ENBRIDGE INC. (Registrant)
Date: January 31, 2007	By:	“/s/ Alison T. Love”
		Alison T. Love
		Vice President & Corporate Secretary

 

 

system and Aux Sable, offset by lower earnings from EGD due primarily to warmer than normal weather and higher costs in the fourth quarter of 2006.

Project Development Update

The Company has made significant progress during 2006 in advancing strategic growth projects designed to provide crude oil shippers with low cost access to diverse markets.

The Spearhead Pipeline commenced operations in early March 2006, delivering Canadian crude from Chicago, Illinois to Cushing, Oklahoma. Throughput has increased steadily, surpassing the Company’s expectations. In the fourth quarter of 2006, nominations have exceeded the 125,000 barrel per day (bpd) capacity. The Company is considering expanding the capacity of Spearhead during 2007 to meet this demand.

Construction has started on the Southern Access Expansion, which will ultimately add 400,000 bpd of additional capacity to the crude oil mainline from Edmonton, Alberta to Chicago at a cost to Enbridge of approximately $0.2 billion. The additional capacity on the Canadian portion is scheduled to come into service in phases, which started in 2006 and will conclude in 2009. The U.S. portion of the expansion is estimated to cost approximately US$1.3 billion and is being undertaken by EEP, the Company’s 16.6% owned affiliate, which owns the U.S. portion of the mainline.

In January 2007, the Company obtained industry support for the 450,000 bpd Alberta Clipper Project. This project would involve the addition of a new line to the Enbridge mainline system between Hardisty, Alberta and Superior, Wisconsin at a cost of approximately $1.5 billion (2006 dollars) to Enbridge and US$0.8 billion (2006 dollars) to EEP. Enbridge expects to finalize commercial terms in the first quarter of 2007 and, subject to receipt of required regulatory approvals, is targeting to have the Alberta Clipper Project in service between late 2009 and mid 2010.

The Company has also obtained industry support for the $0.3 billion Line 4 Extension Project. This project will extend Line 4 from its current initiation point at Hardisty, Alberta back upstream to the Company’s terminal at Edmonton. Subject to receipt of required regulatory approvals, the Line 4 extension project is targeted to be in service in late 2008.

Current shipper preferences and the demand to accelerate the development of capacity to traditional U.S. markets will likely result in the Alberta Clipper Project preceding the Gateway Project. The Gateway Project includes both a petroleum export line and a condensate import line between Edmonton and Kitimat, British Columbia. The revised in service date for the Gateway Project is expected to be 2012 to 2014.

The Company is also developing a US$0.4 billion project to extend the mainline from Flanagan, Illinois to Patoka, Illinois. The Southern Access Extension is supported by industry. An initial Offer of Settlement proposing a rolled in tolling structure for the extension was not approved by the Federal Energy Regulatory Commission (FERC), however shipper support for the project continues to be strong and the Company is working with industry to prepare an alternative tolling structure. The Company expects to file a second application with the FERC in the first quarter of 2007 to allow the project to continue on schedule with an estimated in service date in 2009.

In 2006, the Company announced its intention to build the US$1.3 billion Southern Lights Pipeline, which would transport diluent from Chicago back to Edmonton where it is needed for blending with bitumen production from the oil sands. Enbridge successfully closed a binding open season in July 2006 and in the fourth quarter of 2006, received industry support for the project. The Company expects to file remaining regulatory applications in the first quarter of 2007. Subject to receipt of required regulatory approvals, Southern Lights is expected to be in service by mid 2010.

The Company advanced a number of upstream development projects during 2006. An application for regulatory approval was filed for the $0.5 billion Waupisoo Pipeline project, which would transport crude oil from the Cheecham Terminal on the Athabasca Pipeline to Edmonton and is expected to be in service in mid-2008. The Stonefell Terminal Project, near Fort Saskatchewan, Alberta, has received regulatory approval and is proceeding, with a target in-service of mid 2008. Construction on the Surmont Project, which includes pipeline and tank facilities required by the Surmont Oil Sands Project at the Cheecham Terminal, was completed and first throughput is expected in 2007. The Long Lake Project is under construction at the Cheecham Terminal and completion of these pipelines and tanks is expected in early 2007, to coincide with first production from the Long Lake Oil Sands Project.

Enbridge and EEP are developing a number of opportunities to build crude oil contract terminals in both Canada and the U.S. Enbridge is advancing plans to build a new terminal at Hardisty and has executed contracts for over 80% of the expected 7.5 million barrel capacity. Enbridge has also agreed to provide terminaling services to BA Energy Inc. for their bitumen upgrader, currently under construction at Fort Saskatchewan, Alberta. EEP is progressing on the construction of various terminal projects at Cushing, Oklahoma, Superior, Wisconsin and Griffith, Indiana.

Enbridge is also advancing a number of natural gas pipelines projects. The expansion of Vector Pipeline has been approved by the FERC and is expected to be completed in the fourth quarter of 2007. The Neptune Pipeline project will connect the deepwater Neptune oil and gas field through natural gas and crude oil laterals currently under construction by the Company in the Gulf of Mexico. Enbridge also plans to construct a natural gas lateral to connect the deepwater Shenzi field to existing Gulf of Mexico pipelines. The Neptune laterals are expected to be in service in 2007 and the Shenzi lateral is expected to begin transporting natural gas in 2009.

Share Issuance and Dividend Declaration

On January 16, 2007, Enbridge entered into an agreement with a group of underwriters to issue 13.5 million common shares at a price of $38.75 per share. In conjunction with the offering, through a private placement, Enbridge will sell an additional 1.5 million common shares to Noverco, which will maintain Noverco’s approximately 9.5% interest in Enbridge. Both offerings are expected to close on or about February 2, 2007.

On January 16, 2007, the Board of Directors declared quarterly dividends of $0.3075 per common share, reflecting a 7% dividend increase. On January 30, 2007, the Board of Directors declared quarterly dividends of $0.34375 per Series A Preferred Share. Both dividends are payable on March 1, 2007 to shareholders of record on February 15, 2007.

New Board Member

The Board of Directors announced the appointment of J. Herb England as a director of the Company, effective January 1, 2007. Mr. England has been appointed to fill the vacancy on the Board created by the resignation of William Fatt in July 2006. Mr. England has extensive operating experience in both public and private companies, and has served as a Chairman, Chief Executive Officer and Chief Financial Officer in several industry sectors. He will be nominated for shareholder election at the May 2007 shareholders’ meeting.

Consolidated Earnings

		Three months ended								Year ended
(millions of Canadian dollars)		December 31,								December 31,
		2006				2005				2006				2005
Liquids Pipelines			71.2				60.9				274.2				229.1
Gas Pipelines			14.2				12.9				61.2				59.8
Sponsored Investments			21.5				20.5				86.8				64.8
Gas Distribution and Services			69.6				68.9				178.2				178.8
International			19.0				27.8				83.2				87.4
Corporate			(24.4	)			(17.0	)			(68.2	)			(63.9	)
			171.1				174.0				615.4				556.0

•

Liquids Pipelines earnings increased primarily due to improved results from the Enbridge crude oil mainline system reflecting higher earnings from the Incentive Tolling Settlement (ITS), Terrace expansion and lower oil loss costs.

•

Gas Pipelines earnings improved due to increased results from Enbridge Offshore Pipelines which was affected by two severe hurricanes in 2005.

•

Sponsored Investments earnings increased due to strong results from EEP, which experienced significantly higher crude oil throughput, strong margins and increased volumes in the natural gas gathering and processing businesses.

•

Gas Distribution and Services results reflected a significant contribution from Aux Sable through its upside sharing agreement, offset by the impact of warmer than normal weather and a lower allowed return on equity at EGD.

•

International earnings continue to be strong but were lower in 2006 due to a one time gain in CLH in 2005.

•

Corporate costs were higher in 2006 and reflected higher interest expense, increased business development activity and the impact of a strong labour market.

Adjusted Operating Earnings

		Three months ended								Year ended
(millions of Canadian dollars, except per share amounts)		December 31,								December 31,
		2006				2005				2006				2005
GAAP earnings as reported			171.1				174.0				615.4				556.0
Significant after-tax non-operating factors and variances:
Sponsored Investments
EEP non-cash derivative fair value losses/(gains)			(1.4	)			(0.9	)			(6.5	)			5.0
Dilution gains on EEP unit issuance			—				(4.3	)			—				(8.9	)
Revalue future income taxes due to tax rate changes			—				—				(6.0	)			—
Gas Distribution and Services
Warmer than normal weather affecting EGD			6.7				1.5				36.9				—
Dilution gains in Noverco (Gaz Metro unit issuance)			(4.0	)			—				(4.0	)			(7.3	)
Revalue future income taxes due to tax rate changes			—				—				(28.9	)			—
International
Gain on land sale in CLH			—				(7.6	)			—				(7.6	)
Corporate
Revalue future income taxes due to tax rate changes							—				(14.0	)			—
Adjusted Operating Earnings			172.4				162.7				592.9				537.2
Adjusted Operating Earnings per Common Share		$	0.50			$	0.48			$	1.74			$	1.59

The Company has foreign currency denominated earnings, primarily from U.S. based operations and investments, as well as its Euro investment in CLH. The Company uses long-term derivative contracts to economically hedge a significant portion of the cash distributions from these long-term investments. However, this does not eliminate the generally accepted accounting principles (GAAP) earnings

volatility caused by exchange rate differences. During the year ended December 31, 2006, the Company received foreign currency denominated cash distributions and settled associated hedge transactions resulting in $17.1 million (2005 — $13.0 million) of incremental cash flows, which were not included in reported earnings.

Non-GAAP Measures

This news release contains references to adjusted operating earnings, which represent earnings applicable to common shareholders adjusted for non-operating factors. Management believes that the presentation of adjusted operating earnings provides useful information to investors and shareholders as it provides increased predictive value and performance trends. Adjusted operating earnings represent earnings applicable to common shareholders adjusted for significant non-operating factors. This measure does not have a standardized meaning prescribed by Canadian GAAP and is not considered a GAAP measure. Therefore, this measure may not be comparable with a similar measure presented by other issuers.

Liquids Pipelines

		Three months ended								Year ended
(millions of Canadian dollars)		December 31,								December 31,
		2006				2005				2006				2005
Enbridge System			52.4				46.3				202.3				170.1
Athabasca System			12.7				11.8				52.8				48.6
Spearhead Pipeline			3.2				(0.3	)			6.3				(1.1	)
Olympic Pipeline			1.7				—				6.5				—
Feeder Pipelines and Other			1.2				3.1				6.3				11.5
			71.2				60.9				274.2				229.1

•

The Enbridge System reflected higher earnings from a number of factors including lower oil loss costs, favourable ITS performance and, within Terrace, lower taxes, higher toll revenues and the impact of higher volumes generating surcharge revenue. In the fourth quarter of 2006, earnings from service metrics under the ITS and higher toll revenues within Terrace were partially offset by higher operating costs.

•

Athabasca System earnings continued to grow as infrastructure additions contributed positively, but were partially offset by higher operating expenses.

•

Spearhead Pipeline began commercial operations in early March 2006. Volumes have remained strong and continue to surpass the Company’s expectations with fourth quarter nominations exceeding capacity.

•

Olympic Pipeline was acquired effective February 1, 2006 and has performed reliably as expected.

•

Decreased earnings in Feeder Pipelines and Other were primarily due to increased business development costs related to the Company’s organic growth projects. The NW System is now included in Feeder Pipelines and Other

Gas Pipelines

		Three months ended								Year ended
(millions of Canadian dollars)		December 31,								December 31,
		2006				2005				2006				2005
Alliance Pipeline US			7.4				7.7				29.7				32.1
Vector Pipeline			4.1				4.3				13.4				15.9
Enbridge Offshore Pipelines			2.7				0.9				18.1				11.8
			14.2				12.9				61.2				59.8

•

Alliance Pipeline US earnings were lower in 2006 primarily due to the stronger Canadian dollar, which had less of an impact in the fourth quarter as the exchange rate was more consistent with the prior year.

•

Vector Pipeline earnings were also impacted by the stronger Canadian dollar and higher operating costs in the second and third quarters of 2006 due to scheduled integrity inspections required by the regulator within the first six years of operation.

•

Enbridge Offshore Pipelines volumes returned to 2005 pre-hurricane levels during the second quarter of 2006, resulting in increased earnings compared with 2005. The 2006 improvement was partially offset by the impact of the stronger Canadian dollar and, in the fourth quarter, by reduced throughput.

Sponsored Investments

		Three months ended								Year ended
(millions of Canadian dollars)		December 31,								December 31,
		2006				2005				2006				2005
Enbridge Income Fund (EIF)			10.0				8.4				37.8				34.2
Enbridge Energy Partners (EEP)			11.5				7.8				43.0				21.7
Dilution gains in EEP			—				4.3				—				8.9
Revalue future income taxes due to tax rate changes			—				—				6.0				—
			21.5				20.5				86.8				64.8

•

EIF’s contribution was comparable with the prior year and reflected modest earnings growth at EIF. The increase in earnings reflected lower tax on distributions received from EIF.

•

EEP’s 2006 results improved significantly, despite the stronger Canadian dollar, and reflected considerably higher liquids throughput on the Lakehead System, higher margins and increased volumes in the natural gas gathering and processing businesses in addition to a higher Enbridge ownership interest. The 2006 results also included $6.5 million (net to Enbridge) of unrealized mark-to-market gains (2005 — $5.0 million of losses) on derivative financial instruments that do not qualify for hedge accounting treatment (gain of $1.4 million in the fourth quarter of 2006 and a loss of $0.9 million in the fourth quarter of 2005).

•

EEP issued partnership units in the first and fourth quarters of 2005 and because Enbridge did not fully participate in these offerings, dilution gains resulted. While new units were issued by EEP in the third quarter of 2006, no dilution gains resulted as Enbridge participated in the offering, increasing Enbridge’s ownership interest in EEP from 10.9% to 16.6%.

Gas Distribution and Services

		Three months ended								Year ended
(millions of Canadian dollars)		December 31,								December 31,
		2006				2005				2006				2005
Enbridge Gas Distribution (EGD)			36.4				56.5				61.8				111.9
Noverco			11.5				6.6				22.7				28.3
CustomerWorks/ECS			2.8				4.3				18.8				23.2
Other Gas Distribution			2.4				1.8				6.5				6.7
Enbridge Gas New Brunswick			2.7				2.3				9.8				6.1
Gas Services			(0.3	)			1.1				(1.5	)			0.2
Aux Sable			9.7				(0.9	)			25.8				5.3
Other			4.4				(2.8	)			5.4				(2.9	)
Revalue future income taxes due to tax rate changes			—				—				28.9				—
			69.6				68.9				178.2				178.8

•

EGD’s distribution volumes and earnings in 2006 were impacted by warmer than normal weather in Ontario which reduced earnings by $36.9 million, whereas weather in 2005 approximated normal

		weather and did not impact earnings. Weather in the fourth quarter of both years was also warmer than normal, reducing earnings by $6.7 million in 2006 and by $1.5 million in 2005.
•		EGD earnings were also reduced by a lower allowed rate of return on common equity, partially offset by a higher rate base. These factors had a more pronounced effect in the first and fourth quarters as those are high volume distribution periods.
•		EGD’s earnings are also affected by variances from the forecast cost of service, including operating and maintenance costs. EGD’s costs can vary from quarter to quarter due to many factors including weather, project timelines and the timing of operating and capital expenditures. This provided a negative earnings effect in the fourth quarter of 2006 in contrast with a positive effect in 2005.
•		Noverco earnings were higher in the fourth quarter compared with the prior year due to a $4.0 million dilution gain from a Gaz Metro LP unit issuance in which Noverco did not participate. In addition, the first quarter of the prior year included a $7.3 million dilution gain. Excluding dilution gains, earnings from Noverco were lower in 2006 as the prior year included a future income tax recovery stemming from the receipt of a significant cash dividend.
•		Enbridge Gas New Brunswick earnings increased as debt was settled through the issuance of equity, during the third and fourth quarters of 2005, resulting in a higher equity base throughout 2006.
•		Aux Sable entered into an output arrangement effective January 1, 2006, that substantially eliminated all negative earnings variability. Aux Sable now receives a fixed annual fee and a variable upside sharing fee above a certain margin level measured on an annual basis. Fractionation margins were very positive throughout 2006 and as a result, earnings from the upside sharing mechanism account for the majority of earnings from Aux Sable both in the fourth quarter and year to date.
•		Other earnings included an increased contribution from Tidal Energy, which resulted from the expansion of the business into the U.S. at the end of 2005 and increased earnings from its physical storage program.

International

		Three months ended								Year ended
(millions of Canadian dollars)		December 31,								December 31,
		2006				2005				2006				2005
CLH			12.0				21.8				54.5				61.6
OCENSA/CITCol			9.2				8.4				33.9				32.8
Other			(2.2	)			(2.4	)			(5.2	)			(7.0	)
			19.0				27.8				83.2				87.4

•

Earnings from CLH for 2005 included a $7.6 million gain on the sale of land, recorded in the fourth quarter.

Corporate

		Three months ended								Year ended
(millions of Canadian dollars)		December 31,								December 31,
		2006				2005				2006				2005
Corporate			(24.4	)			(17.0	)			(82.2	)			(63.9	)
Revalue future income taxes due to tax rate changes			—				—				14.0				—
			(24.4	)			(17.0	)			(68.2	)			(63.9	)

•

The increase in Corporate costs was due to a number of factors including higher interest expense as a portion of the Company’s floating rate debt was repaid through the issuance of long-term fixed rate debt as well as higher business development activity and the impact of a strong labour market on compensation expense.

Other Disclosures

Enbridge will hold a conference call on January 31, 2007 at 7:00 a.m. Mountain time (9:00 a.m. Eastern time) to discuss the 2006 results. The call can be accessed at 1-800-706-7748 using the access code 32237410, and will be audio webcast live at www.enbridge.com/investor. An audio replay will be available shortly thereafter at 1-888-286-8010 using the access code 56115180; in addition, the webcast replay and transcript will be available on the website, late in the day. The audited consolidated financial statements and MD&A, which contain additional notes and disclosures, will be available on the Enbridge website on February 21, 2007 and filed on SEDAR shortly thereafter.

Enbridge Inc., a Canadian company, is a leader in energy transportation and distribution in North America and internationally. As a transporter of energy, Enbridge operates, in Canada and the United States, the world’s longest crude oil and liquids pipeline system. The Company also has international operations and a growing involvement in the natural gas transmission and midstream businesses. As a distributor of energy, Enbridge owns and operates Canada’s largest natural gas distribution company, and provides distribution services in Ontario, Quebec, New Brunswick and New York State. Enbridge employs approximately 5,000 people, primarily in Canada, the United States and South America. Enbridge’s common shares trade on the Toronto Stock Exchange in Canada and on the New York Stock Exchange in the United States under the symbol ENB. Information about Enbridge is available on the Company’s website at www.enbridge.com.

FORWARD LOOKING INFORMATION

In the interest of providing Enbridge shareholders and potential investors with information about the Company and its subsidiaries, including management’s assessment of Enbridge’s and its subsidiaries’ future plans and operations, certain information provided in this news release constitutes forward-looking statements or information (collectively, “forward-looking statements”). Forward-looking statements are typically identified by words such as “anticipate”, “expect”, “project”, “estimate”, “forecast”, “plan”, “intend”, “target”, “believe” and similar words suggesting future outcomes or statements regarding an outlook. Although Enbridge believes that these forward-looking statements are reasonable based on the information available on the date such statements are made, such statements are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements.

Enbridge’s forward-looking statements are subject to risks and uncertainties pertaining to operating performance, regulatory parameters, weather, economic conditions, exchange rates, interest rates and commodity prices, including but not limited to those risks and uncertainties discussed in this news release and in the Company’s other filings with Canadian and United States securities regulators. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and Enbridge’s future course of action depends on management’s assessment of all information available at the relevant time. Except to the extent required by law, Enbridge assumes no obligation to publicly update or revise any forward-looking statements made in this news release or otherwise, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to Enbridge or persons acting on the Company’s behalf, are expressly qualified in their entirety by these cautionary statements.

Enbridge Contacts:
Media		Investment Community
Glenn Herchak		Bob Rahn
(403) 266-7906		(403) 231-7398
E-mail: glenn.herchak@enbridge.com		E-mail: bob.rahn@enbridge.com

ENBRIDGE INC.
HIGHLIGHTS

		Three months ended								Year ended
(unaudited; millions of Canadian dollars, except per share amounts)		December 31,								December 31,
		2006				2005				2006				2005
Earnings Applicable to Common Shareholders
Liquids Pipelines			71.2				60.9				274.2				229.1
Gas Pipelines			14.2				12.9				61.2				59.8
Sponsored Investments			21.5				20.5				86.8				64.8
Gas Distribution and Services			69.6				68.9				178.2				178.8
International			19.0				27.8				83.2				87.4
Corporate			(24.4	)			(17.0	)			(68.2	)			(63.9	)
			171.1				174.0				615.4				556.0
Cash Flow Data
Cash provided by operating activities			145.4				10.3				1,297.7				947.0
Expenditures on property, plant and equipment			522.9				368.7				1,185.3				724.1
Acquisitions and long-term investments			15.5				30.0				463.7				178.5
Common share dividends			101.1				100.4				403.1				361.1
Per Share Information
Earnings per Common Share			0.50				0.52				1.81				1.65
Diluted Earnings per Common Share			0.49				0.51				1.79				1.63
Dividends per Common Share			0.29				0.29				1.15				1.04
Shares Outstanding (millions)
Weighted Average Common Shares Outstanding											340.0				337.4
Diluted Weighted Average Common Shares Outstanding											343.3				341.2
Operating
Liquids Pipelines1
Deliveries (thousands of barrels per day)			2,303				2,093				2,166				2,008
Barrel miles (billions)			215				182				794				695
Average haul (miles)			1,014				947				1,004				949
Gas Pipelines – Average Daily Throughput Volume
(millions of cubic feet per day)
Alliance Pipeline US			1,583				1,568				1,592				1,597
Vector Pipeline			1,018				1,078				1,015				1,033
Enbridge Offshore Pipelines			2,048				1,551				2,153				2,102
Gas Distribution and Services2
Volumes (billion cubic feet)			123				129				408				438
Number of active customers (thousands)			1,852				1,805				1,852				1,805
Degree day deficiency3
Actual			1,165				1,274				3,355				3,750
Forecast based on normal weather			1,247				1,247				3,745				3,747

ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF EARNINGS

		Three months ended								Year ended
		December 31,								December 31,
(unaudited; millions of Canadian dollars, except per share amounts )		2006				2005				2006				2005
Revenues
Commodity sales			2,123.0				2,085.5				8,264.5				6,193.5
Transportation			579.4				498.8				2,095.1				1,938.1
Energy services			83.3				83.5				284.9				321.5
			2,785.7				2,667.8				10,644.5				8,453.1
Expenses
Commodity costs			1,974.6				1,938.5				7,824.6				5,728.4
Operating and administrative			324.3				275.6				1,084.2				1,057.6
Depreciation and amortization			149.8				147.8				587.4				575.3
			2,448.7				2,361.9				9,496.2				7,361.3
			337.0				305.9				1,148.3				1,091.8
Income from Equity Investments			46.3				44.2				180.3				116.8
Other Investment Income			24.4				54.6				107.8				142.4
Interest Expense			(149.8	)			(136.8	)			(567.1	)			(539.2	)
			257.9				267.4				869.3				811.8
Non-Controlling Interests			(8.1	)			(11.1	)			(54.7	)			(27.6	)
			249.8				256.8				814.6				784.2
Income Taxes			(76.9	)			(81.0	)			(192.3	)			(221.3	)
Earnings			172.9				175.8				622.3				562.9
Preferred Share Dividends			(1.8	)			(1.8	)			(6.9	)			(6.9	)
Earnings Applicable to Common Shareholders			171.1				174.0				615.4				556.0
Earnings Per Common Share			0.50				0.52				1.81				1.65
Diluted Earnings Per Common Share			0.49				0.51				1.79				1.63

ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

(unaudited; millions of Canadian dollars)
Year ended December 31,		2006				2005
Retained Earnings at Beginning of Year			2,098.2				1,840.9
Earnings Applicable to Common Shareholders			615.4				556.0
Common Share Dividends			(403.1	)			(361.1	)
Dividends Paid to Reciprocal Shareholder			12.2				11.2
Dividend Reclassification Adjustment			—				51.2
Retained Earnings at End of Year			2,322.7				2,098.2

ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

		Three months ended								Year ended
		December 31,								December 31,
(unaudited; millions of Canadian dollars)		2006				2005				2006				2005
Cash Provided By Operating Activities
Earnings			172.8				175.8				622.3				562.9
Depreciation and amortization			149.8				147.8				587.4				575.3
Equity earnings less than/(in excess of) cash distributions			8.8				2.0				(54.2	)			63.3
Gain on reduction of ownership interest			—				(13.4	)			—				(29.0	)
Future income taxes			31.7				67.6				(21.0	)			108.1
Other			5.5				5.0				36.5				20.3
Changes in operating assets and liabilities			(223.3	)			(374.5	)			126.7				(353.9	)
			145.4				10.3				1,297.7				947.0
Investing Activities
Acquisitions			—				(2.2	)			(101.4	)			(88.6	)
Long-term investments			(15.5	)			(27.8	)			(362.3	)			(89.9	)
Additions to property, plant and equipment			(522.9	)			(368.7	)			(1,185.3	)			(724.1	)
Affiliate loans			—				0.8				28.0				0.7
Change in construction payable			54.5				27.8				41.0				25.4
			(483.9	)			(370.1	)			(1,580.0	)			(876.5	)
Financing Activities
Net change in short-term borrowings and short-term debt			17.8				207.5				(78.7	)			(125.1	)
Net change in non-recourse credit facilities			62.9				5.6				57.7				11.0
Long-term debt issues			325.0				400.0				1,125.0				1,020.1
Long-term debt repayments			—				(140.0	)			(400.0	)			(536.9	)
Non-recourse long-term debt issues			—				—				2.8				6.8
Non-recourse long-term debt repayments			(30.8	)			(30.3	)			(60.5	)			(85.1	)
Changes in non-controlling interests			(5.9	)			5.9				(31.3	)			1.4
Common shares issues			14.1				6.8				63.1				53.7
Preferred share dividends			(1.8	)			(1.8	)			(6.9	)			(6.9	)
Common share dividends			(101.1	)			(100.4	)			(403.1	)			(361.1	)
			280.2				353.3				268.1				(22.1	)
(Decrease)/Increase in Cash and Cash Equivalents			(58.3	)			(6.5	)			(14.2	)			48.4
Cash and Cash Equivalents at Beginning of Period			198.0				160.4				153.9				105.5
Cash and Cash Equivalents at End of Period			139.7				153.9				139.7				153.9

ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(unaudited; millions of Canadian dollars)
December 31,		2006				2005
Assets
Current Assets
Cash and cash equivalents			139.7				153.9
Accounts receivable and other			2,045.6				1,900.3
Inventory			868.9				1,021.4
			3,054.2				3,075.6
Property, Plant and Equipment, net			11,264.7				10,510.1
Long-Term Investments			2,299.4				1,842.8
Receivable from Affiliate			—				177.0
Deferred Amounts and Other Assets			924.5				850.7
Intangible Assets			241.5				252.6
Goodwill			394.9				367.2
Future Income Taxes			200.1				134.9
			18,379.3				17,210.9
Liabilities and Shareholders’ Equity
Current Liabilities
Short-term borrowings			807.9				1,074.8
Accounts payable and other			1,723.8				1,624.8
Interest payable			95.1				81.7
Current maturities and short-term debt			537.0				401.2
Current portion of non-recourse debt			60.1				68.2
			3,223.9				3,250.7
Long-Term Debt			7,054.0				6,279.1
Non-Recourse Long-Term Debt			1,622.0				1,619.9
Other Long-Term Liabilities			91.1				91.7
Future Income Taxes			1,062.5				1,009.0
Non-Controlling Interests			715.2				691.0
			13,768.7				12,941.4
Shareholders’ Equity
Share capital
Preferred shares			125.0				125.0
Common shares			2,416.1				2,343.8
Contributed surplus			18.3				10.0
Retained earnings			2,322.7				2,098.2
Foreign currency translation adjustment			(135.8	)			(171.8	)
Reciprocal shareholding			(135.7	)			(135.7	)
			4,610.6				4,269.5
			18,379.3				17,210.9

SEGMENTED INFORMATION

Three months ended December 31, 2006

														Gas
(unaudited;		Liquids				Gas				Sponsored				Distribution
millions of Canadian dollars)		Pipelines				Pipelines				Investments				and Services				International				Corporate				Consolidated
Revenues			299.5				85.6				68.5				2,327.0				5.1				—				2,785.7
Commodity costs			—				—				—				(1,974.6	)			—				—				(1,974.6	)
Operating and administrative			(127.5	)			(24.3	)			(21.4	)			(133.4	)			(5.7	)			(12.0	)			(324.3	)
Depreciation and amortization			(38.9	)			(21.6	)			(18.4	)			(70.3	)			(0.2	)			(0.4	)			(149.8	)
			133.1				39.7				28.7				148.7				(0.8	)			(12.4	)			337.0
Income from equity investments			(0.3	)			—				26.2				8.7				11.9				(0.2	)			46.3
Other investment income			0.3				0.9				0.8				2.5				9.6				10.3				24.4
Interest and preferred share dividends			(26.8	)			(18.0	)			(15.3	)			(54.1	)			—				(37.4	)			(151.6	)
Non-controlling interest			(0.2	)			—				(6.7	)			(1.2	)			—				—				(8.1	)
Income taxes			(34.9	)			(8.4	)			(12.2	)			(35.0	)			(1.7	)			15.3				(76.9	)
Earnings applicable to common shareholders			71.2				14.2				21.5				69.6				19.0				(24.4	)			171.1

Three months ended December 31, 2005

														Gas
(unaudited;		Liquids				Gas				Sponsored				Distribution
millions of Canadian dollars)		Pipelines				Pipelines				Investments				and Services				International				Corporate				Consolidated
Revenues			232.3				85.6				63.7				2,282.8				3.4				—				2,667.8
Commodity costs			—				—				—				(1,938.5	)			—				—				(1,938.5	)
Operating and administrative			(83.4	)			(25.5	)			(16.6	)			(135.8	)			(5.8	)			(8.5	)			(275.6	)
Depreciation and amortization			(34.9	)			(24.3	)			(18.3	)			(69.0	)			(0.4	)			(0.9	)			(147.8	)
			114.0				35.8				28.8				139.5				(2.8	)			(9.4	)			305.9
Income from equity investments			0.2				—				20.5				3.6				19.9				—				44.2
Other investment income			(0.2	)			4.3				12.1				12.8				11.6				14.0				54.6
Interest and preferred share dividends			(23.5	)			(19.3	)			(15.3	)			(46.9	)			—				(33.6	)			(138.6	)
Non-controlling interest			(0.5	)			—				(9.1	)			(1.5	)			—				—				(11.1	)
Income taxes			(29.1	)			(7.9	)			(16.5	)			(38.6	)			(0.9	)			12.0				(81.0	)
Earnings applicable to common shareholders			60.9				12.9				20.5				68.9				27.8				(17.0	)			174.0

Year ended December 31, 2006

														Gas
(unaudited;		Liquids				Gas				Sponsored				Distribution
millions of Canadian dollars)		Pipelines				Pipelines				Investments				and Services				International				Corporate				Consolidated
Revenues			1,048.1				345.9				254.7				8,981.6				14.2				—				10,644.5
Commodity costs			—				—				—				(7,824.6	)			—				—				(7,824.6	)
Operating and administrative			(391.2	)			(96.0	)			(67.7	)			(485.8	)			(18.2	)			(25.3	)			(1,084.2	)
Depreciation and amortization			(153.4	)			(87.5	)			(71.9	)			(269.1	)			(0.9	)			(4.6	)			(587.4	)
			503.5				162.4				115.1				402.1				(4.9	)			(29.9	)			1,148.3
Income from equity investments			(0.2	)			—				111.5				17.0				52.2				(0.2	)			180.3
Other investment income			3.2				9.2				2.9				17.8				45.2				29.5				107.8
Interest and preferred share dividends			(102.4	)			(73.3	)			(60.0	)			(197.8	)			—				(140.5	)			(574.0	)
Non-controlling interest			(1.6	)			—				(48.0	)			(5.1	)			—				—				(54.7	)
Income taxes			(128.3	)			(37.1	)			(34.7	)			(55.8	)			(9.3	)			72.9				(192.3	)
Earnings applicable to common shareholders			274.2				61.2				86.8				178.2				83.2				(68.2	)			615.4

Year ended December 31, 2005

														Gas
(unaudited;		Liquids				Gas				Sponsored				Distribution
millions of Canadian dollars)		Pipelines				Pipelines				Investments				and Services				International				Corporate				Consolidated
Revenues			881.0				364.3				249.0				6,947.1				11.7				—				8,453.1
Commodity costs			—				—				—				(5,728.4	)			—				—				(5,728.4	)
Operating and administrative			(311.4	)			(95.5	)			(60.1	)			(549.3	)			(17.5	)			(23.8	)			(1,057.6	)
Depreciation and amortization			(145.6	)			(94.3	)			(71.5	)			(257.3	)			(1.2	)			(5.4	)			(575.3	)
			424.0				174.5				117.4				412.1				(7.0	)			(29.2	)			1,091.8
Income from equity investments			0.8				—				48.6				8.9				58.5				—				116.8
Other investment income			0.4				5.9				27.3				30.6				39.7				38.5				142.4
Interest and preferred share dividends			(96.5	)			(81.9	)			(61.8	)			(178.8	)			—				(127.1	)			(546.1	)
Non-controlling interest			(2.1	)			—				(21.2	)			(3.8	)			(0.5	)			—				(27.6	)
Income taxes			(97.5	)			(38.7	)			(45.5	)			(90.2	)			(3.3	)			53.9				(221.3	)
Earnings applicable to common shareholders			229.1				59.8				64.8				178.8				87.4				(63.9	)			556.0