CALGARY – TransCanada Corp. (TSX:TRP) is seeking permission to lower the tolls collected on its Mainline and other major pipelines that collectively supply natural gas from Western Canada to other parts of the country and the United States.
Whether the National Energy Board agrees to the proposal, remains to be seen..
Greg Lohnes, president of TransCanada’s natural gas pipelines, said the company has been unable to negotiate a unanimous agreement with shippers.
“And that’s why we’ve needed to go to our regulator and file this application,” Lohnes said in an interview Thursday after TransCanada announced its filing.
“We’ve developed a comprehensive proposal. We think it’s balanced among all of our stakeholders, and is implementable in a short period of time.”
He said the proposed reductions for 2012 and 2013 provide for a fair return to Calgary-based TransCanada while lowering the cost of shipping natural gas along the affected pipelines.
TransCanada’s annual revenue going forward would be reduced by about $114 million before taxes, or $150 million after taxes, but the typical householder probably wouldn’t notice much impact.
The change should reduce prices “but our toll, as a proportion of a consumer’s gas bill, is a very small piece,” Lohnes said.
North American natural gas prices have already been extremely low in recent years as a result of huge new sources that can be extracted from shale rock formations with modern drilling technology.
In addition, the abundance of shale gas in the U.S. Northeast and elsewhere has reduced demand for supplies from Western Canada that are carried eastward by the Mainline system.
TransCanada has a network of more than 57,000 kilometres of natural gas pipelines spanning most of the continent.
The proposal, filed Thursday with the National Energy Board, affects TransCanada’s Mainline, Foothills and Alberta pipeline systems.
The Mainline system stretches more than 14,000 kilometres from the borders of Alberta and Saskatchewan to the Quebec-Vermont border.
The shorter Foothills system is 1,241 km long and carries gas from central Alberta to the U.S. border and connections to the U.S. Midwest, the Pacific states and Nevada.
The Alberta system has nearly 23,100 km of pipe that gathers natural gas for use within the province – and connections with the Mainline and Foothills systems.
TransCanada’s proposal is to increased the size of what’s designated as the Alberta system, which would absorb parts of the Foothills and Mainline systems in British Columbia, Saskatchewan and Manitoba, in order to re-allocate where the infrastructure costs are recognized.
The effect, the company argues, would be to reduce the Mainline’s 2012 long-haul toll to $1.41 per gigajoule, down from $2.08 this year. The toll would rise to $2.52 if the changes aren’t allowed.
The company says many short-haul tolls on the Mainline system would also fall .
“The changes we have proposed are designed to enhance the long-term economic viability and competitiveness of the Mainline and the Western Canada Sedimentary Basin as a whole, to the benefit of all stakeholders,” TransCanada chief executive Russ Girling said in a statement Thursday.
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