P.K. Tang (613) 995-1787
June 5, 1985
Dear Sirs:
Re: Pipelines, Meters and Regulators for Capital Cost Allowance Purposes, IT-482
This is in reply to your letter of May 6, 1985 wherein you request clarification as to the proper classification, for capital cost allowance purposes of compressors, metering facilities and pumping equipment.
You recognize that paragraph 8 of IT-482 distinguishes between transmission compressors as class 8 additions and distribution compressors as class 2 additions, and suggest that from this IT the metering facilities and pumping equipment appear to be class 8 additions. Specifically you requested clarification for the following:
1. do metering facilities and pumping equipment qualify for class 8 inclusion, and
2. would meters and regulators meet the Department's definition, if any, of metering facilities.
Our comments:
As explained in paragraph 3 of IT-482 , a pipeline which is usually included in Class 2 by virtue of paragraph (b) thereof is considered to mean the physical facilities through which liquids,gases, etc. are conveyed. This would include pipe, valves, control devices and other appurtenances attached to the pipe. However, it would not include metering facilities, compressors, pumping equipment or tank. The Department does not have a specific definition for the term "metering facilities". It is our view that compressors, pumping equipment or metering facilities would normally be included as Class 8 assets if they are used in the transmission of natural gas via pipeline from a gas field or gas plant to a transmission pipeline or if they are used in conjunction with a main transmission pipeline. On the other hand, if they are used in conjunction with the distribution of gas they are to be included in Class 2 by virtue of paragraph (d) thereof. If the properties are included in Class 2 they cannot be Class 8 properties.
We hope the above will be helpful.
Yours truly,
for Director Corporate Rulings Division Legislation Branch