RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2014

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 10RELATED 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 and $2 million for the three and nine months ended September 30, 2014 (2013 – $1 million and $3 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 and nine months ended September 30, 2014 and 2013 by TransCanada’s subsidiaries and amounts payable to TransCanada’s subsidiaries at September 30, 2014 and December 31, 2013 are summarized in the following tables:

	Three months ended		Nine months ended
(unaudited)	September 30,		September 30,
(millions of dollars)	2014	2013	2014	2013
Capital and operating costs charged by TransCanada’s subsidiaries to:
Great Lakes (a)	7	7	22	23
Northern Border (a)	9	7	26	21
GTN (a)	8	7	21	21
Bison (a)	2	1	4	4
North Baja	1	1	3	3
Tuscarora	1	1	3	3
Impact on the Partnership’s net income:
Great Lakes	3	3	10	10
Northern Border	4	3	11	10
GTN (b)	5	5	14	14
Bison(b)	1	1	3	3
North Baja	1	1	3	3
Tuscarora	1	1	3	3

(unaudited)
(millions of dollars)	September 30, 2014	December 31, 2013
Amount payable to TransCanada’s subsidiaries for costs charged in the period by:
GTN (a)	11	3
Northern Border (a)	12	3
Bison (a)	1	-
Great Lakes (a)	13	3
North Baja	1	1
Tuscarora	1	-

(a) Represents 100 percent of the costs.

(b) Recast as discussed in Note 2.

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 $13 million and $48 million of transportation revenues under these contracts for the three and nine months ended September 30, 2014 (2013 - $14 million and $49 million). These amounts represent 46 percent of total revenues earned by Great Lakes for the three and nine months ended September 30, 2014 (2013 – 54 percent). Great Lakes also earned nil and $1 million of affiliated rental revenue for the three and nine months ended September 30, 2014 (2013 – $1 million and $1 million).

Revenue from TransCanada and its affiliates of $6 million and $23 million are included in the Partnership’s equity earnings from Great Lakes for the three and nine months ended September 30, 2014 (2013 - $7 million and $23 million). At September 30, 2014, $7 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 payable in accordance with the 2013 Acquisition related to the attainment of certain events with respect to the Carty Lateral. This amount was payable to a subsidiary of TransCanada and was recorded in accounts payable to affiliates as of December 31, 2013. On April 11, 2014, the Partnership made the $25 million payment with respect to the Carty Lateral consideration