ARCHIVED – Review of Amendments to the National Energy Board Cost Recovery Regulations

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Review of Amendments to the National Energy Board Cost Recovery Regulations [PDF 249 KB]

Review of Amendments to the National Energy Board Cost Recovery Regulations

1 January 2010

Historical Background

    • Project to review and amend Regulations initiated after discussions with electricity industry and letter sent to Board 31 March 2004 by 5> companies
    • NEB consultation process - 2004/2005
    • Research options - 2005
    • Developed concept - 2005/2006
    • Additional consultation - 2006
    • Drafted amendments - 2006/2007/2008
    • Regulatory implementation process
    • Final* product - Amendments effective 1 January 2010

Amendments to the National Energy Board Cost Recovery Regulations
- 1 January 2010

  • Major features
    • Cost recovery shifts to international and interprovincial power line companies from electricity exporters
    • Mechanics of cost recovery now align more closely with oil and gas pipelines

Company Classification

    • Retain concept of company classification according to size
    • Use only 2 size-related categories as recommended by industry
    • Intermediate eliminated - leaving small and large categories
    • Small company will be defined as a company transmitting less than 50,000 MW.h of power in a year

Company Classification (continued)

    • Small companies - continue to pay fixed levy - $500 p.a.
    • All remaining regulated IPLs will be classified as large
    • Large companies - levies will be proportional to activity
    • Border accommodation classification disappears from cost recovery
    • However, companies transmitting less than 0.5 MW.h of power annually pay no levy

Levy on Newly Regulated IPLs

    • Sec. 5.3 applies to power lines in the same manner as sec. 5.2 applies to oil and gas pipelines
    • Payable by IPL companies not previously regulated  by NEB
    • Set at 0.2% of capital cost as estimated by the Board in issuing the initial certificate/permit
    • Applies upon approval of certificate/permit
    • 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 (exports + imports)
    • Will now require IPLs to report activity - MW.h transmitted
    • For cost recovery, will require aggregate annual data:
      • forecasts of activity for upcoming year
      • actual activity for previous year

Cost Recovery from IPLs (continued)

    • The actual pool of costs 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 levies charged to small companies ($500 per company)
      • Equals: Pool of costs to be shared by large IPLs
    • No longer use 4 year aggregate of volumes for calculation of levy

Cost Recovery from IPLs (continued)

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

Transitional Provisions

    • Forecast of transmissions by power line companies due 15 February 2010
    • Estimate of levies payable and invoice issued by 31 March 2010
    • Invoice payable in full by 15 May 2010
    • Normal cost recovery cycle will begin in June/July of this year

Other Amendments

    • A number of “housekeeping” amendments were included in the current changes
    • Included changes to definitions relating to oil and gas
    • Clearer wording in other sections

For more information

For more detailed information:

Cost Recovery Analyst
National Energy Board
Telephone: 403-630-8843
Telephone (toll free): 1-800-899-1265
Facsimile: 403-292-5503
Facsimile (toll free): 1-877-288-8803
TTY (Teletype): 1-800-632-1663

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