The third toll cut since 2017 will go into effect this fall on TC Energy’s cross-Canada natural gas Mainline, under a swift approval that the National Energy Board (NEB) granted to an unopposed discount package.
The new deal provides 10- to 21-year transportation contracts for 630 MMcf/d at a negotiated rate of C93 cents/gigajoule (GJ), or 73 cents/MMBtu. Traffic is to grow in stages with start dates every Nov. 1 from 2019-2021.
Delivery destinations for 17 participating shippers include Ontario, Quebec, the United States, and Canadian east coast markets via a roundabout route across U.S. connections. The traffic growth would trigger about C$250 million ($188 million) in Mainline compressor additions.
Gas began flowing in November 2017 under the first negotiated Mainline discount, which cut the toll for limited service options between Alberta and Ontario for 1.4 Bcf/d by 46% to C77 cents/GJ (61 cents/MMBtu) from C$1.42/GJ ($1.12/MMBtu).
Shippers won their second break last January after a 10-month fight. The NEB ordered rebates, as rate cuts, of C$1.14 billion ($910 million) in excess toll revenues were salted away in a Mainline “adjustment” or savings account. Reductions of 17-36% are forecast for various delivery services.
In evidence filed with the NEB, TC Energy predicted the new negotiated discount toll deal would generate benefits in the form of lowered system costs for all Mainline shippers.
An overall net gain of C$1.7 billion ($1.3 billion) was forecast from new toll revenues exceeding costs of adding compressor power for the increased deliveries. The Mainline may also avoid C$2.2 billion in potential eastern facilities additions that have been made unnecessary by the new rate discount for western Canadian gas deliveries, TC Energy estimated.