquire the necessary approvals. ATCO Pipelines and TransCanada expect to file their respective applications in December 2011. TransCanada's application to the NEB will include requests for approval of the sale and acquisition of facilities pursuant to s. 74 of the NEB Act and for a Certificate of Public Convenience and Necessity to operate the facilities acquired from ATCO Pipelines pursuant to s. 52 of the NEB Act. Subject to regulatory approval, it is anticipated that the transfer will be completed in 2013.

The asset exchange involves TransCanada and ATCO Pipelines, but will not affect ATCO Gas or its relationships with its customers. ATCO Gas distribution facilities such as regulating stations will not change ownership and ATCO Gas customers will continue to receive their distribution services from ATCO Gas.

The asset exchange is of an administrative nature and its effects will be minimal. There will be no new pipeline construction or land disruption; however, routine activities may be carried out on the facilities subject to the asset exchange during the next two years until the exchange is completed. For example, emergency signage and communications equipment will need to be updated to reflect the change in ownership of the facilities.

Many Alberta landowners have had NEB-regulated and/or AUC-regulated pipelines on their land for many years. These landowners manage their lands in much the same way regardless of which regulatory body oversees the pipeline. While there are some differences in the regulations of the NEB and AUC, they are minimal. After the asset exchange, landowners with our pipelines on their land will be able to continue to use and enjoy their land in the same way they always have.

Existing Agreements
Existing agreements will remain valid and in effect. All existing agreements currently in place with each company will be assigned to the other company when the asset is transferred. TransCanada and ATCO Pipelines are contractually bound to honour these agreements.

Ongoing Annual Payments
If you are receiving annual payments under existing agreements, you will continue to receive them. TransCanada and ATCO Pipelines are bound by the terms of these existing agreements, including the payment terms of the easement agreements.

Crossings
Landowners already have permission to cross the pipeline right-of-way for normal farming operations without having to notify pipeline companies. This will not change. Existing right-of-way agreements state that landowners have the right fully to use and enjoy the right-of-way, as long as it does not interfere with the operation or integrity of the pipeline.

In 2010, the NEB issued guidance that specifically allows for normal farming operations and pipeline crossings without pre-authorization so long as there is no disturbance to the soil deeper than 30 centimetres. Landowners are also protected from liability for pipeline damages that may result from normal farming operations. The operating histories of TransCanada and ATCO Pipelines show that no landowner has been held liable for pipeline damages arising from normal farming operations.

Safety Zone or Control Zone
There is a difference between the NEB regulations and the AUC regulations regarding the safety zone or control zone. However, we do not expect that a shift in jurisdiction will have any impact on existing structures within the safety or control zones of any of the facilities involved in the exchange.

The NEB regulations state that the pipeline operator must be notified of all activities or ground disturbances (excavating, digging, trenching, drilling) deeper than 30 cm (1 foot) and within 30 metres (98 feet) of the edge of the pipeline right-of-way (the safety zone).

The AUC regulations state that the pipeline operator must be notified of any cultivation deeper than 45 cm (18 inches), or any ground disturbance (excavating, digging, trenching, drilling) deeper than 30 cm and within 30 metres of the actual pipe (the control zone).

These safety or control zones exist to prevent accidental damage to pipelines and to protect landowners, the public and the environment.

Abandonment
Approval is required for a pipeline owner to abandon an NEB-regulated or AUC-regulated pipeline. Any concerns about the abandonment process and any future land use will be addressed at that time. We are fully committed to fulfilling all financial obligations related to abandonment.

In addition, right-of-way agreements protect landowners from liabilities, damages, costs, claims, suits, or actions arising from abandonment of the pipeline.

Intervener Funding
In NEB proceedings, stakeholders may apply to recover their costs where their interests are directly affected. Cost recovery is administered through the NEB's Participant Funding Program.

In AUC proceedings, local interveners may apply to the AUC for cost recovery under the AUC's Rule 9: Local Intervener Costs or, in the case of a Surface Rights Board hearing, under Section 39 of the Surface Rights Board Act.

Consultation
In the coming months, TransCanada and ATCO Pipelines will be jointly undertaking a comprehensive consultation program, including open houses (which will be advertised in advance in local newspapers and on the radio), to ensure you are aware of the implications of the asset exchange and have an opportunity to discuss the changes with us and clarify any questions or concerns you may have. Once the regulatory applications have been filed with the AUC and NEB, affected landowners and stakeholders will have the opportunity to participate in the AUC and NEB proceedings, including the filing of a letter of comment with the NEB.

If you have concerns or questions, please contact us. We have several different ways you can get in touch with us and would encourage you to choose the one most convenient to you.

Phone: Landowners: 1.877.414.7750 All others: 1.877.259.2053
Email: tc_atco@transcanada.com
Website: www.transcanada.com/tcatcoassetexchange

The NEB may be contacted at:

National Energy Board
Attention: Anne-Marie Erickson, Secretary of the Board
444 Seventh Avenue SW
Calgary, Alberta T2P 0X8
Email: info@neb-one.gc.ca
Telephone: 403.292.4800
Toll-free: 1.800.899.1265
Fax: 403.292.5503
Toll-free fax: 1.877.288.8803

The AUC may be contacted at:

Alberta Utilities Commission
425 1st Street SW
Calgary, Alberta T2P 3L8
Telephone: 403.592.8845
Fax: 403.592.4406
Email: utilitiesconcerns@auc.ab.ca

Alberta Utilities Commission
10055, 106 Street
Edmonton, Alberta T5J 2Y2
Telephone: 780.427.4901
Fax: 780.427.6970
Email: utilitiesconcerns@auc.ab.ca

Note: For toll-free access to the AUC from anywhere in Alberta, please dial 310.0000 and enter the ten-digit number to be connected.

Related Information

Open Houses ( 61 KB, PDF )
Fact Sheet ( 4.75 MB, PDF )
A Proposed Pipeline - What you need to know - NEB ( 451 KB, PDF )
About the AUC ( 1.85 MB, PDF )
Gas Pipeline Regulation - AUC ( 935 KB, PDF )
Living and Working Near Pipelines - NEB ( 285 KB, PDF )
Pipeline Safety - NEB ( 88 KB, PDF )
Safe Crossing of Pipelines - NEB ( 2.85 MB, PDF )