TransCanada Corp. raised C$296 million in the first use of new freedom to charge as much as the market for transportation services will bear at the eastern end of its natural gas Mainline from Alberta to Ontario, Quebec and connections to the eastern United States.

The performance was disclosed as the National Energy Board (NEB) began hearings this week on hotly contested proposals for tariff changes aimed at generating more gains by abolishing discount-priced capacity sales on the Mainline’s eastern segments.

TransCanada portrayed the initial results as a success for the new regime, which was created by a landmark NEB ruling in March on financial and service restructuring of the Mainline to try curing a chronic excess capacity headache (see Daily GPI, April 1).

The opening performance of the gas transportation free market era was a June open-season auction of one-year firm capacity bookings. Customers lined up to buy 30 service contracts for 638,127 gigajoules (GJ) (606 MMcf/d), TransCanada said.

In response to a grievance by customer BP Energy Canada Co., the NEB directed TransCanada to make one contract change but otherwise upheld results of the auction. The order makes the Mainline drop end dates from firm service deals in order to preserve shippers’ rights to manage the timing of gas transactions.

Critics of TransCanada maintain that the Mainline has adopted strategies for selling firm service that force shippers to buy it or risk paying premium tolls on the entirely deregulated market for short, seasonal delivery bookings that are often interruptible or liable to be disrupted at times of peak demand.

The contested new proposals for scrapping discount-priced eastern gas delivery arrangements just do away with “vestiges of a bygone era,” pipeline company representatives told the NEB as the hearings got under way in Calgary.

Along with BP, a lineup of big Mainline users is fighting the changes, including the Canadian Industrial Gas Users Association and a who’s-who of eastern utilities: the Union Gas subsidiary of Spectra Energy in southwestern Ontario, Enbridge Gas in Toronto and eastern Ontario, Gaz Metro in Quebec, and the Alberta Northeast Gas coalition of distribution companies in New England, New York and New Jersey.

Counter-moves against TransCanada’s Mainline tariff plans include a proposal by Union and Gaz Metro for a short bypass pipeline between the Dawn storage and trading hub in southwestern Ontario and the Toronto-area inlet to the eastern distribution companies’ service networks.

Titled Vaughan Pipeline after its exit point near Toronto, the bypass has further complicated the eastern gas service conflict because the proposed route requires an interconnection with a short leg of the Mainline. TransCanada is fighting a demand by Union and Gaz Metro for the NEB to order the Mainline to accept the link. A parallel dispute over a previous pipeline planning contract between TransCanada and Enbridge has, meanwhile, escalated into a fight in the Ontario courts.

The new regime, which forced the Mainline to cut its benchmark rate for long-distance service from Alberta to eastern Canada almost in half to C$1.42/GJ (US$1.49/MMBtu), was intended to make a start on refilling the half-empty system’s capacity for about 7 Bcf/d, and it shows early signs of working, TransCanada said.

Since the changes went into effect this summer, the Mainline has already sold new firm service bookings of 1.2 Bcf/d, the company told the NEB. Efforts to revive use of the half-century-old gas conduit continue, along with promotion of TransCanada’s C$12 billion Energy East proposal (seeDaily GPI, Aug. 5). The mega-scheme includes slimming down the Mainline by converting one of six jumbo gas pipes in its right-of-way to oil service capable of hitting 1.1 million b/d and an extension from Quebec City to tanker terminals on the Saint Lawrence River and the Atlantic Coast of New Brunswick in Saint John.

In the current gas tariff case, TransCanada dismisses claims by its critics that rising tolls on the eastern Mainline segments will force customers into a long-range supply squeeze. The strategy is seen as liable to make Canadian gas users revert to relying on aging, depleting wells in Alberta and reduce their incentives and freedom to continue increasing imports of low-cost Marcellus shale production from the United States.

Alberta and British Columbia have large shale gas deposits, too, TransCanada has reminded the NEB, which is currently evaluating them in a research collaboration with provincial geological and regulatory agencies.

“The ‘declining WCSB’ premise is entirely incorrect,” TransCanada said. “While Western Canada Sedimentary Basin (WCSB) conventional supply is declining, the growth in unconventional supply has resulted in TransCanada’s current technical recoverable estimate for the WCSB being approximately 560 Tcf for ultimate potential resources in its base case supply analysis. This is higher than the estimate has ever been and is more than double the estimated gas in place prior to the commencement of WCSB production more than 50 years ago.”