2nd Hemispheric Conference of Energy Regulators

1
2nd Hemispheric Conference of Energy Regulators

• Terry Rochefort
• National Energy Board March 8, 2002
• Miami, Florida

2
National Energy BoardAreas of Responsibility

• Regulatory
• construction and operation of inter-provincial
  and international pipelines, and international
  power lines
• pipeline tolls and tariffs
• exports of oil, natural gas and electricity
• frontier oil and natural gas regulation
• Advisory
• monitor functioning of energy markets
• advice to federal government
• public reports

3
NEB Goals

• NEB-regulated facilities are safe and perceived
  to be safe
• NEB-regulated facilities are built and operated
  in a manner which protects the environment and
  respects individual rights
• Canadians derive the benefits of economic
  efficiency
• NEB meets the evolving needs of the public to
  engage in NEB matters

4
Pipeline Incidents and Ruptures

• includes releases, chemical spills, OSH
• 68 reported incidents in 2001
• 5-year average 72
• two ruptures in 2001
• One rupture in 1998, 1999 2000

5
Environmental Performance Indicators

• Early phases of measuring environmental
  performance
• Differences between construction and operation
• High level indicators
• Construction - compliance to conditions
• Operation - major releases

6
Key Strategies - Safety and Environment

• NEB remains committed to Goal-oriented Regulation
  (set the goals/expectations, let companies
  optimize the how)
• Effective Management Programs underpin success
  (OPR expectation, NEB internal)
• Audit Program - audit companies procedures,
  records and programs

7
Economic EfficiencyWhat does it mean to a
regulator?

• Promotion of an efficient infrastructure that
  meets the needs of users and represents a
  reasonable opportunity for a fair return
• Canadians have access to energy on fair market
  terms and conditions
• Regulatory processes are as efficient as possible

8
NYMEX vs. AECO-C Natural Gas Price (US/MMBtu)
9
Eastern Export and AB Border Domestic Gas Prices
(Nov. 1999 to Oct. 2001)
10
(No Transcript)
11
Public Engagement Progress

• Public Engagement Principles
• Alternative Dispute Resolution
• Board Outreach
• E-filing

12
Inter-regulator Initiatives

• Senior executives at FERC and NEB meet twice per
  year
• informal information sharing
• sharing regulatory experiences
• CRE and NEB in process of finalizing a
  Cooperation Arrangement
• twice yearly meetings
• potential staff exchanges

13
Current Regulatory Issues

• Pipeline safety and security
• Preparations for northern gas pipelines
• Pipeline tolls and tariffs
• Market/resource issues

14
Pipeline Safety and Security

• Security is a priority
• Defining reasonable security measures
• Increased concentration on emergency preparedness
• Monitoring and participating in national and
  international emergency preparedness and security
  initiatives

15
Preparations for Northern Pipelines

• Working with other agencies to coordinate
  environmental assessment and regulatory review of
  any application filed
• Draft Cooperation Plan released for public
  comment January 7, 2002. Deadline for comments
  is March 8, 2002

16
Pipeline Tolls and Tariffs

• Formerly, long reliance on COS in monopoly
  environment
• Recent introduction of some competition
• Questions
• how much price flexibility do pipelines need?
• what is the proper risk/reward relationship?
• how can captive shippers be protected?
• Some of these issues are currently before NEB in
  a hearing others yet to be resolved

17
Whats happening in the markets?

• Natural gas
• Prices in a bearish trend which started in mid
  2001 (after spikes of early 2001).
• Potential price up-tick as economy recovers,
  drilling decline is felt, and storage overhang
  disappears
• Oil
• After declines of late 90s, price seems stable
• Oil sands figure in National Energy Policy
• Electricity
• Restructuring pace varies across Canada
• Interest in IPLs at all-time high

18
Overall Lessons Learned

• Goals and measures are part of a worthwhile
  journey. They present a challenge for a
  regulator but pay big dividends!
• Credibility, predictability of process, and
  accessibility are key to regulatory effectiveness
• North American regional integration is happening
  in markets regulatory communications and info
  sharing is essential