ARCHIVED – Review of Amendments to the National Energy Board Cost Recovery Regulations

1 January 2010

• • Project to review and amend Regulations initiated after discussions with electricity industry and letter sent to Board 31 March 2004 by 5> companies
  • NEB consultation process - 2004/2005
  • Research options - 2005
  • Developed concept - 2005/2006
  • Additional consultation - 2006
  • Drafted amendments - 2006/2007/2008
  • Regulatory implementation process
  • Final* product - Amendments effective 1 January 2010

• Major features
  • Cost recovery shifts to international and interprovincial power line companies from electricity exporters
  • Mechanics of cost recovery now align more closely with oil and gas pipelines

• • Retain concept of company classification according to size
  • Use only 2 size-related categories as recommended by industry
  • Intermediate eliminated - leaving small and large categories
  • Small company will be defined as a company transmitting less than 50,000 MW.h of power in a year

• • Small companies - continue to pay fixed levy - $500 p.a.
  • All remaining regulated IPLs will be classified as large
  • Large companies - levies will be proportional to activity
  • Border accommodation classification disappears from cost recovery
  • However, companies transmitting less than 0.5 MW.h of power annually pay no levy

• • Sec. 5.3 applies to power lines in the same manner as sec. 5.2 applies to oil and gas pipelines
  • Payable by IPL companies not previously regulated  by NEB
  • Set at 0.2% of capital cost as estimated by the Board in issuing the initial certificate/permit
  • Applies upon approval of certificate/permit
  • Payment due 90 days after invoice date

• • The electricity commodity recoverable cost pool will continue to be determined as in the past
  • Pool will now be shared by IPLs instead of electricity exporters
  • Measurement parameter for sharing costs among IPLs
    • MW.h transmitted by each regulated IPL (exports + imports)
  • Will now require IPLs to report activity - MW.h transmitted
  • For cost recovery, will require aggregate annual data:
    • forecasts of activity for upcoming year
    • actual activity for previous year

• • The actual pool of costs to be shared by large companies will be determined as follows:
    • Calculate commodity recoverable cost pool using present methodology
      • Deduct: Fees levied in the year on newly regulated IPLs
      • Deduct: Annual fixed levies charged to small companies ($500 per company)
    • Equals: Pool of costs to be shared by large IPLs
  • No longer use 4 year aggregate of volumes for calculation of levy

• • Will continue process of invoicing on an estimated basis for the year
  • After the year has concluded, results will be audited
  • Adjustments, if any, are factored into next billing cycle

• • Forecast of transmissions by power line companies due 15 February 2010
  • Estimate of levies payable and invoice issued by 31 March 2010
  • Invoice payable in full by 15 May 2010
  • Normal cost recovery cycle will begin in June/July of this year

• • A number of “housekeeping” amendments were included in the current changes
  • Included changes to definitions relating to oil and gas
  • Clearer wording in other sections