This report was undertaken as part of the Board's regulatory mandate. The Board's third goal is: "Canadians benefit from efficient energy infrastructure and markets". To determine whether this goal is being achieved, the Board monitors energy markets and transportation systems for evidence that they are working well.

What is the content of the report?

The Board assessed the transportation system using the following three criteria:

there is adequate pipeline capacity in place to move energy products from producers to consumers;
pipeline companies are providing services that meet the needs of shippers at reasonable prices; and
pipeline companies have adequate financial integrity to attract capital on terms and conditions that enable them to effectively maintain their systems and build new infrastructure to meet the changing needs of the market.

The report brings together data from publicly available resources, throughput data supplied by pipeline companies and information collected in the NEB's pipeline shipper survey. The NEB also consulted with representatives of the investment community to assess the financial viability of the industry. Comments from the Canadian Energy Pipeline Association and the Canadian Association of Petroleum Producers were also taken into consideration.

What are the conclusions of the report?

Based on its assessment of the aforementioned criteria, the Board concluded:

1a. There is adequate capacity in place on existing natural gas pipelines.

The basis differentials and capacity utilization charts show that most NEB-regulated gas pipelines have some excess capacity, even during the peak winter season. Some excess capacity out of the WCSB and the unprecedented high prices for energy has provided producers with the flexibility to access markets of their choice at most times. However, there are constraints at the market end of some pipelines as indicted by expansions currently underway.

1b. Capacity is tight on oil pipeline transportation systems.

While the capacity utilization charts show that there is spare capacity on some of the pipelines, additional capacity is required to meet the growing demand, to provide flexibility and to enhance market penetration. The need for additional capacity is best shown by the number of announced and proposed pipelines and expansions.

2. Shippers continue to indicate that they are reasonably satisfied with the services provided by pipelines.

The Board's Pipeline Services Survey revealed that shippers are reasonably satisfied overall with the services they receive from pipeline companies. Physical reliability of pipeline operations was rated very highly by shippers, indicating that products are reliably delivered to markets. Some areas where shippers indicated that pipeline companies need to improve customer service include: making tolls more competitive; exhibiting an attitude of continuous improvement and innovation; and working collaboratively towards fair and reasonable solutions to resolve issues.

3. NEB-regulated pipeline companies are financially sound.

NEB-regulated pipeline companies are financially sound and able to attract capital on reasonable terms and conditions. While it is recognized that some of the data and indicators reviewed are for the consolidated operations of pipeline companies, discussion with the investment community indicated that, at this time, NEB-regulated pipeline companies should have no difficulty in raising capital. Extensive investment will be required in the future to provide needed infrastructure and the financing for those facilities will depend upon the characteristics of the projects and the financial markets at that time.