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Gas Companies to Compete for Nova Scotia Distribution Rights

Gas Companies to Compete for Nova Scotia Distribution Rights

Nova Scotia regulators kicked off competition for gas distribution rights in the province last week, and so far four players have come forward with plans to deliver the first Sable Island gas production to come ashore next fall. A Sempra Energy subsidiary; Scotia Advantage, a partnership of Consumers Gas and Nova Scotia Power; Sask Energy; and Maritimes NRG all plan to submit proposals to distribute gas in the province.

The Nova Scotia Utilities and Review Board, however, is expected to give only one of the companies exclusive franchise rights for a province-wide distribution system. Each company will be given an opportunity to pick apart the plans of the others in a public hearing slated for next spring. The franchise is expected to be awarded next summer.

Nova Scotia regulators have required that companies submit proposals designed to deliver gas to 62% of the population within seven years. The regulatory body is taking a unique approach to gas distribution, by requiring unbundled gas sales and transportation from the start. No distributor will be allowed to engage in commodity sales, which are expected eventually to reach about 500 MMcf/d. Nova Scotia has a population of about 900,000. According to Ziff Energy's Rick DeWolf, a consultant to the Nova Scotia board, a distribution project in the province is expected to cost $220-$500 million to build.

Andrew Rea, president of Sempra Atlantic Gas, said his company "has the experience and financial resources to bring low-cost natural gas to Nova Scotians in the quickest time frame possible." Sempra has been the most active company building start-up distribution systems in recent years. Including Nova Scotia, it now has three start-up distribution operations in development or in planning stages in North America. Sempra subsidiary Frontier Energy is beginning gas service to 150,000 homes and businesses in a seven-county area in North Carolina this month. And through its Bangor Gas partnership with Bangor Hydro, it is breaking ground in Maine for a distribution system that also will begin service next fall.

Franchise applications are due Jan. 29. The Utilities and Review Board plans to hold hearings April 12 and make recommendations shortly thereafter to the provincial cabinet, which will make a final decision on the matter next summer.

Rocco Canonica

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