News Release Archive
NATURAL RESOURCES--GAS DISTRIBUTION ACT INTRODUCED
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Legislation to regulate the sale and distribution of natural gas
within Nova Scotia was introduced by the government today.
"The gas distribution act establishes a framework for orderly
development and operation of a natural gas delivery system to
serve Nova Scotia and its people," said Natural Resources
Minister Eleanor Norrie. "The legislation also establishes an
environment in which the actual sale of gas to Nova Scotians will
be conducted in a fair, open and competitive manner."
Under the legislation, an individual or company must hold a
franchise in order to build and operate a local gas distribution
system. Application for a franchise is made to the Utility and
Review Board, which will review the application and seek public
input. The board recommends to Cabinet which applications should
be approved and then issues a franchise after such approval is
given.
The proposed gas distribution act also covers construction and
operation of gas distribution facilities, charges or tolls, sale
of natural gas, and complaints, penalties and regulations.
"This comprehensive new act brings Nova Scotia right up to date
with current practices and procedures in the gas industry
throughout North America," said Mrs. Norrie. "Most important, it
protects the interests of Nova Scotians and prepares us for the
advent of a whole new industry -- distribution of Sable natural
gas -- within our own boundaries."
Mrs. Norrie said the proposed bill results from an extensive
review of legislation in other jurisdictions, as well as public
comment on a discussion paper issued by the Department of Natural
Resources last fall.
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BACKGROUNDER ON GAS DISTRIBUTION ACT
The proposed gas distribution act acknowledges two distinct
purposes:
1. To provide the regulatory framework necessary to allow the
physical distribution facilities (pipes, tanks, equipment,
etc.) to be put in place and operated in an orderly fashion.
These facilities constitute a natural monopoly and hence must
be regulated to protect consumers who use them.
2. To establish an environment in which the actual selling of gas
to Nova Scotians is conducted in an open, fair and competitive
manner. Sale of gas refers to the offering to Nova Scotia
consumers of the actual gas molecules by an number of
producers, marketers or brokers. Once a sale is made,
arrangements are made to transport the molecules to a buyer
through the monopoly pipeline facilities. If a market is
established where a number of sellers are competing to sell
gas to consumers, this will provide the best assurance that
the resulting price is fair and reasonable.
Persons or companies must have a franchise issued under this act
in order to construct and operate a gas distribution system. A
franchise grants a company the exclusive right to distribute gas
within a given geographic area. Only the provincial government,
through the Utility and Review Board, will issue franchises. This
will ensure a consistent standard of service across the province.
Any existing utility in Nova Scotia which is subject to the
Public Utilities Act (primarily Nova Scotia Power Inc.) will not
be permitted to hold a franchise to operate a distribution
system. A subsidiary or affiliate of the utility will be
permitted to hold the franchise. The split is necessary to ensure
that no cross-subsidization occurs between the energy delivery
systems and that a competitive market between various energy
commodities is maintained.
The distributor may not show any unjust favoritism between
customers anywhere in the franchise area in the amount they
charge for shipping gas, the type or quality of service provided,
or the facilities available. In other words, they must be
impartial providers of transportation service.
Charges or tolls for use of the gas distribution system must be
approved by the Utility and Review Board. These tolls do not
relate to the price of the gas itself, but rather to the services
provided by the distribution system, primarily transportation.
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Contact: Maurice MacDonald 902-424-4426
trp Apr. 15, 1997 - 12:40 a.m.
