Enhanced Investments - Financial Portal

Published: 2023-05-05



		ENBRIDGE INC.

				CONSOLIDATED FINANCIAL STATEMENTS

		(unaudited)

		March 31, 2023

ENBRIDGE INC.
	CONSOLIDATED STATEMENTS OF EARNINGS
		Three months ended
			March 31,
			2023	2022
					(unaudited; mil ions of Canadian dol ars, except per share amounts)

					Operating revenues

					Commodity sales		4,783		8,325
					Gas distribution sales		2,279		2,098
					Transportation and other services		5,013		4,674
					Total operating revenues (Note 2)		12,075		15,097
					Operating expenses
					Commodity costs		4,636		8,291
					Gas distribution costs		1,594		1,456
					Operating and administrative		2,037		1,875
					Depreciation and amortization		1,146		1,055
					Total operating expenses		9,413		12,677
					Operating income		2,662		2,420
					Income from equity investments		517	491
					Other income (Note 9)		102	458
					Interest expense		(905)	(719)
					Earnings before income taxes		2,376		2,650
					Income tax expense		(510)	(593)
					Earnings		1,866		2,057
					Earnings attributable to noncontrol ing interests		(49)	(28)
					Earnings attributable to control ing interests		1,817		2,029
					Preference share dividends		(84)	(102)
					Earnings attributable to common shareholders		1,733		1,927
					Earnings per common share attributable to common shareholders (Note 4)		0.86	0.95
					Diluted earnings per common share attributable to common shareholders (Note 4)	0.85	0.95
					The accompanying notes are an integral part of these interim consolidated financial statements.
							1

ENBRIDGE INC.
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
		Three months ended
			March 31,
			2023	2022

	(unaudited; mil ions of Canadian dol ars)

	Earnings		1,866		2,057
	Other comprehensive income/(loss), net of tax
	Change in unrealized gain/(loss) on cash flow hedges		(45)	294
	Change in unrealized gain on net investment hedges		15	133
	Excluded components of fair value hedges		7	(1)
	Reclassification to earnings of loss on cash flow hedges		7	57
	Reclassification to earnings of pension and other postretirement benefits
	(OPEB) amounts		(4)	(2)
	Foreign currency translation adjustments		(59)	(708)
	Other comprehensive loss, net of tax		(79)	(227)
	Comprehensive income		1,787		1,830
	Comprehensive income attributable to noncontrol ing interests		(64)	(13)
	Comprehensive income attributable to control ing interests		1,723		1,817
	Preference share dividends		(84)	(102)
	Comprehensive income attributable to common shareholders		1,639		1,715
	The accompanying notes are an integral part of these interim consolidated financial statements.
						2

ENBRIDGE INC.
	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
		Three months ended
		March 31,
		2023		2022

			(unaudited; mil ions of Canadian dol ars, except per share amounts)
			Preference shares
	Balance at beginning of period		6,818		7,747
	Redemption of preference shares				—	(737)
			Balance at end of period		6,818		7,010
			Common shares
	Balance at beginning of period		64,760		64,799
	Shares issued on exercise of stock options				2	36
	Shares issued on vesting of restricted stock units (RSU)				12	—
	Share purchases at stated value				—	(30)
	Other				—	(4)
			Balance at end of period		64,774		64,801
			Additional paid-in capital
	Balance at beginning of period		275		365
	Stock-based compensation				—	13
	Options exercised				(1)	(34)
	Other				—	(28)
			Balance at end of period		274		316
			Deficit
	Balance at beginning of period	(15,486) (10,989)
	Earnings attributable to control ing interests		1,817		2,029
	Preference share dividends				(84)	(102)
	Share purchases in excess of stated value				—	(20)
			Balance at end of period	(13,753)		(9,082)
			Accumulated other comprehensive income/(loss) (Note 6)
	Balance at beginning of period		3,520		(1,096)
	Other comprehensive loss attributable to common shareholders, net of tax				(94)	(212)
			Balance at end of period		3,426		(1,308)
			Total Enbridge Inc. shareholders’ equity		61,539		61,737
			Noncontrol ing interests
	Balance at beginning of period		3,511		2,542
	Earnings attributable to noncontrol ing interests				49	28
	Other comprehensive income/(loss) attributable to noncontrol ing interests, net of tax
	Change in unrealized gain on cash flow hedges				17	2
	Foreign currency translation adjustments				(2)	(17)
					15	(15)

	Comprehensive income attributable to noncontrol ing interests				64	13
	Distributions				(92)	(60)
	Contributions				4	6
	Other				(1)	35
			Balance at end of period		3,486		2,536
			Total equity		65,025		64,273
			Dividends paid per common share		0.888		0.860
			The accompanying notes are an integral part of these interim consolidated financial statements.
						3

ENBRIDGE INC.
	CONSOLIDATED STATEMENTS OF CASH FLOWS
		Three months ended
			March 31,
					2023		2022
				(unaudited; mil ions of Canadian dol ars)
				Operating activities
				Earnings		1,866			2,057
				Adjustments to reconcile earnings to net cash provided by operating activities:
				Depreciation and amortization		1,146			1,055
				Deferred income tax expense		484		423
				Unrealized derivative fair value gain, net (Note 7)		(520)		(369)
				Income from equity investments		(517)		(491)
				Distributions from equity investments		453		394
				Other		40		47
				Changes in operating assets and liabilities		914		(177)
				Net cash provided by operating activities		3,866			2,939
				Investing activities
				Capital expenditures		(1,129)			(1,048)
				Long-term investments and restricted long-term investments		(413)		(314)
				Distributions from equity investments in excess of cumulative earnings		100		97
				Additions to intangible assets		(66)		(53)
				Affiliate loans, net		71		—
				Net cash used in investing activities		(1,437)			(1,318)
				Financing activities
				Net change in short-term borrowings		(559)		89
				Net change in commercial paper and credit facility draws		(2,921)			(283)
				Debenture and term note issues, net of issue costs		4,111			2,643
				Debenture and term note repayments		(968)		(1,155)
				Contributions from noncontrol ing interests		4		6
				Distributions to noncontrol ing interests		(92)		(60)
				Common shares issued		—		2
				Common shares repurchased		—		(50)
				Preference share dividends		(84)		(91)
				Common share dividends		(1,798)			(1,742)
				Redemption of preference shares		—		(750)
				Affiliate loans, net		51		—
				Other		(33)		(92)
				Net cash used in financing activities		(2,289)			(1,483)
				Effect of translation of foreign denominated cash and cash equivalents and
				restricted cash		4		(4)
				Net change in cash and cash equivalents and restricted cash		144		134
				Cash and cash equivalents and restricted cash at beginning of period		907		320
				Cash and cash equivalents and restricted cash at end of period		1,051			454
				The accompanying notes are an integral part of these interim consolidated financial statements.
							4

ENBRIDGE INC.
	CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
		March 31,		December 31,
			2023		2022
						(unaudited; mil ions of Canadian dol ars; number of shares in mil ions)
						Assets
						Current assets
	Cash and cash equivalents						976		861
	Restricted cash						75		46
	Trade receivables and unbil ed revenues						4,755			5,616
	Other current assets						2,701			3,255
	Accounts receivable from affiliates						100		114
	Inventory						1,311			2,255
							9,918			12,147
						Property, plant and equipment, net	104,251			104,460
						Long-term investments	16,320			15,936
						Restricted long-term investments	646		593
						Deferred amounts and other assets	9,148			9,542
						Intangible assets, net	3,913			4,018
						Goodwil	32,411			32,440
						Deferred income taxes	463		472
						Total assets	177,070			179,608
						Liabilities and equity
						Current liabilities
	Short-term borrowings						1,437			1,996
	Trade payables and accrued liabilities						4,098			6,172
	Other current liabilities						3,051			5,220
	Accounts payable to affiliates						47		105
	Interest payable						709		763
	Current portion of long-term debt						7,436			6,045
							16,778			20,301
						Long-term debt	71,740			72,939
						Other long-term liabilities	9,235			9,189
						Deferred income taxes	14,292			13,781
							112,045			116,210
						Contingencies (Note 10)Equity

	Share capital
	Preference shares						6,818			6,818
	Common shares (2,025 outstanding at March 31, 2023 and December 31, 2022)						64,774			64,760
	Additional paid-in capital						274		275
	Deficit						(13,753)			(15,486)
	Accumulated other comprehensive income (Note 6)						3,426			3,520
	Total Enbridge Inc. shareholders’ equity						61,539			59,887
	Noncontrol ing interests						3,486			3,511
							65,025			63,398
						Total liabilities and equity	177,070			179,608
						The accompanying notes are an integral part of these interim consolidated financial statements.
								5

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
	(unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements of Enbridge Inc. ("we", "our", "us" and "Enbridge") have been prepared in accordance with general y accepted accounting principles in the United States of America (US GAAP) and Regulation S-X for interim consolidated financial information. They do not include al of the information and notes required by US GAAP for annual consolidated financial statements and should therefore be read in conjunction with our audited consolidated financial statements and notes for the year ended December 31, 2022. In the opinion of management, the interim consolidated financial statements contain al normal recurring adjustments necessary to present fairly our financial position, results of operations and cash flows for the interim periods reported. These interim consolidated financial statements fol ow the same significant accounting policies as those included in our audited consolidated financial statements for the year ended December 31, 2022. Amounts are stated in Canadian dol ars unless otherwise noted.
Our operations and earnings for interim periods can be affected by seasonal fluctuations within the gas distribution utility businesses, as wel as other factors such as supply of and demand for crude oil and natural gas, and may not be indicative of annual results.
Certain comparative figures in our interim consolidated financial statements have been reclassified to conform to the current year's presentation.
		6

2. REVENUES
REVENUE FROM CONTRACTS WITH CUSTOMERSMajor Products and Services
		Gas		Gas
			Transmission		Distribution	Renewable
	Liquids	and		and		Power	Energy	Eliminations	Three months endedMarch 31, 2023(mil ions of Canadian dol ars)
	Pipelines		Midstream	Storage		Generation	Services	and Other Consolidated

Transportation revenue		2,942	1,384		276					—	—	—	4,602
Storage and other revenue		64	95		99					—	—	—	258
Gas distribution revenue		—	—		2,287					—	—	—	2,287
Electricity revenue		—	—		—					66	—	—	66
Total revenue from contracts with
customers		3,006	1,479		2,662					66	—	—	7,213
Commodity sales		—	—		—					—	4,783	—	4,783
Other revenue1,2		30	11		(40)					78	—	—	79
Intersegment revenue		129	1		3					—	18	(151)	—
Total revenue		3,165	1,491		2,625					144	4,801	(151)		12,075
		Gas		Gas
			Transmission		Distribution	Renewable
	Liquids	and		and		Power	Energy	Eliminations	Three months endedMarch 31, 2022(mil ions of Canadian dol ars)
	Pipelines		Midstream	Storage		Generation	Services	and Other Consolidated

Transportation revenue		2,685	1,194		251					—	—	—	4,130
Storage and other revenue		51	84		47					—	—	—	182
Gas gathering and processing
revenue		—	15		—					—	—	—	15
Gas distribution revenue		—	—		2,098					—	—	—	2,098
Electricity revenue		—	—		—					62	—	—	62
Total revenue from contracts with
customers		2,736	1,293		2,396					62	—	—	6,487
Commodity sales		—	—		—					—	8,325	—	8,325
Other revenue1,2		178	7		4					94	2	—	285
Intersegment revenue		141	—		11					—	10	(162)	—
Total revenue		3,055	1,300		2,411					156	8,337	(162)		15,097
1 Includes realized and unrealized gains and losses from our hedging program which for the three months ended March 31, 2023
were a net $55 mil ion loss (2022 - $94 mil ion gain).
2 Includes revenues from lease contracts for the three months ended March 31, 2023 and 2022 of $144 mil ion and $164 mil ion,
respectively.
We disaggregate revenue into categories which represent our principal performance obligations within each business segment. These revenue categories represent the most significant revenue streams in each segment and consequently are considered to be the most relevant revenue information for management to consider in evaluating performance.
					7

Contract Balances
	Contract	Contract	Contract
	Receivables	Assets	Liabilities
(mil ions of Canadian dol ars)Balance as at March 31, 2023
					3,186	232	2,328
Balance as at December 31, 2022					3,183	230	2,241
Contract receivables represent the amount of receivables derived from contracts with customers.
Contract assets represent the amount of revenue which has been recognized in advance of payments received for performance obligations we have fulfil ed (or have partial y fulfil ed) and prior to the point in time at which our right to the payment is unconditional. Amounts included in contract assets are transferred to accounts receivable when our right to the consideration becomes unconditional.
Contract liabilities represent payments received for performance obligations which have not been fulfil ed. Contract liabilities primarily relate to make-up rights and deferred revenue. Revenue recognized during the three months ended March 31, 2023 included in contract liabilities at the beginning of the period was $36 mil ion. Increases in contract liabilities from cash received, net of amounts recognized as revenue during the three months ended March 31, 2023 were $124 mil ion.
Performance ObligationsThere was no material revenue recognized in the three months ended March 31, 2023 from performance obligations satisfied in previous periods.
Revenue to be Recognized from Unfulfilled Performance ObligationsTotal revenue from performance obligations expected to be fulfil ed in future periods is $60.0 bil ion, of which $6.0 bil ion and $6.7 bil ion are expected to be recognized during the remaining nine months ending December 31, 2023 and the year ending December 31, 2024, respectively.
The revenues excluded from the amounts above, based on optional exemptions available under Accounting Standards Codification (ASC) 606, as explained below, represent a significant portion of our overal revenues and revenues from contracts with customers. Certain revenues such as flow-through operating costs charged to shippers are recognized at the amount for which we have the right to invoice our customers and are excluded from the amounts for revenue to be recognized in the future from unfulfil ed performance obligations above. Variable consideration is excluded from the amounts above due to the uncertainty of the associated consideration, which is general y resolved when actual volumes and prices are determined. For example, we consider interruptible transportation service revenues to be variable revenues since volumes cannot be estimated. Additional y, the effect of escalation on certain tol s which are contractual y escalated for inflation has not been reflected in the amounts above as it is not possible to reliably estimate future inflation rates. Revenues for periods extending beyond the current rate settlement term for regulated contracts where the tol s are periodical y reset by the regulator are excluded from the amounts above since future tol s remain unknown. Final y, revenues from contracts with customers which have an original expected duration of one year or less are excluded from the amounts above.
Variable ConsiderationDuring the three months ended March 31, 2023, revenue for the Canadian Mainline has been recognized in accordance with the terms of the Competitive Tol ing Settlement, which expired on June 30, 2021. The tol s in place on June 30, 2021 continue on an interim basis until a new commercial arrangement is implemented and are subject to finalization and adjustment applicable to the interim period, if any. Due to the uncertainty of adjustment to tol ing pursuant to a Canada Energy Regulator (CER) decision, interim tol revenue recognized during the three months ended March 31, 2023 is considered variable consideration.
				8

Recognition and Measurement of Revenues
		Gas		Gas
			Transmission		Distribution	Renewable
	Liquids	and		and		Power
	Pipelines		Midstream	Storage		Generation Consolidated	Three months ended March 31, 2023(mil ions of Canadian dol ars)

Revenue from products transferred at a point in time		—	—		30			—	30
Revenue from products and services transferred over time1	3,006	1,479		2,632			66	7,183
Total revenue from contracts with customers		3,006	1,479		2,662			66	7,213
		Gas		Gas
			Transmission		Distribution	Renewable
	Liquids	and		and		Power
	Pipelines		Midstream	Storage		Generation Consolidated	Three months ended March 31, 2022(mil ions of Canadian dol ars)Revenue from products transferred at a point in time
		—	—		16			—	16
Revenue from products and services transferred over time1	2,736	1,293		2,380			62	6,471
Total revenue from contracts with customers		2,736	1,293		2,396			62	6,487
1 Revenue from crude oil and natural gas pipeline transportation, storage, natural gas gathering, compression and treating, natural
gas distribution, natural gas storage services and electricity sales.
	9

3. SEGMENTED INFORMATION
		Gas		Gas
			Transmission		Distribution	Renewable
Three months endedMarch 31, 2023	Liquids	and		and		Power	Energy	Eliminations
	Pipelines		Midstream	Storage		Generation	Services	and Other Consolidated
(mil ions of Canadian dol ars)
Operating revenues		3,165	1,491		2,625							144	4,801		(151)			12,075
Commodity and gas distribution
costs		—	—		(1,612)							(4) (4,782)	168			(6,230)
Operating and administrative	(1,123)	(549)		(309)							(53)	(18)		15			(2,037)
Income/(loss) from equity
investments		248	238		—							35	—		(4)	517
Other income/(expense)		73	25		12							14	—		(22)	102
Earnings before interest, income
taxes and depreciation and amortization
		2,363	1,205		716							136	1		6	4,427
Depreciation and amortization												(1,146)
Interest expense												(905)
Income tax expense												(510)
Earnings										1,866
Capital expenditures1		280	527		264							45	—		25	1,141
		Gas		Gas
			Transmission		Distribution	Renewable
Three months endedMarch 31, 2022	Liquids	and		and		Power	Energy	Eliminations
	Pipelines		Midstream	Storage		Generation	Services	and Other Consolidated
(mil ions of Canadian dol ars)

Operating revenues		3,055	1,300		2,411							156	8,337		(162)			15,097
Commodity and gas distribution
costs		(11)	—		(1,468)							(4) (8,427)	163			(9,747)
Operating and administrative		(947)	(530)		(299)							(48)	(14)		(37)			(1,875)
Income from equity investments		215	221		—							55	—		—	491
Other income		17	23		21			3	3		391	458
Earnings/(loss) before interest,
income taxes and depreciation and amortization
		2,329	1,014		665							162	(101)		355	4,424
Depreciation and amortization												(1,055)
Interest expense										(719)

Income tax expense										(593)

Earnings												2,057
Capital expenditures1		545	229		266			6	—		12	1,058
	1 Includes al owance for equity funds used during construction.
					10

4. EARNINGS PER COMMON SHARE AND DIVIDENDS PER SHARE
BASICEarnings per common share is calculated by dividing earnings attributable to common shareholders by the weighted average number of common shares outstanding.
DILUTEDThe treasury stock method is used to determine the dilutive impact of stock options and RSUs. This method assumes any proceeds from the exercise of stock options and vesting of RSUs would be used to purchase common shares at the average market price during the period.
Weighted average shares outstanding used to calculate basic and diluted earnings per share are as fol ows:
	Three months ended
		March 31,
		2023	2022
(number of shares in mil ions)
Weighted average shares outstanding		2,025		2,026
Effect of dilutive options and RSUs		3	3
Diluted weighted average shares outstanding		2,028		2,029
For the three months ended March 31, 2023 and 2022, 16.7 mil ion and 12.9 mil ion, respectively, of anti-dilutive stock options with a weighted average exercise price of $55.62 and $56.09, respectively, were excluded from the diluted earnings per common share calculation.
DIVIDENDS PER SHAREOn May 2, 2023, our Board of Directors declared the fol owing quarterly dividends. Al dividends are payable on June 1, 2023 to shareholders of record on May 15, 2023.
	Dividend per share
Common Shares1				$0.88750
Preference Shares, Series A				$0.34375
Preference Shares, Series B				$0.32513
Preference Shares, Series D2				$0.33825
Preference Shares, Series F				$0.29306
Preference Shares, Series H				$0.27350
Preference Shares, Series L		US$0.36612
Preference Shares, Series N				$0.31788
Preference Shares, Series P				$0.27369
Preference Shares, Series R				$0.25456
Preference Shares, Series 1		US$0.37182
Preference Shares, Series 3				$0.23356
Preference Shares, Series 5		US$0.33596
Preference Shares, Series 7				$0.27806
Preference Shares, Series 9				$0.25606
Preference Shares, Series 11				$0.24613
Preference Shares, Series 13				$0.19019
Preference Shares, Series 15				$0.18644
Preference Shares, Series 193				$0.38825
1 The quarterly dividend per common share was increased 3.2% to $0.8875 from $0.86, effective March 1, 2023.2 The quarterly dividend per share paid on Preference Shares, Series D was increased to $0.33825 from $0.27875 on March 1,
2023 due to reset of the annual dividend on March 1, 2023.
3 The quarterly dividend per share paid on Preference Shares, Series 19 was increased to $0.38825 from $0.30625 on March 1,
2023 due to reset of the annual dividend on March 1, 2023.
					11

5. DEBT
CREDIT FACILITIESThe fol owing table provides details of our committed credit facilities as at March 31, 2023:
		Total
	Maturity1	Facilities	Draws2	Available
(mil ions of Canadian dol ars)
Enbridge Inc.	2023-2027	9,623	7,053	2,570
Enbridge (U.S.) Inc.	2024-2027	8,594	1,702	6,892
Enbridge Pipelines Inc.	2024	2,000	876	1,124
Enbridge Gas Inc.	2024	2,500	1,440	1,060
Total committed credit facilities					22,717	11,071	11,646
1 Maturity date is inclusive of the one-year term out option for certain credit facilities.2 Includes facility draws and commercial paper issuances that are back-stopped by credit facilities.
In March 2023, Enbridge Gas Inc. (Enbridge Gas) increased its 364-day extendible credit facility from $2.0 bil ion to $2.5 bil ion.
In addition to the committed credit facilities noted above, we maintain $1.3 bil ion of uncommitted demand letter of credit facilities, of which $720 mil ion was unutilized as at March 31, 2023. As at December 31, 2022, we had $1.3 bil ion of uncommitted demand letter of credit facilities, of which $689 mil ion was unutilized.
Our credit facilities carry a weighted average standby fee of 0.1% per annum on the unused portion and draws bear interest at market rates. Certain credit facilities serve as a back-stop to the commercial paper programs and we have the option to extend such facilities, which are currently scheduled to mature from 2023 to 2027.
As at March 31, 2023 and December 31, 2022, commercial paper and credit facility draws, net of short-term borrowings and non-revolving credit facilities that mature within one year, of $9.0 bil ion and $10.5 bil ion, respectively, were supported by the availability of long-term committed credit facilities and, therefore, have been classified as long-term debt.
LONG-TERM DEBT ISSUANCESDuring the three months ended March 31, 2023, we completed the fol owing long-term debt issuances totaling US$3.0 bil ion:
				Principal
Company					Issue Date	Amount
(mil ions of Canadian dol ars, unless otherwise stated)Enbridge Inc.
					March 2023	5.70% sustainability-linked senior notes due March 20331	US$2,300
					March 2023	5.97% senior notes due March 20262	US$700
1 The sustainability-linked senior notes are subject to a sustainability performance target of 35% reduction in emissions intensity
from 2018 levels at an observation date of December 31, 2030. If the target is not met, on September 8, 2031, the interest rate wil be set to equal 5.70% plus a margin of 50 basis points.
2 We have the option to cal the notes at par after one year from issuance. Refer to Note 7 - Risk Management and Financial
Instruments.
							12

LONG-TERM DEBT REPAYMENTSDuring the three months ended March 31, 2023, we completed the fol owing long-term debt repayments totaling US$513 mil ion and $275 mil ion:
		Principal
Company	Repayment Date	Amount
(mil ions of Canadian dol ars, unless otherwise stated)Enbridge Inc.
	January 2023		3.94%	medium-term notes	$275
	February 2023		Floating rate notes1	US$500
Tri Global Energy, LLC
	January 2023		10.00% senior notes	US$4
	January 2023		14.00% senior notes	US$9
1 The notes carried an interest rate set to equal the Secured Overnight Financing Rate plus a margin of 40 basis points.
On April 15, 2023 cal date, we redeemed at par al of the outstanding US$600 mil ion five-year cal able, 6.38% fixed-to-floating rate subordinated notes that carried an original maturity date of April 2078.
SUBORDINATED TERM NOTESAs at March 31, 2023 and December 31, 2022, our fixed-to-floating rate and fixed-to-fixed rate subordinated term notes had a principal value of $10.3 bil ion.
FAIR VALUE ADJUSTMENTAs at March 31, 2023 and December 31, 2022, the net fair value adjustments to total debt assumed in a historical acquisition were $588 mil ion and $608 mil ion, respectively.
During the three months ended March 31, 2023 and 2022, amortization of the fair value adjustment recorded as a reduction to Interest expense in the Consolidated Statements of Earnings was $11 mil ion.
DEBT COVENANTSOur credit facility agreements and term debt indentures include standard events of default and covenant provisions whereby accelerated repayment and/or termination of the agreements may result if we are to default on payment or violate certain covenants. As at March 31, 2023, we were in compliance with al covenant provisions.
					13

6. COMPONENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME/
(LOSS)
Changes in Accumulated other comprehensive income/(loss) (AOCI) attributable to our common shareholders for the three months ended March 31, 2023 and 2022 are as fol ows:
		Excluded				Pension
	Cash	Components	Net	Cumulative			and
	Flow	of Fair Value		Investment	Translation		Equity	OPEB
	Hedges	Hedges	Hedges	Adjustment		Investees	Adjustment	Total
(mil ions of Canadian dol ars)
Balance as at January 1, 2023		121			(35)	(1,137)				4,348	5	218 3,520
Other comprehensive income/(loss)
retained in AOCI		(90)			7	15				(57)	—	—	(125)
Other comprehensive loss/(income)
reclassified to earningsInterest rate contracts1
		8			—	—				—	—	—	8
Other contracts2		1			—	—				—	—	—	1
Amortization of pension and OPEB
									actuarial gain3	—			—	—			—	—			(5)	(5)
		(81)			7	15				(57)	—				(5)	(121)
Tax impact
Income tax on amounts retained in
									AOCI	28			—	—			—	—	—	28
Income tax on amounts reclassified to
									earnings	(2)			—	—			—	—			1	(1)
		26			—	—				—	—				1	27
Balance as at March 31, 2023		66			(28)	(1,122)				4,291	5	214 3,426
		Excluded				Pension
	Cash	Components	Net	Cumulative			and
	Flow	of Fair Value		Investment	Translation		Equity	OPEB
	Hedges	Hedges	Hedges	Adjustment		Investees	Adjustment	Total
(mil ions of Canadian dol ars)Balance as at January 1, 2022
		(897)			—	(166)				56	(5)	(84) (1,096)
Other comprehensive income/(loss)
retained in AOCI		384			(1)	133				(691)	—	—	(175)
Other comprehensive loss/(income)
reclassified to earningsInterest rate contracts1
		76			—	—				—	—	—	76
Foreign exchange contracts4		(4)			—	—				—	—	—	(4)
Other contracts2		2			—	—				—	—	—	2
Amortization of pension and OPEB
									actuarial gain3	—			—	—			—	—			(3)	(3)
		458			(1)	133				(691)	—				(3)	(104)
Tax impact
Income tax on amounts retained in
									AOCI	(92)			—	—			—	—	—	(92)
Income tax on amounts reclassified to
									earnings	(17)			—	—			—	—			1	(16)
		(109)			—	—				—	—				1	(108)
Balance as at March 31, 2022		(548)			(1)	(33)				(635)	(5)	(86) (1,308)
1 Reported within Interest expense in the Consolidated Statements of Earnings.2 Reported within Operating and administrative expense in the Consolidated Statements of Earnings.3 These components are included in the computation of net periodic benefit credit and are reported within Other income in the
Consolidated Statements of Earnings.
4 Reported within Transportation and other services revenues and Other income in the Consolidated Statements of Earnings.
		14

7. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
MARKET RISKOur earnings, cash flows and other comprehensive income/(loss) (OCI) are subject to movements in foreign exchange rates, interest rates, commodity prices and our share price (col ectively, market risks). Formal risk management policies, processes and systems have been designed to mitigate these risks.
The fol owing summarizes the types of market risks to which we are exposed and the risk management instruments used to mitigate them. We use a combination of qualifying and non-qualifying derivative instruments to manage the risks noted below.
Foreign Exchange RiskWe generate certain revenues, incur expenses and hold a number of investments and subsidiaries that are denominated in currencies other than Canadian dol ars. As a result, our earnings, cash flows and OCI are exposed to fluctuations resulting from foreign exchange rate variability.
We employ financial derivative instruments to hedge foreign currency denominated earnings exposure. A combination of qualifying cash flow, fair value and non-qualifying derivative instruments is used to hedge anticipated foreign currency denominated revenues and expenses and to manage variability in cash flows. We hedge certain net investments in United States (US) dol ar-denominated investments and subsidiaries using foreign currency derivatives and US dol ar-denominated debt.
The foreign exchange risks inherent within the Competitive Tol Settlement framework are not expected to be present in the negotiated settlement. Accordingly, our foreign exchange hedging program related to the Canadian Mainline wil no longer be required, and the related derivatives were terminated in the first quarter of 2023 for a realized loss of $638 mil ion.
Interest Rate RiskOur earnings and cash flows are exposed to short-term interest rate variability due to the regular repricing of our variable rate debt, primarily commercial paper. We monitor our debt portfolio mix of fixed and variable rate debt instruments to manage a consolidated portfolio of floating rate debt within the Board of Directors' approved policy limit of a maximum of 30% of floating rate debt as a percentage of total debt outstanding. We primarily use qualifying derivative instruments to manage interest rate risk. Pay fixed-receive floating interest rate swaps may be used to hedge against the effect of future interest rate movements. We have implemented a hedging program to partial y mitigate the impact of short-term interest rate volatility on interest expense via the execution of floating-to-fixed interest rate swaps. These hedges have an average fixed rate of 4.1%.
On March 8, 2023, we issued US$700 mil ion three-year fixed rate notes which includes the right for us to cal at par after the first year. A corresponding fix-to-floating cancel able swap was also executed which gives the swap counterparty a similar right to cancel the swap after the first year. This swap has a fixed rate of 6.0%. This instrument is our only pay floating-receive fixed interest rate swap outstanding as at March 31, 2023.
Our earnings and cash flows are also exposed to variability in longer term interest rates ahead of anticipated fixed rate term debt issuances. Forward starting interest rate swaps are used to hedge against the effect of future interest rate movements. We have established a program including some of our subsidiaries to partial y mitigate our exposure to long-term interest rate variability on forecasted term debt issuances via the execution of floating-to-fixed interest rate swaps with an average swap rate of 2.5%.
	15

Commodity Price RiskOur earnings and cash flows are exposed to changes in commodity prices as a result of our ownership interests in certain assets and investments, as wel as through the activities of our energy services subsidiaries. These commodities include natural gas, crude oil, power and natural gas liquids (NGL). We employ financial and physical derivative instruments to fix a portion of the variable price exposures that arise from physical transactions involving these commodities. We use primarily non-qualifying derivative instruments to manage commodity price risk.
Equity Price RiskEquity price risk is the risk of earnings fluctuations due to changes in our share price. We have exposure to our own common share price through the issuance of various forms of stock-based compensation, which affect earnings through the revaluation of outstanding units every period. We use equity derivatives to manage the earnings volatility derived from one form of stock-based compensation, RSUs. We use a combination of qualifying and non-qualifying derivative instruments to manage equity price risk.
TOTAL DERIVATIVE INSTRUMENTSWe general y have a policy of entering into individual International Swaps and Derivatives Association, Inc. (ISDA) agreements, or other similar derivative agreements, with the majority of our financial derivative counterparties. These agreements provide for the net settlement of derivative instruments outstanding with specific counterparties in the event of bankruptcy or other significant credit events and reduce our credit risk exposure on financial derivative asset positions outstanding with the counterparties in those circumstances.
The fol owing table summarizes the Consolidated Statements of Financial Position location and carrying value of our derivative instruments, as wel as the maximum potential settlement amounts, in the event of the specific circumstances described above. Al amounts are presented gross in the Consolidated Statements of Financial Position.
	16

	Derivative	Derivative
	Instruments	Instruments	Non-		Total Gross
	Used as	Used as	QualifyingDerivative		Derivative	Amounts	Total Net
	Cash Flow	Fair Value			Instruments	Available	Derivative
March 31, 2023	Hedges	Hedges		Instruments	as Presented	for Offset	Instruments
(mil ions of Canadian dol ars)Other current assets
Foreign exchange contracts								—	68	54				122	(13)	109
Interest rate contracts								194	—	21				215	(11)	204
Commodity contracts								—	—	193				193	(118)			75
Other contracts								—	—	2				2		—	2
								194	68	270				532	(142)	390
Deferred amounts and other assets
Foreign exchange contracts								—	83	131				214	(108)	106
Interest rate contracts								154	—	44				198	(43)	155
Commodity contracts								—	—	67				67	(30)			37
								154	83	242				479	(181)	298
Other current liabilities
Foreign exchange contracts								—	(42)	(89)				(131)		13	(118)
Interest rate contracts								(19)	—	(1)				(20)		11	(9)
Commodity contracts								(30)	—	(218)				(248)	118	(130)
								(49)	(42)	(308)				(399)	142	(257)
Other long-term liabilities
Foreign exchange contracts								—	—	(980)				(980)	108	(872)
Interest rate contracts								(4)	—	(45)				(49)		43	(6)
Commodity contracts								(21)	—	(123)				(144)		30	(114)
								(25)	—	(1,148)	(1,173)	181	(992)
Total net derivative asset/(liability)
Foreign exchange contracts								—	109	(884)				(775)		—	(775)
Interest rate contracts								325	—	19				344		—	344
Commodity contracts								(51)	—	(81)				(132)		—	(132)
Other contracts								—	—	2				2		—	2
								274	109	(944)				(561)		—	(561)
		17

	Derivative	Derivative
	Instruments	Instruments	Non-		Total Gross
	Used as	Used as	QualifyingDerivative		Derivative	Amounts	Total Net
	Cash Flow	Fair Value			Instruments	Available	Derivative
December 31, 2022	Hedges	Hedges		Instruments	as Presented	for Offset	Instruments
(mil ions of Canadian dol ars)Other current assets
Foreign exchange contracts								—	—	46					46	(41)				5
Interest rate contracts								649	—	11					660		—	660
Commodity contracts								—	—	302					302	(182)	120
Other contracts								—	—	7					7		—	7
								649	—	366		1,015	(223)	792
Deferred amounts and other assets
Foreign exchange contracts								—	156	153					309	(138)	171
Interest rate contracts								254	—	—					254		—	254
Commodity contracts								—	—	61					61	(25)				36
Other contracts								1	—	2					3		—	3
								255	156	216					627	(163)	464
Other current liabilities
Foreign exchange contracts								—	(42)	(524)					(566)		41	(525)
Commodity contracts								(48)	—	(284)					(332)	182	(150)
								(48)	(42)	(808)					(898)	223	(675)
Other long-term liabilities
Foreign exchange contracts								—	—	(1,116)		(1,116)	138	(978)
Interest rate contracts								(3)	—	(1)					(4)		—	(4)
Commodity contracts								(37)	—	(133)					(170)		25	(145)
								(40)	—	(1,250)		(1,290)	163	(1,127)
Total net derivative asset/(liability)
Foreign exchange contracts								—	114	(1,441)		(1,327)					—	(1,327)
Interest rate contracts								900	—	10					910		—	910
Commodity contracts								(85)	—	(54)					(139)		—	(139)
Other contracts								1	—	9					10		—	10
								816	114	(1,476)					(546)		—	(546)
The fol owing table summarizes the maturity and notional principal or quantity outstanding related to our derivative instruments:
March 31, 2023		2023		2024	2025		2026	2027 Thereafter	Total
Foreign exchange contracts - US dol ar forwards -
purchase (mil ions of US dol ars)			832 1,000	500							—	—	— 2,332
Foreign exchange contracts - US dol ar forwards - sel
(mil ions of US dol ars)		4,566 4,708 4,763 4,157 2,969										1,728 22,891
Foreign exchange contracts - British pound (GBP)
forwards - sel (mil ions of GBP)									21	30	30					28	32	—	141
Foreign exchange contracts - Euro forwards - sel (mil ions
of Euro)									69	91	86					85	81				262	674
Foreign exchange contracts - Japanese yen forwards -
purchase (mil ions of yen)									—	— 84,800					—	—	— 84,800
Interest rate contracts - short-term debt pay fixed rate
(mil ions of Canadian dol ars)		7,821 1,929	80							26	25	39 9,920
Interest rate contracts - short-term debt receive fixed rate
(mil ions of Canadian dol ars)			711		947	947		179	—	— 2,784
Interest rate contracts - long-term debt pay fixed rate
(mil ions of Canadian dol ars)		4,153 1,494	588							—	—	— 6,235
Equity contracts (mil ions of Canadian dol ars)									—	32	12					—	—	—	44
Commodity contracts - natural gas (bil ions of cubic feet)									34	25	23					8	3	—	93
Commodity contracts - crude oil (mil ions of barrels)									11	—	—					—	—	—	11
Commodity contracts - power (megawatt per hour) (MW/H)									19	(31)	(46)					—	—	—	(17) 1
1 Total is an average net purchase/(sale) of power.
		18

Fair Value DerivativesFor foreign exchange derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative is included in Other income or Interest expense in the Consolidated Statements of Earnings. The offsetting loss or gain on the hedged item attributable to the hedged risk is included in Other income in the Consolidated Statements of Earnings. Any excluded components are included in the Consolidated Statements of Comprehensive Income.
	Three months ended
		March 31,
		2023	2022
(mil ions of Canadian dol ars)Unrealized gain/(loss) on derivative
		(11)	76
Unrealized gain/(loss) on hedged item		11	(87)
Realized loss on derivative		(11)	(75)
Realized gain on hedged item		—	85
The Effect of Derivative Instruments on the Statements of Earnings and Comprehensive IncomeThe fol owing table presents the effect of cash flow hedges and fair value hedges on our consolidated earnings and consolidated comprehensive income, before the effect of income taxes:
	Three months ended
		March 31,
		2023	2022
(mil ions of Canadian dol ars)
Amount of unrealized gain/(loss) recognized in OCICash flow hedges
				Foreign exchange contracts		—	2
				Interest rate contracts		(105)	377
				Commodity contracts		34	4
				Other contracts		(2)	3
Fair value hedges
				Foreign exchange contracts		7	(1)
		(66)	385
Amount of loss reclassified from AOCI to earnings
Foreign exchange contracts1		—	13
Interest rate contracts2		8	76
Other contracts3		1	2
						9	91
1 Reported within Transportation and other services revenues and Other income in the Consolidated Statements of Earnings.2 Reported within Interest expense in the Consolidated Statements of Earnings.3 Reported within Operating and administrative expense in the Consolidated Statements of Earnings.
We estimate that a gain of $20 mil ion from AOCI related to cash flow hedges wil be reclassified to earnings in the next 12 months. Actual amounts reclassified to earnings depend on the foreign exchange rates, interest rates and commodity prices in effect when derivative contracts that are currently outstanding mature. For al forecasted transactions, the maximum term over which we are hedging exposures to the variability of cash flows is 33 months as at March 31, 2023.
					19

Non-Qualifying DerivativesThe fol owing table presents the unrealized gains and losses associated with changes in the fair value of our non-qualifying derivatives:
	Three months ended
		March 31,
		2023	2022
(mil ions of Canadian dol ars)Foreign exchange contracts1
		556	433
Interest rate contracts2		10	—
Commodity contracts3		(39)	(68)
Other contracts4		(7)	4
Total unrealized derivative fair value gain/(loss), net		520	369
1 For the respective three months ended periods, reported within Transportation and other services revenues (2023 - $645 mil ion
gain; 2022 - $134 mil ion gain) and Other income (2023 - $89 mil ion loss; 2022 - $299 mil ion gain) in the Consolidated Statements of Earnings.
2 Reported as an increase within Interest expense in the Consolidated Statements of Earnings.3 For the respective three months ended periods, reported within Transportation and other services revenues (2023 - $6 mil ion
gain; 2022 - $16 mil ion loss), Commodity sales (2023 - $69 mil ion gain; 2022 - $16 mil ion loss), Commodity costs (2023 - $75 mil ion loss; 2022 - $37 mil ion loss) and Operating and administrative expense (2023 - $39 mil ion loss; 2022 - $1 mil ion gain) in the Consolidated Statements of Earnings.
4 Reported within Operating and administrative expense in the Consolidated Statements of Earnings.
LIQUIDITY RISK
	Liquidity risk is the risk that we wil not be able to meet our financial obligations, including commitments and guarantees, as they become due. In order to mitigate this risk, we forecast cash requirements over a 12-month rol ing time period to determine whether sufficient funds wil be available and maintain substantial capacity under our committed bank lines of credit to address any contingencies. Our primary sources of liquidity and capital resources are funds generated from operations, the issuance of commercial paper and draws under committed credit facilities and long-term debt, which includes debentures and medium-term notes. Our shelf prospectuses with securities regulators enable ready access to either the Canadian or US public capital markets, subject to market conditions. In addition, we maintain sufficient liquidity through committed credit facilities with a diversified group of banks and institutions which, if necessary, enables us to fund al anticipated requirements for approximately one year without accessing the capital markets. We were in compliance with al the terms and conditions of our committed credit facility agreements and term debt indentures as at March 31, 2023. As a result, al credit facilities are available to us and the banks are obligated to fund us under the terms of the facilities.
CREDIT RISK
	Entering into derivative instruments may result in exposure to credit risk from the possibility that a counterparty wil default on its contractual obligations. In order to mitigate this risk, we enter into risk management transactions primarily with institutions that possess strong investment grade credit ratings. Credit risk relating to derivative counterparties is mitigated through the maintenance and monitoring of credit exposure limits and contractual requirements, netting arrangements and ongoing monitoring of counterparty credit exposure using external credit rating services and other analytical tools.
				20

We have credit concentrations and credit exposure, with respect to derivative instruments, in the fol owing counterparty segments:
	March 31,		December 31,
		2023		2022
(mil ions of Canadian dol ars)Canadian financial institutions
					471	644
US financial institutions					115	277
European financial institutions					178	334
Asian financial institutions					97	224
Other1					88	105
					949	1,584
1 Other is comprised of commodity clearing house and physical natural gas and crude oil counterparties.
As at March 31, 2023, we did not provide any letters of credit in lieu of providing cash col ateral to our counterparties pursuant to the terms of the relevant ISDA agreements. We held no cash col ateral on derivative asset exposures as at March 31, 2023 and December 31, 2022.
Gross derivative balances have been presented without the effects of col ateral posted. Derivative assets are adjusted for non-performance risk of our counterparties using their credit default swap spread rates and are reflected at fair value. For derivative liabilities, our non-performance risk is considered in the valuation.
Credit risk also arises from trade and other long-term receivables, and is mitigated through credit exposure limits and contractual requirements, the assessment of credit ratings and netting arrangements. Within Enbridge Gas, credit risk is mitigated by the utility's large and diversified customer base and the ability to recover an estimate for expected credit losses through the ratemaking process. We actively monitor the financial strength of large industrial customers and, in select cases, have obtained additional security to minimize the risk of default on receivables. General y, we utilize a loss al owance matrix which contemplates historical credit losses by age of receivables, adjusted for any forward-looking information and management expectations to measure lifetime expected credit losses of receivables. The maximum exposure to credit risk related to non-derivative financial assets is their carrying value.
FAIR VALUE MEASUREMENTSOur financial assets and liabilities measured at fair value on a recurring basis include derivatives and other financial instruments. We also disclose the fair value of other financial instruments not measured at fair value. The fair value of financial instruments reflects our best estimates of market value based on general y accepted valuation techniques or models and is supported by observable market prices and rates. When such values are not available, we use discounted cash flow analysis from applicable yield curves based on observable market inputs to estimate fair value.
FAIR VALUE OF FINANCIAL INSTRUMENTSWe categorize our financial instruments measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement.
Level 1Level 1 includes financial instruments measured at fair value based on unadjusted quoted prices for identical assets and liabilities in active markets that are accessible at the measurement date. An active market for a financial instrument is considered to be a market where transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Our Level 1 instruments consist primarily of exchange-traded derivatives used to mitigate the risk of crude oil price fluctuations, US and Canadian treasury bil s, investments in exchange-traded equity funds held by our captive insurance subsidiaries, as wel as restricted long-term investments in Canadian equity securities that are held in trust in accordance with the CER's regulatory requirements under the Land Matters Consultation Initiative (LMCI).
					21

Level 2Level 2 includes financial instrument valuations determined using directly or indirectly observable inputs other than quoted prices included within Level 1. Financial instruments in this category are valued using models or other industry standard valuation techniques derived from observable market data. Such valuation techniques include inputs such as quoted forward prices, time value, volatility factors and broker quotes that can be observed or corroborated in the market for the entire duration of the financial instrument. Derivatives valued using Level 2 inputs include non-exchange traded derivatives such as over-the-counter foreign exchange forward and cross-currency swap contracts, interest rate swaps, physical forward commodity contracts, as wel as commodity swaps and options for which observable inputs can be obtained.
We have also categorized the fair value of our long-term debt, investments in debt securities held by our captive insurance subsidiaries, and restricted long-term investments in Canadian government bonds held in accordance with the CER's regulatory requirements under the LMCI as Level 2. The fair value of our long-term debt is based on quoted market prices for instruments of similar yield, credit risk and tenor. When possible, the fair value of our restricted long-term investments is based on quoted market prices for similar instruments and, if not available, based on broker quotes.
Level 3Level 3 includes derivative valuations based on inputs which are less observable, unavailable or where the observable data does not support a significant portion of the derivatives' fair value. General y, Level 3 derivatives are longer dated transactions, occur in less active markets, occur at locations where pricing information is not available or have no binding broker quote to support Level 2 classification. We have developed methodologies, benchmarked against industry standards, to determine fair value for these derivatives based on the extrapolation of observable future prices and rates. Derivatives valued using Level 3 inputs primarily include long-dated derivative power, NGL and natural gas contracts, basis swaps, commodity swaps, and power and energy swaps, as wel as physical forward commodity contracts. We do not have any other financial instruments categorized in Level 3.
We use the most observable inputs available to estimate the fair value of our derivatives. When possible, we estimate the fair value of our derivatives based on quoted market prices. If quoted market prices are not available, we use estimates from third party brokers. For non-exchange traded derivatives classified in Levels 2 and 3, we use standard valuation techniques to calculate the estimated fair value. These methods include discounted cash flows for forwards and swaps and Black-Scholes-Merton pricing models for options. Depending on the type of derivative and nature of the underlying risk, we use observable market prices (interest, foreign exchange, commodity and share price) and volatility as primary inputs to these valuation techniques. Final y, we consider our own credit default swap spread, as wel as the credit default swap spreads associated with our counterparties, in our estimation of fair value.
	22

We have categorized our derivative assets and liabilities measured at fair value as fol ows:
				Total Gross
				Derivative
March 31, 2023	Level 1	Level 2	Level 3	Instruments
(mil ions of Canadian dol ars)
Financial assets
Current derivative assets
					Foreign exchange contracts		—	122		—		122
					Interest rate contracts		—	215		—		215
					Commodity contracts		46	63	84			193
					Other contracts		—	2	—		2
							46	402	84			532
Long-term derivative assets
					Foreign exchange contracts		—	214		—		214
					Interest rate contracts		—	198		—		198
					Commodity contracts		—	17	50			67
							—	429	50			479
Financial liabilities
Current derivative liabilities
					Foreign exchange contracts		—	(131)		—		(131)
					Interest rate contracts		—	(20)		—		(20)
					Commodity contracts		(36)	(48)	(164)			(248)
							(36)	(199)	(164)			(399)
Long-term derivative liabilities
					Foreign exchange contracts		—	(980)		—		(980)
					Interest rate contracts		—	(49)		—		(49)
					Commodity contracts		—	(26)	(118)			(144)
							—	(1,055)	(118)				(1,173)
Total net financial asset/(liability)
Foreign exchange contracts							—	(775)		—		(775)
Interest rate contracts							—	344		—		344
Commodity contracts							10				6	(148)		(132)
Other contracts							—	2	—		2
							10	(423)	(148)			(561)
						23

				Total Gross
				Derivative
December 31, 2022	Level 1	Level 2	Level 3	Instruments
(mil ions of Canadian dol ars)
Financial assets
Current derivative assets
					Foreign exchange contracts		—	46		—			46
					Interest rate contracts		—	660		—			660
					Commodity contracts		65	90	147				302
					Other contracts		—	7	—			7
							65	803	147						1,015
Long-term derivative assets
					Foreign exchange contracts		—	309		—			309
					Interest rate contracts		—	254		—			254
					Commodity contracts		—	17	44				61
					Other contracts		—	3	—			3
							—	583	44				627
Financial liabilities
Current derivative liabilities
					Foreign exchange contracts		—	(566)		—			(566)
					Commodity contracts		(60)	(77)	(195)				(332)
							(60)	(643)	(195)				(898)
Long-term derivative liabilities
					Foreign exchange contracts		—	(1,116)		—					(1,116)
					Interest rate contracts		—	(4)	—			(4)
					Commodity contracts		—	(38)	(132)				(170)
							—	(1,158)	(132)						(1,290)
Total net financial asset/(liability)
Foreign exchange contracts							—	(1,327)		—					(1,327)
Interest rate contracts							—	910		—			910
Commodity contracts							5	(8)	(136)				(139)
Other contracts							—	10		—			10
							5	(415)	(136)				(546)
The significant unobservable inputs used in the fair value measurement of Level 3 derivative instruments were as fol ows:
								Fair	Unobservable	Minimum	Maximum	Weighted				Unit of
March 31, 2023								Value	Input	Price	Price	Average Price	Measurement
(fair value in mil ions of Canadian dol ars)Commodity contracts - financial1
Natural gas								(34)	Forward gas price	2.30	10.29	4.60	$/mmbtu2
Crude								(12)		Forward crude price	72.61	104.87	92.25				$/barrel
Power								(92)		Forward power price	25.07	214.37	70.68				$/MW/H
Commodity contracts - physical1
Natural gas								(34)	Forward gas price	0.60	8.14	3.51	$/mmbtu2
Crude									(9)		Forward crude price	74.97	116.60	91.05				$/barrel
Power									33		Forward power price	13.30	107.36	55.46				$/MW/H
								(148)
1 Financial and physical forward commodity contracts are valued using a market approach valuation technique.2 One mil ion British thermal units (mmbtu).
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If adjusted, the significant unobservable inputs disclosed in the table above would have a direct impact on the fair value of our Level 3 derivative instruments. The significant unobservable inputs used in the fair value measurement of Level 3 derivative instruments include forward commodity prices. Changes in forward commodity prices could result in significantly different fair values for our Level 3 derivatives.
Changes in net fair value of derivative assets and liabilities classified as Level 3 in the fair value hierarchy were as fol ows:
	Three months ended
		March 31,
		2023	2022
(mil ions of Canadian dol ars)
Level 3 net derivative liability at beginning of period		(136)	(108)
Total gain/(loss)
Included in earnings1		(44)	(52)
Included in OCI		33	4
Settlements		(1)	(24)
Level 3 net derivative liability at end of period		(148)	(180)
1 Reported within Transportation and other services revenues, Commodity costs and Operating and administrative expense in the
Consolidated Statements of Earnings.
There were no transfers into or out of Level 3 as at March 31, 2023 or December 31, 2022.
NET INVESTMENT HEDGESWe currently have designated a portion of our US dol ar-denominated debt as a hedge of our net investment in US dol ar-denominated investments and subsidiaries.
During the three months ended March 31, 2023 and 2022, we recognized unrealized foreign exchange gains of $59 mil ion and $133 mil ion, respectively, on the translation of US dol ar-denominated debt, in OCI. No unrealized gains or losses on the change in fair value of our outstanding foreign exchange forward contracts were recognized in OCI during the three months ended March 31, 2023 and 2022. No realized gains or losses associated with the settlement of foreign exchange forward contracts were recognized in OCI during the three months ended March 31, 2023 and 2022. During the three months ended March 31, 2023 and 2022, we recognized a realized loss of $44 mil ion and nil, respectively, associated with the settlement of US dol ar-denominated debt that had matured during the period, in OCI.
FAIR VALUE OF OTHER FINANCIAL INSTRUMENTSCertain long-term investments in other entities with no actively quoted prices are classified as Fair Value Measurement Alternative (FVMA) investments and are recorded at cost less impairment. The carrying value of FVMA investments totaled $209 mil ion and $102 mil ion as at March 31, 2023 and December 31, 2022, respectively.
As at March 31, 2023, we had investments with a fair value of $646 mil ion included in Restricted long-term investments in the Consolidated Statements of Financial Position (December 31, 2022 - $593 mil ion). These securities are classified as available-for-sale and represent restricted funds which are col ected from customers and held in trust for the purpose of funding pipeline abandonment in accordance with the CER's regulatory requirements.
We had restricted long-term investments held in trust totaling $249 mil ion as at March 31, 2023, which are classified as Level 1 in the fair value hierarchy (December 31, 2022 - $236 mil ion). We also had restricted long-term investments held in trust totaling $397 mil ion (cost basis - $451 mil ion) and $357 mil ion (cost basis - $437 mil ion) as at March 31, 2023 and December 31, 2022, respectively, which are classified as Level 2 in the fair value hierarchy. There were unrealized holding gains of $34 mil ion on these investments for the three months ended March 31, 2023 (2022 - losses of $60 mil ion).
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We have whol y-owned captive insurance subsidiaries whose principal activity is providing insurance and reinsurance coverage for certain insurable property and casualty risk exposures of our operating subsidiaries and certain equity investments. As at March 31, 2023, the fair value of investments in equity funds and debt securities held by our captive insurance subsidiaries was $351 mil ion and $309 mil ion, respectively (December 31, 2022 - $335 mil ion and $298 mil ion, respectively). Our investments in debt securities had a cost basis of $303 mil ion as at March 31, 2023 (December 31, 2022 - $295 mil ion). These investments in equity funds and debt securities are recognized at fair value, classified as Level 1 and Level 2 in the fair value hierarchy, respectively, and are recorded in Other current assets and Long-term investments in the Consolidated Statements of Financial Position. There were unrealized holding gains of $15 mil ion and losses of $8 mil ion for the three months ended March 31, 2023 and 2022, respectively.
As at March 31, 2023 and December 31, 2022, our long-term debt had a carrying value of $79.5 bil ion and $79.3 bil ion, respectively, before debt issuance costs and a fair value of $74.9 bil ion and $73.5 bil ion, respectively. We also have non-current notes receivable carried at book value and recorded in Deferred amounts and other assets in the Consolidated Statements of Financial Position. As at March 31, 2023 and December 31, 2022, the non-current notes receivable had a carrying value of $691 mil ion and $752 mil ion, respectively, which also approximates their fair value.
The fair value of financial assets and liabilities other than derivative instruments, long-term investments, restricted long-term investments, long-term debt and non-current notes receivable described above approximate their carrying value due to the short period to maturity.
8. INCOME TAXES
The effective income tax rates for the three months ended March 31, 2023 and 2022 were 21.5% and 22.4%, respectively.
The period-over-period decrease in the effective income tax rate is due to higher investment tax credits available on certain capital projects in the US, and the effects of rate-regulated accounting for income taxes relative to earnings.
9. OTHER INCOME
	Three months ended
		March 31,
		2023	2022
(mil ions of Canadian dol ars)

Gain/(loss) on dispositions		3	(2)
Realized foreign currency gain		145	2
Unrealized foreign currency gain/(loss)		(188)	367
Net defined pension and OPEB credit		33	58
Other		109	33
		102	458

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10. CONTINGENCIES
LITIGATIONWe and our subsidiaries are subject to various legal and regulatory actions and proceedings which arise in the normal course of business, including interventions in regulatory proceedings and chal enges to regulatory approvals and permits. While the final outcome of such actions and proceedings cannot be predicted with certainty, management believes that the resolution of such actions and proceedings wil not have a material impact on our interim consolidated financial position or results of operations.
TAX MATTERSWe and our subsidiaries maintain tax liabilities related to uncertain tax positions. While ful y supportable in our view, these tax positions, if chal enged by tax authorities, may not be ful y sustained on review.
INSURANCEWe maintain a comprehensive insurance program for us, our operating subsidiaries and certain equity investments. This program includes insurance coverage in types and amounts and is subject to certain deductibles, terms, exclusions and conditions that are general y consistent with coverage considered customary for our industry, however insurance does not cover al events in al circumstances. We self-insure a significant portion of expected losses relating to certain insurance property and casualty risk exposures in the US and Canada through our whol y-owned captive insurance subsidiaries.
In the unlikely event multiple insurable incidents occur which exceed coverage limits within the same insurance period, the total insurance coverage wil be al ocated among entities on an equitable basis based on an insurance al ocation agreement we have entered into with us and other subsidiaries. Insurance estimates include certain assumptions and management judgments regarding the frequency and severity of claims, claim development and settlement practices and the selection of estimated loss among estimates derived using different methods.
11. SUBSEQUENT EVENT
TRES PALACIOS HOLDINGS LLCOn April 3, 2023, we acquired Tres Palacios Holdings LLC (Tres Palacios) for US$335 mil ion of cash, subject to customary closing adjustments. Tres Palacios is a natural gas storage facility located in the US Gulf Coast and its infrastructure serves Texas gas-fired power generation and liquefied natural gas exports, as wel as Mexico pipeline exports.
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