RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2015

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 for the three months ended March 31, 2015 (2014 – $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, 2015 and 2014 by TransCanada’s subsidiaries and amounts payable to TransCanada’s subsidiaries at March 31, 2015 and December 31, 2014 are summarized in the following tables:

	Three months ended
(unaudited)	March 31,
(millions of dollars)	2015	2014
Capital and operating costs charged by TransCanada’s subsidiaries to:
GTN (a)	6	6
Northern Border (a)	7	7
Bison (a)	1	1
Great Lakes (a)	6	7
North Baja	1	1
Tuscarora	1	1
Impact on the Partnership’s net income attributable to controlling interests:
GTN	4	4
Northern Border	3	4
Bison	1	1
Great Lakes	3	3
North Baja	1	1
Tuscarora	1	1

(a) Represents 100 percent of the costs.

(unaudited)
(millions of dollars)	March 31, 2015	December 31, 2014
Amount payable to TransCanada’s subsidiaries for costs charged in the period by:
GTN (a)	5	10
Northern Border (a)	4	10
Bison	1	2
Great Lakes (a)	4	9
North Baja	1	1
Tuscarora	1	1

(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 $29 million of transportation revenues under these contracts for the three months ended March 31, 2015 (2014 - $22 million). These amounts represent 61 percent of total revenues earned by Great Lakes for the three months ended March 31, 2015 (2014 – 47 percent).

Revenue from TransCanada and its affiliates of $14 million is included in the Partnership’s equity earnings from Great Lakes for the three months ended March 31, 2015 (2014 - $11 million). At March 31, 2015, $11 million was included in Great Lakes’ receivables in regards to the transportation contracts with TransCanada and its affiliates (December 31, 2014 - $15 million).

Effective November 1, 2014, Great Lakes executed contracts with its affiliate, ANR Pipeline Company (ANR) to provide firm service in Michigan and Wisconsin.  These contracts were at the maximum FERC authorized rate and were intended to replace historical contracts.  On December 3, 2014, the FERC accepted and suspended Great Lakes’ tariff records to become effective May 3, 2015, subject to refund.  On January 2, 2015, Great Lakes submitted a request for rehearing and clarification with FERC.  On February 2, 2015, FERC issued an Order granting rehearing to allow for additional time for FERC to consider the request.  On April 20, 2015, ANR filed a settlement with FERC that included an agreement by  ANR to pay Great Lakes the difference between the historical and maximum rates, subject to approval by FERC. Until Great Lakes obtains clarification from FERC or  the settlement is approved, it is providing service to ANR under multiple service agreements and rates.  Great Lakes has deferred approximately $9.4 million of revenue related to services performed in 2014 and has deferred approximately $14 million of revenue related to services performed in 2015 under such agreements that may not ultimately be collected if the settlement is not approved by FERC.