Gas Transportation Model Review

The current balancing provisions and tolerance thresholds set in the client’s Transportation Terms and Conditions provided significant flexibility to transportation customers and shipper agents. Shipper agents were allowed to pool imbalances from multiple customers into aggregate accounts; and an option existed for monthly balancing of certain customer pools. Balancing the system between gas supply and demand requires utilizing storage and transportation capacity resources that are designed to deliver relatively constant quantities of gas on a daily basis. Since the underlying costs of these resources were recovered from sales customers, it is reasonable for transportation customers or their shipper agents to contribute to the recovery of the costs of the resources that are used to balance the system.

Analyzed the client’s midstream transportation and storage capacity resources used in providing balancing of transportation customers’ loads. Constructed a model to analyze multiple scenarios of daily and monthly balancing activity. Conducted an industry-wide benchmarking study of current best practices, by regulatory jurisdiction, related to transportation balancing tariff provisions. Recommended changes to the current transportation balancing tolerance requirements and provided cost information to aid in determining corresponding balancing charges and tolerance levels based on the results of our analysis, our prior case experience, and industry best practices. Participated in stakeholder workshops and testified before the provincial regulatory commission.

The client’s proposed implementation of daily balancing provisions, reflecting our recommendations, were largely supported by the consumer advocate, commercial and industrial consumers, gas marketers, and shipper agents; and were approved by the regulatory commission, finding that daily balancing will: a) result in closer alignment of daily supply with daily demand; b) better align with industry standards; c) treat all transportation customer equally; d) reduce arbitrage opportunities; and e) improve efficiency and fairness between sales and transportation customers.