RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2020

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 was $4 million for the year ended December 31, 2020 (2019 - $4 million; 2018 - $4 million).

As operator of most of our pipelines (except Iroquois and the Pipeline facilities jointly owned with MNE on PNGTS (the Joint Facilities)), TC Energy’s subsidiaries provide capital and operating services to our pipeline systems. TC Energy’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. The Iroquois pipeline system is operated by Iroquois Pipeline Operating Company, a wholly owned subsidiary of Iroquois. The Joint Facilities are operated by MNOC. Therefore, Iroquois and the Joint Facilities do not receive capital and operating services from TC Energy.

Capital and operating costs charged to our pipeline systems, except for Iroquois, for the years ended December 31, 2020, 2019 and 2018 by TC Energy's subsidiaries and amounts payable to TC Energy's subsidiaries at December 31, 2020 and 2019 are summarized in the following tables:


Year ended December 31 (millions of dollars)	2020	2019	2018
Capital and operating costs charged by TC Energy’s subsidiaries to:
Great Lakes (a)	66	47	44
Northern Border(a)	39	39	36
PNGTS (a)	6	7	9
GTN	68	45	34
Bison	2	2	6
North Baja	7	5	4
Tuscarora	6	4	4
Impact on the Partnership’s net income attributable to controlling interests:
Great Lakes	16	20	19
Northern Border	16	18	16
PNGTS	3	4	5
GTN	29	33	28
Bison	2	2	6
North Baja	3	4	4
Tuscarora	3	4	4


December 31 (millions of dollars)	2020	2019
Amount payable to TC Energy’s subsidiaries for costs charged in the year by:
Great Lakes (a)	3	5
Northern Border(a)	2	4
PNGTS (a)	1	1
GTN	4	5
Bison	—	—
North Baja	—	1
Tuscarora	1	—

(a)Represents 100 percent of the costs.

Great Lakes

Great Lakes earns significant transportation revenues from TC Energy and its affiliates. For the year ended December 31, 2020, Great Lakes earned 73 percent of its transportation revenues from TC Energy and its affiliates (2019 – 73 percent; 2018 – 73 percent). Additionally, included in Great Lakes’ other revenues for 2018 and 2019 were cost recovery charges to affiliates for the use of office space in the building owned by Great Lakes. These revenues comprised less than one percent of total revenue in 2018 and 2019. The building was sold to a third party in the third quarter of 2019.

At December 31, 2020, $17 million was included in Great Lakes’ receivables in regard to the transportation contracts with TC Energy and its affiliates (December 31, 2019 – $19 million).

Great Lakes has a cash management agreement with TC Energy whereby Great Lakes’ funds are pooled with other TC Energy affiliates. The agreement also gives Great Lakes the ability to obtain short-term borrowings to provide liquidity for Great Lakes’

operating needs. At December 31, 2020 and 2019, Great Lakes had outstanding receivables from this arrangement amounting to $27 million and $34 million, respectively.

Great Lakes has a long-term transportation agreement with TC Energy's Canadian Mainline natural gas transmission system (Canadian Mainline) that commenced on November 1, 2017 for a ten-year period and allows TC Energy to transport up to 0.711 billion cubic feet of natural gas per day on the Great Lakes system. This contract, which contains volume reduction options up to full contract quantity beginning in year three, was a direct benefit from TC Energy’s long-term fixed price service on its Canadian Mainline that was launched in 2017. For the year ended December 31, 2020, the total reservation revenue earned by Great Lakes on this contract was $75 million (2019 - $76 million; 2018 - $76 million). On November 20, 2020, this contract was revised. Effective November 1, 2021 the original contract rate will be reduced with no changes in the contracted volume. Additionally, after November 20, 2020, the Canadian Mainline shall have the right to reduce the contracted volume or terminate the full contract, effective November 1st of the applicable year, provided that 349 days’ prior written notice has been given to Great Lakes. As of February 24, 2021, no further changes to this contract have been made. The future revenue reduction on Great Lakes from the revised contract is not expected to have a material impact on the Partnership's expected distributions from Great Lakes.

In 2018, Great Lakes executed long-term transportation capacity contracts with its affiliate, ANR Pipeline Company (ANR) in anticipation of specific possible future needs. The original total contract value of these contracts was approximately $1.3 billion over a 15-year period. These contracts were subject to certain conditions and provisions, including a reduction option up to the full contract quantity if exercised up to a certain date. During the first quarter of 2020, several amendments were made to these contracts and ANR exercised the right to terminate a significant portion of the contracts amounting to approximately $1.1 billion. The remaining maximum rate contract, which has a total capacity of approximately 168,000 Dth/day and total contract value of $182 million over a term of 20 years, is expected to begin in late 2022. This contract, which has a full quantity reduction option at any time before October 1, 2022, is dependent on ANR being able to secure the required regulatory approvals and other requirements of the project associated with these volumes. Any remaining unsubscribed capacity on Great Lakes will be available for contracting in response to developing marketing conditions.

Northern Border

For the year ended December 31, 2020, Northern Border provided transportation service to TC Energy Marketing Inc., a subsidiary of TC Energy and earned revenues of $0.8 million in 2020 (2019 and 2018 - none). At December 31, 2020 and 2019, Northern Border had no outstanding receivables from TC Energy Marketing, Inc.

PNGTS

For the year ended December 31, 2020, PNGTS did not provide transportation services to TC Energy subsidiaries. For the years ended December 31, 2019 and 2018, PNGTS provided transportation service to TransCanada Energy Ltd., a subsidiary of TC Energy and earned revenues of less than $1 million and $1 million, respectively. At December 31, 2020 and 2019, PNGTS had no outstanding receivables from TransCanada Energy Ltd. in the consolidated balance sheets.

In connection with the Portland XPress expansion project (PXP), which was designed to be phased in over a three-year time period, PNGTS has entered into an arrangement with affiliates regarding the construction of certain facilities on their systems that are required to fulfill future contracts on the PNGTS system. In the event the expansions are terminated prior to their in-service dates, PNGTS would be required to reimburse its affiliates for any costs incurred related to the development of these facilities. In November 2020, the last phase of PXP (Phase III) was placed in service. As a result of placing the TC Energy facilities associated with the Phases I, II and III volumes in service, PNGTS' reimbursement obligation to TC Energy relating to this project has been extinguished.

Commercial System Purchase

On August 1, 2020, GTN, Great Lakes, Tuscarora and North Baja entered into a purchase agreement with a TC Energy affiliate to purchase an internally developed customer-facing commercial natural gas transmission IT application that maintains and manages customer contracts, natural gas capacity release, customer nominations, metering and billings. The total value of the transaction was $51 million and the Partnership's proportionate share of the cost was $38 million. Prior to the transaction close, GTN, Great Lakes, Tuscarora and North Baja paid the affiliate for the use of this system and the costs are included in the "Impact on Partnership's income" tabular summary above. Refer to Note 7 for additional information.