The Commons Natural Resources Committee has suggested that the operators of the Trans Mountain Pipeline consider raising user tolls in order to mitigate the increasing losses incurred by taxpayers. In a report titled “Federal Assistance to Canada’s Natural Resources Sectors,” the committee highlighted the possibility that the pipeline operator might not be able to charge sufficient tolls to cover the costs of the Trans Mountain expansion. The toll structure, initially designed to cover the project’s estimated cost of $7.4 billion plus 20 to 25 percent of any additional capital cost increases, may prove insufficient, according to the report.
Trans Mountain Corp, in its submission to the Canada Energy Regulator, has proposed a provisional toll plan that would entail the pipeline operator shouldering about two-thirds of the increased construction expenses for the expansion project. This project has faced significant delays. However, shippers expected to pay the higher tolls have expressed concern over the proposed increases, deeming them too high.
The purchase and expansion of the Trans Mountain Pipeline have encountered escalating costs. In 2018, the federal government acquired the pipeline for $4.4 billion from Kinder Morgan after the original owners showed intentions to abandon the project. The finance department had initially budgeted $17.7 billion for the purchase and expansion from Edmonton to Burnaby, British Columbia. Revised estimates now place the cost at nearly $31 billion.
The Parliamentary Budget Office published a report in June 2022, stating that net losses on the project could reach $2.7 billion when factoring in rising interest rates. In response, the natural resource committee urged the Crown corporation responsible for the pipeline to review the toll structure and propose modifications to reduce the risk to taxpayers. Despite inquiries about potential losses, Prime Minister Justin Trudeau assured that the government is confident in the business case for the Trans Mountain Pipeline and emphasized the need to sell the pipeline as the federal government does not intend to run pipelines.
The expansion project aims to significantly increase crude oil flow from Alberta to British Columbia, reaching 890,000 barrels per day. The completion of the expansion is projected for December, but if regulators do not approve a route alteration, the earliest estimated completion date would be April 2024.