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Two Competitors Drop Out of Nova Scotia Distribution Race

Two Competitors Drop Out of Nova Scotia Distribution Race

SaskEnergy and Enbridge Consumers Gas last week dropped out of the competition for a distribution franchise in Nova Scotia once it became clear the provincial government would allow industrial customers to apply for direct connections to the Maritimes and Northeast Pipeline. Their departure leaves only Sempra Atlantic Gas and Maritimes NRG competing for province-wide distribution franchise rights and seven small municipal agencies competing for site-specific franchises.

SaskEnergy, which was leading a consortium of companies, said the government's policy decision significantly increased the risk of holding the franchise because it could limit revenues to a point where a province-wide distribution system would be uneconomic. Industrial customers could apply for a direct connection to Maritimes and avoid paying distribution fees.

The entire province only has a population of about 900,000 and the potential gas load, including that of industrial customers, could reach a maximum of 500 MMcf/d, according to an advisor to the Nova Scotia Utility and Review Board. Board regulations call for those applying for a province-wide franchise to commit to reaching 62% of the province within seven years.

The provincial government's policy statement on direct consumer connections surfaced during an NEB hearing on Maritimes' Point Tupper lateral. But Rick DeWolf, an advisor on distribution policy to the Nova Scotia board, said it has been implied, or understood, all along.

Sempra Atlantic, a subsidiary of Southern California-based Sempra Energy, said it intends to stay in the race. "We have filed our application with all that taken into account. We see nothing new in the government's statement. We are looking forward to the competition over the franchise," said a Sempra spokesman.

Canada's National Energy Board earlier decided it would not issue a generic decision on direct customer connections to interstate lines but will consider the issue on a case-by-case basis. The NEB still must issue a final decision on the Maritimes lateral, which includes four direct connections with industrials.

Rocco Canonica

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