Enbridge Inc.

Annual letter to shareholders 2024

Read or download in PDF format 2023 Annual Report See the Management Information Circular

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Meeting energy needs: A practical and balanced approach

Dear shareholder,

In a year that saw continued war in Ukraine, conflict in the Middle East and inflationary pressures on every consumer, the need for safe, reliable and affordable energy is in sharper focus across the globe.

Energy demand continues to grow, as does the attention on climate change. To sustainably meet our energy needs today and into the future, we need a practical and balanced approach, and energy systems that include responsibly produced natural gas and oil, as well as renewables and lower-carbon options.

Against this backdrop, Enbridge’s mission remains vital and clear: to be the first-choice energy delivery company of our stakeholders—valued by our customers across North America and beyond, trusted by communities where we operate, a dependable advisor to regulators and policy makers, and an inclusive and empowering workplace for our employees.

And as we continue to do that well, and execute on our strategy, we create value for you, our shareholders.

Delivering on our mission is our Enbridge team—proud and passionate people who are dedicated to safely, reliably and sustainably delivering the energy our world needs.

They believe in our Company and are driven by a sense of purpose and desire to serve our customers’ energy needs— 24/7, 365 days a year. We’re grateful for their service and thank them for their loyalty.

Greg Ebel, President and CEO of Enbridge, and Pamela Carter, Chair of Enbridge’s Board of Directors.

Your first-choice energy delivery company

The Company’s strong performance in 2023 reflects the diversification and resiliency of the business and ability to navigate persistent challenges in the economy and environment with little disruption to our strategic goals. The financial discipline that is the Company’s hallmark allowed us to perform well, grow in every area of the business and add attractive lower-carbon opportunities.

Of course, our performance is nothing without a solid safety record. In 2023, we maintained an industry-leading benchmark for integrity management and advanced our continuous improvement mindset. Throughout the year, we took steps to further enhance our safety programs and culture, which resulted in record performance for occupational and process safety, as well as environmental performance.

On the financial side, we handily exceeded the midpoint of our 2023 financial guidance on both earnings before interest, taxes, depreciation and amortization (“EBITDA”) and distributable cash flow (“DCF”) per share. We deployed over $3 billion of investment capacity towards tuck-in acquisitions, and secured another $10 billion of attractive, organic growth projects.

All in, this increases our secured portfolio to $24 billion. As you’ll see below, we also made a strategic move by further expanding our gas utility footprint in North America. Looking ahead, we announced an increase to our dividend in 2024 by 3%, our 29th consecutive annual increase.

Here are 2023 highlights across our core businesses:

Gas Transmission and Midstream

We advanced our liquefied natural gas (“LNG”) export strategy with the $400-million acquisition of Aitken Creek natural gas storage in B.C. and the US$335 million acquisition of Tres Palacios natural gas storage in Texas. We’re connected to four operating LNG facilities in the U.S. Gulf Coast and poised to serve more with three executed precedent agreements for gas transmission to those facilities. We invested in Smartpipe®, an innovative technology, to enhance the safety and operational reliability of our systems while also reducing emissions. And, we’ve made significant investments in renewable natural gas (“RNG”), which is blended into the natural gas stream to lower the carbon content. These investments include food-to-waste company Divert Inc., Enbridge Inc. 2024 Management Information Circular where we broke ground on a facility in Longview, WA, and the acquisition of Morrow Renewables, which includes seven landfill-to-RNG assets. We were also selected by the Department of Energy to advance one of the first hydrogen hubs in the mid-Atlantic region of the U.S.

Gas Distribution and Storage

We added over 46,000 new customers to our natural gas utility. Ontario’s population and industrial growth means that we, along with the government of Ontario, expect natural gas to be critical to affordably meeting customer energy demand and the province’s economic growth. This business is poised to grow significantly with the acquisition of three gas utilities in the U.S. See below for more information.

Liquids Pipelines

We demonstrated our commitment to customers by reaching a win-win-win Mainline tolling settlement that will see customers receive first-choice service at competitive tolls, Enbridge earn attractive risk-adjusted returns, and help ensure safe, reliable and affordable energy for society. Both our Mainline system and our Enbridge Ingleside Energy Center (the largest export facility in North America) delivered record volumes in 2023. We also further bolstered our U.S. Gulf Coast strategy with an increased ownership in Gray Oak pipeline, and conducted an open season on Flanagan South, which secures long-haul transportation from Western Canada down to the Gulf Coast for customers.

Workers walking through rows of solar panels

Power Generation

We increased our ownership in two German offshore wind projects and were selected to develop the Normandy project, which is expected to be France’s largest offshore wind farm to date. We expect to bring two more French offshore wind projects into operation this year. Onshore, we announced a 50% joint venture in the Fox Squirrel solar project in Ohio with our longstanding partner, EDF Renewables. The first phase of that asset went into commercial operation in January 2024. Overall, we see approximately 6.2GW of North American onshore development growth opportunities through 2030.

U.S. gas utilities acquisition: A transformative deal

In September, we announced the US$14-billion ($19-billion) acquisition of three U.S. natural gas utilities from Dominion Energy. This is a rare and unprecedented opportunity to acquire high quality, growing natural gas utilities at scale and at a historically attractive valuation.

On March 7 of this year, we completed the first of these important acquisitions—of The East Ohio Gas Company (now doing business as Enbridge Gas Ohio), following the approval by the Public Utilities Commission of Ohio.

The U.S. utilities acquisition is a transformative opportunity that establishes Enbridge as the largest (by volume) natural gas distribution company in North America.

The utilities are ‘must-have’ infrastructure for providing safe, reliable and affordable energy for some three million customers in Ohio, North Carolina, Utah, Wyoming and Idaho, and add to the four million customers we currently serve through our Ontario gas utility.

And similar to Enbridge’s existing business units, the utilities have a commitment to embedded sustainability and lower carbon initiatives in their operations.

The acquisition supports a more diversified Enbridge, lowers our already industry-leading business risk profile, elevates our existing utility-like model and underpins the longevity of our growth profile—both earnings and dividends.

We have protected our balance sheet strength by employing a flexible funding plan that includes equity prefunding and asset recycling. Enbridge is positioned to fund the remainder of the transaction using the variety of options available to us.

For shareholders, once again this acquisition aligns with our low risk value proposition: stability, strength, consistency, growth and optionality.

First-choice investment

We aim to be your first-choice investment and are committed to providing value to shareholders.

The strength and predictability of our core businesses, our disciplined approach to capital allocation and a strong balance sheet put us in a great position to grow and meet energy demand safely, reliably, affordably and sustainably, while providing shareholders with the investment returns they have come to expect from Enbridge.

We expect EBITDA in 2024 to be between $16.6 billion and $17.2 billion (even before taking into account any additional contributions from the newly acquired U.S. gas utilities). This translates to more than 4% growth over the 2023 guidance midpoint, and DCF per share of $5.40 to $5.80.¹

¹ DCF and DCF per share are non-GAAP measures; these measures are defined and reconciled in the Non-GAAP and other financial measures section of Appendix C of the full PDF version of our 2024 Management Information Circular.

Our vision for the future

It’s been 75 years since our incorporation as Interprovincial Pipeline and the beginning of Enbridge’s history delivering energy to people in North America.

As we celebrate this milestone, we look to the future with a new vision: to provide energy in a planet-friendly way, everywhere people need it.

This vision shapes our strategic decisions and actions as we move forward with:

A diversified portfolio across liquids, gas, renewables and new energy technologies
A focus on helping people live in both an environmentally and economically sustainable way
A global mindset to provide energy to people and regions throughout the world

This will continue to shape our future as we make investments in both conventional energy and lower carbon opportunities. Our view is that the energy transition needs all available options, with natural gas being one of the best.

It’s a critical energy source that can drive down global emissions as an alternate to coal, a complement to renewables, and a way to help reduce energy poverty for millions around the world.

As an industry, it’s on us to make progress to decarbonize the energy we transport. That’s why Enbridge is modernizing our conventional energy systems to enable reliability and lower emissions, blending natural gas with even lower-carbon fuels like hydrogen and RNG and continuing to invest in carbon capture and storage.

We’re also working closely with our customers and shippers to provide them with innovative solutions that support their needs and help them reduce their own emissions.

Building with Enbridge sign at night

Governance

The Board is committed to clear and transparent disclosure and we’re engaged with the management team on how we communicate with our stakeholders. That includes taking time to listen and understand their perspectives.

This year, as part of the commitments made in our Indigenous Reconciliation Action Plan, we established our Indigenous Advisory Group, comprised of Indigenous leaders from across North America. The group meets with members of the senior leadership team four times a year and with the Board annually. We are honored to listen and learn from these leaders and consider their perspectives and interests as we make decisions that impact communities where we operate.

Our Board is made up of diverse, highly qualified and experienced business leaders who bring forward their knowledge and broad leadership perspectives to guide this Company.

In 2023, we were pleased to welcome Manjit Minhas to our Board. Manjit brings extensive entrepreneurial, governance and community engagement experience as the co-founder and CEO of Minhas Breweries, Distilleries and Wineries. We’ve also included information about a new Board candidate, Theresa Jang, who will stand for election at the annual meeting. The broad-based business acumen and experience of both Manjit and Theresa complement our Board’s strong skill set.

We’d like to acknowledge and thank Dan Tutcher who will be retiring after this year’s annual meeting. Dan has been a valued member of our Board for 18 years and his counsel and dedication to Enbridge will be greatly missed.

Our board composition at a glance*

Circular and bar graphs

*—With the exception of average tenure, which reflects current directors, Board composition reflects director nominees standing for election, as of the date of this Circular. For more information, see the director profiles on Pages 18 through 30 of the PDF version of our 2024 Management Information Circular.

Thank you

In our first year as CEO and Board Chair, we are extremely appreciative of the opportunity to serve all who put their trust in Enbridge. We are grateful to our customers and stakeholders for their continued loyalty and are pleased to be your first-choice energy partner.

Thank you to our shareholders for your support and confidence in Enbridge. We continue to work hard to be your first-choice investment. Thank you to our Board colleagues for their amazing stewardship on behalf of our investors.

Finally, thank you to the Enbridge team for ensuring the safe delivery of the energy we all need. Recognizing that life takes energy, we appreciate their efforts to keep it flowing.

The economic and environmental challenges before us are great, but they are not insurmountable. Enbridge is in a strong position to navigate the headwinds and realize the opportunities presented to us.

Put simply, the world will need all forms of energy to meet demand while reducing emissions. Our strategy to grow our businesses, increase access to global markets and invest in lower-carbon platforms takes the big picture into account—now and longer-term.

At Enbridge, the future is clear—Tomorrow is on!

Sincerely,

Greg Ebel signature

Gregory L. Ebel
President and Chief Executive Officer

Pamela Carter signature

Pamela L. Carter
Chair, Board of Directors

Calgary, Alberta
March 5, 2024

Tomorrow is on: Vision and strategy