Gas Pipelines: Have we got the regulatory balance right? A Canadian Perspective Cynthia Chaplin Executive Director, CAMPUT Presentation to the ACCC/AER Regulatory Conference Brisbane, 1 August 2019 1
Overview • Context • Regulation Yesterday • Regulation Today • Regulation Tomorrow: Challenges and Issues 2
Context • What on earth is CAMPUT? • Canada’s Natural Gas Sector in Pictures • Key Factors • Integrated Canada-US Market • Shale Production • Gas-fired Power Generation • Pipeline Politics • LNG Development 3
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Dawn Hub 6
Source: National Energy Board 7
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Customers Industrial Residential Commercial 0% 18% 7% Annual Volumes Number of Customers Commercial 3.3 TCF/year 7 million 15% Residential Industrial 93% 67% Source: Statistics Canada Tables 25-10-0059-01 & 25-10-0058-01 9
Pipelines 10
Regulation Yesterday • Natural Gas Deregulation in Canada • Unbundling • Taxes Lowered • Export Restrictions to US Lifted • Integrated Market Emerges • Canadian Exports Rise • Pipelines Expand • Trading Hubs Grow • Financial Market Emerge • Markers of Success • Government Alignment • Demand/Supply Fundamentals • Regulatory Action • Commitment to Market 11
Regulation Today • Federal Pipeline Regulation • Cost of Service • Market Based • Complaint Basis • Provincial Pipeline Regulation (Ontario) • Cost of service Incentive and Performance-based Regulation • Distribution: Regulated with Customer Choice • Transportation: Regulated • Storage: Regulated and Unregulated • Overall • Customer Choice and Utility Responsiveness • Transparency • Pipeline Capacity 12
Regulated Pipelines - Federal Source: National Energy Board 13
Challenges and Issues • Climate Change Policy • Federal vs Provincial • Change and Uncertainty • Industry Response • Pipeline Approvals • Environmental Issues • Indigenous Rights • Politics • LNG • Regulation • LNG Canada Project • Potential Market Impact 14
Challenges and Issues “… in aggregate, the LNG export licence applications submitted to the Board to date represent a significant volume of LNG exports from Canada. However, all of these LNG ventures are competing for a limited global market and face numerous development and construction challenges . Consistent with the evidence submitted in LNG Canada’s current Application, the Board believes that not all LNG export licences issued by the Board will be used or used to the full allowance .” Emphasis added 15
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Lessons/Observations from Canada • Market Characteristics • Resource Base • Integrated Canada-US Market • Utility Responsiveness • Impact of LNG • Regulatory Characteristics • Stakeholder Satisfaction • Transparency • Pipeline Politics • Potential Impact of LNG 17
Thank you Cynthia Chaplin Executive Director CAMPUT cynthia@camput.org 18
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