Content
Corporate
Corporate includes new business development activities and investing and financing activities, including general corporate investments and financing costs not allocated to the business segments. This segment also includes new platforms currently being pursued by the Company including renewable energy (wind and solar), CO2 transportation and sequestration and Pathfinding initiatives. Pathfinding initiatives include pursuing investment in smaller start-up entities where that investment will enable the development of promising new technologies that complement the Company's core operations.
(millions of Canadian dollars) |
2008 | 2007 | 2006 | ||||||
| Adjusted Corporate Costs | (57.8 | ) | (59.2 | ) | (77.7 | ) | |||
| Gain on sale of corporate aircraft | 4.9 | – | – | ||||||
| U.S. pipeline tax decision | (32.2 | ) | – | – | |||||
| Unrealized derivative fair value gains | 26.2 | – | – | ||||||
| Asset impairment loss | (17.3 | ) | – | – | |||||
| Impact of tax changes | – | 31.1 | 14.0 | ||||||
| Costs | (76.2 | ) | (28.1 | ) | (63.7 | ) | |||
Corporate costs before adjusting items were $57.8 million for the year ended December 31, 2008, comparable with $59.2 million for the year ended December 31, 2007.
2008 corporate costs were impacted by the following non-operating adjusting items:
- A $4.9 million gain on the sale of a corporate aircraft.
- An unfavourable court decision related to the tax basis of previously owned U.S. pipeline assets which resulted in the recognition of a $32.2 million income tax expense.
- Unrealized fair value gain on derivative financial instruments, resulting from forward risk management positions to minimize the volatility of future U.S. dollar earnings across the Company.
- Asset impairment loss related to the write-off of goodwill related to the Company's Ontario wind power assets as well as a write-down of the Company's investment in NSolv, a technology development venture.
Corporate costs before adjusting items were $59.2 million for the year ended December 31, 2007, compared with $77.7 million in 2006. Corporate costs decreased due to lower interest expense resulting from decreased average debt balances throughout 2007 as a result of the equity issuance in the first quarter. As well, expenditures on corporate development activity decreased because of the Company's focus on organic growth. Corporate costs were impacted by the non-operating adjusting item of favorable legislated tax changes in both years.
STRATEGY
In the longer term, developing new business platforms will be important to maintaining growth and diversification within the Company. New platforms currently being pursued include renewable energy (wind and solar), CO2 transportation and sequestration and Pathfinding initiatives. The Company is currently undertaking the following projects:
Ontario Wind Project
Construction of the 190-megawatt Enbridge Ontario Wind Power Project, located in the Municipality of Kincardine on the Eastern shore of Lake Huron in Ontario, was completed in the fourth quarter of 2008. Although turbines were fully available for operation at the end of 2008, staging of turbine operations was implemented to ensure safe and reliable operations for the wind project. As of December 31, 2008, 65 of the 115 wind turbines (56.5%) were operating and reliably delivering power to the grid. The remaining 50 turbines will be phased into service with all turbines targeted to deliver power to the grid by early February 2009. The final capital cost of the project is estimated at $481 million.
Alberta Saline Aquifer Project
The 38-member Alberta Saline Aquifer Project (ASAP) is on track to complete Phase I in Spring 2009. Phase I has identified specific reservoir locations that offer the potential for long term carbon dioxide sequestration and has developed a preliminary design and cost estimate for a carbon dioxide sequestration pilot. Following receipt of regulatory approvals, the ASAP team anticipates that it will begin Phase II, constructing the pilot project, including drilling of the injection and monitoring wells in 2009, with injections of carbon dioxide beginning in 2010. Phase III will involve expanding the pilot project to a large-scale, long-term commercial operation. ASAP, spearheaded by Enbridge, is the largest project of its kind in North America and will play a major role in advancing industry and government's knowledge of carbon dioxide sequestration.
Hybrid Fuel Cell Power Plant
In October 2008, the Company and FuelCell Energy Inc. announced the opening of the world's first hybrid fuel cell power plant. The plant, which will produce 2.2 megawatts of environmentally preferred, ultra-clean electricity, or enough power for approximately 1,700 residences, is also the first multi-megawatt commercial fuel cell to operate in Canada. Support for this $10 million project was provided by both the Canadian and Ontario Governments. The Company, as the exclusive distributor of the hybrid fuel cell technology, will be promoting the technology to other natural gas distribution companies throughout North America.
CAPITAL EXPENDITURES
Capital expenditures in Corporate were $117 million in 2008 (2007 – $159 million). Capital expenditures for 2009 are expected to be $80 million.