NOVA Gas Transmission Application: CER provides reasons for denial of NGTL firm-linked transportation service

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CALGARY – ENERGY – The Commission of the Canada Energy Regulator denied NOVA Gas Transmission Ltd.’s (NGTL) application for a proposed firm transportation linked service, and associated tolling methodology, from receipt points along the North Montney Mainline in Northeast B.C. to the proposed Willow Valley Interconnect delivery point. The Commission found that the tolling methodology would result in tolls that were not just and reasonable. The Commission approved NGTL’s request to designate the Willow Valley Interconnect delivery point as a Group 1 delivery point, citing the overall benefits to the designation.

On January 19, 2022, the Commission issued its decision with reasons to follow as NGTL requested an expedited decision.

In May 2021, NGTL applied to the CER for a new service for PETRONAS Canada Ltd. This service would link the North Montney Mainline and the Coastal GasLink pipeline (CGL) at the Willow Valley Interconnect delivery point. From here, natural gas would be transported on the CGL pipeline to the LNG Canada export terminal in Kitimat, B.C.

Tolls for the service were designed to cover only incremental costs and shifted the risk of cost overruns to other shippers on the NGTL System. The toll design did not satisfy the cost causation principle. This principle says that users of a pipeline system are responsible for the costs associated with transporting their product through the pipeline.

The Commission also decided there was insufficient information at this time to determine if the previously approved tolling methodology for the existing NGTL system would still be appropriate once gas deliveries began at the Willow Valley Interconnect. This decision does not impact the current tolling methodology for existing services on the North Montney Mainline.

Quick Facts

  • The CGL pipeline is under construction by TC Energy and is regulated by the British Columbia Oil and Gas Commission.
  • The Commission heard from 22 intervenors/participants in the hearing.
  • The CER is responsible for regulating tolls, tariffs, and traffic for pipelines that cross a provincial or international border.
  • The Canadian Energy Regulator Act says that tolls must be just and reasonable and not unjustly discriminatory – which generally means all shippers need to be treated fairly.
  • A toll is the price charged by a pipeline company for transportation and other services. Tolls help pipeline companies cover the costs to safely operate and maintain pipelines.
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