IPL ANALYZES NEB DECISION
IPL ANALYZES NEB DECISION EDMONTON, Alberta, June 23 /PRNewswire/ -- Interprovincial Pipe
Line Inc. (NASDAQ-NMS: IPPIF; Montreal, Toronto: IPPIF) commented today on the financial implications of the National Energy Board's June 19, 1992 decision on IPL's Class 3 application for 1992 tolls.
The NEB has approved a rate of return on equity of 12.5 percent compared with 13.25 percent in effect since 1987. IPL expects that this lower rate of return, combined with an effective reduction in the deemed common equity ratio, will reduce annual earnings by approximately $5 million, or 12 cents per share. The NEB also ruled that certain forecasted costs cannot be recovered through 1992 tolls. This could result in a one-time reduction in earnings of approximately $3 million or 8 cents per share. In addition, IPL has been instructed to change its method of accounting for income taxes from a "normalized" to a "flow-through" basis, which is consistent with other pipeline companies regulated by the NEB. While this change will have no effect on earnings, cash flow will be reduced by approximately $13 million this year. As part of its application, IPL requested a toll structure for its deactivated Sarnia-Montreal line (Line 9). The NEB has ruled that stand-alone tolls are appropriate for Line 9 regardless of whether it is deactivated, reactivated in west-east service, or reversed to transport offshore oil from Montreal to Sarnia. The viability of reversal and gas conversion is not expected to be affected by this decision; the impact on possible reactivation is unknown at this time. While Line 9 is deactivated and on a stand- alone toll basis, the Federal Government's support payments will increase substantially. Brian MacNeill, president and chief executive officer, stated, "The decision, while certainly not what we requested, recognizes from the NEB's perspective the current economic situation of the industry. This decision will result in lower IPL tolls; however, the higher level of support payments from the Federal Government will offset the reduction in transportation revenue. In spite of these changes, IPL is in a strong financial position and our outlook for the future remains positive. We intend to maintain the quarterly dividend of 50 cents per common share." Interprovincial Pipe Line Inc. operates the world's longest petroleum pipeline, transporting crude oil and other liquid hydrocarbons from Western Canada to refineries and markets in the Midwest United States and Eastern Canada. IPL is a widely held, publicly owned corporation with shares traded on the Toronto and Montreal stock exchanges in Canada and on the NASDAQ-NMS in the United States. -0- 6/23/92 /CONTACT: Derek Truswell, VP-finance of Interprovincial Pipe Line, 403-420-5303/ (IPPIF) CO: Interprovincial Pipe Line Inc. ST: Alberta IN: OIL SU: AL -- LA020 -- 3016 06/23/92 17:19 EDT
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|Date:||Jun 23, 1992|
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