TransCanada Corp. has reached a sweeping agreement with Central Canadian gas utilities that ends the dispute over tolls on its mainline gas system and the battle over new pipeline infrastructure around the Greater Toronto Area.
But the Calgary-based pipeline company has not been able to secure the peace with the Central Canadian distributors over its proposed Energy East project, which would convert gas-pipeline capacity to carry crude oil to Quebec and New Brunswick.
TransCanada has been at odds with its biggest eastern customers over tolls as the main west-to-east line suffered from shrinking production in Western Canada and growing supplies of shale gas in the United States. This summer, it launched a $4.5-billion lawsuit against rival Enbridge Inc. over a 27-kilometre spur that would provide greater supplies of U.S.-produced gas to consumers in the GTA, Eastern Ontario and Quebec.
The deal announced Friday, which must be approved by the National Energy Board, covers both a new toll structure and deal on the spur line west of Toronto that would provide utilities greater access to U.S. production, as well as Western Canadian gas that shipped through the United States. The deal is between TransCanada and Enbridge Inc.'s Toronto-based distribution arm, as well as two other Central Canadian distributors: Spectra Energy Corp.'s Union Gas, and Montreal-based Gaz Métro LP.
Under the deal, TransCanada, rather than Enbridge, will build additional capacity along the Toronto-area Parkway to Maple corridor. At the same time, Gaz Métro and Union have cancelled an effort to find shippers for their own proposal to build additional pipeline capacity in the area and will join forces with TransCanada.
Gaz Métro chief executive Sophie Brochu said the three local distribution companies are pleased about the deal, which will give consumers "access to affordable and diverse gas supplies and long-term certainty on transportation tolls."
In an interview, TransCanada's executive vice-president Karl Johannson said the deal allows the company to invest in the eastern portion of its system and earn a reasonable rate of return. But he said the parties remain at odds about the Energy East project. "This settlement does not settle the Energy East concerns that our customers have," he said. "But it does provide a framework for continued discussions on Energy East."