Ferc DecisionMy understanding is that ENB's portion of EEP's Diistributable cash flow in 2017 was $784 million. ($643 mln was paid in cash to ENB) For 2018 the Company reduced their forecast by $55 mln and a further $60 million due to the recent Ferc decision taking effect March 31. ($80 mln annually)
Enbridge recorded $5.614
Billion cash flow in 2017 so EEP was 14%.
The Compny stated March 16 that:
"
Under the International Joint Toll mechanism, reductions in the EEP tariff will create an offsetting revenue increase on the Canadian Mainline system owned by Enbridge Income Fund Holdings Inc. (ENF). Financial guidance at ENF remains unchanged; however, this could provide a further tailwind for financial results. The combined impact at both EEP and ENF are offsetting for Enbridge on a consolidated basis." Is this why ENF goes up and ENB should go down? Maybe but the combined impact is offsetting. The cash flow of EEP (ENB's portion) will go down close to 1 times coverage of distributions (from 1.2 times). Maybe EEP maintains the distribution of $643 mln in 2018 at 1 times coverage. Accordingly EEP's earnings might decline but cash flow to ENB would be unchanged while a pick up earnings and cash flow to ENF would still ocurr. Also good for ENB then. However, no doubt the impact will be negative to EEP's credit rating but that won't directly impact cash flow. (EEP's distributle cash flow is after maintenance capital expenditures)
I guess my point is simply it may not be as bad as the market expects and as ENB stated it " does not expect a material impact to its previously disclosed financial guidance over the 2018-2020 horizon".
splurge