Enbridge's new oil pipeline across northern Minnesota has only been operating for two years, but state regulators approved a plan Thursday aimed at making the company pay for eventually decommissioning the project.
The Minnesota Public Utilities Commission (PUC) greenlit a compromise between the Calgary-based Enbridge and the state's Department of Commerce, which had disagreed about how long the pipeline — called Line 93 after replacing the former Line 3 — might operate while the energy sector transitions away from fossil fuels. But the trust fund, unusual in the U.S. but common in Enbridge's Canada, still drew criticism from at least one environmental nonprofit.
Despite that, Katie Sieben, a Democrat who chairs the five-member PUC, said it was a "good outcome" that pushed Enbridge "to commit a significant amount of resources to ensuring that the existing Line 93 now is pulled out of the ground at the end of its useful life."
Under the deal, Enbridge will pay more than $61 million a year into the trust fund until Oct. 1, 2041. That's 20 years after the pipeline started operating. The company estimated decommissioning the new pipeline will cost $1.25 billion.
The PUC required this fund when granting a Certificate of Need for the controversial 337-mile project in Minnesota, but it took until now to finalize all the details.
Before the deal between Enbridge and Commerce, Enbridge and oil shippers split from Commerce on how quickly Enbridge would need to fill the trust fund. The companies, including Cenovus Energy and ExxonMobil, said contributing over 30 years would better align with what they expect will be the economic life of the pipeline.
Shippers like ExxonMobil "bear the majority of the costs of the operation of a pipeline" through tariffs and tolls, including "end-of-life costs" like decommissioning, read a July 28 letter to the PUC from Praveen Duggal, Exxon's manager for logistics, optimization and business development.
"An abbreviated collection period would front-load the costs and adversely impact rates for shippers during that period," wrote attorney Brian B. Bell of Dorsey & Whitney LLP, representing Cenovus Energy. "The increased shipper costs will, in turn, unduly increase costs for consumers."