The Commons Natural Resources Committee said the operators of the Trans Mountain Pipeline should think about increasing user tolls to reduce the beleaguered project’s escalating taxpayer losses, according to its report.
“The pipeline operator may be unable to charge high enough tolls to cover the costs of the Trans Mountain expansion,” said a committee report, titled “Federal Assistance to Canada’s Natural Resources Sectors,” as first reported by Blacklock’s Reporter.
“The committee heard the pipeline’s toll structure was only designed to cover the expansion’s original cost estimate of $7.4 billion plus 20 to 25 percent of any additional capital cost increases,” it said.
Shippers expected to pay the higher tolls have said the proposed increases are too high.
“The cost of completing Trans Mountain expansion has risen significantly over time,” wrote MPs. “At the time of the purchase the construction costs of Trans Mountain were estimated at $7.4 billion. However, in 2022 the Trans Mountain Corporation estimated the project would cost $21.4 billion.”
Revised estimates have reached almost $31 billion.
In a report published in June 2022, the Parliamentary Budget Office said net losses on the project could reach $2.7 billion when rising interest rates are taken into account.
On Sept. 18, the natural resource committee urged the Crown corporation responsible for the pipeline, to “review the toll structure of the Trans Mountain expansion project and propose modifications to the toll structure as necessary to reduce the risk to taxpayers,” beyond which it did not elaborate.
The line needs to be sold, Prime Minister Justin Trudeau told reporters on Aug. 24. “The federal government is not in the business of running pipelines,” he said.
When asked by a reporter if the government would have to prepare taxpayers for news of a loss, Mr. Trudeau said the government is “confident the business case for the Trans Mountain Pipeline remains solid.”
The expansion is set to significantly increase the crude oil flow from Alberta to B.C., ramping it to 890,000 barrels per day. It is hoped work on the expansion will be finished by December, however, if regulators do not approve a request for a route alteration, April 2024 could be the earliest projected completion date.