[Federal Register Volume 63, Number 214 (Thursday, November 5, 1998)]
[Notices]
[Pages 59777-59778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29592]


-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission
[Docket No. OR99-2-000]


Lakehead Pipe Line Company Limited Partnership; Notice of Offer 
of Settlement

October 30, 1998.
    Take notice that pursuant to 18 CFR 385.602, Lakehead Pipe Line 
Company, Limited Partnership (Lakehead), a common carrier oil pipeline 
regulated by this Commission, on October 27, 1998 tendered for filing 
an Offer of Settlement.
    By this offer, Lakehead seeks Commission approval for a 
comprehensive settlement agreement (1998 Settlement Agreement), which 
was entered into on October 21, 1998 by Lakehead and the Canadian 
Association of Petroleum Producers (CAPP), the principal representative 
of the producers Lakehead serves. The 1998 Settlement Agreement is 
intended to govern the rate recovery by Lakehead of the costs of three 
projects for the expansion of Lakehead's capacity and the broadening of 
its capability to transport heavier crude oil. Its primary features 
are:
    (1) A cost-of-service based surcharge, for 15 years, on terms 
included as part of the settlement of Lakehead's most recent rate case, 
for recovery of costs associated with Lakehead's portion of the System 
Expansion Program Phase II (SEP II);
    (2) An agreed-upon flat-rate surcharge for 15 years for recovery of 
costs associated with Lakehead's portion of the so-called Terrace 
Expansion Project (Terrace); and
    (3) An increase in the existing heavy oil surcharge from 20 percent 
of the standard rate to as much as 22 percent to reflect a planned 
operational change permitting shippers to transport heavier grades of 
crude through the Lakehead system.
    In the case of the two expansion-related surcharges, the terms of 
those surcharges have been extensively negotiated between CAPP and 
Lakehead's Canadian affiliate Enbridge

[[Page 59778]]

Pipelines, Inc. (Enbridge),\1\ on behalf of itself and Lakehead. The 
resulting agreements have been formally approved by the National Energy 
Board of Canada (NEB), and the terms of the SEP II surcharge were 
included in the Lakehead rate settlement approved by this Commission on 
October 18, 1996. The proposed change to the heavy oil surcharge has 
also been agreed to by CAPP and the affected heavy oil producers, and 
has been approved in principle by the NEB. This change is conditional 
on CAPP giving notice to Enbridge and Lakehead of CAPP's intent to have 
the higher viscosity limit implemented, and on Lakehead's operations 
being altered to permit movement of much heavier crudes than could be 
accommodated in the past.
---------------------------------------------------------------------------

    \1\ Enbridge was formerly known as Interprovincial Pipe Line 
Inc. (IPL). The name was changed to Enbridge effective October 7, 
1998.
---------------------------------------------------------------------------

    Lakehead states that its rates are currently governed by the 1996 
FERC Settlement, which resolved Lakehead's most recent major rate 
proceeding before this Commission. Under the 1996 FERC Settlement, to 
the extent Lakehead undertakes system capacity expansions during the 
initial five-year period, the costs of such expansions can be recovered 
through an incremental surcharge to Lakehead's rates calculated in 
accordance with Appendix D to the 1996 FERC Settlement.
    The Commission will follow its Rule 602 procedures for processing 
this Offer of Settlement. Parties seeking to comment on any aspect of 
the proposed settlement are required to do so within 20 days of the 
date of the filing of this Offer of Settlement (Rule 602(f)(2), 18 CFR 
385.602(f)(2)), on or before November 16, 1998. Reply comments are due 
November 27, 1998.
David P. Boergers,
Secretary.
[FR Doc. 98-29592 Filed 11-4-98; 8:45 am]
BILLING CODE 6717-01-M