Economic Benefits In The Community

In helping to satisfy society’s need for secure supplies of energy through Enbridge’s core business of transporting natural gas and petroleum products, the company’s activities provide a significant and quantifiable direct economic benefit to a broad group of stakeholders.

Shareholders / Lenders

Enbridge Inc. shareholders realize returns through a combination of capital appreciation and dividends. 2011 was another strong year for Enbridge Inc. share price performance on the Toronto Stock Exchange. Investors holding Enbridge Inc. stock for the entire year realized share price appreciation of 35 per cent. As a result, Enbridge’s overall market value increased by $8 billion to $30 billion. Furthermore, in 2011, Enbridge paid dividends of $0.98/share or a total of $759 million to Enbridge Inc. shareholders. The combination of compounding dividends and capital gains equated to a total shareholder return of 40 per cent in 2011. 

Ongoing support for Enbridge’s share price comes in part from indices that provide business rankings based on information about the social, ethical and environmental policies and practices of organizations. These indices are based on the concept that a company’s commitment to CSR will sustain and grow long-term shareholder value. As a result, a certain segment of investors choose to direct their investments towards these companies. During the past several years, Enbridge has been included in the following indices:

  • Dow Jones Sustainability Index (North America)
  • Ethibel Sustainability Indices (ESI) – Pioneer and Excellence
  • FTSE4Good Index
  • Jantzi Social Index (JSI)

Enbridge Inc. lenders realize returns through interest payments on short- and long-term debt and repayment of principal at maturity. Enbridge Inc. once again met all contractual debt obligations for the year. Interest payments made to lenders during 2011 totaled $749 million.

For information on shareholder/unitholder returns for Enbridge Income Fund Holdings Inc., please visit www.enbridgeincomefund.com, for Enbridge Energy Partners, please visit www.enbridgepartners.com and for Enbridge Energy Management, please visit www.enbridgemanagement.com.

Employees

Enbridge’s business operations provide jobs and contracting opportunities in many communities in Canada and the U.S. Headquartered in Calgary, Enbridge has major offices in Edmonton, Toronto and Houston and numerous field offices in its areas of operations. Combined, Enbridge has over 6,900 employees. In 2011, Enbridge’s payments to employees for salary as well as annual incentive programs totaled approximately $762 million. The company also provides direct economic benefits to employees through savings plans, retirement/pension plans, training programs, as well as health benefit plans. The value of these totaled $173 million in 2011.

For more information on Enbridge’s employment practices, please refer to the section ‘Social Performance: Labour Practices and Decent Work’ of this report.

Community

Directed by its social vision statement, Enbridge concentrates its investments in focus areas that contribute to enriching its communities.

In early 2011, Enbridge further refined the definition of its focus areas, expanding them to six, as follows: Lifelong Learning; Community Leadership; Natural Legacy; Arts and Culture; School Plus; and Safe Community. For descriptions of these six areas, please see ‘Society – SO1 – Community Partnerships and Investments – Strategy ’ in the Social Performance chapter of this report.

By investing in each of these key areas with its dollars, partnerships and human capital, Enbridge is able to support organizations that contribute to the economic and social development of communities near the company’s operations. Enbridge believes these investments are essential to being a good neighbour and are a contributing factor in maintaining the company’s social license to operate.

Enbridge partners with charitable and non-profit organizations in its various geographic regions in Canada and the U.S. that have the skills and expertise to effect change.

In the year ended December 31, 2011, Enbridge’s actual enterprise-wide community investment expenditure totaled $13 million, which the company invested in more than 550 charitable, non-profit, and community organizations. This total represents approximately one per cent of Enbridge’s 2011 Canadian pre-tax profit.

Other direct economic community benefits, although more difficult to quantify, arise as a result of new projects in and around Enbridge’s right-of-way communities. These include job creation, skills training, as well as the purchase of goods and services in and around those communities. Please see ‘EC9’ below for recent examples of projects highlighting these direct and indirect economic benefits.

For more information on Enbridge’s community investment, please see ‘‘Society – SO1 – Community Partnerships and Investments” in the Social Performance chapter of this report.

Government

As a result of its operations within communities across North America, Enbridge pays income, property, business and other required taxes to local, state, provincial and federal governments in Canada and the U.S. These funds are ultimately used in part to fund and operate public services and infrastructure, both locally and nationally. In 2011, Enbridge paid $100 million in income, property, business and other required taxes in the two countries.

Customers

Enbridge’s gas distribution business provides close to 2 million customers in Canada and upper New York State with access to one of the lowest cost, and cleanest burning, fuel sources—natural gas. Accessing this essential service at a lower cost helps families to manage their cost of living. 

Ontario-based Enbridge Gas Distribution (EGD) has distributed over $56 million to customers through the incentive regulation sharing model, which concluded its fourth year in 2011. This agreement has benefited Enbridge’s customers and improved returns to shareholders. EGD is one of the fastest growing utilities in North America, adding over 30,000 new customers a year. (For more information on incentive regulation, please see page 65 of Enbridge Inc.’s 2011 year-end Management Discussion and Analysis.)

Enbridge also works with its gas distribution customers through its demand-side management (DSM) programs to increase the efficient use of valuable energy resources, thereby further reducing each household’s costs, while at the same time reducing environmental impact. Since 1995, EGD has helped customers reduce their natural gas cumulative consumption by about 7.0 billion cubic metres through participation in its DSM programs (the equivalent of enough gas to supply approximately 2.3 million homes1 for one year) and net energy savings to customers of approximately $2.1 billion. Through these DSM activities, EGD has helped its customers avoid cumulatively approximately 13.3 million tonnes of carbon dioxide emissions2. Measures like these move Enbridge closer to realizing its emission reduction targets, despite the pressures of significant growth in its customer base.

1   Assumes a typical residential customer uses 3,064 m3 per year to heat their home and water

2   Assumes 1.89 kgs of CO2 are emitted for each m3 gas that is consumed

Enbridge’s activities also provide a direct, yet not so easily quantifiable, economic benefit to its hydrocarbon transportation customers. Every day through its energy transportation systems in Canada and the U.S., Enbridge provides its energy producer customers with direct access to markets. Pipelines are the lowest cost and safest transportation solution for large volumes of hydrocarbons. Without this infrastructure, these customers would not be able to achieve the netback pricing that they do for their products. Furthermore, their resulting increased profitability in turn can lead to their growth, which can in turn lead to increased employment and community investment.

SUMMARY TABLE OF DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED

Enbridge Inc.

2011

($million)

2010

($million)

2009

($million)

Revenues

19,402

15,127

12,466

Commodity costs

14,854

11,291

9,011

Operating and administrative expenses

1,720

1,466

1,430

Adjusted earnings1

1,110

984

855

Payments to shareholders2

759

648

555

Payments to lenders3

749

711

656

Total compensation4

935

813

786

Donations and other community investments5

13

11.5

10

Payments to governments6

100

233

325

1.  Adjusted earnings is a non-GAAP measure representing earnings attributable to common shareholders adjusted for non-recurring factors.

2.  Includes cash dividends and dividends reinvested through the Common Share Dividend Reinvestment and Share Purchase Plan.

3.  Includes total interest payments on debt during the year net of capitalized interest.

4. Includes amounts for annual payroll, annual incentive rewards, employee benefits, employee training and development, and employee relocations.  At December 31, 2011, Enbridge had 6,934 employees.

5.  Includes investments in charitable and not-for-profit organizations.

6.  Includes property taxes, business taxes, provincial capital taxes and income taxes paid.

For information pertaining to Enbridge Income Fund Holdings Inc., please visit www.enbridgeincomefund.com; for Enbridge Energy Partners, please visit www.enbridgepartners.com; for Enbridge Energy Management, please visit www.enbridgemanagement.com.

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