NOTE 11RELATED 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, 2016 and 2015.

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, 2016 and 2015 by TransCanada’s subsidiaries and amounts payable to TransCanada’s subsidiaries at March 31, 2016 and December 31, 2015 are summarized in the following tables:

	Three months ended
(unaudited)	March 31,
(millions of dollars)	2016	2015


Capital and operating costs charged by TransCanada’s subsidiaries to:
Great Lakes (a)	7	6
Northern Border (a)	6	7
PNGTS (a), (c)	2	-
GTN (a)	6	6
Bison (d)	(1)	1
North Baja	1	1
Tuscarora	1	1
Impact on the Partnership’s net income:
Great Lakes	3	3
Northern Border	3	3
PNGTS (c)	1	-
GTN (b)	5	4
Bison	1	1
North Baja	1	1
Tuscarora	1	1

(unaudited)
(millions of dollars)	March 31, 2016	December 31, 2015


Net amounts (receivable)/payable to TransCanada’s subsidiaries is as follows:
Great Lakes (a)	2	3
Northern Border (a)	2	5
PNGTS (a)	1	-
GTN	2	3
Bison	(1)	-
North Baja	-	-
Tuscarora	1	1

(a)

Represents 100 percent of the costs.

(b)

In April 2015, the Partnership acquired the remaining 30 percent interest in GTN.

(c)

In January 2016, the Partnership acquired 49.9 percent interest in PNGTS.

(d)

In March 2016, Bison sold excess pipe (at cost) to an affiliate.

Great Lakes’ earns revenues from TransCanada and its affiliates, some of which are provided at discounted rates and some are at maximum recourse rates. Great Lakes earned $46 million of transportation revenues under these contracts for the three months ended March 31, 2016 (2015 - $29 million). These amounts represent 76 percent of total revenues earned by Great Lakes for the three months ended March 31, 2016 (2015 – 61 percent).

Accordingly, revenue from TransCanada and its affiliates of $22 million is included in the Partnership’s equity earnings from Great Lakes for the three months ended March 31, 2016 (2015 - $14 million). At March 31, 2016, $15 million was included in Great Lakes’ receivables in regards to the transportation contracts with TransCanada and its affiliates (December 31, 2015 - $17 million).

Effective November 1, 2014, Great Lakes executed contracts with an 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 February 2, 2015, FERC issued an Order granting a rehearing and clarification request submitted by Great Lakes, which allowed additional time for FERC to consider Great Lakes’ request. Following extensive discussions with numerous shippers and other stakeholders, 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 (ANR Settlement). Great Lakes provided service to ANR under multiple service agreements and rates through May 3, 2015 when Great Lakes’ tariff records became effective and subject to refund. Great Lakes deferred an approximate $9 million of revenue related to services performed in 2014 and approximately $14 million of additional revenue related to services performed through May 3, 2015 under such agreements. On October 15, 2015, FERC accepted and approved the ANR Settlement. As a result, Great Lakes recognized the deferred transportation revenue of approximately $23 million in the fourth quarter of 2015.

On March 11, 2016, PNGTS declared its first quarter 2016 distribution of $13 million, of which the Partnership received its 49.9 percent share or $6 million on April 18, 2016.