NOTE 18 RELATED PARTY TRANSACTIONS

The Partnership does not have any employees. The management and operating functions are provided by the General Partner. The General Partner does not receive a management fee in connection with its management of the Partnership. The Partnership reimburses the General Partner for all costs of services provided, including the costs of employee, officer and director compensation and benefits, and all other expenses necessary or appropriate to the conduct of the business of, and allocable to, the Partnership. Such costs include (i) overhead costs (such as office space and equipment) and (ii) out‑of‑pocket expenses related to the provision of such services. The Partnership Agreement provides that the General Partner will determine the costs that are allocable to the Partnership in any reasonable manner determined by the General Partner in its sole discretion. Total costs charged to the Partnership by the General Partner were $4 million for the year ended December 31, 2018 (2017 - $4 million, 2016 - $3 million).

As operator of most of our pipelines (except Iroquois and the PNGTS Joint Facilities) TransCanada’s subsidiaries provide capital and operating services to our pipeline systems. TransCanada’s subsidiaries incur costs on behalf of our pipeline systems, including, but not limited to, employee salary and benefit costs, and property and liability insurance costs. The Iroquois pipeline system is operated by Iroquois Pipeline Operating Company, a wholly owned subsidiary of Iroquois. The PNGTS joint facilities are operated by MNOC. Therefore, Iroquois and the PNGTS joint facilities do not receive capital and operating services from TransCanada.

Capital and operating costs charged to our pipeline systems, except for Iroquois, for the years ended December 31, 2018, 2017 and 2016 by TransCanada’s subsidiaries and amounts payable to TransCanada’s subsidiaries at December 31, 2018 and 2017 are summarized in the following tables:


Year ended December 31 (millions of dollars)	2018	2017	2016
Capital and operating costs charged by TransCanada’s subsidiaries to:
Great Lakes (a)	44	36	30
Northern Border(a)	36	43	32
PNGTS (a)(b)	9	9	8
GTN	34	34	27
Bison	6	6	2
North Baja	4	4	4
Tuscarora	4	4	5
Impact on the Partnership’s net income attributable to controlling interests:
Great Lakes	19	15	13
Northern Border	16	16	12
PNGTS (b)	5	5	5
GTN	28	29	24
Bison	6	6	3
North Baja	4	4	4
Tuscarora	4	4	4


December 31 (millions of dollars)	2018	2017
Amount payable to TransCanada’s subsidiaries for costs charged in the year by:
Great Lakes (a)	3	3
Northern Border(a)	3	4
PNGTS (a)	1	1
GTN	4	3
Bison	1	1
North Baja	—	—
Tuscarora	1	—

^(a)

Represents 100 percent of the costs.

^(b)

Recast to consolidate PNGTS for the year ended December 31, 2016 (Refer to Note 2).

Great Lakes

Great Lakes earns significant transportation revenues from TransCanada and its affiliates, some of which are provided at discounted rates, negotiated rates and some at maximum rates. For the year ended December 31, 2018, Great Lakes earned 73 percent of its transportation revenues from TransCanada and its affiliates (2017 -- 57 percent; 2016 -- 68 percent). Additionally, included in Great Lakes’ other revenues were cost recovery charges to its affiliates for use of office space in the building it owns and is less than one percent of its total revenues in 2018 (2017 – 1 percent; 2016 – 1 percent).

At December 31, 2018, $18 million was included in Great Lakes’ receivables in regards to the transportation contracts with TransCanada and its affiliates (December 31, 2017 – $20 million).

During 2017, Great Lakes operated under a FERC approved 2013 rate settlement that included a revenue sharing mechanism that required Great Lakes to share with its customers certain percentages of any qualifying revenues earned above certain ROEs. During the second quarter of 2018, the refund was settled with its customers and a significant portion of the refund was with its affiliates. Under the terms of the 2017 Great Lakes Settlement, beginning in 2018, the revenue sharing was eliminated.

Great Lakes has a cash management agreement with TransCanada whereby Great Lakes’ funds are pooled with other TransCanada affiliates. The agreement also gives Great Lakes the ability to obtain short-term borrowings to provide liquidity for Great Lakes’ operating needs. At December 31, 2018 and 2017, Great Lakes had outstanding receivables from this arrangement amounting to $36 million and $64 million, respectively.

Great Lakes has a long-term transportation agreement with TransCanada’s Canadian Mainline that commenced on November 1, 2017 for a ten-year period and allows TransCanada to transport up to 0.711 billion cubic feet of natural gas per day on the Great Lakes system. This contract, which contains volume reduction options up to full contract quantity beginning in year three, was a direct benefit from TransCanada’s long-term fixed price service on its Canadian Mainline that was launched in 2017. For the year ended December 31, 2018 and 2017, the total revenue earned by Great Lakes on this contract was $76 million and $13 million, respectively.

During the second quarter of 2018, Great Lakes reached an agreement on the terms of new long-term transportation capacity contracts with its affiliate, ANR Pipeline Company. The contracts are for a term of 15 years from November 2021 to October 31, 2036 with a total contract value of approximately $1.3 billion. The contracts contain reduction options (i) at any time on or before April 1, 2019 for any reason and (ii) any time before April 2021, if TransCanada is not able to secure the required regulatory approval related to anticipated expansion projects.

PNGTS

For the years ended December 31, 2018, 2017 and 2016, PNGTS provided transportation services to a related party. Revenues from TransCanada Energy Ltd., a subsidiary of TransCanada, for 2018, 2017 and 2016 were approximately $1 million, $1 million and $2 million, respectively. At December 31, 2018, PNGTS had nil outstanding receivables from TransCanada Energy Ltd. in the consolidated balance sheets (December 31, 2017 – nil).

In connection with anticipated future commercial opportunities, PNGTS has entered into an arrangement with its affiliates regarding the construction of certain facilities on their systems that will be required to fulfill future contracts on the PNGTS’ system. In the event the anticipated developments do not proceed, PNGTS will be required to reimburse its affiliates for any costs incurred related to the development of these facilities. As of December 31, 2018, the total costs incurred by these affiliates was approximately $47 million (December 31, 2017 - $3 million).