Canada’s National Energy Board (NEB) approved new tolls for TransCanada PipeLines’ Mainline for this year that include slightly lower charges in TransCanada’s Eastern Zone but an increase in the minimum bid floor price for interruptible transportation service to 110% of firm from 80%, to provide an incentive for shippers to sign up for firm capacity.

The board approved a 2003 average rate base of $8.57 billion and a net revenue requirement of $1.9 billion, an increase of $17 million over the 2002 level. The board further approved a depreciation rate of 3.42% for 2003, compared with the applied-for rate of 3.65% and the 2002 rate of 2.89%. TransCanada officials said they still had not reviewed the decision and had no comment.

In addition, the board approved the establishment of a new Southwest Tolling Zone that will encompass the existing Southwest Delivery Area that is currently part of the Eastern Zone.

The NEB said the tolls will remain interim pending an appellate court ruling on TransCanada’s appeal of the NEB’s decision to dismiss its September 2002 request for review and variance on its Fair Return Application (see Daily GPI, Feb. 21). In its order on the Fair Return Application, the NEB sharply lowered the pipeline company’s proposed toll increase and requested rate of return.

Furthermore in this new decision, the board decided that the level of the interim tolls should be changed to reflect a rate of return on common equity of 9.79% on a deemed common equity ratio of 33%. The resulting interim FT toll to the Eastern Zone is expected to be slightly below the current interim rate of $1.203 per gigajoule approved by the board in January 2003. TransCanada had proposed a toll of $1.232 per gigajoule. The tolls for 2002 were $1.153 per gigajoule.

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