Toll and Rate Calculations - Alliance Pipeline · PDF fileFDS IBR 50% Share to APL $228.65 FFPS Zone 1 $697.34 $721.02 $768.37 FFPS Zone 2 $868.37 $901.05 $966.41 ... Energy per unit

SUMMARY DOCUMENT – REFER TO PRECEDENT AGREEMENT FOR LEGAL TERMS AND CONDITIONS

STRONG CONNECTIONS.NEW CHOICES: Toll and Rate Calculation


Agenda

� Review of New Services

� Alliance Tolls by Service

� Volumetric vs. Energy Tolling

� Distinction between Canada and the U.S.

� Rich Gas Credits

� Fuel Treatment

� Interruptible Pricing

� Firm Rich Gas Service

� Imbalance Management


Alliance New Services Dec 1, 2015

3-10 Years Fixed Rates

1-10 YearsFixed RatesFDS

FT-1

FRS

1-10 Years NegotiatedFixed Rates

CanadaU.S.

5-10 Years Negotiated Index

Based Rates

FDS

CanadaU.S.

FT-1

FT-1

3-10 Years Negotiated Fixed Rates

Segmented

IndexBased

FirmFullPath

Title Transfer

$/GJ

$/Mcf

$/Mcf

5-10 Years Negotiated Index

Based Rates

$/GJ$/Dth

$/Dth

$/Mcf

Chicago Hub

Energy tolls converted @ fixed 40.97MJ/m3 (1,100 Btu/cf) Assumes U.S. Shipper Declines Recourse Rate

Chicago Hub

3-10 Years Fixed Rates

FFPS

Canada

U.S.

Chicago Hub

ATP


Term

Segment 5+ Yrs 3 & 4 Yrs 1 & 2 Yrs

$/GJ

FRS-Zone 1 $0.36 $0.38 $0.42

FRS-Zone 2 $0.50 $0.52 $0.58

FDS (Canada) $0.20 $0.20 $0.20

FFPS Zone 1 $0.56 $0.58 $0.62

FFPS Zone 2 $0.70 $0.72 $0.78

FT-1/FT-1-FPS (U.S.) $0.37 $0.37 $0.37

Full Path Z1-Chicago $0.92 $0.94


$/Dth

FRS-Zone 1 $0.38 $0.40 $0.44

FRS-Zone 2 $0.53 $0.55 $0.61

FDS (Canada) $0.21 $0.21 $0.21

FFPS Zone 1 $0.59 $0.61 $0.65

FFPS Zone 2 $0.74 $0.76 $0.82

FT-1/FT-1-FPS (U.S.) $0.39 $0.39 $0.39



$/Mcf

FRS-Zone 1 $0.42 $0.44 $0.49

FRS-Zone 2 $0.58 $0.61 $0.67

FDS (Canada) $0.23 $0.23 $0.23

FFPS Zone 1 $0.65 $0.67 $0.72

FFPS Zone 2 $0.81 $0.84 $0.90

FT-1/FT-1-FPS (U.S.) $0.42 $0.42 $0.42



* Shaded rates are for Staged Contracts only. Canada and U.S. Rates are in native currency.

Energy rates converted using a fixed 1,100 btu/cf (40.97 MJ/m3) conversion factor

Alliance Tolls by Service


Volumetric vs. Energy Tolling

� Contracts for all firm transportation services are volumetric

� In Canada the transportation tolls are expressed in $/103m3/month

– FRS and FFPS tolls are volumetric

– FDS tolls are effectively energy based

• Volumetric contract with a volumetric rate converted to energy at fixed heating value at ATP

• To allow for downstream marketers to price their deals

� In US the transportation tolls are expressed in $/Dth/month

– FT-1 rates are energy based

• Contracts are volumetric contract volumes converted to energy at a fixed Thermal Conversion Factor


Alliance Pipeline New Services

Service FFPS FRS FDS FT-1

Contract Capacity 103m3 103m3 103m3 Mcf

Scheduled in GJ GJ GJ Dth

Unit for Title Transfers GJ GJ GJ Dth

Transportation Billing Unit 103m3/mo 103m3/mo 103m3/mo Dth/mo


Canadian Firm Service Tolls

Term

Segment 5+ Yrs 3 & 4 Yrs 1 & 2 Yrs

$/103m3/month

FRS-Zone 1 $449.90 $473.58 $520.93

FRS-Zone 2 $620.93 $653.61 $718.97

FDS (Canada) $247.44 $247.44 $247.44

FDS IBR 50% Share to APL $228.65

FFPS Zone 1 $697.34 $721.02 $768.37

FFPS Zone 2 $868.37 $901.05 $966.41

FRS and FFPS 1 & 2 year rates are for Staged Contracts only.


Firm Receipt Service (FRS)

� Firm transportation service with fixed volumetric tolls for two receipt zones (Zone 1 and Zone 2).

� Contract unit = 103m3; Nominated in energy (GJ).

� Energy per unit toll minimized via heat packing.

� Daily entitlement is contract volume x default location energy conversion factor + FRS Fuel Requirement (in kind) of 1.5% (GJ) and 2.0% (GJ) for Zone 1 and Zone 2 respectively.

� Demand billing unit = $/103m3/Month – Zone 1 Example

• If a shipper wants to contract for 50 MMcf/d = 1,416.4 103m3/d

• Monthly bill for demand charges for a 5 year contract term =

1,416.4 103m3/d x $449.90/ 103m3/month = $637,238.36

• If shipper gas transporting to ATP is deemed at 41MJ the rate is $0.36/GJ, at 45MJ the rate falls to $0.33/GJ

• Each day the shipper’s entitlement will be approximately 58,000GJ (Demand) + 870GJ (Fuel in kind)

� Priority Interruptible Transportation Service and Stage Contracts available for contract terms of 3+ years and 5+ years respectively.


Staged Contracts For FRS and FFPS Shippers

� Shippers committing to a term of 5 years or more along with an aggregate contracted capacity averaging 1,400 103m3/d (approximately 50 MMcf/d) may stage their service contracts.

� To determine if the shipper has met the average volume commitment of 1,400 103m3/d for a 5 year or greater contract term, the average of the contract capacities at multiple receipt points and multiple services (FRS and FFPS) may be used.

� This option provides flexibility for shippers by allowing contract volumes to match their production targets.

� The first tranche of the staged contract profile shall commence December 1, 2015 and subsequent tranches on dates agreed upon by Shipper and Alliance.

� The toll is the weighted average of the tolls for all the volume tranches over the 5 year (or greater) contract term.

� Proposed stages must be provided in the request for service form.


Staged Contract Example

� Toll is the weighted average of the three tolls:

� This rate is applied to all volumes under this arrangement and is the basis for determining Priority Interruptible Transportation Service tolls:

FRS Zone 1 Volume (103m3/d)

Toll ($/103m3/mo)

Volumes at 5 yr rate 900 $449.90



Staged Toll over 5yrs 1740 $480.92

900 103m3/d

1100 103m3/d

900 103m3/d


Priority Interruptible Transportation Service (PITS)

� Available to FRS and FFPS shippers with contract term of 3 years or more.

� FRS and FFPS shippers may nominate up to the equivalent of 25% of their contracted capacity at their contract point (PITS volume).

� PITS is scheduled after firm but ahead of other IT and diversions.

� There are two rate tiers for PITS

– The rate for the first 10% of shipper’s contracted capacity will be equal to 110% of the shipper's FRS/FFPS toll up; and

– The rate for the next 15% of shipper’s contracted capacity will be equal to 125% of the shipper's FRS/FFPS toll.


Firm Delivery Service (FDS)

� Firm transportation service with fixed volumetric tolls.

� Include a fixed demand charge ("FDS") or an Index Based Rate ("IBR") option ("FDS-IBR").


� Daily entitlement is contract volume x energy conversion factor of 40.97 MJ + FDS Fuel Requirement (in kind) of 1.25% (GJ).

� Energy per unit toll is the same for all volumes, however, FDS shippers receive Rich Gas Credit if ATP heat exceeds 40.97MJ.

� Demand billing unit = $/103m3/Month - Example

• If a Shipper wants to deliver 58,000GJ to the border, the required contract is for 50 MMcf/d = 1,416.4 103m3/d


1,416.4 103m3/d x $247.44 103m3/month = $350,474

• All gas leaving ATP is deemed at 40.97MJ so the $/GJ is $0.20

• Each day the shipper’s entitlement will be approximately 58,000GJ (Demand) + 725GJ (Fuel)


Sample Rich Gas Credit Calculation

Quarterly System Rich Gas Credit

ATP Gross Heating Value (GHV) = 42.25 MJ/m3

ATP Energy Conversion Factor (ConvF) = 40.97 MJ/m3

FDS Toll ($/103m3/mo.) = $247.44 FDS Toll ($/103m3/d) = $8.14

FDS Quarterly Scheduled Quantity (QSQ) + FDS-IBR QSQ (GJ) = 161,100,747 GJ

Actual Quarterly Volume (AQV) = (FDS QSQ + FDS-IBR QSQ) / ConvF

= 161,100,747 GJ/ 40.97 MJ/m3 = 3,932,164 103m3

Quarterly System Rich Gas Credit* (QSRGC) = AQV x FDS Toll x (GHV-ConvF)/ConvF

= 3,932,164 x $8.14 x ((42.25-40.97)/40.97) = $1,000,000

*If negative will result in Quarterly System Rich Gas Debit (QSRGD)

Shipper’s Rich Gas Credit

FDS CC + FDS-IBR CC in the Month where credit is applied = 39,000 103m3/d.

Shipper’s Contract Capacity in the Month where credit is applied = 1,950 103m3/d.

Shipper’s Rich Gas Credit = ((∑QSRGC - ∑QSRGD) / (FDS CC + FDS-IBR CC)) x Shipper's Contracted Capacity in the Month = ($1,000,000 / 39,000) x 1,950 = $50,000

Shipper Credit for Q1 will be applied to July transportation invoice


Firm Full Path Service (FFPS)

� Firm transportation service with fixed volumetric tolls from two Canadian receipt zones (Zone 1 and Zone 2) to the Canada-U.S border.

� Must hold FT-1 (U.S.) service with matching term and volume to FFPS.


� Energy per unit toll minimized via heat packing.

� Daily entitlement is contract volume x energy conversion factor + FDS Canada and U.S. Fuel Requirement (in kind) (GJ).

� Demand billing unit = $/103m3/Month – Zone 1 Example

• If a shipper wants to contract for 50 MMcf/d = 1,416.4 103m3/d


1,416.4 103m3/d x $697.34/ 103m3/month = $987,712.38

• If shipper gas transporting to ATP is deemed at 41MJ the rate is $0.56/GJ, at 45MJ the rate falls to $0.51/GJ

� Priority Interruptible Transportation Service and Stage Contracts available for contract terms of 3+ years and 5+ years respectively.


Firm Transportation Service U.S. (FT-1)

� Contract unit = Mcf

� Nominated in energy (Dth)

� Daily entitlement is contract volume + FT-1 fuel requirement of 2.00%

� Demand billing unit = $/Dth/Month

� Volumes converted to energy at a Thermal Conversion Factor which can vary by agreement (1,100Btu is expected base)

• If a customer wants to deliver 50,000 Dth to Chicago from the border, the required contract volume is 45,455 Mcf

• Monthly bill for demand charges is = 45,455 x 1.1 x 11.73 = $586,500

• Each day the shipper’s entitlement will be approximately 50,000Dth (Demand) + 1,000Dth (Fuel) = 46,364 Mcf

Term

$/Mcf/month 5+ Yrs 3 & 4 Yrs 1 & 2 Yrs

FT-1 $12.90 $12.90 $12.90


Fuel

FDS

FT-1

FRS

CanadaU.S.

FT-1

Segmented

FirmFullPath

Title Transfer

2.00%

2.00%

Chicago Hub

Energy tolls converted @ fixed 40.97MJ/m3 (1,100 Btu/cf)

FFPS

Canada

U.S.

Chicago Hub

ATP

Zone 1

Zone 2

1.50%

1.25%

Zone 2

Zone 1

3.25%

2.75%

2.00%


Fuel

� FFPS fuel will be very similar to today

– Shipper entitlement will include fuel requirement for Canada and U.S.

– Shipper doesn’t have to pay Canadian freight for fuel used in the U.S.

� Fuel for FRS, FDS and FT-1 will be different

– Shipper’s holding FRS, FDS and FT-1 capacity will have to pay freight for fuel used in downstream zones


Segmented Services Fuel Example

� If a shipper wishes to deliver 50,000 Dths of 1,100 Btu/cf gas to Chicago from FRS Zone 1, the shipper would have to pay freight on fuel to be used in the FDS and FT-1 segments

FDS

FT-1

FRS Zone 1

Canada

U.S.

Segmented

Title Transfer 2.00%

Chicago Hub

ATP

1.50%

1.25%

CC: 45,455 McfCC: 50,000Dth

Entitlement: 51,000 DthFuel: 1,000 Dth

CC: 1,312.4 103m3

CC: 51,000DthEntitlement: 51,638 Dth

Fuel: 638 Dth

CC: 1,328.8 103m3

CC: 51,638DthEntitlement: 52,413 Dth

Fuel: 775 Dth


Interruptible ( IT) Service Pricing

� Alliance will have IT capacity available

– No longer offering AOS

� Interruptible Receipt Service (ITRS) and Interruptible Delivery Service(ITDS) will be available, and offered as a biddable service with bidfloors established daily by Alliance Pipeline.

� Interruptible Full Path Service (ITFPS) will be available, and offered asa biddable service with bid floors established daily by Alliance Pipeline.ITFPS customers can move gas from their receipt point to the CanadaU.S. border, and must have a matching IT-1 nomination to move theirvolumes from the border to a U.S. delivery point.

� ITRS, ITDS and ITFPS will be scheduled after firm capacity and PITS.


Firm Rich Gas Service

� Firm Rich Gas Service allows shippers to flow gas that exceeds Alliance’s HCDP specification of -5°C

� The rate for this service is 1¢/°C/Mcf

– Proxy for the cost of facilities to process the C5+

� Example:

– If a shipper wishes to deliver 50MMcf/d of gas at an HCDP of 0°C the surcharge would be 5¢/Mcf x 50 MMcf/d = approx. $76,000/month

� Shipper may opt out of a FRGS agreement with only 1 month notice

� Billed on a demand basis (not commodity)


Imbalance Management

� All services have 4% tolerance

– Based upon contract capacity

– All contract tolerances aggregated at the account level

� Y-Day scheduling window will be implemented

– Imbalance trading

� Pipeline will assess Balancing Fees to imbalances outside of tolerance

� Longer term daily imbalances will be cashed out back to the tolerance limit

� Strict enforcement of tolerances with balancing fees/penalties increases hub activity and liquidity


Imbalance Management Example

� Assume an ATP imbalance of 10,000GJs

� Available tolerance is 4,000GJs

� Shipper account is 6,000GJs outside of tolerance

– This quantity is assessed balancing fees each day

� Five days later:

– If shipper account is still at 6,000GJs outside of tolerance transporter will cash out this quantity


Imbalance Management ExampleContinued

Initial Imbalance

10,000 GJS

Tolerance4,000GJs

Qty in excess of Tolerance6,000 GJs

After Day 5

Tolerance4,000GJs


Balancing Fees Schedule

Total account imbalance on day six of Alliance Trading Pool imbalance being out of imbalance tolerance

Deficit Balancing Cash Out (% of index price of gas on day in which Alliance Trading Pool imbalance first exceeds imbalance tolerance)

Surplus Balancing Cash Out (% of index price of gas on day in which Alliance Trading Pool imbalance first exceeds imbalance tolerance)

4% Up to 10% 115% 85%

>10% Up to 15% 130% 70%

>15% Up to 20% 140% 60%

>20% 150% 50%

� For prior example, if index price was $3.50/GJ on the day the

imbalance was incurred, the shipper:

– Receives $2.975/GJ for a pack

– Is charged $4.025/GJ for a draft


Questions?


Contacts

www.alliancepipeline.com

Bob BlattlerDirector, Supply DevelopmentDirect: (403) 517-6431Email: [email protected]

Rob EngelhardtManager, Service DesignDirect: (403) 517-7708Email: [email protected]

Rick StadelDirector, Market ServicesDirect: (403) 517-6399Email: [email protected]

Michael FujdaManager, Strategic AnalysisDirect: (403) 517-6273Email: [email protected]

Documents

Toll and Rate Calculations - Alliance Pipeline · PDF fileFDS IBR 50% Share to APL $228.65 FFPS Zone 1 $697.34 $721.02 $768.37 FFPS Zone 2 $868.37 $901.05 $966.41 ... Energy per unit