TransCanada offers to slash rates
CALGARY Pressured by rising competition from Pennsylvania, TransCanada Corp. has renewed its push to ship more western Canadian natural gas to the Toronto region by offering discounted tolls on its network.
On Wednesday, TransCanada offered to cut its tolls on its underused main-line pipeline system for the second time to thwart plans for a recently approved U.S. pipeline between Pennsylvania and Ontario that would hurt its market share in Ontario.
The pipeline company had offered to cut tolls late last year, but failed to secure enough shipper commitments for that structure, depending on how much gas was sent down the line. Now, TransCanada is offering to cut its tolls between Empress, Alta., and an important gas pricing hub in Dawn, Ont. for all shippers to 77 cents per gigajoule from $1.42 if shippers commit to the line for 10 years.
TransCanada needs regulatory approval from the National Energy Board to change its tolling structure on the main line. It is under pressure to secure a new, NEB-approved deal with shippers before the fourth quarter when Dallas-based Energy Transfer Partners LP expects to have its US$4.2 billion Rover pipeline in service, which would erode TransCanada’s market share in Ontario.
“While we have held extensive discussions with customers and have received a positive response, it is important that these threshold conditions are met for TransCanada to advance this offering,” Stephen Clark, TransCanada senior vice-president of Canadian natural gas pipelines, said in a release.
“We think it is likely that the open season will be successful,” RBC Dominion Securities analyst Robert Kwan wrote in a research note.