Thank you very much.
Good evening, everyone. What I'd like to do tonight is to quickly describe the issue and our proposed solution. Then we can respond to any questions you may have.
First, the Northern Pipeline Agency is a federal agency within the Department of Natural Resources' portfolio. It was established by the Northern Pipeline Act, and it is responsible for the administration of the act. The agency's core mandate is the federal regulation of the planning and construction of the Canadian portion of the Alaska Highway gas pipeline project.
The issue is that, at present, the agency is over-collecting its cost from TransCanada, which is the project proponent. This is an unintended consequence of the current cost-recovery regulations, as the agency is required to use estimated operating costs, as set out in the main estimates, to bill the proponent.
Our solution is to resolve the over-collection of funds permanently through a minor technical amendment to section 29 of the Northern Pipeline Act. Specifically, we are seeking a technical amendment through the cost-recovery framework used by the agency, as set out in section 29.
We are looking for two things. First, the amendment would allow the agency to recover its full cost from the project proponent based on its actual spending, its actual costs, rather than estimated costs, which is now the case. Second, the amendment would remove from the act the requirement to use the National Energy Board's cost-recovery regulations. The unintended consequence, as I mentioned before, is to cause the agency to over-collect from the project proponent because it uses estimated costs, as opposed to actual costs. The amendment would be simple and would allow the government to quickly, efficiently, and permanently address the issue and prevent future over-collection.
Why now? Budget 2017 identified the need to modernize or streamline the framework for recovering costs for this project. The government believes that this amendment would improve the existing cost-recovery framework, making it more efficient and enhancing transparency. Also, it is a federal responsibility to correct this over-collection issue and enable the repayment to the project proponent, and to do so as soon as possible.
To conclude, the proposed amendment would resolve the issue of over-collection permanently, which is a key element of the amendment we are seeking. This technical amendment, once approved, would allow the agency to bill the project proponent based on its actual costs rather than its estimated operating costs. The government is of the view that an improved cost-recovery mechanism would further support the agency in carrying out its federal responsibilities: first, to efficiently and effectively fulfill Canada's obligations as set out in the act and in the Canada-U.S. agreement, and second, to maintain a state of federal readiness should the proponent proceed with the construction of the northern portion of the project.
With that, I will open it up for questions.