Most pipeline companies must establish a trust, provide a letter of credit issued by a Schedule 1 bank, or a surety bond supplied by a surety company regulated under the Trust and Loan Companies Act. The Board will require almost all pipeline companies to provide their trust agreement, surety bond, or letter of credit for approval.
The Board will regularly review companies’ estimates of abandonment costs, the coverage provided by their set-aside mechanisms, and the assumptions about how those funds will grow. To allow for greater transparency and to facilitate consultation, the Board expects pipeline companies to consider specific tools to communicate information about abandonment funding. Additionally, the amount of abandonment funds being set aside must be included in annual reports filed with the Board.
In 2009, as a part of its RH-2-2008 Reasons for Decision, the NEB directed all pipeline companies to begin setting aside abandonment funds. That decision set-out guiding principles and considerations, and a list of attributes for any mechanism that would be used to set aside funds for pipeline abandonment. It also established a five-year Action Plan for companies to follow.
The Board’s decision on set-aside and collection mechanisms for pipeline abandonment cost funding is the tenth and final step of the Action Plan.