2nd floor _ Smith Street Winnipeg, Manitoba R3C1K2 MANITOBA Order No. 115/99 THE PUBLIC UTILITIES BOARD ACT June 24, 1999 Before: G. D. Forrest, Chairman J. A. MacDonald, Member K. Collin, Member AN APPLICATION BY CENTRA GAS MANITOBA INC., ON ITS OWN BEHALF AND ON BEHALF OF THE RURAL MUNICIPALITY OF ROCKWOOD, THE RURAL MUNICIPALITY OF WOODLANDS AND THE TOWN OF TEULON, FOR AN ORDER: 1. APPROVING AND AUTHORIZING NEW FRANCHISE AGREEMENTS WITH THE RURAL MUNICIPALITIES OF ROCKWOOD AND WOODLANDS AND THE TOWN OF TEULON 2. APPROVING THE FINANCIAL FEASmlLlTY TEST FOR THE EXPANSION OF NATURAL GAS TO THE COMMUNITIES OF GROSSE ISLE (THAT PORTION LOCATED IN THE RURAL MUNICIPALITY OF ROCKWOOD), BALMORAL, GUNTON, WARREN, WOODLANDS, AND TEULON 3. APPROVING AN EXPANSION SURCHARGE RATE TO BE CHARGED FOR THE SALE OF GAS AND PROVISION OF TRANSPORTATION SERVICES TO NEW CUSTOMERS IN ruE RURAL MUNICIPALITIES OF ROCKWOOD AND WOODLANDS AND THE TOWN OF TEULON l1li01258 Executive Summary ................................................................................................................... i 1.0 .APPE.ARAN'CES •• OOO ...DDH.OOOItOOOOV.oo ..........oOCHtOo.oae •••• ltCloo.oeeoee .. O.oe •• IItOID ....... __ DClooo.ee&Meooe ...... _OCNeOOClO.OOO ....... oeoeo.OOOClIID 1 Z.O WlTNESSES_DCl ..... o ••olllOOa ••fHIO .........eo.o .... "_.oeoo.oo.o ........ ooeooeo~ooooooe __ao •• o.oODDUO!HtDClo ••• _oae.... OG ...ooo ......_oooaoooooooo 2 2.1 WITNBSSBS FOR CENTRA GAS MANITOBA INC ......................................................................................... 2 2.2 WKTNESSES FOR lNTBIU..AKE NATURAL GAS CO-oP Lm.......................................................................... 2 3.~ IN'TER'VENORS •• ..-.oo._o___ .o ............. _o_o •• oOo.a.o .. oeoo_.ODIiI~.ooeOCtGoa •••••Oe ••oooooooooooa_.otcteOCl ••• OOOOO __ OO ••• OOOODDe l 4.0 PRESENTERS OHClOOO.... .,. ••• "" •••• ___........ o •• ct_.OlDoooeeOOOOoeooo ••••••_ •••••.,..ID __•• O"OCIO_ ••• _oOO._ ....... oo •••...-o. __ .oo ... " •• 3 5.0 BACKGRO'VND ••• o,o.oo •••oo .................. __ oo ••••••_o •• _".. ooe_ .............. 1I .... OOODOeoo .....~DO ...O_ ••O_._ ••••• DClOO ....DODCIOO.O." , 6.0 'I'BE APPLICAnON ................... o ....o .....o_tl_ •• _oooooo ••• ooo.OOCHJODfl .........__ OIOOO •••••••_ •••••• _ ................_0 .. _ ........ , 7.0 THE TRANSMISSION AND DISTRIBUTION SYSTEMS _ ............................... _ ........ _ ............. U 7.1 SYS'JI"BII,t DESIGN AND ROurING ............................................................................................................. 1 n 7.2 CAPITAL COSTS ...................................................................................................................................... 13 8.0 THE FRANCHISE AGREEMENTS•••• .,.o._••• oOOOOGGIt __.D1KIooa ••o ...DDO.oa .....OO.ooOOGODo.ctCJO_.aMOOO ••OHOOOoeooe.Oooeeoct ...... 14 9.0 THE FEASmwn TEST •• _ ........ O ........___ OD.OoeecHtIltOOOttOO.ooo ....._ ......oo ..... OOO.OIIOMO ......OOOOO •• "._0 ... 0.00 ...... __ 0_ 15 9.1 CUSroMBRATIACHl\IiBNTS AND ANNuAL VOLUMES ............................................................................. 15 9.2 0nmR FEAsmlLlTY TEsT COSTS AND FORECAST REvENuEs ................................................................ 17 9.3 FEAsmIUYY 'l'BST REsULTS ................................................................................................................... 18 9.4 ·CONVBRSION COSTS AND PoTENTIAL SAVINGS ..................................................................................... 18 10.0 FUNDlIN'G .ARRAN'GEMENTS o. __......... oaooe ..oo.ogoaOO-'OOO.,... ___._. __ 01100 ••••••___ ........ _ ••O._ ... __ .. ooooo 20 10.& FEDERAl!. FuNDING ............................................................................................................................ 20 10.2 PROVINCIAL FuNDING ....................................................................................................................... 21 10.3 MUNICIPAL FuNDING ........................................................................................................................ 21 10.4 CONNECTION FEES ............................................................................................................................ 22 10.5 FuNDING SUMMARy .......................................................................................................................... 23 tUB S'URCBAR.GE 000000_._._.000._••• 0.0 •••_ ..000.1111 ••••• 0 .. _ ......_-.00000 __ .0000 •••__ 800.000_00 •••_11 ••_110 ...... 0 ••••• 0 •••••••••••••• 24 11.0 THE ROLES AND RESPONSImLrrmS OF ING AND CEN'mA......... ..; .......... _ .................. ~S 12.1 TIm R.OLES AND REsPONSIBIUTIES OF INO ...................................................................................... 25 12.2 1'HB ROLES AND REsPONSmlLITIBS OF CENTRA ................................................................................ 2S 12.3 JOINT RBSPONSIBILI11BS ......................................................................................................: ............. 26 13.0 PROJECT BENEFITS .AND RISKS __ ............... oooa •••••_ ...._ .._ •••••O ••__ IIl_ •••• _ ••••••••• _ ...._ .........._ ....... l7 14.0 POSSIBLE ACQUISITION OF CENTRA BY MANITOBA IIYDIRO .............." ......................... %8 15.0 INTERVENORS' POSITIONS............. _IIlII_ .................... " ••••••ooo ••••••• a .................000 ....... _ ..................0 l' lUll PRESENTERS' POSmONS....................... oo.............. eeo- •••••••••••••-_ •••••••• _ ...............0 •••110 •••••••••••••••••• 39 16.1 PRESENTERS WHO SUPPORTED THE APPLICATION ............................................................................ 40 16.2 PRESENTERS WHO DID NOT SUPPORT THE APPUCATION .................................................................. SO MG12S6a z BOARD FlN'DINGS 0111000000.0•• 00_ ••• 01118Il00000_0 ••• 00000000"000_000"''''0000000000000000000•• 000_0.00000000000000000000000000000000000000 (0@ R7.l GBNlBRAL .......................................................................................................................................... (5~ n1.2 lFEAsmlLlTY 'I'BsT ............................................................................................................................. aD n 17.3 FEDERAL lFuNDING ............................................................................................................................ 6:i: 17.4 PROVINCIAL FuNoINGS ..................................................................................................................... 6) 17.5 MUNICIPAL FuNDING ........................................................................................................................ ~ 17.6 FRANCHISE AGRB&4BNT ................................................................................................................... (Qi~ 11.7 SURCHARGIB ...................................................................................................................................... aii1 17.8 CONNECTiON FBIBS ............................................................................................................................ aii1 IT IS THEREFORE ORDERED mAT: OOOOlilOOOOOO••• OOOOOOODHQMOODOOOOOODOOIMIOOOOOOODOOOOOOODOOQOOODOOOOOOOOoooooo00000000000 ~~ MG12SQitl During 1994 and 1995, the Interlake Development Corporation considered the economic viability of provimng natw'aI gas service to the Interlake area. The Interlake NaMa! Gas Co-op Ltd. (ING) was mcoIporated in 1996 and developed a bw;iness plan related to the extension of natura! gas to the Interlake. ING subsequently established a working relatiooshlp with Centra Gas Manitoba Inc. (Centra), and also approached the Federall, Provincial and Municipal governments to secure third party funding necessary to make the proposed project finmcially viable. INO worked with Centra to modify and refine a two-stage development pro~ each stage consisting of two phases. Stage I will extend natural gas service to six communities within the Rural Municipalities of Rockwood and Woodlands in Phase I and to all of the rural customers in RocJlcwood and Woodlands in Phase ll. Stage n wiill extend namral gas to Arberg and Riverton mPhase I and Biftost and Gimli in Phase IlL In December 1998, Centra applied to The Public Utilities Board (''the Boam") for approval of new franchise agreements for the distribution of natmal gas within the Rwcal Municipalities of Rockwood and Woodlands, and the TOWlll of Teulon. Centra also applied folt" the approval of the financial feasibility test for expansion of natwraI gas service to the commUtDities of Grosse Isle (that portJiolllllOcated in the Rma1! Municipality of Rockwood). BaUmoral, Gooton, Warren, Woodlands and Teulon. Centra also requested approval IOfm expansion surcharge rate to be charged tlO new customers in the Rural Municipalities of Rockwood and. WOlOdlands and the Town efTewon. A public hearing to consider the Application was held in TeuRon over seven days during Marcb 1999, and final argument was heard on Aprin 7, 1999. The proposed Phase I, Stage I project has an estimated capital cost of $7,796,000 to be financed by a federal contribution of $2.3~0,OOO, a Provincial contribution of $2,350,000, i ,,- from Centra of$SS2,OOO. The total! funding package provides fOI!" $2,OJ31S,OOOJ to ~@ s~ alSRci@ to provide fer cost overruns from Phase I, if any, and to provide foll' fufruure (cOll1ilfoni1l>~tioll'il funding for Phase Ii.