Canada's National Energy Board (NEB) has approved revised interim tolls for the Canadian Mainline transmission system of TransCanada Corp. effective Tuesday (March 1).

TransCanada CEO Russ Girling said the company was pleased with the NEB decision. "The Mainline continues to be a critical piece of North American natural gas transmission infrastructure that will be needed for years to come," he said. "The interim tolls will allow for collection of revenues that will more closely reflect TransCanada's costs and forecast throughput in 2011."

Under the approved interim tolls, long-haul service from Empress, AB, to Dawn, ON, will be $1.89/gigajoule (GJ). Two adjustments will be made to the existing 2007-2011 settlement resulting in a lower revenue requirement and therefore lower interim tolls, TransCanada said. These are deferral of the recovery of about $237 million of undercollected 2010 Mainline revenues, and a $31 million reduction representing shippers' share of forecast operation and maintenance savings this year.

Absent the adjustments, the toll for long-haul service from Empress to Dawn would have been $2.35/GJ under the existing Mainline settlement.

The setting of tolls on the troubled TransCanada Mainline has been a contentious issue. Most recently Shell Energy North America (Canada) Inc. urged NEB to freeze rates until at least mid-2011 (see Daily GPI, Feb. 22). Not long before that shippers on the pipeline warned of "rate shock" if the company succeeds with an amended January revival of its rejected December rate request (see Daily GPI, Feb. 14; Jan. 10).

TransCanada asked NEB for increased interim tolls on Jan. 25. The interim tolls in effect at the time were set equal to final 2010 tolls effective Jan. 1 by NEB Order TGI-04-2010. After receiving comments from interested parties and the company, NEB "has decided to approve the application as filed," NEB told TransCanada attorneys in a letter last Thursday.

"As has been stated in the past, the board establishes interim tolls without an extensive examination of substantive issues and a decision to approve interim tolls is, in no way, a ruling by the board as to the merits of any case presented by an applicant or by interested parties to set final tolls," NEB said. "In light of the limited filings in an application to set or amend interim tolls, absent compelling evidence to the contrary, interim tolls are normally established in a manner that aligns with the board's most recent decision which relates to a company's final tolls.

"While it is significant that the proposed revised interim tolls are calculated in accordance with previously approved toll methodologies and the 2007-2011 Mainline Settlement, modified in similar fashion as was approved for establishing final 2010 tolls, the board notes that there is more than the usual level of uncertainty related to final 2011 Mainline tolls."

NEB wrote that it "is concerned with the continuing uncertainty related to this matter. Accordingly, the board expects TransCanada to file its application for final Mainline tolls, whether supported by a settlement or otherwise, by noon Calgary time, 2 May 2011.

"TransCanada will continue to work with its stakeholders on an arrangement that improves the competitiveness of the Canadian Mainline and the Western Canadian Sedimentary Basin."

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