Enbridge Inc

Good morning, and welcome to the Enbridge, Inc. Third Quarter 2023 Financial Results Conference Call. My name is Rebecca Morley, and I'm the Vice President of Investor Relations. Joining me this morning are Greg Ebel, President and CEO, Pat Murray, Executive Vice President and Chief Financial Officer, and the heads of each of our business units, Colin Grunding, Liquids Pipelines, Cynthia Hansen, Gas Transmission and Midstream, Michelle Harriton, Gas Distribution and Storage, and Matthew Ackman, Renewable Power. At this time, all participants are in a listen-only mode. Following the presentation, we'll conduct a question and answer session for the investment community. As per usual, this call is being recorded and webcast, and I encourage those listening on the phone to follow along with the supporting slides. We'll try to keep the call to roughly one hour, and in order to answer as many questions as possible, we'll be limiting questions to one plus a single follow-up if necessary. we'll be prioritizing questions from the investment community. So if you're a member of the media, please direct your inquiries to our communications team, who would be happy to assist you. As always, our investor relations team will be available following the call for any follow-up questions. On to slide two, where I'll remind you that we'll be referring to forward-looking information on today's presentation and Q&A. By its nature, this information contains forecast assumptions and expectations about future outcomes. which are subject to the risks and uncertainties outlined here and discussed more fully in our public disclosure filings. We'll also be referring to non-GET measures summarized below. And with that, I'll turn it over to Greg Ebel.

Thanks very much, Rebecca, and good morning, everyone. Thanks for joining us. I'm pleased to be here today to review another strong quarter. We're also excited to share a number of new announcements that further enhance our long-term value proposition and, of course, provide an update on our businesses. Pat will then walk you through the financial performance, our capital allocation priorities, and our outlook. And lastly, I'll close with a few takeaways. And as always, the Enbridge team is here to address any questions you may have at the end. Q3 was another solid quarter for Enbridge. Strong operational performance across the business drove strong financial results that were consistent with their expectations. As such, we're pleased to reaffirm our EBITDA and DCF per share guidance. As part of the pre-funding for the gas utilities acquisition, we successfully raised over $8 billion in September. And when combined with the assumed debt, we have over $14 billion of required funding in place, which significantly de-risks our financing plan associated with the utility acquisition, which we expect to close on a staggered schedule through 2024. Adjusted for pre-funding of the acquisitions, our debt to EBITDA for the quarter is right at the bottom of our stated 4.5 to 5 times range. On an unadjusted basis, you'll note debt to EBITDA at 4.1 times. System utilization across the business was really strong. In our liquids business, we are relaunching and upsizing an open season on Flanagan South Pipeline, which should further strengthen our mainline path. And we are also set to initiate an open season for the Gray Oak Pipeline. in the fourth quarter and will offer full path Permian service by exports through Enbridge Ingleside Energy Center. In gas transmission, we initiated an open season on the Algonquin gas pipeline system to provide additional service to New England, where reliable and affordable gas is desperately needed. And our teams continue to demonstrate their ability to execute. We're on track to successfully place approximately $3 billion of secured capital into service by year end And our fake comp and Provence Grand Large French offshore wind projects remain on budget and are still expected to come into service in Q1 2024. From a regulatory perspective, we expect to file the mainline tolling agreement with CER before year end. And our Ontario gas utility rebasing process is well underway, and we expect the OEB will issue a decision on 24 rates by year end. Together with Dominion, we have filed applications for all key U.S. federal and state required regulatory approvals to complete the pending U.S. gas utility acquisitions, and all are still expected to close in 2024. Last but not least on the execution front, we continue to make progress on our emissions, social and diversity, and inclusion goals, and remain committed to global ESG leadership. As you're aware, in the third quarter, we added visibility to our growth outlook through the aforementioned gas utilities acquisitions. The assets have an embedded rate-based CAGR of 8% and cost recovery mechanisms that result in improved capital efficiencies. And in our renewable business, we're excited to announce a European offshore wind acquisition, which we will discuss in greater detail in a few minutes. We are continuing to execute on our tuck-in M&A strategy and are excited to welcome the moral RNG operations team to Enbridge. These fully contracted landfill gas to RNG facilities further establish Enbridge in the RNG space. All in all, 2023 has been a great year so far, operationally and financially. As mentioned earlier, we remain on track to achieve our guidance and deliver on our growth commitments. Before we dig into the details of the quarter, I'd like to revisit our investor value proposition that we laid out earlier this year. Our business is stable and we remain committed to delivering predictable cash flows. The balance sheet is strong and remains a key priority. We have a long track record of sustainably returning capital to shareholders and will continue to grow our dividend. We have visibility to our near-term and medium-term growth outlooks with conventional and lower carbon opportunities embedded throughout the business. All of our project announcements during and subsequent to the quarter are individually and collectively aligned with that value proposition. Each will generate an attractive risk-adjusted return that is regulated or backed by long-term off-take agreements. Looking forward, our 5% EBITDA medium-term growth outlook that we set out at Investor Day is significantly de-risked, and today's announcements enhance Enbridge's lower carbon footprint across multiple business units while increasing DCF per share. Together, these value drivers have underpinned 20 years of dividend growth and average annual shareholder returns of approximately 11%. And we expect this to continue. We're confident that our recent acquisitions enhance each component of our value proposition. Let's take a minute to review the quality of our cash flow profile. Post closings of the gas utility acquisition, Enbridge's EBITDA mix will be approximately 50% natural gas and renewables and 50% liquids. During the quarter, we've seen continued volatility in interest rates and foreign exchange markets, but our long-standing active risk management strategy is designed to allow us to continue to deliver results in all market cycles. 98% of Enbridge's earnings are currently generated from either cost of services noted or take-or-pay contracted assets. and that will only improve as we close the gas utilities transactions. We actively manage our forward interest rate exposure through risk mitigation policies, which leave us with just 10% of our debt portfolio exposed to floating rates through the end of 2024. 95% of our customer base is investment grade, and 80% of our EBITDA comes from assets with built-in inflation protection against rising costs. This enables our business to deliver consistent high quality cash flows which drive predictability in all economic cycles. And we take tremendous pride in our 17 year track record of achieving our guidance and we look forward to continuing that trend this year. Turning to the acquisition of the three premier U.S. gas utilities that we announced during the quarter, this transaction represents a generational opportunity for the company. Upon closing, Enbridge will be North America's largest natural gas utility platform, delivering approximately 9.3 BCF of natural gas per day to approximately 7 million customers. Enbridge was able to secure historically attractive acquisition multiples on the assets, creating long-term value for our shareholders. And as a reminder, we agreed to pay approximately 1.3 times the estimated 2024 rate base and approximately 16.5 times price-to-earnings based on 2023 estimates, both of which are significantly below recent precedent and subsequent transactions. Pro forma, these gas utilities further enhance the stability of our already industry-leading risk profile by adding incremental regulated earnings. And those earnings will grow alongside $1.7 billion of annual low-risk, quick-cycle rate-based investments. Each of the utilities is located in GAF-supportive jurisdictions and has an attractive capital structure allowing us to earn constructive returns with favorable equity thickness. Since the announcement of the deal, we've made significant progress on the financing of these acquisitions. So let's move on to that now. The all-in purchase price of the transactions is $19 billion, inclusive of $6 billion of assumed debt, which initially left approximately $13 billion left to finance. Immediately following the announcement, we issued $4.6 billion of common shares and issued an additional $3.7 billion of hybrid notes, which received partial equity treatment from rating agencies. In combination with the assumption of debt, we have approximately 75% of the required financing in place, significantly de-risking the funding plan. The remaining financing needs are very manageable and can be satisfied through the various tools available to us. including the issuance of senior unsecured notes, asset recycling, the reinstatement of Enbridge's drip program, or initiating at-the-market common share issuances. We'll make use of that flexibility and the staggered closing timelines to optimize the financing plan and factor in changes to the macroeconomic environment. Now let's jump into the business unit updates, starting with liquids. In liquids pipelines, our highly competitive system remains heavily utilized with record third quarter volumes on the mainline and significant apportionment levels in the month of November. In May, we reached a settlement for the mainline tolling framework and those tolls took effect on July 1st. We expect to finalize that settlement with industry and submit a joint application to the Canadian Energy Regulator before the end of the year. with the expectation that the new tolling settlement will be approved and implemented in the first quarter of 2024. We relaunched and upsized our previously announced FSP open season. In addition to contracting throughput on Flanagan South, the open season volumes also secure long haul throughput on the Enbridge network from Western Canada to the Gulf Coast. In the Permian region, We saw a new record for export volumes through Ingleside again this quarter, giving us further verification of and confidence in our Gulf Coast strategy. In order to support further growth in the Permian and meet our customer needs, we expect to initiate an open season on our gray oak pipeline by the end of this year, and we'll add 2 million barrels of storage at our Ingleside terminal in 2024. Now let's take a look at our gas transmission business. Starting in Canada, the engineering work on wood fiber LNG is progressing and we expect to hit our 60% engineering milestones and to set our preferred return in the second half of 2024. We also closed the previously announced acquisition of Aitkin Creek gas storage on November 1st. This asset is well positioned and will enhance our service offering to our customers and support our LNG export strategy in BC. And in the US Northeast, we've initiated an open season on the Algonquin pipeline, which will provide much needed supply to New England and it will help stabilize energy prices in the area. All told, we're continuing to progress on over $11 billion of high quality investments in the gas transmission business and capitalize on strong North American gas supply and demand fundamentals. Moving to our gas distribution business in Ontario, We continue to see growth in our distribution business, which is supported by population growth and customer additions. We are on track to exceed our customer additions forecast of 42,000 for this year. Ontario population is expected to grow by approximately 2.5 million people over the next decade. All of those people will need access to cost-effective, reliable energy, and Enbridge will be there to provide it. And as we mentioned on the previous call, the Ontario government has publicly promoted that natural gas will play a critical role in supplying the province's energy mix. The need for natural gas and customer growth at Enbridge Gas will continue to underpin our estimated billion dollars of annual capital investment in Ontario for the foreseeable future. On the regulatory front, the Ontario Energy Board approved our partial settlement to support the establishment of our 24 rates, and we expect them to issue a final decision on the remaining items by the end of the year. We look forward to providing a comprehensive update alongside our year-end results. Next, let's take a closer look at some of the developments in our renewable business. I'm pleased to announce that the acquisition of additional ownership in Hohisi and Albatross offshore wind farms, which are located approximately 100 kilometers off the northern coast of Germany. These are assets we know well and where we have had a strong relationship and partnership with ENBW. The acquisition will almost double our ownership of the assets, and it's expected to be immediately accretive to DCF. The step up in ownership of Hohisi and Albatross will materially grow the size of our renewable power business and continue our track record of investing in assets that generate utility-like cash flows while working towards our net zero commitments. In France, we're on track to bring a gigawatt of new generation online by 2025. At Fécamp, we'll install about half of the turbines, and at Provence Grand Large, all turbines have been installed and all floaters have been secured. All three projects are in budget. Fécamp and PGL are expected to be in service during the first quarter of 2024, and Calvados continues to make good progress towards its 2025 in-service date. Now let's take a deeper look at the equally attractive investment in renewable natural gas we announced today. Enbridge has entered into an agreement with Morrill Renewables to acquire seven high quality operating and fully contracted landfill gas to RNG assets located in Texas and Arkansas. The facilities we are acquiring currently collect, compress, treat, and sell approximately 4.5 BCF of pipeline quality renewable natural gas each year. And as the landfills continue to grow, that production number will continue to grow at approximately 3% annually, with minimal required capital investment. RNG fundamentals are strong in the United States and indicate continued growth in demand over the long term as gas utilities increasingly continue to set RNG blending targets. This was the perfect opportunity to meaningfully add to our RNG portfolio with an accretive Enbridge-like tuck-in, which has long-term, full-volume offtake agreements with Shell Energy North America and BP. Unique to this deal, and in keeping with our commitment to protect our balance sheet, we've staggered the purchase price over 24 months. This transaction represents a uniquely de-risked portfolio of operating, scalable R&G assets that add immediate, accretive DCF to Enbridge and accelerate progress towards our energy transition goals. Finally, both this transaction and the increased ownership in the Hohisi and Albatross operating wind power facilities were fully contemplated when we announced the acquisition of the three gas utilities. Now let's turn to Pat to walk through the quarterly financials.

Thanks, Greg, and good morning, everyone. I'm happy to announce that continued strong operational performance led to record third quarter EBITDA, which is up 3% year-over-year, and DCF per share, which is also up 2% year-over-year. In liquids, our systems remain highly utilized. The mainline transported just under 3 million barrels per day, a record for third quarter volumes. In the Gulf Coast, Ingleside also posted record volumes, and we realized a full quarter of contributions from the increased economic interest in Grey Oak and Cactus II. Overall, strong operating performance in liquids was partially offset by the lower toll on the mainline, which took effect on July 1st. Gas transmission is down slightly, primarily due to lower ownership interest in DCP midstream following our transaction with P66 last year. Performance at the utility was down slightly as well due to the reversal of storage and transportation favorability that we noted for investors earlier in the year would occur over Q2 and Q3. Our renewable business performed in line with expectations. We benefited from development fees earned on degeneration projects from our North American renewable onshore development acquisition in 2022. partially offset by lower wind resources year over year. Energy services results improved versus 2022 due to the expiry of transportation commitments earlier in this year and lower commodity backwardation. Below the line in DCF, higher interest expense, the timing of maintenance capital, and higher NCI distributions to our Athabasca Indigenous Investment Partners offset some of the EBITDA benefit this quarter. Our results once again underline the low risk nature of our businesses and the predictability of our financial and operational results that support our capital structure. With that, let's talk about how we're tracking the guidance. As Greg mentioned, we're reaffirming our 2023 financial guidance again this quarter. Our business outlook remains unchanged, and we continue to expect high utilization across our asset base. We've executed a number of tuck-in acquisitions throughout the year, which will contribute to our fourth quarter EBITDA but we expect these tailwinds to be offset by the impact of the lower mainline toll and the equity pre-funding of the U.S. gas utilities. All told, we expect to finish the year with another quarter of strong operating performance, which, alongside our risk management initiatives, provides us confidence that we will achieve the full-year guidance laid out for you last year, even when taking into account the equity issuance in early September. Let's turn to our medium-term outlook, which we are also reaffirming. As we look forward, business optimizations remain a key area of focus for us, and we'll continue to look for opportunities to optimize within our upcoming rebasing framework and mainline agreements. In the second bucket, the LDC acquisition bolstered our secured organic growth projects by adding an incremental $1.7 billion of low-risk annual rate-based investments post-closing. And finally, we are judiciously deploying our investment capacity. We've added another $2 billion of tuck-ins this quarter, with the additional ownership of PC and Albatross wind farms and the RNG assets, bringing us to $3 billion for the year. We continue to execute the strategy we laid out at Investor Day and allocate capital to deliver the quality growth we committed to. Prudent capital allocation is core to our value proposition, and we will continue to evaluate opportunities for organic growth and opportunistic tuck-in M&A that maximizes shareholder returns. Let's move on to our capital allocation priorities which continue to follow a deliberate and disciplined approach. While we've been active in the M&A space, each transaction fits very well into our long-term strategy and adds additional low-capital utility-like growth to our portfolio. The funding plans we have laid out highlight our continued commitment to our stated guardrails. We carefully structured the financing of the U.S. gas utilities to be flexible and, as importantly, to maintain our leverage within the 4.5 times to 5 times range. Furthermore, the plan articulated in September during the announcement of the LDC acquisition had contemplated additional tuck-ins before the end of the year. The associated incremental low-risk cash flows will help to preserve our balance sheet strength and support our growing dividend for years to come while staying within our DCF payout range of 60% to 70%. And as always, we are constantly evaluating opportunities to recycle capital at attractive valuations. Let's turn to our secured capital. Today, our secured growth program sits at $24 billion. New to our backlog this quarter is the addition of $1.7 billion of annual rate-based investment in announced U.S. gas utilities post-closings. We concluded a three-year program, keeping with how we present our Ontario utility growth program, but we expect that level of annual investment to continue through the decade. By the end of the year, we expect to place approximately $3 billion of organic capital into service, primarily through our Ontario customer additions and GPM modernization programs. Our robust, secure growth program is diversified geographically across our business units and is expected to be employed over the next five years. This diversity of location, timing, and business unit helps mitigate against the impact of delays or inflation on any one single large project. And with that, I'll turn it back to Greg to close the call.

Well, thanks very much, Pat. And as we wrap up here for questions, I want to leave you with a few key takeaways. Enbridge's resilient, low-risk business model is supported by our scale, diversification, and high-quality cash flows, which enables us to deliver reliable growth in all market cycles. Balance sheet strength is always a priority for us, and we are committed to our debt to EBITDA range of 4.5 to 5 times, while continuing to return capital to shareholders through sustainable dividend growth. As we discussed today, the U.S. gas utility acquisitions will enhance each of these takeaways by adding regulated earnings that enhance our cash flow quality, increase credit worthiness, and underpin our dividend growth for years to come. Our visible growth backlog incorporating conventional infrastructure investments and lower carbon opportunities supports long-term shareholder returns and positions us as a first-choice investment opportunity. Finally, let me let you know that we'll be releasing our guidance at the end of November for next year. and we'll be hosting our annual Investor Day in New York in March of next year as well. We look forward to seeing you there. But until then, thank you very much, and we look forward to taking your questions. I think we're ready now to open up the lines for those questions.

Okay, and if you would like to ask a question, please press star then one on your telephone keypad. Our first question is from Robert Kwan with Arby's Capital Markets. Your line is open.

Good morning. If I can just start with capital allocation and specifically just the thought process around how you're looking at leverage and the tuck-in deals. you've announced in light of the acquisition financing that's still outstanding and just given the current market environment. And I guess just one thing specifically, you mentioned the tuck-ins were contemplated as part of the utility disclosures. So if you can just confirm that the chart you had that had leverage kind of around that midpoint at the high end, you know, 4.75, that these deals would not be taking leverage into the high end of the range.

Yeah, for sure. Thanks, Robert. And yes, definitively, that's exactly what we contemplated. So these, both before, during the utility acquisitions, and now, that is still where we are. I think it's equally important to point out we'd obviously run by those possible transactions with rating agencies, et cetera, as well. And then from a capital allocation perspective, I think maybe just going back and thinking about We've been very deliberate over the last couple of years to swiftly and methodically move the corporation to a much less risky setup and a very utility-like setup, right? So recall that we first sold the Canadian GNP assets. We then went down the route of lowering our position in DCP and swapping those positions for very utility-like pipelines, lowering both any volume exposure and commodity exposure. and then went on to achieve this year what is really a utility-like mainline toll settlement, and then next the utilities as well. And then these transactions that we announced today fit very much in that same vein. Long-term contracts, great off-takes, and the same with the German power projects, and the same on the RNG facility, which is a little bit unique. Not everybody would do that with RNG, but we did. felt that's really important. And that's because that supports the four and a half to five times debt to EBITDA structure and continues to allow us to pay out dividends in that 60% to 70% payout range. And yeah, so I'll leave it there.

Pat, do you want to add anything to that? Nope. One thing I might add is that, as you mentioned, that 60% to 70% payout range, we brought that down over the last few years too. So it's at the midpoint, which should allow us to continue to grow dividends up to the level that we grow cash flows over the next little while.

That's great. If I could just finish, excuse me, with the RNG strategy, just where do you see this business going for you? Did you see this acquisition as being more opportunistic or something that you want to build upon in similar sizes? And I guess, you know, just generally, can you just talk about these facilities? Are they general landfills? And how do you think about just with the increasing separation of organics away from general landfills, what the risk there might be?

For sure. And Cynthia's here, so maybe I'll let Cynthia start with that.

Sure, Robert. Thanks. So we're, as you know, excited about this RNG opportunity because, as Greg noted, this is an opportunity for us to have a utility-like return. So these are unique assets. And the market is fairly large and growing. So overall RNG, I think last year, 22. There's 75 BCFs in North America. It's growing to around 95. So there's Lots of growth, but again, we'll be very disciplined with how we look at those opportunities. What we like about Morrow is that it positions us as a leader in the space and that we'll understand and continue to be able to evaluate future growth opportunities. It is a unique asset. There will be other opportunities like that, but again, the discipline required to make sure it fits the The type of utility-like structure and our ability to have those off-take agreements will be critically important as we go forward.

Okay, just your thoughts on general landfill versus targeting something that is specifically organic?

Yeah, so you would remember that we had invested in Diverge earlier this year, which specifically addresses that food waste component. So when we looked at this opportunity, where this landfill or these seven landfills are located, there's a lot of growth opportunities just there. And as Greg said, there's an embedded kind of 3% growth with very little capital outlay. So you do have to be looking at where the landfills are located. And fortunately, these assets are in geographic areas in Texas and Arkansas where we're going to see that growth. So we're not concerned that there's going to be any kind of cannibalization of that kind of other food waste growth.

That's great. Thank you.

Thanks, Robert.

The next question is from Teresa Chen with Barclays. Your line is open.

Good morning. Greg, I wanted to ask about the remaining funding options for that $4.5 billion related to the gas utility acquisition. Can you talk about your order prioritization for those really four tools in the toolkit, and specifically related to the asset sales? Can you just help us think about valuation, execution in this market as you rotate capital and optimize your portfolio, given that there are other assets from some of your competitors that are in the market as well?

Yeah, for sure. So yeah, let's start there. Recycling has always been an important part of the financial complex and methodology here at Enbridge. And I wouldn't just think about it as a sale of assets. Think about things like some of our partnerships that we've done with indigenous communities. We did that last year. Those continue to create really great opportunities for us to recycle capital and still, frankly, be involved in the projects and maintain operational strategic control. So that's an element. Yeah, and you look across the size of the company, we've got various pipe assets, pipe You can look at wind assets, renewables. I don't think we are restricted in any way, shape, or form in terms of what we'll look at. And you're right, there's a market out there for selling assets. But we think the way that we've structured virtually all of our assets now, that they are low-risk utility-like and will be very attractive, as opposed to, say, selling GNP assets in this type of market. So that's one. And then, too, we've still got some hybrid ability in there. That's something, obviously, we'll look at in unsecured notes. And then we do have the possibility of using the drip in the ATM. So that's probably the route I would go down. But, again, you've got to judge this based on what you see in the economic environment from a macro perspective. What I'm really happy about is we are a long ways down the trail of securing that financing opportunity. and you know it'll be into 24 and you know target say the end of 24 we have all these uh assets in the house so i think we've structured this well by getting uh you know three quarters of it off the table and uh setting ourselves up well with multiple uh avenues to achieve the last 25 percent got it thank you um and turning to the liquids business um

Related to the Flanagan South open season, really interesting to see the upsizing, given that I'm sure your shippers, like everyone else, is evaluating the in-service of TMX sometime next year. But not only is there enough for the previous open season, but it's been upsized now. Can you talk about what's driving that demand to bring barrels all the way to the Gulf Coast and your conversations with the shippers as this open season progresses?

Hey, Teresa, it's Colony. Thanks for the question. We're less surprised, I think. The fundamental in play here is a demand pull for Canadian Heavy to the Pad 2 and Pad 3 marks, which we've seen for many, many years. It's been growing and growing and growing. So you see some demand pull. I think you also see some supply push. It basically represents contracted egress in the sense that you have... verification ability through the main line to get on to fsp and as you see the uh the pricing basis is very wide uh now and i think it's expected to uh be wide through through the decade as egress will become constrained again so i think it's um i think it's less surprising maybe than uh you're observing but and of course you're building e hot the terminus of that in in houston And it's a very competitive path.

So I think it, bottom line, underscores the resilience of the mainline system. Makes sense. Thank you. Thank you.

The next question is from Robert Cattelier with CIBC Capital Markets. Your line is open.

Hi, good morning. I wondered if you could start with... giving us a description of how you think the recent Supreme Court opinion on the Impact Assessment Act will impact your appetite for asset development in Canada.

Yeah, you know, Robert, I think it's a little bit early. Obviously, you know, you can read a lot of tea leaves in this. The federal government says they're going to make some adjustments and fix that. I'm not sure exactly what that means. And, you know, so we'll have to consider that over the coming months and years. So that's one. I think you also have to think about it from the clean electricity standards. And none of this really immediately solves just the overall getting certificates to move forward with major pipelines from my perspective. So I'm not, I think it's status quo at this point in time. I don't see it impacting any of the projects that we have in a big way in Canada. As you know, most of those are inter-provincial. So whether it's, you know, things going on in Ontario or major projects in British Columbia, they are within the province. And so I don't see a major issue from that perspective. But I just think it's early days wherever we'll have to see. You know, it's not easy to build anything anywhere. And as such, that's why we kind of like having that portfolio of businesses where we can pick and choose with the best returns and the most accretive projects across multiple jurisdictions. But, yeah, I think time's going to tell. I wish I had a better answer for you, Rob, but I just don't think it's clear yet where they're going to go.

All right. Okay. And then a similar question in the U.S. As you look at U.S. offshore wind projects having some difficulty and with supply chain and everything else. How does this play into your gas transmission assets, including the Algonquin open season? And what do you think is possible with respect to that open season in terms of, you know, the scale of what you might accomplish?

Yeah, I'll let Cynthia answer, but, you know, I guess just from a macro perspective, I think we've been extremely careful at Enbridge of considering pace. And I think the pace of the transition, I think it's served us very well. by sticking with gas assets, with liquid assets, with keeping our renewables business going. So I really do think we've, you've heard us pitch it for a long time in all of the above strategy, and that's going to continue. But if anything, the last 24 months, whether it's activities in Europe, the war between Russia and the Ukraine, or the war in the Middle East, The instability that's out there has really underlined the need for North American infrastructure and North American infrastructure that looks at exports as well to help in less stable regions. And probably one of the worst served areas is the Northeast. So, Cynthia, do you want to speak to that?

Yeah. Thanks, Greg. We have been participating in many technical conferences with FERC and others to just address those issues. And these are near-term reliability concerns. So, yes, there will be more in the future potentially for those concerns if you see any wind development scale there. But this is really to – this open season is to address near-term issues as well as some peaking issues that are starting to create these problems and dynamics in the northeast. So, we have two different auctions that we're speaking to our customers up in the Northeast for this project, Maple. A sound receipt and then another round-the-cone receipt. So, what we see for that opportunity, one would be up to 500 Dexlarms per day. The other receipt is 250 Dexlarms per day. There's been a lot of interest. We're having great conversations. That open season closed on November 17th, so more to come as we work with our customers to find what the best receipt point, what the best build-out is, but we'll continue to do that. The end service dates for these projects is targeted to be in 2029, so lots of work to go, and I'm sure we'll continue to have more and more discussions with as we see more of that energy transition in the U.S. Northeast.

Robert, the only other thing I'd add is kind of related. I really don't see North American offshore as something that's attractive to us. It would not fit our risk parameters from a return perspective, a risk of getting it done. Very different than what we've seen in Europe with really long-term contracts with things that actually get done on time, I think. People often forget there's only one operating offshore wind facility in North America, I think still today, and it took a decade and a half to get done. Maybe there's two, but they're small. So just to be clear, that's not something that we find attractive.

No, I understand that last point. I was just saying, you know, the dynamics offshore for offshore wind are actually playing into your hands with your gas assets. But thanks for those answers. Thank you.

Thank you.

The next question is from Jeremy Tonette with JP Morgan. Your line is open.

Hi, good morning. Good morning. Just wanted to come back to the conversation of capital allocation, if I could, especially in light of rates moving up sharply here and just wondering how that has impacted your thoughts on the different components of capital allocation and Particularly as it relates to acquisitions on renewables, I think there's a concern in the marketplace that the returns there are a bit lower. And so just wondering how you see that factoring in at the same time, it seems like in midstream.