Revenue requirement settlement reached by TC Energy with NGTL customers
TC Energy Corporation announced that its wholly-owned subsidiary, NOVA Gas Transmission Ltd. (NGTL), has reached a five-year negotiated revenue requirement settlement with its customers and other interested parties that extends from 2020 to 2024.
"This settlement is the result of a collaborative engagement with our customers and is responsive to the needs of both the industry and our business," said Russ Girling, TC Energy President and Chief Executive Officer. "Recognizing it is a challenging time for a number of our customers, this innovative settlement includes incentives to keep tolls competitive while providing a stable return to TC Energy as we execute in excess of $14 billion of pipeline projects to enhance the connectivity of Western Canadian Sedimentary Basin (WCSB) natural gas supply to all markets."
The settlement is designed to facilitate the cost-effective transportation of natural gas from the WCSB to key North American demand centers. The agreement:
- encompasses a five-year term from January 1, 2020 through December 31, 2024;
- fixes the equity return at 10.1 per cent on 40 per cent deemed common equity;
- provides NGTL with the opportunity to increase depreciation rates should tolls fall below projected levels;
- includes an incentive-mechanism for certain operating costs where variances from projected amounts are shared between NGTL and its customers; and
- includes a mechanism to review the settlement should tolls exceed a pre-determined level, without affecting the equity return.
NGTL expects to file an application with the Canada Energy Regulator (CER) for approval of the five-year negotiated revenue requirement settlement in the second quarter.