Appendices

A. Credit Rating Scale Comparison Chart and Recent Ratings Changes

This chart provides a comparison of the credit rating scales used by DBRS Morningstar, S&P, and Moody's, when rating long-term debt. Because of differences between these agencies’ rating approaches and definitions, some subjectivity is required in comparing their rating scales. Each agency also provides a rating outlook or trend, which assesses the potential direction of a credit rating. Common outlooks or trends are: 'Positive', 'Negative', and 'Stable.'

Table A.1. Credit Rating Scale Comparison

DBRS Morningstar

DBRS Morningstar’s credit ratings for most Group 1 pipeline companies, as well as their parent companies, are shown below. All remained investment grade, but some companies’ ratings were changed between 2015 and 2020, and some were discontinued.

Table A.2. DBRS Morningstar’s Credit Ratings

• In 2019, DBRS discontinued ratings of Maritimes & Northeast Pipeline Limited Partnership in 2019, following repayment of all of its outstanding public securities.
• In March 2019, DBRS downgraded Kinder Morgan Cochin ULC to BBB from BBB (high) and downgraded the preferred shares of Kinder Morgan Canada Limited as well. The downgrades followed the Government of Canada’s purchase of Trans Mountain Asset Group. DBRS noted that the remaining assets had a relatively weaker credit profile compared with the assets sold, resulting in the downgrades. The Trans Mountain Asset Group is no longer rated.

S&P

S&P’s credit ratings for most Group 1 pipeline companies, as well as their parent companies, are shown below. All remained investment grade, but some companies’ ratings were changed between 2015 and 2020.

Table A.3. S&P’s Credit Ratings

• In February 2017, Westcoast Energy Inc. (Westcoast) was upgraded to BBB+ from BBB following parent company, Spectra Energy Corp.’s merger with Enbridge Inc. (Enbridge). The upgrade with stable outlook on Westcoast reflects S&P’s view of the outlook on ultimate parent, Enbridge.
• In May 2018, TransCanada Corp. (TransCanada) and TransCanada Pipelines Ltd. (TCPL) were downgraded to BBB+ from A- reflecting S&P’s view that TransCanada will not achieve sufficient funds from operations relative to debt levels in the next two years, which is a requirement set for an "A-" rating. TransCanada acquired U.S. midstream company Columbia Pipeline Group Inc. in 2016, which in S&P’s view diluted the quality of TransCanada’s assets. TCPL had been rated at A- since 1995 and TransCanada had been rated at A- since 2009.

Moody's

Moody’s credit rating histories for several Group 1 pipeline companies, as well as their parent companies, are shown in Figure 32. All remain investment grade, but some companies’ ratings or outlooks were changed between 2015 and 2020.

Table A.4. Moody’s Credit Ratings

• In December 2017, Moody’s downgraded Enbridge to Baa3 from Baa2 reflecting its high leverage, a persistently large capital investment program, and material corporate and capital structure complexity. However, in January 2019, Enbridge was upgraded back to Baa2 due to Enbridge’s actions to reduce structural complexity in its organizational and capital structure and Moody’s expectation for sustained improvement in leverage metrics.
• In April 2019, Moody’s downgraded TCPL to BAA1 from A3 due to weak financial metrics and leverage ratios, which in Moody’s view stemmed from challenges in executing its large capital program leading to delays in earnings growth and some cost-overruns. Prior to this, TCPL had been rated A3 since 2008. At the same time, Moody’s also downgraded TCPL subsidiary NOVA Gas Transmission Ltd. (NGTL) to Baa1 from A3 and downgraded TransCanada, TCPL’s ultimate parent company, issuer rating to Baa2 from Baa1, reflecting a 1-notch adjustment below the rating of TCPL as a result of its structural subordination to TCPL.
• In March 2020, Moody’s reduced its outlook on TC Energy Corporation (TC Energy) to ‘negative’ from ‘stable’ due to its decision to move forward with the Keystone XL (KXL) project, which Moody’s viewed as having a very high level of execution risk related to environmental, social and governance factors. While Moody’s reduced the outlook to ‘negative’, it affirmed the company’s credit rating due to the considerable financial support for KXL from the Alberta government. At the same time, Moody’s affirmed the ratings of TCPL and NGTL, and reduced their outlooks to ‘negative.’
• In July 2020, Moody’s reduced its outlook on Alliance Pipeline LP to ‘negative’ due to the high percentage of contracts expiring over the near term (approximately 70%). Increased re-contracting risk raises the business risk and is driving the negative outlook.

B. Absolute Liability Limits and Readily Accessible Resource Levels for Oil and Gas Pipeline Companies

Table B.1. Absolute Liability Limits and Readily Accessible Resource Levels for Oil and Gas Pipeline Companies

Table B.2. Financial Resource Requirements of Major Pipeline Companies

C. Abandonment Cost Estimates and Amounts Set Aside for Major Oil and Gas Pipeline Companies

Table C. Abandonment Cost Estimates and Amounts Set Aside for Major Oil and Gas Pipeline Companies

Date modified:

2024-02-26