OEB Issues Decision on Union Gas Limited



    TORONTO, Jan. 17 /CNW/ - Today the Ontario Energy Board issued a Decision
on a settlement agreement regarding an application by Union Gas Limited for
approval of a multi-year incentive rate mechanism for its regulated natural
gas distribution, transmission and storage services.
    The Incentive Regulation Plan approved is a five year plan, beginning
January 1, 2008. The Plan limits any rate increase by a price index after
deducting an amount for productivity which will encourage Union to develop
efficiencies in its operations and put downward pressures on rates. If Union's
earnings reach a certain threshold, the extra earnings will be shared with
customers. Some costs will continue to be passed through directly to
customers.
    The Plan will be used to calculate rates starting April 1, 2008, on an
interim basis. The estimated rate increase for residential customers from
implementation of the Plan in the first year will be less than 2%.

    
    In its Decision, the Board stated an acceptable Incentive Rate Plan must:

    -   Establish incentives for sustainable efficiency improvements that
        benefit customers and shareholders;
    -   Ensure appropriate quality of service for customers; and
    -   Create an environment that is conducive to investment, to the benefit
        of customers and shareholders.
    

    The Board determined this Plan meets these criteria and is in the public
interest. The Board stated that the Plan is an important step forward in
establishing long term rate stability in a manner that will promote maximum
efficiencies for the benefit of both ratepayers and shareholders.
    Three matters were unresolved and will proceed to a hearing. These are
Commodity risk Management, the treatment of customer additions under incentive
regulation and how tax changes resulting from changes to federal and/or
provincial legislation and/or regulations will be treated under the Plan. The
Board indicated that it will render a further decision on the outstanding
matters following the hearing.

    The Ontario Energy Board regulates the province's electricity and natural
gas sectors in the public interest. It envisions a viable and efficient energy
sector with informed consumers served by responsive regulatory processes that
are effective, fair and transparent.
    For more information on the Board, please visit our Web site at
www.oeb.gov.on.ca or contact the Consumer Relations Centre at 416-314-2455 or
toll-free at 1-877-632-2727.





For further information:

For further information: Vanda Wall, Ontario Energy Board, (416)
440-8149


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