Westcoast 1.1 Response to Westcoast Energy Inc. (Wes

NOVA Gas Transmission Ltd. FT-L (NM) Service Application

Westcoast 1.1 Response to Westcoast Energy Inc. (Westcoast)

Information Request No. 1 RH-001-2021

August 27, 2021 Page 1 of 1

IR Number: Westcoast 1.1

Reference: i) NGTL Application, paragraph 7

ii) NGTL Evidence, Section 1.2.3, page 7

iii) NGTL Evidence, Section 2.2.6, page 17

Preamble: In reference i), NGTL indicates that the proposed FT-L (NM) Service was developed to enable NGTL to compete to attract and meet the unique needs and circumstances of PETRONAS who has an interest in the LNG Canada project, and will supply gas to that project through the Coastal GasLink pipeline.

In reference ii), NGTL references the “limited and one-time nature” of the service.

In reference iii), NGTL indicates that assignments are available as part of the FT-L (NM) Service attributes.

Request: a) Is the proposed FT-L (NM) Service available only to PETRONAS? If so (i) did NGTL agree with PETRONAS that the service would only be available to PETRONAS, and (ii) where in NGTL’s tariff or otherwise is it stipulated that no other shipper may contract for this service?

b) If the proposed FT-L (NM) Service is available to other shippers (i) is there a limit on the volume of FT-L (NM) Service available to other shippers, and (ii) what toll would those shippers pay for the service?

c) Was FT-L (NM) Service offered to other shippers on the NMML at the time NGTL offered the Service to PETRONAS? Did NGTL consider offering FT-L (NM) Service through an open season process available to all potential shippers with biddable tolls to assess how the market might value the proposed service?

d) Please confirm whether PETRONAS is able to permanently assign all or a portion of FT-L (NM) Service to a third party.

Response:

a) through c) Refer to the response to CER 1.9.

d) Confirmed. See Section 15.5 of the NGTL Tariff General Terms and Conditions.






Reference: i) NGTL Evidence, Section 2.3, page 17

ii) NGTL Evidence, Section 1.1, page 2

iii) NGTL Evidence, Section 1.2.2, page 6

iv) North Montney LNG Limited Partnership and Petronas Energy Canada Ltd. (“PECL”) Additional Written Evidence, MH-053-2018, page 21

Preamble: In reference i), NGTL indicates that it has executed Phase 1 and Phase 2 PEAs with PETRONAS to underpin the facilities needed to provide the proposed FT-L (NM) Service.

In reference ii), NGTL indicates that the Phase 2 contract quantity is subject to a positive final investment decision (“FID”) being made for Phase 2 of the LNG Canada Project.

In reference iii), NGTL indicates that it secured a commitment from PETRONAS of 65 MMcf/day associated with Phase 1 and, subject to a positive FID, 510 MMcf/day associated with Phase 2 of the LNG Canada Project.

In reference iv), North Montney LNG Limited Partnership and PECL write, in connection with Phase 1 of the LNG Canada Project, that PECL was successful in obtaining approximately 500 MMcf/day of capacity on Zone 3 of the Westcoast system for a 40-year term and that “this capacity will enable PETRONAS Canada to supply its entire LNG Canada gas supply obligation”.

Request: a) Please provide copies of the Phase 1 and Phase 2 PEAs.

b) Are there any agreements or side letters between NGTL and PETRONAS, or between their respective affiliates, pertaining to the proposed FT-L (NM) Service, other than the PEAs. If so, please provide copies of these documents.

c) Please explain why NGTL included in its FT-L (NM) Service offering 65 MMcf/day associated with Phase 1 of the LNG Canada Project when PETRONAS has previously indicated that its entire LNG Canada gas supply obligation for Phase 1 would be supplied through the Westcoast system.





d) What is NGTL’s understanding regarding the anticipated timing for a FID in respect of Phase 2 of the LNG Canada Project.

Response:

a) Refer to Attachment Westcoast 1.2a-1 for the form of FT-L (NM) PEA for Phase 1 and Attachment Westcoast 1.2a-2 for the form of PEA for Phase 2.

b) Refer to Attachment Westcoast 1.2b for a Letter Agreement between PETRONAS and NGTL regarding the Service dated October 14, 2020 (Letter Agreement). NGTL confirms that the Letter Agreement is the only agreement or side letter between NGTL and PETRONAS or between their respective affiliates pertaining to the Service that is currently in effect, other than the PEAs.

c) NGTL sought to attract as much net benefit to the NGTL System and its customers as it could for both Phase 1 and Phase 2 and was ultimately successful in attracting65 MMcf/d of FT-L (NM) contracts associated with Phase 1. Also refer to the response to WEG 1.6 (a).

d) NGTL is not aware of the target date for the Phase 2 FID. For the purpose of illustrating rate impacts and benefits of the Service to the existing NGTL System, NGTL has assumed that the Phase 1 contracts will commence December 2024 and the Phase 2 contracts will commence April 2027.1 Both parties have termination rights in the scenario where a positive Phase 2 FID does not occur by January 1, 2031.2

1 NGTL Evidence, Section 1.1. 2 NGTL Evidence, Section 2.3.3.






Reference: NGTL Evidence, Section 2.2.1, page 11

Preamble: NGTL states that the rate applicable for the “Base Service” will be indexed starting at 21 cents/Mcf/day for both Phase 1 and Phase 2.

Request: Please explain how the 21 cents/Mcf/day rate was derived. If it was based with reference to the Westcoast T-North long-haul toll, please describe NGTL’s understanding of Westcoast’s T-North long-haul toll, both current (2021) and following the in-service date of the Spruce Ridge expansion.

Response:

1.3 The proposed Service, including its tolling methodology, was negotiated between NGTL and PETRONAS, a non-affiliated party, on an arm’s length basis. The negotiated Service and its tolling were developed with the goal of providing net benefits to the NGTL System and its customers while reflecting consideration of the available competitive alternative for PETRONAS to transport volumes from the North Montney area to the CGL pipeline. In negotiating the Service, including its tolling methodology, NGTL took into account the unique attributes of the Service, which are more restrictive than those of existing NGTL services like FT-R and FT-D, and Westcoast’s T-North Long Haul service. Also refer to the response to CER 1.4.






Reference: NGTL Evidence, Section 5.1, pages 26-27

Preamble: NGTL indicates that, in addition to FT-L (NM) Service, NGTL will make existing delivery services available at the proposed WVI delivery point, including FT-D and “other delivery services”. NGTL also states that it conducted an open season from January 25, 2021 to February 5, 2021 for FT-D service at the proposed WVI delivery point (WVI FT-D-1 Open Season), with eligible billing commencement dates between April 1, 2024 and April 1, 2025, and that, as a result of the open season, NGTL awarded and executed PEAs for 323,474 GJ/day of FT-D service, subject to NGTL receiving the necessary approvals.

Request: a) Please provide a copy of the WVI FT-D-1 Open Season documents and the form of PEA awarded and executed by NGTL for this new FT-D service at the new WVI Group 1 delivery point.

b) Did PETRONAS execute a PEA for any FT-D service at the new WVI delivery point?

c) Did NGTL restrict the volume of FT-D Service made available to other shippers at the new WVI Group 1 delivery point, under the WVI FT-D-1 Open Season or otherwise?

d) Please provide the number of shippers who were awarded FT-D service contracts at the new WVI delivery point in the open season and the volume awarded to each shipper.

e) Has NGTL awarded any additional FT-D service contracts at the new WVI delivery point since the open season? If so, please provide the number of shippers and the volume awarded to each shipper.

f) What “other delivery services” does NGTL intend to provide at the WVI delivery point? Has NGTL entered into contracts for these other delivery services? If so, please provide details of these contracts.

g) What facilities does NGTL need to construct at the new WVI delivery point to interconnect with the Coastal GasLink pipeline at that location and what will be the physical delivery capacity at the new WVI delivery point?





Response:

a) Refer to the response to FEI 10.1 and CER 1.12 (d).

b) Refer to the response to CER 1.7 (e).

c) No. Refer to the response to CER 1.7 (b).

d) Refer to the response to CER 1.7 (e).

e) No.

f) Refer to the response to CER 1.7 (e).

g) Refer to the response to CER 1.2.






Reference: NGTL Application, Section 2.3.2, page 18

Preamble: NGTL indicates that PETRONAS can terminate the PEAs should the Commission approve a base rate for the proposed service at a level that is higher than both the rate applied for in the Application and the Westcoast T-North 5-year long haul toll at the time of the Commission decision on the Application. NGTL further indicates that “For purposes of this termination right, the Westcoast T-North toll level will also include consideration of the potential toll impact of a Westcoast expansion to accommodate PETRONAS’ incremental volumes”.

Request: Please explain in detail what this “consideration” is, including

a) the specific Westcoast expansion facilities that were used to calculate the potential T-North toll impact,

b) the capital cost of such expansion facilities,

c) the resulting T-North cost of service and 5-year long haul toll impact after giving effect to such expansion, with all supporting assumptions,

d) the specific post-expansion T-North 5-year long haul toll that NGTL and PETRONAS agreed upon for purposes of the termination right, and

e) the specific source of the information that was used by NGTL and PETRONAS for the Westcoast expansion facilities and capital costs used to calculate the T-North toll impact and resulting toll that was agreed upon for purposes of the termination right.

Response:

1.5 In preparing this response, NGTL identified the need to correct footnote 25 on page 18 of the NGTL Evidence, as follows:

For the purpose of this termination right in the Phase 2 PEA, the Westcoast T-North toll level will also include consideration of the potential toll impact of a Westcoast expansion to accommodate PETRONAS’ incremental volume.

a) through e)

The potential toll impact of a Westcoast expansion for the purposes of this termination right has not yet been calculated. See section 7.1 (b) in the Phase 2 PEA at Attachment





Westcoast 1.2a-2 for information on how the potential toll impact of an expansion is to be calculated for the purposes of this termination right.

The Phase 2 PEA indicates that if the potential toll impact of a Westcoast expansion attributable to Westcoast providing T-North Long Haul service to PETRONAS for 510 MMcf/d of additional volumes becomes publicly available through this proceeding, that will be the toll impact used for the termination right.

Where it is not made publicly available through this proceeding, or where either party believes that the toll made publicly available is different than what would be reasonably expected using historical information, then on or before 30 days after the close of record for this proceeding, each party will provide their calculation of the incremental toll for the 510 MMcf/d PETRONAS volume (including expected costs and overall billing determinant change as a result of the new capacity and turnback) to the other party using the average unit cost of the Westcoast T-North System expansion over the immediately preceding 5 years.

If the parties do not agree on the impact after providing their calculation to each other, either party may submit to expert dispute resolution for final and binding determination.






Reference: i) NGTL Evidence, Section 6.2, pages 29-30

ii) NGTL Evidence, Section 6.1, page 28

iii) Canada Energy Regulator Notice of Public Hearing and Procedural Letter dated July 15, 2021

Preamble: The PETRONAS volumes that will be transported under the proposed FT-L (NM) Service (65 MMcf/day for Phase 1 and 510 MMcf/day for Phase 2) will physically flow from receipt points on the NMML to the new WVI delivery point for delivery to the Coastal GasLink pipeline and the LNG Canada project at Kitimat. NGTL also acknowledges that the availability of FT-D service and other delivery services at the new WVI delivery point could result in other gas received on the NMML through FT-R or IT-R being delivered to the WVI delivery point for delivery to the Coastal GasLink pipeline and the LNG Canada project. NGTL indicates that 323,474 GJ/day of FT-D service contracts at the new WVI delivery point were awarded as a result of the open season held between January 25, 2021 and February 5, 2021.

In reference (ii) NGTL states that “implementation of the Service and availability of FT-D service at the WVI delivery point will not impact the direction of gas flow on the Groundbirch Mainline. Gas transported on the TLS [Tower Lake Section] will continue to flow eastward once it reaches the Groundbirch Mainline”.

In reference (iii), the CER states that “NGTL has confirmed in its Application that the implementation of the FT-L (NM) Service and availability of FT-D service at the WVI delivery point will not impact the direction of flow on the Groundbirch Mainline, and that gas transported on the Tower Lake Section will continue to flow eastward once it reaches the Groundbirch Mainline. On this basis, the Commission is not persuaded by the comments from WEG and FEI that the Condition has been triggered, and will not, at this time, re-examine the matter on its own initiative”.

Request: a) In Section 5.5 of the North Montney Project Application, NGTL provided schematic flow diagrams for the NMML showing the contract flow requirements (Figure 5-3) and maximum capability (Figure 5-4) for the project at that time. Please provide flow diagrams similar to Figures 5-3 and 5-4 (i.e., contract flow requirements and maximum capability) showing:





i. the contract flow requirements and maximum capability on the NMML and the NGTL facilities east of the Saturn Compressor Station before the new WVI delivery point goes into service,

ii. the contract flow requirements and maximum capability on the NMML, the NGTL facilities east of the Saturn Compressor Station and at the new WVI delivery point after the WVI delivery point goes into service and services commences for the PETRONAS Phase 1 FT-L (NM) Service volumes and the FT-D contract volumes at the WVI delivery point, and

iii. the contract flow requirements and maximum capability on the NMML, the NGTL facilities east of the Saturn Compressor Station and at the new WVI delivery point after the WVI delivery point goes into service and service commences for the PETRONAS Phase 2 FT-L (NM) Service volumes and the FT-D contract volumes at the WVI delivery point.

b) If implementation of FT-L (NM) Service and availability of FT-D service at the WVI delivery point will not impact the direction of gas flow (i.e., eastbound) on the Groundbirch Mainline, please confirm that all gas delivered by NGTL at the WVI delivery point (both PETRONAS Phase 1 and Phase 2 FT-L (NM) Service volumes and all FT-D volumes at the WVI delivery point) will be gas that is physically transported from receipt points upstream of the WVI delivery point, including the receipt points on the NMML. If not confirmed, please explain how NGTL will meet its delivery obligations at the WVI delivery point if gas flows on the Groundbirch Mainline are not reversed and flow westward to the WVI delivery point?

Response:

a) Refer to the response to CER 1.1.

b) Gas received through FT-R service at any receipt point on the NGTL System is commercially available to be transacted through the NIT hub and can be delivered at any delivery point on the NGTL System, including WVI, under FT-D service. For the FT-L (NM) Service, gas deliveries at WVI must balance receipt quantities, which are only permitted to be received upstream from along the NMML.

From a physical operation perspective, NGTL optimizes aggregate flows on the System on a daily basis for all services. NGTL expects that aggregate receipts upstream





of the WVI delivery point will continuously exceed delivery at the WVI point, such that the gas physically delivered at WVI will be less volume than has been physically received upstream of WVI on the NMML and the Groundbirch Mainline. As a result, the Groundbirch Mainline is expected to continue to physically flow eastbound as is currently the case.






Reference: i) NGTL Evidence, pages 2 and 3

ii) NGTL North Montney Mainline Project Application for a Variance (MH-031-2017), page 3

iii) NGTL System Rate Design and Services Application (RH-001-2019), page 3-17

iv) NGTL Response to Westcoast Information Request 1.6 in RH-001-2019 proceeding

Preamble: In reference (i), NGTL indicates that as a result of the proposed FT-L (NM) Service, NGTL was able to attract 65 MMcf/d of long-term commitments from PETRONAS associated with Phase 1 of the LNG Canada Project and 510 MMcf/d associated with Phase 2 of the LNG Canada Project. NGTL further indicates that the Phase 1 FT-L (NM) Service volumes will not trigger the need for incremental mainline facilities but will require customer facilities including one receipt meter station on the NMML and the proportionate share of one delivery meter station at the new WVI delivery point. NGTL also indicates that, at this time, it expects the Phase 2 volumes to require, and has included in its assessment of the Service, two new compressor units, two additional receipt meter stations along the NMML as well as an expansion of the WVI delivery point. NGTL has assumed that the Phase 1 contracts will commence December 2024 and the Phase 2 contracts will commence April 2027.

At the time of the NGTL North Montney Variance Application, NGTL indicated that it had entered into 20-year FT-R contracts with 11 shippers for FT-R service on the NMML representing a total volume of 1.485 Bcf/d (reference (ii)). At the time of the NGTL System Rate Design and Services Application proceeding, NGTL indicated that between the issuance of the MH-031-2017 Decision and mid-February 2019, customers executed 232 MMcf/d of additional 20-year NMML FT-R contracts, bringing the total NMML FT-R contracts to 1,717 Bcf/d (reference (iii)). Reference (iv) provides the service commencement dates of these volumes.

Request: a) Please provide the current total number of FT-R shippers on the NMML and the current total volume of the NMML FT-R contracts.





b) Assuming that NGTL did not agree to provide FT-L (NM) Serviceto PETRONAS, what volume of additional FT-R contracts wouldNGTL be able to accommodate on the NMML without addingnew facilities on the NMML (other than new customer receiptmeter stations for the additional FT-R contracts)? In responding,please assume that there are no capacity limitations downstream ofthe NMML on the NGTL System.

c) Is NGTL planning to reserve capacity on the NMML for thePETRONAS Phase 1 volume of 65 MMcf/d and the Phase 2volumes of 510 MMcf/d? In other words, is it NGTL’s intention tonot contract additional FT-R volumes on the NMML prior toDecember 2024 (Phase 1) and prior to the Phase 2 FID decision(Phase 2)? If this is not the case and NGTL does contractadditional FT-R service on the NMML prior to the Phase 1 andPhase 2 contract commencement dates, please confirm that NGTLmay need to install facilities other than those described in theApplication to accommodate the Phase 1 and Phase 2 volumes.

d) If NGTL were to contract 510 MMcf/d of additional FT-Rvolumes on the NMML prior to a positive Phase 2 FID decisionand the Phase 2 contract commencement date, what additionalfacilities would NGTL then need to construct on the NMML inorder to accommodate the PETRONAS Phase 2 volumes?

e) Assuming the Phase 2 FT-L (NM) Service goes into effect, whatadditional facilities would NGTL need to construct on the NMMLin order to accommodate an additional 510 MMcf/d of FT-Rcontracts on the NMML. If in order to respond NGTL needs tomake an assumption regarding the location of where the additionalgas would come onto the NMML, please assume that the gas willbe delivered onto the NMML in the same general vicinity that thePETRONAS Phase 2 volumes would come onto the NMML.

Response: a) As of August 16, 2021, there are eight customers which together hold a total of 1557

MMcf/d of FT-R service on the NMML. There are also 290 MMcf/d of FT-R contracts pending declaration. Once all of these pending FT-R contracts are declared, there will be a total of 1847 MMcf/d contracts on NMML. Refer to the response to CER 1.1 a) for details.

b) Refer to the response to CER 1.12 c).

c) Refer to the response to CER 1.1 a).





d) and e)

The facilities discussed in this response are illustrative based on current NGTL System design flow requirements and the hypothetical scenario provided. Once requests for incremental service are received, NGTL will reassess the facility requirements prior to submitting a facility application to the Commission. Consistent with the design methodology, NGTL will typically propose the lowest cost facility option to increase capacity through the constrained area for System expansions.

Should an additional 510 MMcf/d of FT-R volumes on the NMML be contracted prior to the commencement of Phase 2 of FT-L (NM) Service, assuming no other changes in requirements, NGTL would need new compression facilities at Saturn and Mackie Creek to increase the capacity through the constrained area on the NMML for the incremental FT-R requests. Additionally, incremental facilities downstream of the NMML may also be required to transport the incremental FT-R supply to downstream NGTL markets. If subsequently, a positive Phase 2 FID occurred, and assuming no change in other contracts, an additional NMML compressor station and a section of NMML loop of approximately 20 km would be needed to accommodate the Phase 2 FT-L (NM) contract quantity. These facilities on the NMML would have a slightly higher capital cost than the new compression facilities at Saturn and Mackie Creek, but would have lower operating cost, such that the overall net benefits associated with the Service would not be materially impacted.







Preamble: NGTL states that the proposed tolling and service structure for the FT-L (NM) Service represent a fair assessment of its market value.

Request: a) Did NGTL assess potential demand for additional FT-R service on the NMML before offering the FT-L (NM) Service to PETRONAS and, if so, how did NGTL make that assessment?

b) Did NGTL hold an open season to allow all shippers the opportunity to contract for additional FT-R service on the NMML before offering the FT-L (NM) Service to PETRONAS? If so, please provide a copy of the open season documents.

Response:

a) and b)

NGTL does not award FT-R service through open seasons. Customers interested in FT-R service on the NMML or elsewhere on the NGTL System may request it by submitting a non-binding Application for Service at any time. 1 There is no set window during which customers must submit service requests, and Applications for Service may include requests for commencement of service at any future date. Once received, NGTL reviews Applications for Service and determines its ability to accommodate the request(s), including whether it can meet the requested service commencement date(s). NGTL places Applications for Service into a queue, sorted by location and timing, which it then utilizes to plan its facility expansion program. An Application for Service only becomes binding upon the execution of a PEA.

NGTL continually reviews its service request queue and any Applications for Service received, which would demonstrate the demand, if any, for additional FT-R service on the NMML.

1 Available on TC Energy’s Customer Express Website - http://www.tccustomerexpress.com/2801.html.

Accessed August 26, 2021.







Preamble: NGTL describes the impacts and benefits of FT-L (NM) Service.

Request: a) Please provide the toll revenue that would be collected by NGTL for each of the years 2024 to 2033 if NGTL contracted a volume equivalent to the Phase 1 volume (65 MMcf/d) as standard FT-R service on the NMML instead of FT-L (NM) Service. Please assume that the FT-R tolls for this service would be the average of the FT-R tolls on the NMML

b) Please provide the toll revenue that would be collected by NGTL for each of the years 2027 to 2036 if NGTL contracted a volume equivalent to the Phase 2 volume (510 MMcf/d) as standard FT-R service on the NMML instead of FT-L (NM) Service. Please assume that the FT-R tolls for this service would be the average of the FT-R tolls on the NMML

c) Please provide the toll revenue that would be collected by NGTL for each of the years 2024 to 2033 if NGTL contracted 65 MMcf/d of FT-D service at the new WVI delivery point.

d) Please provide the toll revenue that would be collected by NGTL for each of the years 2027 to 2036 if NGTL contracted 510 MMcf/d of FT-D service at the new WVI delivery point.

e) Assuming FT-P service for delivery to a group 1 delivery point were permitted under the NGTL tariff, what would the toll be for such service from the NMML to the new WVI delivery point.

f) Please provide the toll revenue that would be collected by NGTL for each of the years 2024 to 2033 if a volume equivalent to the Phase 1 volume (65 MMcf/d) were contracted for delivery from the NMML to the new WVI delivery point at a toll equal to the FT-P service rate provided in response to (e) above.

g) Please provide the toll revenue that would be collected by NGTL for each of the years 2027 to 2036 if a volume equivalent to the Phase 2 volume (510 MMcf/d) were contracted for delivery from the NMML to the new WVI delivery point at a toll equal to the FT-P service rate provided in response to (e) above.





Response:

NGTL does not believe the volumes that were attracted through the FT-L (NM) Service would have been secured as FT-R, FT-D or FT-P services. Therefore, the following information is not representative of the revenues that are expected to be derived in the absence of the proposed Service.

a) and b)

Tables Westcoast 1.9-1 & 1.9-2 provide the revenue that is based on the 2021 Final FT-R NMML Rates (5+ year term) for Phase 1 and Phase 2, respectively.

Table Westcoast 1.9-1: Revenue for 65MMcf/d [[Phase 1 FT-L (NM) Service] Based on 2021 Final FT-R NMML Rates

Year 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Revenue ($MM) 0.9 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0

Table Westcoast 1.9-2: Revenue for 510 MMcf/d [Phase 2 FT-L (NM) Service] Based on 2021 Final FT-R NMML Rates

Year 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Revenue ($MM) 59.3 78.9 78.9 78.9 78.9 78.9 78.9 78.9 78.9 78.9

c) and d)

Tables Westcoast 1.9-3 & 1.9-4 provide the revenue that is based on the 2021 Final FT-D1 Floor Rates (5+ year term) for Phase 1 and Phase 2, respectively.

Table Westcoast 1.9-3: Revenue for 65MMcf/d [Phase 1 FT-L (NM) Service] Based on 2021 Final FT-D1 Floor Rates

Year 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Revenue ($MM) 0.4 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.2

Table Westcoast 1.9-4: Revenue for 510 MMcf/d [Phase 2 FT-L (NM) Service] Based on 2021 Final FT-D1 Floor Rates

Year 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Revenue ($MM) 24.7 32.8 32.8 32.8 32.8 32.8 32.8 32.8 32.8 32.8

e) Refer to the response to CER 1.13 (c)





f) and g)

Tables Westcoast 1.9-5 and 1.9-6 provide the revenue based on an average FT-P rate for distances equivalent to NMML receipt points to WVI for Phase 1 and Phase 2, respectively.

FT-P is only available at Group 2 delivery points and would therefore not be available at WVI. The information provided in Tables Westcoast 1.9-5 and 1.9-6 is illustrative of a Group 2 delivery point located at the same location as WVI. The FT-P rates are based on 2021 Final Rates and include the NMML Surcharge, which would be applicable to FT-P service that uses receipt points on the NMML.

Table Westcoast 1.9-5: Revenue for 65MMcf/d [Phase 1 FT-L(NM) Service] Based on Average FT-P Rate for Distances Equivalent to NMML Receipts Receipt Points to WVI

Year 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Revenue ($MM) 0.9 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10.3 10.3

Table Westcoast 1.9-6: Revenue for 510 MMcf/d [Phase 2 FT-L (NM) Service] Based on Average FT-P Rate for Distances Equivalent to NMML Receipts Receipt Points to WVI

Year 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Revenue ($MM) 60.7 80.6 80.6 80.6 80.6 80.6 80.6 80.6 80.6 80.6






Reference: i) NGTL Rate Design and Service Application, Section 3.5, Pages 3-12 to 3-17

ii) NGTL Evidence, Section 5.1, Pages 26-27

Preamble: In reference (i), NGTL describes the need for additional supply from the NMML to replace system declines, meet incremental system delivery requirements and support market balancing. In reference (ii), NGTL states that it has executed PEAs for 323,474 GJ/day of incremental FT-D service at the WVI delivery point.

Request: a) What is the total level of receipt contracts versus delivery contracts on the NGTL system currently?

b) Please provide an update to Figure 3-5 contained in reference (i) showing receipt and delivery contracts (including all volumes associated with executed PEAs) as well as NGTL’s forecast design flow to 2027 for each of the following scenarios:

i. assuming 100% renewal of all receipt and delivery contracts;

ii. assuming no renewal of receipt and delivery contracts; and

iii. assuming no renewal of receipt contracts and 100% renewal of delivery contracts.

Response:

a) and b)

Refer to Figure Westcoast 1.10 for the total level of receipt and delivery contracts (inclusive of executed PEAs) and for NGTL’s forecast design flow to 2027 for each of the scenarios requested. NGTL notes that design flows beyond 2025 are not available at this time.





Figure Westcoast 1.10






Reference: NGTL Evidence, Section 1.2.3

Preamble: NGTL describes the stakeholder notification process but does not specify what concerns were raised regarding the FT-L (NM) Service.

Request: Please describe in detail the concerns that were raised by stakeholders regarding the FT-L (NM) Service and its potential impacts.

Response:

The referenced Section 1.2.3 of the NGTL Evidence summarizes the concerns that were identified, while adhering to the provisions of confidentiality of the TTFP. Also refer to the response to CER 1.16.






Reference: NGTL Evidence, page 27

Preamble: NGTL states that it does not currently expect volumes to be contracted under NGTL’s existing suite of services at the WVI delivery point to be comparable to the current East Gate and West Gate Group 1 delivery points and accordingly the WVI delivery point is not proposed to be designated as a Major Market for the purpose of FT-R service pathing.

Request: a) Please confirm whether the FT-L (NM) Service Phase 1 and Phase 2 volumes were considered in assessing whether the WVI delivery point should be designated as a Major Market for the purpose of FT-R service pathing.

b) Assuming the WVI delivery point were to be designated as a Major Market for the purpose of FT-R service pathing, what would the impact be on the NMML FT-R tolls and the NMML surcharge using the 2021 actual tolls as a baseline.

Response:

a) NGTL did not consider the proposed FT-L (NM) Service and related contract volumes in assessing Major Market eligibility for the WVI delivery point. Major Market designation is used solely for the purpose of FT-R service pathing under the existing NGTL rate design. Since deliveries that will take place under FT-L (NM) Service at WVI can only be received under the Service, FT-L (NM) contract quantities were not considered for the determination of FT-R pathing. The applicable criteria for Major Market designation for FT-R pathing purposes are summarized below:

• account for a significant amount of System CDQ

• delivery CDQ for each Major Market exceeded 1.2 Bcf/d at time of initial Major Market designation in 2019 (based on 2017 Delivery CDQ)

• represent a discrete geographic area

• have a stable demand over time

The pending FT-D contract quantities at WVI do not meet these criteria. The only deliveries currently anticipated at WVI that could be supplied by FT-R currently total 323,474 GJ/d and are therefore well below the quantities required to warrant Major Market designation.

b) NGTL has not completed a detailed path analysis of the impact Major Market designation would have on FT-R rates at each receipt point on the System and is not prepared to undertake the analysis since WVI does not meet the requirements for Major Market designation and such a designation is not proposed.





NGTL does not forecast System pathing used for rate determination as it based on total future System volumes which are uncertain. Accordingly, NGTL cannot provide the requested toll impact resulting from Major Market designation at the proposed WVI delivery point. Should the WVI delivery point meet the requirement for Major Market designation in the future, an application to the Commission for approval of the resulting rates would be required prior to this designation being implemented.






Reference: Evidence of John J. Reed and Toby Bishop (“Reed and Bishop”), page 17

Preamble: In the reference, Reed and Bishop ask:

Q29. ALTHOUGH THE RATE FOR THE FT-L (NM) SERVICE IS NEGOTIATED, AND THEREFORE NOT BASED STRICTLY ON COST OF SERVICE, ARE OTHER ASPECTS OF THE TOLLING METHODOLOGY CONSISTENT WITH COST CAUSATION?

Request: a) What would the rate for FT-L (NM) Service be if it were based strictly on cost of service?

b) Please explain how the rate in a) was determined.

Response:

a) and b)

The proposed FT-L (NM) Service and related tolling were not developed on a cost of service basis, and NGTL has not developed a rate for the FT-L (NM) Service as if it were based strictly on cost of service. As set out in the response to CER 1.15, the service features and rights of the FT-L (NM) Service are materially different than existing services on the NGTL System.

Based on the circumstances of the FT-L (NM) Service, where the facilities used to provide the service are primarily existing facilities and therefore represent sunk costs, along with relatively modest facility additions, the cost-based floor for a reasonable toll represents one which covers the incremental costs of providing the incremental service. As shown in the response to WEG 1.10 (g), the negotiated rate for FT-L (NM) Service exceeds the rate that would apply to the Service if it were based strictly on incremental cost.

Documents

Westcoast 1.1 Response to Westcoast Energy Inc. (Wes