TransCanada (TRP.TO) says it has lined up enough shipper support to go ahead with a new pipeline tolling system designed to allow more western Canadian natural gas to be shipped to Ontario to compete with growing American supplies.
The Calgary-based pipeline company says it will now seek regulatory approval from the National Energy Board for the new tolls with a targeted in-service date of Nov. 1.
TransCanada is offering the lower toll costs to help fill its underutilized Canadian Mainline natural gas pipeline system from a centre in Alberta to a hub in southern Ontario.
It says shippers have signed 10-year fixed-price agreements at 77 cents per gigajoule to move a total of 1.5 million gigajoules, enough to heat about 16,000 average Canadian households for a year.
Analyst Robert Kwan of RBC Dominion Securities says the news is positive for TransCanada but cautions that the new tolls will likely be opposed by interveners and NEB approval can't be guaranteed.
TransCanada hopes to win approval for the new tolls before the fourth quarter of this year, when the competing Rover pipeline proposed by Energy Transfer Partners is expected to give American natural gas another access point to the Ontario market.