Enbridge Energy Partners, L.P.

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1 Equity Research Earnings Update April 30, 2007 Stock Rating: Sector Performer Sector Weighting: Market Weight mo. Price Target $60.00 EEP-NYSE (4/27/07) $61.19 Key Indices: None 3-5-Yr. EPS Gr. Rate (E) 6.0% 52-week Range $42.00-$61.82 Shares Outstanding 83.9M Float 49.9M Shrs Avg. Daily Trading Vol. 125,789 Market Capitalization $5,133.8M Dividend/Div Yield $3.70 / 6.0% Fiscal Year Ends December Book Value $23.65 per Shr 2007 ROE (E) 11.0% LT Debt $2,234.0M Preferred Nil Common Equity $1,984.6M Convertible Available No Earnings Per Share Prev Current 2006 $2.86A 2007 $2.70E $2.60E 2008 $3.15E P/E x x 23.5x x Pipelines, Utilities, & Power Enbridge Energy Partners, L.P. Q1 Results Lower Than Expected But Target Up On Outlook Enbridge Energy Partners reported Q1'07 EPU of $0.61 vs. our estimate of $0.67. We are reducing our 2007 EPU estimate of $2.70 to $2.60. However, we maintain our 2008 estimate of $3.15 and raise our target price to $60 from $55 due to recent success in financing growth and value expansion. Two problems created earnings downside in the quarter. A gas processing plant had operational issues, and measurement losses were larger than anticipated. Management noted that both issues are largely under control and should not pose longer-term problems. The quarterly report reinforces our positive outlook for growth. Guidance for EBITDA from gas pipeline expansion continues to include a major improvement in the back half of the year. A solid performance in the back half of 2007 would likely kick off a multi-year period of growth at EEP. In valuing EEP, we rely on an adjusted EV/EBITDA multiple, taking into account capital employed in projects under construction. Our new $60 target price is based on a 2008E EV/EBITDA range of 12x 13x. We recommend owning EEP units, while it undertakes its profitable expansion. Stock Price Performance Distribution Per Unit 2002 $ $ $ $ $ E $3.70 Company Description EEP owns the U.S. portion of a major crude pipeline from Western Canada, and natural gas assets in the U.S. mid-continent region. This MLP is considered foreign income in Canada. Matthew Akman 1 (416) Matthew.Akman@cibc.ca Gilbert Chan, CFA (416) Gilbert.Chan@cibc.ca Alda Pavao, CFA 1 (416) Alda.Pavao@cibc.ca Source: Reuters All figures in US dollars, unless otherwise stated CIBC World Markets does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. See "Important Disclosures" section at the end of this report for important required disclosures, including potential conflicts of interest. See "Price Target Calculation" and "Key Risks to Price Target" sections at the end of this report, where applicable. Find CIBC research on Bloomberg, Reuters, firstcall.com CIBC World Markets Inc., P.O. Box 500, 161 Bay Street, BCE Place, Toronto, Canada M5J 2S8 (416) and cibcwm.com CIBC World Markets Corp., 300 Madison Avenue, New York, NY (212) (800)

2 Investment Summary Enbridge Energy Partners reported Q1'07 EPU of $0.61 vs. our estimate of $0.67. We are reducing our 2007 EPU estimate of $2.70 to $2.60. However, we are maintaining our 2008 estimate of $3.15. We are also raising our target price to $60 from $55 due to recent success in financing growth and continued valuation expansion among energy infrastructure companies. The Q1 result was messy and weaker than we anticipated. In fact, had it not been for the sale of natural gas from storage, earnings per unit would have only been $0.46. Two problems created negative earnings impacts in the quarter: One of the gas processing plants, namely Zyback, had operational problems that curtailed the production of natural gas liquids. Management noted that contracts are largely structured on a fee basis related to volumes. Extensive work was done on the plant and it is running normally at this time. Unusually high gas measurement losses also occurred during the quarter. We believe this operational issue, and the issue related to Zyback, are attributable to unusually rapid growth in the basin and in the company. We are hopeful and expect Enbridge management to focus on operational issues now and that problems will be temporary. Nevertheless, we see costs related to these problems ongoing in Q2; therefore, we are our reducing that quarterly estimate from $0.68 to $0.62. Near-term problems aside, business fundamentals continue improving on a sustainable basis as gas processing and oil pipeline volumes increased materially: Volume flows on the Lakehead oil pipeline system in Q1 07 were about 1.58 million barrels per day vs. about 1.51 million barrels per day in Q1 06. Volume flows on the gas midstream assets were about 2.04 bcf/day vs. about 1.76 bcf/day in the same quarter last year. The quarterly report reinforces our positive outlook for growth. Guidance for EBITDA from gas pipeline expansion continues to include a major improvement in the back half of the year. The East Texas extension and expansion has achieved 550 MMcf/day of volume commitments for an average six-year term, and it should contribute over $50 million of EBITDA mostly later this year. A solid performance in the back half of 2007 would likely kick off a multi-year period of growth at EEP. New oil pipelines appear on track. The Southern Access project should begin delivering cash flow next year. We believe EBITDA could grow from about $550 million in 2007 to $700 million in As a result, our forecasts suggest the cash distribution could move up to $4.00/unit (see attached summary model). Beyond 2008 we see further growth now from Southern Access and the Alberta Clipper project. Assuming the company can raise equity at or near the current unit price, projects like Alberta Clipper should be materially accretive to cash flow per unit. As discussed in previous research, we see the potential for distributable cash flow per unit to rise well above $4.50 by 2009/10. 2

3 Valuing EEP units is challenging now because of the major capital spending program under way. The company will spend almost $3 billion in the next two years on pipelines that will not be in full service until Therefore, unadjusted EV/EBITDA multiples will tend to overstate valuation on the company. We therefore rely primarily on an adjusted EV/EBITDA multiple in our valuation. Our models adjust for capital employed in projects under construction. Our new $60 target price is based on a 2008E EV/EBITDA range of 12x 13x. While the units have traded at a lower range, we believe valuation multiples will be sustainable, as cash flow accretion from new projects becomes more visible. We recommend owning EEP units while it undertakes this expansion process. Exhibit 1. Consolidated Earnings And Distribution Forecasts (US$ mln. unless otherwise stated) Years Ending December Q1/07 Q2/07E Q3/07E Q4/07E 2007E 2008E Lakehead Deliveries (billion bbl miles) Average revenue per 1,000 bbl miles $1.072 $1.104 $1.104 $1.104 $1.104 $1.104 $1.100 Operating revenue $414.5 $111.3 $116.1 $117.5 $119.2 $464.1 $490.6 Power expense $101.0 $24.2 $26.3 $28.7 $25.9 $105.1 $ per 1,000 bbl mile $0.261 $0.240 $0.250 $0.270 $0.240 $0.250 $0.250 Lakehead OM&A $114.7 $29.0 $29.6 $ $119.0 $125.0 Lakehead EBITDA $198.9 $58.1 $60.2 $58.7 $62.9 $240.0 $254.1 Other Oil Pipelines and S. Access EBITDA $65.0 $14.0 $16.8 $17.1 $17.1 $65.0 $139.8 Gas Transmission $35.0 $8.0 $9.0 $11.0 $12.0 $40.0 $113.2 Gas G&P $179.1 $23.9 $40.0 $60.0 $70.7 $194.6 $203.1 Marketing ($8.1) $14.8 $0.6 $1.0 ($12.4) $4.0 $0.0 Corporate ($2.8) ($0.5) ($0.8) ($1.1) ($1.8) ($4.2) ($9.0) Total Gas EBITDA $203.2 $46.2 $48.8 $70.9 $68.5 $234.4 $307.3 Total EBITDA $467.1 $118.3 $125.8 $146.7 $148.5 $539.4 $701.2 Depreciation $136.0 $36.5 $40.0 $50.0 $48.5 $175.0 $202.2 Operating income $331.0 $81.8 $85.8 $96.7 $100.0 $364.4 $499.0 Investment & other income $8.5 ($1.1) $1.0 $1.0 $2.6 $3.5 $3.5 Interest expense ($110.5) ($25.3) ($27.6) ($31.0) ($34.6) ($118.5) ($158.3) Minority interest $0.0 $0.0 $0.0 $0.0 $0.0 $1.0 $1.0 Net Income - Enbridge Energy Partnership $229.0 $55.4 $59.2 $66.7 $68.0 $250.3 $345.2 Depreciation $136.0 $175.0 $202.2 Maintenance capital ($45.0) ($60.0) ($70.0) Other $0.0 $0.0 $0.0 Available cash $320.0 $365.3 $477.3 Payout ratio on all units 89% 93% 89% Cash payout ratio to EEP units 69.2% 63.2% 55.7% Cash Distribution to Partners Common unitholders $194.9 $200.5 $222.8 General partner $26.4 $30.5 $43.2 Units outstanding at EEP Pay-In-Kind Units Average total units outstanding Earnings per unit $2.86 $0.61 $0.62 $0.70 $0.67 $2.60 $3.15 Quarterly distribution per unit $0.925 $0.925 $0.925 $0.925 $0.925 $0.925 $1.000 Annual distribution per unit $3.70 $3.70 $4.00 Source: Company reports and CIBC World Markets Inc. 3

4 Price Target Calculation Our $60 target price is based on a 2008E EV/EBITDA range of 12x 13x. Our target price implies a cash distribution yield of 6.7%. Our target yield is found within EEP s historical yield range of 6.0% 10.5%, but at the low end due to our forecast growth. Key Risks To Price Target Enbridge Energy Partners could fall short of our 2007/08 earnings and distributions forecasts (and fail to meet our target price) for various reasons, including (but not limited to) the impact of lower than expected oil sands volumes, increased pipeline competition, and unplanned operational issues. Given MLPs yield-oriented nature, EEP is sensitive to significant rises in interest rates. If current U.S. treasury yields continue to rise, EEP units could be negatively impacted as relative yields fall. However, anticipated distribution growth could offset some of the negative implications of rising interest rates long-term. 4

5 Our EPS estimates are shown below: 1 Qtr. 2 Qtr. 3 Qtr. 4 Qtr. Yearly 2006 Current $0.71A $0.93A $0.70A $0.52A $2.86A 2007 Prior $0.67E $0.68E $0.70E $0.65E $2.70E 2007 Current $0.61A $0.62E $0.70E $0.67E $2.60E 2008 Current $3.15E 5

6 IMPORTANT DISCLOSURES: Analyst Certification: Each CIBC World Markets research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report. Potential Conflicts of Interest: Equity research analysts employed by CIBC World Markets are compensated from revenues generated by various CIBC World Markets businesses, including the CIBC World Markets Investment Banking Department within the Corporate and Leveraged Finance Division. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, CIBC World Markets generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers. In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest. Important Disclosure Footnotes for Enbridge Energy Partners, L.P. (EEP) 6

7 CIBC World Markets Price Chart HISTORICAL PERFORMANCE OF CIBC WORLD MARKETS' RECOMMENDATIONS FOR ENBRIDGE ENERGY PARTNERS, L.P. (EEP) Date Change Type Closing Price Rating Price Target Coverage 01/31/ SP Matthew Akman 07/31/ SP Matthew Akman 10/27/ SP Matthew Akman 05/01/ SP Matthew Akman 08/01/ SP Matthew Akman 09/18/ SP Matthew Akman 10/30/ SP Matthew Akman 01/30/ SP Matthew Akman 7

8 CIBC World Markets' Stock Rating System Abbreviation Rating Description Stock Ratings SO Sector Outperformer Stock is expected to outperform the sector during the next months. SP Sector Performer Stock is expected to perform in line with the sector during the next months. SU Sector Underperformer Stock is expected to underperform the sector during the next months. NR Not Rated CIBC World Markets does not maintain an investment recommendation on the stock. R Restricted CIBC World Markets is restricted*** from rating the stock. Sector Weightings** O Overweight Sector is expected to outperform the broader market averages. M Market Weight Sector is expected to equal the performance of the broader market averages. U Underweight Sector is expected to underperform the broader market averages. NA None Sector rating is not applicable. **Broader market averages refer to the S&P 500 in the U.S. and the S&P/TSX Composite in Canada. "Speculative" indicates that an investment in this security involves a high amount of risk due to volatility and/or liquidity issues. ***Restricted due to a potential conflict of interest. Ratings Distribution*: CIBC World Markets' Coverage Universe (as of 29 Apr 2007) Count Percent Inv. Banking Relationships Count Percent Sector Outperformer (Buy) % Sector Outperformer (Buy) % Sector Performer (Hold/Neutral) % Sector Performer (Hold/Neutral) % Sector Underperformer (Sell) % Sector Underperformer (Sell) % Restricted % Restricted % Ratings Distribution: Pipelines, Utilities, & Power Coverage Universe (as of 29 Apr 2007) Count Percent Inv. Banking Relationships Count Percent Sector Outperformer (Buy) % Sector Outperformer (Buy) % Sector Performer (Hold/Neutral) % Sector Performer (Hold/Neutral) % Sector Underperformer (Sell) % Sector Underperformer (Sell) 0 0.0% Restricted % Restricted % Pipelines, Utilities, & Power Sector includes the following tickers: ACO.X, CU, EEP, EMA, ENB, FTS, RRI, SE, TA, TRP. *Although the investment recommendations within the three-tiered, relative stock rating system utilized by CIBC World Markets do not correlate to buy, hold and sell recommendations, for the purposes of complying with NYSE and NASD rules, CIBC World Markets has assigned buy ratings to securities rated Sector Outperformer, hold ratings to securities rated Sector Performer, and sell ratings to securities rated Sector Underperformer without taking into consideration the analyst's sector weighting. Important disclosures required by IDA Policy 11, including potential conflicts of interest information, our system for rating investment opportunities and our dissemination policy can be obtained by visiting CIBC World Markets on the web at or by writing to CIBC World Markets Inc., BCE Place, 161 Bay Street, 4th Floor, Toronto, Ontario M5J 2S8, Attention: Research Disclosures Request. 8

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