Nova Gas Transmission, TransCanada PipeLines’ Alberta system, has reached a one-year settlement with customers which would set a lower revenue requirement in 2003 than it collected in 2002.

The settlement announced Friday with the producers, industrial users, consumer groups, marketers and exporters which use the Nova system will form the basis for the pipeline’s tolls for 2003. It includes a revenue requirement fixed at C$1.277 billion, compared to C$1.347 billion in 2002. A number of factors contributed to the lower requirement, a spokesperson said. Costs and taxes were down and the value of the asset base decreased.

TransCanada CEO Hal Kvisle said the settlement was “significantly influenced by last year’s National Energy Board (NEB) decision on our Canadian Mainline Fair Return application,” which the company is challenging (see Daily GPI, Sept. 18, 2002 and June 28, 2002). “The NEB formula, which sets return on equitity for the mainline, established a benchmark for negotiations on the Alberta system.” The decision on the mainline cut TransCanada’s rate increase request, which it said was necessary because of the risk associated with the competitive market, from 12% to 2%.

The company opted for the short-term settlement for the Nova system because of the “uncertainty” surrounding the rate-setting process. TransCanada is awaiting action on its mainline rehearing request and there also is the possibility the Energy and Utilities Board will have a generic proceeding this year on cost of capital.

System tolls based on the settlement will be determined after the settlement is filed and accepted.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.