ARCHIVED – National Energy Board Cost Recovery Regulations for the Electricity Industry – De-mystifying Cost Recovery Fees (It’s easy as A B C)

4. Assurance
   • The Auditor General performs an annual audit of NEB costs
   • The pool of Recoverable Costs is certified
   • For purposes of cost recovery, the fiscal period is the calendar year

1. Companies pay their share of recoverable costs in 3 ways:
   • “Greenfield” levies (pipeline start-ups only - Sec 5.2)
   • Fixed fees (small, intermediate companies and “other” commodities)
   • Sharing remaining pool of costs (large companies)

2. Allocation Principles
   • Allocation of costs to commodity categories is based on time spent on each commodity - gas, oil, electricity.
   • Non-specific time (i.e. not attributed to a specific commodity) is allocated across all commodities in proportion to the time spent on those commodities.
   • Within each commodity group, costs are shared according to activity levels (throughputs, exports).

3. Cap on fees (Sec 4.1)
   • For large oil, gas and commodity pipelines, fees may be capped at 2% of the cost of service for that company. (Company must apply for relief.)
4. Electricity export averaging
   • Sharing of costs allocated to large electricity exporters is based on a 4 year rolling average of export activity.

1. Obtain relevant company operating data
   • Throughputs, exports, cost of service (August 31)
     • actuals for previous year(s)
     • forecast for current year
     • forecast for next year

2. Determine estimate of next year’s recoverable costs
   • obtain NEB budgets for current and next fiscal years
   • adjust fiscal years to calendar estimate budget for next calendar year
   • calculate estimate of recoverable costs for next calendar year

3. Obtain audited results for previous calendar year
4. Calculate difference between previous year’s estimated costs and audited actual costs
5. Determine adjustment (if any) for each company
6. Calculate estimated billing for each company for the coming year– adjusted for differences determined in Step 5

7. Issue information package with preliminary estimated billing information (September 30)
8. Receive applications for relief under Sec 4.1 (October 31)

9. Issue (December 31) final estimated billing for coming year reflecting:
   • final estimate of NEB recoverable cost for next year
   • adjustments arising from differences between estimates and actuals from preceding year
   • reallocations arising from approved applications for relief

10. During the next year, issue quarterly invoices to large companies and single invoice at mid-year to small and intermediate companies based on estimated fees.

The End