CER approves TNPI’s Incentive Tolls Settlement Agreement

CALGARY, AB, Dec. 19, 2023 /CNW/ – Today, the Commission of the Canada Energy Regulator (CER) approved the Trans-Northern Pipelines Inc. (TNPI) Incentive Tolls Settlement Agreement (ITSA). This decision [Filing C27751] allows TNPI to implement a new toll design. A key feature of the ITSA, beginning in 2025, enables the TNPI System to be separated into two segments to determine tolls. The approved ITSA is a shift from the current rolled-in approach, where all shippers were charged tolls based on the costs of the entire TNPI System.

During the hearing, the Commission heard from TNPI, Suncor and Imperial Oil about the viability and cost-competitiveness of the TNPI System. Two TNPI shippers participated as intervenors; Imperial Oil supported the ITSA proposal, while Suncor opposed it. The other two shippers did not participate as intervenors in the hearing, but Shell provided a letter of support.

The Commission found that the ITSA would result in just and reasonable tolls. The two-segment toll design would likely reduce existing cross-subsidization and better adhere to the fundamental tolling principle of having shippers pay for what they use compared to a rolled-in approach. Further, the Commission found that the ITSA tolls are generally competitive with marine and rail alternatives, considering all relevant and appropriate costs.

The TNPI System transports refined petroleum products such as gasoline, diesel and jet fuel to large cities in Ontario and Quebec and connects major refineries in that region. The TNPI System includes approximately 850 km of operating pipeline and various auxiliary infrastructure, all regulated by the CER.

On November 22, 2022, the CER received an application from TNPI to approve the ITSA.The ITSA is a negotiated agreement between TNPI and its shippers outlining fees for using the pipeline to transport refined petroleum products, also known as tolls.The ITSA replaces a previous tolling agreement called the Incentive Tolls Settlement (ITA) from 1996.The ITSA is for an initial 5-year term and can be renewed for an indefinite amount of subsequent 5-year terms if parties agree to continue the agreement.Under the ITSA, the TNPI System would be divided into two segments for toll calculation purposes: Nanticoke-East and Montreal-West.The ITSA includes the framework for establishing TNPI’s revenue requirement, tolls and Conditions of Transport.Suncor uses the TNPI System to transport refined products from its Montreal refinery to markets such as the Greater Toronto Area (GTA) and Ottawa. Suncor also uses the Toronto Airport Lateral to move jet fuel produced at its Sarnia refinery to the Toronto Pearson Airport.Imperial Oil uses the TNPI System to transport refined petroleum products from its Nanticoke refinery to markets in the GTA. Imperial is also a major shipper on the system to Ottawa and Belleville.The nameplate capacity of the TNPI System varies across each segment of the pipeline. For example:From Montreal to Farran’s Point, pipeline capacity is 132,000 barrels per day (b/d).From Farran’s Point to Ottawa, pipeline capacity is 59,000 b/d.From Nanticoke to Oakville, pipeline capacity is 105,000 b/d.

Decision [Filing C27751]Project webpageITSA Application Pipeline Profile for TNPI

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SOURCE Canada Energy Regulator