Union Gas 2011 Deferral Account and Earnings Sharing Disposition

March 20, 2013

Union Gas has received Ontario Energy Board (OEB) approval of its 2011 Earnings Sharing & Disposition of Deferral Accounts and Other Balances (EB-2012-0087) on February 28, 2013.  These adjustments are part of the annual deferral account and earnings sharing processes.  M12, C1, M13, and M16 transportation Shippers will see a one-time adjustment on their April invoice (received in May) relating to the following accounts:

IFRS Conversion Costs: Union Gas has converted the accounting methodology used from Canadian Generally Accepted Accounting Principles (“CGAAP”) to International Financial Reporting Standards (“IFRS”).   A deferral account has been established to recover the cost associated with upgrading Union Gas’ accounting system in order to report results under IFRS. This deferral account will be cleared over multiple years.  For 2011 $31,681 will be collected from ex-franchise transportation Shippers.  For M12, C1 and M16 transportation Shippers, the adjustment is based on contracted quantities.  For M13 transportation Shippers, the adjustment is based on volumes flowed.

2011 Earnings Sharing:  During the current Incentive Regulation period, earnings above a specific threshold are subject to sharing with Shippers.  For 2011, Union Gas earned in excess of the threshold and is distributing $507,259 among M12, C1, M16, and M13 transportation Shippers.  For M12, C1 and M16 transportation Shippers, the adjustment is based on contracted quantities.  For M13 transportation Shippers, the adjustment is based on volumes flowed.

Harmonized Sales Tax Adjustment: On July 1, 2010, Harmonized Sales Tax (“HST”) came into effect in Ontario, combining provincial and federal taxes. The impact of HST resulted in both savings and additional costs to Union related to the provincial component of the tax.   In its EB-2010-0148 Decision, the Board ordered Union to establish a Harmonized Sales Tax (HST) deferral account to record the amount of Provincial Sales Tax (PST) previously paid and collected in approved rates now subject to Harmonized Sales Tax (HST) tax credits or the amount of HST paid on taxable items for which no tax credits are received from the Canadian Revenue Agency (CRA). Union will share the net impact 50/50 between the ratepayers and the shareholders. For 2011 $206,565 will be distributed to the ex-franchise transportation Shippers.  For M12, C1 and M16 transportation Shippers, the adjustment is based on contracted quantities.  For M13 transportation Shippers, the adjustment is based on volumes flowed.

Please contact yourAccount Manager for additional details.