An attempt to score a quick tax-cut coup has been quietly abandoned by TransCanada PipeLines Ltd., which beat a retreat from a public airing of its political agenda in a potentially lengthy regulatory case. The company said it would hold off action on the case pending the report of a federal-provincial task force which is considering changes in the overall pipeline regulatory regime.

In a letter to the National Energy Board, TransCanada regulatory strategy chief Celine Belanger said the plan to save C$8 million (US$5.3 million) a year in corporate taxes and eliminate C$75 million (US$50 million) in deferred taxes has been cancelled. The retreat followed a challenge by the NEB for TransCanada to reveal how the move would affect other relationships with federal and provincial authorities.

The feat would have been accomplished by completing TransCanada’s two-year-old takeover of Nova Corp. with a formal, legal business amalgamation that would make the entire combination a corporate resident of Alberta. TransCanada had said the change was for tax purposes only, and that it would not affect federal jurisdiction over a long-distance gas transportation system

It was dropped after the NEB directed TransCanada to provide a complete explanation of how Alberta’s Gas Utilities Act and its Public Utilities Board Act would apply to the proposed legal combination, including how the provincial legislation would affect the current regulatory regime. The NEB also wanted similar explanations of potentially changed relationships with authorities in other provinces.

In disclosing cancellation of the plan, Belanger said it prefers to work on such issues with a group preparing a report on them for the federal and provincial energy ministers. Titled the Task Force on Energy Pipeline Regulation, the group is scheduled to make a report to the ministers in time for their annual meeting in September. Belanger wrote,

“The scope of this effort encompasses the possibility of changed regulatory regimes for TransCanada’s interests.” She said the company has worked “diligently” and “sedulously” with the federal-provincial group: “TransCanada’s preference for discussing any potential change in regulatory regimes . . . continues to be via the task force process.”

While the governmental group is operating in strict secrecy, it has made its existence well known by canvassing interests ranging from pipelines and their shippers to aboriginal communities affected by gas development. There are already signs that the review has potential to generate changes as an element of the continental energy strategy currently under discussion by the Canadian, United States and Mexican governments. On the Canadian side, the politicians are in a mood to encourage changes that take advantage of market opportunities.

Belanger said the amalgamation plan could be revived after the ministerial task force completes its work. Recommendations will undergo cabinet-level reviews by the federal and provincial governments.

Ottawa’s Minister of Natural Resources, Ralph Goodale, made it known on a visit to Calgary, to address the Canadian Energy Pipelines Association, that officialdom shares the industry’s interest in improving the efficiency of the regulatory system. He declared intentions to bring together the plethora of Canadian agencies involved for a single, streamlined regulatory review of Arctic gas pipeline proposals when applications begin to land on government desks later this year.

Goodale said the federal government favours a “one project-one assessment” model and is working on a “clear regulatory road map for the assessment of a northern pipeline. He said that could include reactivating the Canadian side of the co-operative arrangements worked out with the U.S. in the 1970s for efficient approvals of the dormant Alaska Natural Gas Transportation System, the Northern Pipeline Agency. Like an American counterpart in Washington known as the pipeline commissioner’s office, the Canadian arctic gas agency continues to exist on paper.

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