WASHINGTON, March 22 U.S. regulators on Friday
rejected a proposed toll plan for Enbridge Inc's $2.5
billion expansion of its Sandpiper project that would move oil
from North Dakota to refineries in the Midwest.
The Federal Energy Regulatory Commission (FERC) turned down
the Enbridge plan, saying the company's proposed rate structure
to fund system upgrades was not supported by existing
Enbridge, which is seeking to bring Sandpiper into service
in early 2016, had sought to recover the costs of the expanded
pipeline from North Dakota to Minnesota and Wisconsin through
surcharges added to existing rates.
Refiners including Flint Hills Resources and St.
Paul Park Refining Company had protested the surcharges. Flint
said Enbridge did not get shipper commitments to pay rates that
would cover the cost of expansion, evidence that the expansion
plan was not viable.
In issuing the ruling, FERC said it "must ensure that, in
addressing Enbridge North Dakota's cost recovery mechanisms,
shippers are protected from risks that should appropriately be
assigned to the pipeline."
Sandpiper is an important part of Enbridge Energy Partners'
plan for overall expansion in its Canadian and U.S. oil
pipeline network aimed at moving surging volumes of light oil
from the Bakken formation. Enbridge Energy Partners, the U.S.
affiliate, is footing part of the bill for the expansion.
The program also includes expansions and new pipelines in
Illinois, Indiana, Southern Ontario and Quebec. The so-called
Light Oil Access plan would add a total of 400,000 barrels a day
of capacity to the system. Enbridge Energy Partners is expected
to foot slightly more than half the total bill.
FERC encouraged Enbridge to submit a new rate plan.
Enbridge spokesman Graham White said the 2016 timeline of
the project had not changed and it was reviewing FERC's decision
and assessing its next steps.