National Energy Board RH-003-2011 TransCanada PipeLines Limited, NOVA Gas Transmission Ltd. and Foothills Pipe Lines Ltd. Application dated 1 September 2011 for Approval of the Business and Services Restructuring Proposal and Mainline Final Tolls for 2012 and 2013 Requests of the Canadian Association of Petroleum Producers to TransCanada PipeLines Limited November 22, 2011 National Energy Board RH-003-2011 Information Requests of the Canadian Association of Petroleum Producers to TransCanada PipeLines Limited Question 1: Reference: NEB Oct.21, 2011 letter Preamble: The hearing is proposed to be held in three evidentiary phases: Alberta System extension (ASE), everything else (except ASE and cost of capital), and cost of capital. Request: Please identify those portions of the Application that TransCanada considers relate to the first phase, ASE. Question 2: Reference: Application, Relief Requested, p.1 of 13, para.1 and p.12 of 13, para.30 Preamble: Para.1 says the Application is for “…approvals required to implement a proposed restructuring of the services and tolling….” of the referenced pipelines. The relief requested in para.13 in respect of the restructuring is framed as: “TransCanada requests orders of the Board under Parts I and IV of the NEB Act, as applicable: (a) approving the Restructuring Proposal in respect of the Mainline, the Alberta System and the Foothills System, as described in the Application.” Request: (a) Please provide, for each of the pipelines for which application is made, a list or table of the specific decision, orders and relief it is requesting the NEB to make if it were to approve the Restructuring Proposal. (b) Please identify for each specific decision, order and item of relief in respect of the Restructuring Proposal whether it is Part I or Part IV of the NEB Act under which the decision, order or relief is requested. (c) If not provided in (b), please identify what decisions, orders and relief are requested in respect of the Restructuring Proposal involve the exercise of authority under Part I of the NEB Act. November 22, 2011 CAPP Information Requests to TCPL Page 1 Question 3: Reference: Application p.1 of 13, para.1, p.2 of 13, para.9 Preamble: Foothills Pipeline Ltd. is an applicant and the Foothills system is described as having four segments referred to as Zones 6 through 9. Reference is also made to three subsidiaries that hold certificates. Request: (a) Which of the four zones are the subject of the Application. (b) In what capacity does Foothills Pipeline Ltd. make application for the zones that are the subject of the Application? For example, does it apply in its capacity as the direct owner of the facilities, as operator, as the company to which certificates were issued, as an entity that would be a company as that term is defined in the NEB Act, or in some other capacity? (c) Please identify the three subsidiaries and please also identify the Zones for which each holds the certificates. (d) Does each of the three subsidiaries own the facilities in one or more zones? Please explain which facilities are owned by which subsidiary. (e) Please explain the ownership structure of the four zones. (f) How many zones are there in the Foothills Pipeline System and what are all the companies that hold the certificates for the Foothills Pipeline System? (g) Is Foothills Pipelines Ltd. a company within the meaning of the Northern Pipeline Act? Question 4: Reference: Application, p.1 of 13; para.1 and p.3 of 13, para.10; 2010 Annual Report Tab 9.3.1. NEB Filing Manual, Attachment 13.1 Preamble: The Application in para. 1 identifies the various pipelines that are making the Restructuring Proposal. The Application in para.10 states that “TransCanada manages and operates the Mainline, the Alberta System and the Foothills System in common as a single enterprise.” November 22, 2011 CAPP Information Requests to TCPL Page 2 Request: (a) The 2010 Annual Report shows 17 pipelines of which 14 are in operation, 1 under construction, and 2 are proposed. (i) Which of these are managed by TransCanada? (ii) Which of these are operated by TransCanada? (iii) Which of these are managed and operated by TransCanada in common as a single enterprise? If there are more than one grouping of pipelines that are managed and operated in common as single enterprises please identify all such groupings. (b) The 2010 Annual Report, p.8, shows three business segments: natural gas pipelines, oil pipelines, and energy. Are all TransCanada businesses managed and operated in common as a single enterprise (that is, there is one common single enterprise? Is each of the three business segments managed and operated in common as a single enterprise (that is, there are three common single enterprises)? How many common single enterprises are there within the TransCanada corporate structure? Please explain. (c) Do any of TransCanada’s businesses have interests that compete with the interests of other businesses? If so, please explain how TransCanada makes decisions among the competing interests. (d) If not explained above, please explain how TransCanada when it manages and operates more than one business as single enterprises makes decisions when the interests of one business competes with the interests of another within the common single enterprise. (e) Suppose for example, ANR had a project that might bring U.S. gas into a market served by other TransCanada pipelines that might potentially off load another TransCanada pipeline, how does TransCanada decide if that is a good thing to do? Please explain. Question 5: Reference: Application, p.1 of 13, para.1 & 2 Preamble: Application p.1 of 13, para.1 says the Application is for “…approvals required to implement a proposed restructuring of the services and November 22, 2011 CAPP Information Requests to TCPL Page 3 tolling….” of the referenced pipelines. Para.2 refers to a “Business and Services Restructuring Proposal”. Request: (a) Please confirm that the NEB approvals sought by the Application are only in respect of cost allocation, toll design, services, and tolls. If not confirmed, please explain. (b) What does the term “business” in the description of the Application refer to? For example, does it refer to the undertaking by each pipeline to transport gas, does it refer to the business of TransCanada as the manager and operator of various pipelines, does it refer to TransCanada as the manager and operator of a common enterprise, or does it refer to something else? (c) What ‘business’ is being restructured other than the cost allocation, toll design, services and tolls of each regulated pipeline that has joined in the Application? Question 6: Reference: Application, Revised October 31, 2011. Preamble: On page 3 of 13, TransCanada states “The Restructuring Proposal is TransCanada’s comprehensive response to recent and dramatic changes in the business environment of natural gas supply, demand and transportation in North America that have raised significant issues that impact the long term viability of existing pipeline infrastructure and supply basins. … Proposed cost allocation and toll design changes are intended to result in prices that are more appropriate given the current and anticipated usage of the system, the cost of transportation, the responsibility for system costs, the benefits of the system, and the value of services.” Request: (a) Please define the period of time encompassed in the word “recent” used in the phrase “recent and dramatic changes in the business environment”. (b) Please provide the approved rate of return on equity and the actual rate of return on equity for the Mainline for the years 2000 to 2010. November 22, 2011 CAPP Information Requests to TCPL Page 4 (c) Please confirm that the proposed restructuring if approved will entail significant changes to the Mainline’s long standing cost of service, cost allocation and toll design methodology. If not confirmed, please explain. (d) Please confirm that the proposed Alberta System Extension if approved will result in shifting the cost responsibility from the Mainline and Foothills to the Alberta System. If not confirmed, please explain. (e) Please confirm that the proposed toll design changes if approved will result in significant changes in cost responsibility between shippers. If not confirmed, please explain. (f) Please confirm that as the owner of the pipeline system, the Mainline and TransCanada Corporation have benefited from the investments. If not confirmed, please explain. (g) Please confirm that the proposed restructuring is not designed to increase risk to the Mainline or TransCanada Corporation. If not confirmed, please explain. Question 7: Reference: Executive Summary, p.1 of 21, l.1; p.6 of 21, l.8 Preamble: The Executive Summary p.1 speaks of “Recent and dramatic changes in the business environment of natural gas supply, demand and transportation in North America have raised significant issues that impact the long term economic viability of existing pipeline infrastructure and supply basins.” TransCanada then goes on to state at p.6 that the changes proposed in the Application “…will enhance the economic viability of the mainline and the WCSB, and will improve the efficiency and operating effectiveness of its pipeline systems.” Request: (a) Please spell out each and every case where TransCanada proposed, or is currently proposing, or subsequently built new facilities that respond to the changes in circumstances referred to in the Preamble (b) Which natural gas pipelines have been negatively impacted by these changes? Please explain the manner and extent to which they have been negatively impacted. November 22, 2011 CAPP Information Requests to TCPL Page 5 (c) Have there been any positive impacts for North American pipeline infrastructure and supply basins as a result of these changes? If so, please describe these positive impacts.