2023–24 Annual Report of the Commission of the Canada Energy Regulator – 2023-24 Work of the Commission

During 2023-24, the Commission released 618 decisions on applications related to pipelines, powerlines, tolls and tariffs, export licences, frontier exploration and production, leave to open orders and other matters that spanned the energy infrastructure lifecycle. Below is the 2023-24 summary of Commission decisions and recommendations:

Compared to the previous year, 2023-24 saw an increase in decisions pertaining to tolls and tariffs (23 versus 14) and frontier exploration and production (38 versus 11) categories, and a decrease in decisions released in the infrastructure category (48 versus 88). Of note, part of the overall reduction in decisions (618 versus 738) can be attributed to the fact that as of 29 August 2022, there is no longer a CER Act requirement to obtain import licenses and orders. The appendices to this report contain further information related to all Commission decisions and recommendations, and specific highlights are provided below.

Applications of significant public interest typically require oral and written steps to inform the Commission’s decision-making. During 2023-24, the Commission held its hearings in a variety of formats, emphasizing public access, efficiency and the specific needs of participants. Participants attended hearings in person, virtually, or a hybrid of both. Written submissions are available on the CER’s website, while the Commission’s oral hearings are typically streamed or broadcast, with published transcripts. The Commission will continue to be flexible and make use of technology to enhance public participation in the years ahead.

Depending on the requirements of the hearing, the Commission may choose to hold workshops and technical sessions, and both were conducted this fiscal year. These sessions aim to collect and clarify information, helping participants gain insights on a project’s impacts and proposed mitigation strategies.

The Commission also receives oral Indigenous knowledge on various projects to better understand impacts on potentially affected First Nations, Inuit and Métis communities. The Commission makes best efforts to conduct these sessions in locations convenient for the participation of Indigenous Peoples. They may also be held in a virtual or hybrid format when requested.

In various decisions and reports this year, the Commission considered its duties and obligations in light of the United Nations Declaration on the Rights of Indigenous Peoples Act (UN Declaration Act) and the CER’s commitment to Reconciliation. The Commission’s regulatory processes enable deep consultation, as required, and support several key objectives of the UN Declaration Act. The Commission is committed to continuing to learn and evolve its processes to further support Reconciliation.

An overview of the more significant applications before the Commission in the past year is provided below. While these larger applications tend to generate more attention, a significant amount of Commission time is devoted to routine regulatory matters, which include various types of smaller infrastructure applications, ensuring compliance with conditions, permits for export, and addressing financial regulatory issues, to name a few.

Trans Mountain Expansion Project

As the Trans Mountain Expansion Project (TMEP) moved into the final stages of construction and sections of the 1,150 km pipeline were being completed and tested, the Commission authorized 18 leave to open orders and made numerous decisions on condition compliance-related matters (see Appendix G).

On 1 June 2023, Trans Mountain filed an application to establish tolls for the commencement of its service. The Commission approved the applied-for interim tolls, via a preliminary decision and established a process to complete the assessment of TMEP’s Final Interim Tolls and expects that Trans Mountain’s final tolls will be determined in accordance with its directions within the Final Interim Tolls Decision. This process will take place in 2024-25.

The Commission also received three applications for project variances related to geotechnical challenges along the TMEP pipeline route. These were related to issues identified with planned micro-tunneling in the Pípsell (Jacko Lake) area requiring a route deviation and horizontal directional drilling, and boring issues identified along a 2.3 km section between Hope and Chilliwack in British Columbia (Mountain 3 Horizontal Directional Drill Variance Application). The Commission initiated oral hearing processes for the variance applications, as further detailed in Appendix C.

The Commission’s approach to adjudication of these matters balanced the need to enable construction to be undertaken in a safe and efficient manner while taking into account potential impacts to the rights of Indigenous Peoples.

NorthRiver Midstream NEBC Connector Project

In 2023-24, the Commission recommended to the Governor in Council (GIC) the approval of NorthRiver Midstream NEBC Connector GP Inc.’s NEBC Connector Project. Portions of the NEBC project development area are located on traditional lands of Blueberry River First Nations and other Treaty 8 First Nations. Following a decision of the Supreme Court of British Columbia^Footnote 3 on cumulative effects, both Blueberry River First Nations and other Treaty 8 Nations were engaged in their own negotiations with the Province of British Columbia concurrent with the Commission’s hearing.

The Commission designed the hearing process to consider feedback from various Indigenous communities, highlighting cumulative effects and mitigation strategies. This included considering recommendations provided by the CER Crown Consultation Coordinator. The Commission included innovative conditions in its recommendation to the GIC, such as requiring the applicant to contribute to funds established as a result of the provincial and First Nations negotiations. The Commission also recommended the establishment of an Indigenous-led Land Securement Fund for Crown lands in British Columbia and Alberta.

International Powerlines

Under section 247 of the CER Act, the Commission authorizes the construction and operation of international power lines. In 2023-24, the Commission issued a permit (under section 248 of the CER Act) for the Hertel-New York International Power Line, a 58 km, 400 kilovolt transmission line from Hertel substation in La Prairie, Québec to an interconnection point at the Canada-United States border located beneath the Richelieu River. The proposed project will provide the state of New York, United States, with up to 1250 megawatts of electricity and will be jointly owned by Hydro-Québec and the Mohawk Council of Kahnawà:ke.

Tolls and Tariffs

There was an increase in the number of tolls and tariffs applications and related Commission decisions in 2023-24. In addition to the TMEP interim tolls application mentioned previously, others are discussed below. Trans-Northern Pipelines Inc. (TNPI) applied to update its Incentive Tolls Settlement Agreement (ITSA) for its system that runs between Ontario and Québec. A two-day oral hearing was held in Calgary, Alberta in September 2023. The Commission released its decision on 19 December 2023, finding that the applied-for toll design would result in just and reasonable tolls. The Commission found the ITSA would likely reduce existing cross-subsidization and better support shippers paying for what they use compared to a rolled-in approach.

On 23 May 2023, NOVA Gas Transmission Ltd. (NGTL) applied to affirm the tolling methodology for its 204 km North Montney Mainline (NMML) in northeast British Columbia. The NMML will connect with the Coastal GasLink pipeline at the Willow Valley Interconnect (WVI), which is scheduled to be in service in April 2024, and will transport gas to LNG Canada Development Inc.’s export facility.The Commission previously required NGTL to reapply for a revised design for the NMML in the event of new significant market flows. The Commission determined that the tolling methodology proposed by NGTL was just and reasonable following the start of deliveries at the WVI.

The Commission also assessed Enbridge's application for the Mainline Tolling Settlement to determine the calculation of tolls for shippers through to December 2028. The Commission found that Enbridge conducted a fair and robust two-year negotiation process and engaged meaningfully with all impacted stakeholders, resulting in unanimous support, and meeting the requirements of the Revised Guidelines for Negotiated Settlements of Traffic, Tolls and Tariffs. The Commission found that the Settlement will result in tolls that are just and reasonable, and tolls and services that are not unjustly discriminatory.

Abandonment Cost Estimates and Set-Aside Collection Mechanisms

As part of its oversight, the CER reviews companies’ abandonment cost estimates (ACE) every five years. The CER also ensures that companies have the appropriate financial instruments in place to secure these funds (see Appendix I), known as Set-Aside and Collection Mechanisms (SAM COM), as part of this process. A five-year review cycle commenced in 2021. The Commission released a report on 15 June 2023 where it provided an updated base case used for calculating companies’ ACEs and explained the new geographic information system based method used to calculate ACEs. On 27 March 2024, the Commission released a report providing companies with their final ACEs resulting from the ACE SAM COM review. The five-year review will continue into 2024-25 with the release of the Commission's decisions on the SAM COMs for companies using trusts to fund abandonment.

Canadians can be confident that the financial resources required to properly abandon CER-regulated pipelines have been, and continue to be, assessed and set aside for that purpose.

Frontier Exploration and Production

On 7 March 2024, the Commission approved the final application for the Inuvialuit Energy Security Project (IESP). Located in the Inuvialuit Settlement Region in the Northwest Territories, the IESP will convert natural gas into compressed natural gas, propane, and synthetic diesel that can be used for power and heat. This will reduce the area’s dependence on imported fuel that is otherwise transported by truck or barges. This was one of five Commission authorizations granted for the project under the Northwest Territories’ Oil and Gas Operations Act.

The Commission is currently assessing Imperial Oil Resources N.W.T. Ltd.’s requests under the Canada Oil and Gas Operations Act. Imperial requested to vary its Norman Wells Operations Authorization for a ten-year extension and to replace certain pipeline segments under the Mackenzie River (known as Line 490 Corridor Replacement Activities). Steps to hear these applications will include community engagement and oral Indigenous knowledge sessions.

Compensation Matters

The Commission remained seized with numerous land-related compensation matters. For these applications, the CER offers an alternative dispute resolution process where participants can come to an agreement outside of the adjudication process. However, if the alternative dispute resolution process is not used, or if an agreement is not otherwise reached, the compensation matter is adjudicated by the Commission using a formal hearing process. During the reporting period, eight compensation applications were filed with the CER. For information on the status of these applications, please see Appendix H.

Date modified:

2024-10-29