Enbridge Inc. · TSX:ENB
Enbridge — Corporate Update (June 2005)
16 slides from Enbridge's corporate update, Jun 24, 2005
Slide 1: Incentive Tolling Settlement
Incentive Tolling Settlement June 24, 2005 Patrick D. Daniel President & Chief Executive Officer J. Richard Bird Group Vice President, Liquids Pipelines
Slide 2: Forward Looking Statements
Forward Looking Statements Certain information provided in this presentation constitutes forward-looking statements. The words "anticipate", "expect", "project" and similar expressions are intended to identify such forward looking statements. Although Enbridge believes that these statements are base
Slide 3: Overview
Overview Incentive Tolling Settlement MOU – CAPP and Enbridge – January 1, 2005 – December 31, 2009 – Preserves historic principles: cooperation, cost savings – Adds: service incentives and risk sharing Builds on Original Incentive Tolling Agreement – January 1, 1995 – December 31, 2004 – $107 m
Slide 4: Benefits for Shippers
Benefits for Shippers Regulatory Efficiency Continuation of 50/50 Cost Efficiency Sharing Power Savings Guarantee Enbridge Assumes Risk for Pipeline Integrity Enhanced Service (measured by new metrics) – Batch quality & delivery predictability – Capacity reliability 4
Slide 5: Benefits for Enbridge
Benefits for Enbridge Opportunity to Earn Above NEB Multi-Pipeline ROE Continued Throughput Protection (TRV) on Canadian Mainline Power Costs Now Flow Through to Shippers Regulatory Efficiency – Permits Enbridge to focus on creating value for shippers 5
Slide 6: ITS Timeline
ITS Timeline MOU Announcement June 24 NEB Toll Filing Reflecting MOU Terms Mid July 6
Slide 7: ITS Scope
ITS Scope Norman Wells Enbridge Liquids Pipelines Segment* 2004 Earnings (millions) $48 $220 $99 Zama Fort McMurray $73 Edmonton Hardisty Kerrobert Core SEP I, II, Athabasca, Total ITS Terrace, Line Norman Regina 8/9 Wells, U.S. Cromer Feeders Gretna * Excludes Sponsored Investments Clearbrook Montr
Slide 8: What Stays the Same?
What Stays the Same? Covers Same Core Capital Base Five Year ITS Term Cost Savings Incentives (50/50 sharing) Power Savings Guarantee NRA Off Ramps for Opportunities & Major Changes – NEB orders – Change in legislation – Change in environmental requirements, etc. 8
Slide 9: What Changes?
What Changes? Earnings Base (negotiated) Now $57.9 Million, Was $62.8 Million – Includes approximately $6 million of NRA’s earnings base rolled into new base Starting Point Revenue Requirement (negotiated) $290.9 Million – Inflates at 50% of GDPP (was 75%) New Integrity Allowance $18.2 Million
Slide 10: New Metrics
New Metrics Batch Quality & Delivery Predictability Bonus/Penalty Structure 2005 +/- $10 million (after tax) 2006/7 +/- $15 million (after tax) 2008/9 +/- $20 million (after tax) Quality Metrics - Example (Absolute & Variability Measure) 1.50 Sulfur Contamination Minimum Penalty 0.70 Baseline Bo
Slide 11: New Metrics
New Metrics Batch Quality – Reduce contamination of each batch within system – 20 Metrics, Six sub-metrics • Sulfur pickup • Density/contamination • Total acid number (TAN) • Micro carbon residue (MCR) • Diesel flash point • Ultra-low sulfur pickup Delivery Predictability – Reduce the variabilit
Slide 12: New Metrics
New Metrics Capacity Reliability – Ensure system capacity is available when required – Bonus/penalty structure, relative to annual target capacity baseline • Penalty equals C$200,000 per percentage point, per month below target (penalty capped at C$10 million annually (after tax)) • Bonus equals C
Slide 13: ITS Earnings Contribution 2005 Illustrative Proforma
ITS Earnings Contribution 2005 Illustrative Proforma 100 80 C$ Millions 60 40 20 0 Threshold Earnings Cost Savings, Integrity Service Metrics Allowance & Power Guarantee Expected Earnings Potential Earnings Note: ITS MOU outcome consistent with Q1 2005 earnings & 2005 EPS guidance assumptions. 13
Slide 14: ITS Earnings Contribution 2005 Illustrative Proforma vs. 2004
ITS Earnings Contribution 2005 Illustrative Proforma vs. 2004 120 100 Incentive Potential C$ Millions 80 60 40 20 0 2004 2005 Threshold Earnings Costs Service Metrics 14
Slide 15: Summary
Summary ITS Integrated With Overall Customer Relationship Win-Win Agreement, Creates Additional Industry Value Enbridge Will Immediately Implement Service Metrics Continue to Develop: – Oil Sands regional infrastructure – Incremental terminalling and storage infrastructure – Diluent infrastr
Slide 16: Incentive Tolling Settlement
Incentive Tolling Settlement June 24, 2005 Patrick D. Daniel President & Chief Executive Officer J. Richard Bird Group Vice President, Liquids Pipelines