Business Risks Competition Water Heater Rentals INTERNATIONAL 2000 Financial Results Outlook Enbridge Services may face challenges in 2001 as the rising cost of the gas commodity may result in diversion of otherwise disposable income from appliances to the commodity cost of natural gas for home heating. However, higher natural gas prices may provide additional incentive for energy conservation and an The loss in 1999 is comparable with 1998 with the exception  of the positive contribution related to the operations unbundled in the fourth quarter of 1999. Expansion and diversification of the services offered by this business are progressing. Enbridge believes that its measured approach to acquisitions will provide greater returns in the  long-term and is a prudent strategy for successful growth. While the unbundled business activities represent a significant component of the earnings growth, there have been additional positive developments. These include increased rental revenues, the expansion of services, increased market penetration and service area development, and cost reductions as a result of productivity gains. Enbridge Commercial Services commenced operations on January 1, 2000 and provides information technology, fleet, call management centre, customer care and billing services  to Enbridge Services, Enbridge Consumers Gas and others. Energy Services earnings of $31.8 million, before the effect of the tax rate reductions, represent a $36.1 million improvement from the 1999 loss of $4.3 million. Earnings for 2000 include  a full-year contribution from the retail products and services business activities unbundled from Enbridge Consumers Gas, whereas the 1999 results reflect a contribution for only one quarter, following the unbundling transaction. During the second quarter of 2000, the Company decided to close its retail store operations in British Columbia. Costs to complete the closure have been reflected in earnings. provide a complementary portfolio of retail energy products  and services, including the sale and maintenance of heating and air conditioning appliances and equipment, fireplaces and financing for those appliances. This business also provides a water heater rental program that was a primary component of the ancillary business activities unbundled from the regulated utility in the fourth quarter of 1999. ENBRIDGE 2000 ANNU AL REPORT 24 increased market for high efficiency furnaces. Continued expansion of the residential water heater rental operations and continued growth in the heating, ventilating, air conditioning (HVAC) sales and service business is expected, which will provide stability to earnings. The 17 Enbridge-owned and operated Ontario retail stores will continue to contribute to profitability, while also acting as a sales channel for the core HVAC service business. Enbridge Services also plans to expand both its product offerings and the markets it serves. Although the marketplace includes many large, recognizable companies, no one company has clearly come to the forefront  as a market leader in the new non-regulated environment. The appliance sales marketplace is subject to strong price competition, including many price discounters. Enbridge  believes that its strategy of service integration provides a competitive advantage in the market it serves. The unbundling transaction resulted in the transfer of the  water heater rental assets to the Energy Services business. The historically low number of water heaters returned to the Company could be challenged by the increasing levels of competition in Ontario. International includes earnings from the investment in the Colombia, South America crude oil pipeline (OCENSA) as well  as fees earned as operator of the Jose Terminal in Venezuela. The Company also provides technology and consulting services through Enbridge Technology Inc. (millions of dollars) 2000 1999 1998 OCENSA/CITCOL 30.3 24.0 24.8 Jose Terminal 1.5 6.3 — Consulting, business development costs and other (4.5) (1.6) (0.5) Tax rate reductions (0.9) — — 26.4 28.7 24.3