Campus Exhibit List for Oral Argument

# Exhibit Title PDF Page # (As Filed)

PDF Page # (Extracts)

1. C10422-2 Campus – Final Argument for North Suffield Pipeline Toll Application December 15, 2020 – A7L7V5

10-11, 19-25, 32-33 of 53

2-12

2. C07022-1 Campus Energy – CER Application (Suffield North) & Appendix A – June 26 2020 – A7G6J2

5, 21-25, 28-30 of 43

13-21

3. C10050-2 Complainants Responses to CER IR No. 2 – A7L2K6 17 of 24 22 4. C10389-2 Campus Reply Evidence – Revised Appendix C – Illustrative Discretionary

Tolls Feb 19 to Nov 20 – A7L7I1 1 of 1 23

5. C10255-2 Campus Reply Evidence – A7L5K5 3-6, 8 of 17 24-286. C10255-4 Campus Reply Evidence – Appendix B – Graph of Declining Throughput

on Suffield System – A7L5K7 1of 1 29

7. C07022-5 Appendix D – Campus Energy Proforma Suffield TSA (Effective July 1, 2019) – Campus Energy CER Application (North Suffield Pipeline) – June 26, 2020 – A7G6J6

5-17 of 22 30-42

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prospective shippers. 27 Far from being improper, Campus’s conduct reflects the market-

based tolling methodology operating as intended. The result, as discussed in the next

section, are competitive tolls that continue to provide a less costly alternative to the NGTL

system.

C. Campus’s Proposed Market-Based Tolls

23. Campus requests that the Commission approve the following market-based tolls for the

North Suffield Pipeline:28

Term Toll ($/GJ) Allowable ITp Volume

IT $0.32 None

ITp Firm Rate + $0.02 N/A

FT 2 Year $0.24 Can ship 40% of firm volume at ITp

FT 5 Year $0.22 Can ship 50% of firm volume at ITp

FT 10 Year $0.21 Can ship 100% of firm volume at ITp

FT 20 Year $0.20 Can ship 300% of firm volume at ITp

24. Posted in June 2019, these tolls were set in relation to the tolls charged on the NGTL system

as at May 1, 2019. To deliver gas produced in the Suffield area to the Mainline, shippers

on the NGTL system are required to pay both the NGTL Princess Receipt toll and the

NGTL Empress Delivery toll. The following table summarizes the significant cost savings

of Campus’s proposed tolls relative to the posted NGTL tolls: 29

27 Campus Toll Application, at paras 128-129 [C07022-1]; Campus Reply Evidence, at paras 33-43 [C10255-2]. 28 Campus Toll Application, Appendix “A” - Tolls and Tariff for the Suffield Pipeline System, Effective July 1, 2019 [C07022-1]. 29 Campus Response to CER IR 1.5(c) [C08291-2].

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Campus Proposed

Market-Based Toll

($/GJ)

May 2019 Combined

NGTL Receipt &

Delivery Toll ($/GJ)

Shipper Savings (%)

IT $0.32 $0.34 5.8%

FT 2 Year $0.24 $0.31 22.5%

FT 5 Year $0.22 $0.29 24.1%

FT 10 Year $0.21 $0.28 25.0%

FT 20 Year $0.20 $0.28 28.6%

25. Campus acknowledges, however, that in June 2020 NGTL posted revised lower tolls.

Campus’s proposed FT tolls still achieve significant cost savings for shippers, but,

exercising the discretion it requests in the Toll Application, Campus would have to lower

its posted IT toll to be competitive with NGTL’s new posted IT rate:30

Campus Proposed

Market-Based Toll

($/GJ)

June 2020 Combined

NGTL Receipt &

Delivery Toll ($/GJ)

Shipper Savings (%)

IT $0.32 $0.29 -

FT 2 Year $0.24 $0.27 11.1%

FT 5 Year $0.22 $0.25 12.0%

FT 10 Year $0.21 $0.24 12.5%

FT 20 Year $0.20 $0.24 16.7%

26. Campus also recognizes that not all Suffield area producers with IT service on NGTL will

necessarily ship their gas to the Mainline at Empress. When market prices do not justify

transporting gas to eastern markets, producers may simply put their gas on the NGTL

system and then sell it through the Nova Inventory Transfer (“NIT”). In such case, these

shippers would only pay the posted NGTL Receipt toll. Thus, when market conditions

30 Campus Response to Complainant IR 1.11(2) [C08291-3]. The manner in which Campus would have adjusted its IT toll in response to market conditions, including the lower NGTL posted tolls, is shown in Campus Reply Evidence – Revised Appendix C – Illustrative Discretionary IT Tolls Feb 19 to Nov 20 [C10389-2].

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(c) Are the proposed modifications to Campus’s terms and conditions of service

appropriate?

40. For the reasons outlined below, Campus’s proposed tolls are just and reasonable and should

be approved by the Commission.

IV. LAW & ANALYSIS

A. Should the Commission approve Campus’s proposed market-based tolls?

i. The North Suffield Pipeline should continue operating under a market-based tolling methodology

41. From inception, the North Suffield Pipeline has operated under a market-based tolling

methodology.62 This methodology has served the pipeline and its shippers well. The

Commission should not fundamentally change the North Suffield Pipeline’s tolling

methodology absent clear and overriding evidence that the current methodology is wholly

incapable of yielding just and reasonable tolls. No such evidence exists, and certainly not

on the record of this proceeding. Accordingly, the Commission should confirm that the

North Suffield Pipeline will continue to operate on the basis of market-based tolls.

42. The Canadian Energy Regulator Act (CERA) requires that tolls be just and reasonable, and

not unjustly discriminatory.63 There is no prescribed methodology that must be followed

to achieve these ends. As the Federal Court of Appeal once said of the Commission’s

predecessor, the NEB:

…tolls are to be just and reasonable and may be charged only as specified in a tariff that has been filed with the Board and is in effect. The Board is given authority in the broadest of terms to make orders with respect to all matters relating to them. Plainly, the Board has authority to make orders designed to ensure that the tolls to be charged by a pipeline company will be just and reasonable. But its power in that respect is not trammelled or fettered by statutory rules or directions as to how that function is to be carried out or how the purpose is to be achieved. In particular, there are no statutory directions that, in considering whether tolls that a pipeline company propose to charge are just and reasonable, the Board

62 NEB Decision GH-2-2000, p 11-12 (PDF pages 20-21). 63 Canadian Energy Regulatory Act, SC 2019, c 28, s. 10, at s. 230 and 235.

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must adopt any particular accounting approach or device or that it must do so by determining cost of service and a rate base and fixing a fair return thereon.64 [Emphasis added]

43. In response to Complainants’ IR 1.1(9), Campus outlined the relevant factors to consider

when assessing whether market-based tolling is still appropriate for North Suffield, as set

out below.65 The Complainants have not disputed these factors. Each of the relevant factors

militates in favour of maintaining market-based tolling for North Suffield:

(a) Whether the competitive relationship between North Suffield and NGTL is

materially different now than it was when North Suffield was brought into service?

Answer: the same competitive relationship continues to exist.

(b) Whether current and prospective North Suffield shippers have alternatives?

Answer: they do, the NGTL system.

(c) The extent to which current or prospective shippers have used available alternatives

in the past?

Answer: each of the Complainants is currently connected to and shipping on the NGTL system.

(d) Whether North Suffield has been shown to have market power and, if so, whether

it has been shown to have abused its market power?

Answer: North Suffield does not have any market power over the Complainants. Each of them acknowledges that it can divert volumes from North Suffield to the NGTL system, except for a small portion of Torxen’s production which Torxen acknowledges could be connected to the NGTL system.

64 British Columbia Hydro & Power Authority v. Westcoast Transmission Co., [1981] 2 FC 464 (Fed. C.A.), at 655-56 (emphasis added). This passage was reproduced and cited with approval in Transcanada Pipelines Ltd. v Canada (National Energy Board), 2004 FCA 149 at para 30. See also Bell Canada v. Bell Aliant Regional Communications, 2009 SCC 40 at para. 40. 65 Campus Response to Complainant IR 1.1(9) [C08291-3].

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(e) Whether current or prospective shippers have been prevented from getting the

physical service (namely, transmission of gas) that they desire?

Answer: None of the Complainants (nor any other shipper) with a TSA has ever been denied the physical service they desire.

44. A market-based tolling methodology is fundamentally different from a cost-of-service

methodology. The two methodologies result in fundamentally different cost and risk

sharing arrangements between a pipeline and its shippers. This was acknowledged and

explained by the NEB in Decision GH-2-1998 when it approved market-based tolling for

the South Suffield Pipeline:

In considering whether a tolling methodology would result in just and reasonable tolls, the Board takes into account the differing points of view of shippers and pipeline owners. Shippers will be concerned with the relative risk they bear because of uncertainty about future toll levels. The pipeline company would also be concerned about whether or not its proposed tolling methodology would allow it to attract sufficient volumes to its system, recover its costs, and provide an appropriate return on its investment.

The proposed Firm Service tolls on the AEC Suffield Pipeline are fixed for contract terms of 5, 10, 15 and 20 years. These tolls would not vary over their term and in contrast to traditional cost-of-service tolls, they are lower for longer contract terms. Tolls for similar contract terms would be set, possibly at a different level, for services commencing at the start of each subsequent year.

Fixed tolls would involve a different sharing of risks and rewards between the pipeline company and its shippers than would the sharing under cost-of-service regulation.

Shippers would be relieved from the risk of asset under-utilization or stranded costs and would benefit from rate certainty. The pipeline company would be responsible for any potential stranded assets and would assume any risk related to possible increases in costs due to inflation or rising financial costs.

Another impact of fixed tolls is that, in the early years of a new pipeline, shippers would not pay the relatively higher initial tolls resulting from cost-of-service regulation. High tolls in the early life of a pipeline are caused by the fact that a greater share of a pipeline’s revenue requirement is return on a rate base which has yet to be depreciated. In the absence of a pipeline expansion, the

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pipeline’s rate base would be depreciated each year causing a decline in the pipeline’s revenue requirement which would eventually result in lower tolls in the later years of a pipeline’s life.

Fixed tolls would not allow shippers to be exposed to these lower tolls.

AEC Suffield’s proposed Firm Service tolls would insulate shippers from changes in transportation cost and some of the risks associated with more traditional tolling methodologies. The pipeline company would assume those risks but in turn may be able to earn a return that would appropriately compensate it. The Board believes that a sharing of risks and rewards that is agreed to by a pipeline company and its shippers would be an appropriate way to achieve the goals of regulation without the direct involvement of the regulator. Indeed, because both parties have a better understanding of their own circumstances and thus the most appropriate tradeoffs to make, the solution they agreed to may well be superior to the solution the regulator could make through a cost-of-service based toll. The Board also notes that shippers have the alternative of utilizing NGTL’s system for transportation services. In light of the foregoing, it is the Board’s view that the tolls on the AEC Suffield pipeline would be just and reasonable. Therefore, the Board accepts the Firm Service tolls proposed by AEC Suffield.66 [Emphasis added]

45. In Decision GH-2-2000 the NEB approved the same market-based approach to tolling for

the North Suffield Pipeline.67

46. Likewise, in Decision GH-1-2003 the NEB approved substantially the same market-based

approach to tolling for EnCana’s Ekwan Pipeline:

7.2 Tolls, Tariff and Transportation

EnCana Ekwan stated that it is a commercially at-risk pipeline in that only EnCana Ekwan would be at risk should tolls or contracted volumes be insufficient to generate a reasonable return. The actual rate of return that EnCana Ekwan earns would depend on its ability to manage its costs.

EnCana Ekwan proposed a market-based toll for its transmission services and entered into a Precedent Agreement

66 NEB Decision GH-2-98, at p13-14 (PDF pages 21-22). 67 NEB Decision GH-2-2000, p 11-12 (PDF pages 20-21). See also Campus Reply Evidence, at paras 3-15 [C10255-2].

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with an affiliate, EnCana Gas Marketing, to provide firm transportation service for a ten-year term at a fixed toll of $214.74 per 103m3/month ($0.20/mcf).

EnCana Ekwan indicated it is prepared to offer other potential shippers a similar toll for a similar volume and term. If other potential shippers requested different types of firm service for smaller volumes or for shorter-term service commitments, EnCana Ekwan would be prepared to establish market-based tolls for those different types of transportation service.

If capacity were available after meeting firm transportation requirements, EnCana Ekwan would be prepared to offer Interruptible Transportation Service at market-based rates.

EnCana Ekwan’s application was not contested in this regard.

Views of the Board

Pursuant to Part IV of the NEB Act, the Board must ensure that tolls are just and reasonable and that there is no unjust discrimination in tolls, service or facilities.

EnCana Ekwan’s proposed fixed-term service toll would insulate its shipper from changes in transportation costs. In return for assuming the risks of potentially stranded assets and possible cost increases, EnCana Ekwan has set the toll at a level which it believes will recover costs and provide an appropriate return on investment.

The Board notes that EnCana Ekwan is prepared to offer service to other shippers at market-based rates, thus not precluding other producers from shipping gas on the proposed pipeline.

Based on the above, the Board finds the proposed tolling methodology to be acceptable.68 [Emphasis added]

47. The benefits of this approach continue to accrue to North Suffield shippers today. Shippers

are incentivized to subscribe for FT service at the current market-rate, with that rate being

fixed for the entire FT service term. This insulates FT shippers from increases in the

market-cost of transportation service until the expiry of their FT term. All current and

68 NEB Decision GH-1-2003 at p 20-21 (PDF pages 30-31).

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prospective shippers on the North Suffield Pipeline—including the Complainants—would

realize these same benefits by subscribing for FT service today.

48. The Complainants only apparent argument in favour of switching to a cost-of-service

tolling methodology is that, as they calculate it, Campus’s cost-of-service would be lower

than Campus’s proposed market-based tolls. As detailed below, Campus strongly disagrees

with the Complainant COS Model, and Campus believes that properly calculated cost-of-

service tolls would indeed be higher than its proposed market-based tolls. However,

assuming for the sake of argument that cost-of-service tolls would be lower for the North

Suffield Pipeline than market-based tolls, it would simply be a reflection of the fact that

tolls are set on fundamentally different bases under market-based tolling as compared to

cost-of-service tolling. However, a cost of service toll at this point in the pipeline’s

operating life would fundamentally alter the basis upon which the NEB approved the

pipeline being built and operated. The pipeline as supported by market-based tolling was

deemed to be in the public interest when it was approved. The NEB determined that

shippers received the benefit of a lower than cost-of-service tolls at the front end of the

contract terms agreed to by shippers and the pipeline accepted this risk in exchange for

revenue certainty in the later term. In Campus’s submission, a change to cost-of-service

tolls at the very end of the 20 year contract terms the contract shippers agreed to is nether

just nor reasonable. It upends the allocation of risk that the NEB found appropriate between

pipeline and shipper which was founded on a market-based toll. With that said, Campus

notes that even if a cost of service toll were notionally lower that does not inescapably

mean market-based tolls are not just and reasonable or that cost-of-service tolls should be

preferred.

49. The NEB directly addressed this issue in Decision RH-002-2014 in respect of the Alliance

Pipeline, confirming that cost-of-service is not the only pathway to just and reasonable

tolls:

Alliance’s proposed toll methodology is not based on cost of service. While cost of service has been widely used and accepted in toll design, there is no requirement that tolls be derived in this manner in order to be found just and reasonable. The methodology that the Board employs in setting just and reasonable

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tolls is not prescribed by law, and the Board has broad discretion to determine what is just and reasonable. The Board is of the view that different circumstances or market conditions may warrant unique or innovative tolling methodologies.69 [Emphasis added]

50. Further, in RH-002-2014 the NEB cautioned against assessing one proposed tolling

methodology against another. The question is not whether one methodology produces tolls

that are equally or more just and reasonable than some other methodology, but whether the

proposed methodology itself is capable of yielding just and reasonable tolls. The NEB

stated:

Finally, B.C.-MNGD suggested that the toll methodology proposed under the NSO constitutes a marked departure from the way in which the Pipeline has been operated historically, and that Alliance bears the onus of demonstrating that its proposal would result in tolls that are at least as just and reasonable as those currently in place. In the Board’s view, the justness and reasonableness of tolls and tariffs is not easily compared across differing sets of circumstances or toll methodologies. The Board also considers that, for any given set of circumstances, there may be several approaches to tolling that yield just and reasonable results. Each approach should be considered on its own merits and in respect of the many diverse factors that comprise its circumstances. The Board considered the firm tolls proposed under the NSO based on Alliance’s specific circumstances and the characteristics of the NSO as a whole, and has found those firm tolls to be just and reasonable.70 [Emphasis added]

51. These principles should apply with even greater force in a case like this, where Campus

proposes to maintain the status quo and continue using the same tolling methodology that

was originally approved for the North Suffield Pipeline, and under which it has always

operated.

52. The Complainants’ self-imposed difficulty is that for their own commercial reasons they

choose to subscribe for IT service only. They prefer operational flexibility over toll

certainty. That is fine, but it comes at a cost. None of the Complainants’ commercial

reasons for preferring IT over firm service argues against the North Suffield Pipeline’s

69 NEB Decision RH-002-2014 at p 42 (PDF page 56). 70 NEB Decision RH-002-2014 at p 43 (PDF page 57).

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has not motivated shippers who supposedly have long-term transportation needs to

subscribe for FT service.

75. In this respect, the North Suffield Pipeline is facing challenges similar to those faced by

the Trans Canada Mainline. The following statements from the NEB in Decision RH-003-

2011 in the context of significant reduced throughput and changing market conditions on

the Mainline are equally apposite to North Suffield today:

The current pricing methodology for IT and STFT is not appropriate. Shippers using IT or STFT to meet a firm operating requirement do not contribute sufficiently to the Mainline’s fixed costs. For example, shippers are increasingly able to meet their peak requirements for gas by contracting for STFT for a short term (for as little as one week), often paying only 110 per cent of the corresponding FT toll for that term. This provides shippers the assurance that they will receive service when they need it, but pay only a fraction of the full year’s cost of having the Mainline’s capacity available to them.

The pricing discretion proposed by TransCanada under the Restructuring Proposal did not go far enough. In our view, conferring greater discretion on TransCanada to set bid floors for IT and STFT service will provide TransCanada the opportunity to recover the costs of its capacity, during the period of time in which its capacity is used, from those who use it.

TransCanada will have to assess how to price IT and STFT. Optimizing billing determinants and maximizing net revenues on the Mainline, while mitigating the threat of bypass, requires TransCanada to exercise judgment about how much it charges. TransCanada is accountable for how it exercises its discretion and is encouraged by the new incentive mechanism to make decisions that result in the greatest Mainline net revenue, which in the long-run will benefit shippers who require Mainline service.81

76. Later in RH-003-2011 the NEB continued:

…In a low load factor environment, there is little incentive for shippers to contract for firm service if the FT toll is similar to the toll for discretionary services because shippers can obtain flexibility of using the pipeline without committing for an entire year.

81 NEB Decision RH-003-2011 at p. 2 (PDF page 21).

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In the current circumstances of underutilization, users of discretionary services receive virtually guaranteed service whenever they need it, but pay for only a portion of the annual costs of the capacity, making it difficult for TransCanada to recover the costs of that capacity. In our view, allowing TransCanada to charge higher rates for discretionary services will provide it with a better opportunity to recover the costs of that capacity from those who use it, during the period of time in which it is used.82

77. The North Suffield Pipeline faces the same challenges. By their own evidence, both Pine

Cliff and Torxen use or have used the North Suffield Pipeline to fulfil their firm operating

needs, but have never subscribed for FT service.83 Campus should be permitted to set the

default price for IT service at a level that incentivizes shippers with long-term

transportation needs to subscribe for firm service.

78. On the other hand, unlike the TransCanada Mainline, Campus also requires flexibility to

adjust its IT rate to respond to market conditions that might cause volumes to shift from

North Suffield to the NGTL system. Campus understands that shippers connected to NGTL

can sell their gas at NIT, and that Empress Delivery capacity sometimes trades below the

posted NGTL Empress Delivery toll (and sometimes well above). While attracting

incremental FT volumes is the ultimate objective, there may be times where retaining

existing IT throughput is a greater business imperative. This is why Campus has requested

discretion to adjust its IT rates below the proposed default $0.32/GJ IT rate.

79. Having such discretion allows Campus to send proper price signals to the market about

the relative value of FT versus IT service, while at the same time remaining nimble enough

to retain and attract IT volumes in down markets. An illustration of how Campus would

strike this balance is outlined in Revised Appendix C of Campus’s Reply Evidence; in all

circumstances, Campus proposes to match or offer shippers a discount on the lowest toll

they would have to pay NGTL.84

82 NEB Decision RH-003-2011 at p. 126 (PDF page 145). 83 Both Pine Cliff and Torxen acknowledge having firm transportation needs but having never subscribed for FT service: Pine Cliff and Torxen Responses to Campus IR 1.1(g) and (p) [C10050-3]. 84 Campus Reply Evidence – Revised Appendix C – Illustrative Discretionary IT Tolls Feb 19 to Nov 20 [C10389-2].

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III. REQUESTED RELIEF

11. Based upon the information contained in and attached to this Application, and on any

additional information as may be directed or permitted by the Commission, Campus hereby applies

to the Commission for an Order:

(a) Confirming that the Suffield Pipeline System operates as a commercially-at-risk

pipeline charging market-based tolls;

(b) Approving the Revised Tolls and Tariff and Revised TSA (as defined herein) for

Suffield North and making them effective as of July 1, 2019;

(c) Directing shippers who have received new firm or interruptible service on Suffield

North since July 1, 2019 to pay to Campus the difference between the interim tolls

and the tolls payable under the Revised Tolls and Tariff for the interim period;

(d) Granting Campus the discretion to post a revised IT toll from time to time based on

Campus’s assessment of prevailing market conditions, in an amount equal to or less

than the IT toll proposed in the Revised Toll and Tariff;

(e) Dismissing the Complaints of Rockpoint, Pine Cliff, and Torxen; and

(f) Such further and other relief as may be necessary or that the Commission may

allow.

IV. FILING MANUAL – GUIDE P – TOLLS AND TARIFF INFORMATION

12. This section, together with the appendices referred to herein, provides the information that

Campus was directed to file in accordance with Guide P of the Commission’s Filing Manual.

13. The information is presented for base year 2018, current year 2019, and test year 2020. In

2018, Suffield was owned by AltaGas. Information for that year is based upon AltaGas’ publicly

filed financial statements. Information for 2019 is based upon Campus’s 2019 financial statements

and forecast costs for 2020 are based upon Campus’s budget.

14. All figures are in Canadian Dollars. Campus does not earn any miscellaneous revenue from

Suffield North.

15. For illustrative purposes, Campus retained the Drazen Consulting Group (“Drazen”) to

assess what cost-of-service tolls would be on the Suffield system based on available financial

information. Attached as Appendix “B” is the Toll Model compiled by Campus and Drazen based

upon available financial information (the “Toll Model”).

A. P.1 Cost of Service

16. Schedule 1.0 of the Toll Model provides a summary of Campus’s total cost of service (i.e.

total revenue requirement) for Suffield North for years 2018, 2019, and 2020. As discussed below,

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100. It is useful to consider the NEB’s determinations at the time the Suffield pipelines were

approved. They provide the framework upon which the CER should consider Campus’s continued

need to operate as a market-based pipeline.

i. Suffield South

101. The Suffield South NEB Application made clear that the proposed market-based toll

structure was meant to incent shippers to subscribe for long-term firm service on the Suffield

system, with the owner being at risk for any revenue shortfall:

The AEC Suffield Pipeline is a commercially at-risk pipeline with

market-based charges for transmission services. AEC Suffield is

applying for approval of its market-based approach for

transportation rates, as well as for an Order designating AEC

Suffield as a Group 2 company for the purposes of toll and tariff

regulation.

The rate design for firm service incorporates a long-term incentive

approach, offering long-term certainty to shippers as well as to AEC

Suffield. AEC Suffield believes that the applied for transportation

rate design for firm service, which provides for lower rates for a

longer term commitment, creates an appropriate risk-sharing

arrangement between AEC Suffield and its shippers. However, if

rates are insufficient to generate a reasonable return, only AEC

Suffield is at risk.22

102. The Suffield South NEB Application outlined the following principles used to set the initial

firm service tolls:

The principles used in designing the transportation rates for firm

service are described below.

• The firm transportation rates vary with the length of contract

that a shipper signs. Due to the higher revenue risks to AEC

Suffield associated with shorter contract terms, the firm

transportation rates decrease with increasing terms.

• AEC Suffield is at risk for recovery of variances in project

development costs. Once a shipper has signed a firm

service transportation contract with AEC Suffield, its

rates are fixed for the term of the contract.

• AEC Suffield is at risk for its revenue requirements

following the expiry of a contract. Assumptions were made

regarding the gas supply/market conditions that would

22 AEC Suffield Gas Pipeline Inc. Application to the National Energy Board, dated September 1997 (the “Suffield

South NEB Application”), Volume 2, page 7-1.

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prevail at the end of a contract term, as well as the

subsequent revenue streams which could be expected from

either contract renewals or newly negotiated contracts for

non-renewed capacity.23

103. The Suffield South NEB Application noted that the Suffield system would provide

transportation services at approximately 60% of the rates then charged on the NGTL system.24

104. Because Suffield South was proposed to be a commercially-at-risk pipeline charging

market-based tolls, the application did not seek approval of a capital structure or rate of return.

Rather, returns generated by the pipeline would depend on how well the owner managed its

operations, costs, and future revenue:

AEC Suffield proposes to finance the pipeline through internal

financing from its parent company, Alberta Energy Company

Ltd. This will involve a combination of debt and equity financing

by Alberta Energy Company Ltd. However, as AEC Suffield

will not be a cost of service pipeline, the actual capital

structure is not material.

The rate of return is expected to be adequate compensation for

the risks assumed by AEC Suffield. The actual rate of return

achieved will depend on AEC Suffield's ability to manage the

initial development costs, and future pipeline revenues and

operating costs. AEC Suffield will be contractually committed

to provide the appropriate transportation services, regardless of

the return that the project generates.25 [Emphasis added]

105. The Suffield South NEB Application did not propose an initial interruptible service toll, as

it was anticipated that there would be limited capacity for such service based on initial demand for

long-term firm service. However, the application stated that unused capacity would be made

available for interruptible service at rates established on a “market basis”.26

106. The NEB approved the market-based toll approach for Suffield South in Decision GH-2-

98:

In considering whether a tolling methodology would result in just

and reasonable tolls, the Board takes into account the differing

points of view of shippers and pipeline owners. Shippers will be

concerned with the relative risk they bear because of uncertainty

about future toll levels. The pipeline company would also be

concerned about whether or not its proposed tolling methodology

23 Suffield South NEB Application, supra note 2224, Volume 2, page 7-2. 24 Suffield South NEB Application, supra note 22, Volume 1, page ES-2. 25 Suffield South NEB Application, supra note 22, Volume 2, page 7-3. 26 Suffield South NEB Application, supra note 22, Volume 2, page 7-2.

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would allow it to attract sufficient volumes to its system, recover its

costs, and provide an appropriate return on its investment.

The proposed Firm Service tolls on the AEC Suffield Pipeline are

fixed for contract terms of 5, 10, 15 and 20 years. These tolls would

not vary over their term and in contrast to traditional cost-of-service

tolls, they are lower for longer contract terms. Tolls for similar

contract terms would be set, possibly at a different level, for services

commencing at the start of each subsequent year.

Fixed tolls would involve a different sharing of risks and

rewards between the pipeline company and its shippers than

would the sharing under cost-of-service regulation.

Shippers would be relieved from the risk of asset under-utilization

or stranded costs and would benefit from rate certainty. The pipeline

company would be responsible for any potential stranded assets and

would assume any risk related to possible increases in costs due to

inflation or rising financial costs.

Another impact of fixed tolls is that, in the early years of a new

pipeline, shippers would not pay the relatively higher initial tolls

resulting from cost-of-service regulation. High tolls in the early

life of a pipeline are caused by the fact that a greater share of a

pipeline’s revenue requirement is return on a rate base which has yet

to be depreciated. In the absence of a pipeline expansion, the

pipeline’s rate base would be depreciated each year causing a

decline in the pipeline’s revenue requirement which would

eventually result in lower tolls in the later years of a pipeline’s life.

Fixed tolls would not allow shippers to be exposed to these lower

tolls.

AEC Suffield’s proposed Firm Service tolls would insulate

shippers from changes in transportation cost and some of the

risks associated with more traditional tolling methodologies.

The pipeline company would assume those risks but in turn may

be able to earn a return that would appropriately compensate

it. The Board believes that a sharing of risks and rewards that

is agreed to by a pipeline company and its shippers would be an

appropriate way to achieve the goals of regulation without the

direct involvement of the regulator. Indeed, because both

parties have a better understanding of their own circumstances

and thus the most appropriate tradeoffs to make, the solution

they agreed to may well be superior to the solution the regulator

could make through a cost-of-service based toll. The Board also

notes that shippers have the alternative of utilizing NGTL’s

24

system for transportation services. In light of the foregoing, it is

the Board’s view that the tolls on the AEC Suffield pipeline

would be just and reasonable. Therefore, the Board accepts the

Firm Service tolls proposed by AEC Suffield.27 [Emphasis added]

ii. Suffield North

107. The North Suffield NEB Application, submitted in March 2000, proposed that Suffield

North have the same market-based toll structure as Suffield South:

The North Suffield Pipeline is a commercially at-risk pipeline with

market-based charges for transmission services….

The rate design for firm service on the North Suffield Pipeline will

incorporate a long­term incentive approach, offering long-term

certainty to shippers as well as to AEC Suffield. AEC Suffield

believes that the applied-for transportation rate design for firm

service, which provides for lower rates for a longer term

commitment, creates an appropriate risk-sharing arrangement

between AEC Suffield and its shippers. However, if rates are

insufficient to generate a reasonable return, only AEC Suffield is at

risk.28

108. An expanded set of principles was outlined regarding calculation of firm service tolls:

The principles that will be used in designing the firm transportation

service tolls and the terms of service on the North Suffield Pipeline

are described below.

• AEC Suffield's objective in developing tolls is to attract

sufficient volumes to ensure the viability of the North

Suffield Pipeline while at the same time providing AEC

Suffield with an acceptable rate of return on its investment.

AEC Suffield will be assessing the market requirements,

the competitive alternatives (like NGTL), and the pipeline

economics in establishing its tolls.

• The firm service transportation rates for the North Suffield

Pipeline will vary with the length of the term of the

transportation service agreement. Due to the higher revenue

risks to AEC Suffield associated with shorter contract

terms, the firm transportation rates will decrease with

increasing terms.

27 National Energy Board Reasons for Decision GH-2-98 at pages 13-14. 28 AEC Suffield Gas Pipeline Inc. North Suffield Pipeline Application to the National Energy Board, dated March

200 (the “Suffield North NEB Application”), Volume 1, page 7-1.

25

• Producer economics are a particularly significant factor in

designing the terms under which AEC Suffield will provide

firm service. Several potential shippers have expressed a

concern about declining deliverability from gas reserves

behind a specific receipt location. For those shippers which

have such a concern, AEC Suffield's firm service

agreements will take this into consideration by providing an

annual option to the shipper which allows it to reduce its

contract commitment by up to 10 percent.

• AEC Suffield Gas Pipeline Inc. - North Suffield Pipeline

Transportation Rates, Tariff and Financial Information

• AEC Suffield is at risk for recovery of variances in project

development costs as its rates will be fixed over the period

during which service will be provided.

• AEC Suffield is also at risk for its revenue requirements

following the expiry of a contract. Assumptions will be

made regarding the gas supply/market conditions that

would prevail at the end of a contract term, as well as the

subsequent revenue streams which could be expected from

either contract renewals or newly negotiated contracts for

non-renewed capacity.29

109. Based on these principles, the proposed maximum rates for Suffield North were estimated

to be approximately 50% less than NGTL rates at that time.30

110. The Suffield North NEB Application provided that shippers could subscribe for firm

service at rates determined in accordance with the application until May 31, 2000, after which

“[f]irm service rates for any shippers on the North Suffield Pipeline which are not original shippers

will be determined by commercial arrangements made between such shippers and AEC

Suffield.”31

111. As with Suffield South, no rate base, capital structure, or rate of return were proposed for

Suffield North on the basis that such variables were not relevant to market-based tolls.32

112. In Decision GH-2-2000 the NEB approved the same tolling methodology for Suffield

North as was approved for Suffield South.33

29 Suffield North NEB Application, supra note 28, Volume 1, pages 7-1 to 7-2. 30 Suffield North NEB Application, supra note 28, Volume 1, page ES-3. 31 Suffield North NEB Application, supra note 28, Volume 1, page 7-2. 32 Suffield North NEB Application, supra note 28, Volume 1, page 7-2. 33 National Energy Board Reasons for Decision GH-2-2000, pages 11-12.

28

published by CGPR less the lower of the Empress transportation tariff published by TransCanada

Corporation and the Empress – AECO/NIT market differential published by CGPR on that Day…”

to balance the customer’s account.

125. Campus believes that specifying the AECO/NIT index as the benchmark for the gas price

in Articles 5.4 and 5.5 is reasonable, based on a readily identifiable market price and provides

added clarity for both Campus and its shippers. The Empress tariff or differential is representative

of downstream markets that Campus’s shippers have access to using the Suffield system.

126. Given that shippers are the most knowledgeable about their gas supply and downstream

demand, and given that uncontested Article 5.2(a) of the General T&Cs provides that “Customer

shall at all times have the obligation to balance, each Day and each Month, the quantity of Gas

which Customer tenders for transportation at the Point of Receipt, less Unaccounted for Gas, with

the quantity of Gas delivered by Transporter to Customer at the Point of Delivery,” Campus

believes that it is reasonable for shippers to bear the risk of their receipt and delivery volumes

falling out of balance. This is a standard term used in the industry.

Article 7.2 Billing

127. The Revised TSA changes the billing date in Article 7.2(a) from on or before the 20th of

each month to “on or before the Day succeeding the Alberta Energy Regulator Volumetric Data

and Waste Management Reporting Deadline of each Month” (the “AER reporting date”). The

AER reporting date is an industry standard date well known to current and prospective Suffield

shippers. Tethering the billing date to the AER reporting date ensures that Campus’s billing cycle

will be in line with other important industry dates, and will automatically adjust if the AER

reporting date is changed in the future.

VII. CAMPUS’S RESPONSE TO SHIPPER COMPLAINTS

128. Campus has made good faith efforts, both before posting the revised tolls and since, to

engage with its shippers about the revised tolls and terms and conditions of service on the Suffield

system.

129. The following chronology provides a summary of Campus’s engagement efforts:

March 11, 2019 Campus sent initial term sheet to shippers.

March 15, 2019 Campus met with Pine Cliff to discuss the initial term sheet.

March 22, 2019 Campus received a letter from Torxen expressing concern about

the initial term sheet, including the quantum of the proposed toll

increase and the potential for toll discrimination because of lower

tolls in IPC’s TCF Agreement.

Campus met with Rockpoint to discuss the initial term sheet.

Rockpoint expressed concern about the timing and quantum of

the proposed toll increase.

29

March 22 to May 2,

2019

Campus met with other shippers to discuss the initial term sheet.

March 26, 2019 Campus met with Torxen, who suggested that tolls on the

Suffield system should be cost-of-service rather than market-

based.

May 15, 2019 Based on shipper feedback, Campus issued a revised term sheet

to shippers and advised them that Campus would file it with the

NEB.

Campus met with Pine Cliff to discuss the revised term sheet.

May 15 to 22, 2019 Campus met with other shippers to discuss the revised term

sheet.

May 16, 2019 Campus met with Torxen to discuss the revised term sheet.

May 21, 2019 Campus met with Rockpoint to discuss the revised term sheet.

May 31, 2019 Campus sent letters to IT shippers advising that revised tolls and

Revised TSA would be effective July 1, 2019.

June 5, 2019 Campus filed revised tolls with the NEB.

June 7 to 14, 2019 Complainants each filed a complaint with the NEB regarding the

revised tolls.

June 13 to July 4,

2019

Campus filed responses to the complaints (and other

correspondence) filed by the Complainants.

June 27, 2019 NEB issued Interim Toll Order TGI-003-2019.

July 2, 2019 Complainants sent letter to Campus requesting additional

information.

July 8, 2019 In response to the July 2nd letter, Campus issued letters to

shippers offering to meet, present and discuss the revised tolls

filed on June 5th.

July 22 to

September 10, 2019

Campus provided confidential, without prejudice presentations

to other shippers regarding the revised tolls.

August 1, 2019 Campus provided a confidential, without prejudice presentation

to the Complainants regarding the revised tolls.

August 8, 2019 Complainants sent Campus a letter requesting further

information.

August 16, 2019 Campus met with Pine Cliff.

August 20, 2019 Campus responded to the August 8th letter.

August 23, 2019 Complainants filed a letter with the NEB requesting further

procedure to resolve their complaints and requesting an order

directing further disclosure by Campus.

30

August 26, 2019 Based on shipper feedback, Campus sent shippers a further

revised term sheet.

September 9, 2019 Campus met with Rockpoint.

September 20, 2019 Campus filed a response to the Complainants August 23rd letter.

Campus’s letter included revised firm service tolls.

September 26, 2019 Complainants filed a response to Campus’s September 20th

letter.

October 9, 2019 Campus filed a response to the Complainants September 26th

letter.

February 21, 2020 Commission directed Campus to file an application for tolls and

terms and conditions of service on the Suffield system. The

Commission’s letter encouraged the parties to avail themselves

of the CER’s alternative dispute resolution processes (“ADR”).

March 5, 2020 Campus filed a letter indicating its willingness to participate in

ADR.

March 10, 2020 Complainants filed a letter declining to participate in the ADR.

VIII. CONCLUSION

130. Campus is confident that it will be able to reach mutually satisfactory arrangements with

its shippers, including the Complainants, once the Commission resolves the fundamental issue of

whether the financial information regarding the Suffield North cost-of-service is sufficient to

satisfy the Complainants that the tolls proposed by Campus are both justified and competitive.

131. The financial information and the matters and facts referred to in this Application provides

the basis for the CER to make a determination that Campus’s continued operation as a

commercially-at-risk group 2 company charging market based tolls is appropriate and that the

proposed tolls are just and reasonable.

132. While Campus has provided the cost of service financial information that the CER

requested, it is important to keep in mind that the Suffield Pipeline System was approved and built

as a commercially-at-risk market-based pipeline. Suffield was supported by long-term

transportation contracts that contemplated risk sharing between the pipeline and shippers that

relieved shippers from traditional cost of service risks:

Fixed tolls would involve a different sharing of risks and rewards

between the pipeline company and its shippers than would the

sharing under cost-of-service regulation.

Shippers would be relieved from the risk of asset under-utilization

or stranded costs and would benefit from rate certainty. The pipeline

company would be responsible for any potential stranded assets and

Rockpoint, Pine Cliff and Torxen Response to IR No. 2 from the Canada Energy Regulator

December 1, 2020

17

2.8 Interruptible premium

Reference: (i) Rockpoint, Pine Cliff and Torxen - Written Evidence of the Complainants, PDF page 19 of 39, C09222-2

(ii) NEB Reasons for Decision, RH-003-2011 PDF page 145, A51040-1

(iii) Rockpoint, Pine Cliff and Torxen - Written Evidence of the Complainants, PDF page 37 of 39, C09222-2

Preamble: In reference i) the Complainants indicated that a 10% premium is

appropriate for interruptible service. In reference ii) the NEB discusses that “in a low load factor environment, there is little incentive for shippers to contract for firm service if the FT toll is similar to the toll for discretionary services because shippers can obtain flexibility of using the pipeline without committing for an entire year. In the current circumstances of underutilization, users of discretionary services receive virtually guaranteed service whenever they need it, but pay for only a portion of the annual costs of the capacity, making it difficult for TransCanada to recover the costs of that capacity.” Reference iii) states that without an adequate notice provision for adjustment of tolls in a TSA, a shipper will have no certainty with respect to the tolls it will be paying on the North Suffield Pipeline in any given month.

Request: (a) Did the Complainants receive virtually guaranteed service whenever they needed it on the North Suffield pipeline? What is the evidence that supports the answer provided? Discuss whether the principles and/or facts from RH-003-2011 would have application here.

(b) Discuss the appropriateness of a ten per cent premium under the current environment on the North Suffield Pipeline.

(c) Discuss the circumstances for each shipper (Rockpoint, Pine Cliff, & Torxen) that affect its ability to sign up for firm service.

(d) If the North Suffield pipeline offered a reasonable cost-based toll for firm service on one year terms, and had discretion in setting rates for interruptible services, how would this impact the Complainants’ use of the pipeline?

Response: (a)

Rockpoint As discussed in response to CER IR 2.2, Rockpoint has only shipped for 33 days since its connection was completed. As noted, the nature of Rockpoint's potential requirements are more consistent with

Illustrative Monthly Market Based Suffield Toll CalculationPrincess East

NGTL Princess East IT Posted Receipt Toll (A)

NGTL Empress Posted IT Delivery Toll (B)

Combined NGTL Princess East Receipt Toll and

Empress Delivery Toll (C)NIT - Empress Transport

Day Ahead Index (D)

Combined NGTL Posted Princess East Receipt Toll

and Empress Traded Index (E) Suffield Monthly IT Toll (F)

($/GJ) ($/GJ) ($/GJ) ($/GJ) ($/GJ) ($/GJ)

2019-02-28 $0.144 $0.226 $ 0.37 $0.09 $ 0.23 $ 0.222019-03-31 $0.144 $0.226 $ 0.37 $0.66 $ 0.80 $ 0.322019-04-30 $0.144 $0.226 $ 0.37 $1.37 $ 1.52 $ 0.322019-05-31 $0.134 $0.216 $ 0.35 $0.83 $ 0.96 $ 0.322019-06-30 $0.134 $0.216 $ 0.35 $1.49 $ 1.62 $ 0.322019-07-31 $0.134 $0.216 $ 0.35 $0.82 $ 0.95 $ 0.322019-08-31 $0.134 $0.216 $ 0.35 $0.94 $ 1.07 $ 0.322019-09-30 $0.134 $0.216 $ 0.35 $1.45 $ 1.59 $ 0.322019-10-31 $0.134 $0.216 $ 0.35 $0.05 $ 0.19 $ 0.182019-11-30 $0.134 $0.216 $ 0.35 $0.08 $ 0.21 $ 0.202019-12-31 $0.134 $0.216 $ 0.35 $0.02 $ 0.16 $ 0.152020-01-31 $0.130 $0.230 $ 0.36 ($0.01) $ 0.12 $ 0.132020-02-29 $0.130 $0.230 $ 0.36 $0.01 $ 0.14 $ 0.132020-03-31 $0.130 $0.230 $ 0.36 ($0.01) $ 0.12 $ 0.132020-04-30 $0.130 $0.230 $ 0.36 ($0.00) $ 0.13 $ 0.132020-05-31 $0.130 $0.230 $ 0.36 ($0.00) $ 0.13 $ 0.132020-06-30 $0.120 $0.177 $ 0.30 ($0.00) $ 0.12 $ 0.122020-07-31 $0.120 $0.177 $ 0.30 ($0.00) $ 0.12 $ 0.122020-08-31 $0.120 $0.177 $ 0.30 ($0.01) $ 0.10 $ 0.122020-09-30 $0.120 $0.177 $ 0.30 ($0.02) $ 0.10 $ 0.122020-10-31 $0.120 $0.177 $ 0.30 ($0.00) $ 0.12 $ 0.122020-11-30 $0.120 $0.177 $ 0.30 ($0.01) $ 0.10 $ 0.12

Campus Illustrative Interuptible Toll Calculation:

* Monthly toll (F) will be calculated and billed by combining NGTL's posted receipt toll at Princess East (A) and NGX's posted Empress Day Ahead monthly average (D) less $0.01(A) + (D) - $0.01 = (F)

* Floor at NGTL's IT receipt toll at Princess East (A)

* Ceiling at $0.32 ($/GJ)

* References are:ICE NGX AB-NIT - TCPL - Empress Transport Day Ahead Index posted monthly average on NGX.comTC Energy Final and Interim Rates and charges as posted from time to time on NGTL's Customer Express

Revised December 14, 2020

3

I. INTRODUCTION

1. Campus submits the following evidence in reply to:

(a) the Evidence of the Complainants, dated October 30, 2020 (Complainants’ Written Evidence);

(b) Complainants Response to Information Request No. 1 of Campus Energy Partners Suffield LP (Response to Campus IR); and

(c) Complainants Response to Information Request No. 2 of the Canada Energy Regulator (CER) (Response to CER IR);

(collectively, the Complainants’ Evidence).

2. The Complainants’ Evidence contains numerous factual inaccuracies and a considerable amount of argument. Campus addresses the potentially material misstatements of the Complainants below. Campus will address the numerous arguments advanced by the Complainants throughout their evidence in Campus’s final argument.

II. MARKET-BASED TOLLS

3. The Complainants erroneously deny that the North Suffield Pipeline has always operated on the basis of market-based tolls, and they attempt to draw a false distinction between market-based tolls versus complaint-based regulation.1 The two are not mutually exclusive. In fact, the National Energy Board (NEB) expressly approved market-based tolls for the North Suffield Pipeline while at the same time subjecting the pipeline to complaint based regulation. This is patently clear from AEC Suffield’s original application to the NEB for a certificate of public need and convenience for the North Suffield Pipeline (the CPCN Application),2 and the NEB’s approval of the CPCN Application,3 as described below.

4. Under heading “7.0 Transportation Rates, Tariff and Financial Information,” the CPCN Application stated:

The North Suffield Pipeline is a commercially at-risk pipeline with market-based charges for transmission services. AEC Suffield is regulated by the NEB and is currently classified as a Group 2 company for the purpose of the toll and tariff regulation of the South Suffield Pipeline.

The rate design for firm service on the North Suffield Pipeline will incorporate a long-term incentive approach, offering long-term certainty to shippers as well as to AEC Suffield. AEC Suffield

1 Complainants’ Written Evidence, para 74-78. 2 North Suffield Pipeline Application to the National Energy Board, Volume 1 of 2, filed by AEC Suffield Gas Pipeline Inc., dated March 2000. Attached as Appendix A are extracts from Section 7.0 – Transportation Rates, Tariff and Financial Information of the CPCN Application. 3 NEB Decision GH-2-2000.

4

believes that the applied-for transportation rate design for firm service, which provides for lower rates for a longer term commitment, creates an appropriate risk-sharing arrangement between AEC Suffield and its shippers. However, if rates are insufficient to generate a reasonable return, only AEC Suffield is at risk.

The tolls and financing information requirements outlined in Parts Ill and X of the Guidelines pertain to cost-of-service regulated pipelines, and are therefore not applicable to AEC Suffield. AEC Suffield's request for exemption from these requirements is set out in Section 1.1 of Volume 1.4

5. All of this remains true of Campus’s proposed Market-Based Tolls.

6. Under the heading “7.1 Transportation Revenue and Rates”, the CPCN Application stated: “Gas transportation rates on the North Suffield Pipeline for firm service will be determined on the basis of transportation market demand and the duration of the term of the firm service transportation agreements.”5

7. Again, this is precisely what Campus did in June 2019 when it posted its proposed Market-Based Tolls. At the time, there was increasing demand for service on the North Suffield Pipeline.

8. Under heading “7.1.1 Firm Transportation Service”, describing the tolling principles used to design the initial firm service rates, the CPCN Application states:

AEC Suffield's objective in developing tolls is to attract sufficient volumes to ensure the viability of the North Suffield Pipeline while at the same time providing AEC Suffield with an acceptable rate of return on its investment. AEC Suffield will be assessing the market requirements, the competitive alternatives (like NGTL), and the pipeline economics in establishing its tolls.6

9. Campus has followed this same approach in setting its proposed Market-Based Tolls.

10. Under the same heading, the CPCN Application also stated:

As of the date of the Application, AEC Suffield has not finalized its rates. The final rates are dependent on the final level of shipper commitment. AEC Suffield expects that its rates will be finalized by April 1, 2000 but AEC Suffield anticipates that the final rates will not exceed those which were charged to the original shippers on the

4 CPCN Application at p. 7-1, emphasis added. See Appendix A at PDF page 3 of 5. 5 CPCN Application at p. 7-1, emphasis added. See Appendix A at PDF page 3 of 5. 6 CPCN Application at p. 7-1, emphasis added. See Appendix A at PDF page 3 of 5.

5

South Suffield Pipeline. The anticipated maximum rates are shown in Table 7-1.

Table 7-1 North Suffield Pipeline

Illustrative Maximum Firm Service Transportation Rates

Up until the earlier of, May 31, 2000 or until the capacity on the North Suffield Pipeline is fully subscribed, AEC Suffield is prepared to enter into a precedent agreement for firm service with any other prospective shipper at the rates which will be established in accordance with this Section 7.1.1. Firm service rates for any shippers on the North Suffield Pipeline which are not original shippers will be determined by commercial arrangements made between such shippers and AEC Suffield. All such arrangements will comply with the requirements of Section 62 of the NEB Act.7

11. As this passage makes clear, any firm service agreement on the North Suffield Pipeline entered into after May 31, 2000 would be by just and reasonable commercial arrangement between the pipeline owner and shipper.8

12. Under the heading “7.1.2 Interruptible Transportation Service” the CPCN Application states:

AEC Suffield will also offer Interruptible Transportation Service ("IT") to make the most effective use of the North Suffield Pipeline if there is available capacity after meeting the requirements of its firm service shippers. In that there will be competition for the business of prospective IT shippers from NGTL, AEC Suffield considers that it would be appropriate to establish its IT rates, from time to time, on a market basis. The initial IT rate will be

7 CPCN Application at p. 7-2. See Appendix A at PDF page 4 of 5. 8 Section 62 of the National Energy Board Act, RSC 1985, c N-7, provided: “All tolls shall be just and reasonable, and shall always, under substantially similar circumstances and conditions with respect to all traffic of the same description carried over the same route, be charged equally to all persons at the same rate.”

Term-Years

$/GJ

20 0.147

15 0.153

10 0.162

5 0.175

6

established based on a 10% premium to the 5 year firm service transportation rate.9

13. Campus continues to compete with NGTL for interruptible service (IT) volumes. Indeed, the Complainants have confirmed that they have the ability to divert volume between the North Suffield Pipeline and NGTL based on price (except a small proportion of Torxen production originating at the Tide Lake, Princess East and Princess West receipt points, which Torxen acknowledges could be connected to NGTL).10 In setting the IT rate in its proposed Market-Based Tolls, and in requesting discretion to adjust its IT toll in response to market conditions, Campus is attempting to remain competitive with NGTL, with whom it competes for volumes.

14. Further, under the heading “7.2 Request Method of Toll Regulation”, the CPCN Application stated:

It is requested that the tolls for the North Suffield Pipeline be regulated on a complaints basis as are AEC Suffield's tolls on the South Suffield Pipeline. AEC Suffield's rates will be established on a market basis rather than being based on an established return on rate base as determined under a regulatory cost-of-service review. This approach has the advantage of reducing the need for regulatory involvement and ensures long-term rate certainty. There will be a limited number of shippers on the North Suffield Pipeline and AEC Suffield's toll design and its service offerings do not warrant an unnecessary administrative or economic burden on the company.11

15. The NEB approved completely the market-based tolling methodology proposed by AEC Suffield in the CPCN Application. Under heading “4.2 Tolls, Tariffs and Transportation” the NEB summarized the Application as follows: “AEC Suffield indicated that it is a commercially-at-risk pipeline and proposes market-based tolls for its transportation services.”12 Regarding AEC Suffield’s proposed IT service, the NEB understood that “AEC Suffield considers it appropriate to establish its IT rates on a market basis.”13 Notably, the NEB observed that “AEC Suffield’s application was not contested in this regard.”14 Regarding method of regulation, the NEB agreed that AEC Suffield should continue to be regulated as a Group 2 company, stating: “In accordance with the Board’s MOG, Group 2 Companies are regulated on a complaint basis. Accordingly, the Board does not consider it necessary to issue an order approving AEC Suffield’s proposed tolls and tariff.”15 The ultimate disposition in Decision GH-2-2000 was approval of Application

9 CPCN Application at p. 7-2, emphasis added. See Appendix A at PDF page 4 of 5. 10 Complainants’ Response to Campus IR 1.1(f); Torxen Response to Campus IR 1.2(k)(iii). 11 CPCN Application at p. 7-3, emphasis added. See Appendix A at PDF page 5 of 5. 12 NEB Decision GH-2-2000 at p. 11 (PDF Page 20 of 40), emphasis added. 13 NEB Decision GH-2-2000 at p. 12 (PDF Page 21 of 40), emphasis added. 14 NEB Decision GH-2-2000 at p. 12 (PDF Page 21 of 40). 15 NEB Decision GH-2-2000 at p. 12 (PDF Page 21 of 40).

8

20. For whatever reason, AltaGas never increased tolls on the North Suffield Pipeline.23 Thus, when AltaGas entered into the Former TSAs, AltaGas agreed to tolls reflective of market prices and conditions that existed when the North Suffield Pipeline was first approved in the year 2000.

21. The Complainants acknowledge that the Former TSAs were terminable by either party on 30 days notice. Each of the Former TSAs contained the following clause:

Subject to the provisions of this Agreement, the transportation of Customer Gas shall commence on [January 1, 2018/March 1, 2018/January 1, 2019] (“Date of Initial Delivery”) and shall continue thereafter unless terminated by either Party by giving thirty (30) days prior written notice to the other Party, such termination shall be effective as of the first Day of the Month following the expiry of such thirty (3) day notice period.

22. While Pine Cliff and Torxen subsequently executed new TSAs with Campus after the Former TSAs were cancelled—and Campus denies either of them executed their new TSA under duress—neither is currently shipping under their TSA. To date, Rockpoint has not executed a new TSA with Campus. Thus, none of the Complainants are currently shippers on the North Suffield Pipeline; Torxen ships for an undisclosed price indirectly through IPC only.

IV. COMPLAINANTS’ SUPPOSED RELIANCE ON THE TRANSFER APPLICATION

23. The Transfer Application24 was filed on September 28, 2018.

24. In not opposing the Transfer Application, the Complainants each purport to have relied on the following statement in the Transfer Application: “2133151 has no immediate plans to alter or implement any changes to the tolls and tariffs on the Pipelines”.25

25. In respect of this statement of fact, which was made as of September 28, 2018 in the context of an impending sale of 2133151 from AltaGas to Birch Hill Equity partners, which context was known to each of the Complainants at the time, none of the Complainants:

(a) submitted any information requests to inquire about the meaning of the words “no immediate plans” or whether, once it assumed management, Birch Hill might have any future plans to change the tolls or tariff for the North Suffield Pipeline;

(b) sought any assurance from AltaGas or Birch Hill that the tolls or tariff for the North Suffield Pipeline would not be changed for any period of time following approval of the Transfer Application; or

23 A fact that is acknowledged in Rockpoint Response to Campus IR 1.1(i). 24 [A94251-2] 25 Complainants’ Written Evidence, at paras. 26-30, 42, 59, and 67.

 

‐$1.00

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

 ‐

 2,000,000

 4,000,000

 6,000,000

 8,000,000

 10,000,000

 12,000,000

 14,000,000

Nov

‐02

Feb‐03

May‐03

Aug‐03

Nov

‐03

Feb‐04

May‐04

Aug‐04

Nov

‐04

Feb‐05

May‐05

Aug‐05

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Feb‐06

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‐06

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‐07

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‐08

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Nov

‐09

Feb‐10

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‐10

Feb‐11

May‐11

Aug‐11

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‐11

Feb‐12

May‐12

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‐12

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‐13

Feb‐14

May‐14

Aug‐14

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‐14

Feb‐15

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‐15

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‐19

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Historical Suffield System Monthly Volumes in GJ with Empress Transport Price

 Volume (GJ) Empress Transport Day Ahead ($/GJ)

Page 1

Exhibit “B” Transportation Service Agreement

General Terms and Conditions

Contents

Article 1 - Context

Article 2 - General Provisions

Article 3 - Quality of Gas

Article 4 - Measurement

Article 5 - Gas Delivery

Article 6 - Nomination Procedures

Article 7 - Financial Matters

Article 8 - Force Majeure

Article 9 – Termination on default

Article 10 - Notice

Article 11 – Liability

Article 12 - Miscellaneous provisions

Preamble

WHEREAS, Customer wishes to have Transporter provide the Transportation Service, and Transporter wishes to provide Customer with Transportation Service, pursuant to the terms and conditions of this Transportation Service Agreement;

NOW THEREFORE, in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Parties agree as follows:

Article 1 – Context

1.1 Definitions

The following words or terms when used in the Transportation Service Agreement shall, unless the context otherwise requires, have the meanings given below:

(a) “Agreement Cover Sheet” means thedocument executed by Customer andTransporter to which this Exhibit B is attached;

(b) “Allocation Method” means the procedureused to assign portions of Customer’s Gasflows to Customer’s various Points of Delivery

and downstream markets in coordination with other transportation service agreements having Gas deliveries at any of the same locations;

(c) "Contract Demand" means the maximumquantity of Gas in any consecutive twenty-four(24) hour period that Transporter shall beobligated to transport from the Point ofReceipt to the Point of Delivery, as specified inExhibit “A” of the Transportation ServiceAgreement;

(d) "Cubic meter of Gas" or "m3" means thequantity of Gas which at a temperature offifteen degrees Celsius (15C) and at apressure of one hundred one and threehundred twenty-five one-thousandths(101.325) kPa absolute occupies one (1) cubicmeter;

(e) "Customer" means a person, firm, partnership,corporation or organization that contracts forTransportation Service, and is specified in theTransportation Service Agreement;

(f) "Customer Account" shall have the meaningascribed thereto in Clause 5.2 (b);

(g) "Date of Initial Delivery" means the dateTransporter and Customer agree tocommence Gas delivery by Customer underthe Transportation Service Agreement fromthe Point of Receipt to the Point of Delivery;provided however that the Date of InitialDelivery shall be adjusted by Transporter ifTransporter is unable to commence Gasdelivery under the Transportation ServiceAgreement on such date;

(h) "Day" means a period of twenty-four (24)consecutive hours, beginning and ending ateight hours (08:00), Mountain Time;

(i) "Firm" means an obligation of Transporter toprovide Transportation Service up to theContract Demand volume to which “Firm”service is specified in Exhibit “A” to theAgreement, and an obligation of Customer touse or otherwise pay for the Load Factor;

(j) “Gas" means all natural gas both before andafter it has been subjected to any treatment or

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process by absorption, purification, scrubbing or otherwise, and includes all fluid hydrocarbons;

(k) "Gas Pipeline System" means all those

facilities, including the Specific Facilities, owned or used by Transporter in the receipt, transportation, compression, measurement, testing and delivery of Gas and that are regulated by the Canada Energy Regulator;

(l) "GJ" means gigajoules or one billion

(1,000,000,000) joules; (m) "Gross Heating Value" means the number of

megajoules obtained from the combustion of a cubic meter of Gas at a temperature of fifteen degrees Celsius (15C), with the Gas free of water vapour, and at a pressure of one hundred one and three hundred twenty-five one-thousandths (101.325) kPa absolute and with the products of combustion cooled to the initial temperature of the Gas and the water formed by the combustion condensed to the liquid state;

(n) “Ideal Gas Law” means the law that the

product of the pressure and the volume of one gram molecule of an ideal gas is equal to the product of the absolute temperature of the gas and the universal gas constant.

(o) "Imbalance Quantity" means the difference,

each Day, between the total number of joules contained in the Gas which was received by Transporter at the Point of Receipt in such Day, less Unaccounted For Gas, and the total number of joules contained in the Gas which Transporter delivered to Customer at the Point of Delivery in such Day;

(p) “Interruptible” means no obligation of

Transporter to provide Transportation Service and no obligation of Customer to use or pay for any minimum quantity of Transportation Service;

(q) “Interruptible Preferred” means no obligation

of Transporter to provide Transportation Service other than in priority to Interruptible service up to the Contract Demand volume to which “Interruptible Firm” service is specified in Exhibit “A” to the Agreement, and no

obligation of Customer to use or pay for any minimum quantity of Transportation Service;

(r) "J" means joule; (s) "kPa" means kilopascals of pressure gauge

unless otherwise specified; (t) “Load Factor” means a percentage of Contract

Demand, specified in Exhibit “A” to the Transportation Service Agreement;

(u) "Maximum Contract Pressure" means the

pressure identified in Exhibit “A” to the Transportation Service Agreement;

(v) "MJ" means megajoules or one million

(1,000,000) joules; (w) "Month" means a period beginning at eight

hours (08:00), Mountain Time, on the first Day of a calendar month and ending at eight hours (08:00), Mountain Time, on the first Day of the next succeeding calendar month;

(x) “Monthly Limit” means the range within or

equal to plus (+) or minus (-) five percent (5%) of Customer’s Contract Demand at the Point of Receipt, net of Unaccounted for Gas, during the Month;

(y) "Nomination" means a written request for Gas

to flow at a Point of Receipt or a Point of Delivery at a specified rate of flow;

(z) “Other System” means a pipeline system of a

third party which is federally or provincially regulated;

(aa) "Party" means a person, firm, partnership, or

corporation which is bound by this Agreement and "Parties" means all such persons, firms, partnerships or corporations collectively;

(bb) “Pipeline Abandonment Fee” means the rates

specified in Exhibit “A” to the Transportation Service Agreement as Pipeline Abandonment Fee, as submitted to the Canada Energy Regulator or its successor;

(cc) "Point of Delivery" means the point or points

on the Gas Pipeline System at which Transporter delivers from the Gas Pipeline

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System to Customer the Gas under the Transportation Service Agreement, as specifically identified in Exhibit “A” to the Transportation Service Agreement;

(dd) "Point of Receipt" means the point or points on

the Gas Pipeline System at which the Gas under the Transportation Service Agreement first enters the Gas Pipeline System, as specifically identified in Exhibit “A” to the Transportation Service Agreement;

(ee) "Prime Rate" means the rate of interest, expressed as an annual rate of interest, announced from time to time by the principal bank in Canada used by Transporter as the reference rate then in effect for determining interest rates on Canadian dollar commercial loans in Canada;

(ff) "Rate Schedule" means the rates as specified

in Exhibit “A” to the Transportation Service Agreement as submitted to the Canada Energy Regulator or its successor;

(gg) “Service Priority” means the order in which available transportation capacity will be allocated to Transportation Service that is either Firm or Interruptible, as specified in Exhibit “A” to the Transportation Services Agreement, with Firm service having priority over Interruptible Preferred service and Interruptible service, and equal priority with all other Firm service in proportion to each customer’s Firm Contract Demand.

(hh) "Specific Facilities" means those facilities

installed by Transporter for the benefit of Customer and required to receive, transport, measure, test or deliver Gas, as specified in Exhibit “A” of the Transportation Service Agreement;

(ii) "103m3", means one thousand (1,000) cubic

meters of Gas; (jj) "Transportation Service" means the service of

transporting Gas through the Gas Pipeline System;

(kk) “Transportation Service Agreement" or

“Agreement” means this agreement entitled

Transportation Service Agreement between Transporter and Customer and includes the Agreement Cover Sheet and all Exhibits attached thereto including these General Terms and Conditions;

(ll) "Unaccounted for Gas" means Customer's

share of line loss, measurement variance, and compressor fuel (excluding Gas lost referred to in Clause 5.9(a)).

1.2 Interpretation

(a) In the interpretation of the Transportation

Service Agreement, words in the singular shall be read and construed in the plural or words in the plural shall be read and construed in the singular where the context so requires.

(b) The headings used throughout the

Transportation Service Agreement are inserted for reference purposes only, and are not to be considered or taken not account in construing the terms or provisions of any Article, Clause or Schedule nor to be deemed in any way to qualify, modify or explain the effect of any such provisions or terms.

(c) The definitions of all units of measurement and

their prefixes used throughout the Transportation Service Agreement shall be in accordance with the International System of Units

1.3 Conflicts If there is any conflict between Exhibit “B” or anything contained in Exhibit “B” and any provision of the Agreement Cover Sheet and Exhibit “A”, the provision of the Agreement Cover Sheet and Exhibit “A” shall prevail over Exhibit “B”.

Article 2 - General provisions

2.1 Transportation only The Transportation Service Agreement is solely for the transportation of Gas and Customer shall not acquire any title or interest in the Gas Pipeline System. Transporter shall not acquire any title or interest in the Gas being transported under the Transportation Service Agreement, except as

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expressly provided for in clauses 2.6(c), 5.3(b), 5.4 and 5.5. 2.2 Land use Customer hereby agrees to provide Transporter, at no cost and with respect to property owned or controlled by Customer, with any land use rights and access required to provide and maintain service under this Transportation Service Agreement. 2.3 Right of entry (a) To the extent permitted by the terms of any

surface leases, road use agreements or other rights of access or entry, Customer hereby grants to Transporter the right and privilege to enter upon, use occupy and enjoy the installation, access roads or complex of the Customer at any reasonable time as may be necessary for or useful in connection with the following:

(i) to install, operate, maintain, or

remove its facilities, or (ii) to read, inspect, repair, or remove its

metering devices, or (iii) to do anything else incidental to

providing or discontinuing the Transportation Service.

(b) If any of the Gas Pipeline System is situated

within the Customer's installation or complex, the Customer shall ensure that Transporter can obtain access to the Gas Pipeline System when necessary.

2.4 Gas under Transporter control Gas delivered to Transporter by Customer for transportation shall be under the exclusive control of Transporter from the time such Gas is accepted at the Point of Receipt until delivered at the Point of Delivery. 2.5 Transporter determines routing Transporter does not dedicate the Gas Pipeline System or any segment thereof to transport Gas for Customer, and accordingly the routing and facilities used in providing Transportation Service shall be at Transporters’ discretion and may change from time to time.

2.6 Gas may be commingled (a) Transporter may in the course of providing

Transportation Service commingle or exchange Gas owned by or transported for others, or remove certain hydrocarbon components present in the Gas.

(b) As commingling, exchanging, or the removal of

certain hydrocarbon components may alter the Gross Heating Value or constituent parts of the Gas between the Point of Receipt and the Point of Delivery, Transporter shall not be required to deliver at the Point of Delivery Gas with the same Gross Heating Value or containing the same constituent parts as Gas delivered at the Point of Receipt and Transporter shall make whatever compensating adjustments to volume and Gross Heating Value as may be warranted to comply with the requirements of Section 5.1.

(c) In the event, and to the extent, that any

hydrocarbon components in the Gas delivered at the Point of Receipt are different from the Gas delivered at the Point of Delivery as the result of commingling, exchanging or removal of such hydrocarbon components in the course of providing Transportation Service then, notwithstanding anything to the contrary otherwise contained in the Transportation Service Agreement, title to such hydrocarbon components shall be deemed conclusively to have passed to Transporter or Customer, as the case may be, at the Point of Receipt.

2.7 Customer confirms right to deliver Customer represents to and covenants with Transporter that Customer shall have the right to transport all Gas delivered under the Transportation Service Agreement to Transporter at the Point of Receipt. 2.8 Common stream arrangements (a) In the case where the Gas delivered under the

Transportation Service Agreement is commingled with other Gas prior to delivery at the Point of Receipt, Customer shall be responsible for all common stream arrangements and represents and warrants

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that such arrangements shall be in place prior to the Date of Initial Delivery, and shall advise Transporter, prior to the Date of Initial Delivery, as to whom is to act as common stream operator.

(b) Customer shall use commercially reasonable

efforts to ensure that the common stream operator provides the daily allocations for Gas delivered each Month to Transporter as soon as practically possible after Transporter advises the common stream operator of the total volume of Gas received at the Point of Receipt during such Month, but in any event within two (2) working Days.

(c) In addition, Customer will use commercially

reasonable efforts to ensure that the common stream operator provides Transporter with estimates of the daily allocation of Gas delivered at the Point of Receipt during any Month when requested to do so by Transporter

2.9 Commitment to maintain systems The Parties hereto mutually undertake to operate and maintain their respective pipeline systems and equipment safely and in such a manner as not to interfere with the system or equipment owned or operated by the other Party and in particular each Party undertakes and agrees to consult with the other before commencing construction or operation of any new equipment or facilities which such Party reasonably expects might interfere with or affect the operation of the other Party's pipeline system or equipment and to make modifications to the design or construction of any such equipment or facilities as practically may be requested of it to minimize any interference with such Party's pipeline system or equipment.

Article 3 – Quality of Gas

3.1 Gas must be of merchantable quality (a) The Gas delivered at the Point of Receipt

hereunder shall at all times be of merchantable quality and comply with the quality requirements that Transporter is required to meet at its downstream interconnects with Other Systems;

(b) If, in Transporter’ reasonable opinion, Gas received by Transporter at the Point of Receipt fails to be of merchantable quality or fails to meet any one or more of the quality requirements set forth in this Article, Transporter may at any time and from time to time immediately and without prior notice cease to receive further deliveries of Gas at the Point of Receipt until Customer remedies such failure to the satisfaction of Transporter. Transporter may install, at Customer's expense, such Specific Facilities including any Gas quality control, monitoring and/or shutdown equipment deemed necessary, in Transporter’s commercially reasonable opinion, to ensure that Gas received by Transporter at the Point of Receipt meets the quality requirements set forth in this Article.

3.2 Quality on delivery All Gas delivered by Transporter to Customer at the Point of Delivery shall have the Gross Heating Value and quality that results from the Gas having been commingled in Transporter’ system. 3.3 Notice on change in input quality Customer shall notify Transporter as soon as practicable in the event of any adverse change in Gas quality that is anticipated or determined by Customer and affects Gas which may be delivered into the Gas Pipeline System at the Point of Receipt. 3.4 Notice on change in output quality Transporter shall notify Customer or its agent as soon as practicable in the event of any adverse changes in Gas quality that is determined by Transporter and affects Gas which may be delivered from the Gas Pipeline System at the Point of Delivery.

Article 4 - Measurement 4.1 Statutory standards apply All measurements, calculations and procedures used in determining the quantities of Gas delivered at the Point of Receipt or at the Point of Delivery, shall be in accordance with all applicable laws and regulations.

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4.2 Measuring equipment All measuring equipment, devices and materials required to measure the Gas at the Point of Receipt or at the Point of Delivery shall be installed, maintained and operated by Transporter, its agents, or third parties acceptable to Transporter, and shall be of standard manufacture and of a type approved by regulatory bodies with authority. Customer or Transporter may install and operate check measuring equipment; provided that it does not interfere with the operation of the Point of Receipt or Point of Delivery equipment or system. 4.3 Testing of measuring equipment The accuracy of the measuring equipment shall be verified by standard tests and methods acceptable to Transporter, at least once every ninety (90) Days or as Transporter otherwise deems appropriate and at other times upon the reasonable request of either the Transporter or Customer. Notice of the time and nature of each test shall be given by Customer to Transporter, sufficiently in advance to permit a representative of Transporter to be present. If, after notice, Transporter fails to have a representative present the results of the test and adjustment, if any, made by Customer or its agents shall nevertheless be accepted until the next test. All tests of such measuring equipment shall be made at Customer expense. 4.4 Inspection of records and equipment Transporter and Customer shall have the right to inspect the charts, measurement or test data and measuring equipment installed or furnished by the other under this Article and Clause 3.1(b), at all times during business hours; provided however that the readings, calibration and adjustment of such measuring equipment shall be done only by the Party furnishing same. Unless the Parties otherwise agree, each Party shall preserve all original test data, charts and other similar records in such Party's possession for a period of at least six (6) years. 4.5 Units used (a) Unit of measurement: The unit of volume for

purposes of measurement shall be one (1) cubic meter of Gas.

(b) Unit of billing/payment: For the purpose of determining the amount to be billed by Transporter and paid by Customer for the transportation of Gas under the Transportation Service Agreement, the Gross Heating Value of each cubic meter of Gas transported shall be determined in accordance with Clause 4.7 of this Article and Transporter shall on the basis of such measurement bill Customer, and Customer shall pay Transporter the applicable charges and/or tariffs for each gigajoule of Gas delivered into the Gas Pipeline System at the Point of Receipt, net of Unaccounted For Gas.

(c) Atmospheric pressure: For the purposes of

measurement the atmospheric pressure at the Point of Receipt and at the Point of Delivery shall be determined in accordance with the regulations provided in Clause 4.1 of this Article and shall be rounded to the nearest one-hundredth (1/100) of a kPa and deemed to be constant.

4.6 Method of measurement In determining the quantities of Gas delivered at the Point of Receipt or at the Point of Delivery the following practices shall prevail: 4.6.1 Metering

(a) The Gas delivered at the Point of Receipt and at the Point of Delivery shall be metered by one or more meters approved for custody transfer by regulatory bodies with authority and adopted by Transporter.

(b) Measurement shall be designed, installed and maintained in accordance with the methods prescribed in the applicable AGA or API Standards, as published by the American Gas Association (“AGA”) or American Petroleum Institute (“API”) or any subsequent revision thereof, approved by the regulatory bodies with authority and adopted by Transporter.

(c) Correction shall be made for the deviation of the Gas from the Ideal Gas Laws at the pressure and temperature at which the Gas is metered in accordance with the methods prescribed in AGA Report No. 8, “Compressibility Factor of Natural Gas and Related Hydrocarbon Gases (1994) as

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published by the AGA or any subsequent revision thereof, approved by regulatory bodies with authority and adopted by Transporter. To determine the factors for such corrections a quantitative analysis of the Gas shall be made at commercially reasonable intervals.

4.6.2 Gas Sampling (a) Gas samples shall be representative of the Gas

being metered at the time such samples are taken and done so in accordance with the applicable API MPMS 14.1 (June 2001) or GPA Standard as published by the API and the Gas Processors Association Institute or any subsequent revision thereof, approved by the regulatory bodies with authority and adopted by Transporter.

4.6.3 Temperature (a) The flowing temperature of the Gas being

metered shall be determined and recorded by means of a temperature sensing device installed and maintained in accordance within the applicable AGA Report, as published by the American Gas Association or any subsequent revision thereof, approved by regulatory bodies with jurisdiction and adopted by Transporter.

4.6.4 Correction and adjustment (a) If, upon any test, the metering equipment is

found to be in error, the meters shall be adjusted at once to record accurately or be replaced. If the meter is found to be in error by more than the acceptable limit of plus or minus two percent (+/- 2%), any previous reading of such equipment shall be corrected to zero error for any period that is known definitely or agreed upon, but in the case the period is not known definitely or agreed upon, such correction shall be for a period covering the last half of the time elapsed since the date of the last test.

(b) In the event that the measuring equipment is

out of service or out for repair, so that the volume being measured is not correctly indicated by the reading thereof, the volumes attributable to the period shall be estimated

and agreed upon on the basis of the best data available, using the first of the following methods which is feasible:

(i) by using the reading of any check

measuring equipment, if installed and registering accurately;

(ii) by correcting the error if the

percentage of error is ascertained by calibration test or mathematical calculations;

(iii) by estimating the volume delivered

based upon deliveries under similar conditions during a period when the measuring equipment was registered accurately.

4.7 Gross heating value Tests to determine the Gross Heating Value of Gas delivered shall be established by the use of a Gas chromatograph, recording calorimeter, or any other device that is approved by regulatory bodies with jurisdiction and adopted by Transporter and shall be used in the calculation of the number of gigajoules delivered under the Transportation Service Agreement. 4.8 Composition (a) The composition of the Gas delivered shall be

determined by tests of representative samples of Gas so delivered and conducted by Transporter or its agents, utilizing a chromatograph of standard manufacture.

(b) Such tests shall be done once per Month or at

such other intervals as may be justified by the consistency of previous tests thereof; provided that Transporter shall conduct additional tests when reasonably requested by Customer.

(c) The results of any such test shall be used

during the period commencing on the Day such sample shall have been taken or from the commencement date if a sample is taken over a period of time, as the case may be, until the next test; provided that the results of the first such test shall be used from the Date of Initial Delivery of Gas until the second test.

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4.9 Gas characteristics (a) The Gas characteristics including, without

limiting the generality of the foregoing, Gross Heating Value, relative density, nitrogen and carbon dioxide content of the Gas shall be determined by continuous recording equipment or by laboratory equipment.

(b) The Gas samples to be tested shall be representative of the Gas delivered at the time such samples are taken and may be either spot samples or proportional samples, which is taken over a period of time.

(c) If continuous recording equipment is used the

arithmetic average of the recordings for each Day shall be used to determine Gas characteristics.

(d) If spot samples or proportional samples are

taken Gas characteristics shall be determined from the analysis of the samples using laboratory equipment, approved by Transporter.

4.10 Pulsation dampening If Customer owns or operates any compression facilities upstream of the Point of Receipt or downstream of the Point of Delivery, Customer shall cause to be provided sufficient pulsation dampening equipment to ensure that the compression facilities do not interfere with the operation of the Gas Pipeline System. 4.11 Facilities interference In the event Customer's facilities interfere with Transporter’ ability to provide accurate measurement at the Point of Receipt or the Point of Delivery, Transporter may immediately and without prior notice cease to receive further deliveries of Gas at the Point of Receipt until the Customer remedies the cause of such interference to the satisfaction of Transporter 4.12 Use of third-party measurements Transporter and Customer hereby agree that notwithstanding anything contained elsewhere in the

Transportation Service Agreement, at a Point of Delivery or at a Point of Receipt which connects with an Other System and the Other System’s measuring equipment is used or relied on by Transporter for measuring Gas transported under the Transportation Service Agreement, the Other System’s procedures for measurement and testing of Gas shall apply. 4.13 Forecast volumes Customer agrees to provide to Transporter, for planning purposes, such forecasts of future Monthly volumes to be transported under the Transportation Service Agreement as Transporter may request from time to time.

Article 5 - Gas delivery 5.1 Obligation to receive and deliver Subject to the other provisions of this Article and the Service Priority, Transporter agrees to receive from Customer at the Point of Receipt the quantity of Gas which Customer tenders for transportation up to the Contract Demand plus Unaccounted For Gas, and Transporter agrees to tender for delivery to Customer and Customer shall receive at the Point of Delivery, a volume of Gas containing the equivalent number of joules as are contained in the volume of Gas tendered by Customer at the Point of Receipt less Unaccounted For Gas; provided however that Transporter shall not be required in any hour to accept at the Point of Receipt nor deliver at the Point of Delivery a quantity of Gas in excess of 105% of the Contract Demand, divided by 24, unless otherwise specified on the applicable Rate Schedule. 5.2 Responsibility for balancing (a) Customer shall at all times have the obligation

to balance, each Day and each Month, the quantity of Gas which Customer tenders for transportation at the Point of Receipt, less Unaccounted for Gas, with the quantity of Gas delivered by Transporter to Customer at the Point of Delivery.

(b) The Imbalance Quantity, if any, shall be

accumulated and recorded by Transporter in an account ("Customer Account") as it becomes known by Transporter.

(c) The maintaining of the Customer Account by

Transporter shall in no manner relieve

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Customer of Customer's obligation to balance Customer's Gas supply delivered at the Point of Receipt with Customer's takes at the Point of Delivery.

(d) Transporter shall make the Customer Account

available to Customer in a timely manner and in a form that will allow Customer to balance. Customer is responsible for keeping informed of and acting upon this information.

5.3 Management of imbalances (a) In the event the sum of each Imbalance

Quantity for the Month plus the cumulative unsettled Imbalance Quantities for the previous Months is outside the Monthly Limit, and Customer does not bring its Customer Account within the Monthly Limit on reasonable notice from Transporter, Transporter will suspend Customer’s receipts or deliveries (as the case may be) until such time as the Customer brings its Customer Account within the Monthly Limit.

(b) At the time of termination of the

Transportation Service Agreement, the outstanding Customer Account shall be settled by Transporter purchasing from or selling to the Customer at the average daily spot market prices prevailing at the Point of Delivery during the Settlement Period. The “Settlement Period” means the time required by Transporter, acting reasonably, to clear the Customer Account final imbalance. If no average daily spot market price is quoted for the Point of Delivery in industry publications commonly used as reference for daily spot market prices, the price for that Point of Delivery shall be calculated as the average daily spot market price for the nearest point quoted by any such publication adjusted for transportation and fuel at prevailing market rates. Transporter’s determination of such prices shall be substantiated by copies of the references used to determine them and shall prevail in the absence of manifest error.

5.4 Failure of supply In the event of a failure of Customer's supply at the Point of Receipt, as evidenced by Customer, upon notice by Transporter to Customer, not supplying at

the Point of Receipt a quantity of Gas, net of Unaccounted For Gas, equal to the Gas being delivered to Customer by Transporter at the Point of Delivery, and further that Customer does not reduce Customer's takes at the Point of Delivery to balance deliveries at the Point of Receipt, net of Unaccounted For Gas, then Customer will be charged the highest price transacted at the AECO/NIT index published by CGPR plus the higher of the Empress transportation tariff published by TransCanada Corporation and the Empress – AECO/NIT market differential published by CGPR on that Day in replacement thereof, for all Gas delivered by Transporter to Customer in excess of the Gas delivered by Customer to Transporter, net of Unaccounted For Gas. 5.5 Failure of market In the event of a failure of Customer's market(s) at the Point of Delivery, as evidenced by Customer, upon notice by Transporter to Customer, not taking at the Point of Delivery a quantity of Gas, equal to the Gas being delivered, net of Unaccounted for Gas, by Customer to Transporter at the Point of Receipt, and further that Customer does not take action to balance, then Transporter will purchase from the customer at the lowest price transacted at the AECO/NIT index published by CGPR less the lower of the Empress transportation tariff published by TransCanada Corporation and the Empress – AECO/NIT market differential published by CGPR on that Day those volumes of Gas required to balance the Gas supplied at the Point of Receipt, net of Unaccounted for Gas with Gas delivered at the Point of Delivery. 5.6 Overriding rights and obligations Notwithstanding anything contained elsewhere in this Article: (a) Transporter reserves the right to restrict the

flow of Gas at the Point of Delivery or the Point of Receipt on reasonable notice to Customer to achieve a balance, to correct any imbalance, or in the event Customer repeatedly exceeds the Contract Demand without Transporter’ authorization; and

(b) The provisions for settlement per Clauses

5.3(b), 5.4 and 5.5, do not relieve the Customer of its obligation to balance receipts and deliveries of Customer's Gas into and out

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of the Gas Pipeline System. If Customer persistently fails to meet its obligation to balance, Transporter will assess, and Customer will pay a charge to settle such imbalance.

5.7 Inability to exchange (a) Notwithstanding anything contained elsewhere

in the Transportation Service Agreement and where the Customer has contracted for Firm Transportation Service specifically at a Point of Delivery that is an interconnection with an Other System, and such Point of Delivery is designated as an Exchange Point in Exhibit “A” (an “Exchange Point”), Customer recognizes that Transporter’s ability to deliver Gas may be dependent upon an exchange with volumes of Gas which would normally be delivered into the Gas Pipeline System.

(b) Customer further recognizes that changes in such

incoming volumes of Gas or changes in either the capacity of the interconnection with an Other System or the capacity of the Gas Pipeline System may occur from time to time.

(c) In the event that Transporter is unable to

continue to exchange volumes of Gas at the Exchange Point with volumes of Gas which would normally be delivered into the Gas Pipeline System at the Exchange Point, or there are changes in incoming Gas volumes or capacity, then this shall constitute an event of Force Majeure and Transporter shall serve written notice to Customer advising of its inability to continue to provide Transportation Service under the Transportation Service Agreement by the exchange of volumes of Gas which would normally be delivered into the Gas Pipeline System.

(d) The notice under Clause 5.7(c) will specify:

(i) Customer's proportionate share of the additional costs associated with the capital improvements that are required to maintain Transportation Service at that Exchange Point; and

(ii) The volume of Gas that Transporter is

able to receive and transport to that Exchange Point if no capital improvements are made; and

(iii) The location of alternate Points of Delivery at which Transporter can continue Transportation Service at the then current level.

(e) In the event that Customer receives notice

pursuant to Clause 5.7(c) of this Article, Customer shall, within thirty (30) Days after the receipt of such notice, provide written notice to Transporter indicating which of the options set out in such notice Customer intends to exercise.

(f) In the event that none of the options provided

in Clause 5.7(c) of this Article are acceptable to Customer, acting in a commercially reasonable manner, Transporter will reduce Customer’s Contract Demand for the duration of Transporter’s inability to exchange Gas effective on the date such notice is received by Customer. The Contract Demand will be reduced by a proportion equal to Customer’s average daily deliveries at the Exchange Point divided by the average of all deliveries under the Transportation Services Agreement, for the most recent three hundred and sixty five (365) days or the age of the Transportation Service Agreement, whichever is less; provided however Customer shall reimburse Transporter in the same proportion for Customer's share of the un-depreciated book value of the Specific Facilities at the effective date of Contract Demand reduction together with all costs of abandoning or removing such facilities.

5.8 Maximum contract pressure (a) All Gas delivered hereunder for Transportation

Service through the Gas Pipeline System shall be capable of entering the Gas Pipeline System at the Point of Receipt at a pressure of at least the Maximum Contract Pressure as specified in Exhibit “A” of the Transportation Service Agreement.

(b) Customer will deliver the Gas, or cause the Gas

to be delivered, to Transporter at the Point of Receipt at such pressures as Transporter may require from time to time at the Point of Receipt up to the Maximum Contract Pressure.

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(c) Transporter will deliver the Gas, or cause the

Gas to be delivered, to Customer at the Point of Delivery at such pressures as are available in the Gas Pipeline System from time to time.

5.9 Lost and unaccounted for gas (a) Subject to Clause 11.1 (b) Transporter shall not

be responsible for Gas lost by pipeline rupture, explosion, fire or other similar calamity, but shall maintain and provide to Customer a record of Customer's proportionate share of any such loss and cooperate with all commercially reasonable requests of Customer's insurers or their agents during the course of the investigation of any claim arising from any such loss.

(b) Unless otherwise agreed to in writing,

Unaccounted for Gas shall be deducted from the volume of Gas received from Customer at the Point of Receipt. To the extent such Gas cannot be deducted, Customer shall be responsible to pay Transporter for Unaccounted for Gas at a commercially reasonable market price.

5.10 Allocations (a) For the purpose of administering Transportation

Service Agreements, Gas flows shall be allocated by the common stream operator at the Point of Receipt and by Transporter at the Point of Delivery to determine the daily flow under each agreement and to Customer’s downstream market(s).

(b) Customer may choose one of the following

Allocation Methods for its Customer Account to be used at the Point of Delivery or a mutually acceptable alternative method may be determined:

(i) Allocation prorated to Nomination; (ii) Allocation equal to Nomination at all Points

of Delivery but one, which is allocated the difference between total Nomination and physical flow;

(iii) Allocation by entitlement (allocation of

deliveries based on actual receipts); and

(iv) Allocation based on pre-set priority (first-

next).

(c) The Allocation Method at the Point of Delivery shall be specified in Exhibit “A” to the Transportation Service Agreement; provided however that at locations where a portion of the Gas flowing belongs to parties other than Customer and the allocation methods elected by the parties delivering at that location are incompatible, all parties must agree in writing on the allocation method to be used by those parties at that location. In the event that all parties are unable to agree on an acceptable allocation method, Transporter reserves the right to decide on the allocation method which will be used at the location in question.

(d) A request for change in Allocation Method

must be made by either Customer or Transporter, thirty (30) days prior to the requested change date, though both Parties will endeavor to respond to a shorter notice period. Customer and Transporter shall agree and confirm in writing on the revised Allocation Method prior to the change.

(e) In the event Customer and Transporter are

unable to agree on an acceptable revised Allocation Method, Transporter reserves the right to decide on the revised Allocation Method that will be used.

5.11 Impaired deliveries (a) If by reason of the causes set out in Clause

5.11(c), Transporter fails, in whole or in part, to provide Transportation Service provided for in the Transportation Service Agreement, then Transporter shall be relieved of liability for not providing Transportation Service, and Transporter may curtail or discontinue Transportation Service during the continuance and to the extent of the inability; provided however that Transporter shall endeavour to give reasonable notice of any curtailment or discontinuance of Transportation Services arising by virtue of such causes and shall promptly endeavour to remedy the cause of any curtailment or discontinuance of Transportation Services as soon as possible, acting in a commercially reasonable manner.

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(b) Such notice shall specify Transporter’s

estimate of the duration of any such curtailment or discontinuance of Transportation Services.

(c) The causes referred to above are:

(i) the necessity, in Transporter’s sole opinion, of making modifications or improvements to the Gas Pipeline System; provided however that Transporter shall, when practicable, endeavour to effect such modifications or improvements, which are not emergency in nature, at a time and in a manner which shall not unduly interfere with or interrupt Transportation Services; or

(ii) (ii) the necessity of making repairs to the Gas Pipeline System used to transport Gas.

(d) Customer’s obligation to use or otherwise pay

for transportation of a minimum volume of Gas shall be reduced during the period of any curtailment or discontinuance of Transportation Services, in proportion to the reduction in the volume of Firm Service available to Customer.

Article 6 – Nomination Procedures

6.1 Nomination Cycles

Transporter follows North American Energy Standards Board (“NAESB”) nomination cycles and deadlines. The nomination cycle consists of four processes: (a) Nomination Process: the shippers nominate

their requests for transportation to Transporter following the cycles outlined by the NAESB;

(b) Capacity Allocation Process: Transporter determines if there is sufficient capacity to transport the nominated quantities, and if there is not, capacity is allocated by service priority;

(c) Interconnect Confirmation Process: Transporter confirms with downstream pipeline operators that sufficient downstream transportation has been nominated and allocated capacity, and Transporter also confirms with upstream pipeline operators that sufficient upstream transportation has been nominated and allocated capacity;

(d) Scheduled Quantities: the transportation

quantity scheduled to flow is the lesser of: the quantity nominated by the shipper, the capacity allocated by Transporter, the quantity confirmed by the downstream operator and the quantity confirmed by the upstream operator; Transporter makes available the scheduled quantity to the shipper.

6.2 Nomination Submission All Nominations are to be submitted in electronic format via email at suffieldnominations@campusenergy.ca. 6.3 Issue Date & Time The issue date time is the time stamp on an electronic Nomination used to determine the order in which Nominations were received. When two Nominations have overlapping effective dates, the Nomination with the later issue date time will replace the Nomination with the earlier issue date time.

Article 7 - Financial Matters

7.1 Customer pays tariffs (a) Customer shall pay to Transporter, for

Transportation Service provided under the Transportation Service Agreement, commencing on the Date of Initial Delivery, the tariffs and charges set forth in Exhibit “A” to the Transportation Service Agreement.

(b) Customer shall not be relieved by Force

Majeure as described in Article 8 from the obligation to pay the charges set forth pursuant to this Article.

7.2 Billing (a) Transporter shall render to Customer on or

before the Day succeeding the Alberta Energy

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Regulator Volumetric Data and Waste Management Reporting Deadline of each Month a statement setting forth for each Point of Receipt and each Point of Delivery with respect to Gas transported for Customer during the preceding Month:

(i) the amount payable by Customer

calculated in accordance with Article 7, (ii) the amount payable by Customer, if any, in

accordance with Articles 3 and 5; (iii) the volume, Gross Heating Value and total

energy of the Gas measured or estimated at each Point of Receipt and each Point of Delivery including Unaccounted for Gas.

(b) If actual information necessary for billing is

unavailable to Transporter sufficiently on the Day succeeding the Alberta Energy Regulator Volumetric Data and Waste Management Reporting Deadline to permit the use of such information in the preparation of the statement, Transporter shall use the best available information.

(c) As information becomes available

necessitating an adjustment or correction to any Monthly statement, Transporter shall make the required adjustments or corrections and shall account for them in Customer’s next Monthly statement. Neither Transporter nor Customer shall be entitled to interest on any adjustment or correction.

7.3 Payment (a) Customer agrees to pay Transporter on or

before the tenth (10th) Day following the rendering of a statement by Transporter to Customer, the total amount payable by Customer as set forth in the statement, which amount shall be deemed to be increased or decreased by the amount of any adjustment or correction set out in the statement.

(b) Each such payment shall be made in Canadian

funds by electronic funds transfer or by cheque drawn in Transporter’s favour and

delivered to Transporter at the address stated in the Transportation Service Agreement.

7.4 Unpaid bills Transporter shall have the right to charge interest, calculated daily and compounded monthly, on the unpaid portion of any statement from the date payment is due until the date payment is actually made, at an annual rate of interest which is four percent (4%) above the Prime Rate in effect each Day from the date when such payment is due until the same is paid. 7.5 Disputes In the event that Customer disputes any part of any statement, Customer shall nevertheless pay to Transporter the full amount of the statement when payment is due. If the disputed amount is ultimately found to be owing to Customer, Transporter shall pay interest to Customer at an annual rate of interest, calculated daily and compounded monthly, which is two percent (2%) above the Prime Rate in effect each Day from the date that the disputed payment is made to Transporter until it is repaid to Customer. Without limiting the Parties remedies at law, both Parties shall act diligently to resolve such a dispute. 7.6 Failure to pay In the event Customer fails to pay the full amount of any statement within thirty (30) Days after payment is due, Transporter, in addition to any other remedy it may have, (a) may suspend the receipt and delivery of Gas on three (3) business Days’ notice to Customer until full payment, including interest charges is made and such suspension shall not terminate or otherwise affect Customer's obligations to Transporter; and (b) may set the amount unpaid off against any sums due or accruing due to Customer from Transporter (or any of its affiliates) or collect by other means available, under any agreement with Customer. 7.7 Financial assurances (a) Customer shall provide Transporter with any

financial information Transporter reasonably requests in order that Transporter may establish Customer’s credit worthiness.

(b) If, at any time, the credit worthiness of

Customer is or becomes unsatisfactory to