Gaz Métro welcomes the NEB decision concerning TQM’s return on capital

March 24, 2009 - Press releases

Montréal, March 24, 2009 – The National Energy Board (NEB) last Thursday  announced its decision regarding the application by Trans Québec & Maritimes Pipeline Inc. (TQM), 50% owned by Gaz Métro Limited Partnership and 50% by TransCanada Corporation, concerning the cost of capital for 2007 and 2008.

In its decision, the NEB agreed to vary from its previous methodology and set a 6.4% total weighted average after-tax cost of capital for each of the two years. The NEB granted TQM an aggregate return on capital, thus leaving it to choose its optimal capital structure. 

For comparison purposes, the NEB decision equates to a 9.85% return on 40% deemed equity in 2007 and a 9.75% return on 40% deemed equity in 2008. Without these changes, TQM’s authorized returns would have been 8.46% and 8.71% in 2007 and 2008, respectively, on 30% deemed equity.

In arriving at its decision, the NEB accepted TQM’s arguments that the evolution in the dynamics of natural gas consumption markets and potential sources of supply, as well as increased competition between pipeline companies, have increased the commercial risk to which TQM is exposed.

In Gaz Métro’s opinion, this decision, which should be well received by investors in energy infrastructures, constitutes a significant openness and re-establishes the criteria for a fair and reasonable return on capital.

TQM in brief
Trans Quebec & Maritimes Pipeline Inc. is a 572 km pipeline system that connects with TransCanada's Canadian Mainline and transports natural gas from Saint-Lazare to a point near Quebec City, and connects with the Portland Natural Gas Transmission system at the Quebec/New Hampshire border.

Gaz Métro Overview
With nearly $3.6 billion in assets, Gaz Métro is Quebec’s natural gas distribution company. Working in this regulated industry for over 50 years, Gaz Métro has become the trusted energy provider to over 179,600 customers in Quebec and 134,500 customers in Vermont while developing the skills and expertise needed to diversify beyond natural gas.
Gaz Métro’s prudent growth strategy has been met with the successful entry into electricity distribution in Vermont and in the wind power sector. Offering strong and stable distributions with a competitive spirit, Gaz Métro is committed to its customers, unitholders, employees and community.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this press release may be forward-looking pursuant to applicable securities laws. Such forward-looking information reflects the intentions, plans, expectations and opinions of the management of Gaz Métro inc. (GMi), Gaz Métro’s general partner, and are based on information currently available to management and on assumptions with respect to future events. The words “plans”, “expects”, “estimates”, “forecasts”, “intends”, “anticipates” or “believes”, or similar expressions, including the negative of these terms and future or conditional forms, often identify forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties and other factors outside management’s control. A number of factors could cause actual results of GMi and Gaz Métro to differ materially from the results discussed in the forward-looking statements, including, but not limited to, terms of decisions rendered by regulatory bodies, general economic conditions, the competitiveness of natural gas in relation to other energy sources, the reliability of natural gas supplies, the integrity of the natural gas distribution system, exchange rates fluctuations and other factors described in the 2008 Annual Information Form of each of Gaz Métro and GMi under the item “Risks”, and in the Management’s Discussion and Analysis for the period ended December 31, 2008. Although the forward looking statements contained herein are based upon what management believes to be reasonable assumptions, including assumptions to the effect that no unforeseen changes in the legislative and operating framework of energy markets in Quebec and in the State of Vermont will occur, that no significant event occurring outside the ordinary course of business, such as a natural disaster or other calamity, will occur, and other assumptions described in the Management’s Discussion and Analysis for the period ended
December 31, 2008, management cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of this date, and management assumes no obligation to update or revise them to reflect new events or circumstances, except as required pursuant to applicable securities laws. Readers are cautioned not to place undue reliance on these forward-looking statements.


For additional information:

Investors and analysts
Caroline Warren
Investor Relations
514-598-3324

Media
Marie-Noëlle Cano
Media and Public Relations
514-598-3449

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