Canada Energy Regulator Denies Enbridge’s Mainline Contracting Application

A panel of the Canada Energy Regulator (the “Commission”) has denied Enbridge Pipeline Inc.’s (“Enbridge”) proposal to create a new service and tolling framework for the Canadian Mainline.

In December 2019, Enbridge submitted its Mainline Contracting Application to the Canada Energy Regulator. The Canadian Mainline accounts for over 70% of the oil transportation capacity out of the Western Canadian Sedimentary Basin. For decades, it has operated on a wholly uncommitted basis, with shippers nominating the transportation capacity they require on a monthly basis.

Enbridge’s Mainline Contracting Application sought the approval of long-term contracts for committed service on 90% of the Canadian Mainline, reserving the remaining 10% for uncommitted shipments. Enbridge also sought approval for tolling changes differentiating between various shipper groups based on contracted capacity, distance and segment.

The Commission held a nearly eight-week virtual hearing to consider the application. Thirty-nine intervenors participated in the hearing, including producers, refiners and provincial governments.

On November 26, 2021, the Commission denied Enbridge’s application, finding that reserving 10% of the Canadian Mainline’s capacity for uncommitted shipments would be inconsistent with Enbridge’s common carriage obligations and likely would have diminished overall access to the Canadian Mainline. The Commission also found that Mainline Contracting may have resulted in potentially significant disruptions to oil markets. The application did not include sufficient justification for the discriminatory aspects of Mainline Contracting with respect to the tolls and terms and conditions of service. Finally, the proposed tolls could have produced unreasonable returns and unreasonably exceeded cost of service tolls.

As a result of the Commission’s decision, Enbridge’s proposed open season will not proceed and the existing interim tolls and conditions of service will remain in effect.

MLT Aikins lawyers Rangi Jeerakathil and Jessica Buhler appeared on behalf of two intervenors in the Canada Energy Regulator hearing. Rangi and Jessica advise clients on a variety of regulatory issues in de-regulated and regulated industries. They have extensive experience appearing before various administrative tribunals and courts.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.