Content
Gas Distribution & Services
Gas Distribution and Services consists of gas utility operations which serve residential, commercial, industrial and transportation customers, primarily in central and eastern Ontario, the most significant being EGD. It also includes natural gas distribution activities in Quebec, New Brunswick and New York State, the Company's investment in Aux Sable (a natural gas fractionation and extraction business) and the Company's Energy Services businesses.
Earnings
(millions of Canadian dollars) |
2008 | 2007 | 2006 | ||||||
| Enbridge Gas Distribution | 123.3 | 114.6 | 98.7 | ||||||
| Noverco | 20.4 | 18.6 | 18.7 | ||||||
| Enbridge Gas New Brunswick (EGNB) | 14.7 | 12.1 | 9.8 | ||||||
| Other Gas Distribution | 7.6 | 7.3 | 6.5 | ||||||
| Energy Services | 16.8 | 6.0 | 10.1 | ||||||
| Aux Sable | 28.3 | 10.6 | 25.8 | ||||||
| Other | (6.8 | ) | (0.3 | ) | 8.1 | ||||
| Adjusted Earnings | 204.3 | 168.9 | 177.7 | ||||||
| EGD – colder/(warmer) than normal weather | 23.1 | 14.2 | (36.9 | ) | |||||
| EGD – provision for one-time charges | (2.8 | ) | – | – | |||||
| EGD/Noverco – impact of tax changes | – | 26.8 | 28.9 | ||||||
| Noverco – dilution gain | – | – | 4.0 | ||||||
| Energy Services – unrealized derivative fair value gains/(losses) | 22.6 | (2.4 | ) | – | |||||
| Energy Services – SemGroup and Lehman bankruptcies | (5.7 | ) | – | – | |||||
| Aux Sable – unrealized derivative fair value gains/(losses) | 54.5 | (28.1 | ) | – | |||||
| Other – gain on sale of investment in Inuvik Gas | 4.6 | – | – | ||||||
| Earnings | 300.6 | 179.4 | 173.7 | ||||||
Adjusted earnings were $204.3 million for the year ended December 31, 2008 compared with $168.9 million for the year ended December 31, 2007. Earnings increased primarily due to customer growth and higher ancillary revenues at EGD, customer growth at EGNB and improved financial performance at Energy Services and Aux Sable.
Adjusted earnings were $168.9 million for the year ended December 31, 2007 compared with $177.7 million for the year ended December 31, 2006. Decreased earnings were due to lower contributions from Aux Sable and the Energy Services businesses, partially offset by customer growth and higher operating margins at EGD.
Gas Distribution and Services earnings were impacted by the following non-operating adjusting items:
- EGD's earnings included a $2.8 million provision for one-time charges to better align certain operating practices with its strategy under incentive regulation (IR).
- Energy Services earnings reflected unrealized fair value gains in 2008 and losses in 2007 on derivative instruments, resulting from forward risk management positions used to "lock-in" the profitability of forward physical transportation and storage transactions at Tidal Energy.
- Energy Services earnings for 2008 also included a $5.7 million write-off as a result of bankruptcies by SemGroup and Lehman Brothers. The full amount of all such receivables has been provided for; however, some potential for partial recovery exists.
- Aux Sable year-to-date earnings reflected unrealized fair value gains in 2008 and losses in 2007 on derivative financial instruments used to mitigate the uncertainty of the Company's 2009 share of the contingent upside sharing mechanism which allows Aux Sable to share in natural gas processing margins in excess of certain thresholds. Similar to Energy Services, these non-cash gains arose due to the revaluation of financial derivatives used to "lock in" the profitability of forward contracted prices.
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Gas Distribution and Services Adjusted Earnings |
Earnings |
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Revenues for the year ended December 31, 2008 were $14,279.6 million compared with $10,217.9 million for the year ended December 31, 2007. The increase in revenues was due to higher average commodity prices in Energy Services and EGD as well as unrealized derivative gains on risk managed forward positions.
Revenues for the year ended December 31, 2007 were $10,217.9 million compared with $8,973.2 million for the year ended December 31, 2006. The increase in revenues was a result of a significant increase in volumes transacted by Energy Services and, to a lesser extent, an increase in commodity prices for those transactions.