- Enbridge Inc. responded today to the Canada Energy Regulator’s (CER) decision to deny the implementation of contracting for firm service on the Enbridge Canadian Mainline system on November 26, 2021.
- Enbridge has reviewed the decision and identified the following steps, including re-engaging all stakeholders on the Mainline system, including shippers and non-shippers.
The Enbridge Mainline connects western Canadian crude oil and product supply to Canadian and U.S. Midwest markets and eventually the U.S. Gulf Coast.
For decades, the system has provided:
- Unrivaled market access.
- Crude oil quality management.
- System reliability.
- Long-term expansion potential at the most competitive toll.
Since the Enbridge system’s inception in 1950, the Mainline’s commercial underpinning has evolved from a contested cost-of-service (COS) framework to incentive rate-making.
In 1995, Enbridge pioneered the first incentive tolling agreement with our customers, which aligned industry and Enbridge interests and supported significant investment and Mainline expansion. However, the most recent incentive agreement, the Competitive Tolling Settlement (CTS Agreement), will expire in June 2021; thus, the Mainline is currently subject to interim tolls (subject to refund) that will remain in effect until the CER approves new tolls.
In 2018, Enbridge began consultations with industry participants to determine their goals for the following Mainline tolling arrangement before the CTS Agreement’s upcoming expiration.
The company received significant industry concerns about continuing Mainline apportionment, owing to growing western Canadian production and a lack of sufficient egress. Many existing shippers expressed a desire for continued toll certainty and the ability to contract for firm service to maintain access to the system.
Based on its all review of the CER decision, Enbridge will begin negotiating a go-forward Mainline commercial framework in consultation with its stakeholders. The following steps will be taken as part of the process:
- Enbridge will re-engage stakeholders to obtain feedback on important objectives and variables in considering the future commercial framework, the current industry outlook, and the desire for future Mainline expansion.
- Enbridge will investigate alternatives with stakeholders, which could include a modified and extended CTS agreement, a new incentive rate-making agreement, or a COS rate-making structure. However, any negotiated agreement would need to be approved by the CER before it could be implemented.
Source: Yahoo finance
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