TransCanada Corporation (TSX:TRP) (NYSE:TRP) (TransCanada) today announced that its wholly-owned subsidiary NOVA Gas Transmission Ltd. (NGTL) has reached a settlement with shippers and other interested parties regarding the NGTL System annual revenue requirement for the years 2013 and 2014.
"This settlement is the product of an open negotiation between NGTL and its stakeholders, and represents an acceptable balance of interests among the parties," says Karl Johannson, executive vice-president and president, Natural Gas Pipelines. "TransCanada is pleased to have worked with our stakeholders through our collaborative process to reach this consensus, which will bring cost and rate certainty on the NGTL System through 2014."
The settlement covers all elements of the NGTL System cost of service and is comprised of flow-through and fixed cost components. The settlement:
- fixes the equity return at 10.10 per cent on 40 per cent deemed common equity during the term, compared with 9.7 per cent equity return on 40 per cent equity for 2012;
- establishes NGTL System depreciation at a forecast composite rate of 3.05 per cent for 2013 and 3.12 per cent for 2014, compared to a composite rate of 2.71 per cent achieved in 2012; and
- fixes operating, maintenance and administration (OM&A) costs at $190 million for 2013 and $198 million for 2014, with any variances to NGTL's account.
All other elements of NGTL System costs, including interest expense, transportation by others, and pipeline integrity, will be treated as flow-through costs.
NGTL has filed an application with the National Energy Board for approval of the settlement and final 2013 rates, as well as changes to existing interim rates to reflect the settlement, to be effective September 1, 2013, pending adjudication of the application.