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Maritimes' Canadian Cost of Service Lowered

Maritimes' Canadian Cost of Service Lowered

Canada's National Energy Board has shaved about $2.2 million off of Maritimes & Northeast Pipeline's requested cost of service and cut about $11.6 million out of the pipeline's requested rate base. The NEB also altered Maritimes' plans regarding discounts.

In a decision released last week that covers the pipeline's tolls from Dec. 1, 1999 through the end of this month, the board authorized M&NP a revenue requirement for the period of $95.9 million and approved a rate base of $716.9 million. The rate of return on rate base approved by the board was set at 8.6%.

The board struck down a last minute change in plans by Maritimes to restrict discounts to only primary delivery points within the provinces. In joint evidence filed by the provinces of Nova Scotia and New Brunswick, it was indicated that a distinction between primary and secondary delivery points was never made or discussed during negotiations that led to a June 1997 agreement between the pipeline, the provinces and the Sable Offshore Energy Project. The provinces said in their testimony that it was their understanding that the discounts would apply to all deliveries under firm service contracts within each province. During the hearing, M&NP altered its original position and offered instead a compromise position. It proposed that the provincial discount would apply to all firm service contracts based on the contract demand at primary delivery points. No discounts will apply to export volumes.

The board considered M&NP's application for final tolls at a public hearing held in Halifax, NS, from June 26 to July 7. Copies of the NEB's Reasons for Decision RH-1- 2000 are available at http://www.neb.gc.ca.

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