Canadian regulator slashes tolls for TransCanada mainline

CALGARY, Alberta (Reuters) - Canada's National Energy Board on Thursday agreed to cut fixed tolls on TransCanada Corp's mainline, a cross-country natural gas pipeline network, which the regulator says will help keep the system competitive and profitable despite increasing supplies from U.S. shale gas producers.

Canada's National Energy Board on Thursday agreed to cut fixed tolls on TransCanada Corp's mainline, a cross-country natural gas pipeline network, which the regulator says will help keep the system profitable amid increasing competition from U.S. shale gas supplies.

The board approved new rates that will see the cost of moving gas from Empress, Alberta, to Dawn, Ontario, fall to C$1.42 per gigajoule from C$2.58 per gigajoule under TransCanada's current tolling structure.

The decision comes more than 18 months after TransCanada, the country's largest pipeline operator, first asked the board to approve sharply lower tolls for long-haul shippers on the mainline while increasing the amount charged to short-haul customers.

The 14,101-kilometer (8,762-mile) pipeline system once carried as much as 6 billion cubic feet of gas per day. However, as customers in Central Canada and the U.S. Northeast increasingly switched to gas from closer supplies like the Marcellus shale field centered on Pennsylvania, volumes on the system fell by half and tolls rose as a smaller pool of shippers were required to shoulder the regulated system's full costs.

"Mainline tolls have increased substantially over a short period of time as a result of throughput declines related to increasing levels of competition in the Mainline's supply and market areas," the board said in a statement. "The board found that tolls cannot continue to increase each year in response to throughput declines."

TransCanada said it is still reviewing the decision and cannot yet say how the new tolling structure will affect its operations.

"This is a long and complex decision and we will need time to complete a full analysis before we can comment any further on how this decision will impact TransCanada," the company said in a statement.

While setting the new tolls, the board disallowed TransCanada's bid to extend the tolling methodology used on the Nova system, its Alberta gas-gathering pipeline network, into British Columbia and Saskatchewan. The move could have raised tolls on the Nova system by a third.

"We're pleased that TransCanada's attempt to transfer costs from the mainline to (the Nova system) has been rejected," said Nick Schultz, vice-president, pipeline regulation, for the Canadian Association of Petroleum Producers, which lobbies for the country's largest oil and gas companies.

"We viewed that as imprudent ... and the NEB said clearly that it is imprudent from a (Nova) perspective and also that it is an inappropriate transfer from one affiliate to another."

Under the new rules, TransCanada will be allowed an 11.5 percent return on equity for the mainline and approved an incentive plan that will see the company's profits from the system rise further if revenues are higher than forecast.

TransCanada could not be immediately reached for comment.

TransCanada shares rose 10 Canadian cents to close at C$48.83 on the Toronto Stock Exchange on Wednesday. The board's decision was released after trading ended.

(Reporting by Scott Haggett; Editing by Carol Bishopric and Richard Chang)

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Australian regulator approves Qantas-Emirates deal

SYDNEY (AP) -- Australia's competition regulator gave Qantas Airways Ltd. and Emirates final approval Wednesday to form a five-year global alliance, with special conditions for flights across the Tasman Sea.

The Australian Competition and Consumer Commission said the partnership will give the public better products and service offerings.

"The ACCC is satisfied that the alliance is likely to result in material, but not substantial, public benefits," ACCC chairman Rod Sims said in a statement.

The ACCC had already granted interim approval, allowing the Australian and Dubai-based carriers to sell codeshare flights between Australia and Europe, North Africa, the Middle East and Asia.

Wednesday's final ruling, which lasts for five years, also allows Qantas and Emirates to pair up on flights across the Tasman Sea, subject to conditions.

They must maintain existing capacity on four overlapping routes to New Zealand: Sydney-Auckland, Melbourne-Auckland, Brisbane-Auckland and Sydney-Christchurch.

"On these routes, the ACCC is concerned that Qantas and Emirates will have the ability and incentive to reduce or limit growth in capacity in order to raise airfares," Sims said.

The requirement to maintain capacity on these four routes — which account for about 65 percent of all seats between Australia and New Zealand — would be subject to a review to consider whether increases in the minimum capacity were warranted.

"With this condition, the ACCC is satisfied that the relevant net public benefit tests are met," the ACCC said.

Qantas and Emirates also planned to cooperate on sales, marketing and pricing.

The alliance was a key plank in Qantas chief executive Alan Joyce's bid to return the Flying Kangaroo's international operations to profitability.

Under the partnership, Qantas will use Dubai, rather than Singapore, as the stopover point for its flights to London.

The first Qantas flight to London via Dubai departs on Sunday.

Qantas signed a 10-year partnership deal with Emirates in September last year, ending a 17-year relationship with British Airways.

Neither Emirates nor Qantas takes equity in the other under the deal.

Joyce said the decision was great news for Australian travelers and local tourism, as well as the airline itself.

"Qantas is an Australian icon and the future of its international business is much brighter with this partnership," he said.

In welcoming the ACCC decision, Emirates President Tim Clark, said: "This is a truly game-changing partnership that brings together two of the world's best airlines and offers some of the highest quality travel experiences."

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