Content
Fund Strategy
Fund’s Objective
The Fund is an unincorporated open-ended trust established by a trust indenture under the laws of the Province of Alberta. The Fund commenced operations on June 30, 2003, and is administered by Enbridge Management Services Inc. (EMSI or Manager or Administrator), a wholly owned subsidiary of Enbridge Inc. (Enbridge). EMSI also serves as the manager of Enbridge Commercial Trust (ECT), a subsidiary of the Fund. The Fund has investments in businesses that operate crude oil and natural gas pipelines as well as waste heat recovery facilities and wind power.
The Fund’s objectives are to provide a predictable flow of distributable cash and to increase, where prudent, cash distributions on a per trust unit basis.
Strategy
In order to further achieve the Fund’s objectives, the Manager pursues a business strategy for the Fund which involves:
- Maximizing the efficiency and profitability of its existing assets through representation on the Boards and/or management committees governing the Fund’s assets;
- Pursuing organic growth and expansion opportunities in its existing businesses; and
- Acquiring and or developing new energy infrastructure businesses that are complementary and in keeping with the risk and return profile of its existing business.
To successfully pursue this strategy, the Fund must mitigate certain business risks. These risks, and the Fund’s strategies for managing them, are described under “Risk Factors.”
The Tax Fairness Plan as enacted may limit the Fund’s ability to successfully execute this strategy, and, accordingly, the Manager continues to consider a variety of alternatives to optimize returns and value to unitholders.
The Manager does not expect the Fund’s operations, cashflows and earnings to be materially impacted by the current economic downturn and financial market turmoil. A large portion of the Fund’s sources of revenue are contractually secured, and demand for the Fund’s services has not been materially affected thus far, as evidenced by increased volumes on the Alliance System in 2008 and continuing progress on the Saskatchewan System expansion project announced in the fourth quarter of 2008. Given the uncertain economic climate, the Manager is undertaking certain measures to protect the Fund’s ongoing profitability and financial flexibility, including increased emphasis on counterparty credit risk management. To ensure that the Fund has sufficient liquidity to refinance maturing term debt in the event of a disruption in capital markets, the Manager is seeking to secure additional committed standby credit facilities from commercial banks and/or Enbridge Inc.
Core Business Activities
The Fund’s activities are carried out through three operating segments:
- Alliance Canada includes the Fund’s 50% interest in the Canadian portion of the Alliance System. The Alliance System is a natural gas pipeline system, comprised of Alliance Canada and Alliance US, transports natural gas from supply areas in northwestern Alberta and northeastern British Columbia to delivery points near Chicago, Illinois.
- Saskatchewan System owns and operates crude oil and liquids pipeline systems primarily connecting producing fields in southeastern Saskatchewan and southwestern Manitoba with Enbridge’s mainline pipeline, for transportation to the United States.
- Green Power includes entities that produce electricity via alternative energy sources and consists of a 50% interest in each of NRGreen and the SunBridge wind project, as well as a 33% interest in each of the Magrath and Chin Chute wind projects.