Government Asks Gas Distributor to Go to UARB for Changes
PETROLEUM DIRECTORATE--Government Asks Gas Distributor to Go to UARB for Changes
The government of Nova Scotia will not support an application by Sempra Atlantic Gas to fundamentally change its franchise to distribute gas across the province, said Gordon Balser, Minister of the Petroleum Directorate.
“Our primary responsibility is to look out for the interests of Nova Scotians, not Sempra,” Mr. Balser said. “Sempra won the right to distribute gas in Nova Scotia by agreeing to exceed government requirements at the time. They are now seeking to change those terms fundamentally. It wouldn’t be fair to all the others who bid for the contract for us to endorse what is, in essence, a totally new deal.”
Sempra Atlantic Gas, a subsidiary of California-based Sempra Energy, won Nova Scotia’s gas distribution franchise in December 1999, following public hearings at the Utility and Review Board (UARB). They agreed to distribute gas across the province within seven years, absorbing the financial risk.
On April 25, Sempra notified government of its desire to delay construction of a distribution network because of the high price of gas and because they were not allowed to lay the pipeline on the shoulders of provincial roadways.
They are now proposing that they be given what is essentially a new franchise without competition. They requested government’s “unequivocal” support in a Plan B application to the UARB that would see:
- distribution network reduced to areas deemed economical
- no further distribution without good rate of return to shareholders
- unlimited timeline for construction
- provisions to limit financial risk to Sempra
The minister said if evidence shows the economic challenges of today’s gas market require changes to Nova Scotia’s regulatory regime, that information should be presented to the UARB. However, the government does not believe that Sempra should have the exclusive right to pursue a franchise if fundamental changes are made.
“Sempra currently has an exclusive franchise to distribute gas under an existing set of conditions. It’s now Sempra’s choice as to what they do with that franchise,” Mr. Balser said.
“If Sempra is convinced of the need for and the merits of their new proposal, they should subject that plan to a public review before the UARB, recognizing that other parties may wish to pursue the franchise in its revised form.”
The government of Nova Scotia recognizes that Sempra can also choose to surrender the franchise. Should they choose to do so, government will respond on the appropriate terms under which that surrender takes place, Mr. Balser said.