Trans-Northern Pipelines Incentive Tolls Settlement Agreement

Project Background

What is a pipeline toll?

Transcript:

• What is a pipeline toll?
• Pipeline Toll: the price charged by a pipeline company to use their pipeline
• Who decides what price is fair?
• That’s the job of CER’s Commission
• The pipeline company proposes how much they would like to charge for the use of the pipeline
• The parties that want to use the pipeline tell us what they are willing to pay
• Then the Commission listens to everyone’s ideas
• and makes a decision that is fair for everyone
• Our goal is to protect the interests of Canadians
• And keep the companies we regulate competitive
• To learn more visit our website

Our role

In addition to ensuring that pipelines are safe for people and the environment, the Canada Energy Regulator (CER) also regulates pipeline tolls and tariffs. Tolls are the price a pipeline company charges its customers to ship products, such as oil or natural gas, on its pipeline. The pipeline company uses toll revenues to pay for maintenance, earn back the money spent to build the pipeline and provide a return to its investors. Tolls also allow pipeline companies to operate and maintain pipelines safely.

A company can only charge a toll for pipeline services if it is included in a tariff filed with the CER or approved by a CER order. Pipeline tariffs specify the procedures by which shippers are to submit nominations for transportation service, including the form and timing of nominations. Sounds simple enough, but for some pipelines, a tariff could fill a large three-ring binder.

The Canadian Energy Regulator Act says tolls must be ‘just and reasonable’ and not unjustly discriminatory. Additionally, the Act does not allow unjust discrimination in service, which generally means all shippers must be treated fairly.

Application

On November 22, 2022, Trans-Northern Pipelines Inc. (TNPI) applied for approval of an Incentive Tolls Settlement Agreement (ITSA). The ITSA was signed by two of TNPI’s four shippers: Imperial Oil Limited and Shell Canada Products. The other two shippers: Suncor Energy Products Partnership and Valero Energy Inc., did not sign it.

In recent years, tolls on the TNPI system have increased due to reduced system capacity and throughput resulting from safety orders that reduced the system’s maximum operating pressure.

TNPI has indicated that some shippers have raised concerns about the current tolls’ ongoing appropriateness, which they contend results in significant and undue cross-subsidization between pipeline segments.

During the recent comment process, the CER received one notice of opposition from Suncor, notices of support from Shell and Imperial, and TNPI’s response to the opposing comments. Suncor submitted that the segmented tolling design in the ITSA would render the Montreal Line increasingly uncompetitive and would not be in the public interest if any shippers left it.

The Commission has determined that it will hold a public hearing to consider the Application. For more information on tolls, throughput, and other aspects of TNPI’s operations, please refer to the CER’s Pipeline Profile for TNPI.

Source: TNPI’s ITSA Application [Document C22197-4]

Negotiated Settlements:

What is the Incentive Tolls Settlement Agreement?

TNPI’s Incentive Tolls Settlement Agreement (ITSA) is an example of a negotiated settlement – an agreement between a pipeline company and its shippers outlining the fees for using the pipeline to transport commodities. The agreement includes incentives for the pipeline company to operate more efficiently. The ITSA aims to ensure that the pipeline is operated cost-effectively while meeting safety and environmental standards. It also encourages the pipeline company and its customers to work together to achieve these goals.

What are settlement guidelines?

The Guidelines for Negotiated Settlements of Traffic, Tolls, and Tariffs describe a process for resolving issues related to the transportation of goods through pipelines, including tolls (i.e., fees charged for transportation) and tariffs (i.e., the rates charged for specific types of transportation).

Companies and other interested parties can negotiate a settlement without going through a formal hearing process. This is called a “negotiated settlement.”

In some cases, however, a company may not get all of its shippers to agree to the proposed settlement. If the company still believes the settlement is reasonable and justifiable, it can still apply for approval from the Commission of the CER. This is called a “contested settlement” that may be set down for a hearing.

For more information: Revised Guidelines for Negotiated Settlements of Traffic, Tolls and Tariffs, dated 12 June 2002 [Document A02885-1]

Timeline and Documents

Project Map

Participate

Choosing Your Participation Level in the Hearing Process

The level of participation in the hearing process should be based on how much it will impact your interests. A person’s involvement should correspond to the degree to which the application may affect you.

Intervenors

Intervenors must explain how an application impacts their interests and why Intervenor status is required. Being an Intervenor requires a time commitment and may involve costs to prepare and submit evidence. This includes submitting written evidence, asking questions about evidence, submitting and responding to motions, and making a final argument. If you want to participate in the upcoming hearing as an Intervenor, you must register here before March 23, 2023.

Commenters

Commenters are allowed to file one letter of comment that will be placed on the public record and considered by the Commission. However, commenters can’t ask questions about the evidence or present it in person at a hearing. Commenters are not required to register, but are encouraged to sign up for email notifications through the Participation Portal.