TC Energy's Q2 2025: Unpacking Contradictions in Capital Expenditure, Data Center Strategy, and Leverage Plans

Capital expenditure commitment, data center strategy, leverage reduction timeline, Columbia gas settlement rates and constraints, and U.S. gas pipeline investment strategy are the key contradictions discussed in TC Energy Corporation's latest 2025Q2 earnings call.



Strong Financial Performance:
- TC Energy reported a 12% year-over-year increase in comparable EBITDA for Q2 2025, leading to an increased 2025 guidance of $10.8 billion to $11 billion.
- This growth was driven by demand across assets and effective collaboration with stakeholders, including a settlement in principle with customers on the Columbia Gas system.

Infrastructure Investments and Capacity Expansion:
- The company has completed or placed into service approximately $5.8 billion of capacity projects, with plans to place $8.5 billion of assets into service by the end of 2025.
- These investments are strategically located to capitalize on growing natural gas demand and support long-term growth in North American markets.

Improved Project Returns:
- TC Energy's sanctioned projects in 2024 achieved an average unlevered after-tax IRR of approximately 11%, compared to 8.5% a few years ago.
- This improvement is due to increased competition for capacity and effective project execution, leading to projected IRRs in the low to mid-teens for new projects.

Regulatory and Market Dynamics:
- The settlement on the Columbia Gas system resulted in a 26% increase in pre-filed firm transportation rates.
- This was facilitated by a constructive agreement with customers and supports TC Energy's ability to capture growth opportunities across its asset base.