In an effort to deal with the serious decontracting problem onits pipeline system caused by the addition of Northern Border’sChicago expansion and the Alliance Pipeline project, TransCanadasaid last week it is strongly considering filing an applicationwith the National Energy Board this month to raise the floor pricefor interruptible and short-term firm transportation service,something the pipeline’s shippers almost certainly will oppose.

TransCanada spokesman Glenn Herchik said the pipeline may seekto increase the floor prices for interruptible service to 110% ofthe cost of firm service from 50% of the cost of firm. Short-termfirm floor rates could be raised to 135% of the cost of firm from100%.

“For comparative purposes, down in the states interruptibletransportation and short-term firm are at much higher levels thanthis,” said Herchik, claiming floor rates for IT on U.S. pipelinesaverage about 200% of firm costs.

“We don’t want to undervalue our firm transportation,” he said.”We have about 580 MMcf/d of firm transportation [8% ofTransCanada’s total firm capacity] that has not been renewed underprior contracts. This is one of the things that we’re considering,and we have talked to customers about this.

“I guess our thinking is we believe our IT and our short-termfirm services should be priced to better reflect their valuerelative to long-term firm,” he added. “And we believe that newprices for short-term services will also enhance the value of firmtransportation for those customers who have made this greatercommitment.”

Nick Shultz, general counsel for the Canadian Association ofPetroleum Producers, said customers are wary of any changes inTransCanada’s rates. “We have to evaluate what they’re proposing.We’ll take a position when we see it. But we do have a concern thatany new tolls for a service like that is consistent with thefunctioning of the commodity market.”

Rocco Canonica

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