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Wednesday, August 28, 2013

Shippers complain: Does Enbridge have enough insurance?

On May 9, 2011, Enbridge Pipelines (NW) Inc. discovered an oil release near Willowlake Creek, NWT from its Norman Wells Pipeline.  Between 750 and 1,500 barrels (between 119,243 L and 238,485 L) of oil were released.  Enbridge charged repair and clean up costs arising from the spill to its shippers on the pipeline.  One of the shippers, ISH, contacted Enbridge to enquire why insurance coverage on the pipeline was not used to cover the spill costs.  Enbridge did not provide a response.

ISH has now brought a complaint before the National Energy Board (NEB) asking the NEB to compel Enbridge to explain why the spill costs were not paid by insurance and to determine whether Enbridge failed to comply with certain sections of the NEB Act.  In its books, Enbridge designated most of the spill costs as standard costs of operating the pipeline. 

ISH has noted that, at the time of the Norman Wells clean-up, Enbridge may have already exhausted its insurance coverage in dealing with the Line 6B rupture in Marshall, MI.  ISH says that it is "concerned that ENW's insurance coverage, under the comprehensive insurance coverage, had been exhausted at the time of the Pipeline leak, and that ISH, and the other shippers on the Pipeline, were accordingly denied the benefits of insurance coverage."  ISH raises questions about the cross-subsidization of pipelines and its effect on shippers: "exhaustion of insurance by ENW's affiliated entities should not entitle collection of Spill Costs from its shippers, while such Spill Costs would have otherwise been covered by insurance."

Read the complaint at: Letter from ISH to NEB re Enbridge Pipelines (NW) Inc. 2011 Willowlake Pipeline Spill Operating Costs Complaint.