This agreement, awaiting Canada Energy Regulator approval, aims to provide long-term stability and competitive pricing for natural gas transportation.
Pembina Pipeline Corporation announced today that its Alliance Pipeline Limited Partnership has successfully reached a comprehensive negotiated settlement with its shippers and interested parties, collectively known as the Shipper Committee, regarding the Canadian segment of the Alliance Pipeline. The agreement, which has been filed with the Canada Energy Regulator (CER) for approval, marks a pivotal moment for the pipeline's future operations and commercial framework.
The settlement comes after several months of intricate and productive discussions involving over 30 members of the Shipper Committee.
This agreement directly addresses a CER order issued in November 2024, which mandated Alliance to submit a detailed toll application justifying its existing tolling methodology or propose a new one. The CER had deemed the then-current tolls as interim until a resolution was reached. Following this directive, Alliance engaged collaboratively with the Shipper Committee to forge this negotiated settlement.
Key highlights of the Settlement include a robust 10-year term, effective from November 1, 2025, through October 31, 2035. A revised term-differentiated toll schedule is a cornerstone of the agreement, introducing a new 10-year toll and implementing reductions to existing 1-year, 3-year, and 5-year tolls. These "New Tolls" are projected to decrease existing long-term firm tolls by an average of 14% on a volume-weighted average basis. Critically, all existing long-term firm service contracts will adopt these New Tolls, which will remain fixed for the entire 10-year period.
Furthermore, the Settlement offers existing long-term firm shippers a one-time option to extend their terms, allowing them to capitalize on the new term-differentiated tolls. Alliance anticipates a substantial portion of contracted volumes will opt for the 10-year toll, thereby extending the weighted average term of Alliance's overall contractual profile.
A significant new provision is the revenue-sharing mechanism for biddable transportation service (seasonal and interruptible) volumes exceeding the long-term firm capacity of 1.325 billion cubic feet of natural gas per day. Revenue from these volumes will be shared equally (50/50) between Alliance and its firm and seasonal shippers. This aligns the interests of Alliance and its customers, while maintaining the pipeline's ability to fairly allocate short-term capacity based on market demand.
The Settlement explicitly states no retroactive impact on the interim tolls that have been in effect since November 2024. These interim tolls will be finalized and applied until October 31, 2025. Alliance will continue to operate under an 'at-risk' commercial model, where its returns and cost recovery are directly tied to customer demand and its efficiency in providing service and managing costs.
