Bill 88 — ( Second Session) First Session, 18Th Legislature, 24 Elizabeth Ii Z-. F' the Legislative Assembly of Alberta Bill 88 the Natural Gas P'Rice Administration Act (Legislature 18, Session 1)

L18 S1 5539

Alberta — Bills

1975 Bill 88 ( Second Session) First Session, 18th Legislature, 24 Elizabeth II z-. f' THE LEGISLATIVE ASSEMBLY OF ALBERTA BILL 88 THE NATURAL GAS P'RICE ADMINISTRATION ACT THE MINISTER OF ENERGY AND NATURAL RESOURCES First Reading . .. . ...... , .................. . Second Reading ............................ . Third Reading ................... , .......... . Printed by the Queen's Printer for the Province of Alberta, EDMONTON

Bill 88 BILL 88 1975 (Second Session) THE NATURAL GAS PRICE ADMINISTRATION ACT (Assented to , 1975) HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Alberta, enacts as follows: 1.

(1) In this Act, (a) "Alberta cost of service" with respect to any gas or the movement of any gas means the costs and charges, wherever incurred, (

i) that are attributable to the acquisition of the gas by the original buyer, except the contract field price or the regulated field price, which ever applies, (ii) that are associated with the movement and metering of the gas in Alberta, (iii) that are related to any processing required to cause the gas to become marketable gas or that are otherwise related to the supply of the gas, and (iv) that consist of interest or other costs which, under a contract entered into prior to N ovem ber 1, 1975, were recoverable by the original buyer from the price at which he sold the gas, or any portion of those costs or charges, as prescribed by or pursuant to the regulations; (b) "Btu's" means British thermal units; (c) "contract delivery point" means the point within Alberta at which delivery of gas is taken by the original buyer under a gas sales contract; (d) "contract fi'eld price" means the price of gas under a gas sales contract, whether the price is specified in the contract or is redetermined pursuant to the contract by agreement or by arbitration or is fixed and determined by an order of the Public Utilities Board under The Gas Utilities Act; (e) "designated officer" means an officer of the De partment of Energy and Natural Resources or

Explanatory Notes I.

Interpretation.

any board, commission or other public body created by

an Act of the Legislature or any member or em ployee thereof, designated by the Minister as the designated officer for the purposes of this Act; (f) "gas" means raw gas or marketable gas (as those expressions are defined in The, Oil and Gas Conser vation Act) that is produced, extracted or recovered in Alberta; (g) "gas sales contract" means a contract for the sale and delivery of gas within Alberta under which the producer of the gas is the seller; (h) "marketable gas" means marketable gas as defined in The Oil and Gas Conservation Act; (i) "Minister" means the Minister of Energy and Natural Resources; (j) "original buyer" means the buyer under a gas sales contract; (k) "priee adjustment" with respect to any month means the amount determined by the Minister as the price adjustment for the month under an order made pur suant to

section 4; (1) "producer" means the person who owns gas at the time it is first produced, extracted or recovered in Alberta; (

m) the "regula ted field price" of any gas means the regulated field price of the gas determined in ac cordance with

section 9.

(2) For the purposes of this Act, all gas sold under a gas sales contract to an original buyer whose principal business is the transportation or sale or both of gas in interprovincial or international markets shall be deemed to be intended to be removed from Alberta regardless of where the gas is 'eventually consumed.

(3) For the purposes of this Act, in determining for any month the Alberta cost of service with respect to gas in tended to be removed from Alberta, there shall be deducted an amount equal to the revenues received from the original buyer's sales of gas in Alberta in that month (other than gas delivered by him to the Minister and repurchased by him from the Minister pursuant to

section 16) less the amount paid to the producers in respect of that gas. ( 4) For the purposes of this Act, (

a) where a producer delivers his gas to any person under an order of the Public Utilities Board made pursuant to The Gas Utilities Act requiring him to qO so, ~

i) the order of the Board shall be deemed to be a gas sales contract, 2

(ii) the gas so delivered shall be deemed to be de livered under a gas sales contract, (iii) the point at which the gas is delivered under the order shall be deemed to be the contract deli very point, and (iv) the person to whom the gas is delivered shall be deemed to be the original buyer of the gas; (

b) where the price of gas sold by the producer of the gas is a price fixed and determined by an order of the Public Utilities Board under The Gas Utilities Act, the price so fixed and determined shall be deemed to be the contract field price of the gas notwithstanding the existence of any gas sales contract that provides for the price of the gas. 2.

For the purposes of this Act and any regulation or order under this Act, priees for gas, price adjustments and the Alberta cost of service or any kind of Alberta cost of service with respect to gas or the movement of gas shall be expressed in or converted to cents per million Btu's based on gross or higher heating value, upon such conditions as to the delivery of the gas as are specified in the gas sales contract for the gas, the contract relating to the move ment of the gas or an order of the Minister under

Part 2, as the case may be. 3. The IVIinister may delegate any of his powers and duties under this Act or the regulations to any officer of the Department of Energy and Natural Resources, any board, commission or other public body created by

an Act of the Legislature or any member or employee thereof. 4. The Minister may by order determine for any month an amount as the priee adjust.ment for that month for the purposes of this Act. 3

2. Manner of expressing prices of gas and costs of service. 3. Delegation of Minister's powers and duties. 4. Determination of monthly price adjustment. 3

(1) The Lieutenant Governor in Council may make regulations (

a) for the purposes of

section 1, clause (a); (

b) providing for any matter relating to appeals to the Public Utilities Board under

section 6; (

c) exempting any class of gas sales contracts from the operation of

section 9; (

d) suspending the operation of any provisions of this Act indefinitely or for a stated period; (

e) providing for any matter in connection with or in cidental to the administration of this Act. 6. Any determination or estimation of any Alberta cost of service made under this Act or the regulations is subject to appeal to the Public Utilities Board in accordance with the regulations. 7. Any Alberta cost of service prescribed, determined or estimated pursuant to this Act or the regulations applies notwithstanding any order of the Public Utilities Board under The Gas Utilities Act. 4

5. Regulations. 6. Appeals re Alberta cost of service. 7. Overriding effect of determination of Alberta cost of service. 4

PART 1 REGULATION OF FIELD PRICES OF GAS 8. The purpose and intent of this

Part is to provide for the regulation of prices paid for gas under gas sales con tracts. 9.

(1) The Minister may by order prescribe for any month the price of any gas (

a) at the point of production, extraction or recovery of the gas, or (

b) at the contract delivery point of the gas, or (

c) at any other point in Alberta, and the price so prescribed plus the price adjustment for the month is the regulated field price of the gas for the month at the point described in the order.

(2) Where an order of the Minister under subsection (1) prescribes a price for gas for any month at a point up stream from the contract delivery point of the gas, (

a) the designated officer shall determine the Alberta cost of service with respect to the gas and the move ment of the gas from the upstream point to the contract delivery point, and (

b) the aggregate amount of the price prescribed by the Minister under subsection (1), the price adj ustment for the month and the Alberta cost of service deter mined under clause (

a) is the regulated field price of the gas for the month at the contract delivery point.

(3) Where an order of the Minister under subsection (1) prescribes the price of gas for any month at a point in Alberta downstream from the contract delivery point of the gas, (

a) the designated officer shall determine the Alberta cost of service with respect to the gas and the move ment of the gas from the contract delivery point to the downstream point, and (

b) the aggregate amount of the price prescribed by the Minister under subsection (1) and the price adjustment for the month minus the Alberta cost of service determined under clause (

a) is the regu lated field price for the month at the contract delivery point. 10.

(1) Where the contract field price of gas delivered in any month under a gas sales contract is different from the regulated field price of the gas for the month at the contract 5

8. Intent and purpose of

Part 1. 9. Determination of regulated field price. 10. Regulated field price supersedes contract field price. 5

delivery point, the price of gas delivered under the contract during the month shall for all purposes be deemed to be the regulated field priee for the month at the contract delivery point and not tlie contract field price.

(2) Where an original buyer is required to sell gas at the regulated field price by virtue of

section 9 and this section, (

a) the original buyer shall not, upon a resale of that gas within Alberta, include the price adjustment in the price of the gas on the resale or otherwise pass on the price adjustment to the buyer of the gas on the resale, but (

b) the original buyer is entitled to be reimbursed for the price adjustment from moneys in the Natural Gas Price Administration Act Fund in accordance with the regulations under

section 17. 11. The regulated field price at the contract delivery point determined with respect to any gas sales contract for any month applies with respect to that contract for that month notwithstanding (

a) anything in the gas sales contract, or (

b) any award under The Arbitration Act or any agree ment that redetermines the price under a gas sales contract, or (

c) any order of the Public Utilities Board under The Gas Utilities Act. 6

II. Overriding effect of price determination under

section 9. 6

PART 2 ACQUISITION AND RESALE OF GAS 12. In this Part, (a) "Alberta border price" for any month means the amount determined under

section 15 as the Alberta border priee for the month; (b) "Canadian cost of service" with respect to any gas or the movement of any gas means the costs or charges of transmission and metering and all other costs associated with the movement of the gas outside Alberta, as determined by the National Energy Board; (

c) the "international border price" of any gas means the price of that gas at the point it crosses the international boundary of Canada as specified in the licence of the N ~tional Energy Board authorizing the removal of that gas from Canada or as other wise prescribed by the Government of Canada. 113. The purpose and intent of this

Part is to provide legislative authority for the following: (

a) the acquisition by the Minister of gas, the removal from gas so acquired of any constituent other than methane, and the resale of the gas so acquired; (

b) the distribution to produeers and original buyers on an equitable basis of net revenues accruing to the Crown under this Part. 14.

(1) The Minister may on the basis of any regulated field price determine for any month an amount called the "Alberta border price" with respect to gas intended to be removed from Alberta (

a) for consumption within Canada, and (

b) to be used as fuel in the transmission of Canadian gas back to Canada in any pipeline system in the United States.

(2) The Alberta border price shall for all purposes be (

a) the price to be imputed to all gas referred to in subsection (1) at the point at which the gas reaches an Alberta border, and (

b) the cost to be imputed to that gas at the point at which it crosses an Alberta border. 7

Definitions. 13. Intent and purpose of

Part 2. 14. Alberta border price. 7

1.(5.

(1) The Min'ister may by order direct that any owner of gas in Alberta shall deliver that gas to the Minister at the point within Alberta prescribed in the order.

(2) Where gas is delivered to the Minister pursuant to an order under subsection (1), the gas becomes the property of the Crown in right o~ Alberta.

(3) Where any gas is delivered to the Minister pursuant to an order under subsection (1), the Minister shall com pensate the person to whom the order is directed (

a) in the case of gas intended to be removed from Alberta, in an amount equal to the Alberta border price less the Alberta cost of service with respect to that gas and the movement of that gas from the delivery point prescribed in the Minister's order under subsection (1) to the point on the Alberta border at which the gas is or will be removed from Alberta, or (

b) in the case of gas intended for consumption within Alberta, in an amount equal to the lesser of (

i) the Alberta border price minus an amount esti mated by the designated officer as an amount that would b~ the Alberta cost of service with respect to the gas and the movement of the gas from the delivery point prescribed in the Min ister's order under subsection (1) to the point on the Alberta border specified by the desig nated officer if the gas were to be moved be tween those points and pipeline facilities were available for that purpose, and (ii) the contract field price plus the Alberta cost of service with respect to the gas and the move ment of the gas from the contract delivery point to the delivery point prescribed in the Minister's order under subsection (1).

(4) Where any gas is delivered to the Minister pursuant to an order under subs'ection (1), the Minister, on behalf of the Crow~ in right of Alberta, shall sell the gas, except for any constItuent caused to be removed therefrom pursuant to

section 16 and any gas used as fuel for the purpose of such removal, to the person to whom the order under sub section (1) was directed unless that person elects not to buy the gas in which case the Minister may sell the gas to any other person.

(5) Where the Minister sells gas pursuant to subs'ection (4), the price at which the gas shall be sold shall be (

a) in the case of (

i) gas sold for consumption within Canada, or (ii) gas used in the transmission of Canadian gas back to Canada in any pipeline system in the 8

IS. Compulsory purchase of gas by the Minister and resale. 8

United States for which the person to whom the Minister's order is directed under sub section (1) is charged in connection with such transmission, the amount paid as compensation for the gas under subsection (3) ; (

b) in the case of gas sold for consumption outside Canada, exC'ept any gas referred to in clause (a), subclause (ii), the international border price less the sum of (

i) the Alberta cost of service with respect to the gas and the movement of the gas from the point at which the Minist'er delivers the gas to the purchaser to the point on the Alberta border at which the gas is or will be removed from Alberta, and (ii) the Canadian cost of service with respect to the gas and the movement of the gas from the Alberta border to the point at which it crosses the international boundary of Canada.

(6) Except with respect to gas from which a constituent is removed pursuant to

section 16, the point of delivery of gas sold by the Minister under this

section shall be the delivery point prescribed in the order under subsection (1). 1.16.

(1) Where the Crown in right of Alberta becomes the owner of any gas pursuant to

section 15, the Minister, on behalf of the Crown in right of Alberta, (

a) may, subject to subsection (2), cause any consti tuent of the gas other than methane to be removed from the gas in Alberta; (

b) may enter into an agreement with any person for any purpos'e related to the removal of any con stituent of gas pursuant to clause (a); (

c) may sell within Alberta any constituent of the gas removed pursuant to clause (

a) to any person.

(2) The Minister shall not take any action under sub section (1), clause (

a) unless the Lieutenant Governor in Council (

a) is satisfied that the constituent would not other wise be removed from the gas within Alberta, (

b) declares that it is in the public interest that the constituent be removed from the gas, and (

c) approves the removal of the constituent from the gas by the Minister.

(3) There shall be a fund called the "Natural Gas Con stituent Proceeds Fund "'(No.2)" which shall be held and administered by the Minister. 9

16. Removal of constituents from gas by the Minister and dis tribution of the sale proceeds to producers. 9

(4) The Minist'er shall keep a separate accounting record of the Fund.

(5) The proceeds of the sale of any constituent sold pur suant to subsection (1), clause (

c) shall be paid into the Fund.

(6) The following shall be paid out of the Fund: (

a) any costs incurred by the Minister in connection with the removal of any constituent of gas pursuant to this section; (

b) moneys paid to producers pursuant to the regula tions under subsection (7).

(7) The Lieutenant Governor in Council may make regu lations (

a) authorizing the Minister to make payments to the producers of the gas from which any constituent was removed pursuant to this section, from moneys in the Fund that are not from time to time required to pay any costs referred to in subsection (6), clause (a); (

b) prescribing the conditions on which the payments shall be made and the manner in which they shall be made; . (

c) governing any other matter incidental to the mak ing of payments under this section.

(8) The regulations under subsection (7) (

a) shall, as far as practicable, provide for payments to producers on an equitable basis; (

b) may authoriz'e the Minister or any other person to do any act in connection with the administration of the regulations; (

c) shall be administered in such a manner that the producers receive all the moneys in the Fund except for those moneys required to pay costs referred to in subsection (6), clause (a).

(9) The Minist~r shall (

a) after .the end of each fiscal year of the Government prepare a report summarizing the operation of the Fund for the preceding fiscal year and a financial statement showing the revenues of and expendi tures from the Fund during the same fiscal year, (

b) submit the financial statement to the Provincial Auditor for auditing, and (

c) when the report for a fiscal year and the financial statement, as audited by the Provincial Auditor, are prepared, lay a copy of them before the Legis lative Assembly if it is then sitting and if not, within 15 days after the commencement of the next sitting. 10

(1) There shall be a fund called the "Natural Gas Price Administration Act Fund" which shall be held and administered by the Minister.

(2) The Minister shall keep a separate accounting record of the Fund.

(3) The proceeds of the sale of gas received by the Min ister pursuant to

section 15 shall be paid into the Fund.

(4) The following shall be paid out of the Fund: (

a) compensation payable by the Minister pursuant to

section 15 with respect to gas delivered to him under that section; (

b) any cost of service incurred by the Minister with respect to gas delivered to the Minister under sec tion 15 and the movement of gas from the point of delivery to the Minister to the point of delivery to the purchaser of the gas from the Minister; (

c) moneys paid to producers and original buyers pur suant to the regulations under subsection (5).

(5) The Lieutenant Governor in Council may make regu lations (

a) authorizing the Minister to make payments on a monthly basis from moneys in the Fund that are not from time to tim'e required to pay any com pensation Qr costs referred to in subsection (4), clauses (

a) and (b), to (

i) eligible producers, and (ii) eligible original buyers by way of reimburse ment to those buyers for the price adjustments required to be paid by them by virtue of the operation of

section 9; (

b) prescribing the classes of producers and original buyers eligible to receive payments pursuant to clause (a); (

c) prescribing the conditions on which the payments shall be made and the manner in which they shall be made; (

d) governing any other matter incidental to the mak ing of payments to producers and original buyers under this section.

(6) The regulations under subsection (5) (

a) shall, as far as practicable, provide for paym'ents to eligible producers and original buyers on an equitable basis; (

b) may authorize the ~inister or any other person to do any act in connection with the administration of the regulations; 11

17. The Natural Gas Marketing Fund and distribution to eligible producers and original buyers of profits realized from the sale of gas by the Minister. 11

(

c) shall be administered in such a manner that the eligible producers and eligible original buyers receive all of the moneys in the Fund except for those moneys required to pay for compensation or costs referred to in subsection (4), clauses (

a) and (b).

(7) The Minister shall (

a) after the end of each fiscal year of the Government prepare a report summarizing the operation of the Fund for the preceding fiscal year and a financial statement showing the revenues of and expendi tures from the Fund during the same fiscal year, (

b) submit the financial statement to the Provincial Auditor for auditing, and (

c) when the report for a fiscal year and the financial statement, as audited by the Provincial Auditor, are prepared, lay a copy of them before the Legis lative Assembly if it is then sitting and if not, within 15 days after the commencement of the next sitting. 12

PART 3 AMENDMENTS TO THE NATURAL GAS PRICING AGREEMENT A,eT 18. The Natural Gas Pricing Agreement Act is am~nded (

a) as to

section 1, subsection (1), clause (

f) by strik ing out the words "or an agent of the Government of Alberta" and by substituting the words ", a board, commission or other public body created by

an act of the L'egislature or any member or employee thereof", (

b) as to

section 1, subsection (1), clause (

f) by striking out the words "gas (as defined in The Oil and Gas Conservation Act)" and by substituting the words "raw gas or marketable gas (as those expressions are defined in The Oil and Gas Conservation Act)", (

c) as to

section 1 by adding after subsection (3) the following subsection: ( 4) For the purposes of this Act, (

a) where a supplier and producer delivers his gas to any person under an order of the Public Utilities Board made pursuant to The Gas Utilities Act requiring him to do so, (

i) the order of the Board shall be deemed to be a gas sales contract, (ii) the gas so supplied and delivered shall be deemed to be delivered under a gas sales contract, (iii) the point at which the gas is delivered under the order shall be deemed to be the contract delivery point, and (iv) the person to whom the gas is delivered shall be deemed to be the original buyer o(the gas; (

b) where the price of gas sold by the produeer of the gas is a price fixed and determined by an order of the Public Utilities Board under The Gas Utilities Act, the price so fixed and deter mined shall be deemed to be the contract field price of the gas notwithstanding the existence of any gas sales contract that provides for the price of the gas. (

d) as to

section 3, by striking out the words "or any agent of the Government of Alberta," and by sub stiuting the words", any board, commission or other public body created by

an Act of the Legislature or any member or employee thereof,", (

e) as to

section 1 0 by adding the following subsection after subsection (3): 13

18. This

section will amend

chapter 38 of the Statutes of Alberta 1975 (Second Session) enacted on November 25, 1975. ' (a)

Section 1 (1)(

f) presently reads: (f) "designated officer" means an officer of the Department of Energy and Natural Resources or an agent of the Government of Alberta designated by the Minister as the designated officer for the purposes of this Act; (

b) Section l(1)(

h) presently reads: (h) "gas" means gas (as defined in The Oil and Gas Conservation Act) that is produced, extracted or recovered in Alberta; (

C) The new subsection (4) being added to

section 1 of the Act corresponds to

section 1 (4) of this Bill. It is meant to take care of cases where there may not be a contract but rather an order under The Gas Utilities Act requiring a producer to supply gas. It also takes care of the case where th€ price of gas is fixed by a Public Utilities Board order, whether or not there is a contract dealing with quantities and specifications and any other matters except price. (

d) Section 3 presently reads: 3. The Minister may delegate any of his powers and duties under this Act or the regulations to any officer of the Department of Energy and Natural Re sources or any agent of the Government of Alberta, except the power to enter into a federal-provincial agreement. (

e) The new subsection (4) is added to

section 10 to ensure that the original buyer, while he cannot pass on the price adjustment to the next buyer, is nevertheless entitled to reimbursement from the Fund und€r

section 16. (f)

Section 11(2) presently reads:

(2) Any provision in a gas sales contract that specifies the price of g3.S delivered thereunder and any award. agreement or order referred to in sub section (1), clause (

b) or (

c) is inoperative with respect to any month during which the regulated field price applies to the contract. This subsection is removed largely as a consequence of the addi tion of subsection (4) of

section 1 so that it will not render inopera tive any pricing orders of the Public Utilities Board which in turn establish the "contract field price" in certain cases by virtue of s. 1 (4). The subsection is removed also to prevent any conflict with s. 10(2)(

b) of the Act. It is considered that s. 11(1) of the Act will by itself sufficiently indicate that regulated field prices prevail over any other prices. 13

( 4) Where an original buyer is required to sell gas at the regulated field price by virtue of this s'ection, (

a) the original buyer shall not, upon a resale of that gas within Alberta, include the price adjustment in the price of the gas on the resale or otherwise pass on the price adj ustm'ent to the buyer of the gas on the resale, but (

b) the original buyer is entitled to be reim bursed for the price adj ustment from moneys in the Natural Gas Pricing Agree ment Act Fund in accordance with the regulations under

section 16. (

f) as to

section 11 by striking out subsection (2).

PART 4 COMME,NCEMENT 19.

(1) This Act, except

Part 3, comes into force on a date to be fixed by Proclamation.

(2) Part 3 comes into force on the date upon which this Act is assented to and upon coming into force shall be deemed to have been in force at all times on and after November 1, 1975. 14 Title: 1975 (18th, 1st) Bill 88, The Natural Gas Price Administration Act

Document details

Collection	Alberta — Bills
Citation	L18 S1 5539
Type	bill
Volume / chapter	L18 S1 5539
Language	en
Format	json
Source	PROVINCIAL
Identifier	c5e7f988711152bd0efa3aced24dc1c9dbf5d1f0

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