Canada’s Pipeline Transportation System 2016

Trans Quebec & Maritimes Pipeline Inc.’s Trans Quebec & Maritimes Pipeline

Table 10.6.1: Trans Quebec & Maritimes Pipeline Inc.’s Trans Quebec & Maritimes Pipeline
Commodity and NEB Group Natural Gas
(Group 1)
Annual average capacity 24 106m³/d
(0.8 Bcf/d)
Average utilization 2015 62%
Primary receipt points TransCanada Mainline near Saint-Lazare, QC
Primary delivery points Montreal, Quebec City, East Hereford, QC
Rate base 2015 $343 million
Cost of Service 2015 $84 million
Abandonment Cost Estimate and Collection PeriodFootnote a $102 million;
25 years
Map – Trans Quebec & Maritimes Pipeline

Source: NEB

Text version of this map

This map provides an overview of the Trans Quebec and Maritimes Pipeline from west of Montreal to Quebec and East Hereford.

Overview

The 572 km Trans Quebec & Maritimes Pipeline system (TQM) extends from an interconnection with the TransCanada Mainline near Saint-Lazare, QC, 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, QC.

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. TQM is equally owned by TransCanada Corporation and a subsidiary of Gaz Métro Limited Partnership. The TransCanada Mainline holds contracts for all of the capacity on TQM.

Key Developments

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

Utilization

Figure 10.6.1 shows capacity and throughput on TQM for 2010-2015. Capacity is 24 106m³/d (0.8 Bcf/d). Throughput varies seasonally with utilization rates as high as 95% in winter months and as low as 41% in the summer. In 2015, throughput averaged 15 106m³/d (0.5 Bcf/d).

Figure 10.6.1: TQM Throughput vs. Capacity

Figure 10.6.1: TQM Throughput vs. Capacity

Sources: TransCanada, NEB

Text version of this graphic

This bar chart shows throughput and capacity on the Trans Quebec and Maritimes Pipeline between 2010 and 2015. Capacity in 2015 was 24 106m³/d (0.8 Bcf/d). Throughput averaged 15 106m³/d (0.5 Bcf/d) in 2015, compared to 14 106m³/d (0.49 Bcf/d) in 2014.

Figure 10.6.2 shows capacity and throughput at the East Hereford export point for 2010-2015. Capacity is 6 106m³/d (0.2 Bcf/d), and in 2015 throughput averaged 6 106m³/d (0.2 Bcf/d). Throughputs at the East Hereford were high in 2015, due to decreased natural gas production offshore Nova Scotia and increased demand in the U.S. Northeast market, particularly during the winter season.

Figure 10.6.2: East Hereford Throughput vs. Capacity

Figure 10.6.2: East Hereford Throughput vs. Capacity

Source: Sources: TransCanada, NEB

Text version of this graphic

This bar chart shows throughput and capacity at the East Hereford export point on the Trans Quebec and Maritimes Pipeline between 2010 and 2015. Capacity in 2015 was 6 106m³/d (0.2 Bcf/d). Throughput averaged 6 106m³/d (0.2 Bcf/d) in 2015, compared to 4 106m³/d (0.14 Bcf/d) in 2014.

Tolls

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 10.6.3: TQM Benchmark Toll

Figure 10.6.3: TQM Benchmark Toll

Source: NEB toll filings

Text version of this graphic

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

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 10.4.2: 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 83.7%
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
After Tax Weighted Average Cost of Capital 6.4% 6.47% 6.76% 5.66% 6.12% 5.91%
Interest and Fixed-Charges Coverage RatioNote 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)
Photos: left: A pump jack silhouetted against the setting sun; centre: The grey valves and wheels of a pump station on clear day; right: Folded hands hold a pen on a board room table in a large meeting room.

 

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