01:05:06 EDT Fri 29 Mar 2024
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or Name
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Enbridge Inc
Symbol ENB
Shares Issued 851,644,421
Close 2015-02-19 C$ 61.64
Market Cap C$ 52,495,362,110
Recent Sedar Documents

Enbridge's annual profit rises to $1.6-billion in 2014

2015-02-19 16:34 ET - News Release

Mr. Al Monaco reports

Enbridge Inc. had fourth quarter adjusted earnings of $409-million, or 49 cents per common share, and annual adjusted earnings for 2014 of $1,574-million, or $1.90 per common share.

Highlights:

  • Fourth quarter earnings were $88-million; earnings for the full year were $1,154-million. Quarterly and full-year earnings included the impact of a number of unusual, non-recurring or non-operating factors;
  • Fourth quarter and full-year adjusted earnings were $409-million and $1,574-million, respectively, or 49 cents per common share and $1.90 per common share, respectively;
  • Enbridge increased its quarterly dividend by 33 per cent to 46.5 cents per common share effective March 1, 2015, and announced a revised dividend payout policy range of 75 per cent to 85 per cent of adjusted earnings;
  • Enbridge announced plans to transfer the majority of its Canadian liquids pipelines business and certain Canadian renewable energy assets to Enbridge Income Fund. It is also reviewing a potential transfer of its directly held United States liquids pipelines assets to Enbridge Energy Partners LP;
  • Enbridge transferred natural gas and diluent pipeline interests to Enbridge Income Fund for proceeds of $1.8-billion, and finalized the transfer of the U.S. portion of the Alberta Clipper pipeline to Enbridge Energy Partners for aggregate consideration of $1-billion (U.S.);
  • Enbridge continued the successful execution of its record growth capital program and placed 15 projects into service totalling $10-billion in 2014. Completed projects include the Flanagan South pipeline and Seaway Crude pipeline system twinning;
  • In February, the National Energy Board approved conditions 16 and 18 on Enbridge's application for the reversal and expansion of line 9B, allowing the company to apply for leave to open;
  • Enbridge finalized the purchase of an 80-per-cent interest in a portfolio of two wind farms in the U.S. for approximately $300-million (U.S.), and was selected to develop the $200-million (U.S.) Stampede oil pipeline in the deepwater Gulf of Mexico;
  • Guidance for 2015 adjusted earnings is $2.05 to $2.35 per common share.

"Two thousand fourteen was a successful year on many fronts," said Al Monaco, president and chief executive officer, Enbridge. "Our solid financial results again extend our record of delivering strong and predictable earnings growth, year after year. We increased our dividend by 11 per cent and announced a further increase of 33 per cent effective March 1 of this year. We also placed $10-billion of capital projects into service and we expect to complete another $9-billion in 2015; and we increased our five-year capital program to a record $44-billion, $34-billion of which is commercially secured and in execution. With the strength of our business model and this large inventory of growth projects, we remain confident in our ability to deliver an anticipated average annual adjusted earnings per share growth rate of 10 to 12 per cent through 2018, before consideration of the impact of the proposed restructuring that we announced late last year.

"While the vast majority of Enbridge's businesses have limited direct commodity price exposure, the recent drop in oil prices is impacting our customers. As a critical transportation provider, we strive to support the competitiveness of our customers and the industry through stable and predictable tolls, operating and capital efficiency, and opening new markets, such as the path we recently completed to the U.S. Gulf Coast, that help to alleviate price discounts," said Mr. Monaco.

In December, Enbridge announced plans to transfer the majority of its Canadian liquids pipelines business and certain renewable energy assets to Enbridge Income Fund with a combined carrying value of $17-billion. Enbridge is also reviewing a potential transfer of its interest in U.S. liquids pipelines assets to Enbridge Energy Partners, although the review of this transaction has not progressed to a conclusion.

Also in December, Enbridge announced a 33-per-cent increase to its quarterly common share dividend and a corresponding new dividend payout policy range of 75 per cent to 85 per cent of adjusted earnings. The revised payout policy reflects the excellent progress the company has made on financing its growth capital program, expected growth in free cash flow and ready access to cost-effective financing sources, including drop-downs to its sponsored vehicles.

"Collectively, these actions are intended to further enhance the value of our industry-leading organic growth capital program, and the competitiveness of Enbridge's cost of capital for new organic growth opportunities and asset acquisitions," said Mr. Monaco. "Our plan to transfer the Canadian liquids pipelines business to the fund will allow a large portion of our growth capital program to be financed at an advantageous cost, while reducing the financing requirement at Enbridge. The plan also enables us to monetize a portion of our existing assets on favourable terms and release capital from the business for redeployment into future growth opportunities, thereby positioning Enbridge for growth beyond 2018.

"We believe the Canadian restructuring plan will be beneficial for shareholders of both Enbridge and Enbridge Income Fund Holdings. That said, our strategy, disciplined approach to the business and our key priorities, of which first and foremost is the safe and reliable operation of our systems, will not change."

In November, Enbridge finalized the $1.8-billion transfer of natural gas and diluent pipeline interests to the fund, a transaction that provided Enbridge approximately $1.2-billion in net financing for its growth capital program. In January, 2015, Enbridge and EEP also finalized the transfer of the U.S. segment of the Alberta Clipper pipeline for aggregate proceeds of approximately $1-billion (U.S.).

During 2014, Enbridge increased its inventory of growth capital projects to $44-billion and, more importantly, increased the commercially secured component of its project portfolio to $34-billion, which includes the $7.5-billion line 3 replacement program, the largest growth project in the company's history. The company also made significant progress on its market access initiatives and in December, brought into service the Flanagan South pipeline and the Seaway crude pipeline system twin. Combined, the Flanagan South and Seaway pipeline twin projects provide 600,000 barrels per day of incremental capacity for producers in Western Canada and the Bakken to the U.S. Gulf Coast refining hub.

"Improving market access for our customers has been a key focus of our's over the past five years and we reached an important milestone in 2014," said Mr. Monaco. "Together with our mainline system, these two projects establish the first full-path, large-volume pipeline network from Western Canada to the U.S. Gulf Coast, which will also contribute to continental energy security."

In February, the National Energy Board approved conditions 16 and 18 of Enbridge's application for the reversal and expansion of line 9B. The company subsequently applied to the NEB for a leave to open. Subject to NEB approval for the leave to open, Enbridge expects to place line 9B into service in the second quarter of 2015. In its decision, the NEB imposed additional obligations on Enbridge that direct the company to take a life cycle approach to water crossings and valves, requiring the company to perform continuing analysis and rationale to ensure optimal protection of the area's water resources.

"The reversal of line 9 is critical for our customers and is a positive strategic development for Canada. Line 9 allows Ontario and Quebec refineries to access reliable feedstock that will substantially reduce reliance on higher-cost foreign sources of crude. The project helps to assure the long-term viability of Eastern Canadian refineries and an important petrochemical complex, thereby protecting thousands of Canadian jobs. At the same time, it also opens up a timely and crucial market access conduit for Western Canadian producers by utilizing existing infrastructure that reduces costs and minimizes the industry's environmental footprint," said Mr. Monaco.

In December, Enbridge completed the purchase of an 80-per-cent interest in a portfolio of two U.S. wind farms from E.ON Climate and Renewables North America LLC, a subsidiary of E.ON SE, one of the world's largest investor-owned power and gas companies. These projects, with an aggregate generating capacity of over 400 megawatts, are operational and represent a $300-million (U.S.) investment by Enbridge.

"The acquisition of these two wind farms represents another important step in our power-generation growth strategy. It will bring our total net generating capacity of renewable power projects to more than 1,600 megawatts, and it keeps us on track to double capacity by 2018," Mr. Monaco said.

In January, 2015, Enbridge announced it will build a crude oil pipeline in the Gulf of Mexico to connect the planned Stampede development operated by Hess Corp. to an existing third party pipeline system. The Stampede oil pipeline is expected to cost approximately $200-million (U.S.) and be operational in 2018.

Enbridge continued to advance key areas of safety and operational reliability performance through the execution of its operational risk management plan, which involves the continuing maintenance and enhancement of the company's pipelines and facilities.

"Safety and operational reliability remain our top priorities, and our operational risk management plan is helping position Enbridge as an industry safety leader," Mr. Monaco said. "We continue to invest heavily in pipeline integrity, leak detection capability, environmental protection and emergency response to ensure our energy transportation and distribution systems operate safely, reliably and in an environmentally responsible manner. We were also proud to publish our second annual operational reliability review to highlight our performance as we strive toward our goal of zero incidents."

As acknowledgement of the company's sustainability leadership, Corporate Knights again named Enbridge in its Global 100 ranking of the most sustainable corporations in the world, based on Enbridge's economic, environmental and social performance in 2014.

"We are honoured to again be recognized for our commitment to addressing social and environmental considerations," Mr. Monaco said.

Operations

Adjusted earnings for the fourth quarter of 2014 were $409-million or 49 cents per common share. Full-year adjusted earnings were $1,574-million, or $1.90 per common share, which is within Enbridge's 2014 guidance range of $1.84 to $2.04 per common share. Enbridge's solid 2014 performance reflected the strength of its existing businesses and the successful execution of its continuing growth capital program. The most significant contributions to year-over-year earnings came from the liquids pipelines and sponsored investments segments. In liquids pipelines, higher Canadian mainline earnings were largely driven by throughput growth reflecting strong supply from Western Canada and downstream refinery demand for Canadian crude, as well as efforts by the company to enhance throughput on its mainline system through optimization of operations. However, this growth was tempered by lower Canadian mainline tolls, which came into effect on Aug. 1, 2014. New liquids pipelines assets placed into service during the year, including Flanagan South, Seaway pipeline twin and Norealis pipeline, also provided a positive uplift to liquids pipelines earnings.

Within sponsored investments, EEP had a strong 2014 largely driven by growth in its liquids business. EEP's Lakehead system experienced similar throughput growth to Canadian mainline and also further benefited from higher tolls across the majority of its major liquids pipelines. EEP earnings were also positively impacted by new assets placed into service, in particular the line 6B replacement and expansion, a key component of Enbridge and EEP's eastern access program. Enbridge also directly benefited through its 75-per-cent interest in the U.S. portion of the eastern access expansion projects held through Enbridge Energy LP (EELP). Enbridge's other sponsored vehicle, the fund, also had a strong 2014. The impact of an increased asset base, including the most recent transfer of natural gas and diluent pipeline interests in November, 2014, continued to drive growth in the fund.

The year-over-year growth noted above was partially offset by weaker results in the company's gas pipelines, processing and energy services segment. Changing market conditions had a negative impact on the company's energy services businesses and Aux Sable natural gas processing facilities. Narrowing location spreads and less favourable conditions in certain markets accessed by committed transportation capacity, combined with unrecovered demand charges, resulted in lower earnings from energy services following a very strong 2013 fiscal year. Aux Sable earnings reflected lower fractionation margins and lower volumes at its upstream plants.

The adjusted earnings discussed above exclude the impact of unusual, non-recurring or non-operating factors, the most significant of which are changes in unrealized derivative fair value gains and losses from the company's long-term hedging program, makeup rights adjustments, income tax incurred on the capital gain triggered by the transfer of assets between entities under common control of Enbridge, gains on the disposal of non-core assets and investments, as well as certain costs and related insurance recoveries arising from crude oil releases.

Fourth quarter 2014 overview

For more information on Enbridge's growth projects and operating results, please see the management's discussion and analysis, which is filed on SEDAR and EDGAR, and also available on the company's website.

  • On Feb. 9, 2015, EEP and its partially owned subsidiary, Midcoast Energy Partners LP, announced that they are entering into the emerging Eaglebine shale play in East Texas through two transactions totalling approximately $200-million (U.S.). EEP and MEP have commenced construction of a lateral and associated facilities that will create gathering capacity of over 50 million cubic feet per day for rich natural gas to be delivered from Eaglebine production areas to their complex of cryogenic processing facilities in East Texas. The initial facilities are projected to be placed into service by late 2015, with the lateral expected to be in service by mid-2016. MEP also executed an agreement with New Gulf Resources LLC to purchase NGR's mid-stream business in Leon, Madison and Grimes counties, Texas. The acquisition consists of a natural gas gathering system that is currently in operation;
  • On Jan. 12, 2015, Enbridge announced that it will build, own and operate a crude oil pipeline in the Gulf of Mexico to connect the planned Stampede development, which is operated by Hess, to an existing third party pipeline system. Stampede Pipeline, a 26-kilometre (16-mile), 18-inch diameter pipeline with capacity of approximately 100,000 barrels per day will originate in Green Canyon block 468, approximately 350 kilometres (220 miles) southwest of New Orleans, La., at an estimated depth of 1,200 metres (3,800 feet). After finalization of scope and a definitive cost estimate, Stampede pipeline is now expected to be completed at an approximate cost of $200-million (U.S.), and is expected to be placed into service in 2018;
  • On Jan. 2, 2015, Enbridge completed the transfer of its 66.7-per-cent interest in the U.S. segment of the Alberta Clipper pipeline to EEP for aggregate consideration of $1-billion (U.S.), consisting of approximately $694-million (U.S.) of Class E equity units issued to Enbridge by EEP and the repayment of approximately $306-million (U.S.) of indebtedness owed to Enbridge. The terms of the transfer were reviewed and recommended by an independent committee of EEP. The Class E units issued to Enbridge are entitled to the same distributions as the Class A units held by the public, and are convertible into Class A units on a one-for-one basis at Enbridge's option. The Class E units are not entitled to distributions with respect to the quarter ended Dec. 31, 2014. The Class E units are redeemable at EEP's option after 30 years, if not converted earlier by Enbridge. The units had a liquidation preference equal to their notional value at Dec. 23, 2014, of $38.31 (U.S.) per unit, which was determined based on the trailing five-day, volume-weighted average price of EEP's Class A common units;
  • On Dec. 3, 2014, Enbridge announced its plan to transfer the majority of its Canadian liquids pipelines business comprising Enbridge Pipelines Inc. and Enbridge Pipelines (Athabasca) Inc., and certain Canadian renewable energy assets with a combined carrying value of approximately $17-billion, with an associated secured growth capital program of approximately $15-billion, to the fund. The transfer of the assets is expected to be completed in mid-2015. The Canadian restructuring plan was announced along with a 33-per-cent increase to the company's next quarterly common share dividend effective March 1, 2015, along with a corresponding new dividend payout policy range.

The Canadian restructuring plan is intended to enhance Enbridge's value to investors while the company executes its $44-billion growth capital program, and to enhance the competitiveness of its financing costs for new organic growth opportunities and asset acquisitions. Transferring the assets to the fund is expected to allow the majority of the growth capital program to be financed at an advantageous cost, while reducing the financing requirement at Enbridge. It also allows Enbridge to monetize a portion of its existing assets on favourable terms, releasing capital from the business for redeployment into future growth opportunities.

Pursuant to the plan, Enbridge Income Fund Holdings is expected to acquire an increasing interest in the assets through investments in the equity of the fund over a period of several years, in amounts consistent with its equity financing capability. The Canadian restructuring plan has been approved in principle by Enbridge's board of directors, but it 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 of directors, and by the boards of ENF and the fund, following a recommendation by an independent committee of ENF and the fund, 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 ENF 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 company's future forecast, based on such market conditions, will not materially change.

Enbridge's Canadian liquids pipelines includes its Canadian mainline system held through EPI and its regional oil sands system held through EP Athabasca. Both entities would be transferred from direct ownership by Enbridge to ownership by the fund. Enbridge will retain operating responsibility for the liquids pipelines business, as it does for the assets currently held through the fund and for those held through EEP, as well as responsibility for business development and project construction. In particular, Enbridge's enterprise-wide priority on the safety and reliability of its operations, including protection of employees, the public and the environment, will continue to apply to Canadian liquids pipelines.

The fund currently already holds a number of Enbridge's renewable energy assets. The remainder of the existing Canadian renewable energy assets are held through EPI. Under the Canadian restructuring plan, the intention is to leave these renewable assets in EPI and include them with the transfer of the Canadian liquids pipelines business to the fund. These renewable assets consist of Enbridge's interests in the Massif du Sud wind project, the Lac Alfred wind project and the Saint Robert Bellarmin wind project, all located in Quebec, and the Blackspring Ridge wind project in Alberta.

The Canadian restructuring plan contemplates the issuance by ENF 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 business through the fund. Enbridge will retain an obligation to ensure the fund has sufficient equity financing to undertake the growth capital program associated with the transferred assets, and the amount of public equity to be issued by ENF would be adjusted as necessary to match its capacity to raise equity financing on favourable terms. Enbridge will contribute additional equity to ENF to maintain its current 19.9-per-cent interest. Enbridge would also take back a significant portion of the consideration for the assets transferred to the fund in the form of additional equity in a subsidiary of the fund.

As a result, Enbridge's aggregate economic interest in the fund is expected to increase from its current level of 66.4 per cent to approximately 90 per cent initially, and then decline to approximately 80 per cent by 2018 as ENF increases its investment in the fund.

Enbridge also has under review a potential U.S. restructuring plan, which would involve the transfer of its directly held U.S. liquids pipelines assets to EEP. This review has not yet progressed to a conclusion. The proposed U.S. liquids pipelines restructuring plan is separate from the agreement to drop down Enbridge's 66.7-per-cent interest in the U.S. segment of the Alberta Clipper pipeline to EEP, which closed on Jan. 2, 2015.

  • On Nov. 28, 2014, Enbridge announced it had entered into an agreement with E.ON to purchase an 80-per-cent interest in a wind farm portfolio, which included the 203-megawatt Magic Valley 1 wind farm located near Harligen, Tex., and the 202-megwatt Wildcat 1 wind farm near Elwood, Ind., for approximately $300-million (U.S.) Both wind farms are operational and were placed into service in 2012. Upon closing of the transaction on Dec. 31, 2014, E.ON retained a 20-per-cent interest and remained the operator;
  • In the fourth quarter, the company completed the following financing transactions:
    • On Nov. 19, 2014, the fund issued medium-term notes of $550-million with a 10-year maturity, $250-million with a 30-year maturity and $330-million with a two-year maturity;
    • In the fourth quarter of 2014, Enbridge increased its enterprise-wide general purpose credit facilities to $18.6-billion.

                        CONSOLIDATED EARNINGS
            (in millions of dollars except per-share amounts)

                                       Three months ended        Year ended
                                                  Dec. 31,          Dec. 31,
                                           2014      2013     2014     2013

Earnings attributable to common
shareholders
Liquids pipelines                            19        46      463      427
Gas distribution                             69        80      213      129
Gas pipelines, processing and energy
services                                    185      (325)     571      (68)
Sponsored investments                       140        79      419      268
Corporate                                  (325)     (151)    (558)    (314)
Earnings/(loss) attributable to
common shareholders from continuing
operations                                   88      (271)   1,108      442
Discontinued operations -- gas
pipelines, processing and energy
services                                     --         4       46        4
                                             88      (267)   1,154      446
Earnings/(loss) per common share           0.11     (0.33)    1.39     0.55
Diluted earnings/(loss) per common
share                                      0.10     (0.33)    1.37     0.55

Earnings attributable to common shareholders were $1,154-million, or $1.39 per common share, for the year ended Dec. 31, 2014, compared with $446-million, or 55 cents per common share, for the year ended Dec. 31, 2013. The company has continued to deliver on its investor value proposition and achieved significant earnings growth from operations over the past year, as discussed in adjusted earnings. However, the positive impact of this growth and the comparability of the company's earnings are impacted by a number of unusual, non-recurring or non-operating factors, the most significant of which is changes in unrealized derivative fair value gains and losses. The company has a comprehensive long-term economic hedging program to mitigate interest rate, foreign exchange and commodity price exposures. The changes in unrealized mark to market accounting impacts from this program create volatility in short-term earnings, but the company believes that over the long term it supports the reliable cash flows and dividend growth upon which its investor value proposition is based. Earnings for 2014 were also negatively impacted by the tax effect of a transfer of assets between entities under common control of Enbridge. The intercompany gain realized as a result of the transfer has been eliminated for accounting purposes. However, as the transaction involved the sale of partnership units, all tax consequences have remained in consolidated earnings and resulted in a charge of $157-million in 2014.

Also impacting the comparability of earnings year over year were costs and related insurance recoveries associated with the line 6B crude oil release. Earnings for the years ended Dec. 31, 2014, and 2013 included EEP's cost estimates relating to the line 6B crude oil release of $86-million (U.S.) ($12-million (U.S.) after tax attributable to Enbridge) and $302-million (U.S.) ($44-million (U.S.) after tax attributable to Enbridge), respectively. For the year ended Dec. 31, 2013, EEP recognized insurance recoveries of $42-million (U.S.) ($6-million (U.S.) after tax attributable to Enbridge) related to the line 6B crude oil release. Within liquids pipelines, 2014 and 2013 earnings reflected remediation and long-term stabilization costs of approximately $4-million and $56-million after tax and before insurance recoveries, respectively, related to the line 37 crude oil release that occurred in June, 2013. In 2014, Enbridge recognized insurance recoveries of $8-million after tax related to the line 37 crude oil release.

Other significant items impacting the comparability of the company's year-over-year earnings were a $57-million after-tax gain recognized on the disposal of non-core assets within Enbridge offshore pipelines, as well as a $14-million after-tax gain on the sale of an alternative and emerging technologies investment within the corporate segment. These transactions were recognized in 2014.

Finally, the company's 2013 earnings reflected certain out of period adjustments that also impact the comparability of earnings between years. The out of period adjustments included a non-cash adjustment of $37-million after tax to defer revenues associated with makeup rights earned under certain long-term take or pay contracts within regional oil sands system. Also in regional oil sands system, there was an out of period adjustment of $31-million after tax related to the recovery of income taxes under a long-term contract, partially offset by a related correction to deferred income tax expense. In gas distribution, an out of period adjustment of $56-million after tax was recognized, reflecting an increase to gas transportation costs which had incorrectly been deferred.

Earnings attributable to common shareholders for the three months ended Dec. 31, 2014, were $88-million, or 11 cents per common share, compared with a loss of $267-million, or a loss of 33 cents per common share, for the three months ended Dec. 31, 2013. Fourth quarter performance drivers were largely consistent with year to date trends, and continued to be impacted by changes in unrealized fair value derivative, and foreign exchange gains and losses. Aside from the operating factors discussed in adjusted earnings, factors unique to the fourth quarter of 2014 included the impact of the tax effect associated with the transfer of assets between entities under common control of Enbridge, as noted above. Finally, the fourth quarter of 2014 included a $14-million after-tax gain recognized on the disposal of non-core assets within offshore and leak insurance recoveries recognized from the June, 2013, line 37 crude oil release.

Non-GAAP (generally accepted accounting principles) measures

This news release contains references to adjusted earnings/loss which represent earnings or loss attributable to common shareholders adjusted for unusual, non-recurring or non-operating factors on both a consolidated and segmented basis. These factors, referred to as adjusting items, are reconciled and discussed in the financial results sections for the affected business segments. Adjusting items referred to as changes in unrealized derivative fair value gains or loss are presented net of amounts realized on the settlement of derivative contracts during the applicable period. Management believes the presentation of adjusted earnings/loss conveys useful information to investors and shareholders, as it provides increased transparency and predictive value. Management uses adjusted earnings/loss to set targets, including setting the company's dividend payout target, and to assess performance of the company. Adjusted earnings/loss and adjusted earnings/loss for each of the segments are not measures that have a standardized meaning prescribed by accounting principles generally accepted in the U.S. and are not considered GAAP measures; therefore, these measures may not be comparable with similar measures presented by other issuers.

Adjusted earnings for the year ended Dec. 31, 2014, were $1,574-million, or $1.90 per common share, compared with $1,434-million, or $1.78 per common share, for the year ended Dec. 31, 2013. The adjusted earnings growth was a reflection of the strength of Enbridge's existing asset portfolio, combined with the successful execution of its large growth capital program, which saw a number of new assets placed into service.

The combination of strong core assets and the successful execution of the growth capital program were particularly evident in the company's liquids pipelines and sponsored investments segments, and were significant drivers of the company's overall year-over-year adjusted earnings growth. Within liquids pipelines, Canadian mainline delivered a second consecutive year of adjusted earnings growth largely as a result of higher throughput from growing crude oil supply from Western Canada and higher downstream refinery demand, as well as successful efforts by the company to optimize capacity and throughput, and to enhance scheduling efficiency with shippers.

New liquids pipelines assets placed into service, including the Norealis pipeline, contributed to regional oil sands system adjusted earnings growth. In the fourth quarter of 2014, the company placed into service Flanagan South and Seaway pipeline twin. The two projects are key components of the company's Gulf Coast access program, which provides connectivity for producers in Western Canada and the Bakken to the U.S. Gulf Coast refining hub. Both of the projects provided incremental earnings for the company in the fourth quarter of 2014 and are expected to have a more significant impact on adjusted earnings growth in 2015.

Enbridge's sponsored vehicles, EEP and the fund, also contributed positively to adjusted earnings growth. EEP adjusted earnings reflected increased contributions from its liquids business due to new assets placed into service during 2013 and 2014, combined with higher throughput and tolls on its major liquids pipelines. New assets placed into service include the replacement and expansion of line 6B as part of Enbridge and EEP's eastern access program. Enbridge also benefited through its 75-per-cent interest in the U.S. portion of the eastern access expansion projects held through EELP. Within EEP's natural gas and natural gas liquids (NGL) businesses, which it holds directly and indirectly through its partially owned subsidiary, MEP, lower volumes had a negative impact on adjusted earnings. Within the fund, adjusted earnings growth reflected the benefit of an increased asset base that resulted from Enbridge's asset drop-downs that occurred in 2011 and 2012, and most recently in the fourth quarter of 2014.

Gas pipelines, processing and energy services 2014 adjusted earnings decreased compared with the previous year, due in large part to market factors impacting the company's energy services businesses and Aux Sable facilities. Narrowing location spreads and less favourable conditions in certain markets accessed by committed transportation capacity, combined with unrecovered demand charges, resulted in lower adjusted earnings for energy services following a very strong 2013 fiscal year. Aux Sable adjusted earnings decreased in 2014, and reflected lower fractionation margins and lower volumes at its upstream processing plants.

A key element of Enbridge's strategy is to secure the longer-term future through developing new platforms for growth and diversification. Examples of diversification initiatives that drove year-over-year growth in adjusted earnings included the company's investment in Canadian mid-stream assets, being the Cabin gas plant, and the Pipestone and Sexsmith gathering systems, as well as Enbridge's continued investment in renewable energy assets through the acquisition of new wind farms and additional interests in existing wind farm assets that it owns with others.

The company's 2014 adjusted earnings were impacted by higher preference share dividends in its corporate segment, as well as higher interest expense across various business segments reflecting incremental preference share and debt financing incurred to finance its growth capital program.

Adjusted earnings were $409-million, or 49 cents per common share, for the three months ended Dec. 31, 2014, compared with $362-million, or 44 cents per common share, for the three months ended Dec. 31, 2013. With respect to the fourth quarter of 2014, many of the annual trends discussed above were also the factors in driving adjusted earnings growth over the fourth quarter of 2013. In liquids pipelines, higher throughput on Canadian mainline and new assets placed into service across the segment provided a favourable uplift to 2014 fourth quarter adjusted earnings. However, this growth was more than offset by lower quarter-over-quarter toll on Canadian mainline. In the fourth quarter of 2013, regional oil sands system included a favourable adjustment related to a reduction in third party revenue sharing with the founding shipper on the Athabasca pipeline. Although this adjustment had no impact on full-year 2013 adjusted earnings, it resulted in higher adjusted earnings in the fourth quarter of 2013 compared with the equivalent 2014 period. Excluding the impact of this 2013 adjustment, regional oil sands system adjusted earnings were comparable between the fourth quarter periods.

Energy services earnings for the fourth quarter were higher than the comparable period in 2013, as wider location and crude grade differentials enabled it to capture more profitable margin and tank management arbitrage opportunities, which helped to partially offset the decrease in adjusted earnings during the first nine months of 2014 due to narrowing location spreads and less favourable conditions in certain markets accessed by committed transportation capacity, combined with unrecovered demand charges.

                          LIQUIDS PIPELINES
                       (in millions of dollars)

                                       Three months ended        Year ended
                                                  Dec. 31,          Dec. 31,
                                           2014      2013     2014     2013

Canadian mainline                           100       119      500      460
Regional oil sands system                    47        55      181      170
Seaway and Flanagan South pipelines          35        10       74       48
Southern Lights pipeline                     12        13       49       49
Spearhead pipeline                            4         6       31       31
Feeder pipelines and other                    1         2       23       12
Adjusted earnings                           199       205      858      770
Canadian mainline -- changes in
unrealized derivative fair value (loss)    (178)     (143)    (370)    (268)
Canadian mainline -- line 9B costs
incurred during reversal                     (2)       --       (8)      --
Regional oil sands system -- makeup
rights adjustment                             1       (13)       6      (13)
Regional oil sands system -- leak
remediation and long-term pipeline
stabilization costs                          --        (3)      (4)     (56)
Regional oil sands system -- leak
insurance recoveries                          4        --        8       --
Regional oil sands system -- makeup
rights out-of-period adjustment              --        --       --      (37)
Regional oil sands system -- long-term
contractual recovery out-of-period
adjustment, net                              --        --       --       31
Seaway and Flanagan South pipelines --
makeup rights                                          --                --
adjustment                                  (14)       --      (25)      --
Southern Lights pipeline -- changes in
unrealized derivative fair value
gains                                         9        --       --       --
Spearhead pipeline -- changes in
unrealized derivative fair gains              1        --        1       --
Spearhead pipeline -- makeup rights
adjustment                                    1        --       --       --
Feeder pipelines and other -- makeup
rights adjustment                            --        --        3       --
Feeder pipelines and other -- project 
development costs                            (2)       --       (6)      --
Earnings attributable to common
shareholders                                 19        46      463      427

  • Canadian mainline adjusted earnings reflected higher throughput with several factors contributing to the increase, including increased oil sands production, strong refinery demand in the midwest market partly due to a start-up of a midwest refinery's conversion to heavy oil processing in the second quarter of 2014, and successful efforts by the company to optimize capacity and throughput, and to enhance scheduling efficiency with shippers. Other positive contributors to adjusted earnings included higher terminalling revenues, lower operating and administrative costs, and lower income tax expense, which reflected current income taxes only and was lower due to higher available tax deductions;
  • Partially offsetting the positive impacts noted above was a lower year-over-year average Canadian mainline international joint tariff (IJT) residual benchmark toll, with the impact of lower tolls especially prominent in the fourth quarter of 2014. Changes in the Canadian mainline IJT residual benchmark toll are inversely related to the Lakehead system toll which, on average, was higher throughout 2014 due to the recovery of incremental costs associated with EEP's growth projects. In the fourth quarter of 2014, the Canadian mainline IJT residual benchmark toll was $1.53 (U.S.) per barrel compared with $1.80 (U.S.) per barrel in the equivalent period of 2013. The decrease in the toll was a key contributor in lower adjusted earnings in the fourth quarter of 2014 compared with the same period of 2013. Also negatively impacting adjusted earnings were higher power costs associated with incremental throughput as well as higher depreciation from an increased asset base. Finally, Canadian mainline adjusted earnings for 2014 were impacted by the absence of revenues from line 9B which was idled in late 2013, and is being reversed and expanded as part of the company's eastern access initiative;
  • Regional oil sands system adjusted earnings growth was primarily driven by contributions from the Norealis pipeline which was completed in April, 2014, higher throughput on the Athabasca pipeline and higher capital expansion fee revenue from the Waupisoo pipeline. Partially offsetting the increase in adjusted earnings were higher depreciation expense from a larger asset base, and higher operating and administrative, interest and tax expenses from increased operational activities. In the fourth quarter of 2013, regional oil sands system included a favourable adjustment related to a reduction in third party revenue sharing with the founding shipper on the Athabasca pipeline. Although this adjustment had no impact on full-year 2013 adjusted earnings, it resulted in higher adjusted earnings in the fourth quarter of 2013 compared with the equivalent 2014 period. Excluding the impact of this 2013 adjustment, regional oil sands system adjusted earnings were comparable between the fourth quarter periods;
  • Seaway and Flanagan South pipelines adjusted earnings for the full-year and fourth quarter of 2014 reflected the incremental earnings associated with first oil received on Flanagan South and Seaway pipeline twin in December, 2014. Also positively impacting adjusted earnings were higher average tolls on Seaway pipeline. Partially offsetting the increased adjusted earnings were higher operating expense and financing costs from an increased asset base;
  • Southern Lights pipeline adjusted earnings were comparable between the two fiscal years; however, due to offsetting factors. Higher recovery of negotiated depreciation rates in 2014 transportation tolls were offset by higher interest expense associated with the issuance of Class A units to the fund;
  • Spearhead pipeline adjusted earnings for both the full year and fourth quarter of 2014 reflected higher throughput and tolls, as well as lower pipeline integrity expenditures that were more prominent in 2013. These positive factors were offset by incremental power costs associated with higher throughput and by higher administrative expenses;
  • The increase in feeder pipelines and other adjusted earnings for 2014 compared with 2013 reflected higher tolls and throughput on the Toledo pipeline, incremental earnings from the Eddystone rail project completed in April, 2014, higher tankage revenue and lower business development costs not eligible for capitalization. Partially offsetting these increases in adjusted earnings were lower average tolls on the Olympic pipeline. The fourth quarter of 2014 reflected similar annual trends; however, Toledo pipeline earnings were lower due to higher property taxes and higher business development costs not eligible for capitalization.

Liquids pipelines earnings were impacted by the following adjusting items:

  • Canadian mainline earnings/loss for each period reflected changes in unrealized fair value losses on derivative financial instruments used to manage risk exposures inherent within the competitive tolling settlement, namely foreign exchange, power cost variability and allowance oil commodity prices;
  • Canadian mainline earnings/loss for 2014 included depreciation and interest expenses charged to line 9B while it was idled and undergoing a reversal as part of the company's eastern access initiative;
  • Regional oil sands system earnings for each period included a non-cash adjustment to defer revenues associated with makeup rights earned under certain long-term take or pay contracts (a makeup rights adjustment);
  • Regional oil sands system earnings for 2014 and 2013 included charges, before insurance recoveries, related to the line 37 crude oil release, which occurred in June, 2013;
  • Regional oil sands system earnings for 2014 included insurance recoveries associated with the line 37 crude oil release, which occurred in June, 2013;
  • Regional oil sands system earnings for 2013 included an out-of-period makeup rights adjustment;
  • Regional oil sands system earnings for 2013 included an out-of-period, non-cash adjustment to correct deferred income tax expense and to correct the rate at which deemed taxes are recovered under a long-term contract;
  • Seaway and Flanagan South pipelines earnings for 2014 included a makeup rights adjustment;
  • Southern Lights pipeline earnings for the fourth quarter of 2014 included an unrealized fair value gain on derivative financial instruments;
  • Spearhead pipeline earnings for 2014 included an unrealized fair value gain on derivative financial instruments;
  • Spearhead pipeline earnings for the fourth quarter of 2014 included a makeup rights adjustment;
  • Feeder pipelines and other earnings for 2014 included a makeup rights adjustment;
  • Feeder pipelines and other earnings for 2014 included certain business development costs related to the Northern Gateway project that are anticipated to be recovered over the life of the project.

                            GAS DISTRIBUTION
                        (in millions of dollars)

                                        Three months ended       Year ended
                                                   Dec. 31,         Dec. 31,
                                            2014      2013     2014    2013

Enbridge Gas Distribution Inc.                58        59      158     156
Other gas distribution and storage            10         8       19      20
Adjusted earnings                             68        67      177     176
EGD -- colder than normal weather              1        13       36       9
EGD -- gas transportation costs
out-of-period adjustment                      --        --       --     (56)
Earnings attributable to common
shareholders                                  69        80      213     129

  • Enbridge Gas Distributions operating results were largely comparable both for the full-year and fourth quarter of 2014 with the equivalent 2013 periods. Enbridge Gas Distributions adjusted earnings reflected the impact of the Ontario Energy Board (OEB) decision on Enbridge Gas Distributions' customized incentive regulation plan, which was approved with modifications by the OEB in July, 2014. Enbridge Gas Distributions operated the first half of 2014 under OEB-approved interim distribution rates. On Aug. 22, 2014, an OEB rate order under the customized incentive regulation plan approved the final rates with an effective date of Jan. 1, 2014. Positively impacting adjusted earnings were customer growth, lower employee-related and other costs, and the impact of the approved customized incentive regulation plan. The customized incentive regulation plan approved a new approach for determining depreciation, and future removal and site restoration reserves, which resulted in lower depreciation expense. These positive effects were partially offset by reduced rates and the resumption of the earnings sharing mechanism under the customized incentive regulation plan, as well as lower shared savings mechanism revenues;
  • Other gas distribution and storage earnings for the full year included a loss from Enbridge Gas New Brunswick Inc. related to a contract, which expired in October, 2014, to sell natural gas to the Province of New Brunswick. Due to an abnormally cold winter in the first quarter of 2014, costs associated with the fulfilment of the contract were higher than the revenues received. Higher distribution volumes and higher rates that became effective in May, 2014, partially offset the decreased earnings in Enbridge Gas New Brunswick and were the key driver for higher 2014 fourth-quarter earnings in Enbridge Gas New Brunswick.

Gas distribution earnings were impacted by the following adjusting items:

  • Enbridge Gas Distributions earnings for each period were adjusted to reflect the impact of weather;
  • Enbridge Gas Distributions earnings for 2013 reflected an out-of-period correction to gas transportation costs that had previously been deferred.

               GAS PIPELINES, PROCESSING AND ENERGY SERVICES
                        (in millions of dollars)

                                       Three months ended        Year ended
                                                  Dec. 31,          Dec. 31,
                                           2014      2013     2014     2013

Aux Sable                                     8        17       28       49
Energy services                               8       (19)      35       75
Alliance pipeline U.S.                        5        12       41       43
Vector pipeline                               3         4       15       22
Canadian mid-stream                           6         3       23       12
Enbridge offshore pipelines                   1         2       (2)      (2)
Other                                        (1)       (2)      (4)       4
Adjusted earnings                            30        17      136      203
Energy services -- changes in
unrealized derivative fair value
gains/(loss)                                138      (337)     424     (206)
Offshore -- gain on sale of non-core
assets                                       14        --       57       --
Other -- changes in unrealized
derivative fair value gains/(loss)            3        (1)      --      (61)
Earnings/(loss) attributable to common
shareholders                                185      (321)     617      (64)

  • Aux Sable earnings decreased both for the full year and the fourth quarter of 2014 primarily due to lower fractionation margins which decreased contributions from the upside sharing mechanism, partially offset by an increase in propane volumes produced at the Channahon plant. Lower volumes at upstream processing plants and higher administrative expense also had a negative impact on Aux Sable earnings;
  • Energy services adjusted earnings decreased for the full year due to narrowing location spreads and less favourable conditions in certain markets accessed by committed transportation capacity, combined with associated unrecovered demand charges. Additionally, 2014 adjusted earnings reflected losses realized in the first quarter of 2014 on certain financial contracts intended to hedge the value of committed transportation capacity, but which were not effective in doing so. During the second and fourth quarters of 2014, the company closed out a forward component of these derivative contracts which had been determined to be no longer effective. Partially offsetting the decrease in adjusted earnings were more favourable conditions in certain markets in the fourth quarter of 2014 that gave rise to wider location and crude grade differentials, and enabled energy services to capture more profitable margin and tank management arbitrage opportunities. Due in large part to the continued positive effects of these arbitrage opportunities, energy services 2014 fourth-quarter adjusted earnings increased compared with the equivalent 2013 period, which helped to partially offset the decrease in adjusted earnings experienced during the first nine months of the year. Also positively contributing to adjusted earnings were favourable natural gas location differentials caused by abnormal winter weather conditions during the first quarter of 2014. Energy services adjusted earnings are dependent on market conditions and results achieved in one period may not be indicative of results achieved in future periods;
  • Alliance pipeline U.S. earnings reflected the impact of the transfer of Alliance pipeline U.S. to the fund in November, 2014, and the corresponding absence of earnings. Prior to Nov. 7, 2014, the date of the transfer, Alliance pipeline U.S. earnings increased compared with the equivalent 2013 period, and reflected an increase in depreciation expense recovered in tolls, as well as earnings from the Tioga lateral which was placed into service in September, 2013;
  • The decrease in Vector pipeline earnings reflected lower depreciation expense recognized in tolls, partially offset by increased demand for natural gas due to abnormal winter weather conditions experienced in the first quarter of 2014;
  • Canadian mid-stream earnings increased due to higher fees earned from the company's investments in Cabin, Pipestone and Sexsmith. Pipestone earnings were higher due to incremental earnings from the final phase placed into service in 2014 and higher volumes that exceeded take or pay levels;
  • Offshore adjusted earnings/loss for both the full-year and fourth quarter of 2014 were comparable with the corresponding 2013 periods. Offshore results in the past two years reflected persistent weak gas volumes due to decreased production in the Gulf of Mexico. Offshore adjusted earnings also reflected the absence of earnings from the disposals of certain non-core assets that were finalized in March and November, 2014, respectively. Partially offsetting these negative factors were incremental earnings from the completion of the Jack St. Malo portion of the Walker Ridge gas gathering system in December, 2014, and cost savings achieved from the company's decision not to renew windstorm insurance coverage effective May, 2013. Offshore results are expected to improve with a full year of the Jack St. Malo portion of the Walker Ridge gas gathering system, and the expected 2015 third quarter completion and in service of both the Big Foot gas portion of the Walker Ridge gas gathering system and the Big Foot oil pipeline;
  • Other adjusted earnings decreased for the 2014 full year as a result of lower southbound revenues on the Montana Alberta tie line combined with its higher depreciation expense and financing costs, and higher business development costs not eligible for capitalization. Partially offsetting the decrease in adjusted earnings was the positive impact of new wind farms placed into service over the past two years. Two thousand fourteen fourth quarter adjusted earnings followed a similar trend as the full year; however, the impact of new wind farms placed into service more than offset the lower earnings from the Montana Alberta tie line and higher business development costs not eligible for capitalization.

Gas pipelines, processing and energy services earnings/loss were impacted by the following adjusting items:

  • Energy services earnings/loss for each period reflected changes in unrealized fair value gains and losses related to the revaluation of financial derivatives used to manage the profitability of transportation and storage transactions, and the revaluation of inventory;
  • Energy services adjusted earnings for 2014 excluded a realized loss of $117-million incurred to close out certain forward derivative financial contracts intended to hedge the value of committed physical transportation capacity in certain markets accessed by energy services, but determined to be no longer effective in doing so;
  • Energy services adjusted earnings for 2013 excluded a realized loss of $58-million incurred to close out derivative contracts intended to hedge forecasted energy services transactions which did not occur;
  • Offshore earnings for 2014 included a gain from the disposal of non-core assets;
  • Other earnings/loss for each period reflected changes in unrealized fair value gains and losses on the long-term power price derivative contracts acquired to hedge expected revenues and cash flows from Blackspring Ridge.

                          SPONSORED INVESTMENTS
                        (in millions of dollars)

                                       Three months ended        Year ended
                                                  Dec. 31,          Dec. 31,
                                           2014      2013     2014     2013

Enbridge Energy Partners LP (EEP)            40        46      197      165
Enbridge Energy LP (EELP)                    49        14      107       38
Enbridge Income Fund                         34        29      125      110
Adjusted earnings                           123        89      429      313
EEP -- changes in unrealized derivative
fair value gains/(loss)                      14        (3)       5       (6)
EEP -- leak remediation costs                 5        (9)     (12)     (44)
EEP -- makeup rights adjustment              --        --       (1)      --
EEP -- asset impairment (loss)               (2)       --       (2)      --
EEP -- employee severance costs              (1)       --       (1)      --
EEP -- leak insurance recoveries             --        --       --        6
EEP -- tax rate differences/changes          --        --       --       (3)
EEP -- gain on sale of non-core assets       --         2       --        2
The fund -- changes in unrealized
derivative fair value gains                  --        --        3       --
The fund -- makeup rights adjustment          1        --       --       --
The fund -- drop-down transaction costs      --        --       (2)      --
Earnings attributable to common
shareholders                                140        79      419      268

  • Enbridge Energy Partners adjusted earnings increased for the full year and largely reflected strong performance from its liquids business, as new assets placed into service during 2013 and 2014, combined with higher throughput and tolls on Enbridge Energy Partners' major liquids pipelines, drove higher adjusted earnings. New assets placed into service included the replacement and expansion of line 6B as part of Enbridge and Enbridge Energy Partners' eastern access initiative, as well as the line 6B 75-mile replacement program. Within Enbridge Energy Partners' North Dakota system, the Bakken expansion and access programs, which enhance crude oil gathering capabilities in the Bakken region, have also been a significant contributor to adjusted earnings growth. Positive factors experienced by Canadian mainline as noted earlier also resulted in higher throughput on Enbridge Energy Partners' Lakehead system. Partially offsetting the increase in adjusted earnings in Enbridge Energy Partners' liquids business were incremental power costs associated with higher throughput, higher depreciation expense from an increased asset base, and higher operating and administrative costs primarily associated with a larger work force, partially offset by lower pipeline integrity costs. Within Enbridge Energy Partners' natural gas and NGL businesses, which it holds directly and indirectly through its partially owned subsidiary MEP, lower volumes mainly due to decreased drilling activity had a negative impact on adjusted earnings. Finally, Enbridge Energy Partners' contribution to Enbridge's adjusted earnings reflected higher earnings from Enbridge's May, 2013, investment in preferred units of Enbridge Energy Partners, higher incentive distributions and distributions from Class D units;
  • Enbridge Energy LP earnings reflect its interest in Alberta Clipper, as well as interests in both the eastern access and Lakehead system mainline expansion projects. Higher earnings reflected contributions from assets recently placed into service, most notably the expansion of line 6B from 240,000 barrels per day to 500,000 barrels per day, completed in phases during 2014 as part of the company's eastern access program. Higher earnings from eastern access also reflected a higher surcharge rate due to the Lakehead system filing delay and other true-up adjustments. Also positively impacting earnings were higher tolls on Alberta Clipper;
  • Higher adjusted earnings from the fund for the full year and fourth quarter of 2014 were attributable to the incremental earnings from Enbridge's transfer of natural gas and diluent pipeline interests to the fund in November, 2014, as well as strong performance from the fund's liquids business. Partially offsetting the increase in adjusted earnings were lower wind resources across several of the fund's wind farms and higher interest expense associated with an increase in external debt issued in 2014 to support the acquisition of the natural gas and diluent pipeline interests. Finally, adjusted earnings were also positively impacted by higher preferred unit distributions received from the fund.

Sponsored investments earnings were impacted by the following adjusting items:

  • Earnings from Enbridge Energy Partners for each period included changes in unrealized fair value gains and losses on derivative financial instruments;
  • Earnings from Enbridge Energy Partners for each period included charges related to estimated costs, before insurance recoveries, associated with the line 6B crude oil release;
  • Earnings from Enbridge Energy Partners for 2014 included a makeup rights adjustment;
  • Earnings from Enbridge Energy Partners for 2014 included an asset impairment loss;
  • Earnings from Enbridge Energy Partners for 2014 included unusual employee severance costs triggered by layoffs in Enbridge Energy Partners' natural gas and NGL businesses;
  • Earnings from Enbridge Energy Partners for 2013 included insurance recoveries associated with the line 6B crude oil release;
  • Earnings from Enbridge Energy Partners for 2013 included an out-of-period, non-cash deferred income tax adjustment related to a tax law change;
  • Earnings from Enbridge Energy Partners for 2013 included a gain on sale of non-core assets;
  • Earnings from the fund for 2014 included unrealized fair value gains on derivative financial instruments;
  • Earnings from the fund in the fourth quarter of 2014 included a makeup rights adjustment;
  • Earnings from the fund for 2014 included costs incurred in relation to a transaction to transfer natural gas and diluent pipeline interests to the fund.

                               CORPORATE
                       (in millions of dollars)

                                       Three months ended        Year ended
                                                  Dec. 31,          Dec. 31,
                                           2014      2013     2014     2013

Noverco Inc.                                 21        20       43       54
Other corporate                             (32)      (36)     (69)     (82)
Adjusted (loss)                             (11)      (16)     (26)     (28)
Noverco -- changes in unrealized
derivative fair value gains/(loss)           --        --       (5)       4
Other corporate -- changes in
unrealized derivative fair value (loss)    (151)     (129)    (378)    (306)
Other corporate -- tax on intercompany
gain on sale of asset                      (157)       --     (157)      --
Other corporate -- gain on sale of
investment                                   --        --       14       --
Other corporate -- drop-down
transaction costs                            (6)       --       (6)      --
Other corporate -- foreign tax recovery      --        --       --        4
Other corporate -- impact of tax rate
changes                                      --        --       --       18
Other corporate -- asset impairment
(loss)                                       --        (6)      --       (6)
(Loss) attributable to common
shareholders                               (325)     (151)    (558)    (314)

  • Noverco adjusted earnings included returns on the company's preferred share investment, as well as its equity earnings from Noverco's underlying gas and power distribution investments. Excluding the impact of a small one-time gain on sale of an investment in the first quarter of 2013 and an equity earnings true-up adjustment also recognized in the first quarter of 2013, Noverco adjusted earnings were slightly higher for the year ended Dec. 31, 2014, and reflected stronger operating earnings from Gaz Metro LP, in which Noverco holds an approximate 71-per-cent interest, and higher preferred share dividend income;
  • Other corporate adjusted loss decreased and reflected lower net corporate segment finance costs and lower income taxes, which were partially offset by higher preference share dividends from an increase in the number of preference shares outstanding, and higher operating and administrative costs.

Corporate loss was impacted by the following adjusting items:

  • Noverco earnings for 2014 and 2013 included changes in unrealized fair value gains and losses on derivative financial instruments;
  • Other corporate loss for each period included changes in the unrealized fair value gains and losses on derivative financial instruments primarily related to forward foreign exchange risk management positions;
  • Other corporate loss for 2014 was impacted by tax on an intercompany gain on sale;
  • Other corporate loss for 2014 included transaction costs associated with the proposed Canadian restructuring plan and costs incurred in relation to a transaction to transfer natural gas and diluent pipeline interests to the fund;
  • Other corporate loss for 2013 was reduced by recovery of taxes related to a historical foreign investment;
  • Other corporate loss for 2013 was impacted by tax rate changes;
  • Other corporate loss for 2013 included charges related to asset impairment losses.

Conference call

Enbridge will hold a conference call on Friday, Feb. 20, 2015, at 9 a.m. Eastern Time (7 a.m. Mountain Time) to discuss the 2014 annual results. 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 38886502 followed by the pound key. 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 at toll-free 1-888-843-7419 within North America and outside North America at 1-630-652-3042 (access code 38886502 followed by the pound key) until Feb. 27, 2015.

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

                        OPERATING HIGHLIGHTS

                                       Three months ended        Year ended
                                                  Dec. 31,          Dec. 31,
                                           2014      2013     2014     2013

Liquids pipelines -- average deliveries
(thousands of barrels per day)
Canadian mainline (1)                     2,066     1,827    1,995    1,737
Regional oil sands system (2)               725       666      703      533
Spearhead pipeline                          173       168      186      172
Gas distribution -- Enbridge Gas
Distribution 
Volumes (billions of cubic feet)            129       135      461      434
Number of active customers
(thousands)(3)                            2,098     2,065    2,098    2,065
Heating degree days (4)
Actual                                    1,261     1,368    4,044    3,746
Forecast based on normal weather          1,218     1,248    3,517    3,668
Gas pipelines, processing and energy
services
Average throughput volume (millions
of cubic feet per day)
Vector pipeline                           1,370     1,446    1,418    1,494
Enbridge offshore pipelines               1,410     1,388    1,466    1,412

Notes:
(1) Canadian mainline includes deliveries ex-Gretna, Man., which is made
up of U.S. and Eastern Canada deliveries originating from
Western Canada.
(2) Volumes are for the Athabasca mainline and Waupisoo pipeline, and exclude
laterals on the regional oil sands system.
(3) Number of active customers is the number of natural gas-consuming EGD
customers at the end of the period.
(4) Heating degree days is a measure of coldness that is indicative of
volumetric requirements for natural gas utilized for heating purposes in
EGD's franchise area. It is calculated by accumulating, for the fiscal
period, the total number of degrees each day by which the daily mean
temperature falls below 18 degrees Celsius. The figures given are those
accumulated in the Greater Toronto Area.

                 CONSOLIDATED STATEMENTS OF EARNINGS
           (in millions of dollars except per-share amounts)

                                       Three months ended        Year ended
                                                  Dec. 31,          Dec. 31,
                                           2014      2013     2014     2013

Revenues
Commodity sales                           6,192     6,939   28,281   26,039
Gas distribution sales                      835       710    2,853    2,265
Transportation and other services         1,770       644    6,507    4,614
                                          8,797     8,293   37,641   32,918
Expenses
Commodity costs                           5,926     6,773   27,504   25,222
Gas distribution costs                      647       490    1,979    1,585
Operating and administrative                917       788    3,281    3,014
Depreciation and amortization               426       362    1,577    1,370
Environmental costs, net of
recoveries                                   (3)       82      100      362
                                          7,913     8,495   34,441   31,553
                                            884      (202)   3,200    1,365
Income from equity investments              117        86      368      330
Other expense                              (123)      (82)    (266)    (135)
Interest expense                           (313)     (265)  (1,129)    (947)
                                            565      (463)   2,173      613
Income taxes recovery/(expense)            (249)      216     (611)    (123)
Earnings/(loss) from continuing
operations                                  316      (247)   1,562      490
Discontinued operations
Earnings from discontinued
operations before income taxes               --         6       73        6
Income taxes from discontinued
operations                                   --        (2)     (27)      (2)
Earnings from discontinued operations        --         4       46        4
Earnings/(loss)                             316      (243)   1,608      494
(Earnings)/loss attributable to
non-controlling interests and
redeemable non-controlling interests       (157)       28     (203)     135
Earnings/(loss) attributable to
Enbridge                                    159      (215)   1,405      629
Preference share dividends                  (71)      (52)    (251)    (183)
Earnings/(loss) attributable to
Enbridge common shareholders                 88      (267)   1,154      446
Earnings/(loss) from continuing
operations                                   88      (271)   1,108      442
Earnings from discontinued
operations, net of taxes                     --         4       46        4
                                             88      (267)   1,154      446
Earnings/(loss) per common share
attributable to Enbridge common
shareholders
Continuing operations                      0.11     (0.33)    1.34     0.55
Discontinued operations                      --        --     0.05       --
                                           0.11     (0.33)    1.39     0.55
Diluted earnings/(loss) per common
share attributable to Enbridge 
common shareholders
Continuing operations                      0.10     (0.33)    1.32     0.55
Discontinued operations                      --        --     0.05       --
                                           0.10     (0.33)    1.37     0.55

We seek Safe Harbor.

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