Taking a giant step toward successfully completing a 10-monthquest, Sempra Energy announced last week that the Nova ScotiaUtility and Review Board (URB) has said it will recommend SempraAtlantic Gas as the province’s first-ever gas distributor. Theprovincial government, which has the final say in the matter, saidit would issue a decision in the next three weeks.
“We are extremely pleased that the [URB] has recommended to theprovincial government that Sempra Atlantic Gas be Nova Scotia’snatural gas distributor. We are studying the decision to betterunderstand its terms and conditions and to determine if it isconsistent with our application,” said Andrew Rea, president ofSempra Atlantic.
The Sempra subsidiary won the recommendation to serve the entireprovince over Maritimes NRG and several municipalities, whichsought to serve individual territories within the province. Whenthe opportunity became available last December, two other companies(Sask Energy and Scotia Advantage) also submitted bids, butsubsequently dropped out after the provincial government said itwould let industrial customers apply for direct connections to theMaritimes & Northeast Pipeline (M&NP), which is scheduledto begin operations in early December.
Nova Scotia’s population is about 900,000. While the provincialgovernment asked for proposals designed to deliver gas to 62% ofthe population within seven years of construction, Sempra’s bidoutlined a plan designed to service 75% of the population withinthat same time frame. Its system, scheduled to begin constructionearly next summer if approved, would consist of about 4,145 milesof medium-pressure plastic main, about 870 miles of high-pressuresteel main, 11 tap stations and 150 pressure-limiting stations. Theoverall cost is estimated at C$1.1 billion. It has been estimatedthat the system could eventually transport 500 MMcf/d.
The URB said it chose Sempra over Maritimes NRG because thesuccessful bid answered, either more completely or more accurately,issues of construction, market analysis, customer costs andfinancial capabilities of the company. First among the issues wasSempra’s assurance of a four-year system build-out. Maritimes’ bidindicated it would expand its system only if it was “economicallyfeasible” to do so. Sempra, however, “provided an unequivocalcommitment” to build-out its planned system for at least four fullyears.
Another key issue in the URB’s decision was that Maritimes’proposal relied heavily on the M&NP lateral policy for purposesof constructing transmission facilities. Maritimes NRG argued thatthe facility construction costs would be rolled in to the M&NPtoll, saving Nova Scotia gas users $200 million. Although the URBdebated heavily on this issue, it said insufficient evidence waspresented and it was not persuaded that the lateral policy can berelied on to ensure the timely construction of transmissionfacilities.
If Sempra’s plan were accepted, it would represent the third newmarket supply system the California-based holding company isinvolved in. Frontier Energy, another Sempra subsidiary, recentlybegan construction on its $55 million, 120-mile distribution systemin Warren County, NC. The new pipe will bring gas service to sevennorthwestern North Carolina counties. Also, Sempra Energy UtilityVentures has teamed up with Bangor Gas to build a distributionsystem in Bangor, ME. Last year, 11 miles of plastic distributionline were installed in Brewer, Bangor and Veazie counties.
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