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Enbridge cites supply-chain pressures and timing of customer contributions for 2023 capital overrun
Summary
At a Utah PSC technical conference, Enbridge staff said 2023 actual capital expenditures were 112.58% of budget due to higher contractor and material costs, weather delays, a high water table, restricted construction windows, and timing mismatches on customer contributions; fleet and meter inventory timing also contributed.
Enbridge staff told the Utah Public Service Commission that several operational and timing factors combined to push the utility’s 2023 capital expenditures above budget, producing a 112.58% variance in that year.
The company said contractor and material costs ran higher than expected, noting that inflation in 2023 reached roughly 7% at some points and that unusually cold weather in late 2022 pushed work into spring 2023. A high water table and city-imposed restrictions on construction zones and hours increased mobilization and permit costs, the company said.
Why it matters: higher-than-expected capital spend changes year-to-year net additions and can affect revenue requirement modeling used to set customer rates.
Enbridge identified several specific drivers. Fleet capital was about $4 million higher than planned after a backlog of vehicle replacements arrived in 2023. Meter costs were approximately $6 million higher overall; roughly $4 million of that replenished meter inventory that had fallen during supply-constraint years, and about $2 million represented meters that arrived early and were recorded in 2023 rather than in the budgeted year. The company said the most significant single item was a $16 million impact tied to timing mismatches between customer contributions in aid of construction (CIAC) and when work was performed.
On CIAC timing, Enbridge said customers do pay contributions before work begins under the tariff, but when construction is delayed—because of supply-chain constraints or other factors—the offsetting capital costs show up in a later accounting period. “If there's a lag, it's favorable to the company,” an intervenor noted; Enbridge confirmed it has adopted accounting steps to better match contributions to the period when the work is completed, including moving late-year contributions to a holding account until work is performed.
Commission staff and intervenors asked follow-up questions about tracking of CIAC by project and rate class; Enbridge said CIAC is tracked at the project level, by rate class and by transportation versus non-transportation business where applicable, and that project-level matching has been improved since 2023.
Enbridge also presented capital-budget context. The company said steady-state programs (new-customer mains, meters and services, plus an infrastructure replacement program subject to a commission cap) create baseline capital needs each year, while large, discrete projects—examples cited included an LNG facility completed in late 2022 and a multi-phase Southern system expansion around St. George—create year-to-year swings in totals.
Ending: staff said accounting and improved year-end recognition of contributions should reduce timing mismatches going forward; the commission directed Enbridge to provide schedules and exhibits used in the presentation for review.
