* Regulator sets new, lower, tolls on mainline
* Says new regime allows system to be competitive
* New tolls come as volumes on mainline system falling
CALGARY, Alberta, March 27 Canada's National
Energy Board on Thursday agreed to cut fixed tolls on
TransCanada Corp's mainline, a cross-country natural
gas pipeline network, which the regulator says will help keep
the system competitive and profitable despite increasing
supplies from U.S. shale gas producers.
Canada's National Energy Board on Thursday agreed to cut
fixed tolls on TransCanada Corp's mainline, a
cross-country natural gas pipeline network, which the regulator
says will help keep the system profitable amid increasing
competition from U.S. shale gas supplies.
The board approved new rates that will see the cost of
moving gas from Empress, Alberta, to Dawn, Ontario, fall to
C$1.42 per gigajoule from C$2.58 per gigajoule under
TransCanada's current tolling structure.
The decision comes more than 18 months after TransCanada,
the country's largest pipeline operator, first asked the board
to approve sharply lower tolls for long-haul shippers on the
mainline while increasing the amount charged to short-haul
The 14,101-kilometer (8,762-mile) pipeline system once
carried as much as 6 billion cubic feet of gas per day. However,
as customers in Central Canada and the U.S. Northeast
increasingly switched to gas from closer supplies like the
Marcellus shale field centered on Pennsylvania, volumes on the
system fell by half and tolls rose as a smaller pool of shippers
were required to shoulder the regulated system's full costs.
"Mainline tolls have increased substantially over a short
period of time as a result of throughput declines related to
increasing levels of competition in the Mainline's supply and
market areas," the board said in a statement. "The board found
that tolls cannot continue to increase each year in response to
TransCanada said it is still reviewing the decision and
cannot yet say how the new tolling structure will affect its
"This is a long and complex decision and we will need time
to complete a full analysis before we can comment any further on
how this decision will impact TransCanada," the company said in
While setting the new tolls, the board disallowed
TransCanada's bid to extend the tolling methodology used on the
Nova system, its Alberta gas-gathering pipeline network, into
British Columbia and Saskatchewan. The move could have raised
tolls on the Nova system by a third.
"We're pleased that TransCanada's attempt to transfer costs
from the mainline to (the Nova system) has been rejected," said
Nick Schultz, vice-president, pipeline regulation, for the
Canadian Association of Petroleum Producers, which lobbies for
the country's largest oil and gas companies.
"We viewed that as imprudent ... and the NEB said clearly
that it is imprudent from a (Nova) perspective and also that it
is an inappropriate transfer from one affiliate to another."
Under the new rules, TransCanada will be allowed an 11.5
percent return on equity for the mainline and approved an
incentive plan that will see the company's profits from the
system rise further if revenues are higher than forecast.
TransCanada could not be immediately reached for comment.
TransCanada shares rose 10 Canadian cents to close at
C$48.83 on the Toronto Stock Exchange on Wednesday. The board's
decision was released after trading ended.