NOTE 13 NET INCOME PER COMMON UNIT

Net income (loss) per common unit is computed by dividing net income (loss) attributable to controlling interests, after deduction of net income attributed to PNGTS' former parent, amounts attributable to the General Partner and Class B units, by the weighted average number of common units outstanding.

The amounts allocable to the General Partner equals an amount based upon the General Partner's effective two percent general partner interest, plus an amount equal to incentive distributions. Incentive distributions are paid to the General Partner if quarterly cash distributions on the common units exceed levels specified in the Partnership Agreement (refer to Note 14).

The amount allocable to the Class B units in 2017 equals an amount based upon 30 percent of GTN's distributable cash flow during the year ended December 31, 2017 less $20 million (2016 – $20 million; 2015 – $15 million).

Net income (loss) per common unit was determined as follows:

(millions of dollars, except per common unit amounts)	2017		2016		2015

Net income attributable to controlling interests(a)	252		248		37
Net income attributable to PNGTS' former parent(a)(b)	(2	)	(4	)	(24	)

Net income allocable to General Partner and Limited Partners	250		244		13
Incentive distributions attributable to the General Partner(c)	(12	)	(7	)	(3	)
Net income attributable to the Class B units(d)	(15	)	(22	)	(12	)

Net income (loss) allocable to the General Partner and common units	223		215		(2	)
Net income allocable to the General Partner's two percent interest	(4	)	(4	)	–

Net income (loss) attributable to common units	219		211		(2	)

Weighted average common units outstanding (millions) – basic and diluted	69.2		65.7	(e)	63.9
Net income (loss) per common unit – basic and diluted(f)	$ 3.16		$ 3.21		$ (0.03	)


(a)	Recast to consolidate PNGTS for years ended December 2016 and 2015 (Refer to Note 2).
(b)	Net income allocable to General and Limited Partners excludes net income attributed to PNGTS' former parent as it was allocated to TransCanada and was not allocable to either the general partner, common units or Class B units.
(c)	Under the terms of the Partnership Agreement, for any quarterly period, the participation of the incentive distribution rights (IDRs) is limited to the available cash distributions declared. Accordingly, incentive distributions allocated to the General Partner are based on the Partnership's available cash during the current reporting period, but declared and paid in the subsequent reporting period.
(d)	As discussed in Note 10, the Class B units entitle TransCanada to a distribution which is an amount based on 30 percent of GTN's distributions after exceeding certain annual thresholds. The distribution will be payable in the first quarter with respect to the prior year's distributions. Consistent with the application of Accounting Standards Codification (ASC) Topic 260 – "Earnings per share", the Partnership allocated the Class B units a distribution in an amount equal to 30 percent of GTN's total distributable cash flows during the year ended December 31, 2017 less the threshold level of $20 million (2016 – less $20 million; 2015 – less $15 million). During the year ended December 31, 2017, 30 percent of GTN's total distributable cash flow was $35 million. As a result of exceeding the threshold level of $20 million, $15 million of net income attributable to controlling interests was allocated to the Class B units at December 31, 2017 (2016 – $22 million; 2015 – $12 million) (Refer to Note 10).
(e)	Includes the common units subject to rescission. These units are treated as outstanding for financial reporting purposes (Refer to Note 10).
(f)	Net income (loss) per common unit prior to recast.