S&P Global revises Enbridge Gas outlook to stable on OEB order

Investing.com -- S&P Global Ratings revised its outlook on Enbridge Gas Inc. (EGI) to stable from negative on Tuesday, while affirming all ratings including the ’A-’ issuer credit rating and ’A-2’ short-term rating.

The rating agency cited the Ontario Energy Board’s (OEB) May 29, 2025 final order for EGI’s phase-2 proceedings as supportive of the company’s credit quality. The OEB decided to maintain the current incentive rate-setting mechanism through 2028 and directed EGI to address energy transition impacts in its 2029 rebasing application.

S&P views the OEB’s approach to energy transition as balanced and credit-supportive, noting the regulator’s determination that assessing impacts on the utility, ratepayers, and potential stranded assets requires longer-term detailed analysis.

The stable outlook aligns with S&P’s outlook on parent company Enbridge Inc. (NYSE:ENB) Under S&P’s base-case forecast, EGI’s stand-alone funds from operations (FFO) to debt will range between 12% and 13% through 2028.

S&P continues to assess EGI’s business risk profile as excellent, reflecting the low-risk nature of its operations, effective regulatory risk management, and large size. The company operates almost all of Ontario’s gas distribution network with approximately 3.9 million customers.

The financial risk profile remains classified as significant. S&P’s base-case scenario assumes a stable regulatory environment, annual capital spending of C$1.2 billion-C$1.4 billion, and dividend payments of $500 million-$600 million annually through 2028.

S&P noted that EGI’s ’a-’ stand-alone credit profile combined with insulating measures allow it to be rated one notch higher than parent Enbridge’s ’BBB+’ group credit profile. Key insulating factors include EGI’s status as an independent legal entity with separate financial statements, funding arrangements, and regulatory oversight.

The rating agency indicated it could lower EGI’s ratings if Enbridge is downgraded, if EGI’s FFO to debt consistently falls below 10%, or if business risks increase due to adverse regulatory developments. An upgrade could occur if Enbridge is upgraded and EGI’s FFO to debt consistently exceeds 15%.

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