TransCanada's GTN System Files Rate Case
CALGARY, Alberta – June 30, 2006 – TransCanada Corporation (TSX, NYSE: TRP) (TransCanada) today announced that Gas Transmission Northwest Corp. (GTN), its wholly-owned interstate pipeline that serves markets in the U.S. Pacific Northwest and California, filed a rate case with the Federal Energy Regulatory Commission (FERC). The comprehensive filing requests a number of tariff changes including an increase in rates for certain services. GTN’s current rates are based on its last rate case, filed in 1994.
"Since GTN’s current rates were established, North America’s natural gas transmission network has become significantly more integrated and competitive,” said Hal Kvisle, TransCanada’s president and chief executive officer. “Fundamental changes to the markets served by GTN include an increase in pipeline capacity into GTN’s major market in California as well as an increase in pipeline capacity out of GTN’s major supply area in the Western Canada Sedimentary Basin.”
The changes in the competitive landscape have caused a number of long-term firm transportation customers to not renew their contracts. These contract non-renewals, combined with shipper defaults, have resulted in a significant amount of unsubscribed capacity. As a result, GTN’s revenues no longer allow it to recover its costs and earn a fair return on invested capital.
In its filing, GTN is asking FERC for authority to share the costs of unsubscribed capacity with its long-term firm shippers through a number of changes to its rates. They include:
• An increase in its rate for full-haul, long-term, firm service from 26 cents per dekatherm to 45 cents per dekatherm. However, the rate paid by long-term firm shippers could be significantly lower if GTN is successful in remarketing unsubscribed capacity;
• New rates for seasonal long-term firm and short-term transportation services; and
• Market based rates for full-haul interruptible transportation service.
The proposed rates include a rate of return on common equity of 14.5 per cent, a common equity ratio of 62.99 per cent and a depreciation rate for transmission plant of 2.76 per cent.
The filing also proposes a number of tariff changes related to credit provisions as well as the rationalization of existing capacity when an expansion of the system is being considered.
TransCanada's GTN System is a dual pipeline that begins at an interconnect with TransCanada's BC System near Kingsgate on the Idaho-British Columbia border and traverses the states of Idaho, Washington, and Oregon before ending at interconnects with Tuscarora Gas Transmission Company and Pacific Gas & Electric Company at the Oregon-California border.
TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure. TransCanada’s network of more than 41,000 kilometres (25,600 miles) of pipeline transports the majority of Western Canada’s natural gas production to key Canadian and U.S. markets. A growing independent power producer, TransCanada owns, or has interests in, approximately 6,700 megawatts of power generation in Canada and the United States. TransCanada’s common shares trade on the Toronto and New York stock exchanges under the symbol TRP.
FORWARD LOOKING INFORMATION
Certain information in this news release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in this information may differ from actual results or events. Factors which could cause actual results or events to differ materially from current expectations include, among other things, the ability of TransCanada to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits, the availability and price of energy commodities, regulatory decisions, competitive factors in the pipeline and power industry sectors, and the current economic conditions in North America. For additional information on these and other factors, see the reports filed by TransCanada with Canadian securities regulators and with the United States Securities and Exchange Commission. TransCanada disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
- 30 -
For further information, please contact:
(403) 920-7859 or Toll Free (800) 608-7859
Investor & Analyst Inquiries:
David Moneta/Myles Dougan