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Canada regulator to make preliminary decision on Trans Mountain expansion tolls

2/2 © Reuters. FILE PHOTO: A pipe yard servicing government-owned oil pipeline operator Trans Mountain is seen in Kamloops, British Columbia, Canada June 7, 2021. REUTERS/Jennifer Gauthier/File Photo 2/2   TRP -0.13% Add to/Remove from Watchlist Add to Watchlist Add Position

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By Ismail Shakil and Nia Williams


OTTAWA (Reuters) - The Canada Energy Regulator (CER) said on Thursday it will make a preliminary decision on Trans Mountain Corp's proposed shipping tolls for its oil pipeline expansion project this autumn, before holding a hearing on the tolls next year.


The timing of the decision aims to ensure interim tolls are in place when the pipeline expansion becomes operational, the regulator said in a statement.


The 590,000 barrel-per-day Trans Mountain expansion project (TMEP) will nearly triple the flow of oil from the province of Alberta to Canada's Pacific Coast and is expected to start operating late in the first quarter of 2024.


But shippers including Canadian Natural (NYSE:CNQ) Resources and Cenovus Energy (NYSE:CVE) are disputing the interim tolls proposed by Trans Mountain, arguing a portion of the base toll is too high.


Long-term shipping contracts cover 80% of the expansion project's capacity. The final tolls will impact the value of the pipeline when the Canadian government, which bought it in 2018 to ensure the expansion got built, puts it up for sale.



The CER said the hearing next year would look at issues including the "fairness and reasonableness" of existing tolling agreements with shippers and potential repercussions on Trans Mountain's financial standing.


"After service begins on the TMEP and final costs are known, Trans Mountain can request approval from the Commission of the CER for final tolls," the regulator said.


Canada regulator to make preliminary decision on Trans Mountain expansion tolls