CALGARY,
AB, May 4, 2023 /CNW/ - Today, Enbridge Inc.
(TSX: ENB) (NYSE: ENB) (Enbridge or the Company) announced that it
has reached an agreement in principle on a negotiated settlement
(the settlement) with shippers for incentive tolls on its Mainline
liquids system, which moves over 3 million barrels a day of crude
oil and liquids from Western
Canada to demand markets in multiple provinces and
states.
The settlement covers both the Canadian and U.S. portions of the
Mainline and will provide customers with a stable, competitive toll
relative to competing alternatives. In addition, the settlement
will preserve high utilization of the Mainline, and incentivize
Enbridge to maximize capacity, benefiting industry egress and
customer netbacks. The settlement term is 7.5 years through
2028.
"This settlement continues with Enbridge's track record of
working cooperatively with shippers, and industry groups, and
builds on a 27-year history of similar incentive deals on the
Mainline itself," said Colin
Gruending, Enbridge's Executive Vice President and President
of Liquids Pipelines. "This settlement is a win-win-win – customers
will continue to receive competitive and responsive service;
Enbridge will earn attractive risk-adjusted returns; and the
Mainline will continue to feed North
America and global markets with a long-term source of safe,
secure, and affordable energy."
The settlement has been approved by the Enbridge Board of
Directors and received overwhelming support from a 37-member
industry stakeholder group that includes producers, refiners,
integrated companies, industry agencies, and governments.
As part of the settlement, Enbridge will be filing new interim
tolls for local Canadian crude movements and cross-border
international joint toll deliveries to take effect on July 1, 2023. The settlement also eliminates the
need to complete its previously filed Lakehead cost of service
application, currently before the United
States' Federal Energy Regulatory Commission.
Enbridge expects to jointly finalize the settlement with
industry and submit an application for its approval to the Canada
Energy Regulator in Q3 2023, with the expectation that the new
tolling settlement could be approved and implemented later this
year.
Some highlights of the settlement include:
- Establishment of a competitive and stable toll that preserves
ongoing high utilization of the Mainline, as well as the
profitability of crude oil production in Western Canada
- An International Joint Toll (IJT), for heavy crude oil
movements from Hardisty to
Chicago, comprised of a
C$1.65 per barrel toll plus a
US$2.57 per barrel toll, plus the
applicable Line 3 Replacement surcharge. Tolls will continue to be
distance and commodity adjusted, and will utilize a dual currency
IJT that will reduce Enbridge's exposure to foreign exchange
fluctuations in respect to the Canadian portion of the toll
- During the term, Mainline IJT tolls will be governed by the
terms of the settlement, and for the purpose of calculating tolls,
all other previous surcharges are superseded by the settlement
- A financial performance collar providing incentives for
Enbridge to optimize throughput and cost, but also providing
downside protection in the event of extreme supply or demand
disruptions or unforeseen operating cost exposure. This performance
collar is intended to ensure the Mainline will earn 11% to 14.5%
returns, on a deemed 50% equity capitalization, throughout the term
of the agreement, which is similar to the returns earned on average
during the previous tolling agreement
- Toll escalation for operation, administration, and power costs
tied to U.S. consumer price and power indices
- Certain future expenditures associated with Line 5, including
the Wisconsin relocation project
and construction of a tunnel under the Straits of Mackinac will be
included in rate base. Half the capital will be included in rate
base as incurred and collect a new surcharge, while the other half
will be backstopped and placed into rate base, for collection via a
surcharge, upon project completion
- A structure to manage power costs that allows Enbridge to
continue its solar self-power initiatives to reduce emissions
- For additional details, please refer to the Mainline tolling
supplemental deck
Approximately 70% of Mainline deliveries are tolled under this
settlement, while approximately 30% of deliveries are tolled on a
full path basis to markets downstream of the Mainline. The other
continuing feature is that the Mainline toll will flex up or down
US$0.035 per barrel for 50,000 barrel
per day changes in throughput.
The expected financial outcome from this settlement is in line
with previously reported financial results and guidance provided,
subject to filing and regulatory approval of the definitive
agreement and associated rates.
Enbridge is pleased with the customer cooperation and alignment
this framework furthers with industry.
"We'd like to thank our customers and stakeholders who worked
with us to realize this settlement," said Gruending. "We look
forward to continuing that collaboration in the coming months to
advance and implement this tolling settlement."
Forward-Looking Information
Forward-looking information, or forward-looking statements,
have been included in this news release to provide information
about Enbridge Inc. ("Enbridge" or the "Company") 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 in
this news release include statements with respect to the Mainline
tolling settlement agreement in principle (the "Settlement"),
including the terms and characteristics thereof, the benefits of
the Settlement, expected regulatory filings, approvals and process
and the timing thereof, finalization and implementation of the
Settlement and the timing thereof, and expected financial outcomes
of the Settlement.
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: the expected supply of,
demand for and prices of crude oil, natural gas, natural gas
liquids (NGL), liquified natural gas (LNG) and renewable energy;
anticipated utilization of our assets; exchange rates; inflation;
interest rates; availability and price of labour and construction
materials; the stability of our supply chain; operational
reliability and performance; maintenance of support and regulatory
approvals, including with respect to the Settlement; anticipated
in-service dates; weather; announced and potential acquisition,
disposition and other corporate transactions and projects and the
timing and benefits thereof; governmental legislation; litigation;
credit ratings; hedging program; expected EBITDA and expected
adjusted EBITDA; expected earnings/(loss) and adjusted
earnings/(loss); expected earnings/(loss) or adjusted
earnings/(loss) per share; expected future cash flows; expected
future distributable cash flow (DCF) and DCF per share; estimated
future dividends; financial strength and flexibility; debt and
equity market conditions; and general economic and competitive
conditions. Assumptions regarding the expected supply of and demand
for crude oil, natural gas, NGL, LNG 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 our services. Similarly, exchange rates,
inflation and interest rates impact the economies and business
environments in which we operate and may impact levels of demand
for our services and cost of inputs and are therefore inherent in
all forward-looking statements.
Enbridge's forward-looking statements are subject to risks
and uncertainties pertaining to the successful execution of our
strategic priorities, including with respect to the Settlement and
matters connected therewith; operating performance; regulatory
parameters, including with respect to the Settlement; litigation;
acquisitions and dispositions and other transactions, and the
realization of anticipated benefits therefrom; project approval and
support; renewals of rights-of-way; weather; economic and
competitive conditions; global geopolitical conditions; political
decisions; public opinion; dividend policy; changes in tax laws and
tax rates; exchange rates; interest rates; inflation; commodity
prices; and supply of and demand for commodities, including but not
limited to those risks and uncertainties discussed in this news
release and in Enbridge's other filings with Canadian and U.S.
securities regulators. The impact of any one assumption, risk,
uncertainty or factor on a particular forward-looking statement is
not determinable with certainty, as these are interdependent and
our 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 statement 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 us or persons
acting on our behalf, are expressly qualified in their entirety by
these cautionary statements.
None of the information contained in, or connected to,
Enbridge's website is incorporated in or otherwise forms part of
this news release.
About Enbridge Inc.
At Enbridge, we safely connect millions of people to the
energy they rely on every day, fueling quality of life through our
North American natural gas, oil or renewable power networks and our
growing European offshore wind portfolio. We're investing in modern
energy delivery infrastructure to sustain access to secure,
affordable energy and building on two decades of experience in
renewable energy to advance new technologies including wind and
solar power, hydrogen, renewable natural gas and carbon capture and
storage. We're committed to reducing the carbon footprint of the
energy we deliver, and to achieving net zero greenhouse gas
emissions by 2050. Headquartered in Calgary, Alberta, Enbridge's common shares trade under
the symbol ENB on the Toronto (TSX) and New
York (NYSE) stock exchanges. To learn more, visit us at
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.