TransCanada Announces 2018-2019 Revenue Requirement Settlement with NGTL System Shippers
TransCanada Corporation today announced that its wholly-owned subsidiary, NOVA Gas Transmission Ltd. (NGTL), has filed an application with the National Energy Board for approval of a negotiated settlement with its customers and other interested parties on the annual costs required to operate the NGTL System for 2018 and 2019.
“This settlement is the product of a collaborative and open negotiation process between TransCanada and its shippers, which will bring greater natural gas transportation cost certainty to customers on the NGTL System,” said Tracy Robinson, TransCanada’s senior vice president and general manager, Canadian Gas Pipelines. “We appreciate the hard work by industry and other interested parties in reaching this settlement so we can continue to provide safe, reliable and cost-effective transportation to our customers.”
The settlement covers NGTL System operating costs including return on equity and depreciation. It also includes a mechanism that incentivizes TransCanada to remain strongly focused on cost management as well as operating efficiencies and system reliability. The agreement:
- Encompasses a two-year period (January 1, 2018 to December 31, 2019)
- Fixes the equity return at 10.1 per cent on 40 per cent deemed common equity
- Establishes depreciation at a forecast composite rate of 3.45 percent
- Fixes operating, maintenance and administration (OM&A) costs at $225 million for 2018 and $230 million for 2019, and includes a sharing mechanism that incents NGTL to achieve cost efficiencies
- Provides for flow-through treatment of all other costs including pipeline integrity expenses and emissions costs
The NGTL System is an extensive natural gas pipeline system in Western Canada comprised of approximately 24,320 kilometers of pipeline and associated facilities. Subject to regulatory approvals, TransCanada has committed approximately $7.2 billion in near-term growth capital to the system.
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