Pembina Pipeline reaches settlement with shippers on Alliance Pipeline

"We are pleased after many months of complex, yet productive, discussions to have reached a negotiated solution with the Shipper Committee, consisting of over 30 members," said Scott Burrows, Pembina's President and Chief Executive Officer. "The negotiated tolls are competitive and will provide toll certainty to Shippers. The Settlement is fair and equitable to Alliance and all Shippers. We now look forward to a timely response from the CER."

In November 2024, the CER ordered Alliance to submit for approval a detailed toll application justifying why its current tolling methodology remained compliant with the Canadian Energy Regulator Act, or a new tolling methodology application. Likewise, the CER ordered that the current tolls be deemed interim tolls until resolution of the above. Following the CER order, Alliance worked collaboratively with the Shipper Committee towards a negotiated settlement.

Highlights of the Settlement include:

• A 10-year term, effective 1 November 2025 - 31 October 2035.
• A revised term-differentiated toll schedule that includes the establishment of a new 10-year toll and a reduction to the existing 1-year, 3-year and 5-year tolls ("New Tolls"). The New Tolls are expected to reduce existing long-term firm tolls by an average of 14 percent on a volume weighted average basis.
• All existing long-term firm service contracts will incorporate the New Tolls, and the New Tolls will remain fixed for the 10-year period effective 1 November 2025.

The Settlement offers existing long-term firm shippers a one-time term extension option, enabling shippers to take advantage of the new term-differentiated tolls, effective 1 November 2025. Alliance anticipates a significant portion of contracted volumes to take advantage of the 10-year toll, thereby extending the weighted average term of Alliance's contractual profile.

Revenue from biddable transportation service (seasonal and interruptible) for volumes above long-term firm capacity of 1.325 billion ft³/d, will be shared 50/50 between Alliance and firm and seasonal shippers, thus aligning the interests of Alliance and its shippers and maintaining Alliance's ability to fairly and equitably allocate short-term capacity when available and demanded by the market.

The Settlement has no retroactive impact on the interim tolls in effect since November 2024. The interim tolls will be made final and apply until 31 October 2025.

Alliance will remain under an 'at-risk' commercial model where returns and Alliance's ability to recover operating costs are squarely driven by the customer demand for its service and Alliance's ability to efficiently provide such service and manage costs.

Alliance will return approximately CAN$95 million, currently held as an existing liability on Alliance's balance sheet, associated with eligible recoverable costs (Recoverable Cost Variance). The economic impact to Alliance of the return of this balance is limited to foregone carrying charges, which previously accrued at 8.75%. Alliance's ability to recover the same limited categories of cost in the future via surcharges under the Settlement is unchanged.

The Shipper Committee supported the Settlement through a vote on 23 July 2025. The Settlement is contingent on approval by the CER. Alliance has filed an application with the CER requesting approval of the Settlement by 15 September 2025. The full application is available for viewing on the CER Website.

Pembina expects the financial impact to Alliance from the Settlement over the next 10 years will be an approximately CAN$50 million per year reduction in long-term firm service revenue, plus the impact of the new revenue sharing provision. The impact of the revenue sharing provision is subject to biddable transportation service tolls, which will depend primarily on future commodity prices. The estimated impact of the revenue sharing provision assuming an AECO-Chicago natural gas spread of CAN$1.50 per thousand ft³ is approximately CAN$40 million. The estimated impact of every incremental CAN$0.25/thousand ft³ change is approximately CAN$10 million. Applying the terms of the Settlement to Alliance's financial results over the historical five-year period from 2020 to 2024, the average annual impact of the Settlement, including the reduction in long-term firm service revenue and the impact of the new revenue sharing provision, would have been approximately CAN$95 million.

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