A sweeping new distance-based tolling system for TransCanada’sAlberta System was approved by the Alberta Energy and UtilitiesBoard (AEUB) on Friday. The new products and pricing receipt-pointstructure for gas transportation tolls and services will beginreplacing Nova’s old postage-stamp tolling method starting in Apriland will be phased in over four years.

The new rate design, called Receipt Point Specific Rates, betterreflects the cost associated with distance and pipeline diameter,the board said in a statement regarding its decision. Nova’spostage stamp rate structure meant that all customers transportinggas to Alberta border delivery points paid the same rate regardlessof the distance traveled within Alberta. But the board concludedthe objective of postage-stamp rates — enhancing the developmentof gas reserves through significant expansion of the Nova systemover the past 20 years — has been accomplished. Changing marketconditions and increased competition in gas transportation nowrequire a new approach. It will mean export shippers tappingreserves close to the U.S. border probably will be paying a lotless for exports than Nova’s current 28-cent postage-stamp rate,while shippers tapping reserves in northern Alberta will be payinghigher rates that reflect longer-distance shipping.

“The new Alberta System pricing structure increasesTransCanada’s ability to deal with competition by enabling thecompany to introduce prices more reflective of costs,” said DougBaldwin, TransCanada’s president and CEO. “At the same time, newreceipt-point contracting terms will offer gas customers in theWestern Canada Sedimentary Basin a choice of term-variable pricingwhile providing the same service they currently receive. Indeed,the new pricing structure will help strengthen TransCanada’s gastransmission business, one of our main focuses going forward.”

Nova filed the application to change the rate design on theAlberta System with the AEUB in April. The application reflectedinput gathered during a stakeholder consultation process that beganin late 1996. It also was consistent with a memorandum ofunderstanding TransCanada reached with the Canadian Association ofPetroleum Producers (CAAP) in March. The application was thesubject of an EUB public hearing held in the fall of 1999.Stakeholders representing virtually all sectors of the energyindustry, including the CAAP, the Small Explorers and ProducersAssociation of Canada, natural gas distribution and otherindustrial and public interest groups, participated.

“As a result of the collaborative involvement of many of[Nova’s] customers in the development of the new pricing structure,the balance between flexibility and cost accountability wassuccessfully achieved,” said Garry Mihaichuk, President ofTransCanada Transmission.

The new pricing structure retains the Nova Inventory Transfersservice and the flexibility and simplicity of receipt and deliverycontracting services. It also moves new lateral pipelineconstruction outside of Nova’s principle regulated business,providing customers with increased choice and competitive options.It provides customers greater choices with term-linked tolls andincludes a transition feature intended to mitigate business impactsto customers during the move to new rates (higher rates will bephased in over four years while lower rates will be phased in overtwo years).

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