ARCHIVED – Electricity Cost Recovery – Proposed Amendments to the National Energy Board Cost Recovery Regulations

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Electricity Cost Recovery - Proposed Amendments to the National Energy Board Cost Recovery Regulations [PDF 78 KB]

Proposed Amendments to the National Energy Board Cost Recovery Regulations

19 January 2006

NEB Cost Recovery - Information Session Agenda

  • Welcome and Introduction
  • Proposed Cost Recovery Concept as Approved by the Board
  • New Cost Recovery Process
  • Next Steps - Regulatory Process
  • Adjourn at 3:30 p.m.

NEB Cost Recovery - Concept Background

  • The Board regulates in the Canadian public interest within the mandate set by Parliament
  • Focus on cost recovery for the Board’s overall regulatory responsibility
  • Industry’s input was valuable when developing the proposed concept

NEB Cost Recovery - Concept Background

  • Commodity charging approach consistent with oil and gas sector of activities
  • Simple to develop and administer
  • Equitable approach

NEB Cost Recovery - Concept

  • Levy on newly regulated international power line companies
    • levy of 0.2% of project capital costs
  • Levy on the international power line companies regulated by the NEB
    • actual energy transmitted in MW.h (international exports and imports)

NEB Cost Recovery - Concept

  • Company classification and definition:
    • Small, large and border accommodation categories
    • Using existing definition with appropriate changes
  • Year End Change
    • NEB cost recovery year will align with the NEB fiscal year

NEB Cost Recovery - Concept

Proposed Cost Recovery Process
Based on the NEB Concept

Levy on Newly Regulated IPLs

  • Parallels greenfield fee concept in oil & gas
  • Payable by IPL companies
    • not previously regulated by NEB
    • will apply to new power lines approved by the Board

Levy on Newly Regulated IPLs (continued)

  • Set at 0.2% of capital cost as estimated by the Board in issuing the certificate or permit
  • Applies upon approval of certificate or permit
    • invoiced after certificate or permit issued
    • payment due 90 days after invoice date

Cost Recovery from IPLs

  • The electricity commodity recoverable cost pool will continue to be determined as in the past
  • Pool will now be shared by IPLs instead of electricity exporters
  • Measurement parameter for sharing costs among IPLs -> MW.h transmitted by each regulated IPL (international exports + imports)

Cost Recovery from IPLs (continued)

  • Recoverable cost pool to be shared by large companies in the proportion that each company’s activity (MW.h transmitted - i.e. international exports + imports) is to the aggregate of activity by all large companies

Cost Recovery from IPLs (continued)

  • The actual pool to be shared by large companies will be determined as follows:
    • Calculate commodity recoverable cost pool using present methodology
    • Deduct: Fees levied in the year on newly regulated IPLs
    • Deduct: Annual fixed fees charged to small companies (@ $500 per company)
    • Deduct: Border accommodations fees (if any)
    • Equals: Pool of costs to be shared by large IPLs

Cost Recovery from IPLs (continued)

  • Will now require IPLs to report activity – MW.h transmitted
  • For cost recovery, will require aggregate annual data:
    • forecasts of activity for current and upcoming year
    • actual activity for previous year
    • no averaging
    • transition into new process to be determined

Cost Recovery from IPLs (continued)

  • Will continue process of invoicing on an estimated basis for the year
  • After the year has passed, results will be audited
  • Adjustments, if any, are factored into next billing cycle

Company classification

  • Retain concept of company classification according to size
  • Implement industry recommendation to use only 2 size-related categories
  • Intermediate eliminated - leaving small and large categories
  • Small companies continue to pay fixed fee - $500
  • Large companies will share in cost pool

Company classification (continued)

  • Small company will be defined as person transmitting less than 50,000 MW.h of power in the year
  • All remaining regulated IPLs will be classified as large
  • Border accommodation companies will remain, but definition will be amended to remove reference to exports

Year End Change Transition Plan

  • This change will significantly reduce NEB workload
  • Eliminates an entire year end closing cycle from our schedule
  • Will transition by using a 3 month stub period Appropriate modifications to work calendar will be made e.g.:
    • timing of calls for actual & forecast activity information
    • timing of billing cycle
    • timing of audit

Year End Change Transition Plan

Year End Change Transition Plan
Year End Change Transition Plan

Slide description

Fiscal Year: Ends March 31

Calendar Year: End December 31

Run a 3 month stub period prorating appropriate factors e.g. fixed fee amounts. The next period then coincides with the NEB fiscal year.

Note: The dates used in this graphic are illustrative only. Actual dates will depend on when approval is given for changes to be implemented.

NEB Cost Recovery - Comment Period

  • Written comments should be mailed or faxed to the Board by 20 February 2006
  • Comments shall be addressed to the Secretary of the Board

NEB Cost Recovery - Comment Period (continued)

  • The Board will consider and respond to stakeholders written comments
  • Regulation drafting process should begin after the comment period is completed
  • Stakeholders will have other opportunities to comment before the promulgation of the regulations

Regulation Process

Regulation Process
Regulation Process

Slide description

Phase 1:
- Conception and Development
- Consultation: Inateractive process

Phase 2:
- Drafting Regulations
- Legal drafting

Phase 3:
- Examination by DOJ and PCO
- Ministerial and TB approvals

Phase 4:
- Pre-Publication Canada Gazette, Part I
- Comment Period

Phases 1 to 4: Phases for Stakeholders Consultations

Phase 5:
- Submission Final to DOJ, PCO and TB

Phase 6:
- Canada Gazette, Part II


DOJ: Department of Justice
PCO: Privy Council Office
TB: Treasury Board
SJC: Standing Joint Committee

Thank you!

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