Pipeline Profiles: Trans Quebec & Maritimes Pipeline

Sources: Trans Quebec & Maritimes Pipeline Inc., NEB

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The 572 km Trans Quebec & Maritimes Pipeline system (TQM) extends from an interconnection with the TransCanada Mainline near Saint Lazare, Quebec, to a point near Quebec City in the Municipality of Lévis on the south shore of the St. Lawrence River. TQM also extends from Terrebonne, north of Montreal, to a point on the Canada-U.S. border near East Hereford, Quebec. The TQM pipeline has 31 delivery points and two compressor stations. At East Hereford, TQM connects to the Portland Natural Gas Transmission System, which supplies natural gas to the U.S. Northeast market, primarily Vermont, New Hampshire, Maine and Massachusetts. The TransCanada Mainline holds contracts for all of the capacity on TQM.

In 2016, capacity at Saint Lazare averaged 24.38 million cubic metres per day (0.86 billion cubic feet per day) and throughput averaged 14.26 million cubic metres per day (0.5 billion cubic feet per day). The average utilization of Saint Lazare in 2016 was 58.5%.

Flows measured at Saint Lazare are intra-Canada. The TQM Pipeline receives gas from the TransCanada Mainline at an interconnect near Saint Lazare, Québec.

In 2016, export capacity at East Hereford averaged 5.6 million cubic metres per day (0.2 billion cubic feet per day) and throughput averaged 5.35 million cubic metres per day (0.19 billion cubic feet per day). The average utilization of East Hereford in 2016 was 95.51%.

Flows measured at East Hereford are exports. The TQM Pipeline connects with the Portland Natural Gas Transmission System at the Canada/U.S. border near East Hereford, Québec.

The physical capacity of a pipeline is based on many factors such as the product(s) being carried, direction of flow, ambient temperature, pipeline compression, and maintenance work or other pressure restrictions. The operational capacity at each key point may also reflect contracts for transportation service, and supply and demand across the system. The actual physical capacity of the pipeline may be higher than the assumed operational capacity stated here.

Open data can be freely used, modified and shared by anyone for any purpose. The data for these graphs are available here.

Key Developments

Last updated: August 2016

There have been no recent major developments on the TQM pipeline.

Regulatory Documents

Last updated: August 2016

Tolls

Last updated: August 2016

TQM has operated under toll settlements from 2010-2016. The TransCanada Mainline has firm contracts for all the capacity on TQM and demand charges are paid by TransCanada Pipelines, regardless of flows.

Figure 10.6.3 shows the TQM benchmark tollNote 1 (T-1 demand charge for they system per month) and the GDP deflator (normalized) for 2010-2015. Tolls decreased slightly from 2010 to 2012 under the toll settlement. Expected throughput increased from 2012 to 2014, reducing tolls each of those years.

Figure 1: M&NP Benchmark Toll

Figure 1: M&NP Benchmark Toll

Source: NEB toll filings

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This graph shows the TQM benchmark toll as a solid red line and the GDP deflator as a black dashed line. The benchmark toll decreased from $6.9 million per month in 2010 to a low of of $6.4 million in 2013 then increased up to $7.4 million in 2015.

Financial

Last updated: August 2016

The 2014-2016 TQM Settlement Agreement fixed return on rate base and did not specify a capital structure or rate of return on equity. For illustrative purposes, TQM reports its rate of return on rate base based on the After Tax Weighted Average Cost of Capital (ATWACC) methodology as approved by the NEB’s most recent cost of capital decision for TQM, RH-1-2008. Because the ATWACC includes return on debt as well as return on equity, it is typically lower than return on equity. In recent years it has averaged about 6%.

TQM’s revenue has been stable, and its costs and rate base have been declining. Due to less debt in its capital structure, coverage ratios have improved in 2014 and 2015. Its credit rating, as issued by DBRS, remains investment grade.

Table 1: Trans Quebec & Maritimes Pipeline Inc.
Trans Quebec & Maritimes Pipeline Inc. 2010 2011 2012 2013 2014 2015
Revenues (millions) $82.0 $82.3 $82.2 $78.6 $80.8 $83.5
Fixed Costs (millions) $69.6 $69.0 $68.8 $63.6 $60.0 $58.8
Rate Base (millions) $412.9 $393.8 $373.3 $362.3 $352.7 $343.0
Return on Equity 6.4% 6.47% 6.76% 5.66% 6.12% 5.99%
Interest and Fixed-Charges Coverage RatioTable Note a 3.20 4.54 4.31 3.75 3.98 4.24
Cash Flow to Total Debt and Equivalents RatioNote a 16.4% 19.8% 18.8% 16.7% 17.7% 17.7%
DBRS Credit Rating A (low) A (low) A (low) A (low) A (low) A (low)

 

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