Enbridge Inc Q2 FY2024 Earnings Call

Good morning, and welcome to the Enbridge Inc. Second Quarter 2024 Financial Results Conference Call. My name is Rebecca Morley and I’m the Vice President of the Investor Relations team. Joining me this morning are Greg Ebel, President and CEO; Pat Murray, EVP and Chief Financial Officer and the Heads of each of our business units, Colin Gruending, Liquids Pipelines; Cynthia Hansen, Gas Transmission and Midstream; Michele Harradence, Gas Distribution and Storage; and Matthew Akman, Renewable Power. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session for the investment community. Please note that this conference call is being recorded. As per usual, this call is being webcast and I encourage those listening on the phone to follow along with the supporting slides. We'll try to keep the call to roughly one hour and in order to answer as many questions as possible, we will be limiting the questions to one plus a single follow-up, if necessary. We will be prioritizing questions from the investment community. So if you are a member of the media, please direct your inquiries to our communications team, who will be happy to respond. As always, our Investor Relations team will be available following the call for any follow-up questions. On to Slide 2, where I will remind you that we’ll be referring to forward-looking information on today’s presentation and Q&A. By its nature, this information contains forecast assumptions and expectations about future outcomes which are subject to the risks and uncertainties outlined here and discussed more fully in our public disclosure filings. We will also be referring to non-GAAP measures summarized below. And with that, I will turn it over to Greg Ebel.

Well thanks very much Rebecca and good morning everyone. We appreciate you joining us on the call today. I am pleased to be here to highlight the significant progress we have made on our strategic priorities and to discuss our strong second quarter results. I will start by providing a mid-year update outlining the team’s strong execution of our financial, operational, and growth priorities. We have accomplished exactly what we said we would and then some and look forward to continuing the momentum through the balance of the year. I will give an overview on the utilities acquisitions and highlight what the team has managed to accomplish since we announced the deal less than a year ago. I will also provide an update on each of the businesses and highlight key developments there. And then before having Pat take us through the details of the financial results, I'll take the opportunity to share how we are seeing our scale and connectivity extending growth and providing opportunities across all our four business franchises. And more specifically, how we're seeing this play out in the market with growing power, natural gas, and oil demand. As some of you have heard me say, you can't run a full-time economy on part-time power and Enbridge is in a position to serve our customers and their growing demand full-time through multiple service offers. Once Pat wraps up, I'll close with a few key messages and then our management team will be pleased to answer questions following our presentation. Before I jump into the progress we've made this year, I want to acknowledge everyone impacted by the ongoing wildfires in Northern Alberta and British Columbia. We're committed to supporting our partners, customers, and communities during this challenging time. And while we've seen no impact on the operations to date, safety will be our number one priority as we continue to monitor the situation. Now onto the mid-year update. As you can see, we've achieved or made significant headway on the commitments we laid out at the start of the year. I'm pleased to share that the U.S. Gas Utilities acquisition funding is now fully complete. Moving forward, we don't see returning to the public markets for the equity portion of our capital needs, and consistent with that, we have now cancelled our ATM program. I'm pleased to report our base business performance is very much on track through the first half of the year. Separately, you will see that we are recasting our full-year financial outlook by adding to that original 2024 guidance the expected contributions from the two U.S. Gas Utilities we have closed, the expected closing of PSNC, and all of the associated acquisition financing. Pat will talk more about this later in the call. Our balance sheet remains strong with debt to EBITDA well within our targeted range at 4.7 times, providing financial flexibility to execute on our capital allocation priorities. I'm really proud of the team's execution and focus on operational safety and excellence. So far this year, we've had strong asset performance with high utilization across our franchises. As an example, just look at what's happening in liquids. During the second quarter, we achieved record volumes on the mainline and at our Ingleside export facility. As mentioned, we've closed two of the three U.S. Gas Utilities that we acquired representing what will ultimately be approximately 80% of the total annualized EBITDA, and have reached a settlement in principle with the public staff for the North Carolina Utility Commission. PSNC remains on track to close in Q3. We're also pleased to have reached a pre-packaged rate settlement on our Texas Eastern pipeline with customers. This reflects our continued focus on optimizing our return assets to ensure we are earning a reasonable return while delivering safe and reliable energy for customers. And I'm pleased to report that the FERC has now approved this customer settlement. On growth, we've made good progress executing opportunities in our development pipeline. We sanctioned the 130 megawatt Orange Grove Solar project in Texas backed by a long-term PPA with AT&T. Through our Whistler joint venture we have reached final investment decision for the Blackcomb pipeline, which will provide up to 2.5 BCF of much-needed natural gas egress for Permian shippers. And we sanctioned an expansion of our Gray Oak pipeline in our Liquids business. With clear line of sight to the U.S. Gas Utilities acquisition closing, let me take a moment to highlight our strong execution of that transaction. We're ahead on our plan to complete the $19 billion acquisition of these three gas utilities that we announced just last September. This reinforces our proven track record of effective M&A execution and highlights the strength of our relationships with all our stakeholders, including customers, regulators, and governments right across North America. Federal approvals were all received in due course, with the closing of East Ohio Gas occurring well before our expectations in early March. We look forward to continuing to build long-term productive relationships with all stakeholders in Ohio as we integrate that premier utility business. Next, we announced the closing of Questar and Wexpro in early June. Again, our experience and relationships helped ensure timely regulatory approvals were obtained to welcome a growing multi-state utility into our Enbridge family ahead of expectations. Integration is going well so far and we will continue to provide safe, reliable, and affordable energy for our customers throughout the transition. In North Carolina, we are on track to receive regulatory approval and close in Q3. The team's dedication to executing these transactions, completing the financing, and integrating these assets which diversify our business and enhance our stable cash flow and growth profile has been exceptional. Now let's jump into the exceptional performance at each of the BUs. We saw high utilization across our Liquid system, once again this quarter. This highlights the demand-pull nature of our systems and the continued need for crude oil to fuel everyday life in North America and beyond. The main line transported record second quarter volumes of 3.1 million barrels per day and has so far been apportioned for all months in 2024. July volumes are also expected to be strong and we are expecting apportionment again in August. The utilization year-to-date and the great macro backdrop keeps us confident in our 3 million barrels per day estimate on the main line for 2024 and underpins discussions with customers for expansions in 2026 and beyond. I will also note that this marks our first full year under the new main line tolling settlement. The agreement has proven to be a win-win for us, our customers, and the markets we serve. And as a reminder, we have annual toll inflators for operating expenses and power that were effective July 1st. We are also earning in the upper half of the ROE performance collar. In the Permian, we sanctioned a 120,000 barrels per day expansion of the Gray Oak pipeline following a successful open season this quarter and expect this expansion will come fully online in 2026. The incremental volumes will serve growing demand at our Ingleside facility and we expect the expansion to be capital-efficient with an EBITDA multiple below five times. We now have 18 million barrels of storage capacity at Ingleside with an additional 2.5 million barrels under construction. Of note, Ingleside also set a quarterly record for exports and saw a single-day loading record of more than 2.3 million barrels. This again underscores our belief that cash flow from that asset will be sustainable and growing for many years to come. Now let's take a look at gas transmission. We optimized our assets and advanced our U.S. Gulf Coast strategy during the quarter. As mentioned on Texas Eastern, we reached and the FERC approved a negotiated settlement with shippers effective October 1st. Base rates are expected to increase by 6% through 2025 with an additional uplift of approximately 3% in 2026. In the Permian, we closed the previously announced acquisition of an interest in the Whistler JV which brought into service the ADCC pipeline on July 1st. That asset will support U.S. LNG exports to global markets. In addition, the JV recently reached FID for the Blackcomb pipeline after securing firm transportation agreements. When completed in 2026, Blackcomb is expected to add up to 2.5 billion cubic feet per day of desperately needed natural gas egress for our Permian customers. The Venice Extension, another project serving LNG exports on the Louisiana Coast through the Plaquemines LNG facility, is on budget and on track to enter service later this year. Now, let's move on to our gas distribution segment. As I mentioned earlier, we closed the acquisition of Questar and Wexpro at the end of May, and we are well on our way to creating the largest natural gas utility in North America and expect North Carolina to close in the third quarter. As a reminder, each of these utilities have attributes that position us for long-term growth. Enbridge Utah is a fully regulated gas utility that serves more than 1.2 million customers, and we are excited about the data center opportunities we are seeing there. Utah's projected population growth is 5% annually through at least 2028, which we expect to drive rate-based growth for years to come. Enbridge Gas Utah rates are effective until 2026. In Ontario, we have almost 4 million customers and expect residential and industrial growth as well as system modernization will backstop ongoing rate-based growth in Ontario. In Ohio, we have another 1.2 million customers connected to our utility. We expect to continue growing rate-based through necessary investments, which will modernize existing infrastructure, ensuring reliable and affordable energy for our customers. Enbridge Gas Ohio has a rate case ongoing with new rates expected in 2025. All of our utilities, including PSNC, which we expect to close in the coming months, have attractive returns on equity and are located in natural gas supportive jurisdictions. Now let’s turn to the renewables business and we made great progress on the growth commitments laid out at our Investor Day for that business. We previously announced the plan to develop the Seven Stars wind project in Saskatchewan with FID expected in 2025. This 200 megawatt wind farm will have greater than 30% indigenous participation and is backed by government loan guarantees. The project is expected to provide emissions-free power to more than 100,000 Saskatchewan homes and is a great example of how the cross-pollination of our business units is generating growth. Moving on to solar, we expect to complete our investment in Fox Squirrel Phase 2 in Q3. Similar to Phase 1, Phase 2 is backed by a long-term PPA with Amazon for 100% of the energy production. We also sanctioned the 130 megawatt Orange Grove Solar project in Texas with an in-service expected in 2025. This project is backed by a long-term PPA with AT&T for 100% of the off-take. In our conversations, we're finding more and more that hyperscalers value the reliability, experience, and proven track record that Enbridge brings to the table as a truly diversified energy provider. And finally, Fécamp is now fully operational, supplying nearly 770,000 people with low carbon electricity across the Seine-Maritime region in France. With four growing franchises and gas utility acquisitions almost complete, let's take a look at Enbridge's collective offering and why we're positioned to benefit from growing global demand. Our asset footprint makes up North America's first choice energy provider. In fact, we don't just have assets, we have franchises in each of the businesses where we're involved. Each of those franchises contains super-systems, which are integrated value chains connecting the best supply basins in North America to key domestic demand markets and export terminals. Strong relationships with governments, regulatory, and tribal bodies make us the first choice for energy delivery within the jurisdictions we serve. We have a strong track record of operational excellence, utilizing technology and innovation to drive efficiencies. Diversification and asset interconnectivity make us a one-stop shop, which attracts high-quality customers and partners like AT&T, Amazon, Exxon, BT, Suncor, and NextEra to name but a few. Lower carbon optionality exists throughout our balanced conventional portfolio, and we plan to focus on investments that match the pace of the global energy transition. And importantly, we believe all these growth opportunities can be equity self-funded through our strong balance sheet and disciplined capital allocation. Scale and connectivity are key competitive advantages that are driving new growth opportunities, so let me touch on those briefly. Our large income and asset position allows us to provide differentiated service offerings that are driving value for our customers. It's still in the early innings for us, fully realizing the advantage of our vast position, but we're seeing growing opportunities across our footprint due to increasing natural gas and renewable power demand and their interconnectivity. As an example, in our gas utility business, data center growth in Utah is being driven by the need for reliable and affordable energy. In this quarter, we added 50 megawatts under contract and have numerous additional inquiries to provide natural gas for an additional 1.5 gigawatts of capacity. Throughout our utility footprint, we are engaged in additional early-stage discussions with data centers that we expect to translate into future growth. In gas transmission, our assets are ideally located and well connected. We are within 50 miles of 45% of all natural gas power generation in North America. In fact, in July, we achieved seven of our highest-ever daily deliveries to U.S. power plants from our gas transmission system. We've had a range of customers in the U.S. Southeast that expressed interest in securing approximately 700 million cubic feet a day of transmission capacity to serve up to 5,000 megawatts of new gas power demand. In renewable power, our scale, financial and execution capabilities are differentiators. Data centers need base load power solutions such as natural gas to support the 24x7 energy demands of hyperscalers. But many customers are balancing that reliability requirement with their renewable energy commitments. It's not always possible to co-locate or develop behind-the-meter power solutions to support new data centers, so we are having discussions with large blue-chip customers to provide traditional and virtual long-term PPAs. Virtual long-term PPAs are where customers may look at signing long-term offtake agreements to support the development of clean energy products to offset emissions produced elsewhere in the business. We have over 2 gigawatts of regionally diverse wind and solar projects in development that we talked about at Investor Day, which are capable of serving new data center load with in-service expectations in 2026 and beyond. The collective strength of our franchises lends well to the growth opportunities in front of us, and I'm confident Enbridge will play an essential role in delivering energy everywhere people need it. With that, I'll pass it over to Pat to walk through yet another strong quarter of financial results.

Thanks, Greg and good morning, everyone. It's been a very strong quarter for Enbridge and as Greg noted, we had continued high utilization across all of our franchises. Questar closed in May, and we've now brought in roughly 80% of the total annualized U.S. LDC EBITDA in-house. I'll be speaking to adjusted results on this slide inclusive of the utility acquisitions. Year-over-year, second quarter adjusted EBITDA is up 8% and DCF per share of $1.34 includes a higher share count from all the prefunding of the U.S. Gas Utilities. Liquids volumes were high across the board with the mainline transporting 3.1 million barrels per day, a second quarter record. Ingleside also broke its previously quarterly and daily records for export volumes. In GTM, lower operating costs as well as the Aitken Creek and Tomorrow RNG acquisitions more than offset the sale of Alliance and Aux Sable on April 1st. A full quarter of Enbridge Gas Ohio and partial contributions from our Questar acquisition added approximately $175 million of EBITDA as compared to Q2 in 2023. And in Canada, a higher distribution margin and customer additions over the last year helped offset the negative impact of warm weather at our Ontario utility. Below the line, higher financing costs on floating rate debt and new issuances and the higher share count that I mentioned before, impacted per share metrics. As you can see at the bottom of the slide, the base business continues to deliver strong financial results. So let's look ahead to how the rest of the year is shaping up. With two gas utilities in the door, all the financing complete and a good line of sight to closing PSNC, we're pleased to be able to recap Enbridge's 2024 financial guidance. We're raising our 2024 EBITDA range to $17.7 billion to $18.3 billion. This increase reflects partial year contributions from each of the U.S. Gas Utilities and assumes we closed PSNC mid-third quarter. Even with the partial years of EBITDA, all of the funding completed for these transactions, we're still maintaining our DCF guidance range of $5.40 to $5.80 per share. I'm also reaffirming our near-term financial outlook of 7% to 9% EBITDA growth through 2026, 4% to 6% EPS growth, and approximately 3% BCF growth per share. All in all, it's shaping up to be another strong year with base business performing well and great execution on both the closings and the full financing of the U.S. Gas Utilities. Now let's turn to the balance sheet. In reaction to closing Questar and the progress on the acquisition funding plan, DBRS and S&P took positive actions on our credit ratings during the quarter. DBRS upgraded Enbridge to A low and S&P removed the negative outlook, affirming Enbridge's BBB+ stable outlook. Fitch also reaffirmed our BBB+ rating. While not unexpected, we're pleased to see that the agencies share a view that our long-held leverage target of 4.5 to 5 times is a sweet spot for Enbridge. As we previously communicated, we expect leverage to peak after closing the PSNC acquisition and decrease throughout 2025 as we earn annualized EBITDA contributions from all the utilities. With that, let me move on to capital allocation. Our priorities remain unchanged, and we're laser-focused on the balance sheet. We canceled the remaining ATM this morning as we return to our equity self-funding model. We're well within our target debt-to-EBITDA range despite only partially EBITDA contributions from our newly acquired U.S. LDCs. The dividend remains a staple of our investment offering, and we're committed to extending our 29-year track record of responsible dividend growth by continuing to grow the business in a very sustainable manner. Our $24 billion of secured capital backlog, which is underpinned by low-risk commercial terms, will be funded entirely through internally generated investment capacity. We plan to deploy approximately $6 billion to $7 billion per year in growth capital, leaving us another $2 billion that can be allocated towards the next available opportunities whether that be sanctioning new strategic projects, accretive tuck-in M&A, or debt reduction. With that, I'll pass it back to Greg to close off the call.

Great financial overview, Pat. Thanks very much. Now let me conclude with why we think we're a first choice investment opportunity. We have a consistent track record of sustainably returning capital to shareholders, supported by a visible growth pipeline. This has resulted in an annual total share return of greater than 10% over the past 20 years, and we see no change to that proposition going forward. We expect cash flow to grow 5% over the longer term, and when coupled with a growing dividend, investors are positioned to realize an annual total return of 10% to 12% for the foreseeable future, supported by our low-risk business model, which includes 98% of our cash flows generated from either cost of service or take-or-pay contracts, a customer base that is over 95% investment grade and 80% of the EBITDA earned from assets with protection against inflation. And our debt portfolio, which is less than 5% exposed to floating rate volatility. In short, we have diversified utility-like cash flows, a strong balance sheet, and visible growth opportunities across each business unit franchise that will support and extend our 29 consecutive years of dividend increases. We remain committed to continuing the strong track record of returning capital to shareholders and believe it positions us as a first choice investment. Thank you again. And operator, please open up the line for questions.

Thank you. Your first question comes from Rob Hope from Scotiabank. Your line is open.

Good morning everyone, thanks for taking my call or my questions. Maybe to start off with the TEPCO rate case. Can you walk us through kind of what the key drivers of the change there are, whether there were kind of some key roadblocks there and as well as kind of what you think it does mean in terms of an EBITDA or income uplift in 2025 and 2026?

Thanks, Rob, it's Cynthia. So the settlement, as you know, basically is a black box prepackaged settlement. So there's a whole bunch of items that came into consideration. So the team, our team at Enbridge looks at what capital we've spent, what our operating costs are, forecasting that out into the future. We also look at what our rates are going to be impacted, have lots of that kind of conversation. So a lot of stuff goes into determining what those components are. And we don't specifically identify any one thing. But what it does allow us to do is to continue to earn that fair return into the future. And basically, as was noted, that's a 6% increase as of October of this year and then a further 2.75% in January of 2026. So with that rate all in, basically, we're in a position to continue to get a fair return. The next time we'll go back, we have a moratorium up until October of 2027, but a comeback by Q3 of 2030. So we're just well positioned to continue to earn a strong return on those assets.

Alright, appreciate that. And then maybe moving over to the 2024 recast EBITDA guidance range. Can you walk us through the puts and takes there, it does seem like H1 has outperformed expectations, especially on the Liquid side and layering in the Dominion assets gets us towards the upper end of the range. Just want to get a sense of whether or not you have adjusted the other businesses or just layered in Dominion or are there some specific headwinds we should be looking for in H2?

Thanks, Rob, it's Greg. This is based on incorporating the utilities and assuming we secure PSNC in the next couple of months along with the necessary financing. As is our usual practice, we don't make changes to other business units midyear. However, you pointed out that the core business is performing very well, with strong utilization and volumes. It's been a very strong quarter, so if you focus solely on the base business, you'd find it at the upper end of the range.

Alright, appreciate that color. Thank you.

Hey, good morning guys. Just a follow-up on the utilities here. What drove the decision to use the ATM versus asset sales and understanding that you're fully funded for the acquisitions, what do you expect in terms of any asset sales going forward given that you have that ongoing capital recycling program?

Yes. Thanks for the question on that. Here's how we looked at it. Obviously, we had a super high level of confidence in terms of getting all the utilities closed, even a little faster than we had expected. So with that in mind and the fact that we saw the better economics than what was even in our deal model, we moved quickly, confidently to get all the financing done. So that's done. It may not fit everybody's model, but definitely exceeded the deals economic assumptions that we had. With that behind us, the ATM terminated, it's really about now focusing on the business, get it at a great price, and how do we keep moving this transaction forward and combine it with the rest of the assets. And as you would recognize and definitely didn't know if it would work, even with all that, financing in the way in which we did it, we're going to be well within our guidance range. And as we just talked about, the base business would even look like it's better than that. So a great setup on that front. Asset sales still very much part of what we look at. Let's not forget, we did a large asset sale earlier this year with Alliance and Aux Sable, but we're always looking at stuff. I wouldn't say there's anything near term that we have to do. And I think that's the key component here. Balance sheet in good position, financing done, businesses all running well. If we do anything significant on the asset sale side, it will be solely as a result of getting a great price on something.

Okay, thanks for that. And then just on the mainline, clearly, it's been a good quarter despite the onset of TMX. But I have a couple of questions about the near term and the long-term outlook. First, just in the near term, I'm happy to hear your expectations of apportionment in August. But I'm just wondering what you're seeing in terms of risk of producer shut-ins in light of the forest fires and then if you look longer term, the need for egress in post 2026, what level of political risk do you see there, in other words, do you think the producers are going to need that capacity respective of what government is in place in Canada or do you think they are probably waiting for the Canadian Federal Election to get better clarity on carbon prices moving forward?

Hey Robert, yes, it's Colin. Thanks for the question on the mainline. And indeed, it's performing well. Business is good. We are apportioned in August. And I think Greg mentioned that we're very comfortable with the 3.0 million barrels per day full year guide. We're probably likely to exceed that, all things equal. But you did mention the risk of forest fires, I think that remains a present risk, maybe similar to last year. So to date, really negligible impact on mainline volumes and basin production. There are active fires in the region. As you know, we're in close coordination with all our producers and have, I think, collectively everyone's enhanced their investments in mitigation since 2016 but mother nature is there. So we'll watch that carefully through August, September here. But so far, we're looking pretty strong for the year, all things equal. That's the near term. So on the long term, I think on egress Greg mentioned, we're teeing up some insurance egress at a minimum. It's likely they will get used in the 2026, 2027 period. We're socializing that with industry. There's a significant interest at this time. I think if you look at each producer's book of supply optimization, debottlenecking, and modest kind of modular growth, I think that's all also as announced by each of them, and we track it, bottom up and top down, it is likely to proceed kind of irrespective of any administration. It's all manageable, and I think will fit within climate policies stated. There's potentially upside to that, I think, if things change, and we'll be on top of that. I mean I'm not really that concerned with egress bottlenecking here again, industry and collectively has a good beat on that. And I'm virtually there to serve as we've done in the last couple of decades.

Okay, thanks for those answers.

Hi, thanks, good morning. Just on the data center comments and that slide you had, the map and the blobs there. Could you comment on which is the segment you expect to see the best reward or the highest investment opportunity and are you indifferent somewhat to where you're allocating capital towards that growing opportunity?

Yes, that's a great question. I believe all segments will benefit, though liquids may not see as much of an impact, but it has its own significant opportunities. The immediate focus seems to be GDS, as highlighted by our recent announcement where Michele and the team secured a 50-megawatt lateral connected to a 450-megawatt plant. This should be an easy initial step. Gas transmission also presents plenty of opportunities. As I pointed out earlier, there are about 600 to 700 requests for capacity each day in the Southeast. While some of this will involve transitioning from coal to gas, a large portion is driven by data center demand, including storage needs, which exists in both GTM and GDS. We shouldn't overlook Matthew's power side business either. Many data centers are working to meet lower emissions targets, and gas offers reliability that supports this goal. They might also help finance these projects through long-term contracts, similar to what we announced today. Regarding capital allocation, it's based on risk-adjusted returns. Capital in the distribution business is very secure. The same applies to long-term power purchase agreements in renewables, which also come with tax incentives. TTM follows the same pattern. All these segments present strong returns on equity, leading to discussions about the pace of capital deployment and the quality of the off-taker. Importantly, we have the unique ability to engage in all aspects of this market. Overall, demand for liquids, NATI, and electrons is increasing, as is supply, and with our linear infrastructure and components, we stand to benefit. We will leverage this interconnectedness to provide precisely what our customers require, offering a distinctive solution in the market, which positions us well to direct capital toward the best opportunities.

Alright, that's great context. Thank you. And maybe a second question on the U.S. gas utility acquisitions, now you're closing or soon to be close all of them. Like what's the near-term focus or initiatives those buckets and can you comment on that 8% rate base growth visibility or expectation on how long that could persist?

Sure. Michele is here. I'll let her respond.

Sure. Initially, we focused on integrating the utilities into gas distribution and storage. We established an organization for this even before announcing the deal, and we have been very dedicated to it. We brought Ohio on board in March, and then added Utah along with Idaho, Wyoming, and the Wexpro assets in June. This transition involves around 2,500 employees and nearly 2.5 million customers, and it has proceeded very smoothly so far. We have considerable experience in this area from the Union Enbridge Gas merger in Ontario, which gives us confidence. We have about 30 months to work through our TSA with Dominion Energy, providing them with ongoing support. Our initial focus has been on integrating these utilities and analyzing their growth potential. I am really pleased with these utilities and appreciate the diversification of growth they offer. Ontario continues to thrive with economic growth, adding about 40,000 customers annually. Utah, as mentioned in Greg's overview, is experiencing top-tier population growth at around 5% per year through 2028, attracting over 20,000 new customers each year. Alongside rate base growth, Utah has regulatory-approved rider programs to support rural expansion, complemented by data center growth along the Wasatch front. Ohio is also seeing significant growth, mainly driven by the rider-eligible modernization program, and the upgrade process is progressing smoothly. I am confident we will see similar satisfaction with North Carolina. We feel very good about the growth projections we have provided for the coming years.

I believe that an 8% CAGR on our rate base through 2027 does not fully consider the growth from data centers, which will be an additional benefit. Moreover, it's important to note that the rate base growth varies by region, highlighting our capacity to adapt. Depending on the cycle's phase, we may focus on modernization, growth, data center expansions, or transitioning from coal to gas, among other factors. Additionally, we are concentrating on interconnectivity, exploring how we can leverage gas transmission or power to assist utilities and vice versa.

Okay, got it, thank you.

Hi, good morning. We've heard a lot about data centers South of the 49th parallel. I'm wondering if you see anything percolating North of the 49th parallel that you could capitalize on?

Yes, it's Michele here. So let me talk about Ontario a little bit. And for some of you who may have seen it, I've been told that the grandfather of AI is out of the University of Toronto. And more recently, I heard a statistic that there are over 250,000 jobs in Ontario tied to AI, in fact, more than in Silicon Valley. So without question, there's a lot of inbounds going on in Ontario right now about data center growth. I think the ISO is taking a good hard look at things. We know there's a certain amount of, let's call it, forum shopping that's going on, seeing where they can get that. But certainly in the GTA in particular, the Southwest GTA, lots of inquiries about data centers. And given that the timelines to build transmission and other support, there are absolutely going to be opportunities for behind-the-meter support that we can give on the gas distribution system.

Kind of analogous in Ontario to how we are seeing the greenhouse business change over the last 20 years, right. Good land, good location, great access to obviously gas infrastructure, nearness to the border, etcetera. So I wouldn't be surprised to see maybe not the same kind of explosive growth that we've been able to see on the greenhouse side, but definitely a good setup.

Got it. That's very helpful there, thanks. And then just looking at the mainline and looking forward a bit more, just curious for any other color that you could share in particularly looking even later dated. I think in the release you talked about your conversations with regards to incremental egress opportunities. Just wondering if you could expand a bit more on what you see there?

Yes, sure. Indeed, I think with the strength in supply growth and appetite to get to U.S. markets continually in the bid, pulling it that way, industry is casting inside to the future. I like your question. And indeed, we are designing and socializing, as I mentioned, an expansion of the mainline in that late 2026, 2027 period. It would be very capital efficient as our historic expansions have been. This would be in right away, very brownfield, more optimization than expansion, so to speak. But we would be looking to add circa 150,000 barrels a day. Let me say, I think it's quite executable and very economic for industry. So I think that's the next major tranche of egress expansion we have on deck there, but there's also continuing optimizations like we do every month and have for decades. So like I say, I think if you're looking at things base differentials and things, I'm not that concerned that they're going to blow out again. I think there's going to be solutions that they're ready here in time.

Got it, that’s very helpful. Thank you.

Thank you guys and positive update on the data center side. Can you just go back and talk a little bit more about the JV that you announced last quarter with MPLX, Whitewater and the benefits of that going ahead? Also, you guys have a track record of eventually becoming the operators of assets like Gray Oak. So would there be a desire to eventually operate this from the Enbridge side?

Thank you, Manav. It's Cynthia. We are very pleased with our investments in Whitewater. We hold a 19% stake in those assets, which includes full ownership of the Whistler pipeline, an essential route from the Permian, as well as 50% of the Waha gas storage and 70% of the ADCC pipeline that began service on July 1st. With the announcement of the Blackcomb expansion, we are excited about these developments, which are happening in a relatively short timeframe. These are excellent assets managed by capable operators, and we are glad to be involved. We anticipate growth opportunities, despite being a minority interest. Our Rio Bravo pipeline is set to be operated and constructed through Whistler. These are all valuable assets, and we are pleased to collaborate with our partners. This participation allows us to engage fully in the Permian expansion, which we have been considering for quite some time. The outlook for the future appears very promising, and we will continue to seek opportunities in this area.

Yes, I think well said. We're good JV operators too. We've had a long history of working in JVs with great partners. Those are great partners. So I think the future with the structure that exists there today is going to deliver a ton of value, and it's been a great job the team put together.

Thank you, good morning. If I can just start with your strategic priorities and just what do you see as the top two or three over the next 12 to 24 months, but can you also specifically comment on whether there are any large projects that you haven't announced yet or other major asset bases or platforms that you feel are important to execute on your strategy that you need to action on that in that similar timeframe?

Well, here's the first three, I'd give you, Robert. So the first one is, as always, we're doing it, and you see we've made some adjustments this year, it's getting most out of the base assets that we have. How do you get the return on the capital that you already have employed improved, that's exactly how you get 1% or so of growth out of constantly doing that and we've got a great track record and very focused on that. So that's number one. Number two, integrate the utilities that we've just bought both from an operational perspective, but also what other opportunities could exist there commercially, etcetera. Number three, we got $25 billion of projects, which maybe gets to your second question as well. $25 billion of projects that we're executing, $18 billion or so which are in the power and gas side. That's a huge element because that's all about future growth. And doing that all within our ability to keep the balance sheet between 4.5 and 5 times that's the primacy out there right now. So those are what I'd say the top three things to focus on right now, and that's a handful. We're always looking for additional new projects. I think as Colin just laid out, as Cynthia has laid out, and even if you look at both the renewable backlog as well as the utility businesses, those don't have massive projects. They've got real value-added projects at relatively low build. So you're doing things in JVs, whether it's Whitewater, whether you're adding incremental egress that is actually low multiple builds or things like the Gray Oak stuff we're doing on the Gulf Coast, or quick cycle capital that we're seeing at the utilities, $1.5 billion or so going to maybe $3 billion that you can turn quickly. That's better than actually focusing on a $10 billion project that may take 10 years to build. And then of course, Matthew's got the same thing. Got out and bought the TGE assets, and that actually accelerates the growth pattern for renewables and not having to wait for six or seven years there. So I think it's a lot of singles and doubles that add up to a big home run for the corporation.

Got it, thanks. And if I can just finish to better understand or more color on your guidance. First, just on the mainline, you mentioned 3 million barrels a day. You had 3.1 million in the first half. So does that imply 2.9 million in the second quarter, and you can also say just what you are moving right now or what you moved in July, but just also as you get to DCF per share can you just talk about any of the adjustments to your original guidance or can we just take the base business reconciliation in the report and effectively annualize the quarter to get to some of the DCF changes?

Yes, it's Pat. Regarding your volume question, I'm confident about the 3 million barrels, and we might even see a slight upside considering our current position. There is some seasonality in the mainline, and heat restrictions can sometimes lead to lower costs during the July to September period. That aspect doesn't affect demand or supply; it's just how the pipeline functions. We're feeling optimistic about maintaining the 3 million barrels and possibly exceeding that. The new guidance simply incorporates the utility, including partial years of EBITDA from each segment and all the financing we've executed to reduce risk over the past year. From a DCF perspective, we're just adding the extra shares, hybrids, and debt to our base plan. It’s straightforward. I'm also pleased to note, as mentioned by Greg, we're anticipating being on the upper end of the EBITDA guidance, which strengthens our confidence in being at the midpoint of our new DCF guidance range, even with the prefunding, recognizing that the partial year EBITDA would lower it slightly. Overall, I'm very satisfied with the new guidance levels and our business performance.

Okay. But just on your reconciliation, we can take the maintenance CAPEX in the quarter for the most part and annualize it. It looks like there's absolutely no tax incremental involved?

Yes, there is no significant cash tax from the transaction as we originally mentioned. In terms of maintenance capital, it will be slightly higher in the latter half of the year since we only included Utah starting in early June, giving us just one month in the quarter. We will also incorporate PSNC, which is the smallest of the three utilities. We have already received about 80% of the cash flow from it, but there will be a slight increase in the second half of the year as we will have all three utilities contributing for almost the entire second half.

Thanks Robert.

Hi, good morning and congrats on a smooth process getting the gas LDCs done. Wanted to ask on the Ohio rate case that you're in right now. Just any impression of the staff rack that came out and then your level of confidence and visibility on reaching a settlement and constructive outcome there?

Sure, it's Michele here, Keith. As you mentioned, the staff submitted a report in July. It's not uncommon for regulatory staff responses to differ from our initial rate applications. The PUC in Ohio tends to prefer settlements, and we believe we can reach one with them. We are eager to collaborate on that agreement. I expect that final determination will take several months to negotiate, but it presents us with an opportunity for a fair return. We are quite confident that it will align with the model we established for the transaction.

Great, thanks. And then in a prior question on strategic focus, I don't think you listed M&A as one piece of that strategic focus. Is that still on the back burner with the gas LDCs pretty much done now or do you think there will be opportunities over the near term that could make sense?

We continually evaluate mergers and acquisitions given the scale of our operations and the various businesses we engage in, both in terms of acquiring and selling. However, I haven't prioritized it because I don't see any opportunities comparable to a significant utility acquisition, which is a rare occurrence. Yes, we will continue to explore options on both the buying and selling sides, but I view them as more modest compared to major utility transactions.

Good morning. Just to dig a little deeper on the Blackcomb discussion. So with the FID, can you remind us if there are any downstream synergies to tie into your existing Texas transmission or storage assets and I understand you're a minority and a new partner in this JV. Just looking at the future of the Permian, going back to some of Cynthia’s comments in the visible gas growth and what seems to be a need for Greenfield pipe maybe every two years. Can you share why you think Blackcomb was the winning project given many projects in competition and with this commercial win, how the partnership is set up to grow in the outer years, given the visibility for additional gas and gross demand out of the basin?

Thank you, Theresa. Blackcomb stands out as a successful project in this area. One reason the joint venture with Whistler is likely to succeed is their strong history of completing projects on time and within budget. This reliability was a key factor in our decision to enter the joint venture, and it likely contributed to the successes we've seen with Blackcomb. Because this is an interstate pipeline, they can move quickly, with Blackcomb expected to be completed in the second half of 2026, which is excellent news. For specific commercial inquiries, Whitewater should be consulted about their future plans. From our perspective, they are well-positioned to grow in the Permian. Our significant presence in the Aguadulce area complements their infrastructure, and it's encouraging to see increased investments and more volumes being transported. This trend is promising for our overall infrastructure in the region and highlights why we were eager to engage in this transaction and join the joint venture. Whistler has a solid operating background and is well-positioned for further expansion in the Permian.

Yes, I think well said. We're good JV operators too. We've had a long history of working in JVs with great partners. Those are great partners. So I think the future with the structure that exists there today is going to deliver a ton of value, and it's been a great job the team putting it together.

Thank you, good morning. If I can just start with your strategic priorities and just what do you see as the top two or three over the next 12 to 24 months, but can you also specifically comment on whether there are any large projects that you haven't announced yet or other major asset bases or platforms that you feel are important to execute on your strategy that you need to action on that in that similar timeframe?

Well, here's the first three, I'd give you, Robert. So the first one is, as always, we're doing it, and you see we've made some adjustments this year, it's getting most out of the base assets that we have. How do you get the return on the capital that you already have employed improved, that's exactly how you get 1% or so of growth out of constantly doing that and we've got a great track record and very focused on that. So that's number one. Number two, integrate the utilities that we've just bought both from an operational perspective, but also what other opportunities could exist there commercially, etcetera. Number three, we got $25 billion of projects, which maybe gets to your second question as well. $25 billion of projects that we're executing, $18 billion or so which are in the power and gas side. That's a huge element because that's all about future growth. And doing that all within our ability to keep the balance sheet between 4.5 and 5 times, that's the primacy out there right now. So those are what I'd say the top three things to focus on right now, and that's a handful. We're always looking for additional new projects. I think as Colin just laid out, as Cynthia has laid out, and even if you look at both the renewable backlog as well as the utility businesses, those don't have massive projects. They've got real value-added projects at relatively low build. So you're doing things in JVs, whether it's Whitewater, whether you're adding incremental egress that is actually low-multiple builds or things like the Gray Oak stuff we're doing on the Gulf Coast, or quick cycle capital that we're seeing at the utilities, $1.5 billion or so going to maybe $3 billion that you can turn quickly. That's better than actually focusing on a $10 billion project that may take 10 years to build. And then of course, Matthew's got the same thing. Got out and bought the TGE assets, and that actually accelerates the growth pattern for renewables and not having to wait for six or seven years there. So I think it's a lot of singles and doubles that add up to a big home run for the corporation.

Got it, thanks. And if I can just finish to better understand or more color on your guidance. First, just on the mainline, you mentioned 3 million barrels a day. You had 3.1 million in the first half. So does that imply 2.9 million in the second quarter, and you can also say just what you are moving right now or what you moved in July, but just also as you get to DCF per share can you just talk about any of the adjustments to your original guidance or can we just take the base business reconciliation in the report and effectively annualize the quarter to get to some of the DCF changes?

Yes, Robert, it's Pat. Regarding your question about volume, Colin has expressed confidence in achieving 3 million barrels, with some potential upside. Keep in mind, seasonal factors in the mainline and heat restrictions typically result in lower costs during July, August, and September. This fluctuation is related to pipeline operation rather than demand or supply. I feel very positive about reaching 3 million barrels and possibly exceeding that. The new guidance reflects the incorporation of the utility and the partial EBITDA contributions from each aspect, along with the financing we've secured to strengthen our funding plan over the past year. From a DCF perspective, it's essentially adding the extra shares, hybrids, and debt issued to the base plan. It's a straightforward approach. We've highlighted that we should fall within the upper range of the EBITDA guidance, which gives us confidence that we’ll be near the midpoint of our updated DCF guidance, even considering the effect of partial year EBITDA, which may lower that figure somewhat. Overall, I’m very satisfied with the new guidance levels and how the business is performing.

Okay. But just on your reconciliation, we can take the maintenance CAPEX in the quarter for the most part and annualize it. It looks like there's absolutely no tax incremental involved?

There was no significant cash tax from the transaction, as we previously discussed. In terms of maintenance capital, there will be a slight increase in the latter half of the year since we only included Utah for one month in the quarter due to its late addition at the beginning of June. We will also be adding PSNC, which is the smallest of the three utilities. We already have about 80% of the cash flow in, but we expect a bit more increase in the second half of the year as we will have all three utilities for nearly the entire six months.

Thanks Robert.

Hi, good morning and congrats on a smooth process getting the gas LDCs done. Wanted to ask on the Ohio rate case that you're in right now. Just any impression of the staff rack that came out and then your level of confidence and visibility on reaching a settlement and constructive outcome there?

Sure, it's Michele here, Keith. As you mentioned, the staff submitted a report in July. It's not uncommon for the regulator's staff responses to differ from our initial rate applications. I believe that the Public Utilities Commission in Ohio prefers to reach a settlement, and we are optimistic about achieving that with them. We look forward to collaborating on that agreement. I would say that we anticipate a final decision, which will take several months to finalize. This presents us with the chance for a fair return, and we expect it to align with the model we've established for the transaction. Therefore, we are quite confident about reaching a successful outcome.

Great, thanks. And then in a prior question on strategic focus, I don't think you listed M&A as one piece of that strategic focus. Is that still on the back burner with the gas LDCs pretty much done now or do you think there will be opportunities over the near term that could make sense?

We always consider mergers and acquisitions, especially given our diverse range of businesses on both the buying and selling sides. However, I haven't prioritized it because I'm not seeing any transactions similar to the utility acquisition, which was a significant and rare opportunity. We will continue to evaluate both buying and selling options, but I believe the smaller acquisitions won't be as impactful as the utility deal.

Good morning. Just to dig a little deeper on the Blackcomb discussion. So with the FID, can you remind us if there are any downstream synergies to tie into your existing Texas transmission or storage assets and I understand you're a minority and a new partner in this JV. Just looking at the future of the Permian, going back to some of Cynthia’s comments in the visible gas growth and what seems to be a need for Greenfield pipe maybe every two years. Can you share why you think Blackcomb was the winning project given many projects in competition and with this commercial win, how the partnership is set up to grow in the outer years, given the visibility for additional gas and gross demand out of the basin?

Thank you, Theresa. Blackcomb stands out as a strong performer in this sector. A key factor for the success of the joint venture with Whistler is their proven ability to deliver projects on time and within budget. This reliability drew us to the partnership and likely contributed to our success with Blackcomb. Regarding timing, because this is an interstate pipeline, they can move quickly, with a completion date set for the second half of 2026, which is excellent. For specific commercial inquiries, I recommend reaching out to Whitewater about their future plans. From our perspective, they are well-positioned to expand further in the Permian region. Our significant presence in the Aguadulce area aligns well with their infrastructure, and it's encouraging to see increased investments and volumes in the area, which is positive for our overall infrastructure. This is one of the reasons we were eager to engage in this transaction and join the venture. Whistler has a strong operational history and is well-equipped to continue scaling in the Permian.

Yes, I think well said. We're good JV operators too. We've had a long history of working in JVs with great partners. Those are great partners. So I think the future with the structure that exists there today is going to deliver a ton of value, and it's been a great job the team putting it together.

Thank you, good morning. If I can just start with your strategic priorities and just what do you see as the top two or three over the next 12 to 24 months, but can you also specifically comment on whether there are any large projects that you haven't announced yet or other major asset bases or platforms that you feel are important to execute on your strategy that you need to action on that in that similar timeframe?

Well, here's the first three, I'd give you, Robert. So the first one is, as always, we're doing it, and you see we've made some adjustments this year, it's getting most out of the base assets that we have. How do you get the return on the capital that you already have employed improved, that's exactly how you get 1% or so of growth out of constantly doing that and we've got a great track record and very focused on that. So that's number one. Number two, integrate the utilities that we've just bought both from an operational perspective, but also what other opportunities could exist there commercially, etcetera. Number three, we got $25 billion of projects, which maybe gets to your second question as well. $25 billion of projects that we're executing, $18 billion or so which are in the power and gas side. That's a huge element because that's all about future growth. And doing that all within our ability to keep the balance sheet between 4.5 and 5 times that's the primacy out there right now. So those are what I'd say the top three things to focus on right now, and that's a handful. We're always looking for additional new projects. I think as Colin just laid out, as Cynthia has laid out, and even if you look at both the renewable backlog as well as the utility businesses, those don't have massive projects. They've got real value-added projects at relatively low build. So you're doing things in JVs, whether it's Whitewater, whether you're adding incremental egress that is actually low multiple builds or things like the Gray Oak stuff we're doing on the Gulf Coast, or quick cycle capital that we're seeing at the utilities, $1.5 billion or so going to maybe $3 billion that you can turn quickly. That's better than actually focusing on a $10 billion project that may take 10 years to build. And then of course, Matthew's got the same thing. Got out and bought the TGE assets, and that actually accelerates the growth pattern for renewables and not having to wait for six or seven years there. So I think it's a lot of singles and doubles that add up to a big home run for the corporation.

Got it, thanks. And if I can just finish to better understand or more color on your guidance. First, just on the mainline, you mentioned 3 million barrels a day. You had 3.1 million in the first half. So does that imply 2.9 million in the second quarter, and you can also say just what you are moving right now or what you moved in July, but just also as you get to DCF per share can you just talk about any of the adjustments to your original guidance or can we just take the base business reconciliation in the report and effectively annualize the quarter to get to some of the DCF changes?

Yes, Robert, it's Pat. Regarding your volume question, I believe Colin mentioned that we are quite confident about achieving 3 million barrels, with a possibility of exceeding that given our current position. There is some seasonality in the mainline, and heat restrictions can lead to lower costs during the July, August, and September period, which we will observe. This variability is purely a function of how the pipeline operates and is not influenced by demand or supply factors. Overall, we feel positive about the 3 million target and its potential for growth. As for the new guidance, we have incorporated the utility impacts, including the partial year EBITDA from each of them, and all the financing we executed to minimize risk in our funding plan over the last year. From a DCF perspective, we simply added the extra shares, hybrids, and debt issued to the base plan, making it straightforward. It's encouraging that we expect to be at the upper end of the EBITDA guidance, which reinforces our confidence in aligning with the midpoint of our new DCF guidance range, despite the adjustments due to partial year EBITDA that could lower that figure slightly. Overall, we are very pleased with the new guidance levels and the business's performance.

Okay. But just on your reconciliation, we can take the maintenance CAPEX in the quarter for the most part and annualize it. It looks like there's absolutely no tax incremental involved?