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Negotiated settlements and the National Energy Board in Canada

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  • Doucet, Joseph
  • Littlechild, Stephen

Abstract

In Canada, settlements between oil and gas pipelines and users have largely superseded the litigation of major pipeline toll cases since 1995. Quantitatively, from the first half to the second half of the period 1985-2007 the average number of pipeline toll hearing days in Canada fell by three-quarters. On average, settlements last more than twice as long as litigated outcomes and have cut regulatory processing times by about one third for gas pipelines and by about two thirds for oil pipelines, with the result that regulatory processing times per effective toll-year have fallen to 13% and 27% respectively of previous levels. Qualitatively, settlements have been used to determine prices, operating and capital cost projections, return on equity, service quality improvements, risk-sharing investments and information requirements. They were the vehicle by which multi-year incentive agreements developed rapidly for all pipelines. They have also been used to introduce light-handed regulation. They have provided a mechanism for fruitful collaboration between pipelines and their customers and have changed attitudes in the industry. Two key actions of the National Energy Board have facilitated settlements by clarifying expectations and property rights: its generic cost of capital decision that removes the market power of the pipeline and enables effective negotiation with users, and its willingness to judge a settlement by the reasonableness of the process leading up to it instead of imposing the Board's own values on the outcome.

Suggested Citation

  • Doucet, Joseph & Littlechild, Stephen, 2009. "Negotiated settlements and the National Energy Board in Canada," Energy Policy, Elsevier, vol. 37(11), pages 4633-4644, November.
  • Handle: RePEc:eee:enepol:v:37:y:2009:i:11:p:4633-4644
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    References listed on IDEAS

    as
    1. Doucet, Joseph & Littlechild, Stephen, 2006. "Negotiated settlements: The development of legal and economic thinking," Utilities Policy, Elsevier, vol. 14(4), pages 266-277, December.
    2. Stephen Littlechild, 2009. "Stipulated settlements, the consumer advocate and utility regulation in Florida," Journal of Regulatory Economics, Springer, vol. 35(1), pages 96-109, February.
    3. Zhongmin Wang, 2004. "Settling Utility Rate Cases: An Alternative Ratemaking Procedure," Journal of Regulatory Economics, Springer, vol. 26(2), pages 141-163, September.
    4. Cooter, Robert D & Rubinfeld, Daniel L, 1989. "Economic Analysis of Legal Disputes and Their Resolution," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1067-1097, September.
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    Citations

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    Cited by:

    1. Stephen Littlechild, 2012. "Regulation and Customer Engagement," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    2. Littlechild, S., 2011. "Regulation, customer protection and customer engagement," Cambridge Working Papers in Economics 1142, Faculty of Economics, University of Cambridge.
    3. Clastres, Cédric, 2011. "Smart grids: Another step towards competition, energy security and climate change objectives," Energy Policy, Elsevier, vol. 39(9), pages 5399-5408, September.
    4. Littlechild, Stephen C. & Ponzano, Eduardo A., 2008. "Transmission expansion in Argentina 5: The regional electricity forum of Buenos Aires province," Energy Economics, Elsevier, vol. 30(4), pages 1491-1526, July.
    5. Littlechild, Stephen C., 2012. "German airport regulation: Framework agreements, civil law and the EU Directive," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 63-75.
    6. Littlechild, Stephen C., 2012. "Australian airport regulation: Exploring the frontier," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 50-62.
    7. Stephen Littlechild, 2009. "Stipulated settlements, the consumer advocate and utility regulation in Florida," Journal of Regulatory Economics, Springer, vol. 35(1), pages 96-109, February.
    8. Stephen Littlechild, 2016. "Contrasting Developments in UK Energy Regulation: Retail Policy and Consumer Engagement," Economic Affairs, Wiley Blackwell, vol. 36(2), pages 118-132, June.
    9. Cédric Clastres, 2010. "Les réseaux intelligents : régulation, investissement et gestion de la demande électrique," Post-Print halshs-00539818, HAL.
    10. Bordignon, Stephen & Littlechild, Stephen, 2012. "The Hunter Valley access undertaking: Elements of a negotiated settlement," Transport Policy, Elsevier, vol. 24(C), pages 179-187.
    11. Littlechild, Stephen, 2012. "The process of negotiating settlements at FERC," Energy Policy, Elsevier, vol. 50(C), pages 174-191.
    12. Stephen Littlechild, 2012. "Merchant and regulated transmission: theory, evidence and policy," Journal of Regulatory Economics, Springer, vol. 42(3), pages 308-335, December.
    13. Haney, Aoife Brophy & Pollitt, Michael G., 2013. "International benchmarking of electricity transmission by regulators: A contrast between theory and practice?," Energy Policy, Elsevier, vol. 62(C), pages 267-281.
    14. Littlechild, S., 2007. "The bird in hand: stipulated settlements and electricity regulation in Florida," Cambridge Working Papers in Economics 0713, Faculty of Economics, University of Cambridge.
    15. repec:eee:jaitra:v:67:y:2018:i:c:p:211-223 is not listed on IDEAS
    16. Chakravorty, Shourjo, 2015. "A study of the negotiated-settlement practice in regulation: Some evidence from Florida," Utilities Policy, Elsevier, vol. 32(C), pages 12-18.
    17. Fellows, G. Kent, 2011. "Negotiated settlements with a cost of service backstop: The consequences for depreciation," Energy Policy, Elsevier, vol. 39(3), pages 1505-1513, March.
    18. Ivanenko, Vlad, 2012. "Modularity analysis of the Canadian natural gas sector," Energy Economics, Elsevier, vol. 34(4), pages 1196-1207.
    19. Cédric Clastres, 2011. "Smart grids : Another step towards competition, energy security and climate change objectives," Post-Print halshs-00617702, HAL.

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