DECISION 2001-71 ESBI ALBERTA LTD. SYNCRUDE CANADA LIMITED/ALBIAN SANDS ENERGY PROJECT PART A: INTERIM CONNECTION AND COMPENSATION EUB Decision 2001-71 (August 30, 2001) ALBERTA ENERGY AND UTILITIES BOARD ESBI ALBERTA LTD. ESBI ALBERTA LTD. SYNCRUDE CANADA LIMITED/ALBIAN SANDS ENERGY PROJECT PART A: INTERIM CONNECTION AND COMPENSATION CONTENTS 1 INTRODUCTION................................................................................................................. 1 2 LEGAL & PROCESS ISSUES............................................................................................ 2 2.1 Views of Syncrude.......................................................................................................... 2 2.2 Views of Albian .............................................................................................................. 3 2.3 Views of EAL ................................................................................................................. 4 2.4 Views of the Board ......................................................................................................... 4 3 FACILITY & TECHNICAL ISSUES................................................................................. 6 3.1 Views of EAL ................................................................................................................. 6 3.2 Views of Syncrude........................................................................................................ 11 3.3 Views of Albian ............................................................................................................ 15 3.4 Views of AE.................................................................................................................. 18 3.5 Views of the Board ....................................................................................................... 19 4 COMPENSATION ISSUES............................................................................................... 21 4.1 Views of EAL ............................................................................................................... 21 4.2 Views of Syncrude........................................................................................................ 22 4.3 Views of AE.................................................................................................................. 22 4.4 Views of Albian ............................................................................................................ 22 4.5 Views of the Board ....................................................................................................... 22 5 TERMS AND CONDITIONS ISSUES ............................................................................. 23 5.1 Views of EAL ............................................................................................................... 23 5.2 Views of Syncrude........................................................................................................ 23 5.3 Views of Albian ............................................................................................................ 24 5.4 Views of AE.................................................................................................................. 26 5.5 Views of the Board ....................................................................................................... 26 6 ORDER ................................................................................................................................ 29 APPENDIX 1 – ANNUAL COST OF SERVICE .................................................................... 31 EUB Decision 2001-71 (August 30, 2001) • i ALBERTA ENERGY AND UTILITIES BOARD Calgary, Alberta ESBI ALBERTA LTD. SYNCRUDE CANADA LIMITED/ALBIAN SANDS Decision 2001-71 ENERGY PROJECT Application No. 1240682 PART A: INTERIM CONNECTION & COMPENSATION File No. 5700-1 1 INTRODUCTION On July 27, 2001 the Board received an application (the Application) from ESBI Alberta Ltd. (EAL) with respect to the use of facilities owned by Syncrude Canada Limited (Syncrude), located on Syncrude’s Industrial System site in the Fort McMurray area, and required by EAL to connect the oil sands project of Albian Sands Energy Inc. (Albian)1 to the Alberta Integrated Electrical System (AIES). Specifically, the Application requested: a) a final order under Section 17(2)(e) of the Hydro and Electric Energy Act (HEEA), having regard for Section 17(2.1) of HEEA, requiring Syncrude to share and participate or otherwise combine its interests in certain transmission facilities described below (the "Syncrude Facilities") with ATCO Electric Ltd. (AE), the owner of certain transmission facilities (the "ATCO Facilities"), and an interim order prescribing suitable terms and conditions (T&C)T&C") in the period between the effective date of the order and the issuance of a final order prescribing T&C; b) a final order under Section 17(2)(b) of HEEA requiring Syncrude to connect the Syncrude Facilities with the ATCO Facilities as contemplated by Connection Order No. U2001-067, dated March 30, 2001, issued to Syncrude; c) a final order under Section 17(5) of HEEA requiring that the order contemplated by the paragraph above be complied with so as to permit the interconnection to be in place and operating by September 5, 2001, subject to reasonable modification to accommodate Syncrude's maintenance schedule, but in no event later than 15 September 15, 2001; d) an interim order under Section 17(6) of HEEA determining the compensation to be paid to Syncrude by EAL on behalf of its customers for use of the Syncrude Facilities for the provision of system access service in the period between the effective date of the order and the issuance of a final order setting compensation. The Board also received correspondence from Syncrude dated July 27, 2001, in relation to the Application. 1 Albian is a joint venture company formed to operate the Muskeg River Mine on behalf of Shell Canada Limited (Shell), Chevron Canada Limited and Western Oil Sands Inc. EUB Decision 2001-71 (August 30, 2001) • 1 PART A: INTERIM CONNECTION AND COMPENSATION ESBI ALBERTA LTD. Following a meeting among the parties on August 1, 2001, in a letter of the same date, the Board established a written process in relation to EAL’s requests for interim relief, as follows: Comments from the Parties August 13, 2001 Reply from the Parties August 20, 2001. On August 13, 2001 the Board received comments from Syncrude, Albian, and AE. On August 20, 2001, the Board received reply from EAL, Albian, Syncrude and AE. The Board also received further correspondence from Syncrude dated August 24, 2001, responding to comments and suggestions made in the reply of EAL and Albian. The Board also received correspondence from Albian on August 24, 2001 responding to the comments of Syncrude of the same day. For the benefit of interested readers the Board notes that on November 21, 2000 the Board issued Orders U2000-318 and U2000-328 approving ATCO Electric’s Muskeg River 240 kV transmission project (Application 2000265). At that time the Board noted that the final disposition of that application was pending upon a reliability study being provided by the Transmission Administrator (TA), a resolution of technical concerns raised by TransAlta Energy, Suncor and Syncrude, and agreement among the stakeholders with respect to system access. On March 30, 2001 the Board issued Order U2001-067 approving the interconnection of the aforementioned ATCO Muskeg River transmission facilities with the Syncrude 240 kV transmission line 201-PTL260-1. At that time the Board noted that it had not received the reliability study requested of the TA. In light of the Albian project’s need for 20 MW of power for the construction and commissioning phase, however, the Board still approved the connection as it was satisfied it would not adversely affect the transmission system in the Fort McMurray area. In this Decision, in addition to the requested interconnection, the Board has dealt with the issues of compensation and liability on an interim basis. The Board notes that parties have raised a number of other issues which may affect the public interest. The Board considers that these issues can be dealt with in a subsequent public hearing as well. These issues include, but are not restricted to: • The effect upon Syncrude’s ISD status and the effect upon other ISD holders, • Whether Syncrude can be deemed to be a utility, and; • System reliability. 2 LEGAL & PROCESS ISSUES 2.1 Views of Syncrude Syncrude initially opposed EAL’s request for interim relief. Syncrude emphasized the magnitude of its investment in its integrated oilsands operations and the importance to those operations of the reliability of its privately constructed electric Facilities. Syncrude was primarily concerned 2 • EUB Decision 2001-71 (August 30, 2001) PART A: INTERIM CONNECTION AND COMPENSATION ESBI ALBERTA LTD. that the reliability of its Facilities not be affected by the proposed interconnection. Syncrude did not consider that either it or the Board had had an adequate opportunity to address those primary issues in the circumstances. Syncrude also raised concerns about the potential effect of an interim order granting the interconnection on its status under the EUA and on the status of its ISD under HEEA. In particular, Syncrude sought assurances that the interconnection would not result in its Facilities being characterized under the EUA as an “electric utility” and,