Company: ENBSF
Filing Date: 2025-02-14
Form Type: 10-K
Source: 0000895728-25-000006
Chunk: 44

Company: ENBRIDGE INC
Filing Date: 2025-02-14
Form: 10-K
Item: Item 7
Chunk 44
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 Lights Pipeline completed an open season to negotiate new transportation service agreements. We did not renew the agreements under a cost-of-service toll methodology, therefore Southern Lights Pipeline was no longer subject to rate-regulated accounting. As a result, the related regulatory liabilities, regulatory tax assets and associated regulatory deferred tax liabilities were derecognized in 2023.

As at December 31, 2024 and 2023, our regulatory assets totaled $7.6 billion and $5.7 billion, respectively, and regulatory liabilities totaled $6.7 billion and $3.8 billion, respectively.

DEPRECIATION

Depreciation of property, plant and equipment, our largest asset with a net book value at December 31, 2024 and 2023, of $131.1 billion and $104.6 billion, respectively, is charged in accordance with two primary methods. For distinct assets, depreciation is generally provided on a straight-line basis over the estimated useful life of the asset commencing when it is placed in service. For largely homogeneous groups of assets with comparable useful lives, the pool method of accounting is followed whereby similar assets are grouped and depreciated as a pool. When group assets are retired or otherwise disposed of, gains and losses are generally not reflected in earnings but are booked as an adjustment to accumulated depreciation.

When it is determined that the estimated service life of an asset no longer reflects the expected remaining period of benefit, prospective changes are made to the estimated service life. Estimates of useful lives are based on third-party engineering studies, experience and/or industry practice. There are a number of assumptions inherent in estimating the service lives of our assets including the level of development, exploration, drilling, reserves and production of crude oil and natural gas in the supply areas served by our pipelines, as well as the demand for crude oil and natural gas and the integrity of our systems. Changes in these assumptions could result in adjustments to the estimated service lives, which could result in material changes to depreciation expense in future periods in any of our business segments. For certain rate-regulated operations, depreciation rates are approved by the regulator and the regulator may require periodic studies or technical updates on useful lives which may change depreciation rates.

The successful efforts method of accounting is used for cost-of-service reserves developed and produced by Wexpro for gas utility affiliate, Questar. Cost-of-service reserves are properties for which the operations and return on investment are subject to the Wexpro Agreements. Under the successful efforts method, Wexpro capitalizes the costs of acquiring