Q4 2024 Enbridge Inc Earnings Call
Good morning, and welcome to the Enbridge, Inc. Fourth quarter 2024 financial results Conference call. My name is Rebecca Morley and I'm, the Vice President of Investor Relations.
Joining me this morning are Greg Evo President and CEO.
Pat Murray Executive Vice President and Chief Financial Officer, and the heads of each of our business units.
And grunting liquids pipeline, Cynthia Hansen gas transmission, and midstream Michel Harridan gas distribution and storage and Matthew Ackman 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. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star.
But by the number one please.
Please note this conference call is being recorded.
As usual the call is being webcast and I encourage those listening on the phone to follow along with the supporting slides.
I'll try to keep the call to roughly one hour and answer as many questions as possible.
We will be limiting questions to one plus a single follow up if necessary, we will prioritize questions from the investment community. So if you are a member of the media. Please direct your inquiries to our communications team, who would be happy to assist you.
Always our Investor relations team will be available following the call for any follow up questions.
On slide two where I'll remind you that we will be referring to forward looking information in today's presentation and Q&A.
Its nature. This information contains forecasts 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'll.
Speaker Change: We will also be referring to non-GAAP measures summarized below and with that I'll turn it over to Greg evil.
Greg: Thanks, very much Rebecca and good morning, everyone. Thanks for joining us as we look back on a record fourth quarter and full year earnings.
Speaker Change: We're going to start today by recapping the many milestones we achieved in 2024.
Speaker Change: Then I'd like to speak to Enbridge is performance through all market cycles, and the benefits of our low risk business model from there I'll showcase how we are positioned to meet the increasing power generation and industrial needs of our customers in North America.
Speaker Change: We will then jump into updates for each of our business units Pat will walk everyone through the quarters financial highlights and capital allocation priorities and lastly, I'll close the presentation with a final note on our value proposition before we open the calls for your questions.
Speaker Change: We delivered record EBITDA and DCF per share in 2024, new assets and continued customer demand contributing to a 13% increase in EBITDA over 2023.
Speaker Change: In December we increased our dividend for the 30th consecutive year, extending our status as one of the only dividend aristocrats in our sector.
Speaker Change: And while I am pleased that Enbridge delivered a 37% total shareholder return to investors in 2024, I'm, even more pleased that our business model will continue to generate strong returns for our shareholders as we advance our strategic priorities.
Speaker Change: On the growth front, we closed the acquisition of three Premier U S natural gas utilities, creating the largest gas utility franchise in North America.
Speaker Change: We also announced three highly strategic tuck in acquisitions, our Permian and Gulf Coast assets building on our integrated oil footprint and establishing a meaningful natural gas presence in the region.
Speaker Change: Across the business, we added over $8 billion.
Speaker Change: Of organic projects to our backlog diversified across all four of our franchises.
Speaker Change: That backlog now includes approximately $3 billion.
Of annual utility investment, earning strong returns under quick cycle capital writers and regulated return frameworks.
Speaker Change: Prudent capital recycling remains an important part of our business model, allowing us to opportunistically surface value for shareholders and in April we closed the sale of our interest in alliance and <unk> stable and subsequently announced the sale of our interest in the east to West highlight for combined proceeds of approximately $3 two.
Speaker Change: Billion.
Speaker Change: Our long held leverage target of four five to five times continues to be the sweet spot for Enbridge and we expect full year contributions from our recently acquired and in service assets to benefit this metric through 2025.
Speaker Change: We will continue to equity self fund up to $8 billion to $9 billion of growth projects annually staying within our debt to EBITDA ratio, while supporting future growth for Enbridge and driving returns for shareholders.
Speaker Change: Now, let's spend a minute reviewing our low risk business model that allows us to perform so consistently.
2024 marks enbridge is 19th consecutive year of achieving guidance underscoring the stability of our business. Despite the myriad of macroeconomic challenges. We've seen these past two decades and looking ahead with the uncertainty around North American trade relations I wanted to remind everyone how each frac.
Speaker Change: <unk> has a commercial framework that will ensure a reliable low risk cash flows and liquids. The mainline is supported by an ROE performance color and a progressive toll ratchet online III surcharge, providing two forms of volume protection and the rest of our liquid systems are predominantly underpinned by long term take or pay.
Speaker Change: Contracts in our gas transmission business, our pipelines operated under a mix of cost of service framework and negotiated take or pay rates delivering over 24 Bcf per day of natural gas to customers.
Speaker Change: Our utility business is fully regulated with flow through cost structures inclusive of the cost of natural gas supply and in renewables projects are backed by long term power purchase agreements with high quality customers and governance.
Speaker Change: Our commitment to disciplined gives us confidence that we can extend our track record of meeting financial guidance steadily growing our dividend and continuing to create value for our investors now let's spend a minute talking about how we're positioned to meet increasing natural gas infrastructure demand and serve our customers and.
Speaker Change: <unk> is the only major midstream company with a portfolio that offers long haul gas transmission reliability of utility infrastructure and emissions benefits of renewable power.
Speaker Change: This unique combination allows us to provide diverse and comprehensive energy solutions for electric power not only meet the affordability and reliability needs of customers, but also support their long term sustainability goals as well.
Speaker Change: In 2024, we added over $5 billion of gas and renewable projects.
Speaker Change: Include pipeline projects for more than two gigawatts of new natural gas generation in Tennessee and Carolina.
Speaker Change: Our new Permian gas egress pipeline, which directly supports U S. Gulf Coast LNG two sets of offshore pipelines in the Gulf and the sanctioning of approximately one two gigawatts of solar in Ohio, and Texas and we're pleased with what we've delivered so far and we expect we'll be able to continue sanctioning attractive projects.
Speaker Change: Across each of our franchises.
Speaker Change: Now ill jump into the business updates starting with liquids 2024 was a milestone year for LP with record annual volumes on Gray Oak Ingleside and Flanagan South we fully expect that under all Canada U S trade relations outcomes Canadian oil will continue to flow cells and our mainline is the vital conduit.
Speaker Change: Supplying downstream demand centers across the continent, and ensuring energy security for millions of North American consumers and workers.
Speaker Change: As we expected the mainline experienced strong volumes all year, averaging throughput of $3 1 million barrels per day, even with Tms entering service.
Speaker Change: In addition, the mainline has been back in a portion of <unk> since November reflecting continued strong demand for our system and that demand alongside our operational excellence has this earning near the upper end of our ROE color earlier than expected as the base grows we continue to advance conversations with customers.
Speaker Change: To develop additional WCS be egress for late 2026 early 2007 and later in the decade. Additionally.
Speaker Change: Additionally, we also signed a letter of intent with the government of Alberta to accelerate future expansion opportunities across our system and support their growth ambitions.
Speaker Change: And in order to bring more condensates, Canada, we're proceeding with a very capital efficient customer backed expansion of southern lights pipeline.
Speaker Change: Earlier this year, we announced a 120000 barrel per day expansion of the Gray oak pipeline to support growing demand from shippers seeking delivery to Corpus Christi, where ingleside facility is located.
Speaker Change: We're expanding our storage offering at Ingalls side to support those additional volumes on Gray Oak and we also acquired plugged in to nearby docks, which dramatically increased single sides VLCC loading windows. All told our liquids franchise is positioned to grow and provide industry, leading service to customers across the.
Speaker Change: Content.
Speaker Change: Our gas transmission business experienced another year of high utilization in 2024, and that's continuing into 'twenty five and once again, we are a 100% re contracted on our gas pipes. This year.
Speaker Change: In fact, we've already seen a few new throughput records on our systems over the last few weeks.
Speaker Change: Our total U S transmission system recorded its two highest delivery days ever in January supported by all time highs on Maritimes and northeast U S. As well as a couple of top 10 days on Texas Eastern and Algonquin.
Speaker Change: Two of our storage facilities Egan hub in Moss Bluff recorded some of their highest ever daily withdrawals in January as well.
Speaker Change: During 2024, we sanctioned approximately $4 billion of new capital projects predominantly focused around the U S Gulf coast infrastructure, extending our growth backlog through the decade.
Speaker Change: The U S. Federal government has now announced reversal of the LNG pause on non FTA facilities, and that's bolstered our confidence in other LNG expansion opportunities.
Speaker Change: And in the fourth quarter, we placed the Venice extension project into service and it's now supplying natural gas to the Plaquemines LNG terminal in Louisiana.
Speaker Change: We also completed a six five bcf expansion of Tres Palacios gas storage facility in Texas, enhancing our competitive service offering the Gulf coast customers, along our Texas Eastern system.
Speaker Change: In the Permian, we purchased a 19% interest in the Whistler joint venture partnering with Whitewater midstream and MPLX and establishing an integrated and growing natural gas footprint in the area.
Speaker Change: Alongside these partners, we sanctioned the black Com pipeline, which is expected to enter service in 2026 and provide up to two five Bcf per day of natural gas egress out of the Permian Basin.
Speaker Change: And then third quarter, we announced our acquisition of a 15% stake in the D var system, a key conduit for the Wister pipeline.
Speaker Change: These investments will drive growth opportunities through the decade.
Speaker Change: On the regulatory front, we recently received approval from the Canadian energy regulator for our $1 2 billion Aspen <unk> T north expansion, ensuring capacity to serve growing LNG demand on RPC pipe system and in the U S. We reached and filed a negotiated settlement with customers on Texas Eastern.
Speaker Change: As well as reaching settlements and principal on both Algonquin gas transmission and Maritimes U S.
Speaker Change: The rates on Texas Eastern had been in effect since October one 2024, and we expect FERC approval of the ADT and Maritimes and northeast sediments later this year.
Speaker Change: Now, let's turn to GDS.
Speaker Change: The utility franchise has approximately doubled in size this year, having Brett Enbridge gas, Ohio, Utah, Idaho, Wyoming, and North Carolina in house, the gas distribution and storage business is now delivering over nine Bcf per day of gas to over 7 million customers. Our team is working every day.
Speaker Change: To deliver reliable and affordable natural gas to these customers and we continue to invest in key infrastructure across North America to meet growing customer demand.
Speaker Change: To that point, both enbridge gas or North Carolina, and Ohio, both hit New Daily All time throughput records last month.
Speaker Change: Enbridge gas, Utah moved its fourth highest daily gas throughput in history, and Enbridge gas, Ontario delivered a single day record for the most gas storage withdrawals out of the dawn hub.
Speaker Change: Each of our four utilities are critically important to their markets and we expect to invest about $3 billion annually across our utility franchise, earning strong returns under quick cycle capital frameworks. For example, here are a few of our larger utility projects underway at our Ontario utility we anticipate.
Speaker Change: Sanctioning the St Lora pipeline project in the coming months or.
200 million dollar multi phased development enhancing our existing footprint in Ottawa.
Speaker Change: North Carolina has two exciting projects to highlight this quarter.
Speaker Change: <unk> project will serve Duke Energy's, new Roxborough natural gas power generation plant and Mariah establishes an LNG gasification facility in person county to support system reliability.
Speaker Change: Both are great examples of essential in footprint developments, ensuring reliable and growing service offerings for customers, we are making strong progress integrating all the new assets into the Enbridge family.
Speaker Change: Now, let's jump into renewables before passing off the pad three.
Speaker Change: Throughout 2024, we advanced our renewables platform under our utility like business model, we are pursuing growing projects with high quality Blue chip customers that are in strong risk adjusted investment returns in 2024, we sanctioned approximately one two net gigawatts of new quick style Gil solar.
Speaker Change: <unk> and almost 20% of that capacity is already operating I'm excited to announce that the entire Fox squirrel facility in Ohio is now in service generating 577 megawatts of renewable power under long term contracts with Amazon.
Speaker Change: Earlier this year, we sanctioned the Orange Grove Solar project, which will generate 130 megawatts of power under long term agreement with AT&T and support the growing electric generation needs of the aircraft market.
Speaker Change: We also sanctioned the Sukhoi a solar project in Texas, which is supported by power purchase agreements with customers, including AT&T and Toyota in Europe, We continue to advance our offshore portfolio, having placed stay calm and protocols ground large into service in 2020 for both those facilities are supported by <unk>.
Speaker Change: Long term ppas with EDF.
Speaker Change: Manufacturing is largely completed for a call vadose and the drilling campaign is underway. We now expect the project to enter service in 2027, which is later than our original schedule and with that I'll pass it off to Pat to review our financial performance.
Pat Murray: Good morning, everyone. Thank you Greg.
Pat Murray: There has been a busy year for us and I'm pleased to report record fourth quarter and full year, EBITDA and DCF per share for.
Pat Murray: For the quarter EBIT increased considerably over $5 1 billion, reflecting an over $1 billion increase from the same period last year.
Pat Murray: Our DCF per share for the quarter rose to $1 41.
And approximately 10% increase over last year and our adjusted earnings per share rose to 75 per share, reflecting a 17% increase over the same timeframe.
Pat Murray: EBITDA benefited from toll escalators on the mainline strong throughput on our Gulf coast, and mid continent assets and lower power costs.
Pat Murray: Partially offset by lower ex Gretna volumes, although 2024 was stronger than we anticipated 23 had realized a record fourth quarter.
Pat Murray: Gas transmission was up significantly from 2023 OLED.
Pat Murray: Owing to contributions from the Whistler JV Tomorrow, RMG Aitken Creek as well as technical rate settlement, taking effect on October one.
Pat Murray: And as a reminder, we achieved that GPM growth. Despite the sale of our interests in the alliance and aux Sable partnerships in the second quarter of 2024.
Pat Murray: For the first time, our gas distribution business reflects a full quarter of EBITDA from all three U S. LDC has acquired in 2024 this drives the $500 million or so of year over year increase within the segment.
Pat Murray: The renewable power, we recognized another tranche of investment tax credits relating to the Fox World Phase II alongside a full quarter of contributions from our higher interest in OTC, an albatross assets acquired in Q4 2023.
Pat Murray: Below the line higher average rate and best balances from the closure of the various U S utilities resulted in higher financing costs in the fourth quarter compared to last year.
Pat Murray: Collecting on full year results 2024, EBITDA exceeded our recast guidance range supported by strong utilization and demand across all franchises as well as the weakening CAD to U S foreign exchange rate.
Pat Murray: For DCF, we finished the year just below our guidance midpoint. Despite pre funding in the U S gas utilities, a great outcome and a testament to the growth within our business.
Pat Murray: As Greg mentioned earlier this marks our 19th consecutive year, achieving or exceeding our financial guidance and while it's early we're currently on pace to extend that track record and 25.
Pat Murray: That note I am pleased to reaffirm the 25 guidance we provided in December.
Pat Murray: We continue to expect adjusted EBITDA between $19 4 billion and $20 billion.
Pat Murray: DCF per share of $5 50 to $5 90 per share.
Pat Murray: Full year LDC contributions new assets in service and continued cost saving initiatives are expected to drive the majority of the growth in 2025.
Pat Murray: Although early so far the mainline is that enforcement all year, we've experienced colder weather in Ontario, and the current strength of the U S dollar could be a tailwind if experience for the entire year.
Pat Murray: This can be partially offset by a slower than expected decline in U S interest rates.
Pat Murray: I'm also reaffirming our mid term outlook and look forward to discussing this with the investment community in a few weeks at our upcoming Investor day.
Pat Murray: Now I'll close my remarks, with a refresher on our long held commitment to capital discipline before passing it back to Greg.
Pat Murray: Our three pillar approach to capital allocation is unchanged in 2025, the balance sheet will remain strictly and focus with our financial guardrails governing all investment decisions. We expect full year contributions from the U S gas utilities that closed in 2020 for it to benefit our leverage metrics in 'twenty five.
Pat Murray: Thoughtful capital recycling program has been a cornerstone of our business for decades, and we successfully recycled over $15 billion.
Pat Murray: Since 2014.
Pat Murray: Including our recently announced east West tie line sale.
Pat Murray: Sustainably returning capital via a low risk dividend is a hallmark of our investment offering we're committed to growing the dividend supported by our diversified and high quality cash flow profile lastly.
Pat Murray: Lastly on growth you can expect us to prioritize brownfield investment at low multiples when sanctioning new projects to supplement our backlog.
Pat Murray: Our capital backlog now sits at 26 billion with 5 billion of assets placed into service in 'twenty, four and $8 billion of newly sanctioned projects added through 2029.
Pat Murray: As always a special thank you to all the team members for delivering an another exceptional year with that I'll pass it back to Greg to finish the presentation.
Greg: Well, thanks, very much Pat and again 2024 caps off a record year of financial and operational performance here at Enbridge.
Greg: Steadily growing dividend supported by a utility like cash flow profile remains a cornerstone of our investment offering as demonstrated by 30 years of consecutive dividend increases the complementary nature of our overlapping businesses will continue to drive growth enable optimization and enhance our opportunity.
Greg: Set through the decade, Enbridge as a first choice investment opportunity offering an attractive yield alongside visible long term growth that is largely insulated from economic gyrations before we close I'll remind everyone to please join US on March 4th for our annual Investor Day in New York the team's excited to see you in <unk>.
Greg: Share the opportunities being realized across the organization and driving our future growth with that I'd like to thank you all for listening and operator, please open the lines for questions.
Speaker Change: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad you raise your hand and joined the queue. If you would like to withdraw your question simply press Star one again.
Speaker Change: Your first question comes from the line of Jeremy Tonet from Jpmorgan. Your line is open.
Jeremy Tonet: Hi, good morning, good morning, Jeremy.
Speaker Change: Also wanted to send the team happy Valentine's day as well.
Just.
Speaker Change: And just curious I guess with WCS b.
Speaker Change: Reduction in growth opportunities, there and initiatives I guess out of Alberta, If you could talk a bit more on how you see that I guess I'm folding over or what type of timeframe and.
Speaker Change: How large could this actually scale over time in your view.
Speaker Change: Well, maybe I'll just start but I'll turn it over to Colin very quickly here, but.
Speaker Change: Youre on it.
Speaker Change: We will send the love back to you too on Valentine's day, but I will say, you're really seeing great opportunities in production growth and we're looking at a lot of quick hit permit light low multiple brownfield type <unk>.
Speaker Change: The activities on the liquids front to serve the markets on both sides of the border. So.
Speaker Change: Youre going to hear more about that during investor day, but Colin do you want to speak to a little bit what we've been doing the last month and so yes.
Speaker Change: Yes, I mean, it's only been hey, good morning, Jeremy it's only been about a month since.
Speaker Change: Announcement, and we've been working feverishly on that even before then I would view that announcement as an endorsement.
Speaker Change: Of our of our role and our playbook.
Speaker Change: We will look to tell you a whole bunch more than a couple of weeks at Enbridge day, but even maybe zoom out a bit further.
Speaker Change: Siding.
Speaker Change: Number of projects.
Speaker Change: In the calendar year.
Speaker Change: Italy.
Speaker Change: Zinc production is surprising to the upside.
Speaker Change: None.
Speaker Change: Huge capital projects by our customers, but as you've been reading lots of Debottlenecking and optimizations essentially re rating that.
Speaker Change: Kit and on demand side.
Speaker Change: Strong as well so.
Speaker Change: So it's shaping up well and there is infrastructure opportunities from tip to start.
Speaker Change: Regionally mainline market access and expertise will play more yes, Jeremy kind of like my opening comments I mentioned.
Speaker Change: Its just one aspect that gives us really great confidence about continuing our growth rate through the decade.
Speaker Change: Equally you would've seen a portion the last few months.
Speaker Change: The pipes being used but the requirements for more or are definitely there. So look forward to talking about that further in a couple of weeks.
Speaker Change: Got it we will wait for more details then.
Speaker Change: And at the risk of a question that might be more fully answered at analyst day as well just wondering with the new regime in DC in different policies towards energy and energy infrastructure development in general.
Speaker Change: If you could share any thoughts on what that means for enbridge, particularly around line five or otherwise yes.
Speaker Change: Sure well I think the first and foremost thing and you've heard US say this in others as well, but we've got the portfolio the Baxter.
Speaker Change: It's in all of the above energy solution, that's going to be needed. If you've got liquids, if you've got natural gas assets and you've got power assets. It's on if you've got export assets. Its on so we've got all of those pieces. So I think that's positive.
Speaker Change: Our rational approach to sustainability issues taxation promoting reform I would expect all of those are going to be pretty.
Speaker Change: Critical to us.
Speaker Change: We're already seeing it.
Speaker Change: Again, just with <unk>.
Speaker Change: Requests for.
Speaker Change: And you'd probably see it in our deck requests for things like gas generation as Colin just mentioned on the oil side I think that's going to be extremely positive.
Speaker Change: Sure, let's let's get into it we've got tariff concerns out there, but there is such a hard wiring of the energy system in North America, We just don't see that as a material impact and I think given what we're seeing from customers.
Speaker Change: That's actually bearing out in reality, and we're going to see it happen on the investment side as well.
Speaker Change: Great that's helpful.
Jeremy Tonet: In a few weeks thanks Jeremy.
Your next question comes from the line of Robert <unk> from CIBC capital markets. Your line is open.
Speaker Change: Hey, good morning, everyone I wanted to continue on the liquid side here.
Jeremy Tonet: Wondering if you could comment on the discourse.
Jeremy Tonet: It's been popping up about the need to diversify our markets for energy.
Jeremy Tonet: And they've got that Canada develops the political will can you indicate your appetite.
Jeremy Tonet: And under what circumstances, you would invest in a long haul liquids pipeline in Canada, such as northern gateway or even align going east.
Rob: Sure. Thanks, Rob.
Rob: Look that's a really thoughtful question and we've obviously given a lot of thought to that I will start by saying that we're really focused intently more on broader themes macro trends like production demand grows earnings returns on capital than day to day political gyrations, but that said, we're not blind to the trade discussions.
Rob: And disputes.
Rob: But a real sustainable trends arent made in a day or month takes a long time. So again, that's why we're focused on some of the stuff we were just talking about.
Rob: In terms of relatively low capital short plays.
Rob: And thats going to be the reality for a long time to come that gas oil energy is going to move north and south.
Rob: More than it does east and west, but specifically say the northern gateway.
Speaker Change: I'm really pleased to see Canadian policymakers focused on that issue and realizing the true benefits of diverse markets. We've pitched that for a long time and I think our views on LNG and liquids exports are well known we said for years that we've been missing the boat unintended on that for a long time, we worked.
Speaker Change: Really hard on northern Gateway first time around rate and service hopefully for Canadians. We had permits we had regulatory approvals indigenous participation strong customer support Unfortunately.
That project was cut short by the federal government, which really cost us hundreds of millions of dollars.
Speaker Change: And our investors that right. So that's a powerful earnings so for us to be willing to seriously consider reinvesting in a project like that whether it's east or west are just west we'd need to see real change on numerous fronts. Let me tell you about that one.
Speaker Change: Things like what Premier Smith in Alberta has been doing in terms of making positive moves to commit volumes on some of these major pipes and seeking internal solutions to energy mobility in Canada, and North America, we would need to see real legislative change at the federal and provincial government level that specific.
Speaker Change: <unk> identify as major infrastructure projects like northern gateway as being in the national interest and therefore legally required.
Speaker Change: Late to see permanent changes and for example, they are eliminating C. 69, 59, all of that would be a positive indicator for a change in the trend towards energy infrastructure and other example.
Speaker Change: Let us see.
Speaker Change: Support for energy production as opposed to reducing it which you see through emission caps in carbon.
Speaker Change: The attacks more indigenous consultation engagement and direct participation via loan guarantees that frankly that loan guarantee program that exists now would be way too small for meaningful projects on that front, and we believe you'd likely need capex cost and reasonable return tractors to ensure you could.
Speaker Change: Actually attract the kind of capital we're talking about to such projects. So.
Speaker Change: Robert It's a lot of coordinated federal and Pan provincial Legislative and regulatory action would be required before we think investors management teams, our customers would be able to green light such projects lots of talk from governments and policymakers, which is great, they're saying the right things, but it's going to take real actions laws regulations to attract.
The capital in our view.
Speaker Change: That's a great answer I can only hope that the politicians understand the need for a better risk transfer mechanism to undertake these massive projects given the history.
Matt: Hey, Matt.
Matt: So just another quick one here on the renewables I'm just curious.
Matt: If youre seeing anything coming out of the Trump administration.
Matt: Maybe you could just update your outlook for what you expect on onshore renewables.
Matt: Administration on what it could mean for reducing the gap between your DCF per share in the other per share metrics.
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Speaker Change: Hey, Rob sorry, we got disconnected there. So hopefully I was just saying that it's a nice spot to be in from a capital allocator perspective.
Speaker Change: All of our business units have opportunities, which mean, we get to pick the ones with the very best returns, which works for investors.
Speaker Change: Okay. Thank you very much thanks Ron.
Speaker Change: Your next question comes from the line of Ben Pham from BMO capital markets. Your line is open.
Speaker Change: Yes.
Ben Pham: Hi, good morning.
Speaker Change: Hey, Matt maybe on the <unk>.
Speaker Change: <unk> side of things.
Speaker Change: Quarter projects coming in and any comments on that.
Speaker Change: Similar situation I know U S.
Speaker Change: Can you comment and maybe just given how the public equities have performed the last couple of years meaningful underperformance like how does that look relative to developing renewable power assets.
Speaker Change: Well, maybe I'll start, but I'm sure Matthew will have some thoughts.
Speaker Change: First of all I think it goes to the customers and you can see who are signing the Amazons AT&T <unk>.
Speaker Change: And I think Youll see some other big Tech data center type people, signing up with us that they want to work with big players.
Speaker Change: And they also want to see differentiated opportunities so whether it's just solar whether its.
Speaker Change: Whether it's wind and also gas so I think we're in a good spot to be able to provide in different jurisdictions multiple offerings and we're a big player. They know we're going to get the stuff done and then maybe Matt you can speak a little bit too.
Speaker Change: The purchase of <unk>.
Speaker Change: Of our development team in Dallas too.
Speaker Change: So.
Speaker Change: Thanks Ben.
Speaker Change: So.
Speaker Change: Yes, the public equities obviously.
Speaker Change: It really boils down to the model that we pursue on renewables is the low risk commercial model.
Speaker Change: And youre seeing a lot of different things play into those public companies, whether it would be.
Speaker Change: Big write downs that you've seen in the offshore.
Speaker Change: Some of them in trouble on development or supply chain and this is where our competitive advantage really kicks in in terms of the.
Speaker Change: The fact that we have the supply chain capabilities, we don't take big speculative risk on offshore leases all of our power is fully contracted as <unk> seen the most high quality Blue chip Counterparties.
Speaker Change: And so what we're seeing on our side is frankly opportunity and I think the few big players that have that capability will continue to see as we've seen very strong.
Speaker Change: Risks.
Speaker Change: Profiles and very strong returns and as you see in the results and I think you mentioned this record results in renewable.
Speaker Change: It shows that we're getting great returns and that these projects and investments are accretive right off the hop both on cash flow and earnings per share. So we look forward to more of that.
Okay. Thanks for that context.
Speaker Change: The U S gas.
Speaker Change: <unk>.
Speaker Change: Even enbridge gas too can you comment on where the realized ROE is.
Speaker Change: Trended during 2024 versus allowed.
Speaker Change: Where the realized ROE trended during 2024 is that your question again.
Speaker Change: Yes.
Speaker Change: We expect all of our utilities to see.
Speaker Change: Do you track.
Speaker Change: And to meet their expected, our oes or their allowed Roe.
Speaker Change: And they are very.
Speaker Change: Steady the U S utilities.
Speaker Change: They don't have any exposure to weather and that sort of thing. So we're very pleased with how Ohio, North Carolina, and Utah as well as <unk> for that matter finished the year. They all finished on budget and exactly where we were expecting them to in Ontario. As I think you would have seen through our quarterly report to say it was a very very mild winter last year, so that impact.
Speaker Change: Our our realized ROE franchise, we wont file that.
The finished or that certain early till the followed but we would be below that based on the weather results do you think on a weather normalized basis and Theyre all on the 10% range right. So just like the gas transmission stuff out in Western Canada, which is very solid steady quick.
Speaker Change: Quick cycle as you know given that 10% return on equity with very little risk.
Speaker Change: Okay got it thank you.
Speaker Change: Thanks.
Speaker Change: Your next question comes from the line of Manav Gupta from UBS. Your line is open.
Manav Gupta: Good morning, Congrats on a strong quarter.
Speaker Change: Guidance generally tends to be a little conservative as it were.
Speaker Change: In 2024 help us understand what could drive you towards the top end of that guidance for 2025.
Speaker Change: Yes. Thanks for the question I think historically, if you looked at our performance, we usually fit right within kind of the guidance range that we have we over performed a little.
Speaker Change: On EBITDA this year, which is great to see.
Speaker Change: But I think if you think about guidance for next year, we've had lots of commentary around the fact that it was set on a $1 35 dollar.
Speaker Change: So if we stay above that that'll be helpful from a tailwind perspective, you should remember, though that we do.
Speaker Change: Hedge their produce business significant amount of that when we released guidance back in December we kind of gave a sensitivity that for every one penny that the dollar stays above that 135, all year. That's about one penny of DCF and about 50 million of EBITDA. So you can kind of get.
Speaker Change: Masturbation of where that might land as a result of that.
Speaker Change: <unk>.
Speaker Change: Michel just noted that last year, we had colder weather in fact, sorry warmer weather significantly warmer weather this year starting off fairly good got some colder weather in Ontario, and even eastern U S, which I think can help that but maybe just offsetting that potentially is.
Speaker Change: With interest rates coming down quite the same extent that maybe we thought they would given how inflation is kind of stayed in the U S. So I think when you take all those together and remember it's pretty early in the year I think we're pretty comfortable still with the guidance range that we have maybe with a few extra tailwind and headwinds at this time.
Speaker Change: Perfect. My quick follow up his theories help us understand the kinds of discussions youre, having with datacenter operators incremental power at your leverage today data positive data center, followed market demand. Thank you, yes, yes for sure look at it's not just talked right I mean, we're actually signing up and executing on projects.
Speaker Change: You've talked a little bit before above the one five gigawatt pie.
Speaker Change: Pipeline, we are building for TVA.
Speaker Change: Syed.
Speaker Change: That's all driven by electricity demand in North Carolina, one four gigawatt.
Speaker Change: For Duke that's all driven by demand in Utah, we've connected several players call. It a couple of hundred behind the meter.
Speaker Change: Megawatt plays in Ontario.
Speaker Change: Lots of discussion with the datacenter, specifically, Ohio, we've just.
Speaker Change: We're connecting a one gigawatt facility there so thats and Thats five gigawatts just in that group between GBS and GTS that we have just signed up and are executing on power generation and these are on two gigawatts on solar and again, you've seen the likes of the AT&T is.
Speaker Change: And Amazon. So yes. There is there is a whole boatload of folks that we're having conversations with and it's not all the big players, there's a bunch of small players too so.
Speaker Change: If you think about each gigawatt call it about 200 million cubic feet a day or so.
Speaker Change: Every.
Speaker Change: Every bcf you add five gigawatts youre going to get abuse Bcf of demand on the infrastructure side. So we're seeing that.
Speaker Change: I'm also going to talk about this more at Investor day too.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the lineup Maurice Choy from RBC capital markets. Your line is open.
Maurice Choy: Thanks, and good morning, everyone.
Maurice Choy: I wanted to touch on capital allocation for a moment here.
If tariffs do occur meaningfully in a prolonged what adjustments if anything at all.
Maurice Choy: You see in your capital allocation strategy.
Maurice Choy: Geographically types of infrastructure types.
Maurice Choy: Any adjustments that you see being necessary.
Maurice Choy: Yes, I would say unless it's a very high tariffs and on a prong basis, we just don't see significant changes on that front.
Maurice Choy: If you think about starting at Ges.
Maurice Choy: GTS on the gas side those flows largely don't go back and forth across the border Theres some of that that goes on but not a significant way as you know we're continuing to invest in export facilities built on the liquids and the and the LNG side those are going to continue to happen.
Maurice Choy: So I just don't see a significant change in the near term.
We talked a little bit about major east west projects, but I'm, not 100% churn or just west projects those are going to happen anytime soon I would say, we're just very focused on some of these short.
Maurice Choy: Quick hit projects Youre going to continue to see the products move back and forth across the border on the liquid side of things and we're very focused on supply chain issues, Fortunately being a big player.
And usually number one or number two customer for so much of the equipment, we get for steel et cetera, I think we're in a great position on that front. The projects that were execute executing today, we've looked at and we just don't see any material impacts on those as well. So obviously, it's a longer term issue, but in the near term I don't see a dramatic.
<unk>.
Maurice Choy: That's a good point about timing here.
A longer term solution versus say, a four year presidential term and maybe on that point are there any parts of the energy value chain words on liquids or oil <unk> gas.
Maurice Choy: You see that.
Maurice Choy: While bulking up.
Maurice Choy: Given all the political uncertainty that we have on both sides of the border.
Speaker Change: Sure look I think in.
Carlos: Carlos Good call Us Lucky.
Carlos: Bulking up on the gas side in the last couple of years, both on the distribution side and on the gas transmission side, we bought multiple storage facility, we entered into new gas deals out of the Permian all of that stuff is front run this and puts us really in the pole position on that front, sometimes I've often heard of the.
Carlos: Big four being talked about in gas, but where the real deal and gas and so I think we continue to move those those projects forward sort of happy on that side, and then that being said.
Colin: As Colin laid out an MLA out again in March I think there's great opportunities on the liquid side too. So I think we've got the right portfolio in the rate jurisdictions, both in and through North America and out of North America. That's a good spot to be in and you're even seeing on the gas side offshore.
Carlos: Activity is I think that was kind of lift over last year, but.
New projects that we're looking at the offshore Gulf of.
Carlos: On the Gulf.
Carlos: That's going to be exciting for us as we move through the end of the decade.
Carlos: Perfect. Thank you very much.
Speaker Change: Your next question comes from the line of Rob Hope from Scotiabank. Your line is open.
Rob Hope: Good morning, everyone.
Speaker Change: Maybe to stick with permitting the BC government has accelerated some permits for the Aspen project on teen Arthur.
Speaker Change: Can you maybe update us on discussions regarding the larger capital plan, there and whether or not you could see some acceleration of permitting and construction.
Speaker Change: Certain things right here yeah. Thanks, Rob. So we are very excited to see that the BC government is supporting the asset.
Speaker Change: On point project.
Speaker Change: <unk> gotten our SCR.
Speaker Change: CER approval for that project, our continuing to work through that there is still some permitting from the BC hydro point for some power connections. So that's all really positive.
Speaker Change: We're a big supporter obviously of the gas infrastructure NBC. We are a pipeline that continues to deliver both to the industrial and residential base. There is part and largely supporting the LNG exports as well.
Speaker Change: We think this is a great thing theres lots of opportunities for growth there. It's a great business for US you know that that is the true cost of service business and as Greg said, we get it really.
Speaker Change: Our return ROE at 10% is something that we really like in our portfolio.
Speaker Change: I appreciate that and then maybe just sticking with gas, but moving over to the gas distribution side now.
Speaker Change: Have the U S assets under your belt for a little while there.
Speaker Change: The integration process gone and are you able to potentially see some early signs of some chunkier projects kind of like the ones that youre seeing in the Carolinas.
Speaker Change: Yes, Rob it's Michele here.
Speaker Change: Now that we've closed all of the utilities, we have them in the integration. It first of all is going really well so far of course, there's lots of work to do but.
Speaker Change: We're definitely seeing the benefits of bringing these utilities together, whether it's the conversation the pursuing of opportunities to bring customers solutions that worked in one area, taking it somewhere else.
Speaker Change: I would say is I think the growth we anticipated at the time that we were looking at this which would have been mid <unk> going back to mid 'twenty three.
Speaker Change: Certainly there were absolutely seeing the customer additions, we're seeing the modernization.
Speaker Change: We're really seeing is a nice tailwind on what I'd call. The electrification side of things. So the power generation group, whether that's for data centers or otherwise and of course natural gas plays that are very obvious robot there, we're seeing that across our businesses.
Speaker Change: Greg mentioned earlier, the datacenter growth hooking up for power generation in every one of the utilities I mean, we've probably got a gigawatt and a half that we're supporting right now in Ontario and of course, the Ontario government has come out with its largest procurement ever and we certainly see strong support from them to need all of the above we see a lot of good.
Speaker Change: Growth happening there, Utah Wasatch front, that's Ogden Salt Lake Provo real area of focus for data centers and natural.
Speaker Change: Natural gas power generators in Ohio, Ohio, I think we were looking at Modernizations and pretty steady customer growth, we're seeing lots come on from whether its data center driven or otherwise.
Speaker Change: And then of course, we've talked about North Carolina, and that's a good example, where there is two phases to that $2 15 project in phase III has come on faster than we thought for a total between the two phases of close to $500 million.
Speaker Change: Cubic feet a day, so very very happy with that and customer growth is really good even like I said that sleepers kind of in Ohio wed like to like its something called the U haul rankings in North Carolina at the end of 2024.
Speaker Change: Third state there, that's where people measure where people move to growth in states, Utah went from nine from 13 up to nine and good old Ohio. They used to be 23 is up to 13. So folks are moving into the jurisdictions, where AD continue to be super supportive of gas, we could not be happier with certainly.
Speaker Change: The new utilities, but also like I said, we're seeing some good growth on the power generation side in Ontario. So what's nice is you get big projects and small projects.
Speaker Change: So you might hook up 200 megawatt behind the meter stuff that might be $50 million in that those start adding up and Theyre really quick hit and quick cycle and then as you said like the North Carolina projects might be a good gig and a half at five or $600 million. So you've got a mix of all of those projects with amazing Counterparties. So.
Speaker Change: Yeah, I mean, we're we're thrilled with them, we're going to continue to grow those assets, where I'd like $3 billion in <unk>.
Speaker Change: Capital a year for the utilities on a combined basis steady quick cycle will turn into EBITDA next year.
Speaker Change: Yeah.
Speaker Change: Alright, I appreciate that and the U haul ranking with a new one for me so thanks for that too.
Speaker Change: Yeah.
Speaker Change: Sure.
Speaker Change: Your next question comes from the line of Theresa Chen from Barclays. Your line is open.
Theresa Chen: Good morning, Thank you for taking my questions.
Theresa Chen: I wanted to revisit the tariff discussion.
With the headlines over the past couple of months.
Theresa Chen: Been a lot of noise on who would bear the cost of the tariffs.
Theresa Chen: More to come to fruition.
Theresa Chen: And it doesn't seem like there would be enough or demand elasticity to really impact us volumes on your system, especially when you think about the various contractual measures in place early color on Nbc's two with U S portion.
Theresa Chen: Based on your analysis, if not the infrastructure provider what do you think would bear the cost of that economic rent shift.
Speaker Change: Yes, I mean, I'll, let Colin talk about which one of those customers might see that.
Speaker Change: Hey, guys. Thanks for the question I think I agree generally with your.
Speaker Change: Synopsis of this.
Speaker Change: Pretty sticky demand you mentioned a number of other reasons.
Speaker Change: A number of our customers have integrated business models and infrastructure right production and refining.
Speaker Change: We built the whole business around that.
Speaker Change: Supply switching to U S. Refiners much has been said and written about that recently.
Speaker Change: Generally suboptimal right so.
Speaker Change: These are must run systems.
Speaker Change: And society depends on it right so.
Speaker Change: We view the impact on volumes on our systems to be negligible and a tariff.
Speaker Change: Situation again, depending on the size of the tariff.
Speaker Change: We think the tariff impact.
Speaker Change: It would likely be shared to some extent.
Speaker Change: And it depends on which region you're in right.
Speaker Change: Sure.
Speaker Change: Where the where the refining.
Speaker Change: Options exist.
Speaker Change: And don't exist. So it will vary but I think it will be shared Teresa.
Speaker Change: Do you agree with that but that's our view from our perch everything <unk>.
Speaker Change: Let's not get too.
Speaker Change: Too excited about the conversations but also put it in context I think even this has been recognized by policymakers when you're at 10% on energy versus some other products that I think you're bang on I mean, the elasticity of that is.
Speaker Change: Is pretty marginal so we don't expect to see much change in that if anything I am concerned about on tariffs. If if they came in does that have an impact on economic growth and if economic growth declines then that can see a decline in energy demand but.
Speaker Change: Yet even offset that with all the things that are going on on generation in datacenters and stuff I'm not even sure. That's materials. So I think that's why we're trying to focus on the long term trends, what's happens and as Colin said this is a societal needs on all this front.
Speaker Change: Give us a lot of confidence that.
Speaker Change: That the tariff issue is not particularly material.
Speaker Change: One more.
Speaker Change: Data point here, maybe to bring it to a head we're seeing fulsome nominations.
Speaker Change: Right on the system Gen Fab sold out in the face of this so.
Speaker Change: That's the trend so far.
Speaker Change: Got it thank you.
Speaker Change: And turning to a different.
The regulatory discussion I wanted to get Cynthia take on what is the path forward at this point for Rio Bravo and Brian.
Speaker Change: Following that series of executive orders by deep sitting administration that appeal to some of the regulations that are required EJ reviews, and then for council subsequent letter to the D. C circuit earlier this month.
Speaker Change: Two how type application.
Speaker Change: Question on warranted.
Speaker Change: What do you think is going to happen from here and can you tell us about next steps and any impediments or.
Speaker Change: Catalysts, along the way.
Speaker Change: Yeah. Thanks, <unk>. So just as a reminder, that Rio Bravo pipeline is now being managed directly through that joint.
Speaker Change: Joint venture but.
Speaker Change: And so we still have an interest in that my thoughts are that.
Speaker Change: We have a new administration there is lots of opportunity.
Speaker Change: For clarity to come in through the process. We do know that the FERC is going through the air supplemental environmental impact statement process of gathering that information and that information is ready to be filed as you mentioned there was additional information that.
Speaker Change: Next decade in Rio Bravo filed.
Speaker Change: Hi.
Stating that the executive orders should actually be taken into account to this process.
Speaker Change: My expectation is we're going to continue to see.
Speaker Change: Rio Bravo work with.
Speaker Change: With the FERC to move through that.
Speaker Change: Actual impact statement to update that and there may be clarity, even before that process, though.
Speaker Change: Both we and our partners through the joint venture and of course next decade are going to continue to work to that process and we have a lot of confidence that the project is going to continue to go forward.
Speaker Change: Thank you.
Speaker Change: Thanks Theresa.
Speaker Change: And that concludes our question and answer session I will now turn the call back over to Rebecca for closing remarks.
Speaker Change: Yeah, great. Thank you and we appreciate your ongoing interest in Enbridge as always our Investor Relations team is available following the call for any additional questions that you may have once again, thank you and have a great day.
Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.
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