NOTE 9 NET INCOME PER COMMON UNIT

Net income per common unit is computed by dividing net income attributable to controlling interests, after deduction of net income attributable to PNGTS’ former parent, amounts attributable to the General Partner and Class B units, by the weighted average number of common units outstanding.

The amount allocable to the General Partner equals an amount based upon the General Partner’s effective two percent general partner interest, plus an amount equal to incentive distributions. Incentive distributions are paid to the General Partner if quarterly cash distributions on the common units exceed levels specified in the Partnership Agreement.

The amount allocable to the Class B units in 2018 equals 30 percent of GTN’s distributable cash flow during the year ended December 31, 2018 less $20 million and the Class B Reduction (December 31, 2017 —$20 million). During the three months ended March 31, 2018 and 2017, no amounts were allocated to the Class B units as the annual threshold was not exceeded.

Net income per common unit was determined as follows:

(unaudited)	Three months ended March 31,
(millions of dollars, except per common unit amounts)	2018			2017

Net income attributable to controlling interests	96			77		(a)
Net income attributable to PNGTS’ former parent (b)	—			(2		)(a)

Net income allocable to General Partner and Limited Partners	96			75
Net income attributable to the General Partner	(2		)	(1		)
Incentive distributions attributable to the General Partner (c)	—			(2		)

Net income attributable to common units	94			72

Weighted average common units outstanding (millions) — basic and diluted	71.2			68.3
Net income per common unit — basic and diluted	$	1.32		$	1.05	(d)

(a)

Recast to consolidate PNGTS (Refer to Note 2).

(b)

Net income allocable to General and Limited Partners excludes net income attributed to PNGTS’ former parent as it was allocated to TransCanada and was not allocable to either the general partner, common units or Class B units.

(c)

Under the terms of the Partnership Agreement, for any quarterly period, the participation of the incentive distribution rights (IDRs) is limited to the available cash distributions declared. Accordingly, incentive distributions allocated to the General Partner are based on the Partnership’s available cash during the current reporting period, but declared and paid in the subsequent reporting period.

(d)

Net income per common unit prior to recast (Refer to Note 2).