RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2014

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 8        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 $1 million for the three months ended March 31, 2014 (2013 – $1 million).

As operator, 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.

Capital and operating costs charged to our pipeline systems for the three months ended March 31, 2014 and 2013 by TransCanada’s subsidiaries and amounts payable to TransCanada’s subsidiaries at March 31, 2014 and December 31, 2013 are summarized in the following tables:

	Three months ended
(unaudited)	March 31,
(millions of dollars)	2014	2013
Capital and operating costs charged by TransCanada’s subsidiaries to:
GTN (a)	6	7
Northern Border (a)	7	7
Bison (a)	1	1
Great Lakes (a)	7	8
North Baja	1	1
Tuscarora	1	1
Impact on the Partnership’s net income attributable to controlling interests:
GTN (b)	4	5
Northern Border	4	3
Bison (b)	1	1
Great Lakes	3	4
North Baja	1	1
Tuscarora	1	1

(a)       Represents 100 percent of the costs.

(b)       Recast as discussed in Note 2.

(unaudited)
(millions of dollars)	March 31, 2014	December 31, 2013
Amount payable to TransCanada’s subsidiaries for costs charged in the period by:
GTN (a)	2	3
Northern Border (a)	2	3
Bison (a)	1	-
Great Lakes (a)	3	3
North Baja	1	1
Tuscarora	-	-

(a)       Represents 100 percent of the costs.

Great Lakes’ earns transportation revenues from TransCanada and its affiliates under contracts, some of which are provided at discounted rates and some at maximum recourse rates. Great Lakes earned $22 million of transportation revenues under these contracts for the three months ended March 31, 2014 (2013 - $21 million). These amounts represent 47 percent of total revenues earned by Great Lakes for the three months ended March 31, 2014 (2013 – 59 percent).

Revenue from TransCanada and its affiliates of $11 million is included in the Partnership’s equity earnings from Great Lakes for the three months ended March 31, 2014 (2013 - $10 million). At March 31, 2014, $11 million was included in Great Lakes’ receivables in regards to the transportation contracts with TransCanada and its affiliates (December 31, 2013 - $11 million).

In 2013, the Partnership accrued $25 million of additional consideration in accordance with the 2013 Acquisition with respect to Carty Lateral. This amount was payable to a subsidiary of TransCanada and was included in accounts payable to affiliates as of March 31, 2014 and December 31, 2013. On April 11, 2014, the Partnership made a $25 million payment with respect to the Carty Lateral consideration. It was financed by cash on hand and a draw on the Senior Credit Facility.