VARIABLE INTEREST ENTITIES

A variable interest entity (VIE) is an entity that is evaluated for consolidation using more than a simple analysis of voting control. The analysis to determine whether an entity is a VIE considers contracts with an entity, including various lease arrangements and contracts to purchase, sell or deliver natural gas and other similar agreements, credit support for an entity, the adequacy of the equity investment of an entity and the relationship of voting power to the amount of equity invested in an entity. This analysis is performed either upon the creation of a legal entity or upon the occurrence of an event requiring reevaluation, such as a significant change in an entity’s assets or activities. A qualitative analysis of control determines the party that consolidates a VIE. This assessment is based on (i) what party has the power to direct the activities of the VIE that most significantly impact its economic performance and (ii) what party has rights to receive benefits or is obligated to absorb losses that could potentially be significant to the VIE. The analysis of the party that consolidates a VIE is a continual reassessment.

As of December 31, 2016, we have determined that our investments in Constitution and ACP are VIEs. These equity method investments are in development stage entities whose equity capitalization is insufficient to support the operations, with reliance upon its members to provide that support in proportion to each member's ownership interest as provided by capital calls in the limited liability company agreements. We have also provided a guarantee and indemnification support for ACP as discussed in Note 11. We have determined that we are not the primary beneficiary under VIE accounting guidance for consolidation of these entities as we do not have the power to direct the activities of these investments that most significantly impact their economic performance, and the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. Our other equity method investments in Cardinal, Pine Needle and Hardy Storage as discussed in Note 11 are not VIEs as they have sufficient equity and the ability to support their operations; our contracts as a customer with these entities for gas transportation or storage are at regulated rates. We will continue to apply equity method accounting to all of our investments.

NON-CONSOLIDATED VIEs

The table below shows our VIEs not consolidated, Constitution and ACP, and how these entities impact the Condensed Consolidated Balance Sheets.



(in millions)	December 31, 2016			October 31, 2016
Investments in equity method unconsolidated affiliates	$	138.6		$	126.3
Current liabilities - taxes payable/(receivable) ⁽¹⁾	(1.4		)	(1.1		)
Deferred credits and other liabilities	3.9			3.7
Total liabilities	$	2.5		$	2.6
Net assets	$	136.1		$	123.7

⁽¹⁾ Accrued income taxes are netted by jurisdiction on a consolidated basis and amounts are included in "Taxes accrued" within "Current Liabilities" on the Condensed Consolidated Balance Sheets.

We are not aware of any situation where the maximum exposure to loss significantly exceeds the carrying values shown above.