Mr. Graham White reports

ENBRIDGE ANNOUNCES 33% DIVIDEND INCREASE, FINANCIAL RESTRUCTURING PLANS, REVISED PAYOUT POLICY AND 2015 ADJUSTED EARNINGS GUIDANCE

Enbridge Inc. will increase by 33 per cent its next quarterly common share dividend. It also has a Canadian restructuring plan and a corresponding new dividend payout policy range. These actions are intended to enhance the value to investors of the company's record organic growth capital program and enhance the competitiveness of its financing costs for new organic growth opportunities and asset acquisitions. Enbridge also announced 2015 adjusted earnings per share guidance of $2.05 to $2.35.

Enbridge's quarterly common share dividend will increase 33 per cent to 46.5 cents per share with the next dividend payable March 1, 2015, to shareholders of record on Feb. 16, 2015.

Enbridge is planning to transfer its Canadian liquids pipelines business, composed of Enbridge Pipelines Inc. and Enbridge Pipelines (Athabasca) Inc., and including certain renewable energy assets, to its Canadian affiliate, Enbridge Income Fund. Enbridge Income Fund Holdings Inc. is expected to acquire an increasing interest in the assets through investments in the equity of EIF over a period of several years in amounts consistent with its equity financing capability. Based on Enbridge's current planning and financing assumptions, EIFH's resulting dividend growth rate is expected to average about 10 per cent per year from 2015 through 2018 through a combination of the organic growth of the assets and its increasing interest in the assets.

Enbridge's board of directors has approved a revised dividend payout policy range of 75 per cent to 85 per cent of adjusted earnings. The previous payout policy range was 60 per cent to 70 per cent. The payout rate is expected to rise from the lower end of the new range in 2015 to the higher end by 2018 as the financing of Enbridge's current record organic growth capital program progresses. Enbridge's resulting annual dividend growth rate is expected, based on Enbridge's current planning assumptions, to average between 14 per cent and 16 per cent from 2015 to 2018.

Enbridge's adjusted EPS guidance for 2015 of $2.05 to $2.35 is before reflecting accretion resulting from the transfer of its Canadian liquids pipelines business, which is expected to be approximately 10 per cent on an annualized basis.

The Canadian restructuring plan has been approved in principle by Enbridge's board of directors, but remains subject to finalization of preliminary internal reorganization steps and a number of internal and external consents and approvals, including final approval of definitive transfer terms by the Enbridge board and by the boards of holdings and the fund following a recommendation by an independent committee of the fund and holdings, and the receipt of all necessary shareholder and regulatory approvals that may be required. Assuming all necessary consents and approvals are obtained, the transfer and initial investment by holdings are targeted for completion in mid-2015. However, there can be no assurance that the planned restructuring will be completed in the manner contemplated, or at all, or that the current market conditions and the corporation's future forecast, based on such market conditions, will not materially change.

Enbridge also has under review a potential parallel U.S. restructuring plan, which would involve transfer of its directly held U.S. liquids pipelines assets to its U.S. affiliate, Enbridge Energy Partners LP. This review has not yet progressed to a conclusion. An independent committee of the board of directors of EEP is currently considering the terms of the previously announced proposed transfer to EEP of Enbridge's 67-per-cent interest in the U.S. segment of the Alberta Clipper pipeline, which is expected to be completed by the end of 2014.

Commenting on today's announcement, Al Monaco, president and chief executive officer, Enbridge Inc., noted: "The 33-per-cent increase in our dividend that we announced today and 14-per-cent to 16-per-cent expected annual average dividend growth rate through 2018 reflects management's confidence in the strength and embedded cash flow growth from the existing assets and the capital projects that will be put into service over the next four years. The change in our dividend policy range to 75 to 85 per cent of adjusted earnings is supported by the excellent progress we've made on our enterprisewide funding program, raising some $16-billion in debt and equity capital over the last two years; the expected increase in free cash flow through 2018; and reliable access to effective sources of equity funding, including from our sponsored vehicles.

"Our plan to transfer the Canadian liquids pipelines business to Enbridge Income Fund comes after an extensive review of the potential to further enhance the value of our $44-billion growth program and lower the cost of funding for that program and for new investment opportunities. We believe that the drop-down of our Canadian liquids pipelines business into the fund will transform it into a high-growth vehicle and be beneficial for shareholders of both Enbridge and Enbridge Income Fund Holdings, while continuing to assure the funding of our organic growth program.

"The combination of accelerated dividend growth and further capitalizing on the use of our premium-sponsored vehicle in Canada (EIF/EIFH) will increase shareholder value and positions Enbridge to deliver industry-leading earnings and dividend growth beyond 2018.

"Although we are focused on optimizing our cost of capital for the benefit of our customers and investors, our first and most important priority will continue to be ensuring the safety and operational reliability of our systems. Enbridge will continue to manage the operations and strategic development of the liquids pipelines business as it does today to ensure cost-effective market access for producers and reliable supply sources for refiners."

Canadian liquids pipelines business

Enbridge's Canadian liquids pipelines business consists of its Canadian mainline system held through EPI and its regional oil sands system held through EPA, both corporations of which would be transferred from direct ownership by Enbridge to ownership by the fund. The combined carrying value of the Canadian liquids pipelines business held in these corporations is approximately $16-billion with an associated secured growth capital program of approximately $15-billion.

The Canadian mainline system includes a number of large-diameter crude oil, natural gas liquid and refined product pipelines receiving hydrocarbon liquids at, and making deliveries to, various locations in Western Canada and connecting to the U.S. mainline system owned by EEP at the Canada/U.S. border near Gretna, Man. This Western Canada portion of the system includes the Canadian segment of the Alberta Clipper pipeline, currently undergoing an expansion to its ultimate capacity of 800,000 barrels per day; the Canadian segment of the Line 3 replacement program; the Edmonton to Hardisty expansion program; and the Canadian mainline system terminal flexibility and connectivity program. The Canadian mainline system also includes a number of pipelines in Eastern Canada.

The regional oil sands system includes a number of trunk line and lateral pipelines collecting synthetic crude oil and diluted bitumen from eight different producing oil sands projects and delivering to the hub terminal locations at Edmonton and Hardisty, Alta. This system also includes Enbridge's 70-per-cent interest in the Norlite diluent pipeline currently under development. The regional oil sands system growth capital program also includes the Norealis pipeline, Surmont phase 2 expansion, Woodland pipeline extension, Athabasca pipeline twinning project and Wood Buffalo extension.

Enbridge will retain operating responsibility for the liquids pipelines business, as it does for the assets currently held through EIF and for those held through EEP, as well as business development and project construction responsibility. In particular, Enbridge's enterprisewide priority on safety and reliability of operations, including protection of employees, the public and the environment, will continue to apply to the Canadian liquids pipelines business.

Renewable energy assets

EIF currently already holds a number of Enbridge's enterprisewide renewable energy assets. Enbridge holds an additional group of Canadian renewable assets, with a carrying value of approximately $1-billion, through EPI. The plan is to leave these assets in EPI and therefore transfer them to EIF in combination with the Canadian liquids pipelines business. These renewable assets consist of Enbridge's interests in the Massif du Sud, Lac Alfred and Saint Robert Bellarmin wind projects in Quebec and the Blackspring Ridge wind project in Alberta.

Financial aspects of the restructuring plan

In total, an aggregate of $17-billion of combined carrying value of assets are to be transferred to EIF under the planned restructuring.

To finance the transaction, the plan contemplates the issuance by EIFH of $600-million to $800-million of public equity per year from 2015 through 2018 in one or more tranches to finance its increasing investment in the Canadian liquids pipelines assets through EIF. Enbridge will retain an obligation to ensure EIF has sufficient equity financing to undertake the growth program associated with the transferred assets, and the amount of public equity to be issued by EIFH would be adjusted as necessary to match its capacity to raise equity financing on favourable terms. Enbridge will contribute additional equity to EIFH to maintain its 19.9-per-cent interest. Enbridge would also take back a significant portion of the proceeds of the asset transfer to EIF in the form of additional equity in a subsidiary of EIF, similar to the previous asset transfers undertaken in 2011, 2012 and 2014.

As a result, Enbridge's aggregate economic interest in EIF is expected to increase from its current level of approximately 66 per cent to approximately 90 per cent initially, and then decline to approximately 80 per cent by 2018 as EIFH increases its investment in EIF.

The terms of the EPI and EPA transfers to EIF are expected to provide a similar level of EPS accretion to Enbridge as for the previous transfers, relative to the magnitude of the transfer. On an annualized basis, this is expected to approximate an average increase of 10 per cent for each year through 2018 above the EPS profile previously expected from Enbridge's record organic growth program.

Enbridge is considering the potential to accommodate public debtholders who may have a desire to hold their notes closer to the Canadian liquids pipelines businesses instead of continuing to have access to the diversified sources of cash flow that will continue to service Enbridge's debt. This could include offering holders of Enbridge notes the ability to exchange a portion but not all of their (Canadian-dollar-denominated) notes for new notes of EIF. The portion which could be exchanged would correspond to the approximate $4-billion of intercompany debt that the fund would otherwise assume as a component of the purchase price. It is also expected that the size of Enbridge's $2.5-billion commercial paper program will be reduced by about $2-billion and EPI's commercial paper program will be expanded by a similar amount.

Revised dividend payout policy

The revised dividend policy reflects Enbridge's increased flexibility for financing of its growth capital program as a result of financing progress achieved to date, increasing internally generated free cash flow, and established access to low-cost financing through preferred share issuances and drop-downs to its sponsored investments. The payout is expected to be near the bottom end of the 75-per-cent to 85-per-cent range initially during the heaviest capital spending years of the growth program, and to rise toward the top end of the range as capital spending tapers and free cash flow expands in the latter years of the 2014-to-2018 business plan.

Under the revised dividend payout policy, Enbridge's aggregate 2014-to-2018 dividend payout is expected to increase by approximately $1.5-billion above the approximately $8-billion, which would have been paid out under the prior policy before the corresponding increase in the dividend reinvestment program. However, Enbridge's remaining equity financing requirement, excluding its sponsored investments, is expected to decline by about $400-million to $1.5-billion over 2014 to 2018 as an increased portion of the growth program financing is undertaken by holdings over time. The company anticipates that it will be able to meet its reduced equity financing requirements through preferred share issuances.

Conference call

Enbridge will hold a conference call on Dec. 4, 2014, at 9 a.m. Eastern Time (7 a.m. Mountain Time) to discuss today's announcement. Analysts, members of the media and other interested parties can access the call toll-free at 1-800-708-4540 from within North America and outside North America at 1-847-619-6397, using the access code of 38441171 followed by the number sign. Callers are asked to please dial in 10 minutes ahead. The call will be audio webcast live. A webcast replay and podcast will be available approximately two hours after the conclusion of the event, and a transcript will be posted to the website within 24 hours. The replay will be available toll-free at 1-888-843-7419 within North America and outside North America at 1-630-652-3042 (access code 38441171 followed by the number sign) until Dec. 11, 2014.

The conference call will begin with presentations by the company's president and chief executive officer and the senior vice-president, finance, followed by a question-and-answer period for investment analysts. A question-and-answer period for members of the media will then immediately follow.

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