File OF-GEN06-FRR 15 July 2019 Alliance Pipeline Ltd

File OF-GEN06-FRR
15 July 2019


Alliance Pipeline Ltd.
Canadian-Montana Pipe Line Corporation
Emera Brunswick Pipeline Company Ltd.
Foothills Pipe Lines Ltd.
Glenogle Energy Inc.
Great Lakes Pipeline Canada Ltd.
Many Islands Pipe Lines (Canada) Ltd.
Maritimes & Northeast Pipeline Management Limited
Minell Pipeline Ltd.
NorthRiver Midstream Canada Pipelines Inc.
NorthRiver Midstream G and P Canada Pipelines Inc.
NOVA Gas Transmission Ltd.
Pembina Energy Services Ltd.
SCL Pipeline Inc.
Steel Reef Pipelines Canada Corp.
Sunoco Pipeline L.P.
TransCanada Pipelines Limited
Trans Quebec & Maritimes Pipelines Inc.


         National Energy Board (NEB or Board)
         Pipeline Financial Requirements
         Information Request No. 1 to Gas Companies (Gas IR No. 1)

Subsection 48.13(1) of the National Energy Board Act (NEB Act) requires pipeline companies to
maintain financial resources equal to their absolute liability level. The Pipeline Financial
Requirements Regulations (Regulations) set out absolute liability limits for the non-major oil
pipeline companies1 (i.e., all other oil, gas, and commodity pipeline companies), which come
into force on 11 July 2019.


                                                                                                                 …/2

1
  Non-major oil pipeline companies are Board-regulated pipeline companies that do not meet the definition of a
major oil pipeline. Major oil pipeline companies have the capacity to transport greater than 250,000 barrels of oil per
day. Refer to the Pipeline Financial Requirement Guidelines for detailed definitions and additional background on
financial requirements.
-2-

On 29 March 2019, the Board issued the Pipeline Financial Requirements Guidelines
(Guidelines). Included in the Guidelines was a schedule for companies to submit their financial
resources plans for Board review and approval. The schedule would enable the Board to assess
as many financial resources plans as practicable prior to the coming into force date of the
Regulations on 11 July 2019.

In its letter, the Board directed all Gas companies to file their financial resource plans by
14 May 2019.

The Board is reviewing the financial resources plan filings from those companies with an
absolute liability class of Gas Class 1, 2, 3, and 4, and has determined that further information is
required.

The Board’s Gas IR No. 1 is contained in one document and is grouped by company. Companies
need only respond to the IRs specifically directed to them. The IRs are found in Appendix I. The
responses to the IRs are due by noon, Calgary time, 29 July 2019.

Yours truly,


Original signed by L. George for


Sheri Young
Secretary of the Board


Attachment
Attachment to Board Letter
                                                                                                          dated 12 July 2019
                                                                                                                 Page 1 of 44

Appendix I

                          Implementation of Financial Resource Requirements
                        Subsections 48.12 & 48.13 of the National Energy Board Act
                                     Financial Resources Plan Filings
                                          File OF-Gen-06 FRR
                                            Filed 14 May 2019

              National Energy Board (NEB or Board) Gas Information Request No. 1

                                                        Table of Contents

Alliance Pipeline Ltd. (Alliance) .................................................................................................... 3
     Gas 1.1    Operating Credit Facility....................................................................................... 3
Canadian-Montana Pipe Line Corporation (CMPL)....................................................................... 3
     Gas 1.2    Insurance ............................................................................................................... 3
     Gas 1.3    Reliance on Insurance and Alternatives ................................................................ 4
Emera Brunswick Pipeline Company Ltd. (Emera) ....................................................................... 6
     Gas 1.4    Financial Resources............................................................................................... 6
     Gas 1.5    Insurance Claims Response ................................................................................... 9
Foothills Pipe Lines Ltd. (Foothills) ............................................................................................. 10
     Gas 1.6    Parental Guarantee .............................................................................................. 10
     Gas 1.7    Certificate of Insurance ....................................................................................... 11
Glenogle Energy Inc. (Glenogle) .................................................................................................. 12
     Gas 1.8    Financial Resource Plan ...................................................................................... 12
     Gas 1.9    Insurance ............................................................................................................. 13
     Gas 1.10 Line of Credit/Readily Accessible Funds ........................................................... 14
     Gas 1.11 Reliance on Insurance ......................................................................................... 15
Great Lakes Pipeline Canada Ltd. (GLC) ..................................................................................... 17
     Gas 1.12 Parental Guarantee .............................................................................................. 17
     Gas 1.13 Certificate of Insurance ....................................................................................... 19
Many Islands Pipe Lines (Canada) Ltd. (MIPL) .......................................................................... 19
     Gas 1.14 Line of Credit and Parental Guarantee ................................................................ 19
     Gas 1.15 Certificate of Insurance ....................................................................................... 22
Maritimes & Northeast Pipeline Management Limited (M&NP) ................................................ 23
     Gas 1.16 M&NP Equity Holding Co. Guarantee ............................................................... 23
     Gas 1.17 M&NP & Emera Arrangement ........................................................................... 25
Minell Pipeline Ltd. (Minell) ........................................................................................................ 26
     Gas 1.18 Parental Guarantee .............................................................................................. 26
NorthRiver Midstream Canada Pipelines Inc. (NorthRiver) ........................................................ 27
     Gas 1.19 Access to Parent’s Financial Resources .............................................................. 27
Attachment to Board Letter
                                                                                                          dated 12 July 2019
                                                                                                                 Page 2 of 44

     Gas 1.20 Lines of Credit ..................................................................................................... 29
NorthRiver Midstream G and P Canada Pipelines Inc. (NorthRiver G and P)............................. 30
     Gas 1.21 Access to Parent’s Financial Resources .............................................................. 30
     Gas 1.22 Lines of Credit ..................................................................................................... 31
NOVA Gas Transmission Ltd. (NGTL) ....................................................................................... 32
     Gas 1.23 Parental Guarantee .............................................................................................. 32
     Gas 1.24 Certificate of Insurance ....................................................................................... 34
Pembina Energy Services Ltd. ...................................................................................................... 34
     Gas 1.25 Commodity .......................................................................................................... 34
SCL Pipeline Inc. (SCL) ............................................................................................................... 35
     Gas 1.26 Shell Canada Limited Line of Credit .................................................................. 35
Steel Reef Pipelines Canada Corp. (Steel Reef) ........................................................................... 36
     Gas 1.27 Parental Guarantee .............................................................................................. 36
     Gas 1.28 Certificate of Insurance ....................................................................................... 38
     Gas 1.29 Capacity of Parent Company............................................................................... 39
Sunoco Pipeline L.P. (SPLP) ........................................................................................................ 40
     Gas 1.30 Letter of Credit .................................................................................................... 40
TransCanada Pipelines Limited (TCPL) ....................................................................................... 40
     Gas 1.31 Certificate of Insurance ....................................................................................... 40
Trans Quebec & Maritimes Pipelines Inc. (TQM) ....................................................................... 41
     Gas 1.32 Parental Guarantee .............................................................................................. 41
     Gas 1.33 Certificate of Insurance ....................................................................................... 43
Attachment to Board Letter
                                                                               dated 12 July 2019
                                                                                      Page 3 of 44

           National Energy Board (NEB or Board) Gas Information Request No. 1

Alliance Pipeline Ltd. (Alliance)

 Gas 1.1         Operating Credit Facility
      Reference:      i)     A99430-2 Alliance, Financial Resources Plan, PDF page 1 of 2
                      ii)    National Energy Board’s Pipeline Financial Requirements
                             Guidelines, Section 7.2(d), PDF page 25 of 28

      Preamble:       In reference i), Alliance states that it had $120 million undrawn on the
                      credit facility as at 31 December 2018. It also has unrestricted cash on
                      hand from time to time.
                      In reference ii), the Pipeline Financial Requirements Guidelines
                      (Guidelines) state that lines of credit be accompanied by a description of
                      the structure (and balance) of the line of credit including notice of
                      cancellation, secured/unsecured, total amount, and the undrawn portion.

      Request:         a) Provide updated amounts for:
                             a.1) the credit facility’s undrawn portion as at Alliance’s most recent
                                  fiscal quarter ended; and
                             a.2) the unrestricted cash balance as at Alliance’s most recent fiscal
                                  quarter ended.

Canadian-Montana Pipe Line Corporation (CMPL)

 Gas 1.2         Insurance
      Reference:      i)     A99416-1 CMPL, Financial Resources Plan, PDF page 2 of 3
                      ii)    A99416-10 CMPL, Certificate of Insurance, PDF page 1 of 1
                      iii) National Energy Board’s Pipeline Financial Requirements
                           Guidelines, Section 7.2(a), PDF page 24 of 28

      Preamble:       Reference i) indicates that CMPL is a named insured under a liability
                      insurance program with $100 million of coverage that can be modified to
                      $300 million, if needed.
                      Reference ii) lists the Insured as NorthWestern Corporation. Under the
                      additional description section, it states that “Name insured includes:
                      Canadian-Montana Pipeline Company Ltd, a wholly owned subsidiary
                      company of NorthWestern Energy”. The certificate lists the insurers as
Attachment to Board Letter
                                                                              dated 12 July 2019
                                                                                     Page 4 of 44

                    “Associated Electric & Gas Ins Svcs” and “Energy Ins Mut Ltd”. The
                    certificate also states an expiration date of 1 July 2019.
                    In reference iii), the Pipeline Financial Requirements Guidelines
                    (Guidelines) state that:
                         “A Company relying on insurance must provide a certificate of
                         insurance, containing an overview of its insurance policies, detailing at
                         a minimum:
                            Coverage/policy types, and limits of each policy type;
                            Deductible amounts, per incident and policy type;
                            A list of insured parties under the policy(ies);
                            Effective date(s) and expiry date(s); and,
                            The insurance providers, and the providers’ respective A.M. Best
                             Ratings (or equivalent).”

    Request:        a)    Provide a pro-forma (or executed) certificate(s) of insurance:
                          a.1) detailing, at minimum, the criteria listed in reference iii).
                                Examples of detailed items that were not provided in references
                                i) or ii) include, and are not limited to, deductible amounts and
                                the insurance provider’s A.M. Best Rating (or equivalent).
                          a.2) showing that the policy(ies) is (or will be) in effect beyond
                                1 July 2019, as indicated in reference ii).
                    Provide the relevant excerpt of the insurance policy(ies) detailing the
                    clauses providing for the coverage of subsidiary companies of
                    NorthWestern Corporation, including CMP.

CMPL

Gas 1.3        Reliance on Insurance and Alternatives
    Reference:      i) A99416-1 CMPL, Financial Resources Plan, PDF page 2 of 3
                    ii) National Energy Board’s Pipeline Financial Requirements Guidelines,
                        Section 4.3, PDF page 20 of 28
                    iii) National Energy Board’s Pipeline Financial Requirements Guidelines,
                         Section 5, PDF page 22 of 28
                    iv) National Energy Board’s Pipeline Financial Requirements Guidelines,
                        Section 7.1, PDF page 23 of 28
Attachment to Board Letter
                                                                    dated 12 July 2019
                                                                           Page 5 of 44

Preamble:   In reference i), CMPL states that it is a named insured under a liability
            insurance program with $100 million of coverage that can be modified to
            $300 million, if needed.
            Reference ii) states that if a Company chooses to place a high degree of
            reliance on insurance as part of its Financial Resources Plan (for example,
            >50% of its financial resources being composed of insurance), the Board
            would expect the Company to further justify this approach in part by
            describing its risk, operating characteristics, and potential exposure to
            sudden financial resource draws in the event of a release.
            Reference iii) states that if the Board is not satisfied with a pipeline
            Company’s Financial Resources Plan […], the Board may direct a
            Company to maintain Financial Resources in certain types and in certain
            amounts of each type. This may be necessary for various reasons,
            including but not limited to: […]
                 A Company’s Financial Resources Plan is too heavily reliant on
                  contingent resources of a third party, (e.g. sole reliance on
                  insurance, with no internal financial means to respond to an
                  incident prior to availability of insurance proceeds).
            Reference iv) states that:
            “The Pipeline Financial Requirements Regulations (Regulations)
            prescribe a list of financial resource types, and a list of readily accessible
            types from which the Board may choose to direct Companies to maintain.
            The financial resource types are prescribed via the Regulations as follows:
                  Insurance policy:
                  Escrow agreement;
                  Letter of credit;
                  Line of credit;
                  Participation in a pooled fund referred to in subsection 48.14(1) of
                   the NEB Act;
                  Parent company guarantees;
                  Surety bond or pledge agreement, or indemnity bond or suretyship
                   agreement; and
                  Cash or cash equivalents.”

Request:    a) Regarding reference ii), explain whether CMPL has performed any
               analysis regarding the expected cost of a release, including response,
               remediation, and potential claims.
                 a.3) If CMPL has performed such an analysis, provide this analysis.
Attachment to Board Letter
                                                                         dated 12 July 2019
                                                                                Page 6 of 44

                       a.4) If CMPL has not quantified its potential cost exposure in the
                            event of a release, describe CMPL’s risk, operating
                            characteristics, and potential exposure to sudden financial draws
                            in the event of a release.
                  b) Explain whether it would be feasible for CMPL to obtain further
                     access to readily accessible resources, including additional funding
                     under its parental guarantee or via other means such as obtaining direct
                     credit capacity from a financial institution.
                  c) Should the Board not be satisfied with the Financial Resources Plan
                     submitted by CMPL and determine that it is necessary to direct CMPL
                     to maintain additional financial resources, select from the following
                     list (as described in reference iv)) the financial resource type CMPL
                     would prefer the Board direct it to maintain, and provide a rationale
                     for the selection:
                                a letter of credit;
                                a line of credit (from a financial institution);
                                participation in a pooled fund referred to in subsection
                                 48.14(1) of the Act; or
                                cash or cash equivalents.

Emera Brunswick Pipeline Company Ltd. (Emera)

 Gas 1.4     Financial Resources
     Reference:   i)   A99400-1 Emera, Financial Resource Plan, PDF pages 1-2 of 4
                  ii) A99400-1 Emera, Financial Resource Plan, PDF page 2 of 4
                  iii) National Energy Board’s Pipeline Financial Requirements Guidelines,
                       section 7.1, PDF page 23 of 28
                  iv) National Energy Board’s Pipeline Financial Requirements Guidelines,
                      section 4.2, PDF page 20 of 28
                  v) National Energy Board’s Pipeline Financial Requirements Guidelines,
                     section 7.2(f), PDF pages 26-27 of 28
                  vi) National Energy Board’s Pipeline Financial Requirements Guidelines,
                      section 7.2(d), PDF page 25 of 28

     Preamble:    In reference i), Emera submits that it maintains the required amounts of
                  financial resources to meet its Absolute Liability Limit through a
                  combination of ENB’s cash working capital and its insurance policies.
                  Emera further explains that it maintains $10 million in working capital
                  that is readily accessible to Emera immediately following a loss event, and
Attachment to Board Letter
                                                       dated 12 July 2019
                                                              Page 7 of 44

has access to continued cash flow thereafter from interim payments made
under Emera’s insurance policies.
In reference ii), Emera submits that working capital is one source of
Readily Accessible Funds. Emera further indicates that it has other
instruments available to it at the Authorization Holder and Parent
Company level that would also be sources of Readily Accessible Funds
and Emera may substitute (or supplement) its cash working capital to
satisfy its Readily Accessible Funds obligation with these other
instruments as circumstances dictate.
In reference iii), the Pipeline Financial Requirements Guidelines
(Guidelines) state that:
   “The [Pipeline Financial Requirements Regulations] set out that a
   Company must maintain certain minimum amounts of Financial
   Resources in a form that is readily accessible to the Company, as
   reiterated in Table 2 above. The financial instruments the NEB could
   order a Company to use are set out in the Regulations and would be
   one or more of the following for the purposes of the Readily
   Accessible Portion:
          Letter of credit;
          Line of credit;
          Participation in a pooled fund referred to in the NEB Act; and,
          Cash or cash equivalents.”
In reference iv), the Guidelines state that:
   “…the Board will not rely on Financial Resources of a parent or
   affiliate as a demonstration of ‘maintaining’ Financial Resources at the
   operating Company level, absent a parental/affiliate guarantee, a line
   of credit with a parent/affiliate guarantor, or some other instrument or
   mechanism providing direct, unencumbered access to those parent
   company Financial Resources at the authorization holder Company’s
   sole discretion.”
The Guidelines also state that:
   “For any Financial Resources Plan that intends to place reliance on the
   resources of a parent or affiliate, a detailed corporate structure diagram
   must be provided. Additionally, a description of the mechanism or
   instrument that provides access to parent/affiliate funds (such as a
   letter of guarantee or line of credit), as well as a copy of the
   instrument, must be provided.”
In reference v), the Guidelines list the requirements for parental guarantee
agreements. The reference also states that a parental guarantee agreement
must provide proof that there are sufficient funds at a parent company
Attachment to Board Letter
                                                                   dated 12 July 2019
                                                                          Page 8 of 44

           level to cover the Financial Resources for its NEB-regulated company.
           Further, the Guidelines require parental guarantee agreements must be
           accompanied by the most recent audited financial statements of the parent
           company.
           In reference vi), the Guidelines provide a list of the minimum
           requirements for lines of credit that may satisfy the Board:
                   Issued by a bank acceptable to the Board;
                   Be explicit as to the amount of Financial Resources covered;
                   Provide the Company with funds on demand; and,
                   Be accompanied by a description of the structure (and balance) of
                    the line of credit including notice of cancellation,
                    secured/unsecured, total amount, undrawn portion.

Request:   a)   Discuss how the entity identified as “ENB” in reference i) relates to
                Emera.
           b)   Provide a detailed corporate structure diagram for Emera.
           c)   If Emera, as indicated in reference i), is relying on “ENB’s cash
                working capital”, provide a description of the mechanism or
                instrument that provides access to ENB’s funds (such as a letter of
                guarantee or line of credit), as well as a copy of the instrument.
                c.1) Provide ENB’s most recent audited financial statements.
           d)   In reference i), Emera identified it meets its Absolute Liability Limit
                through a combination of “cash working capital” and insurance.
                d.1) Discuss the differences, if any, between the Financial Resources
                      Emera has identified as “cash working capital” and “working
                      capital”.
                d.2) Explain how “cash working capital” and “working capital”
                      compare to the financial instruments identified by the Board in
                      reference iii).
           e)   In reference ii), Emera submitted that “working capital” is one source
                of Readily Accessible Funds to meet the above requirements and that
                Emera has other instrument available that would also be sources of
                Readily Accessible Funds.
                e.1) List and describe the other sources of Financial Resources
                      identified by Emera in reference ii) that are available at the
                      Authorization Holder level, and that meet the Board’s definition
                      of Readily Accessible Funds.
                e.2) Confirm whether Emera currently maintains revolving credit
                      facilities or commercial paper programs. If so, describe the
Attachment to Board Letter
                                                                               dated 12 July 2019
                                                                                      Page 9 of 44

                                  financial instruments and include in your description the
                                  minimum requirements listed in reference vi).

Emera

 Gas 1.5        Insurance Claims Response
     Reference:      i)    A99400-3 Emera, Financial Resource Plan, PDF pages 24-25 of 44
                     ii)   A99400-3 Emera, Financial Resource Plan, PDF page 4 of 44

     Preamble:       In reference i), Emera submitted that subsequent to funding through
                     Emera’s “working capital”, the projected timeline for claims recovery via
                     “ENB” insurance program is:
                              For the primary layer of insurance, consisting of $10 million,
                               8 weeks under the “norm” and 16 weeks “in case of delay”, and
                              For the section interim payment of insurance, consisting of
                               $50 million, 12 weeks (3 months) under the “norm” and 24 week
                               (6 months) “in case of delay”.
                     Further, Emera stated that:
                               “In Marsh's experience, typically, with a loss of this size, given the
                               inherent 'duty of utmost good faith' of all parties to the insurance
                               program, if liability and damages are agreed upon by insurers, an
                               interim payment representing an agreed upon portion of the
                               liability assessed against Emera, can be requested as early as 2 to 4
                               months from the date of the initial event.”
                     In reference ii), Emera stated that:
                               “Indirect costs such as resulting lawsuits, loss of life payments, and
                               insurance subrogation are not included in these estimates, as any
                               such costs for which ENB were deemed legally liable would be
                               funded by ENB's liability insurance program and are not included
                               as part of this analysis.”

     Request:        a)    Discuss the most probable cause(s) for a delay to the payment of the
                           primary insurance layer.
                           a.1) For each cause identified in a), discuss their likelihood of
                                  causing delay to the payment of the primary insurance layer.
                     b)    Regarding the indirect costs identified by Emera in reference ii),
                           discuss the earliest Emera could be required to make payments to
                           cover indirect costs.
Attachment to Board Letter
                                                                               dated 12 July 2019
                                                                                     Page 10 of 44

                             b.1) Discuss the likelihood that Emera could be required to make
                                   payment to cover indirect costs while also incurring direct costs.
                             b.2) If Emera is required to make payment to cover indirect costs
                                   while also incurring direct costs, explain whether Emera will
                                   have sufficient Financial Resources to incur both types of costs
                                   simultaneously.

Foothills Pipe Lines Ltd. (Foothills)

 Gas 1.6         Parental Guarantee
      Reference:      i)     A99406-1 Foothills, Financial Resources Plan, PDF page 4 of 174
                      ii)    A99406-1 Foothills, Financial Resources Plan,
                             PDF pages 10-14 of 174
                      iii) National Energy Board’s Pipeline Financial Requirements
                           Guidelines, section 7.2(f), PDF pages 26-27 of 28

      Preamble:       In reference i), Foothills stated that its parent, TransCanada PipeLines
                      Limited (TCPL), is prepared to issue a parental guarantee to Foothills for
                      $100 million for the purposes of Foothills’ financial resources plan.
                      Reference ii) is a draft form of the parental guarantee made by TCPL in
                      favour of Foothills, dated effective 11 July 2019.
                      In reference iii), the Pipeline Financial Requirements Guidelines
                      (Guidelines) state that:
                            “… the [parental] guarantee should:
                                  Provide the Authorization holder with unconditional, on-
                                   demand access to funds;”
                      Although Foothills’ draft parental guarantee is consistent with this aspect
                      of the Guidelines, a guarantee fundamentally is a promise of a guarantor to
                      a third party (i.e., the NEB) to fulfil the obligations owed by the debtor
                      (i.e., Foothills) to the third party in the event the debtor fails to meet those
                      obligations. The parental guarantee made by TCPL is a promise from
                      TCPL directly to Foothills for any liabilities it may incur under the
                      National Energy Board Act, making the obligations thereunder more
                      analogous to an indemnity obligation. To avoid uncertainty as to the
                      parental guarantee’s enforceability and to meet the intent of the
                      Guidelines, a valid guarantee should therefore name the NEB as the
                      beneficiary.

      Request:        a)     Explain whether Foothills would like to (i) revise its parental
                             guarantee such that the Board, or any successor administrative body,
Attachment to Board Letter
                                                                               dated 12 July 2019
                                                                                     Page 11 of 44

                           be named as the beneficiary thereunder; (ii) rely on the proposed
                           indemnity-type instrument provided in reference ii); or (iii) rely on a
                           line of credit or other financial instrument to be provided directly
                           from TCPL to Foothills as part of Foothills’ financial resources plan.
                    b)     If Foothills would like to revise its parental guarantee, provide a draft
                           form of a financial instrument that reflects a typical commercial
                           guarantee relationship. In this financial instrument, be sure to name
                           “Her Majesty the Queen in Right of Canada as represented by the
                           NEB or any successor administrative body” as the beneficiary of the
                           parental guarantee, as well as ensuring compliance with all other
                           requirements set forth in section 7.2(f) of the Guidelines.
                    c)     If Foothills would like to rely on the proposed indemnity-type
                           instrument provided in reference ii), resubmit the financial
                           instrument, providing for a clear indemnity instrument by TCPL to
                           Foothills. For clarity, the Board will require similar characteristics for
                           such indemnity instrument as is set forth in section 7.2(f) of the
                           Guidelines, as applicable, and such other characteristics as it deems
                           relevant and necessary.
                    d)     If Foothills would like to rely on a parental line of credit or an
                           alternative financial instrument that provides access to parent/affiliate
                           funds, provide a copy of this instrument, which is to be in compliance
                           with the Guidelines.

Foothills

 Gas 1.7      Certificate of Insurance
      Reference:    i)     A99406-1 Foothills, Financial Resources Plan, PDF page 16 of 174
                    ii)    A99406-1 Foothills, Financial Resources Plan, PDF page 17 of 174
                    iii) National Energy Board’s Pipeline Financial Requirements
                         Guidelines, section 7.2(a), PDF page 24 of 28

      Preamble:     Reference i) is Foothills’ certificate of insurance. The certificate of
                    insurance specified that the listed insurance policies expired on
                    1 June 2019.
                    Reference ii) is a letter setting out the A.M. Best Ratings of the insurers
                    listed in the certificate of insurance in reference i).
                    In reference iii), the Guidelines state that:
                          “A Company relying on insurance must provide a certificate of
                          insurance, containing an overview of its insurance policies, detailing at
                          a minimum:
Attachment to Board Letter
                                                                              dated 12 July 2019
                                                                                    Page 12 of 44

                               Coverage/policy types, and limits of each policy type;
                               Deductible amounts, per incident and policy type;
                               A list of insured parties under the policy(ies);
                               Effective date(s) and expiry date(s); and,
                               The insurance providers, and the providers’ respective A.M.
                                Best Ratings (or equivalent).”

     Request:        a)    Confirm that the insurance policies listed in reference i), including
                           the types of insurance, insurers, policy numbers, sums insured/limits
                           of liability, and the named insured, have been renewed and are
                           currently in effect.
                           a.1) If not confirmed, provide a new certificate of insurance that
                                details the information listed in reference iii). In addition, if the
                                insurers on the certificate of insurance have changed from those
                                included in reference ii), provide a letter setting out the A.M.
                                Best Ratings of the new insurers.

Glenogle Energy Inc. (Glenogle)

 Gas 1.8        Financial Resource Plan
     Reference:      i)    A98911-1 Glenogle, Financial Resources Plan, PDF pages 1-3 of 3
                     ii)   National Energy Board’s Pipeline Financial Requirements
                           Guidelines, Section 1.2, PDF page 9 of 28
                     iii) National Energy Board’s Pipeline Financial Requirements
                          Guidelines, Section 3.1, PDF page 13 of 28
                     iv) National Energy Board’s Pipeline Financial Requirements
                         Guidelines, Section 4.4, PDF page 20 of 28

     Preamble:       In reference i), Glenogle states that it operates a Gas Class 2 pipeline.
                     Glenogle provided a table specifying its Financial Resources Plan consists
                     of undrawn Lines of Credit of $900,000 and Insurance policy(ies) of
                     $10 million.
                     Glenogle states that it is currently involved in renewing its insurance
                     policies for the ensuing year and has requested a quotation to increase the
                     Limits of Liability specific to the subject pipeline to $50 million, in
                     accordance with the Pipeline Financial Requirements Guidelines.
                     In reference ii), the Pipeline Financial Requirements Guidelines
                     (Guidelines) state that neither the NEB Act nor the Regulations provide
                     authority to the Board to grant exemptions from Absolute Liability
                     provisions of the NEB Act and Regulations; to lower Absolute Liability
Attachment to Board Letter
                                                                               dated 12 July 2019
                                                                                     Page 13 of 44

                     limits; introduce new Absolute Liability Classes; or to accept lower
                     amounts of financial resources that companies must maintain.
                     In reference iii), the Guidelines state that Absolute Liability Limit for a
                     Gas Class 2 Company (for a Company that operates one or more
                     Authorized Gas pipelines whose Risk Value is at least 100,000 but less
                     than 1,000,000) is $50 million.
                     In reference iv), the Guidelines state that a Company must maintain at
                     least 5 per cent of the amount of Financial Resources in types that are
                     readily accessible.

     Request:        a)     Given that reference i) does not demonstrate an appropriate Financial
                            Resources Plan, provide a revised Financial Resources Plan
                            demonstrating that:
                            a.1) the Absolute Liability Limit as stated in reference ii) and iii) has
                                 been met. (As stated in reference ii) the Board is not able to
                                 grant exemptions to the limits set out in the Act and
                                 regulations.)
                            a.2) the readily accessible funds amount, as described in
                                 reference iv), has been met.

Glenogle

 Gas 1.9        Insurance
     Reference:      i)     A98911-1 Glenogle, Financial Resources Plan, PDF pages 1-3 of 3
                     ii)    National Energy Board’s Pipeline Financial Requirements
                            Guidelines, Section 7.2(a), PDF page 24 of 28
                     iii) National Energy Board’s Pipeline Financial Requirements
                          Guidelines, Section 3.1, PDF page 13 of 28

     Preamble:       In reference i), Glenogle states that it relies principally on insurance to
                     satisfy its requirement to maintain Financial Resources for the subject
                     pipeline. A copy of the current certificate of insurance provided shows
                     $10 million policy limits and an expiration date of 31 July 2019. The
                     certificate also shows that HSBC Bank Canada is “First Loss Payee as
                     their interests may appear”.
                     Glenogle states that it is currently involved in renewing its insurance
                     policies for the ensuing year and has requested a quotation to increase the
                     Limits of Liability specific to the subject pipeline to $50 million, in
                     accordance with the Pipeline Financial Requirements Guidelines.
                     In reference ii), the Guidelines state that:
Attachment to Board Letter
                                                                              dated 12 July 2019
                                                                                    Page 14 of 44

                     “A Company relying on insurance must provide a certificate of insurance,
                     containing an overview of its insurance policies, detailing at a minimum:
                              Coverage/policy types, and limits of each policy type;
                              Deductible amounts, per incident and policy type;
                              A list of insured parties under the policy(ies);
                              Effective date(s) and expiry date(s); and,
                              The insurance providers, and the providers’ respective A.M. Best
                               Ratings (or equivalent).”
                     In reference iii), the Guidelines state that Absolute Liability Limit for a
                     Gas Class 2 Company (for a Company that operates one or more
                     Authorized Gas pipelines whose Risk Value is at least 100,000 but less
                     than 1,000,000) is $50 million.

     Request:        a) Provide a pro-forma (or executed) certificate(s) of insurance showing
                        coverage sufficient to meet the Absolute Liability Limit specified in
                        reference iii). The certificate(s) should detail, at minimum, the criteria
                        listed in reference ii). Alternately, provide evidence of another type of
                        Financial Resources used to meet the Absolute Liability Limit
                        specified in iii).
                     b) Provide the relevant excerpt of Glenogle’s insurance policy(ies)
                        detailing the clauses providing for the described “first loss payee”
                        provision in the policy(ies).

Glenogle

 Gas 1.10       Line of Credit/Readily Accessible Funds
     Reference:      i)     A98911-1 Glenogle, Financial Resources Plan, PDF page 1 of 3
                     ii)    National Energy Board’s Pipeline Financial Requirements
                            Guidelines, Section 7.2(d), PDF page 25 of 28
                     iii) National Energy Board’s Pipeline Financial Requirements
                          Guidelines, Section 4.4, PDF page 20 of 28

     Preamble:       In reference i), Glenogle states that it has $900,000 in undrawn Lines of
                     Credit as of 31 December 2018. No further details were provided.
                     In reference ii), the Guidelines state that:
                           “Lines of credit from a financial institution meeting the following
                           minimum requirements may be satisfactory:
                                  Issued by a bank acceptable to the Board;
Attachment to Board Letter
                                                                              dated 12 July 2019
                                                                                    Page 15 of 44

                                Be explicit as to the amount of Financial Resources covered;
                                Provide the Company with funds on demand; and,
                                Be accompanied by a description of the structure (and balance)
                                 of the line of credit including notice of cancellation,
                                 secured/unsecured, total amount, undrawn portion.”
                     Reference ii) also states that:
                          “The Board will only rely on the undrawn portion of a line of credit in
                          consideration of the sum of Financial Resources a Company is
                          maintaining. The Board may direct Companies to report if the
                          undrawn portion of a credit line drops below a certain threshold, as
                          required.”
                     In reference iii), the Guidelines state that a Company must maintain at
                     least 5 per cent of the amount of Financial Resources in types that are
                     readily accessible.


     Request:        a)    Provide an update detailing how much of the line of credit facility
                           noted in reference i) remained available and undrawn as of
                           31 May 2019.
                     b)    Accounting for the factors noted in reference ii), describe the
                           characteristics of the line of credit facility, including:
                           b.1) a list of the bank(s) providing the operating credit facility, and
                                indicate whether it is a (they are) Schedule 1 Canadian bank(s)
                                under the Canada Bank Act.
                           b.2) a description of the structure (and balance) of the line of credit
                                including notice of cancellation, secured/unsecured, total
                                amount, undrawn portion.
                     c)    If the undrawn portion of the line of credit provided in a) does not
                           meet the minimum Financial Resources amount that must be readily
                           accessible as indicated in reference iii), include details of what
                           instruments will be used to meet the difference.

Glenogle

 Gas 1.11       Reliance on Insurance
     Reference:      i) A98911-1 Glenogle, Financial Resources Plan, PDF page of 3
                     ii) National Energy Board’s Pipeline Financial Requirements Guidelines,
                         Section 4.3, PDF page 20 of 28
                     iii) National Energy Board’s Pipeline Financial Requirements Guidelines,
                          Section 5, PDF page 22 of 28
Attachment to Board Letter
                                                                     dated 12 July 2019
                                                                           Page 16 of 44

            iv) National Energy Board’s Pipeline Financial Requirements Guidelines,
                Section 7.1, PDF pages 23 of 28

Preamble:   In reference i), Glenogle states that it relies principally on insurance to
            satisfy its requirement to maintain Financial Resources for the subject
            pipeline.
            Reference ii) states that:
                “Further, if a Company chooses to place a high degree of reliance on
                insurance as part of its Financial Resources Plan (for example, >50%
                of its financial resources being composed of insurance), the Board
                would expect the Company to further justify this approach in part by
                describing its risk, operating characteristics, and potential exposure to
                sudden financial resource draws in the event of a release.”
            Reference iii) states that:
                “If the Board is not satisfied with a pipeline Company’s Financial
                Resources Plan […] the Board may direct a Company to maintain
                Financial Resources in certain types and in certain amounts of each
                type. This may be necessary for various reasons, including but not
                limited to: […]
                        A Company’s Financial Resources Plan is too heavily reliant on
                         contingent resources of a third party, (e.g. sole reliance on
                         insurance, with no internal financial means to respond to an
                         incident prior to availability of insurance proceeds).”
            Reference iv) states that:
               “The Pipeline Financial Requirements Regulations (Regulations)
               prescribe a list of financial resource types, and a list of readily
               accessible types from which the Board may choose to direct Companies
               to maintain. The financial resource types are prescribed via the
               Regulations as follows:
                        Insurance policy:
                        Escrow agreement;
                        Letter of credit;
                        Line of credit;
                        Participation in a pooled fund referred to in subsection 48.14(1)
                         of the NEB Act;
                        Parent company guarantees;
                        Surety bond or pledge agreement, or indemnity bond or
                         suretyship agreement; and
                        Cash or cash equivalents.”
Attachment to Board Letter
                                                                             dated 12 July 2019
                                                                                   Page 17 of 44



     Request:        a)   Regarding reference ii), explain whether Glenogle has performed any
                          analysis regarding the expected cost of a release, including response,
                          remediation, and potential claims.
                          a.1) If Glenogle has performed such an analysis, provide this
                               analysis.
                          a.2) If Glenogle has not quantified its potential cost exposure in the
                               event of a release, describe Glenogle’s risk, operating
                               characteristics, and potential exposure to sudden financial draws
                               in the event of a release.
                     b)   Explain whether Glenogle has any other sources of readily accessible
                          funds and whether it would be feasible for Glenogle to obtain further
                          access to readily accessible resources via other means, such as
                          obtaining further credit capacity from a financial institution.
                     c)   Should the Board not be satisfied with the Financial Resources Plan
                          submitted by Glenogle, and determine that it is necessary to direct
                          Glenogle to maintain additional financial resources, select from the
                          following list (as described in reference iv)) the financial resource
                          type Glenogle would prefer the Board direct it to maintain, and
                          provide rationale:
                                    a letter of credit;
                                    a line of credit (from an parent/affiliate);
                                    a line of credit (from a financial institution);
                                    participation in a pooled fund referred to in subsection
                                     48.14(1) of the Act; or
                                    cash or cash equivalents.

Great Lakes Pipeline Canada Ltd. (GLC)

 Gas 1.12       Parental Guarantee
     Reference:      i)   A99407-1 GLC, Financial Resources Plan, PDF page 4 of 174
                     ii) A99407-1 GLC, Financial Resources Plan, PDF pages 10-14 of 174
                     iii) National Energy Board’s Pipeline Financial Requirements
                          Guidelines, section 7.2(f), PDF pages 26-27 of 28

     Preamble:       In reference i), GLC stated that its parent, TransCanada PipeLines Limited
                     (TCPL), is prepared to issue a parental guarantee to GLC for $100 million
                     for the purposes of GLC’s Financial Resources Plan.
Attachment to Board Letter
                                                                    dated 12 July 2019
                                                                          Page 18 of 44

           Reference ii) is a draft form of the parental guarantee made by TCPL in
           favour of GLC, dated effective 11 July 2019.
           In reference iii), the Pipeline Financial Requirements Guidelines
           (Guidelines) state that:
                “… the [parental] guarantee should:
                     Provide the Authorization holder with unconditional, on-
                      demand access to funds;”
           Although GLC’s draft parental guarantee is consistent with this aspect of
           the Guidelines, a guarantee fundamentally is a promise of a guarantor to a
           third party (i.e., the NEB) to fulfil the obligations owed by the debtor
           (i.e., GLC) to the third party in the event the debtor fails to meet those
           obligations. The parental guarantee made by TCPL is a promise from
           TCPL directly to GLC for any liabilities it may incur under the National
           Energy Board Act, making the obligations thereunder more analogous to
           an indemnity obligation. To avoid uncertainty as to the parental
           guarantee’s enforceability and to meet the intent of the Guidelines, a valid
           guarantee should therefore name the NEB as the beneficiary.

Request:   a)    Explain whether GLC would like to (i) revise its parental guarantee
                 such that the Board, or any successor administrative body, be named
                 as the beneficiary thereunder; (ii) rely on the proposed indemnity-
                 type instrument provided in reference ii); or (iii) rely on a line of
                 credit or other financial instrument to be provided directly from
                 TCPL to GLC as part of GLC’s financial resources plan.
           b)    If GLC would like to revise its parental guarantee, provide a draft
                 form of a financial instrument that reflects a typical commercial
                 guarantee relationship. In this financial instrument, be sure to name
                 “Her Majesty the Queen in Right of Canada as represented by the
                 NEB or any successor administrative body” as the beneficiary of the
                 parental guarantee, as well as ensuring compliance with all other
                 requirements set forth in section 7.2(f) of the Guidelines.
           c)    If GLC would like to rely on the proposed indemnity-type instrument
                 provided in reference ii), resubmit the financial instrument, providing
                 for a clear indemnity instrument by TCPL to GLC. For clarity, the
                 Board will require similar characteristics for such indemnity
                 instrument as is set forth in section 7.2(f) of the Guidelines, as
                 applicable, and such other characteristics as it deems relevant and
                 necessary.
           d)    If GLC would like to rely on a parental line of credit or an alternative
                 financial instrument that provides access to parent/affiliate funds,
                 provide a copy of this instrument, which is to be in compliance with
                 the Guidelines.
Attachment to Board Letter
                                                                                  dated 12 July 2019
                                                                                        Page 19 of 44

GLC

 Gas 1.13        Certificate of Insurance
      Reference:       i)     A99407-1 GLC, Financial Resources Plan, PDF page 16 of 174
                       ii)    A99407-1 GLC, Financial Resources Plan, PDF page 17 of 174
                       iii) National Energy Board’s Pipeline Financial Requirements
                            Guidelines, section 7.2(a), PDF page 24 of 28

      Preamble:        Reference i) is GLC’s certificate of insurance. The certificate of insurance
                       specified that the listed insurance policies expired on 1 June 2019.
                       Reference ii) is a letter setting out the A.M. Best Ratings of the insurers
                       listed in the certificate of insurance in reference i).
                       In reference iii), the Guidelines state that:
                             “A Company relying on insurance must provide a certificate of
                             insurance, containing an overview of its insurance policies, detailing at
                             a minimum:
                                  Coverage/policy types, and limits of each policy type;
                                  Deductible amounts, per incident and policy type;
                                  A list of insured parties under the policy(ies);
                                  Effective date(s) and expiry date(s); and,
                                  The insurance providers, and the providers’ respective A.M.
                                    Best Ratings (or equivalent).”

      Request:         a)     Confirm that the insurance policies listed in reference i), including
                              the types of insurance, insurers, policy numbers, sums insured/limits
                              of liability, and the named insured, have been renewed and are
                              currently in effect.
                              a.1) If not confirmed, provide a new certificate of insurance that
                                    details the information listed in reference iii). In addition, if the
                                    insurers on the certificate of insurance have changed from those
                                    included in reference ii), provide a letter setting out the A.M.
                                    Best Ratings of the new insurers.

Many Islands Pipe Lines (Canada) Ltd. (MIPL)

 Gas 1.14        Line of Credit and Parental Guarantee
      Reference:       i)     A99398-1 MIPL, Financial Resources Plan, PDF page 2 of 4
                       ii) A99398-1 MIPL, Financial Resources Plan, PDF page 3 of 4
Attachment to Board Letter
                                                                      dated 12 July 2019
                                                                            Page 20 of 44

            iii) National Energy Board’s Pipeline Financial Requirements
                 Guidelines, section 4.2, PDF page 20 of 28
            iv) National Energy Board’s Pipeline Financial Requirements
                Guidelines, section 7.2(d), PDF page 25 of 28
            v)    National Energy Board’s Pipeline Financial Requirements
                  Guidelines, section 7.2(f), PDF pages 26-27 of 28

Preamble:   In reference i), MIPL stated that its parent, SaskEnergy Incorporated
            (SaskEnergy), maintains a line of credit with the Ministry of Finance of
            Saskatchewan, and that SaskEnergy will in turn make a similar credit
            facility available to MIPL, to the extent and on terms necessary to meet
            the requirements of the Pipeline Financial Requirements Regulations.
            In reference ii), MIPL indicated that SaskEnergy has requested approval
            from the Ministry of Finance of Saskatchewan to provide MIPL with a
            parental guarantee that would, if approved, provide additional financial
            resources to MIPL’s financial resources plan. MIPL explained that a
            Crown corporation must receive approval from the Ministry of Finance to
            provide guarantees, and that SaskEnergy’s request is currently being
            reviewed by the Province of Saskatchewan.
            In reference iii), the Pipeline Financial Requirements Guidelines
            (Guidelines) state that:
                 “For any Financial Resources Plan that intends to place reliance on the
                 resources of a parent or affiliate, a detailed corporate structure diagram
                 must be provided. Additionally, a description of the mechanism or
                 instrument that provides access to parent/affiliate funds (such as a letter
                 of guarantee or line of credit), as well as a copy of the instrument, must
                 be provided.”
            In reference iv), the Guidelines state that:
                 “The Board has also approved lines of credit from parent
                 companies/affiliates as acceptable Financial Resources, with the
                 following attributes:
                       Provides the Company with funds on demand and at its sole
                        discretion;
                       Provides funds within five (5) business days on written demand
                        from the Company;
                       Non-transferrable and non-assignable, except with prior written
                        approval of the Board or any successor administrative body;
Attachment to Board Letter
                                                        dated 12 July 2019
                                                              Page 21 of 44

          Does not allow termination, amendment, or modification,
           except with prior written approval of the Board or any successor
           administrative body;
          Contains explicit provision to notify the Board or any successor
           administrative body in writing of any event of default, within
           two (2) business days of the guarantor or Company’s
           knowledge of default; and,
          Automatically renews and remains in force unless the Board or
           any successor administrative body has granted approval of
           alternative types of Financial Resources.”
In reference v), the Guidelines state that:
   “A parental guarantee agreement must provide proof that there are
   sufficient funds at a parent company level to cover the Financial
   Resources for its NEB-regulated Company. This parental guarantee
   agreement must be accompanied by the most recent audited financial
   statements of the parent company, as well as any subsequently
   completed unaudited quarterly statements and, if available, the most
   recent credit rating reports from the guarantor. The Financial Resources
   of the parent company will only be relied on for the amount of the
   guarantee agreement.
   Furthermore, the guarantee should:
          Provide the Authorization holder with unconditional, on-
           demand access to funds;
          Specify the amount of the funds being guaranteed for the
           purpose of the Financial Resource Requirements established in
           the NEB Act and Regulations;
          Provide funds within five (5) business days of written demand
           from the Company;
          Be irrevocable, non-transferrable and non-assignable, except
           with prior written approval of the Board or any successor
           administrative body;
          Not allow termination, amendment, or modification, except
           with prior written approval of the Board or any successor
           administrative body;
          Automatically renew and remain in force unless the Board or
           any successor administrative body has granted approval of
           alternative types of Financial Resources; and,
          Require that in the event of default of either the guarantor or the
           NEB-regulated Company, the Board or any successor
           administrative body be served notice of default within two (2)
           business days.”
Attachment to Board Letter
                                                                                  dated 12 July 2019
                                                                                        Page 22 of 44


       Request:         a)     With respect to the line of credit that will be made available to MIPL
                               by SaskEnergy (as per reference i)), respond to the following:
                               a.1) Provide a copy (draft or executed) of the line of credit
                                     agreement between MIPL and SaskEnergy.
                               a.2) Discuss the amount of financial resources that are covered by
                                     the line of credit.
                               a.3) Discuss whether the line of credit agreement contains each of
                                     the attributes listed in reference iv). For each attribute that the
                                     proposed line of credit does not contain, if any, explain why the
                                     attribute is not included in the line of credit.
                        b)     With respect to the pending parental guarantee described in reference
                               ii), respond to the following:
                               b.1) Provide a copy (draft or executed) of the parental guarantee.
                               b.2) Discuss the amount of financial resources that are covered by
                                     the parental guarantee.
                               b.3) Discuss whether the parental guarantee contains each of the
                                     attributes listed in reference v). For each attribute that the
                                     parental guarantee does not contain, if any, explain why the
                                     attribute is not included in the parental guarantee.

MIPL

 Gas 1.15         Certificate of Insurance
       Reference:       i)     A99398-1 MIPL, Financial Resources Plan, PDF page 4 of 4
                        ii)    National Energy Board’s Pipeline Financial Requirements
                               Guidelines, section 7.2(a), PDF page 24 of 28

       Preamble:        Reference i) is MIPL’s certificate of insurance. The certificate of
                        insurance specified that the listed insurance policies expired on
                        30 June 2019.
                        In reference ii), the Guidelines state that:
                              “A Company relying on insurance must provide a certificate of
                              insurance, containing an overview of its insurance policies, detailing at
                              a minimum:
                                   Coverage/policy types, and limits of each policy type;
                                   Deductible amounts, per incident and policy type;
                                   A list of insured parties under the policy(ies);
Attachment to Board Letter
                                                                                dated 12 July 2019
                                                                                      Page 23 of 44

                                Effective date(s) and expiry date(s); and,
                                The insurance providers, and the providers’ respective A.M.
                                 Best Ratings (or equivalent).”

     Request:        a)    Confirm that the insurance policies listed in reference i), including
                           the types of insurance, insurers, policy numbers, sums insured/limits
                           of liability, and the named insured, have been renewed and are
                           currently in effect.
                             a.1) If not confirmed, provide a new certificate of insurance that
                                   details all of the information listed in reference ii).

Maritimes & Northeast Pipeline Management Limited (M&NP)

 Gas 1.16       M&NP Equity Holding Co. Guarantee
     Reference:      i)    A99425-2 M&NP, Financial Resources Plan, PDF page 1 of 3
                     ii) A99425-4 M&NP, Financial Resources Plan summary table,
                         PDF page 1 of 2
                     iii) C00442-2 M&NP, Guarantee Agreement Between Exxon Equity
                          Holding Company dated 26 June 2019
                     iv) National Energy Board’s Pipeline Financial Requirements Guidelines,
                         (Guidelines) section 7.2(f), PDF pages 26-27 of 28

     Preamble:       In reference i), M&NP states that as part of its financial resources plan, it
                     will rely on a parental guarantee arrangement on behalf of ExxonMobil
                     Canada Hibernia Finance Ltd. using Exxon Equity Holding Company as
                     the guarantor, in the amount of $9.55 million.
                     In reference ii), under the column labelled “Parent/Affiliate of M&NP
                     Partner ExxonMobil Canada Hibernia Finance Ltd. (Exxon Equity
                     Holding Co.)”, it shows that $7,591 in deposits receivable from Exxon
                     Mobil Corporation are available with one (1) day timing of access.
                     In reference iii), M&NP filed a Guarantee Agreement between Exxon
                     Equity Holding Company and M&NP.
                     In reference iv), the Guidelines state that:
                          “… the [parental] guarantee should:
                                Provide the Authorization holder with unconditional, on-
                                 demand access to funds;“
                     A guarantee fundamentally is a promise of a guarantor to a third party
                     (i.e., the NEB) to fulfil the obligations owed by the debtor (i.e., M&NP) to
                     the third party in the event the debtor fails to meet those obligations. The
Attachment to Board Letter
                                                                  dated 12 July 2019
                                                                        Page 24 of 44

           parental guarantee made by Exxon Equity Holding Company is a promise
           from Exxon Equity Holding Company directly to M&NP for any
           liabilities it may incur under the National Energy Board Act, making the
           obligations thereunder more analogous to an indemnity obligation. To
           avoid uncertainty as to the parental guarantee’s enforceability and to meet
           the intent of the Guidelines, a valid guarantee should therefore name the
           NEB as the beneficiary.

Request:   a)   With regard to reference ii), explain:
                a.1) how Exxon Equity Holding Co. can backstop the parental
                     guarantee agreement;
                a.2) whether the $7,591 figure represents assets at Exxon Mobil
                     Corporation, Exxon Mobil Canada Hibernia, or Exxon Equity
                     Holding co. – the proposed guarantor to the agreement; and
                a.3) whether, and if so how, the cash referenced is available to
                     Exxon Equity Holding Co. on an unencumbered basis and at its
                     sole discretion. If not, explain why not.
           b) Explain whether M&NP would like to (i) revise its parental guarantee
              such that the Board, or any successor administrative body, be named
              as the beneficiary thereunder; (ii) rely on the proposed indemnity-
              type instrument provided in reference ii); or (iii) rely on a line of
              credit or other financial instrument to be provided directly from
              Exxon Equity Holding Company to M&NP as part of M&NP’s
              financial resources plan.
           c)   If M&NP would like to revise its parental guarantee, provide a draft
                form of a financial instrument that reflects a typical commercial
                guarantee relationship. In this financial instrument, be sure to name
                “Her Majesty the Queen in Right of Canada as represented by the
                NEB or any successor administrative body” as the beneficiary of the
                parental guarantee, as well as ensuring compliance with all other
                requirements set forth in section 7.2(f) of the Guidelines.
           d) If M&NP would like to rely on the proposed indemnity-type
              instrument provided in reference ii), resubmit the financial
              instrument, providing for a clear indemnity instrument by Exxon
              Equity Holding Company to M&NP. For clarity, the Board will
              require similar characteristics for such indemnity instrument as is set
              forth in section 7.2(f) of the Guidelines, as applicable, and such other
              characteristics as it deems relevant and necessary.
                d.1) If M&NP would like to rely on a parental line of credit or an
                     alternative financial instrument that provides access to
                     parent/affiliate funds, provide a copy of this instrument, which
                     is to be in compliance with the Guidelines.
Attachment to Board Letter
                                                                           dated 12 July 2019
                                                                                 Page 25 of 44


M&NP

Gas 1.17       M&NP & Emera Arrangement
    Reference:     i)    A99425-2 M&NP, Financial Resource Plan, PDF page 2 of 3
                   ii) C00442-4 M&NP, Guarantee of Emera Incorporated dated
                       11 July 2019
                   iii) National Energy Board’s Pipeline Financial Requirements Guidelines,
                        (Guidelines) section 7.2(f), PDF pages 26-27 of 28

    Preamble:      In reference i), M&NP states that as part of its financial resources plan, it
                   will rely on an arrangement with Emera in relation to an amount not to
                   exceed CAD $13 million. Details of key terms of the arrangement will be
                   provided as available.
                   In reference ii), M&NP filed a Guarantee from Emera Incorporated, in the
                   amount of $12,795,000.
                   In reference iii), the Guidelines state that:
                        “… the [parental] guarantee should:
                              Provide the Authorization holder with unconditional, on-
                               demand access to funds;“
                   A guarantee fundamentally is a promise of a guarantor to a third party
                   (i.e., the NEB) to fulfil the obligations owed by the debtor (i.e., M&NP) to
                   the third party in the event the debtor fails to meet those obligations. The
                   parental guarantee made by Emera Incorporated is a promise from Emera
                   Incorporated directly to M&NP for any liabilities it may incur under the
                   National Energy Board Act, making the obligations thereunder more
                   analogous to an indemnity obligation. To avoid uncertainty as to the
                   parental guarantee’s enforceability and to meet the intent of the
                   Guidelines, a valid guarantee should therefore name the NEB as the
                   beneficiary.

    Request:       a)    Explain whether M&NP would like to (i) revise its parental guarantee
                         such that the Board, or any successor administrative body, be named
                         as the beneficiary thereunder; (ii) rely on the proposed indemnity-
                         type instrument provided in reference ii); or (iii) rely on a line of
                         credit or other financial instrument to be provided directly from
                         Emera Incorporated to M&NP as part of M&NP’s financial resources
                         plan.
                   b)    If M&NP would like to revise its parental guarantee, provide a draft
                         form of a financial instrument that reflects a typical commercial
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