Oil producers optimistic about deal with Enbridge over Mainline pipeline access — via financialpost oil energy pipeline
The first option is an agreed-upon incentive tolling arrangement that is aligned with specific customers, incentivized to optimize the system and to provide a premium return to the company. The timeline for such a scenario would see Enbridge filing a negotiated settlement with the CER in mid-2022, followed by a regulatory review later in the year. If approved, the framework would be in place by mid-2023.
The second option is a contested cost-of-service structure that sees risks passed through to customers, rate-base driven growth and utility-like returns. In this scenario, Enbridge would file its cost-of-service application in mid-2022, with hearings commencing in late 2022 and a decision by mid-to-late 2023. Here, the framework would follow in late 2023.
“Our goal through this consultation is to determine which of the two options work best for our shippers,” said Jesse Semko, a spokesperson for the company, in an email response to inquiries from Financial Post. For decades, Enbridge operated the Mainline pipeline, which dominates the market for transporting Canadian oil production to the U.S. and global markets, under the “common carrier” system, meaning that all of the pipeline’s enormous capacity has been available for short-term shipments of volumes that shippers could change every month. This gave shippers the flexibility to avoid long-term obligations.
Enbridge discovered that there was no consensus on the form of a new commercial structure. For the most part, shippers of record supported a “firm service” or “contracting” proposal, with 90 per cent of capacity reserved for long-term access to the Mainline. Those favouring a continuation of the “common carrier” system included a diverse group including various oil producers, EPAC, the Saskatchewan government, refiners and integrated companies, and a connected feeder pipeline.
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