Enbridge Income Fund
TSX : ENF.UN

Enbridge Income Fund

January 29, 2007 19:20 ET

Enbridge Income Fund Announces Year End Results

CALGARY, ALBERTA--(CCNMatthews - Jan. 29, 2007) - Enbridge Income Fund (TSX:ENF.UN) (the "Fund") today announced earnings of $35.3 million, or $1.02 per unit, for the year ended December 31, 2006 compared with $15.2 million, or $0.44 per unit, in the prior year. The increase in earnings of $20.1 million is due primarily to future tax recoveries in Alliance Canada and the Saskatchewan System resulting from a reduction in future tax rates substantively enacted during the year. In addition, growth in Saskatchewan System's operations and the acquisition during the fourth quarter of wind power assets, have positively contributed to earnings. This increase is partly offset by higher Corporate costs.

Fourth quarter 2006 earnings of $3.2 million are comparable with earnings of $2.5 million in the prior year fourth quarter and include the addition of wind power assets acquired on October 1, 2006. Financing costs associated with the acquisition partially offset the earnings contribution from these assets.

Jim Schultz, President of Enbridge Management Services Inc., the Administrator of the Fund, commented, "During the fourth quarter, the Fund's operating assets, Alliance Canada, the Saskatchewan System and the newly acquired wind power assets each contributed to stable and sustainable distributions to unitholders. In addition, I'm pleased to announce that both the Chin Chute wind project and the NRGreen's Kerrobert waste heat facility commenced operations during the quarter which was in line with our expectations. Moving forward in 2007, we are excited to be working on more organic growth and expansion projects including three new waste heat facilities within NRGreen, expansions on the Saskatchewan System as well as system optimization on Alliance Canada."

Based on current operations, the Fund estimates that approximately 80% of cash to be distributed in 2007 will be included in the income of unitholders for tax purposes. The remaining 20% of cash distributed to unitholders represents non-taxable return of capital. During 2006, approximately 80% of cash distributed was included in the income of unitholders for tax purposes.

Certain information provided in this news release constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast" and similar expressions are intended to identify such forward-looking statements. Although the Fund believes that these statements are based on information and assumptions, which are current, reasonable and complete, these statements are necessarily subject to a variety of risks and uncertainties pertaining to operating performance, regulatory parameters, economic conditions and commodity prices. You can find a discussion of those risks and uncertainties in our Canadian securities filings. While the Fund makes these forward-looking statements in good faith, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. Except to the extent required by applicable securities law and regulations, the Fund assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.



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SELECTED OPERATING AND FINANCIAL HIGHLIGHTS
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Three months ended Year ended
December 31, December 31,
(millions of dollars except ------------------------------------------
where otherwise noted) 2006 2005 2006 2005
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Average Daily Throughput Volume
Alliance Canada (millions of
cubic feet per day) 1,586.0 1,593.0 1,592.0 1,597.0
Saskatchewan System(1) (thousands
of barrels per day)
Westspur System 157.5 153.4 155.2 148.7
Saskatchewan Gathering System 105.7 104.7 103.8 103.2
Weyburn System 34.8 37.6 37.3 35.0
Virden System 20.5 24.2 20.7 21.5
Green Power(2) (thousands of
megawatt hours produced) 52.2 - 52.2 -

Revenues 68.2 63.7 254.4 249.0

Earnings 3.2 2.5 35.3 15.2
Per Unit (dollars per unit) 0.09 0.07 1.02 0.44

Cash Available for Distribution 16.3 14.8 74.3 74.3
Cash Distributions Declared 17.2 16.5 67.3 66.1

Cash Distributions Declared Per
Unit (dollars per unit)
Ordinary Units 0.2366 0.2275 0.9259 0.9100
Subordinated Units 0.2366 0.2275 0.9259 0.9100
ECT Preferred Units 0.2366 0.2275 0.9259 0.9100

Total Long-Term Liabilities 1,501.2 1,488.8

Total Assets 1,859.4 1,842.9

ECT Preferred Units (number of
units) 38,023,750 38,023,750

Ordinary Units (number of units) 20,125,000 20,125,000
Subordinated Units (number of units) 14,500,000 14,500,000
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Total Number of Equity Units 34,625,000 34,625,000
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(1) Totals are not presented as the same volumes can be transported through
a combination of the pipelines comprising the Saskatchewan System.

(2) Wind assets were acquired on October 1, 2006. NRGreen's Kerrobert waste
heat recovery facility began operations December 29, 2006.


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CONSOLIDATED EARNINGS
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Three months ended Year ended
December 31, December 31,
------------------------------------------
(millions of dollars) 2006 2005 2006 2005
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Alliance Canada 13.2 13.8 59.0 54.7
Saskatchewan System 3.8 2.3 27.0 11.2
Green Power 0.6 - 0.6 -
Corporate (14.4) (13.6) (51.3) (50.7)
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Earnings 3.2 2.5 35.3 15.2
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- The primary reason for the increase in earnings for the year ended December 31, 2006 was a reduction in future income tax rates substantively enacted during the second quarter. Future income tax rates were reduced by approximately 7% for the Saskatchewan System, resulting in future income tax recoveries of $14.0 million. The reduction in future taxes rates for Alliance Canada was approximately 5%, resulting in future tax recoveries of $2.7 million.

- In addition, earnings were positively impacted by the addition of the Green Power segment in the fourth quarter and growth in the Saskatchewan System.

- Fourth quarter earnings generally reflected similar factors as the year-end results, with the exception of the future income tax adjustment recorded in the second quarter.



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ALLIANCE CANADA
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Three months ended Year ended
December 31, December 31,
------------------------------------------
(millions of dollars) 2006 2005 2006 2005
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Revenues 51.6 51.9 201.4 203.9
Operating and maintenance (11.1) (9.3) (35.0) (33.3)
Capital taxes (0.3) (0.3) (1.0) (1.3)
Depreciation and amortization (15.3) (15.6) (61.3) (62.0)
Other income and expense 0.3 0.3 1.0 0.8
Interest expense (12.0) (12.6) (48.7) (50.8)
Current and future income taxes - (0.6) 2.6 (2.6)
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Earnings 13.2 13.8 59.0 54.7
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- Earnings for the year ended December 31, 2006 increased over the same period in the prior year primarily due to the reduction in future income tax rates resulting in future tax recoveries of $2.7 million. The remaining increase in earnings was due to the recovery of notional taxes in tolls for the full year in 2006 and the elimination of large corporation tax to the extent not recovered through tolls. These changes are partially offset by the reduction in the equity return as a result of a depreciating investment base and a reduction in the recovery of notional taxes due to tax rate changes substantively enacted during the second quarter.

- Fourth quarter earnings are lower than the prior year quarter due to the reduction in the equity return as a result of a depreciating investment base and a reduction in the recovery of notional taxes due to tax rate changes substantively enacted during the second quarter.



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SASKATCHEWAN SYSTEM
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Three months ended Year ended
December 31, December 31,
------------------------------------------
(millions of dollars) 2006 2005 2006 2005
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Revenues 15.3 11.8 51.7 45.1
Operating and maintenance (7.9) (5.8) (25.1) (20.7)
Capital taxes - - (0.3) (0.5)
Depreciation and amortization (4.3) (4.1) (16.2) (15.5)
Accretion on asset retirement
obligations (0.1) (0.1) (0.5) (0.4)
Other income and expense (0.2) (0.3) (0.3) (0.3)
Current and future income taxes 1.0 0.8 17.7 3.5
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Earnings 3.8 2.3 27.0 11.2
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- Earnings for the year ended December 31, 2006 were higher primarily due to the reduction in future tax rates substantively enacted during the second quarter, resulting in an increase to earnings of $14.0 million. The remaining increase in earnings is due to several factors that are the result of a higher rate base in the Saskatchewan Gathering and Westspur Systems.

- Fourth quarter earnings reflect similar factors as those for the full year, except the increase in earnings is more pronounced in the quarter due to timing.



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GREEN POWER
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Three months ended Year ended
December 31, December 31,
------------------------------------------
(millions of dollars) 2006 2005 2006 2005
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Revenues 1.3 - 1.3 -
Operating and maintenance (0.4) - (0.4) -
Depreciation and amortization (0.5) - (0.5) -
Other income and expense 0.2 - 0.2 -
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Earnings 0.6 - 0.6 -
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- Earnings in the period were generated primarily from the wind power assets, which were fully operational during the fourth quarter with the Chin Chute wind project commencing operations on October 31, 2006.

- NRGreen's Kerrobert facility commenced commercial operations on December 29, 2006, generating electrical power for sale to SaskPower.



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CORPORATE
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Three months ended Year ended
December 31, December 31,
------------------------------------------
(millions of dollars) 2006 2005 2006 2005
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Management and administrative (0.8) (1.1) (4.3) (3.7)
Interest expense (3.4) (2.7) (11.4) (11.0)
ECT preferred unit distributions (9.0) (8.6) (35.2) (34.6)
Other (1.2) (1.2) (0.4) (1.4)
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Total costs (14.4) (13.6) (51.3) (50.7)
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- Management and administrative costs increased primarily due to a $0.5 million expense for GST recorded in the third quarter as a result of the determination that the Fund is not entitled to claim certain input tax credits. In addition, the distribution rate increased by 1% and 4.5% in January and November 2006, respectively, resulting in higher incentive fees as well as higher ECT preferred unit distributions.

- Interest costs in the fourth quarter have increased from the prior year quarter primarily due to interest expense on the credit facility drawn to finance the wind power asset acquisition.



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Cash Available for Distribution(1)
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Three months ended Year ended
December 31, December 31,
------------------------------------------
(millions of dollars) 2006 2005 2006 2005
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Cash Provided by Operating Activities 13.5 5.2 86.5 84.2
Add/(Deduct):
ECT preferred unit distributions 9.0 8.6 35.2 34.6
Alliance Canada cash retained (12.2) (11.1) (43.6) (42.3)
NRGreen cash retained - - (4.0) -
Saskatchewan System maintenance capital
expenditures (2.7) (3.3) (3.5) (3.9)
Change in operating assets and
liabilities in the period 8.7 15.4 3.7 1.7
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Cash Available for Distribution 16.3 14.8 74.3 74.3
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Cash Available for Distribution is
comprised of the following:
Alliance Canada distributions 15.5 18.1 66.6 73.7
Alliance Canada capital tax (0.3) (0.3) (1.0) (1.3)
Alliance Canada large corporations
tax - (0.6) - (2.5)
Saskatchewan System operating income
before depreciation, amortization
and accretion 7.2 6.0 26.0 23.9
Saskatchewan System maintenance
capital expenditures (2.7) (3.3) (3.5) (3.9)
Saskatchewan System large
corporations tax - - - (0.2)
Green Power operating income before
depreciation, amortization and
accretion 1.1 - 1.1 -
Corporate management and
administrative expense (0.8) (1.1) (4.3) (3.7)
Corporate other income 0.1 - 0.1 0.1
Corporate interest expense (3.1) (2.4) (10.3) (9.7)
Corporate current taxes (0.7) (1.6) (0.4) (2.1)
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Cash Available for Distribution 16.3 14.8 74.3 74.3
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Cash Distributions Declared 17.2 16.5 67.3 66.1
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(1) Cash available for distribution is not a standardized measure under
Canadian Generally Accepted Accounting Principles; therefore, it may
not be comparable to similarly titled measures used by other issuers.


The above calculations of cash available for distribution represent cash available to fund distributions on ordinary units, subordinated units and ECT preferred units, as well as for debt repayments and reserves. This measure is important to unitholders as the Fund's objective is to provide a stable and sustainable flow of distributable cash to unitholders.

The cash retained by Alliance Canada reflects the cash from operations of Alliance Canada that has not been distributed to the Fund. While the cash from operations is proportionately consolidated and is included in the results of the Fund, it is not available for distribution by the Fund until it has been received from Alliance Canada. The cash available for distribution from Alliance Canada is reduced to reflect debt service reserves, capital expenditures and other cash that is needed to fund working capital or other requirements at Alliance Canada. Cash retained by Alliance Canada is included above under "Alliance Canada cash retained" except for cash needed to fund working capital, which is included in "Change in operating assets and liabilities in the period". Distributions from Alliance Canada, which are subject to the approval of the Board of Directors of the General Partner of Alliance Canada, are made on a quarterly basis and paid in the month subsequent to the quarter end.

In the first quarter of 2006, $4.0 million, representing the Fund's 50% investment in the Kerrobert waste heat project, was returned by Alliance Canada to the Fund. Alliance Canada returned these funds as a result of the sale of the project at carrying value to NRGreen. 'NRGreen cash retained' reflects this return from Alliance Canada and its retention for expenditures related to the Kerrobert waste heat project.

The Saskatchewan System maintenance capital expenditures are determined based on the capital requirements necessary to maintain the service capability of the existing assets and include the replacement of system components and equipment, which are worn, obsolete or completing their useful life.

For the year ended December 31, 2006, cash distributions declared of $67.3 million (2005 - $66.1 million) represent 90.6% (2005 - 89.0%) of cash available for distribution. The Fund's policy is to distribute 95% of cash available on average over a five-year period.

The Fund pays cash distributions on a monthly basis to unitholders of record on the last business day of each month. Distributions are payable on or about the 15th day of the month following the declaration. The Fund declared monthly distributions of $0.0765916 per ordinary unit for the first ten months of 2006. The Board of Trustees approved an increase in the monthly distribution to unitholders to $0.08 per ordinary unit on October 30, 2006, effective November 30, 2006. Cash distributions of the same amount per unit were also declared on the subordinated units and the ECT preferred units.

The Board of Trustees approves changes in distributions periodically based on cash flow to meet the Fund's distribution policy. The timing of the regular annual review of the distribution rate is during the fourth quarter, in order to align with the Fund's budgeting and reporting cycles.

Enbridge Income Fund is an unincorporated, open-ended trust created to provide a stable and sustainable flow of distributable cash to unitholders. The Fund is a premier income fund in Canada with a low-risk profile focused on energy infrastructure assets. Its assets include a 50% interest in the Canadian segment of the Alliance Pipeline, a 100% interest in the various pipelines comprising the Saskatchewan System, and 50% interest in each of NRGreen Limited Partnership and the SunBridge wind project as well as a 33% interest in each of the Magrath and Chin Chute wind projects. Information about Enbridge Income Fund, including the interim consolidated financial statements and MD&A, is available on the Fund's web site at www.enbridgeincomefund.com.



ENBRIDGE INCOME FUND
CONSOLIDATED STATEMENTS OF EARNINGS

Three months ended Year ended
December 31, December 31,
(millions of dollars, ------------------------------------------
except per unit amounts) 2006 2005 2006 2005
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Revenues 68.2 63.7 254.4 249.0
Expenses
Operating and maintenance 19.4 15.1 60.5 54.0
Management and administrative 0.8 1.1 4.3 3.7
Capital taxes 0.3 0.3 1.3 1.8
Depreciation and amortization 20.1 19.7 78.0 77.5
Accretion on asset retirement
obligations 0.1 0.1 0.5 0.4
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40.7 36.3 144.6 137.4
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27.5 27.4 109.8 111.6
Other Income and Expense 0.4 - 1.0 0.6
Interest Expense (15.4) (15.3) (60.1) (61.8)
ECT Preferred Unit Distributions (9.0) (8.6) (35.2) (34.6)
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3.5 3.5 15.5 15.8
Tax Recovery/(Expense)
Current (0.7) (2.2) (0.4) (4.8)
Future 0.4 1.2 20.2 4.2
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(0.3) (1.0) 19.8 (0.6)
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Earnings 3.2 2.5 35.3 15.2
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Basic and Diluted Earnings
per Trust Unit 0.09 0.07 1.02 0.44
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ENBRIDGE INCOME FUND
CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY

(millions of dollars)
Year ended December 31, 2006 2005
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Unitholders' Equity at Beginning of Year 294.1 310.4
Earnings 35.3 15.2
Distributions to Unitholders (32.1) (31.5)
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Unitholders' Equity at End of Year 297.3 294.1
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ENBRIDGE INCOME FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended Year ended
December 31, December 31,
------------------------------------------
(millions of dollars) 2006 2005 2006 2005
---------------------------------------------------------------------------

Cash Provided by Operating Activities
Earnings 3.2 2.5 35.3 15.2
Charges/(credits) not affecting cash
Depreciation and amortization 20.1 19.7 78.0 77.5
Amortization of deferred
financing charges 0.5 0.6 1.8 2.2
Accretion on asset retirement
obligations 0.1 0.1 0.5 0.4
Amortization of fair value
increment on debt (1.3) (1.4) (5.2) (5.5)
Future income taxes (0.4) (1.2) (20.2) (4.2)
Other - 0.3 - 0.3
Changes in operating assets
and liabilities
Change in accounts receivable
and other 0.9 (3.2) 6.6 (6.2)
Change in accounts payable
and accrued liabilities (1.8) (9.8) 7.0 4.6
Change in deferred amounts
and other assets (7.8) (2.4) (17.3) (0.1)
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13.5 5.2 86.5 84.2
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Investing Activities
Acquisition of wind assets (42.1) - (42.1) -
Additions to property, plant
and equipment (20.1) (6.7) (32.8) (15.5)
Change in construction payable (5.1) (0.3) (4.6) 0.4
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(67.3) (7.0) (79.5) (15.1)
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Financing Activities
Net change in long-term
credit facility 60.0 6.0 58.0 (6.0)
Net change in non-recourse
long-term credit facility 1.3 2.1 1.3 6.3
Repayment of non-recourse
long-term debt (13.4) (20.8) (27.9) (41.4)
Ordinary and subordinated
trust unit distributions (8.2) (7.9) (32.1) (31.5)
Financing fees - - - (0.2)
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39.7 (20.6) (0.7) (72.8)
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Increase/(Decrease) in Cash
and Cash Equivalents (14.1) (22.4) 6.3 (3.7)
Cash and Cash Equivalents at
Beginning of Period 31.5 33.5 11.1 14.8
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Cash and Cash Equivalents at
End of Period 17.4 11.1 17.4 11.1
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Cash and Cash Equivalents 13.4 2.5
Cash and Cash Equivalents in Trust 4.0 8.6
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17.4 11.1
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ENBRIDGE INCOME FUND
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(millions of dollars)
Year ended December 31, 2006 2005
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Assets
Current Assets
Cash and cash equivalents 17.4 11.1
Accounts receivable and other 27.5 33.3
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44.9 44.4
Property, Plant and Equipment, Net 1,349.0 1,347.2
Intangible Assets 101.9 103.1
Goodwill 308.1 308.1
Deferred Amounts and Other Assets 55.5 40.1
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1,859.4 1,842.9
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Liabilities and Unitholders' Equity
Current Liabilities
Accounts payable and accrued liabilities 32.0 29.5
Distributions payable 2.8 2.6
Current portion of non-recourse long-term debt 26.1 27.9
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60.9 60.0
Long-Term Debt 259.0 201.0
Non-Recourse Long-Term Debt 781.3 811.3
ECT Preferred Units 380.2 380.2
Asset Retirement Obligations 7.9 7.1
Future Income Taxes 72.8 89.2
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1,562.1 1,548.8
Unitholders' Equity
Trust units 333.4 333.4
Cumulative earnings 71.6 36.3
Cumulative distributions (107.7) (75.6)
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297.3 294.1
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1,859.4 1,842.9
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ENBRIDGE INCOME FUND
SEGMENTED INFORMATION

Three months ended December 31, 2006
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(millions of Alliance Saskatchewan Green
dollars) Canada System Power Corporate Consolidated
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Revenues 51.6 15.3 1.3 - 68.2
Operating and
maintenance (11.1) (7.9) (0.4) - (19.4)
Management and
administrative - - - (0.8) (0.8)
Capital taxes (0.3) - - - (0.3)
Depreciation and
amortization (15.3) (4.3) (0.5) - (20.1)
Accretion on asset
retirement obligations - (0.1) - - (0.1)
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24.9 3.0 0.4 (0.8) 27.5
Other income and expense 0.3 (0.2) 0.2 0.1 0.4
Interest expense (12.0) - - (3.4) (15.4)
ECT preferred unit
distributions - - - (9.0) (9.0)
Current income taxes - - - (0.7) (0.7)
Future income taxes - 1.0 - (0.6) 0.4
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Earnings 13.2 3.8 0.6 (14.4) 3.2
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Three months ended December 31, 2005
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(millions of Alliance Saskatchewan Green
dollars) Canada System Power Corporate Consolidated
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Revenues 51.9 11.8 - - 63.7
Operating and
maintenance (9.3) (5.8) - - (15.1)
Management and
administrative - - - (1.1) (1.1)
Capital taxes (0.3) - - - (0.3)
Depreciation and
amortization (15.6) (4.1) - - (19.7)
Accretion on asset
retirement obligations - (0.1) - - (0.1)
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26.7 1.8 - (1.1) 27.4
Other income and expense 0.3 (0.3) - - -
Interest expense (12.6) - - (2.7) (15.3)
ECT preferred unit
distributions - - - (8.6) (8.6)
Current income taxes (0.6) - - (1.6) (2.2)
Future income taxes - 0.8 - 0.4 1.2
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Earnings 13.8 2.3 - (13.6) 2.5
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Year ended December 31, 2006
---------------------------------------------------------------------------
(millions of Alliance Saskatchewan Green
dollars) Canada System Power Corporate Consolidated
---------------------------------------------------------------------------
Revenues 201.4 51.7 1.3 - 254.4
Operating and
maintenance (35.0) (25.1) (0.4) - (60.5)
Management and
administrative - - - (4.3) (4.3)
Capital taxes (1.0) (0.3) - - (1.3)
Depreciation and
amortization (61.3) (16.2) (0.5) - (78.0)
Accretion on asset
retirement obligations - (0.5) - - (0.5)
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104.1 9.6 0.4 (4.3) 109.8
Other income and expense 1.0 (0.3) 0.2 0.1 1.0
Interest expense (48.7) - - (11.4) (60.1)
ECT preferred unit
distributions - - - (35.2) (35.2)
Current income taxes - - - (0.4) (0.4)
Future income taxes 2.6 17.7 - (0.1) 20.2
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Earnings 59.0 27.0 0.6 (51.3) 35.3
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Year ended December 31, 2005
---------------------------------------------------------------------------
(millions of Alliance Saskatchewan Green
dollars) Canada System Power Corporate Consolidated
---------------------------------------------------------------------------
Revenues 203.9 45.1 - - 249.0
Operating and
maintenance (33.3) (20.7) - - (54.0)
Management and
administrative - - - (3.7) (3.7)
Capital taxes (1.3) (0.5) - - (1.8)
Depreciation and
amortization (62.0) (15.5) - - (77.5)
Accretion on asset
retirement obligations - (0.4) - - (0.4)
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107.3 8.0 - (3.7) 111.6
Other income and expense 0.8 (0.3) - 0.1 0.6
Interest expense (50.8) - - (11.0) (61.8)
ECT preferred unit
distributions - - - (34.6) (34.6)
Current income taxes (2.5) (0.2) - (2.1) (4.8)
Future income taxes (0.1) 3.7 - 0.6 4.2
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Earnings 54.7 11.2 - (50.7) 15.2
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