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Winnipeg Free Press - PRINT EDITION

Pipeline costs may boost heating charges

By: Lauren Krugel

9/11/2009 1:00 AM | Comments: 0

CALGARY -- The cost of transporting natural gas eastward from Alberta is expected to rise significantly next year for producers, but that does not necessarily mean consumers will notice a difference on their bills.

"It would be a reasonable expectation that if shippers and the energy companies are paying more, they'll probably try and recoup those costs through the consumer," said Tara O'Donovan, a spokeswoman for the National Energy Board, the federal regulator tasked with approving pipeline tolls.

"But depending on the scenario involved, it's not always the case."

Natural gas is the predominant home-heating fuel throughout most of Canada, though some parts of the Maritimes still rely on heating oil.

TransCanada Corp. (TSX:TRP) ships about nine billion cubic feet of natural gas per day along its Mainline system, which stretches 14,000 kilometres from Alberta to the Quebec-Vermont border.

The Calgary company charges producers a toll for every unit of natural gas that passes through the pipeline.

That cost is $1.19 per gigajoule, but TransCanada warns that in 2010 that price could rise to between $1.65 and $1.90 per gigajoule.

TransCanada has not hammered out a final price yet, but is in talks with its customers, who will feel the pinch.

What's less clear is to what extent the increase will trickle its way down to the other end of the chain, where distributors purchase natural gas and then sell it to consumers. A lot depends on what sort of contract a shipper has with the natural gas distributor at the other end, O'Donovan said. "If there's a fixed-price contract in place, then transportation costs may not impact the cost that the consumer pays."

-- The Canadian Press

Republished from the Winnipeg Free Press print edition November 9, 2009 B6

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