8-K

ENBRIDGE INC 8-K Report (Oct 3, 2016)

Filed October 3, 2016For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

This Form 6-K filing by Enbridge Inc. (ENB) reports on an update regarding Enbridge Gas Distribution's rates, approved by the Ontario Energy Board (OEB) and effective October 1, 2016. The primary impact for investors is the adjustment in natural gas rates for typical residential customers in Ontario. The filing indicates an approximate three percent, or $25 per year, increase in total bills for these customers, bringing the annual cost to around $823. This rise is attributed to higher forecasted natural gas commodity prices. While the rate adjustment reflects increased commodity costs, it is partially offset by a "Cost Adjustment" refund mechanism, which reconciles past forecast costs with actual expenses. Additionally, a separate "Rate Adjustment" charge of approximately $21 will be billed in two installments to cover differences between customer payments and actual costs for the 2015 period. The company emphasizes that it does not profit from the commodity price itself, as these costs are passed through directly to customers.

Key Highlights

  • 1Enbridge Gas Distribution received OEB approval for new rates effective October 1, 2016.
  • 2Typical residential customers will see an approximate 3% increase in their annual natural gas bill, amounting to about $25.
  • 3The increase in customer bills is primarily due to higher forecasted North American natural gas commodity prices.
  • 4A "Cost Adjustment" refund partially offsets the rate increase, reflecting a reconciliation of past forecast costs with actual expenses.
  • 5A separate "Rate Adjustment" charge of approximately $21 will be applied in two installments (October and November) for the 2015 period.
  • 6Enbridge reiterates that it does not earn a profit on the price of natural gas; costs are passed through to customers.
  • 7The company highlights the long-term value of natural gas, noting typical annual bills are $390 lower than 10 years ago and significantly less expensive than electricity or oil.

Frequently Asked Questions

For shareholders, the main impact is on the regulated utility segment, Enbridge Gas Distribution. The approved rate adjustments indicate a modest increase in customer bills due to rising commodity prices. While this could influence customer consumption patterns or potentially lead to customer-side assistance program utilization, the core business model allows for cost recovery, mitigating direct profit impact from commodity price volatility. The filing signals ongoing regulatory oversight and rate-setting processes for a key operating subsidiary.

Customer bills are increasing primarily because of higher forecasted natural gas commodity prices in North America. Enbridge Gas Distribution passes these commodity costs directly through to customers without any mark-up. The increase is also influenced by a "Rate Adjustment" charge to reconcile past costs.

No, Enbridge Inc. does not earn a profit on the price of natural gas itself. The company acts as a pass-through entity for commodity costs. Any difference between the forecasted costs and the actual costs incurred is either collected from or returned to customers through a "Cost Adjustment" mechanism.

Yes, Enbridge reminds customers of several options. These include energy efficiency tips available on their website, access to personalized energy consumption data through myEnbridge, and programs like the Low-Income Energy Assistance Program (LEAP) and the Home Winterproofing Program for qualifying customers facing financial difficulties. Customers unable to pay their bills are encouraged to contact Enbridge to arrange payment plans.