8-K

ENBRIDGE INC 8-K Report (Jul 5, 2016)

Filed July 5, 2016For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

This 8-K filing from Enbridge Inc. (ENB) announces an approved rate adjustment for Enbridge Gas Distribution Inc. by the Ontario Energy Board (OEB), effective July 1, 2016. The primary impact for investors to note is a projected decrease in typical residential customer bills by approximately seven percent, or $63 annually, bringing the total bill to about $798. This reduction is driven by lower Cost Adjustment charges, which reflect a reconciliation of prior period costs, partially offset by higher North American natural gas commodity prices and changes in Enbridge's 2016 distribution rates. A minor, one-time charge of $3 for the "Delivery to You" category will appear on bills for July, August, and September to reconcile interim rates with final approved rates.

Key Highlights

  • 1Ontario Energy Board (OEB) approved new rates for Enbridge Gas Distribution effective July 1, 2016.
  • 2Typical residential customer bills are expected to decrease by approximately 7% ($63 annually).
  • 3The bill decrease is primarily due to lower Cost Adjustment charges, reflecting prior period cost variances.
  • 4Higher natural gas commodity prices and changes in 2016 distribution rates partially offset the decrease.
  • 5A small, one-time reconciliation charge of $3 per customer will be applied to July, August, and September bills.
  • 6Enbridge emphasizes that it does not earn a profit on the price of natural gas, which is passed through directly to customers.
  • 7The company highlighted the ongoing cost-effectiveness of natural gas for heating compared to electricity and oil in Ontario.

Frequently Asked Questions

The main reason for the projected decrease in typical residential customer bills is a reduction in the Cost Adjustment charge. This charge accounts for the difference between forecasted and actual natural gas costs from prior periods. While higher commodity prices and changes in distribution rates partially offset this, the net effect is a bill reduction.

This filing specifically concerns rate adjustments for Enbridge Gas Distribution, which are reviewed and approved by the OEB. Enbridge states that it does not earn a profit on the price of natural gas itself, as these costs are passed through directly to customers. The approved rates are designed to reflect the cost of service and market conditions.

Yes, there is a minor, one-time charge of approximately $3 (about $1 per month) that will be included in the 'Delivery to You' charge on bills for July, August, and September 2016 only. This charge is to reconcile the difference between interim rates and the final approved rates for 2016.

Enbridge highlights that natural gas continues to offer significant value for home and water heating in Ontario. Over the past five years, natural gas has been, on average, over 65% less expensive than electricity and oil for equivalent energy consumption.