Some Gas Buyers Oppose Alberta’s Aeco Moves

Two major natural gas consumers in Alberta are opposed to the temporary tariff protocol proposed by TC Energy and the government to ease price volatility at the Aeco pricing hub, but a third – a significant gas-fired power generator and retail gas services provider – supports the move.

TC Energy’s Nova Gas Transmission Limited (NGTL) filed an application for the new protocol August 26 with the National Energy Board (now the Canada Energy Regulator), which subsequently asked for written comments pertaining to the application.

Canadian Fertilizers Limited, which operates a nitrogen manufacturing complex at Medicine Hat in southeastern Alberta that uses 125,000 gigajoules of natural gas each day, filed comments saying it was “hard opposed” to the proposal, while Dow Chemical, which has petrochemical interests in Alberta, filed a “soft” opposition to the temporary change.

NGTL provided “virtually no justification” for the proposed change, Canadian Fertilizer said, which it also said “wasn’t surprising” since it was the Alberta government, and not NGTL, which precipitated the change.

“The application’s stated object to ‘manage system constraints’…does not discuss the true intent of the proposal – to raise the average price of natural gas for the benefit of a small group of producers,” the company said in its letter of comment. “Unfortunately, this support for producers will come at the expense of every natural gas consumer – both within and outside of Alberta.”

Canadian Fertilizer also objected to the fact that there was little consultation of other stakeholders before the temporary protocol was suggested, and little investigation about “possible unintended consequences of the government intervention.”

Dow Chemical filed a letter of “soft” opposition to the plan, advancing the same concerns as Canadian Fertilizer but noting the temporary nature of the protocol and the government’s assurance that it represents a one-time event that will not extend beyond the summer of 2020.

“Dow takes the government of Alberta at [its] word but remains concerned about [its] intervention in the free market and further policy creep on this and related matters,” Dow said in its letter. “It is our belief that the issue facing Alberta natural gas producers is not an abundance of supply but a dearth of demand.”

The Canadian Fertilizer and Dow Chemical comments were two of only three received from significant gas consumers as of August 30. The third, from Calgary-based power generator and retail energy services provider Enmax, offered support for the expedited process that led to NGTL’s application, but offered no comments on the impacts of that application on its operations or on other natural gas consumers in Alberta.

NGTL and the government of Alberta have asked the CER to rule on the application by September 3, “or as soon thereafter as possible.”