The Company supplies gas to approximately 40,000 residential, commercial and industrial customers.  At year end 2007, the Company’s Western system served just under 22,000 customers and the Northeast system served close to 18,000 customers.  The Western system has three large industrial customers: West Fraser Mills Ltd., Rio Tinto Alcan and B.C. Hydro and Power Authority.  In 2007, these three customers accounted for approximately 29 percent of total gas deliveries and 6 percent of the Company's operating revenues.

Transmission Pipeline System
The Western system transmission pipeline connects with the Spectra Energy pipeline system near Summit Lake, British Columbia and extends 587 kilometres to the west coast of British Columbia at Prince Rupert. The pipeline between Summit Lake and Terrace has been partially paralleled, or looped, with a second line to increase throughput capacity. The Company also owns and operates over 300 kilometres of lateral transmission pipelines extending into the various communities served by the Company, the most significant being dual lines extending approximately 57 kilometres into Kitimat.

Five compressor units maintain pressure on the Company's transmission pipeline system: two located at Summit Lake and one each at Vanderhoof, Burns Lake and Telkwa. The total installed rating of the compressor units is 16,120 kilowatts (21,610 horsepower). The sustainable capacity of the transmission pipeline system, with the present compressor and looping configuration, is approximately 3 260 10³m³ (115 MMcf) per day.  With the closure of the Methanex methanol/ammonia facility in Kitimat in 2005 the Company deactivated its compressor stations at Vanderhoof and Telkwa, as well as 53 miles of 10 inch pipeline and 33 miles of 6 inch pipeline.  These facilities are being maintained for potential future use.

Western System
The Company owns and operates natural gas distribution facilities to deliver gas from its pipeline system to homes and businesses in the various communities located throughout the Western system service area.  The Company’s Western system’s distribution system is comprised of approximately 1,180 kilometers of distribution pipelines.

The Company currently has exclusive franchise agreements with the municipalities of Prince Rupert, Port Edward, Kitimat, Terrace, Smithers, Burns Lake, Houston and Vanderhoof, entitling it to distribute natural gas within those municipalities.  Each of the franchise agreements has an initial term of 21 years, expiring in 2011 (except in the case of Port Edward, where the agreement expires in 2010, and Prince Rupert, where the agreement expires in 2015), and is renewable at the option of either party for a further term of 21 years.

The Company also has operating agreements with the municipalities of Fort St. James and Telkwa that entitle it to install and operate gas distribution facilities in those municipalities.  The initial term of each of these operating agreements has expired, and the Company is operating within ten year renewal terms which expire in 2009 and 2011, respectively.  Each operating agreement provides for an unlimited number of ten year renewal terms, which take effect automatically on the expiry of the preceding renewal term.  If the parties cannot agree on alterations to an operating agreement for a renewal term, the B.C. Utilities Commission may determine such alterations. 

Under all of the municipal franchise and operating agreements, the Company is required to pay the municipality an annual fee on gas sales within the municipality equal to 3 percent of the Company's gross revenue from sales to residential and commercial customers and 3 percent of the gross revenue from the sale of the first 328 000 GJ (approximately 300 MMcf) per year to any industrial customer.

The Western system service area had a total population of approximately 75,000 at December 31, 2007.

Northeast System
The  Northeast system is served by the Company’s wholly owned subsidiary Pacific Northern Gas (N.E.) Ltd. (“PNG(N.E.)”).  The Northeast system serves the Fort St. John and Dawson Creek area through connections with the   Spectra Energy pipeline system at several locations.  The Northeast system also connects with a pipeline owned by Canadian Natural Resources Limited in two locations to obtain supply for the Fort St. John area, and with a producer's pipeline and the Spectra Energy pipeline system near Chetwynd, British Columbia to serve the Tumbler Ridge area. The entire Northeast system consists of approximately 160 kilometres of transmission lines, 1,490 kilometres of distribution lines and a gas processing plant near Tumbler Ridge with a capacity of 120 10³m³ per day.

PNG (N.E.) has exclusive franchise agreements with the District of Taylor and the Cities of Dawson Creek and Fort St. John for 21-year terms, expiring in 2012, 2014 and 2018, respectively, as well as an operating agreement with the Village of Pouce Coupe.  The Dawson Creek and Fort St. John agreements provide for payment of a 3 percent fee on gross revenues from sales of gas to residential and commercial customers, and 3 percent of the gross revenue from the sale of the first 328 000 GJ (approximately 300 MMcf) per year to any industrial customer.  PNG (N.E.) operates its gas distribution facilities in the Tumbler Ridge area pursuant to a certificate of public convenience and necessity issued by the Commission. No franchise fees are payable to municipality of Tumbler Ridge.

The franchise agreement with the City of Dawson Creek and the operating agreement with the Village of Pouce Coupe are renewable for a further term of 21 years at the option of either party.  The franchise agreements with the District of Taylor and City of Fort St. John give the municipalities the right to purchase the distribution system within the municipality on expiry of the franchise agreement, at the fair market value of the assets as a going concern.

The Northeast system service area had a total population of approximately 58,000 at December 31, 2007.