TC Energy Corporation (TRP) Moat Analysis

Erosion risks

• Adverse CER outcomes on allowed returns/cost recovery
• Policy changes affecting pipeline approvals/expansions
• Sustained throughput declines from basin economics or energy transition

Leading indicators

• CER decisions on tolling / revenue requirement filings
• Congestion or apportionment on key systems (utilization trends)
• Expansion project approvals and in-service timing

Counterarguments

• Regulation can cap upside and increase political/regulatory risk
• Alternative egress routes (other pipelines/LNG pathways) can reduce incremental bargaining power over time

Erosion risks

• Counterparty credit deterioration (producer/shipper stress)
• Recontracting risk at lower tolls when contracts roll
• Volume risk if production shifts away from served basins

Leading indicators

• Weighted-average remaining contract term
• Ship-or-pay / firm-service contracted capacity vs available capacity
• Counterparty concentration and credit metrics

Counterarguments

• Contracts protect cash flows but do not fully eliminate long-term demand risk
• Regulators can influence toll structures and contract terms, limiting pricing flexibility

Erosion risks

• Adverse FERC rulings in future rate cases
• Permitting delays or cost overruns on expansions
• Decarbonization reducing long-term gas demand in key corridors

Leading indicators

• FERC dockets / rate case activity and outcomes
• Contracted capacity and utilization on major systems
• New project certificates and in-service dates

Counterarguments

• Many U.S. corridors have multiple pipeline alternatives; competition can pressure recontracting terms
• Regulation constrains price upside and can impose compliance costs

Erosion risks

• Contract roll-offs with weaker shipper demand
• Counterparty credit stress in commodity down-cycles
• Regulatory/market changes enabling more bypass or competition

Leading indicators

• Remaining contract life and renewal success rates
• Ship-or-pay revenue share vs commodity/excess capacity exposure
• Large shipper concentration and credit metrics

Counterarguments

• Long-term contracts reduce churn, but recontracting can reset economics lower
• Some demand can migrate to alternative routes as basins and flows shift

Erosion risks

• Flow reversals or basin decline reducing utilization on specific corridors
• Competition from newbuild pipelines in growth basins
• Regulatory changes forcing more open access/price pressure

Leading indicators

• Directional flow / utilization trends on key corridors
• Pipeline expansion announcements and permitting progress by competitors
• Changes in LNG export buildout and regional power demand (data centers)

Counterarguments

• Network size alone does not guarantee pricing power in regulated markets
• New infrastructure can still be built where economics justify it, even if permitting is difficult

Erosion risks

• Mexico political/regulatory changes impacting contract enforcement
• Sovereign/counterparty concentration risk (CFE)
• FX/inflation and cost overruns affecting real returns

Leading indicators

• Policy signals from Mexico energy regulators/government
• Project permitting milestones and construction progress
• CFE credit metrics and payment performance

Counterarguments

• Government counterparties can attempt to renegotiate terms; relationship is not a guarantee
• Political shifts can change permitting and operational risk profiles quickly

Erosion risks

• Renegotiation risk in politically sensitive periods
• Contracted volume risk if demand outlook weakens
• Construction delays that push out revenue start dates

Leading indicators

• Remaining contract tenor and renewal/extension terms
• Ramp-up timing for new projects (in-service dates)
• Mexico gas demand growth (power generation, industrial load)

Counterarguments

• Long-term contracts mitigate risk but do not fully eliminate political/sovereign uncertainty
• If new competing pipes are built, future expansions could face weaker terms

Erosion risks

• Plant outages/unplanned maintenance reducing availability (especially nuclear)
• Contract renewal risk at lower pricing when PPAs expire
• Policy/regulatory changes in power markets and decarbonization incentives

Leading indicators

• Availability/outage rates and major maintenance events
• Pipeline of contracted renewals and new PPAs
• Exposure to merchant power prices vs contracted revenues

Counterarguments

• Contracts stabilize returns but do not guarantee high returns; renegotiations can reset economics
• Without contracts, generation can behave like a commodity business with volatile margins