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REGULATORY MATTERS | 12 Months Ended
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Dec. 31, 2022
Regulated Operations [Abstract] |
REGULATORY MATTERS | REGULATORY MATTERS We record assets and liabilities that result from regulated ratemaking processes that would not be recorded under US GAAP for non-regulated entities. See Note 2 - Significant Accounting Policies for further discussion. Our significant regulated businesses and the related accounting impacts are described below. Under the current authorized rate structure for certain operations, income tax costs are recovered in rates based on the current income tax payable and do not include accruals for deferred income tax. However, as income taxes become payable as a result of the reversal of temporary differences that created the deferred income taxes, it is expected that rates will be adjusted to recover these taxes. Since most of these temporary differences are related to property, plant and equipment costs, this recovery is expected to occur over the life of the related assets. In the absence of rate-regulated accounting, this regulatory Deferred income taxes balance and the related earnings impact would not be recorded. LIQUIDS PIPELINES Canadian Mainline Canadian Mainline includes the Canadian portion of our mainline system and is subject to regulation by the CER. Tolls, excluding Lines 8 and 9, are governed by the 10-year CTS which expired on June 30, 2021. The tolls in place on June 30, 2021 continue on an interim basis until new tolls are finalized and approved by the CER (Note 4). The CTS established a Canadian Local Toll for all volumes shipped on the Canadian Mainline and an International Joint Tariff for all volumes shipped from western Canadian receipt points to delivery points on our Lakehead System. Under the CTS, we have recognized a regulatory asset of $2.1 billion a s at December 31, 2022 (2021 - $2.1 billion) to offset deferred income taxes, as a CER rate order governing flow-through income tax treatment permits future recovery. No other material regulatory assets or liabilities are recognized under the terms of the CTS. Southern Lights Pipeline The US and Canadian portions of the Southern Lights Pipeline are regulated by the FERC and CER, respectively. Shippers on the Southern Lights Pipeline are subject to long-term transportation contracts under a cost-of-service toll methodology. Toll adjustments are filed annually with the regulators and provide for the recovery of allowable operating and debt financing costs, plus a pre-determined after-tax return on equity (ROE) of 10%. GAS TRANSMISSION AND MIDSTREAM British Columbia Pipeline and Maritimes & Northeast Canada British Columbia (BC) Pipeline and Maritimes & Northeast (M&N) Canada are regulated by the CER. Rates are approved by the CER through negotiated toll settlement a greements based on cost-of-service. Both our BC Pipeline and M&N Canada systems currently operate under the terms of their respective 2022-2026 and 2022-2023 settlement agreements, which stipulate an allowable ROE and the continuation and establishment of certain deferral and variance accounts. US Gas Transmission Most of our US gas transmission and storage services are regulated by the FERC and may also be subject to the jurisdiction of various other federal, state and local agencies. The FERC regulates natural gas transmission in US interstate commerce including the establishment of rates for services, while rates for intrastate commerce and/or gathering services are regulated by the state agencies. Cost-of-service is the basis for the calculation of regulated tariff rates, although the FERC also allows the use of negotiated and discounted rates within contracts with shippers that may result in a rate that is above or below the FERC-regulated recourse rate for that service. GAS DISTRIBUTION AND STORAGE Enbridge Gas Enbridge Gas' distribution rates, commencing in 2019, are set under a five-year Incentive Regulation (IR) framework using a price cap mechanism. The price cap mechanism establishes new rates each year through an annual base rate escalation at inflation less a 0.3% stretch factor, annual updates for certain costs to be passed through to customers, and where applicable, the recovery of material discrete incremental capital investments beyond those that can be funded through base rates. The IR framework includes the continuation and establishment of certain deferral and variance accounts, as well as an earnings sharing mechanism that requires Enbridge Gas to share equally with customers any earnings in excess of 150 basis points over the annual OEB approved ROE. FINANCIAL STATEMENT EFFECTS Accounting for rate-regulated activities has resulted in the recognition of the following regulatory assets and liabilities in the Consolidated Statements of Financial Position.
December 31, | 2022 | 2021 | Recovery/Refund Period Ends
(millions of Canadian dollars) |  |  |
Current regulatory assets |  |  |
Purchase gas variance | 190 |  | 15 |  | 2023
Under-recovery of fuel costs | 109 |  | 114 |  | 2023
Other current regulatory assets | 305 |  | 130 |  | 2023
Total current regulatory assets 1 (Note 9) | 604 |  | 259 |  |
Long-term regulatory assets |  |  |
Deferred income taxes 2 | 4,473 |  | 4,176 |  | Various
Long-term debt 3 | 378 |  | 398 |  | 2032-2046
Negative salvage 4 | 265 |  | 243 |  | Various
Purchase gas variance | 244 |  | 215 |  | 2024
Accounting policy changes 5 | 219 |  | 157 |  | Various
Pension plan receivable 6 | 40 |  | 78 |  | Various
Other long-term regulatory assets | 244 |  | 339 |  | Various
Total long-term regulatory assets 1 | 5,863 |  | 5,606 |  |
Total regulatory assets | 6,467 |  | 5,865 |  |
Current regulatory liabilities |  |  |
Other current regulatory liabilities | 167 |  | 106 |  | 2023
Total current regulatory liabilities 7 | 167 |  | 106 |  |
Long-term regulatory liabilities |  |  |
Future removal and site restoration reserves 8 | 1,615 |  | 1,543 |  | Various
Regulatory liability related to US income taxes 9 | 918 |  | 895 |  | 2050-2072
Pipeline future abandonment costs (Note 14) | 610 |  | 649 |  | Various
Pension plan payable 6 | 231 |  | — |  | Various
Other long-term regulatory liabilities | 250 |  | 234 |  | Various
Total long-term regulatory liabilities 7 | 3,624 |  | 3,321 |  |
Total regulatory liabilities | 3,791 |  | 3,427 |  |
1 Current regulatory assets are included in Accounts receivable and other, while long-term regulatory assets are included in Deferred amounts and other assets. 2 Represents the regulatory offset to deferred income tax liabilities to the extent that it is expected to be included in future regulator-approved rates and recovered from customers. The recovery period depends on the timing of the reversal of temporary differences. In the absence of rate-regulated accounting, this regulatory balance and the related earnings impact would not be recorded. 3 Represents our regulatory offset to the fair value adjustment to debt acquired in our merger with Spectra Energy Corp. (Spectra Energy). The offset is viewed as a proxy for the regulatory asset that would be recorded in the event such debt was extinguished at an amount higher than the carrying value. 4 The negative salvage balance represents the recovery in future rates of the actual cost of removal of previously retired or decommissioned plant assets, as approved by the FERC. 5 This deferral primarily consists of unamortized accumulated actuarial gains/losses and past service costs incurred by Union Gas Limited, relating to the period up to our merger with Spectra Energy, which were previously recorded in AOCI. The amortization of this balance is recognized as a component of accrual-based pension expenses, which are included in Other income/(expense) and recovered in rates, as previously approved by the OEB. 6 Represents the regulatory offset to our pension liability to the extent that it is expected to be included in regulator-approved future rates and recovered from customers. The settlement period for this balance is not determinable. In the absence of rate-regulated accounting, this regulatory balance and the related pension expense would be recorded in earnings and OCI. 7 Current regulatory liabilities are included in Accounts payable and other, while long-term regulatory liabilities are included in Other long-term liabilities. 8 Future removal and site restoration reserves consists of amounts collected from customers, with the approval of the OEB, to fund future costs of removal and site restoration relating to property, plant and equipment. These costs are collected as part of the depreciation expense charged on property, plant and equipment that is reflected in rates. The settlement of this balance will occur over the long-term as costs are incurred. In the absence of rate-regulated accounting, depreciation rates would not include a charge for removal and site restoration and costs would be charged to earnings as incurred with recognition of revenue for amounts previously collected. 9 The regulatory liability related to US income taxes resulted from the US tax reform legislation dated December 22, 2017. These balances will be refunded to customers in accordance with the respective rate settlements approved by the FERC.

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- Definition The entire disclosure for detailed information about regulatory assets and liabilities, including current and noncurrent assets created when regulatory agencies permit the deferral of costs to the balance sheet that would otherwise be required to appear on the company's income statement and would be charged against current expenses or revenues, as well as current and noncurrent liabilities created when regulatory agencies permit. + References No definition available. + Details
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