(Adds details on exiting contract in last paragraph)
CALGARY, Alberta, Feb 22 (Reuters) - TransCanada Corp said on Wednesday it plans to offer a flat toll on its Mainline system that takes natural gas from western Canada to southern Ontario, three months after shippers balked at the previous varied toll structure that they saw as too high.
After discussions with western Canadian sedimentary basin producers, the pipeline company has launched an open season to gauge interest in a “simplified” rate of 77 Canadian cents per gigajoule for a 10-year term, instead of the range of between 75 and 82 Canadian cents previously offered. The open season is expected to close on March 9.
Last November, TransCanada halted its open season for the Mainline after failing to receive enough bids from shippers.
In Ontario, Canadian shippers face competition from eastern U.S. shale basins like the Marcellus and Utica. They have comparable production costs to Canada’s remote Montney and Duvernay gas plays in the west, but lower delivery costs.
Shippers have said TransCanada’s rates were too high for a 10-year commitment, and the company’s previous varied toll offered an option to exit after five years.
TransCanada said that option is still available. (Reporting by Ethan Lou in Calgary, Alberta, and Bengaluru newsroom; Editing by Marguerita Choy and Meredith Mazzilli)