IPL Energy Earnings Growth Continues, Increased Dividend Declared

Business Wire, July 29, 1998

CALGARY, Alberta--(BUSINESS WIRE)--July 29, 1998--IPL Energy (NASDAQ:IPPIF) (TSE:IPL.) (ME:IPL.) (July 29, 1998)IPL Energy Inc. today announced that its Board of Directors has declared a dividend of $0.575 per common share, payable September 1, 1998 to shareholders of record August 14, 1998. This represents an increase of $0.03 per common share, or 5.5 percent, from the prior dividend rate.

"The dividend increase reflects IPL Energy's strong underlying growth in earnings, resulting from the execution of the strategic direction first outlined early last year," said Brian F. MacNeill, President & Chief Executive Officer. "This continued earnings momentum is particularly notable given the influence of this year's extraordinarily warm winter weather, a good portion of which we expect to mitigate through various actions. Our focus continues to be on delivering superior returns to shareholders through earnings growth and a steadily increasing dividend."

IPL Energy also announced earnings of $209.8 million ($2.90 per common share) for the six months ended June 30, 1998. This represents an 11 percent increase when compared with earnings of $188.7 million ($2.79 per common share) for the same period in 1997. Improved results from Energy Transportation and Corporate segments more than offset the impact of warm weather which reduced earnings from the Energy Distribution segment.

FINANCIAL

The Energy Transportation segment contributed $71.0 million to first half earnings, up from $57.9 million earned during the same period last year. The IPL System improved earnings through further operational and cost efficiencies achieved under incentive tolling as well as additional returns generated from system expansion and other capital programs outside of incentive tolling arrangements. In the United States, Lakehead Pipe Line Partners, L.P. also achieved higher throughput volumes, resulting in increased equity earnings and higher incentive allocations to IPL Energy. Finally, earnings from the Colombia pipeline increased, reflecting the higher investment level in 1998.

Earnings from the Energy Distribution segment totalled $141.3 million (1997 - $150.6 million) for the six months ended June 30, 1998. The segment results represent income from The Consumers' Gas Company Ltd., as well as earnings of approximately $22.9 million from the Noverco Inc. investment acquired in mid 1997.

First half earnings include the results of Consumers Gas for the period October 1997 through March 1998. The gas utility contribution to IPL Energy was $121.8 million, down $28.8 million from last year, reflecting both the impact of a lower allowed rate of return on equity and warmer weather throughout the heating season. For the first six months of the year, weather, as measured in degree days, was about 11 percent warmer than in 1997 and about 15 percent warmer than normal. Growth in the core franchise area continued with 43,000 new customers being added during the first half of the year, reflecting strong economic conditions and residential fuel conversions.

IPL Energy estimates that the 1998 impact of the warmer weather represents a potential reduction in earnings of approximately $40 million when compared to earnings expected under normal weather patterns. Through a variety of cost reduction initiatives, operational efficiencies and other corporate actions across the IPL Energy group of companies, management anticipates that the adverse effect of weather on 1998 earnings should be substantially mitigated with many of the initiatives already reflected in the current six months results.

In addition to lower corporate provisions as compared to the prior year, the Corporate segment results include one-time after tax gains of approximately $8 million relating to the sale of a non-strategic real estate property and the recovery of previously expensed assets held in trust under a financing arrangement.

For the three months ended June 30, 1998, the Corporation's earnings increased to $147.6 million ($2.04 per share) from $131.7 million ($1.95 per share) recorded during the same period last year. Reductions in earnings from Consumers Gas due to warm weather were more than offset by higher earnings from North American and Colombian pipeline operations, contributions from the investment in Noverco, as well as the impact of the Corporate gains noted above.

On June 30, 1998, Noverco exercised a warrant to purchase 1.5 million common shares of IPL Energy. The warrant was issued in August 1997, in connection with the acquisition by IPL Energy of a 32 percent interest in Noverco and the acquisition by Noverco of an 8 percent interest in IPL Energy. Upon settlement scheduled for November 13, 1998, IPL Energy will receive $76.5 million of proceeds while Noverco's common share interest in IPL Energy will increase to approximately 10 percent.

PROJECT UPDATE ENERGY TRANSPORTATION LINE 9 FINAL CONSTRUCTION NOTICE RECEIVED

IPL Energy's existing 30 inch diameter Line 9 pipeline between Sarnia and Montreal will be reversed to transport crude oil from Montreal, Quebec to refineries located in Oakville, Nanticoke and Sarnia, Ontario. On July 16, refiners supporting the Line 9 Reversal Project issued the Final Construction Notice thereby allowing construction to commence immediately. The ultimate capacity of the 832 km line will be 240,000 barrels per day and the projected in service date for the reversed Line 9 is April 30, 1999.