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NEB orders TransCanada to stick with lower interim 2011 gas tolls

https://www.chemnet.com   Sep 13,2011 Platts
Canada's National Energy Board late Friday turned down TransCanada Pipelines' application for final 2011 natural gas transportation rates for its Mainline and instead ordered the operator to continue with its lower, interim tolls for the year.

In May, TransCanada proposed a final rate structure that would have hiked tolls up as much as 21 cents/Gj over its interim charges.

The Eastern toll, for instance, would have been C$2.45/Gj, compared with its C$2.24/Gj interim toll. Its Southwest zone toll would be C$2.07/Gj, up 18 cents from the C$1.89 interim rate.

"By finalizing 2011 tolls now, shippers will have added certainty and stability, as there will be no possibility of 2011 toll adjustments," the Friday order stated.

NEB also stated it was also averse to TransCanada's plan to adjust for the difference between its proposed final and interim tolls and have shippers pay that differential in future years.

The agency noted, however, "that a more detailed evidentiary record is required before deciding on certain of the 'flow-through' elements of the revenue requirement."

"As part of the proceeding examining TransCanada's 2012-2013 Tolls Application, TransCanada will be directed to file additional evidence related to these 2011 costs and parties will be given the opportunity to examine that evidence," the order stated.

NEB did leave the door open for some form of retroactive payments, stating that any surplus of shortfall accruing from the final 2011 tolls would be placed into a deferral account "for consideration in 2012 and/or subsequent years."

Last week, TransCanada sent in its Mainline rates for 2012 and 2013 to the NEB, in which it lowered long-haul charges by some 32% and raised prices for interruptible services in an effort to boost the competitiveness of the troubled pipeline, among others.

TransCanada has long attributed the need to revise its rate structure to falling throughput over the past five years on the 8,800-mile mainline, which runs from the Alberta/Saskatchewan border to the Quebec/Vermont border. There, it connects to several Northeast-bound pipes serving premium-priced markets in the US.

Uncertainty over the toll structure has affected market dynamics for more than a year. For instance, many shippers over the winter chose to source their gas from western Canada, move it into the US Midwest and then back across the border to eastern Canada and then onward to US Northeast markets.

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