After years of regulatory hurdles and opposition from environmental groups, TransCanada Corp. announced that it will no longer be proceeding with its proposed Energy East Pipeline and Eastern Mainline projects.
“After careful review of changed circumstances, we will be informing the National Energy Board that we will no longer be proceeding with our Energy East and Eastern Mainline applications. TransCanada will also notify Quebec’s Ministère du Developpement durable, de l’Environnement, et Lutte contre les changements climatiques that it is withdrawing the Energy East project from the environmental review process,” said Russ Girling, TransCanada president and CEO in a press release.
“We appreciate and are thankful for the support of labor, business and manufacturing organizations, industry, our customers, Irving Oil, various governments, and the approximately 200 municipalities who passed resolutions in favor of the projects. Most of all, we thank Canadians across the country who contributed towards the development of these initiatives,” Girling continued. “We will continue to focus on our $24 billion near-term capital program which is expected to generate growth in earnings and cash flow to support an expected annual dividend growth rate at the upper end of an eight to 10 per cent range through 2020.”
As a result of its decision not to proceed with the proposed projects, TransCanada is reviewing its approximate $1.3 billion carrying value, including allowance for funds used during construction (AFUDC) capitalized since inception and expects an estimated $1 billion after-tax non-cash charge will be recorded in the company’s fourth quarter results. TransCanada stopped capitalizing AFUDC on the project effective Aug. 23, 2017, as disclosed on Sept. 7, 2017.
In light of the project’s inability to reach a regulatory decision, no recoveries of costs from third parties are expected.