8-K

ENBRIDGE INC 8-K Report (Jul 6, 2010)

Filed July 6, 2010For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

This 8-K filing by Enbridge Inc. (ENB) primarily contains a press release from its subsidiary, Enbridge Gas Distribution, announcing approved rate adjustments by the Ontario Energy Board (OEB) effective July 1, 2010. The key takeaway for investors is that typical residential customers who buy both gas supply and transportation from Enbridge Gas Distribution will see an annual decrease in costs of approximately $148, largely due to lower commodity prices. Conversely, customers who purchase their gas supply from a third-party marketer but use Enbridge's transportation services will experience a modest annual increase of about $4. This increase is attributed to higher transportation costs for natural gas sourced from Western Canada and the United States. The filing also reiterates that Enbridge Gas Distribution does not profit from the price of natural gas, passing these costs directly through to consumers.

Key Highlights

  • 1Enbridge Gas Distribution received OEB approval for new rates effective July 1, 2010.
  • 2Typical residential customers buying both supply and transportation from Enbridge Gas Distribution will see an annual cost decrease of ~$148.
  • 3The primary driver for the residential customer cost decrease is lower commodity costs.
  • 4Residential customers using Enbridge's transportation but buying gas from marketers will see a ~$4 annual cost increase.
  • 5The increase for transportation-only customers is due to higher costs for moving natural gas from Western Canada and the US.
  • 6Enbridge Gas Distribution does not earn a profit on the price of natural gas; costs are passed through.
  • 7Enbridge Gas Distribution serves approximately 1.9 million customers across Ontario, New York State, New Brunswick, and southwestern Quebec.

Frequently Asked Questions

The main reason for the rate adjustments is the fluctuation in commodity costs for natural gas. Lower commodity prices led to a decrease for most residential customers, while increased transportation costs influenced the rates for those using only Enbridge's distribution services.

No, not all customers will see a reduction. Typical residential customers who purchase both their natural gas supply and transportation services directly from Enbridge Gas Distribution will experience a decrease in their annual costs. However, customers who purchase their gas supply from a third-party marketer and only use Enbridge for transportation services will see a small annual increase.

No, Enbridge Gas Distribution, a regulated utility, does not earn a profit on the price of natural gas itself. The cost of natural gas is passed directly through to customers without any mark-up. Any difference between the forecasted and actual gas prices is reconciled through a 'Cost Adjustment' mechanism.

These specific rate adjustments primarily affect the regulated gas distribution segment and are designed to reflect the cost of service. While they impact customer bills and the operational costs of the distribution utility, the direct profit impact on the parent company, Enbridge Inc., is typically managed through regulated returns on infrastructure assets rather than commodity price fluctuations.