TORONTO, ONTARIO--(Marketwire - March 12, 2012) - Enbridge Inc. (TSX:ENB) (NYSE:ENB) today advised that it faces a potential write down of a significant portion of the value of its investment in Enbridge Gas New Brunswick (EGNB), the New Brunswick gas distribution utility. The potential write down relates to the impact of draft regulations for setting gas distribution rates within the province which were recently posted for a 30-day comment period by the Government of New Brunswick on its website. Enbridge's investment in EGNB currently stands at approximately $460 million.
On December 9, 2011 the Government of New Brunswick tabled and subsequently passed legislation related to the regulatory process for setting rates for gas distribution within the province. The legislation permitted the government to implement new regulations which could affect the franchise agreement between EGNB and the province, impact prior decisions by the province's independent regulator and influence the regulator's future decisions. Significant details of the rate setting process were left to be established in the new regulations and, as such, the effect of such legislation could not be determined at that time.
The draft regulations, as posted, impose explicit limits on the rates which EGNB can charge to individual classes of customers which are substantially below current rates and below the level which would be required to recover Enbridge's investment, or to support any further growth in the number of customers to be supplied with natural gas. Enbridge remains in discussion with the government but if the regulations are placed into effect as currently drafted, a write down is expected to be required.
"We are extremely disappointed with the regulations as currently drafted," said Guy Jarvis, President of Gas Distribution for Enbridge. "Enbridge has made a substantial investment in bringing natural gas to New Brunswick businesses and residents, including reinvesting the money we have earned in the province to further develop our system, and we have adhered to our side of the franchise agreement with the government. For several reasons it is more expensive to distribute natural gas in the Province of New Brunswick than it is in larger markets such as Ontario, but gas is still the lowest cost source of energy available in New Brunswick. The regulations, as drafted, would severely limit our ability to extend the benefits of natural gas to additional businesses and residents in New Brunswick. We believe that natural gas offers great potential benefits to New Brunswick, and that the regulations could be structured to ensure continued savings for existing customers while supporting extension of those same savings to new customers. We will withhold further comment pending completion of discussions with the government."
Enbridge Inc., a Canadian company, is a North American leader in delivering energy and one of the 2011 Global 100 Most Sustainable Corporations. As a transporter of energy, Enbridge operates, in Canada and the U.S., the world's longest crude oil and liquids transportation system. The Company also has a growing involvement in the natural gas transmission and midstream businesses, and is expanding its interests in renewable and green energy technologies including wind and solar energy, hybrid fuel cells and carbon dioxide sequestration. As a distributor of energy, Enbridge owns and operates Canada's largest natural gas distribution company, and provides distribution services in Ontario, Quebec, New Brunswick and New York State. Enbridge employs approximately 6,900 people, primarily in Canada and the U.S. and is ranked as one of Canada's Greenest Employers, and one of the Top 100 Companies to Work for in Canada. Enbridge's common shares trade on the Toronto and New York stock exchanges under the symbol ENB. For more information, visit enbridge.com
Certain information provided in this news release constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast" and similar expressions are intended to identify such forward-looking statements. Although Enbridge believes that these statements are based on information and assumptions which are current, reasonable and complete, these statements are necessarily subject to a variety of risks and uncertainties pertaining to operating performance, regulatory parameters, weather, economic conditions and commodity prices. You can find a discussion of those risks and uncertainties in our Canadian securities filings and American SEC filings. While Enbridge makes these forward-looking statements in good faith, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. Except as may be required by applicable securities laws, Enbridge assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.
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