Spectra Energy, the parent company of Union Gas Limited, has
been hit with a 4th quarter $30 Million charge related
to a decision by Ontario's energy regulator. The Ontario Energy Board (OEB)
determined that the revenues realized by Union Gas from the
optimization of upstream transportation contracts must be
reclassified as gas supply costs. As a result, approximately 90% of
the total reclassified revenues, equaling approximately $30 Million
will be refunded to customers, while the remaining 10% shall accrue
to Union Gas as an incentive to continue to undertake optimization
activities.
In reaching its decision, the OEB explained that it did not
agree with Union Gas' arguments that the optimization
activities were sustainable efficiency improvements found by Union
Gas in 2011 and 2012. Instead, the OEB held that the optimization
revenues were clearly related to reductions in upstream
transportation costs that resulted in an overall reduction to Union
Gas' supply chain
