Enbridge Inc. et al.

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 52-107, s. 9.1 Acceptable Accounting Principles, Auditing Standards and Reporting Currency -- Affiliates request relief from the requirement of NI 52-107, s. 3.2 that financial statements be prepared in accordance with Canadian GAAP -- Part I to permit the Affiliates, who are not SEC Issuers, to prepare their financial statements in accordance with United States GAAP for financial years commencing January 1, 2012 until December 31, 2014 (fiscal 2012, 2013 and 2014). The Affiliates are rate regulated entities and may rely on section 5.4 of NI 52-107 to prepare and file Canadian GAAP -- Part V financial statements for the financial year commencing January 1, 2011 and ending December 31, 2011. Due to significantly divergent views on rate regulated accounting at the IASB, a rate regulated accounting standard has not been finalized. There continues to be significant uncertainty as to when, and if, rate regulated accounting under IFRS will be clarified.

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency, s. 9.1.

Citation: Enbridge Inc., Re, 2011 ABASC 106

February 25, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

ENBRIDGE INC.,

ENBRIDGE GAS DISTRIBUTION INC.

AND ENBRIDGE PIPELINES INC.

(the Filers)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting Enbridge Gas Distribution Inc. (EGD) and Enbridge Pipelines Inc. (EPI), (collectively, the Affiliates) from the requirements in subsection 3.2 of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) that financial statements be prepared in accordance with Canadian GAAP -- Part I (the Exemption Sought) to permit the Affiliates to prepare their financial statements in accordance with United States generally accepted accounting principles (US GAAP).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Québec, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador (the Passport Jurisdictions); and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102 and NI 52-107 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filers:

Enbridge Inc.

1. Enbridge Inc. (EI) was incorporated under the Companies Act (NWT) on April 13, 1970 and continued under the Business Corporations Act (Canada) on December 15, 1987. The head office of EI is in Calgary, Alberta.

2. EI is a reporting issuer or equivalent in the Jurisdictions and each of the Passport Jurisdictions and, to its knowledge, is not in default of securities legislation in any jurisdiction in Canada.

3. The securities of EI are listed on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE).

4. EI is an "SEC issuer" as that term is defined in NI 52-107 and can rely on subsection 3.7 of NI 52-107 to prepare and file with, or deliver to, a securities regulatory authority or regulator US GAAP financial statements.

Enbridge Pipelines Inc.

5. EPI was incorporated by Special Act of Canada on April 30, 1949 and continued under the Business Corporations Act (Canada) on June 2, 1980. The head office of EPI is in Calgary, Alberta.

6. EPI is a reporting issuer or equivalent in the Jurisdictions and each of the Passport Jurisdictions and, to its knowledge, is not in default of securities legislation in any jurisdiction in Canada.

7. EPI does not have any "exchange-traded securities" as that term is defined in National Instrument 21-101 Marketplace Operation (NI 21-101).

8. EPI is a wholly-owned indirect subsidiary of EI and has issued and outstanding the following publicly-held debt (as at January 31, 2011) that is not convertible into equity securities of any issuer:

$200,000,000 Series K Debentures at 8.20%

$2,424,600,000 Medium Term Notes at rates ranging from 2.93% to 6.62%

$25,500,000 in Commercial Paper

9. EPI is a rate-regulated entity whose business includes, through a wholly-owned subsidiary, 100% voting control of Enbridge Energy Management, L.L.C. (EEM), which holds an indirect 25.5% ownership interest in Enbridge Energy Partners, L.L.P. (EEP).

10. EEM and EEP are not reporting issuers or equivalent in any jurisdiction of Canada, but are registrants with the SEC and their securities are listed on the NYSE.

11. EEM and EEP prepare and file US GAAP financial statements with the SEC pursuant to the 1934 Act and, pursuant to US GAAP and International Financial Reporting Standards (IFRS), such financial statements must be consolidated into the financial statements of EPI, which will in turn be consolidated into the financial statements of EI.

12. EPI is not an "SEC issuer" as that term is defined in NI 52-107.

Enbridge Gas Distribution Inc.

13. EGD was incorporated by Special Act of Canada in 1848. EGD was continued under the Corporations Act, 1953 (Ontario) and is now subject to the Business Corporations Act (Ontario). The head office of EGD is in Toronto, Ontario.

14. EGD is a reporting issuer or equivalent in the Jurisdictions and each of the Passport Jurisdictions, and to its knowledge, is not in default of securities legislation in any jurisdiction of Canada.

15. EGD does not have any "exchange-traded securities" as that term is defined in NI 21-101.

16. EGD is a wholly-owned indirect subsidiary of EI and has outstanding the following publicly-held debt (as at January 31, 2011) that is not convertible into equity securities of any issuer:

$235,000,000 Debentures at rates of 9.85% and 10.80%; and

$2,195,000,000 Medium Term Notes at rates ranging from 4.045% to 8.85%

17. EGD is a rate-regulated natural gas distribution utility.

18. EGD is not an "SEC Issuer" as that term is defined in NI 52-107.

General

19. Each of the Filers are rate-regulated entities and, accordingly, may rely on subsection 5.4 of NI 52-107 to prepare and file Canadian GAAP -- Part V financial statements for the financial year commencing January 1, 2011 and ending December 31, 2011.

20. It was anticipated that the International Accounting Standards Board's (IASB) exposure draft would have provided direction regarding rate-regulated accounting under IFRS effective prior to the January 1, 2011 transition date to IFRS to assist rate-regulated issuers with their IFRS transition. However, due to divergent views on rate-regulated accounting at the IASB, a rate-regulated accounting standard has not been finalized. There continues to be significant uncertainty as to when, and if, rate-regulated accounting under IFRS will be clarified.

21. Rate-regulated accounting is well established in the United States and EI already complies with ASC 980 Regulated Operations, the US GAAP standard on rate regulated accounting. EI has reconciled its financial statements to US GAAP for many years.

22. NI 52-107 permits SEC issuers to file US GAAP financial statements in satisfaction of requirements under the securities legislation of the Jurisdictions and the Passport Jurisdictions and does not require any reconciliation of US GAAP financial statements to Canadian GAAP.

23. As an SEC Issuer, EI may rely on subsection 3.7 of NI 52-107 to prepare and file US GAAP financial statements and intends to do so for the financial years commencing on or after January 1, 2012.

24. The financial statements of the Affiliates are consolidated into the financial statements of EI. As the Affiliates are not SEC issuers, they cannot rely on subsection 3.7 of NI 52-107 to file US GAAP financial statements.

25. The Affiliates will certify their interim and annual US GAAP financial statements by filing the appropriate certificates in accordance with National Instrument 52-109 Certification of Disclosure.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted for the financial years commencing January 1, 2012 until the financial year ending December 31, 2014 in respect of each Affiliate provided that:

(a) EI, directly or indirectly, remains the holder of all of the equity securities in respect of the Affiliate;

(b) the Affiliate does not issue any "exchange traded securities" as that term is defined in NI 21-101, and any securities convertible into equity securities of the Affiliate are held directly or indirectly by EI; and

(c) the financial statements of the Affiliate continue to be consolidated into the financial statements of EI.