Morningstar DBRS Confirms Credit Ratings on Enbridge Pipelines Inc. at "A" With Stable Trends

DBRS Limited (Morningstar DBRS) confirmed the Issuer Rating of Enbridge Pipelines Inc. (EPI or the Company) and the credit rating on its Senior Unsecured Notes at "A" as well as the Company's Commercial Paper rating of R-1 (low), all with Stable trends.

KEY CREDIT RATING CONSIDERATIONS
In March 2024, the Canadian Energy Regulator approved the Mainline Toll Settlement (MTS) negotiated with shippers for tolls on the Enbridge System/U.S. Lakehead Pipeline System (the Mainline System) by Enbridge Inc. (ENB; rated A (low) with a Stable trend and the 100% owner of EPI). The MTS was approved as filed and covers both the Canadian portion of the Mainline System (Canadian Mainline) and the Lakehead System over a 7.5-year term through 2028. The MTS confirms the Mainline System will continue to operate as a common carrier system and includes a financial performance collar that provides incentives for ENB to optimize throughput and cost, and provides downside protection in the event of extreme supply or demand disruptions or unforeseen operating cost exposure.

The Canadian Mainline, which is owned by EPI, has consistently provided the most economic route for Western Canadian Sedimentary Basin producers shipping crude oil to the U.S. Midwest (PADD II)/Chicago and has transported about two-thirds of Canadian crude oil exports into the U.S. The Canadian Mainline generated 88% of EPI's Morningstar DBRS-adjusted segment EBITDA in 2024. Morningstar DBRS expects that the lower tolls under the MTS have enhanced the competitiveness of the Mainline. The Mainline was effectively fully utilized in 2024 and Q1 2025 despite the competitive presence of the Trans Mountain Pipeline Expansion Project (TMX).

Morningstar DBRS expects modestly weaker EPI earnings and cash flow in 2025 compared with 2024, based on the nature of the tolls under the Settlement, however the Company's credit metrics are expected to remain supportive of the current ratings.

CREDIT RATING DRIVERS
A positive credit rating action is unlikely given EPI's relatively stable business and financial risk profiles. Although unlikely, Morningstar DBRS could downgrade the credit rating because of adverse regulatory changes or if the Company's cash flow-to-debt ratio weakens below 15% on a sustained basis.

EARNINGS OUTLOOK
Morningstar DBRS expects modestly weaker earnings in 2025 based on lower tolls under the MTS reached with Canadian Mainline shippers and the competitive pressure from the ramp-up of TMX operations through 2025.

FINANCIAL OUTLOOK
Morningstar DBRS expects modestly weaker cash flows in 2025 and 2026, compared with 2024, based on the tolls negotiated with Canadian Mainline shippers through the MTS. Morningstar DBRS notes that the lower tolls under the MTS will enhance the competitiveness of the Mainline System, however, it expects EPI's credit metrics to remain supportive of the current ratings.

CREDIT RATING RATIONALE
Comprehensive Business Risk Assessment (CBRA): AL
EPI's CBRA of AL reflects the Company's strong contractual and regulatory position, adequate access to energy supply, and strong end-user demand. The CBRA also factors in increased competition from the TMX expansion project in EPI's Liquids pipeline segment.

Comprehensive Financial Risk Assessment (CFRA): AAH/AA
EPI's CFRA of AAH/AA reflects strong financial metrics for the current credit rating category. Morningstar DBRS expects debt levels to remain stable in the near and medium term because of minimal capital expenditure requirements and despite material dividends paid to the parent.

Intrinsic Assessment (IA): A
The IA of A is at the lower end of the Intrinsic Assessment Range. The selection limits the impact of a strong CFRA on the rating given that the CFRA already provides an uplift to the rating.

Additional Considerations: None
EPI's credit ratings include no further negative or positive adjustments because of additional considerations.

Further details on the Issuer's Intrinsic Assessment can be found at https://dbrs.morningstar.com/research/456068

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental, Social, or Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025) at https://dbrs.morningstar.com/research/454196

Notes:
All figures are in Canadian dollars unless otherwise noted.

Morningstar DBRS applied the following principal methodology: Global Methodology for Rating Companies in the Oil & Gas, Oilfield Services, and Pipeline and Midstream Energy Industries (May 6, 2025), https://dbrs.morningstar.com/research/453396

Morningstar DBRS credit ratings may use one or more sections of the Morningstar DBRS Global Corporate Criteria (February 3, 2025; https://dbrs.morningstar.com/research/447186) which covers, for example, topics such as holding companies and parent/subsidiary relationships, guarantees, recovery, and common adjustments to financial ratios.

The following methodologies have also been applied:
-- Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025), https://dbrs.morningstar.com/research/454196

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info-DBRS@morningstar.com.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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