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Negotiated Settlements and the National Energy Board in Canada

Author

Listed:
  • Joseph Doucet

    (CABREE, School of Business, University of Alberta, Canada)

  • Stephen Littlechild

    (University of Birmingham)

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In Canada, settlements between oil and gas pipelines and users have largely superseded the litigation of major pipeline toll cases since 1995.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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Joseph Doucet & Stephen Littlechild, 2006. "Negotiated Settlements and the National Energy Board in Canada," Working Papers EPRG 0629, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
  • Handle: RePEc:enp:wpaper:eprg0629
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    References listed on IDEAS

    as
    1. Zhongmin Wang, 2004. "Settling Utility Rate Cases: An Alternative Ratemaking Procedure," Journal of Regulatory Economics, Springer, vol. 26(2), pages 141-163, September.
    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. 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.
    4. Doucet, J. & Littlechild, S., 2006. "Negotiated Settlements: The development of economic and legal thinking," Cambridge Working Papers in Economics 0622, Faculty of Economics, University of Cambridge.
    5. Doucet, Joseph & Littlechild, Stephen, 2006. "Negotiated settlements: The development of legal and economic thinking," Utilities Policy, Elsevier, vol. 14(4), pages 266-277, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    negotiated settlements; regulation; innovation;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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