NET INCOME (LOSS) PER COMMON UNIT

12 Months Ended

Dec. 31, 2020

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

The amounts allocable to the General Partner equals an amount based upon the General Partner’s 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 (Refer to Note 14).

The amount allocable to the Class B units in 2020 equals 30 percent of GTN’s distributable cash flow during the year ended December 31, 2020 less $20 million, the residual of which is further multiplied by 43.75 percent. This amount is further reduced by the estimated Class B Reduction for 2020, an approximately 35 percent reduction applied to the estimated annual Class B Distribution (December 31, 2019 and 2018 - $20 million less Class B Reduction). During the year ended December 31, 2020, no amounts were allocated to the Class B units as the annual threshold was not exceeded (2019 - $8 million, 2018 - $13 million).

Net income (loss) per common unit was determined as follows:


(millions of dollars, except per common unit amounts)	2020		2019		2018

Net income (loss) attributable to controlling interests	284		280		(182)
Amounts attributable to the Class B units (a)	—		(8)		(13)
Net income (loss) allocable to the General Partner and common units	284		272		(195)
Amounts attributable to General Partner's two percent interest	(6)		(5)		4
Net income (loss) attributable to common units	278		267		(191)
Weighted average common units outstanding (millions) – basic and diluted	71.3		71.3		71.3
Net income (loss) per common unit – basic and diluted	$	3.90	$	3.74	$	(2.68)

(a) As discussed in Note 10, the Class B units entitle TC Energy to a distribution which is an amount based on 30 percent of GTN’s distributions after exceeding certain annual thresholds and Class B Reduction. The distribution will be payable in the first quarter with respect to the prior year’s distributions. There was no Class B Unit distribution declared for 2020. However, consistent with the application of Accounting Standards Codification (ASC) Topic 260 – “Earnings per share,” the Partnership allocated the Class B units distribution in an amount equal to 30 percent of GTN’s total distributable cash flows during the year ended December 31, 2019 less the threshold level of $20 million (2018 - less $20 million) and less the Class B Reduction (2019 - $4 million, 2018 - $7 million).