Enbridge Gas Distribution Inc., a wholly owned regulated natural gas distribution utility of Enbridge Inc. (ENB) recently received approval from the Ontario Energy Board (:OEB) for new rates effective Oct 1, 2013.
Per the regulatory ruling, Enbridge Gas Distribution's gas supply charge will decrease from 14.0 cents per cubic metre (¢/m3) to 12.3 ¢/m3. Along with this, a cost adjustment refund on gas supply of 0.8 ¢/m3 will take the charge down to 11.5 ¢/m3.
As a result, residential customers who buy both their gas supply and transportation from Enbridge Gas Distribution will witness an annual decrease of approximately $83 in their bills. This is primarily due to decreased commodity and transportation costs.
Similarly, residential customers who avail only transportation services from Enbridge Gas Distribution will see an annual decrease of about $39. This is primarily due to decreased costs to transport natural gas.
Canada-based Enbridge Inc. is a leading energy transportation and distribution company. As a transporter of energy, Enbridge operates the world's longest crude oil and liquids pipeline system in Canada and the United States. The company is also involved in natural gas transmission and midstream businesses in other countries. As a distributor of energy, Enbridge owns and operates Canada's largest natural gas distribution company. It provides distribution services in Ontario, Quebec, New Brunswick and New York State.
We remain apprehensive about the company’s midstream natural gas business, which is sensitive to changes in natural gas supply-demand fundamentals and commodity cycles associated with gas processing margins.
Enbridge carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.
Meanwhile, one can look at Oiltanking Partners LP (OILT), Pioneer Southwest Energy Partners L.P. (PSE) and Pembina Pipeline Corporation (PBA) as good buying options. These oil production and pipeline operators – sporting a Zacks Rank #1 (Strong Buy) – have solid secular growth stories and the potential to rise significantly from the current levels.