Enbridge, Inc. Q2 FY2024 earnings call

• Mid-year update on strategic priorities: Strong execution on financial, operational, and growth priorities. Completed U.S. Gas Utilities acquisitions with two closed representing ~80% of annualized EBITDA, PSNC on track to close in Q3. - Utilities acquisitions: Ahead on $19B acquisition plan, with East Ohio Gas closed early, Questar and Wexpro closed in June, and North Carolina on track. - Base business performance: High utilization across franchises, liquids volumes strong, gas transmission and distribution segments making progress on optimizations and expansions. - Growth projects: Sanctioned Orange Grove Solar, reached FID for Blackcomb pipeline, expanded Gray Oak pipeline.

Liquids Pipelines: Achieved record volumes on the mainline and Ingleside export facility in Q2. Sanctioned an expansion of the Gray Oak pipeline. Absolute volumes: Mainline transported 3.1 million barrels per day in Q2. Revenue contribution: Integrated within the overall company performance. Gas Transmission and Midstream: Optimized Texas Eastern pipeline with FERC approval of customer settlement. Closed interest in Whistler JV, reached FID for Blackcomb pipeline to provide natural gas egress, and Venice Extension on track. Gas Distribution and Storage: Closed Questar and Wexpro acquisitions, with North Carolina expected to close in Q3. Utah has 1.2 million customers and population growth driving demand, Ontario has ~4 million customers with growth and modernization, Ohio has 1.2 million customers with rate case ongoing. Renewable Power: Sanctioned Orange Grove Solar project in Texas, progressing with Seven Stars wind project in Saskatchewan, and Fécamp operational supplying low-carbon electricity.

• Raised 2024 EBITDA range to $17.7 billion to $18.3 billion, assuming PSNC closes mid-Q3. - Maintained DCF guidance range of $5.40 to $5.80 per share. - Reaffirmed near-term financial outlook of 7% to 9% EBITDA growth through 2026, 4% to 6% EPS growth, and ~3% BCF growth per share.

• Wildfires in Northern Alberta and British Columbia: Committed to supporting partners and communities, with safety as top priority though no current impact on operations noted.

Q: Good morning everyone, thanks for taking my call or my questions. Maybe to start off with the TEPCO rate case. Can you walk us through kind of what the key drivers of the change there are, whether there were kind of some key roadblocks there and as well as kind of what you think it does mean in terms of an EBITDA or income uplift in 2025 and 2026?

A: Thanks, Rob, it's Cynthia. So the settlement, as you know, basically is a black box prepackaged settlement. So there's a whole bunch of items that came into consideration. So the team, our team at Enbridge looks at what capital we've spent, what our operating costs are, forecasting that out into the future. We also look at what our rates are going to be impacted, have lots of that kind of conversation. So a lot of stuff goes into determining what those components are. And we don't specifically identify any one thing. But what it does allow us to do is to continue to earn that fair return into the future. And basically, as was noted, that's a 6% increase as of October of this year and then a further 2.75% in January of 2026. So with that rate all in, basically, we're in a position to continue to get a fair return. The next time we'll go back, we have a moratorium up until October of 2027, but a comeback by Q3 of 2030. So we're just well positioned to continue to earn a strong return on those assets.

Q: Hey, good morning guys. Just a follow-up on the utilities here. What drove the decision to use the ATM versus asset sales and understanding that you're fully funded for the acquisitions, what do you expect in terms of any asset sales going forward given that you have that ongoing capital recycling program?

A: Thanks for the question on that. Here's how we looked at it. Obviously, we had a super high level of confidence in terms of getting all the utilities closed, even a little faster than we had expected. So with that in mind and the fact that we saw the better economics than what was even in our deal model, we moved quickly, confidently to get all the financing done. So that's done. It may not fit everybody's model, but definitely exceeded the deals economic assumptions that we had. With that behind us, the ATM terminated, it's really about now focusing on the business, get it at a great price, and how do we keep moving this transaction forward and combine it with the rest of the assets. And as you would recognize and definitely didn't know if it would work, even with all that, financing in the way in which we did it, we're going to be well within our guidance range. And as we just talked about, the base business would even look like it's better than that. So a great setup on that front. Asset sales still very much part of what we look at. Let's not forget, we did a large asset sale earlier this year with Alliance and Aux Sable, but we're always looking at stuff. I wouldn't say there's anything near term that we have to do. And I think that's the key component here. Balance sheet in good position, financing done, businesses all running well. If we do anything significant on the asset sale side, it will be solely as a result of getting a great price on something.