Canada Pipeline Agreement

For the purposes of this Annex, the actual cost of capital excludes the effect of increased costs or delays due to measures attributable to U.S. shippers, related U.S. gas pipeline companies, Alaskan producers, the construction of the Prudhoe Bay wash or gas packaging facilities, and U.S. or state governments. If the competent regulatory authorities of both countries are unable to agree on the amount of these costs to be excluded, they shall be established in accordance with the procedures referred to in Article IX of the Transit Pipeline Treaty. (b) Both Governments recognize the importance of building the pipeline in a timely manner and with effective cost controls. As a result, the return on equity participation in the pipeline will be based on a variable return for any company that owns a segment of the pipeline, in order to provide an incentive to avoid cost overruns and minimize costs, consistent with sound pipeline management. The incentive programme to determine the reasonable return shall be based on the cost of capital used to measure the cost overruns referred to in Annex III. Members of the Mohawk First Nation in Quebec maintain their rail blockade south of Montreal until they get more information about the agreement. 7. The agreement also covers the Puget Sound pipeline system in the United States. The pipe diameter in Zone 11 may be 30″, 36″ or 42″ for cost allocation purposes, as long as the pipe of identical diameter is used from the delta to Dawson (Zone 10).

a) Governments will establish a technical study group to test and evaluate 54-inch tubes at 1,120 pounds sterling per square inch (psi), 48-inch 1,260 psi and 48-inch 1,680 psi or any other combination of pressure and diameter that would achieve safety, reliability and cost-effectiveness for the operation of the pipeline. . . .