CALGARY, AB, Nov. 28, 2021 /PRNewswire/ - Enbridge Inc.
(Enbridge or the Company) (TSX: ENB) (NYSE: ENB) today
responded to the Canada Energy Regulator's (CER) November 26, 2021 decision to deny the
implementation of contracting for firm service on the Enbridge
Canadian Mainline system.
Enbridge has completed its review of the decision and identified
next steps that include re-engaging all stakeholders, including
shippers and non-shippers on the Mainline system.
The Enbridge Mainline is a critical conduit connecting western
Canadian crude oil and product supply with Canadian and U.S.
Midwest markets, and ultimately the U.S. Gulf Coast. For decades,
the system has provided its customers with unparalleled market
access, crude oil quality management, system reliability and
long-term expansion potential at the most competitive toll. Since
inception of the Enbridge system in 1950, the commercial
underpinning of the Mainline has evolved, from a contested
cost-of-service (COS) framework to incentive rate making. Enbridge
pioneered the first incentive tolling agreement with our customers
in 1995, which aligned industry and Enbridge interests, and
supported significant investment and expansion of the Mainline.
The most recent incentive agreement, called the Competitive
Tolling Settlement (CTS Agreement), expired in June 2021; therefore, the Mainline is currently
under interim tolls (subject to refund) and which will stay in
effect until new tolls are approved by the CER. In 2018, in
preparation for the upcoming expiry of the CTS Agreement, Enbridge
initiated consultations with industry participants to determine
their goals for the next Mainline tolling arrangement. Among other
feedback, the Company heard significant concerns from industry over
continuing Mainline apportionment, due to growing western Canadian
production and lack of sufficient egress. A large portion of
existing shippers expressed desire for continued toll certainty,
and to contract for firm service to ensure access to the
system.
However, it was also evident from extensive industry input that
there was no consensus on what a new commercial structure should
look like – some favoured contracting, while others opposed it
altogether, preferring to maintain the status-quo, a monthly
nominations process and a fixed toll. After significant negotiation
with industry on a comprehensive set of terms, Enbridge applied to
the CER to contract the Canadian Mainline.
In reaching its decision, the CER determined that providing firm
service on the Canadian Mainline is not contrary to the CER Act.
The CER also found that elements of the application provided
strong justification for some proportion of firm service on the
Canadian Mainline. However, the CER denied the application on the
basis that, among other things, contracting as proposed would
result in a significant change to access the Canadian Mainline and
potentially inequitable outcomes to some shippers and non-shippers
without a compelling justification. The CER confirmed Enbridge's
existing process for downstream verification and that interim tolls
would stay in effect.
Based on its review of the CER decision, Enbridge will initiate,
in consultation with its stakeholders, a process to negotiate
toward a go-forward Mainline commercial framework. Elements of the
process will include:
- Enbridge will re-engage with stakeholders, to receive input on
key objectives and variables that are important in considering the
future commercial framework, the current industry outlook and
desire for future expansion of the Mainline; and
- Enbridge will explore, with stakeholders, alternatives that may
include: a modified and extended CTS agreement, a new incentive
rate-making agreement, or a COS rate-making structure. Any
negotiated settlement would require CER approval before
implementation.
In parallel with negotiations of a potential negotiated
settlement, Enbridge will prepare a COS application for the
Canadian Mainline, which will be filed with the CER if Enbridge,
after consultation with stakeholders, concludes that an agreement
to continue with incentive rate making is not achievable.
Enbridge expects the preceding steps to begin in the coming
weeks, although the negotiating process may take through 2022. We
expect the subsequent CER review and decision process to conclude
in 2023.
From a financial perspective, Mainline throughput is expected to
be strong over the next several years and the Company's outlook is
positive. Based on our review of the CER decision and other
factors, the Company anticipates that the range of financial
outcomes associated with an alternative commercial model will be
manageable and is not expected to materially impact Enbridge's
financial results.
Enbridge will provide its 2022 guidance, longer term outlook and
strategic priorities at Enbridge Day on December 7th, 2021, in Toronto.
FORWARD-LOOKING INFORMATION
Forward-looking information, or forward-looking statements,
have been included in this news release to provide information
about Enbridge and its subsidiaries and affiliates, including
management's assessment of Enbridge and its subsidiaries' future
plans and operations. This information may not be appropriate for
other purposes. Forward-looking statements are typically identified
by words such as ''anticipate'', ''expect'', ''project'',
''estimate'', ''forecast'', ''plan'', ''intend'', ''target'',
''believe'', "likely" and similar words suggesting future outcomes
or statements regarding an outlook. Forward-looking information or
statements included in this news release include, but are not
limited to, statements with respect to the following: Mainline
commercial framework, including potential alternatives and
Enbridge's planned next steps, proposed filings with the Canada
Energy Regulator and expected timelines; Mainline throughput;
corporate outlook; and financial outcomes associated with an
alternative commercial model.
Although Enbridge believes these forward-looking statements
are reasonable based on the information available on the date such
statements are made and processes used to prepare the information,
such statements are not guarantees of future performance and
readers are cautioned against placing undue reliance on
forward-looking statements. By their nature, these statements
involve a variety of assumptions, known and unknown risks and
uncertainties and other factors, which may cause actual results,
levels of activity and achievements to differ materially from those
expressed or implied by such statements. Material assumptions
include assumptions about the following: customer and regulatory
approvals; the expected supply of and demand for crude oil, natural
gas, natural gas liquids (NGL) and renewable energy; prices of
crude oil, natural gas, NGL and renewable energy; anticipated
utilization of our existing assets; exchange rates; inflation;
interest rates; availability and price of labour and construction
materials; operational reliability; maintenance of support and
regulatory approvals for the Company's projects; anticipated
in-service dates; weather; the timing and closing of acquisitions
and dispositions; the realization of anticipated benefits and
synergies of transactions; governmental legislation; litigation;
impact of the Company's dividend policy on its future cash flows;
credit ratings; capital project funding; hedging program; expect
earnings before interest, income taxes, depreciation and
amortization (EBITDA) and expected adjusted EBITDA; expected
earnings/(loss) and adjusted earnings/(loss); expected
earnings/(loss) and adjusted earnings/(loss) per share; expected
future cash flows and expected future distributable cash flow (DCF)
and DCF per share; and estimated future dividends. Assumptions
regarding the expected supply of and demand for crude oil, natural
gas, NGL and renewable energy, and the prices of these commodities,
are material to and underlie all forward-looking statements, as
they may impact current and future levels of demand for the
Company's services. Similarly, energy transition, including the
drivers and pace thereof, the COVID-19 pandemic, exchange rates,
inflation and interest rates impact the economies and business
environments in which the Company operates and may impact levels of
demand for the Company's services and cost of inputs, and are
therefore inherent in all forward-looking statements. Due to the
interdependencies and correlation of these macroeconomic factors,
the impact of any one assumption on a forward-looking statement
cannot be determined with certainty.
Enbridge's forward-looking statements are subject to risks
and uncertainties pertaining to the successful execution of our
strategic priorities, operating performance, regulatory parameters
and decisions, changes in regulations applicable to the Company's
business, litigation, acquisitions and dispositions and other
transactions, project approval and support, renewals of
rights-of-way, weather, economic and competitive conditions, public
opinion, changes in tax laws and tax rates, changes in trade
agreements, political decisions, exchange rates, interest rates,
commodity prices, supply of and demand for commodities, energy
transition and the COVID-19 pandemic, including but not limited to
those risks and uncertainties discussed in this news release and in
the Company's other filings with Canadian and U.S. securities
regulators. The impact of any one risk, uncertainty or factor on a
particular forward-looking statement is not determinable with
certainty as these are interdependent and Enbridge's future course
of action depends on management's assessment of all information
available at the relevant time. Except to the extent required by
applicable law, Enbridge assumes no obligation to publicly update
or revise any forward-looking statements made in this news release
or otherwise, whether as a result of new information, future events
or otherwise. All forward-looking statements, whether written or
oral, attributable to Enbridge or persons acting on the Company's
behalf, are expressly qualified in their entirety by these
cautionary statements.
About Enbridge Inc.
Enbridge Inc. is a leading North American energy
infrastructure company. We safely and reliably deliver the energy
people need and want to fuel quality of life. Our core businesses
include Liquids Pipelines, which transports approximately 25
percent of the crude oil produced in North America; Gas
Transmission and Midstream, which transports approximately 20
percent of the natural gas consumed in the U.S.; Gas Distribution
and Storage, which serves approximately 3.8 million retail
customers in Ontario and Quebec; and Renewable Power
Generation, which owns approximately 1,766 megawatts (net) in
renewable power generation capacity in North
America and Europe. The Company's common shares trade on
the Toronto and New York stock exchanges under
the symbol ENB. For more information,
visit www.enbridge.com.
FOR FURTHER INFORMATION PLEASE
CONTACT:
Media
Toll Free: (888) 992-0997
Email: media@enbridge.com
Investment Community
Toll Free: (800) 481-2804
Email: investor.relations@enbridge.com
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SOURCE Enbridge Inc.