Pipeline Abandonment

Pipeline Abandonment 2018-08-08T15:30:07+00:00

In May 2009, the National Energy Board (Board) issued its RH-2-2008 Reasons for Decision that set out guiding principles and considerations and a list of attributes for a mechanism that would set aside funds for pipeline abandonment. It also established a five-year Action Plan for all NEB-regulated companies, including Group 2 companies (Centra). The tenth and final step of the Action Plan specified that the NEB issue decisions on Group 1 companies’ set-aside and collection mechanisms by 31 May 2014.

As of 1 January 2015, NEB-regulated pipeline companies are required to collect adequate funds to pay for future pipeline abandonment.  Pipeline companies must establish a trust or provide a letter of credit issued by a Schedule 1 bank or a surety bond supplied by a surety company regulated under the Trust and Loan Companies Act.  Centra Pipelines has complied with this requirement and has established a monthly Toll to collect the required funds from Shippers of the system as approved by the Board.  Centra Pipelines has also established a Trust to set aside the funds: Centra Transmission Holdings Inc. Trust.

In the MH-001-2012 Reasons for Decision, the Board reiterated that consultation is required throughout all phases of a pipeline’s life cycle, including abandonment. Consistent with that decision, as well as the systematic approach referred to above, the Board suggests that companies develop a comprehensive plan for communication and consultation with landowners for abandonment and abandonment funding.  Centra Pipelines is developing a plan for communication and consultation with landowners for abandonment.

As part of the MH-001-2013 Reasons for Decision, the Board required all companies to establish collection and set-aside mechanism to be approved by the Board and made effective January 1, 2015.  Centra Pipelines is committed to the Abandonment funding as outlined by the Board and is committed to the integration of the Abandonment processes into the pipelines’ operational activities.   As noted, Centra Pipelines has adopted a Trust mechanism to set aside funds collected for the purpose of financing the potential for a future abandonment of the pipeline.  The funds set aside in the Trust will be reported on annually per the Board’s requirement in MH-001-2013, as outlined below.

The Board requires pipeline companies to file annual audited financial statements of the trust as proposed by the Joint Applicants. Trust financial statements must include, at a minimum, the information contained in the illustrative schedules shown at Appendix G to the Joint Application. The trust financial statements must also include an Independent Auditors Report. In addition, the Board is of the view that pipeline companies must explain variances between actual and forecast contributions to the trust and return on funds invested.

The Board has provided a form set out in Appendix XV that companies must use to provide this information to the Board on an annual basis, by 31 January each year. This information must also be communicated to relevant external stakeholders, including shippers, and interested landowners and municipalities.

For more information on the National Energy Board please see the Board’s website:  www.neb-one.gc.ca

For more information on the National Energy Board’s Abandonment Funding regulations, please go to: https://docs.neb-one.gc.ca/ll-eng/llisapi.dll?func=ll&objId=782060&objAction=browse&viewType=1

For more information on Centra Pipelines Abandonment funding please contact us via the Contact Us page.

For reference, please find below the relevant Centra Pipelines filings as discussed above:

Centra Pipelines Statement of Investment Policies and Procedures

Centra Pipelines Royal Trust Agreement

Centra Transmission Holdings Inc. Trust Annual Reports: 20172016, 2015

Centra Transmission Holdings Inc. Trust Audited Financial Statements: 20172016, 2015