Our earnings, cash flows and other comprehensive income/(loss) (OCI) are subject to movements in foreign exchange rates, interest rates, commodity prices and our share price (collectively, market risks). Formal risk management policies, processes and systems have been designed to mitigate these risks.

We employ financial derivative instruments to hedge foreign currency denominated earnings exposure. A combination of qualifying and non-qualifying derivative instruments is used to hedge anticipated foreign currency denominated revenues and expenses and to manage variability in cash flows. We hedge certain net investments in US dollar-denominated investments and subsidiaries using US dollar-denominated debt.

Our earnings, cash flows and OCI are exposed to short-term interest rate variability due to the regular repricing of our variable rate debt, primarily commercial paper. We have a policy of limiting the maximum floating rate debt to 30% of total debt outstanding. To ensure compliance with our policy, we monitor and adjust our debt portfolio mix of fixed and variable rate debt instruments in conjunction with the use of derivative instruments. We have implemented a program to partially mitigate the impact of short-term interest rate volatility on interest expense via the execution of floating-to-fixed interest rate swaps and costless collars. These swaps have an average fixed rate of 3.5%.

Our earnings and cash flows are also exposed to variability in longer term interest rates ahead of anticipated fixed rate term debt issuances. A combination of qualifying and non-qualifying forward starting interest rate swaps are used to hedge against the effect of future interest rate movements. We have established a program including some of our subsidiaries to partially mitigate our exposure to long-term interest rate variability on forecasted term debt issuances via execution of floating-to-fixed interest rate swaps with an average swap rate of 3.6%.

Our earnings, cash flows and OCI are exposed to changes in commodity prices as a result of our ownership interests in certain assets and investments, as well as through the activities of our energy marketing subsidiaries. These commodities include natural gas, crude oil, power and natural gas liquids (NGL). We employ financial and physical derivative instruments to fix a portion of the variable price exposures that arise from physical transactions involving these commodities. We use primarily non-qualifying derivative instruments to manage commodity price risk.

We have a policy of entering into individual International Swaps and Derivatives Association, Inc. (ISDA) agreements, or other similar derivative agreements, with the majority of our financial derivative counterparties. These agreements provide for the net settlement of derivative instruments outstanding with specific counterparties in the event of bankruptcy or other significant credit events and reduce our credit risk exposure on financial derivative asset positions in those circumstances.


March 31, 2025	Derivative Instruments Used as Cash Flow Hedges	Derivative Instruments Used as Fair Value Hedges	Non- Qualifying Derivative Instruments	Total Gross Derivative Instruments as Presented	Amounts Available for Offset	Total Net Derivative Instruments
(millions of Canadian dollars)
Other current assets
Foreign exchange contracts	—	—	26	26	(17)	9
Interest rate contracts	5	—	16	21	(9)	12
Commodity contracts	2	—	432	434	(257)	177

	7	—	474	481	(283)	198
Deferred amounts and other assets
Foreign exchange contracts	—	—	68	68	(58)	10
Interest rate contracts	15	—	92	107	(32)	75
Commodity contracts	—	—	196	196	(53)	143

	15	—	356	371	(143)	228
Other current liabilities
Foreign exchange contracts	—	(31)	(713)	(744)	17	(727)
Interest rate contracts	(11)	—	(25)	(36)	9	(27)
Commodity contracts	—	—	(483)	(483)	257	(226)

	(11)	(31)	(1,221)	(1,263)	283	(980)
Other long-term liabilities
Foreign exchange contracts	—	—	(1,523)	(1,523)	58	(1,465)
Interest rate contracts	(16)	—	(97)	(113)	32	(81)
Commodity contracts	—	—	(162)	(162)	53	(109)

	(16)	—	(1,782)	(1,798)	143	(1,655)
Total net derivative asset/(liability)
Foreign exchange contracts	—	(31)	(2,142)	(2,173)	—	(2,173)
Interest rate contracts	(7)	—	(14)	(21)	—	(21)
Commodity contracts	2	—	(17)	(15)	—	(15)

	(5)	(31)	(2,173)	(2,209)	—	(2,209)


December 31, 2024	Derivative Instruments Used as Cash Flow Hedges	Derivative Instruments Used as Fair Value Hedges	Non- Qualifying Derivative Instruments	Total Gross Derivative Instruments as Presented	Amounts Available for Offset	Total Net Derivative Instruments
(millions of Canadian dollars)
Other current assets
Foreign exchange contracts	—	78	47	125	(29)	96
Interest rate contracts	44	—	23	67	(39)	28
Commodity contracts	2	—	360	362	(191)	171
Other contracts	—	—	3	3	—	3
	46	78	433	557	(259)	298
Deferred amounts and other assets
Foreign exchange contracts	—	—	83	83	(71)	12
Interest rate contracts	9	—	137	146	(27)	119
Commodity contracts	—	—	197	197	(39)	158

	9	—	417	426	(137)	289
Other current liabilities
Foreign exchange contracts	—	(73)	(731)	(804)	29	(775)
Interest rate contracts	(58)	—	(22)	(80)	39	(41)
Commodity contracts	—	—	(451)	(451)	191	(260)

	(58)	(73)	(1,204)	(1,335)	259	(1,076)
Other long-term liabilities
Foreign exchange contracts	—	—	(1,579)	(1,579)	71	(1,508)
Interest rate contracts	—	—	(80)	(80)	27	(53)
Commodity contracts	(1)	—	(238)	(239)	39	(200)

	(1)	—	(1,897)	(1,898)	137	(1,761)
Total net derivative asset/(liability)
Foreign exchange contracts	—	5	(2,180)	(2,175)	—	(2,175)
Interest rate contracts	(5)	—	58	53	—	53
Commodity contracts	1	—	(132)	(131)	—	(131)
Other contracts	—	—	3	3	—	3
	(4)	5	(2,251)	(2,250)	—	(2,250)


March 31, 2025	2025	2026	2027	2028	2029	Thereafter	Total
Foreign exchange contracts - US dollar forwards - purchase (millions of US dollars)	791	—	—	—	—	—	791
Foreign exchange contracts - US dollar forwards - sell (millions of US dollars)	4,706	5,627	4,841	3,552	1,278	30	20,034

Foreign exchange contracts - British pound (GBP) forwards - sell (millions of GBP)	23	28	32		—	—	83

Foreign exchange contracts - Euro forwards - sell (millions of Euro)	93	121	81	67	66	129	557
Foreign exchange contracts - Japanese yen forwards - purchase (millions of yen)	84,800	—	—	—	—	—	84,800
Interest rate contracts - short-term pay fixed rate (millions of Canadian dollars)	1,469	1,737	676	49	13	—	3,944

Interest rate contracts - long-term pay fixed rate (millions of Canadian dollars)1	2,883	1,384	—	—	—	—	4,267
Interest rate contracts - costless collar (millions of Canadian dollars)	1,520	1,314	846	36	—	—	3,716

Commodity contracts - natural gas (billions of cubic feet)2	93	87	42	14	4	2	242
Commodity contracts - crude oil (millions of barrels)2	1	5	(3)	1	1	1	6

Commodity contracts - power (megawatt per hour (MW/H))	118	107	51	30	30	—	64	3

The following table presents foreign exchange derivative instruments that are designated and qualify as fair value hedges. The realized and unrealized gain or loss on the derivative is included in Other income/(expense) or Interest expense in the Consolidated Statements of Earnings. The offsetting loss or gain on the hedged item attributable to the hedged risk is included in Other income/(expense) in the Consolidated Statements of Earnings. Any excluded components are included in the Consolidated Statements of Comprehensive Income.


	Three months ended March 31,
		2025	2024
(millions of Canadian dollars)
Amount of unrealized gain/(loss) recognized in OCI
Cash flow hedges

Interest rate contracts		(35)	138
Commodity contracts		1	12
Other contracts		—	1
Fair value hedges
Foreign exchange contracts		(6)	(15)


		(40)	136
Amount of loss reclassified from AOCI to earnings
Foreign exchange contracts1		12	19
Interest rate contracts2		8	—


		20	19

We estimate that a gain of $2 million from AOCI related to cash flow hedges will be reclassified to earnings in the next 12 months. Actual amounts reclassified to earnings depend on the foreign exchange rates, interest rates and commodity prices in effect when derivative contracts that are currently outstanding mature. For all forecasted transactions, the maximum term over which we are hedging exposures to the variability of cash flows is two years as at March 31, 2025.

3For the respective three months ended periods, reported within Transportation and other services revenues (2025 - $86 million gain; 2024 - $35 million loss), Commodity sales (2025 - $24 million loss; 2024 - $37 million loss), Commodity costs (2025 - $70 million gain; 2024 - $23 million gain) and Operating and administrative expense (2025 - $2 million loss; 2024 - $18 million loss) in the Consolidated Statements of Earnings.

Liquidity risk is the risk that we will not be able to meet our financial obligations, including commitments and guarantees, as they become due. In order to mitigate this risk, we forecast cash requirements over a 12-month rolling time period to determine whether sufficient funds will be available. Our primary sources of liquidity and capital resources are funds generated from operations, the issuance of commercial paper and draws under committed credit facilities and long-term debt, which includes debentures and medium-term notes. Our shelf prospectuses with securities regulators enable ready access to either the Canadian or US public capital markets, subject to market conditions. In addition, we maintain sufficient liquidity through committed credit facilities with a diversified group of banks and institutions which, if necessary, enables us to fund all anticipated requirements for approximately one year without accessing the capital markets. We were in compliance with all the terms and conditions of our committed credit facility agreements and term debt indentures as at March 31, 2025. As a result, all credit facilities are available to us and the banks are obligated to fund us under the terms of the facilities. We also identify other potential sources of debt and equity funding alternatives, including reinstatement of our dividend reinvestment and share purchase plan or at-the-market equity issuances.

Entering into derivative instruments may result in exposure to credit risk from the possibility that a counterparty will default on its contractual obligations. In order to mitigate this risk, we enter into risk management transactions primarily with institutions that possess strong investment grade credit ratings. Credit risk relating to derivative counterparties is mitigated through the maintenance and monitoring of credit exposure limits, contractual requirements and netting arrangements. We also review counterparty credit exposure using external credit rating services and other analytical tools to manage credit risk.

Gross derivative balances have been presented without the effects of collateral posted. Derivative assets are adjusted for non-performance risk of our counterparties using their credit default swap spread rates and are reflected at fair value. For derivative liabilities, our non-performance risk is considered in the valuation.

Credit risk also arises from trade and other long-term receivables, and is mitigated through credit exposure limits and contractual requirements, the assessment of counterparty credit ratings and netting arrangements. Within the Gas Distribution and Storage segment, credit risk is mitigated by the utility's large and diversified customer base and the ability to recover expected credit losses through the ratemaking process. We actively monitor the financial strength of large industrial customers and, in select cases, have obtained additional security to minimize the risk of default on receivables. Generally, we utilize a loss allowance matrix which contemplates historical credit losses by age of receivables, adjusted for any forward-looking information and management expectations to measure lifetime expected credit losses of receivables. The maximum exposure to credit risk related to non-derivative financial assets is their carrying value.

Our financial assets and liabilities measured at fair value on a recurring basis include derivatives and other financial instruments. We also disclose the fair value of other financial instruments not measured at fair value. The fair value of financial instruments reflects our best estimates of market value based on generally accepted valuation techniques or models and is supported by observable market prices and rates. When such values are not available, we use discounted cash flow analysis from applicable yield curves based on observable market inputs to estimate fair value.

Level 1 includes financial instruments measured at fair value based on unadjusted quoted prices for identical assets and liabilities in active markets that are accessible at the measurement date. An active market for a financial instrument is considered to be a market where transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Under the fair value hierarchy, cash and cash equivalents are classified as Level 1. Our Level 1 instruments consist primarily of exchange-traded derivatives used to mitigate the risk of crude oil price fluctuations, US and Canadian treasury bills, and investments in exchange-traded funds held by our captive insurance subsidiaries. We also hold restricted long-term investments in exchange-traded funds and common shares in trusts in accordance with the CER's regulatory requirements under the Land Matters Consultation Initiative (LMCI) and to cover future pipeline decommissioning costs in the state of Minnesota.

Level 2 includes financial instrument valuations determined using directly or indirectly observable inputs other than quoted prices included within Level 1. Financial instruments in this category are valued using models or other industry standard valuation techniques derived from observable market data. Such valuation techniques include inputs such as quoted forward prices, time value, volatility factors and broker quotes that can be observed or corroborated in the market for the entire duration of the financial instrument. Derivatives valued using Level 2 inputs include non-exchange traded derivatives such as over-the-counter foreign exchange forward and cross-currency swap contracts, interest rate swaps, physical forward commodity contracts, as well as commodity swaps and options for which observable inputs can be obtained.

We have also categorized the fair value of our long-term debt, investments in debt securities held by our captive insurance subsidiaries, and restricted long-term investments in Canadian government bonds held in trust in accordance with the CER's regulatory requirements under the LMCI as Level 2. The fair value of our long-term debt is based on quoted market prices for instruments of similar yield, credit risk and tenor. When possible, the fair value of our restricted long-term investments is based on quoted market prices for similar instruments and, if not available, based on broker quotes.

Level 3 includes derivative valuations based on inputs which are less observable, unavailable or where the observable data does not support a significant portion of the derivative's fair value. Generally, Level 3 derivatives are longer dated transactions, occur in less active markets, occur at locations where pricing information is not available or have no binding broker quote to support Level 2 classification. We have developed methodologies, benchmarked against industry standards, to determine fair value for these derivatives based on the extrapolation of observable future prices and rates. Derivatives valued using Level 3 inputs primarily include long-dated derivative power, NGL and natural gas contracts, basis swaps, commodity swaps, and power and energy swaps, physical forward commodity contracts, as well as options. We do not have any other financial instruments categorized in Level 3.

We use the most observable inputs available to estimate the fair value of our derivatives. When possible, we estimate the fair value of our derivatives based on quoted market prices. If quoted market prices are not available, we use estimates from third-party brokers. For non-exchange traded derivatives classified in Levels 2 and 3, we use standard valuation techniques to calculate the estimated fair value. These methods include discounted cash flows for forwards and swaps and Black-Scholes-Merton pricing models for options. Depending on the type of derivative and nature of the underlying risk, we use observable market prices (interest, foreign exchange, commodity and share price) and volatility as primary inputs to these valuation techniques. Finally, we consider our own credit default swap spread, as well as the credit default swap spreads associated with our counterparties, in our estimation of fair value.


March 31, 2025	Level 1	Level 2	Level 3	Total Gross Derivative Instruments
(millions of Canadian dollars)
Financial assets
Current derivative assets
Foreign exchange contracts	—	26	—	26
Interest rate contracts	—	21	—	21
Commodity contracts	30	76	328	434

	30	123	328	481
Long-term derivative assets
Foreign exchange contracts	—	68	—	68
Interest rate contracts	—	107	—	107
Commodity contracts	—	17	179	196

	—	192	179	371
Financial liabilities
Current derivative liabilities
Foreign exchange contracts	—	(744)	—	(744)
Interest rate contracts	—	(36)	—	(36)
Commodity contracts	(49)	(113)	(321)	(483)

	(49)	(893)	(321)	(1,263)
Long-term derivative liabilities
Foreign exchange contracts	—	(1,523)	—	(1,523)
Interest rate contracts	—	(113)	—	(113)
Commodity contracts	—	(33)	(129)	(162)

	—	(1,669)	(129)	(1,798)
Total net financial asset/(liability)
Foreign exchange contracts	—	(2,173)	—	(2,173)
Interest rate contracts	—	(21)	—	(21)
Commodity contracts	(19)	(53)	57	(15)

	(19)	(2,247)	57	(2,209)


December 31, 2024	Level 1	Level 2	Level 3	Total Gross Derivative Instruments
(millions of Canadian dollars)
Financial assets
Current derivative assets
Foreign exchange contracts	—	125	—	125
Interest rate contracts	—	67	—	67
Commodity contracts	34	72	256	362
Other contracts	—	3	—	3
	34	267	256	557
Long-term derivative assets
Foreign exchange contracts	—	83	—	83
Interest rate contracts	—	146	—	146
Commodity contracts	1	14	182	197

	1	243	182	426
Financial liabilities
Current derivative liabilities
Foreign exchange contracts	—	(804)	—	(804)
Interest rate contracts	—	(80)	—	(80)
Commodity contracts	(52)	(116)	(283)	(451)

	(52)	(1,000)	(283)	(1,335)
Long-term derivative liabilities
Foreign exchange contracts	—	(1,579)	—	(1,579)
Interest rate contracts	—	(80)	—	(80)
Commodity contracts	(1)	(31)	(207)	(239)

	(1)	(1,690)	(207)	(1,898)
Total net financial asset/(liability)
Foreign exchange contracts	—	(2,175)	—	(2,175)
Interest rate contracts	—	53	—	53
Commodity contracts	(18)	(61)	(52)	(131)
Other contracts	—	3	—	3
	(18)	(2,180)	(52)	(2,250)


March 31, 2025	Fair Value	Unobservable Input	Minimum Price/Volatility	Maximum Price/ Volatility	Weighted Average Price/Volatility	Unit of Measurement
(fair value in millions of Canadian dollars)
Commodity contracts - financial1
Natural gas	11	Forward gas price	3.78	9.85	5.91	$/mmbtu2
Crude	(8)	Forward crude price	76.32	103.75	97.19	$/barrel

Power	(19)	Forward power price	28.60	195.45	74.48	$/MW/H
Commodity contracts - physical1
Natural gas	(71)	Forward gas price	0.59	12.21	4.61	$/mmbtu2
Crude	25	Forward crude price	76.45	118.36	99.11	$/barrel

Power	(15)	Forward power price	24.97	138.58	76.37	$/MW/H
Commodity options3
Natural gas	134	Forward gas price	4.66	11.29	7.60	$/mmbtu2
		Price volatility	11%	77%	53%
	57

If adjusted, the significant unobservable inputs disclosed in the table above would have a direct impact on the fair value of our Level 3 derivative instruments. The significant unobservable inputs used in the fair value measurement of Level 3 derivative instruments include forward commodity prices. Changes in forward commodity prices could result in significantly different fair values for our Level 3 derivatives.


	Three months ended March 31,
	2025	2024
(millions of Canadian dollars)
Level 3 net derivative liability at beginning of period	(52)	(131)
Total gain/(loss), unrealized
Included in earnings1	23	(17)
Included in OCI	2	12
Included in regulatory assets/liabilities	(45)	—
Settlements	129	9
Level 3 net derivative asset/(liability) at end of period	57	(127)

During the three months ended March 31, 2025 and 2024, we recognized unrealized foreign exchange gains of $47 million and losses of $377 million, respectively, on the translation of US dollar-denominated debt, in OCI. During the three months ended March 31, 2025 and 2024, we recognized realized losses of $81 million and nil, respectively, associated with the settlement of US dollar-denominated debt that had matured during the period, in OCI.

Certain long-term investments in other entities with no actively quoted prices are classified as Fair Value Measurement Alternative (FVMA) investments and are recorded at cost less impairment. The carrying value of FVMA investments totaled $186 million and $187 million as at March 31, 2025 and December 31, 2024, respectively.

As at March 31, 2025, we had investments with a fair value of $1,065 million included in Restricted long-term investments and cash in the Consolidated Statements of Financial Position (December 31, 2024 - $998 million) which are classified as available-for-sale. During the three months ended March 31, 2025, we purchased and sold $103 million and $77 million of restricted long-term investments, respectively (2024 - purchases of $36 million and sales of $10 million). The net cash flow impact is presented in Cash Flows from Investing Activities in the Consolidated Statements of Cash Flows. These securities represent restricted funds held in trust for the purpose of funding pipeline abandonment in accordance with the regulatory requirements of the Canada Energy Regulator, to cover future pipeline decommissioning costs in the state of Minnesota and to satisfy retirement obligations as Wexpro properties are abandoned.

We had restricted long-term investments and cash held in trust totaling $529 million as at March 31, 2025 which are classified as Level 1 in the fair value hierarchy (December 31, 2024 - $491 million). We also had restricted long-term investments held in trust totaling $536 million (cost basis - $558 million) and $507 million (cost basis - $540 million) as at March 31, 2025 and December 31, 2024, respectively, which are classified as Level 2 in the fair value hierarchy. There were unrealized holding gains of $16 million on these investments for the three months ended March 31, 2025 (2024 - losses of $13 million).

We have wholly-owned captive insurance subsidiaries whose principal activity is providing insurance and reinsurance coverage for certain insurable property and casualty risk exposures of our operating subsidiaries and certain equity investments. As at March 31, 2025, the fair value of investments in equity funds and debt securities held by our captive insurance subsidiaries was $nil and $1.1 billion, respectively (December 31, 2024 - $114 million and $1.1 billion, respectively). Our investments in debt securities had a cost basis of $1.1 billion as at March 31, 2025 (December 31, 2024 - $1.1 billion). These investments in equity funds and debt securities are recognized at fair value, classified as Level 1 and Level 2 in the fair value hierarchy, respectively, and are recorded in Other current assets and Long-term investments in the Consolidated Statements of Financial Position. There were unrealized holding gains of $1 million for the three months ended March 31, 2025, (2024 - gains of $16 million).

The fair value of financial assets and liabilities other than derivative instruments, certain long-term investments in other entities, restricted long-term investments, investments held by our captive insurance subsidiaries and long-term debt described above approximate their carrying value due to the short period to maturity.