Natural gas consumers in eastern Canada have gone to court to battle financing methods for pipeline expansion projects they say would make them share the cost of new exports to the U.S.
The Industrial Gas Users Association of Canada is taking action in the Federal Court of Canada against current methods used to finance construction of new pipelines and expansions. The association is supported by the Ontario government and Consumers' Gas Co., a major Ontario gas distributor.
The association seeks a court order requiring the National Energy Board to change its method of setting tolls for pipeline projects.
Association spokesman Ted Bjerkelund said his group is not opposed to export projects but believes they should "stand on their own two feet."
Under NEB's current procedures, the cost of new pipeline facilities is rolled into costs for existing lines to create uniform tolls.
Critics say they face extra tolls to finance a $2.6 billion expansion of the pipeline system operated by TransCanada PipeLines Ltd., intended mainly to serve new markets in the U.S. Northeast.
Bjerkelund said expansion costs should be covered by a separate cost pool with expenses for export facilities separated and used to set special tolls for Alberta companies that benefit from them.
The Canadian Petroleum Association has suggested a new formula to calculate and assess export pipeline costs. CPA called for special methods of billing the main beneficiaries of expansions when tolls for new facilities exceed old rates by more than 20%.
Progas Ltd., Calgary, a major gas exporter, said the present method of rolling in costs is the accepted and fairest method of sharing costs.
Progas Pres. Lorne Larson said opposition to established toll methods could pose a serious threat to new gas exports. Changes resulting in higher tolls for producers in western Canada could cut wellhead netbacks for exports to the point the sales would not be worthwhile.
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