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TC Energy files gas mainline toll agreement with Canadian regulator

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Essential Energy Insights - January 2021


TC Energy files gas mainline toll agreement with Canadian regulator

TC Energy Corp. has asked the Canada Energy Regulator to approve a six-year rate settlement for its Canadian natural gas mainline.

If approved, the agreement would take effect Jan. 1, 2021, and stretch through 2026, the Calgary, Alberta-based company said in a statement. The agreement with shippers would see tolls drop on an important segment of the system and allow TC Energy a return on equity of 10.1% on 40% deemed common equity. Shippers unanimously endorsed the settlement, TC Energy said.

The settlement "enhances competitiveness and provides toll certainty for our customers while maintaining stable revenue for TC Energy," CEO Russ Girling said in the Dec. 20 statement. "The settlement highlights the continued importance of the Canadian Mainline."

TC Energy has worked through the existing tolling agreement to bolster shipments on the mainline system, which delivers gas from western Canada to the U.S. Midwest and central Canada. Producers in Canada have faced still competition in those regions from U.S. shale gas producers. To make Canada's product more competitive, TC Energy offered bargain-priced tolls on the system in 2017 for approximately 1.5 Bcf/d of new shipments. The proposed agreement offers a 20% reduction in tolls on the Empress-to-Emerson segment of the line, which runs from the Alberta-Saskatchewan boundary to the U.S. border in Manitoba.

The settlement includes incentives that allow shippers and the company to share the benefits of cost efficiencies and increased revenue on the system. It also "affirms TC Energy's pricing flexibility and allows new market-driven services to enhance flexibility to respond to changing market conditions," the company said.

Rival Calgary-based pipeline Enbridge Inc. separately filed a proposal with the Canada Energy Regulator for approval of a revised contracting arrangement on its Canadian oil mainline system.