Discounted cross-country pipeline tolls, scheduled to start Nov. 1, will enable Western Canadian natural gas suppliers to take back eastern sales lost to shale production in the United States, predicted the Alberta Department of Energy.

The statement to the National Energy Board (NEB) aligns Alberta with British Columbia (BC) in support of a 46% rate cut sought by TransCanada Corp.’s gas Mainline at regulatory hearings scheduled through Tuesday in Calgary.

Titled Dawn Long-Term Fixed Price, or Dawn LTFP for short, the plan drops the rate for 1.4 Bcf/d of shipments to the storage and trading hub for Ontario, Quebec and the U.S. Northeast to C77 cents/GJ (65 cents/MMBtu).

“The service provides a competitive opportunity for Canadian supply to retain economic access to traditional markets that have become a key challenge facing Alberta’s natural gas industry,” sayid the government in the nation’s top gas-producing province. “The LTFP would provide Canadian supply with a toll structure that ensures Ontario, Quebec and Northeast U.S. consumers continue to have access to Canadian supply.”

In the second-ranked producer province, BC’s energy ministry urged the NEB in June to approve the deal to fulfill “clear need for a competitive tolling offering” to enable Western Canada Sedimentary Basin (WCSB) producers “to preserve and reclaim eastern market share.” BC authorities added, “Further, without such an offering, natural gas production in the WCSB is likely to fall.”

Alberta rejected protests by Ontario and Quebec gas distributors excluded from the deal that it is “cross-subsidization” of a 23-company who’s who of western production by eastern utilities that still pay the full Mainline toll of C$1.42/GJ ($1.19/MMBtu).

The bargain restores pipeline revenue by partly refilling excess capacity on western legs of the Mainline that have been running half-empty as a result of growing U.S. shale supplies flooding Ontario, Quebec and U.S. Northeast markets, Alberta said.

“Western Canadian producers have committed to a 10-year term, market-based transportation service that would attract approximately C$422 million ($338 million) annually to TransCanada’s Mainline. The net revenue to the Mainline is expected to generate C$2 billion ($1.6 billion) of incremental benefit to the system over the term.”

The Dawn LTFP bargain also upholds fairness in the eastern Canadian gas toll regime, Alberta suggested.

The province’s energy department observed Union Gas and Enbridge Gas Distribution have secured Ontario Energy Board approval to charge their customers US$1.1 billion in delivery costs of American shale gas imports via the new Nexus Gas Transmission LLC pipeline in the United States over the next 15 years. The Ontario distributors and Nexus are all corporate affiliates since Enbridge’s US$28 billion takeover of the Spectra Energy last winter, Alberta noted.