TransCanada says Enbridge’s GTA pipeline won’t benefit Ontario consumers

Questions savings from sourcing gas through a hub in the province versus Alberta.

August 21, 2013   by CANADIAN PRESS

CALGARY — TransCanada Corp. is urging Ontario’s energy regulator to reject a proposal by rival Enbridge Inc. for bringing more natural gas into the Greater Toronto Area, arguing the project would not benefit consumers.

In a filing to the Ontario Energy Board, TransCanada questions Enbridge’s view that the GTA Pipeline will lead to savings by sourcing gas from a hub in southern Ontario versus one in Alberta.

It also says the line, as currently proposed, would be too big and that it’s limited to one supply route to get much of the gas to the Toronto region.

“For these reasons, TransCanada opposes the amended application and submits that it is not in the best interest of the nation, Ontario or Ontario’s customers,” the Calgary-based company said.


Canada’s two biggest pipeline firms had previously been working together on part of the GTA Project, called Segment A. The OEB has encouraged pipeline companies to consult and collaborate with one another to ensure infrastructure is built in the most efficient manner possible.

Since Enbridge and TransCanada were working on similar projects in the same region, around the same time, they signed a memorandum of understanding in January of this year to co-operate on Segment A.

But the relationship soured last month when Enbridge’s Toronto-based gas distribution business backed out of the MOU. Enbridge said it was because TransCanada was doling out space on the pipeline in a manner that went against an Ontario law meant to ensure capacity is offered to the market in an “open and non-discriminatory manner.”

TransCanada responded by filing a lawsuit in the Ontario Superior Court of Justice to force Enbridge to either stick to the MOU or pay damages of $4.5 billion. Enbridge has vowed to fight the claim.

“TransCanada has put Enbridge on written notice that if it proceeds with the GTA Project otherwise than in accordance with the MOU, it does so at its peril,” the company said in its filing to the OEB.

TransCanada, Enbridge in court battle over GTA natural gas pipeline

After Enbridge terminated the MOU, it filed an amended regulatory application for the GTA project on July 22, which TransCanada is urging the OEB to reject.

“It is submitted that this supplemental evidence establishes that Segment A, as currently applied for in the absence of the MOU, is substantially oversized and will represent a wholly unnecessary cost burden to distribution customers.”

TransCanada said that if the Enbridge GTA line, and a connecting one proposed by Union Gas, are approved, it could mean a revenue hit of $960 million between Nov. 1, 2015 and Dec. 31, 2017.

In calculating savings from their projects, TransCanada contends Enbridge and Union “do not in any way take into consideration the impact that the approval of these applications will have on TransCanada’s existing infrastructure and the consequential impact that they will have on Ontario consumers.”

TransCanada also questions the savings of sourcing gas from the Dawn hub in southern Ontario versus the Empress hub on the Alberta-Saskatchewan border, saying the cost predictions are “optimistic and inherently unreliable.”

While Dawn is closer, making transportation costs lower, the price of the commodity itself is lower in Alberta, TransCanada notes.

Under their MOU, TransCanada and Enbridge envisaged building a 42-inch pipeline. But without that agreement, TransCanada says that size is far too big, estimating that about “$135 million extra would be borne by distribution customers” under that configuration. A more appropriate size would be 24 inches, TransCanada said.

As well, TransCanada says the GTA project is too reliant on Union Gas’ Dawn-Parkway pipeline to bring gas – some from shales like the Marcellus in the Northeastern United States – to the Toronto area.

“TransCanada disputes the claim that the GTA Project increases supply diversity.”
Enbridge Gas Distribution spokeswoman Chris Meyer said the company is reviewing TransCanada’s evidence and declined to comment on it outside of the regulatory process.

“We’re committed to open consultation and will continue to share our perspective about the proposed project publicly through the regulatory process. Enbridge Gas Distribution’s first obligation is to ensure reliable natural gas delivery to our two million Ontario customers at fair and reasonable prices,” she wrote in an email.

“Enbridge Gas Distribution has not upgraded the backbone of our natural gas distribution system in 20 years. During that time the total number of customers we serve has grown from about 1.1 to over two million – and that number continues to grow. The GTA Project is proposed to address growth and to provide continued system reliability and access to diversified natural gas supply sources.”

© 2013 The Canadian Press

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