The Canadian Province of Nova Scotia told FERC it is concernedit could loose royalty revenue and pay higher rates on theMaritimes and Northeast pipeline as a result of Maritimes recentrequest to defer Phase I pipeline construction costs and servicefor one year. Maritimes told FERC last month its only Phase Ishipper, affiliate Duke Energy, exercised a provision in itscontract with the pipeline allowing it to defer using its firmtransportation on the line by a year.
Nova Scotia said that deferment “would transfer costs fromMaritimes’ Phase I Joint Facilities to its Phase II rates, whichwill be in place when Sable Island production comes on line” inwinter 1999. “As the cost of transporting the Sable Island gas toU.S. markets increases, the value of the gas in the production areawould tend to decrease. Lower values for the gas in the productionarea would tend in turn to reduce the royalty values available toNova Scotia. In addition, should Nova Scotia take its royaltyvalues in kind and ship its gas on Maritimes’ system, the higherPhase II transportation rates that would result from granting ofMaritimes’ motion will have an adverse impact on Nova Scotia.”
The province told the Commission Maritimes should not be allowedto transfer the risk of its Phase I project to Phase II shippersand stakeholders. Instead, it should be “held to the consequencesof its repeated Phase I market representations to the Commission,its own failure to meet the Nov. 1, 1998 in-service date., theat-risk condition on its Joint Facilities certificate, and itsdecision to grant Duke Energy the option to defer its in-servicedate.”
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