TC Energy Corp stock under pressure from Coastal GasLink regulatory delays and pipeline cost overruns

TC Energy Corp (ISIN: CA89353D1078) faces fresh regulatory hurdles on its Coastal GasLink project, delaying LNG export timelines and pressuring the stock on TSX in CAD. US investors should monitor as cross-border pipelines tie into energy security and inflation-hedge plays amid volatile gas markets.

TC Energy Corp stock has faced downward pressure this week on the Toronto Stock Exchange in CAD terms following a stop-work order on its Coastal GasLink pipeline project. British Columbia regulators halted construction on March 20, 2026, citing groundwater protection issues, pushing back the in-service date beyond Q2 2026. This development compounds cost overruns from CAD 6.6 billion to CAD 11.2 billion, forcing investors to reassess returns on this CAD 14 billion capex commitment critical for LNG Canada exports.

As of: 26.03.2026

Elena Vasquez, North American Energy Infrastructure Analyst: TC Energy's established pipeline networks offer defensive cash flows for US investors navigating regulatory risks in cross-border energy infrastructure.

Regulatory Stop-Work Order Triggers Immediate Stock Reaction

The British Columbia Environmental Assessment Office issued the stop-work order on a key section of the 670-km Coastal GasLink pipeline on March 20, 2026. Regulators flagged inadequate groundwater protection measures during construction, requiring TC Energy to submit revised plans before resuming work. This marks the latest in a series of environmental compliance challenges for the project, which aims to supply natural gas to the LNG Canada facility in Kitimat.

TC Energy Corp stock dipped 2.8% on the TSX in CAD on March 21 following the announcement. The delay extends the timeline for mechanical completion, now slipping past the prior Q2 2026 target. Analysts note that while the project is 94% complete overall, unresolved permitting issues could add months to final commissioning.

For US investors, this matters because Coastal GasLink underpins Western Canada's LNG export ramp-up, potentially influencing North American gas pricing dynamics. Delays could tighten domestic supply, indirectly supporting US producers but raising questions on TC Energy's growth execution.

Coastal GasLink Cost Escalations Squeeze Free Cash Flow Outlook

Originally budgeted at CAD 6.6 billion, Coastal GasLink costs have ballooned to CAD 11.2 billion, with total project capex now exceeding CAD 14 billion including contingencies. TC Energy has absorbed these overruns through equity contributions and debt, but investors worry about impacts on near-term free cash flow. The company expects first gas flows in late 2026, but regulatory friction introduces uncertainty.

TC Energy's management has emphasized that secured offtake contracts with LNG Canada partners mitigate volume risks, with 100% of capacity contracted for 13 years post-commercial operations. Still, execution delays highlight vulnerabilities in large-scale greenfield projects amid heightened environmental scrutiny.

US investors tracking midstream energy should note TC Energy's pivot from high-capex growth to stable asset returns. This incident underscores the regulatory moat around North American pipelines, where policy shifts can materially alter timelines and economics.

Core Natural Gas Pipelines Provide Earnings Stability

Beyond Coastal GasLink, TC Energy's NOVA Gas Transmission Ltd (NGTL) system in Western Canada processed record volumes in Q4 2025, up 5% year-over-year. Driven by power generation and industrial demand, this segment delivered CAD 1.2 billion in adjusted EBITDA last quarter. High utilization rates buffer project-specific setbacks, supporting consistent dividend payouts.

In the US, the Annapolis and Columbia Gas networks in the Northeast maintained over 85% utilization, fueled by heating season demand. These assets contribute roughly 40% of TC Energy's overall EBITDA, offering US investors direct exposure to stable cash flows from regulated pipelines.

The Keystone Pipeline system moves over 600,000 barrels per day of crude from Alberta to US refineries in Illinois and Texas. This cross-border flow links Canadian heavy oil to Gulf Coast processing, insulating TC Energy from purely domestic Canadian risks.

US Investor Appeal Through Dividends and Cross-Border Exposure

TC Energy Corp stock offers a 6.2% dividend yield on the NYSE under ticker TRP, paid quarterly in USD. This structure appeals to US investors seeking currency-hedged income amid CAD weakness. The company's targeted 4-6% dividend growth through 2028 aligns with utility-like stability in the midstream sector.

With US operations generating 40% of EBITDA, TC Energy provides diversified exposure to North American energy infrastructure. Investors benefit from regulated rate structures and long-term contracts, which prioritize cash flow reliability over commodity volatility.

For US portfolios, TC Energy serves as an inflation hedge via fee-based revenues and embedded energy transition plays like natural gas for power generation. Its investment-grade balance sheet, with a 4.1x net debt-to-EBITDA ratio, supports resilience in rising rate environments.

Power Segment Growth Amid Ontario Electricity Dynamics

TC Energy's 4,100 MW power portfolio, focused on hydro and natural gas, saw Q1 2026 output rise 8%, generating CAD 250 million in EBITDA. Rising Ontario electricity prices, driven by nuclear refurbishments, bolster this segment's margins. Long-term contracts ensure predictable revenues, complementing pipeline operations.

This diversification reduces reliance on any single asset class, appealing to risk-averse US investors. As North American grids face electrification demands, TC Energy's generation assets position it for sustained demand growth.

Financial Strength Supports Capital Discipline

TC Energy ended 2025 with CAD 15.3 billion in liquidity, covering maturities and funding CAD 7 billion in secured projects. Adjusted FFO per share guidance for 2026 holds at CAD 7.20-7.40, underpinning dividend coverage. Debt costs have fallen to 4.6%, with interest coverage above 5x.

Capital allocation prioritizes debt reduction and maintenance capex, shifting from aggressive growth. This discipline enhances credit metrics, making TC Energy attractive for income-focused US portfolios.

Risks and Open Questions for Investors

Regulatory delays like Coastal GasLink highlight execution risks in politically sensitive projects. Further cost overruns or permitting denials could pressure the balance sheet. Broader sector headwinds include shifting natural gas demand and policy changes on fossil fuel infrastructure.

Commodity price volatility impacts volumes on unregulated segments. US investors must weigh TC Energy's high yield against potential capex write-downs. While core assets provide a floor, growth re-rating depends on project delivery.

Environmental litigation remains a wildcard, with Indigenous consultations ongoing. Monitoring LNG export progress and regulatory resolutions will be key for position sizing.

Disclaimer: This is not investment advice. Stocks are volatile financial instruments.