RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2012

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 9                 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 and $2 million for the three and nine months ended September 30, 2012 (2011 – $1 and $2 million) respectively.

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, 2012 and 2011 by TransCanada’s subsidiaries and amounts payable/(receivable) to TransCanada’s subsidiaries at September 30, 2012 and December 31, 2011 are summarized in the following tables:

	Three months ended				Nine months ended
(unaudited)	September 30,				September 30,
(millions of dollars)	2012		2011		2012		2011
Capital and operating costs charged by TransCanada’s subsidiaries to:
Great Lakes (a)		8		7		24		22
Northern Border (a)		7		8		22		22
GTN (a) (b)		7		9		21		15
Bison (a) (b)		1		3		4		5
North Baja		1		1		3		3
Tuscarora		1		1		3		3
Impact on the Partnership’s net income:
Great Lakes		4		3		11		10
Northern Border		3		3		10		10
GTN (b)		2		2		5		3
Bison (b)		-		1		1		1
North Baja		1		1		3		2
Tuscarora		1		1		3		3

(a)   Represents 100 percent of the costs.

(b)   25 percent interests in each of GTN and Bison were acquired in May 2011.

(unaudited)
(millions of dollars)	September 30, 2012			December 31, 2011
Amount payable/(receivable) to TransCanada’s subsidiaries for costs charged in the year by:
Great Lakes (a)		3			3
Northern Border (a)		3			3
GTN (a)		3			3
Bison (a)		1			1
North Baja		(1	)		1
Tuscarora		-			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 $17 million and $58 million of transportation revenues under these contracts for the three and nine months ended September 30, 2012 (2011 - $17 million and $59 million) respectively. These amounts represent 37 percent and 41 percent of total revenues earned by Great Lakes for the three and nine months ended September 30, 2012 (2011 – 27 percent and 30 percent). Great Lakes also earned $1 million of affiliated rental revenue for the three and nine months ended September 30, 2012 (2011 - $1 million and $1 million).

Revenue from TransCanada and its affiliates of $8 million and $27 million are included in the Partnership’s equity earnings from Great Lakes for the three and nine months ended September 30, 2012 (2011 - $8 million and $28 million). At September 30, 2012, $6 million was included in Great Lakes’ receivables in regards to the transportation contracts with TransCanada and its affiliates (December 31, 2011 - $7 million).