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National Energy Board Turns Down Enbridge Tolls and Tariffs Application

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09/06
For release at 2:30 p.m. (MDT)
2 April 2009

CALGARY - The National Energy Board (NEB) denied an application today from Enbridge Pipelines Inc. (Enbridge) for the toll principles as found in its Transportation Service Agreement and the resulting tolls to be charged for transportation services on its only westbound Canadian crude pipeline.

Enbridge's 849 km-long Line 9 pipeline, which began westbound service in 1999, can ship up to 38,160 cubic metres (240,000 barrels) of crude oil per day from Montreal to Sarnia, Ont. The pipeline currently has two main shippers, Imperial Oil Limited (Imperial) and NOVA Chemicals (Canada) Limited (NOVA Chemicals), both long-term customers.

In its Reasons for Decision, the Board found that the Transportation Service Agreement negotiated by Enbridge and Imperial without the full participation of NOVA Chemicals, would have been highly beneficial to Imperial while being unduly discriminatory to NOVA Chemicals.

The Board found that the applied-for toll design and the resulting financial assurances are a negotiated solution between Enbridge and Imperial that comes at an unreasonable cost to a third party, in this case, NOVA Chemicals. Furthermore, there would likely be uncommitted volumes being transported on Line 9 by NOVA Chemicals that would reduce Imperial's effective transportation cost. For 2008, the net excess revenue paid by NOVA Chemicals to the sole advantage of Imperial, is estimated at $18.5 million.

The Board also found that the discussions prior to the Open Season conducted by Enbridge in 2007 for Line 9 should have included NOVA Chemicals. The Board said that Enbridge's requirement for a shipper to either maintain an investment grade credit rating or to provide certain financial assurances was not clearly outlined in Enbridge's Notice of Open Season.

The Board also noted in its Reasons for Decision that had the parties involved come to an agreement regarding financial assurances, the Board would not have taken issue with the Transportation Service Agreement.

Celebrating 50 years of regulatory leadership, the NEB is an independent federal agency that regulates several parts of Canada's energy industry. Its purpose is to promote safety and security, environmental protection, and efficient energy infrastructure and markets in the Canadian public interest, within the mandate set by Parliament in the regulation of pipelines, energy development and trade.

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For further information:

Sarah Kiley
Communications Officer
National Energy Board
E- mail: sarah.kiley@neb-one.gc.ca
Telephone: 403-299-3633
Telephone (toll free): 1-800-899-1265
Telecopier: 403-292-5503
Telecopier (toll free): 1-877-288-8803
TTY (Teletype): 1-800-632-1663

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