Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 02, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | TC PIPELINES LP | |
Entity Central Index Key | 1,075,607 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 64,179,181 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Transmission revenues | $ 83 | $ 80 | $ 255 | $ 249 | |
Equity earnings from unconsolidated affiliates (Note 4) | 17 | 15 | 63 | 66 | |
Operation and maintenance expenses | (12) | (14) | (36) | (38) | |
Property taxes | (5) | (5) | (16) | (17) | |
General and administrative | (1) | (5) | (5) | (8) | |
Depreciation | (21) | (21) | (63) | (64) | |
Financial charges and other (Note 14) | (12) | (11) | (41) | (37) | |
Net income | 49 | 39 | 157 | 151 | |
Net income attributable to non-controlling interests | 8 | 7 | 26 | ||
Net income attributable to controlling interests | 49 | 31 | 150 | 125 | |
Calculation of net income attributable to common units | |||||
Net income attributable to controlling interests | 49 | 31 | 150 | 125 | |
Net income allocated to the General Partner, including incentive distributions | 2 | 1 | 5 | 3 | |
Class B units | |||||
Calculation of net income attributable to common units | |||||
Net income attributable to limited partners (Note 8) | 2 | $ 2 | 2 | ||
Common units | |||||
Calculation of net income attributable to common units | |||||
Net income attributable to limited partners (Note 8) | $ 45 | $ 30 | $ 143 | $ 122 | |
Weighted average common units outstanding (millions) - basic (in units) | 64 | 62.6 | 63.8 | 62.4 | |
Weighted average common units outstanding (millions) - diluted (in units) | 64 | 62.6 | 63.8 | 62.4 | |
Net income per common unit (Note 8) - basic (in dollars per unit) | $ 0.70 | $ 0.48 | $ 2.23 | $ 1.96 | |
Net income per common unit (Note 8) - diluted (in dollars per unit) | $ 0.70 | $ 0.48 | $ 2.23 | $ 1.96 | |
Common units outstanding, end of period (millions) (in units) | 64 | 63.6 | 64 | 64 | 63.6 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 49 | $ 39 | $ 157 | $ 151 |
Other comprehensive income | ||||
Change in fair value of cash flow hedges (Note 12) | (1) | (2) | (1) | |
Comprehensive income | 48 | 39 | 155 | 150 |
Comprehensive income attributable to non-controlling interests | 8 | 7 | 26 | |
Comprehensive income attributable to controlling interests | $ 48 | $ 31 | $ 148 | $ 124 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash and cash equivalents | $ 28 | $ 26 |
Accounts receivable and other (Note 13) | 31 | 35 |
Inventories | 7 | 7 |
Total current assets | 66 | 68 |
Investments in unconsolidated affiliates (Note 4) | 1,151 | 1,177 |
Plant, property and equipment (Net of $790 accumulated depreciation; 2014 - $737 | 1,953 | 1,968 |
Goodwill | 130 | 130 |
Other assets | 8 | 6 |
Total assets | 3,308 | 3,349 |
Current Liabilities | ||
Accounts payable and accrued liabilities | 30 | 23 |
Accounts payable to affiliates (Note 11) | 8 | 15 |
Accrued interest | 12 | 4 |
Short-term loan (Note 5) | 170 | |
Current portion of long-term debt (Note 5) | 14 | 79 |
Total current liabilities | 64 | 291 |
Long-term debt (Note 5) | 1,890 | 1,446 |
Other liabilities | 27 | 26 |
Total liabilities | 1,981 | 1,763 |
Partners' Equity | ||
General partner | 29 | 29 |
Accumulated other comprehensive loss | (4) | (2) |
Controlling interests | 1,327 | 1,352 |
Non-controlling interests | 234 | |
Total partners' equity | 1,327 | 1,586 |
Total liabilities and partners' equity | 3,308 | 3,349 |
Common units | ||
Partners' Equity | ||
Limited partner | 1,205 | $ 1,325 |
Class B units | ||
Partners' Equity | ||
Limited partner | $ 97 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
CONSOLIDATED BALANCE SHEETS | ||
Accumulated depreciation | $ 790 | $ 737 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash Generated From Operations | ||
Net income | $ 157 | $ 151 |
Depreciation | 63 | 64 |
Amortization of debt issue costs (Note 14) | 1 | 1 |
Accruals for costs related to the 2014 Bison Acquisition | 2 | |
Change in other liabilities | 1 | |
Equity allowance for funds used during construction | (1) | |
Change in operating working capital (Note 10) | 9 | 36 |
Total cash generated from operations | 229 | 255 |
Investing Activities | ||
Investment in Great Lakes | (4) | (4) |
Adjustment to the 2013 acquisition (Note 11) | (25) | |
Acquisition of the remaining 30 percent interest in GTN (Note 6) | (264) | |
Capital expenditures | (45) | (8) |
Other | 1 | 1 |
Total investing activities | (282) | (11) |
Financing Activities | ||
Distributions paid (Note 9) | (169) | (157) |
Distributions paid to non-controlling interests | (9) | (42) |
ATM Equity issuance, net (Note 7) | 26 | 73 |
Equity contribution by the General Partner (Note 6) | 2 | |
Long-term debt issued, net of discount | 598 | 15 |
Long-term debt repaid | (390) | (60) |
Debt issuance costs | (3) | |
Total financing activities | 55 | (171) |
Increase/(decrease) in cash and cash equivalents | 2 | 73 |
Cash and cash equivalents, beginning of period | 26 | 25 |
Cash and cash equivalents, end of period | 28 | 98 |
Northern Border | ||
Investing Activities | ||
Cumulative distributions in excess of equity earnings | 18 | 15 |
Great Lakes | ||
Investing Activities | ||
Cumulative distributions in excess of equity earnings | $ 12 | $ 10 |
CONSOLIDATED STATEMENTS OF CAS7
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | Apr. 01, 2015 |
GTN | Transaction between entities under common control | Former parent, TransCanada subsidiaries | |
GTN ACQUISITION | |
Business Acquisition, Percentage of Voting Interests Acquired | 30.00% |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' EQUITY - 9 months ended Sep. 30, 2015 - USD ($) shares in Millions, $ in Millions | Limited PartnersCommon unitsATM Equity Issuance Program | Limited PartnersCommon units | Limited PartnersClass B unitsUnit issuances | Limited PartnersClass B units | General PartnerATM Equity Issuance Program | General Partner | Accumulated Other Comprehensive Loss | Class B unitsUnit issuances | Non-controlling interests | ATM Equity Issuance Program | Total | |
Balance as of beginning year at Dec. 31, 2014 | $ 1,325 | $ 29 | $ (2) | $ 234 | $ 1,586 | |||||||
Partners' Equity at beginning of year (in units) at Dec. 31, 2014 | 63.6 | |||||||||||
Increase (Decrease) in Partners' Equity | ||||||||||||
Net income | $ 143 | $ 2 | 5 | 7 | 157 | |||||||
Other comprehensive loss | (2) | (2) | ||||||||||
Equity issuance, net (Note 7); Unit Issuances (Note 6) | $ 25 | $ 95 | $ 1 | $ 95 | $ 26 | |||||||
Equity issuance (Note 7); Unit issuances (Note 6) (in units) | 0.4 | 1.9 | ||||||||||
Acquisition of the remaining 30 percent interest in GTN (Note 6) | (124) | (3) | (232) | (359) | ||||||||
Equity contribution (Note 6) | 2 | 2 | ||||||||||
Distributions paid | (164) | (5) | $ (9) | (178) | ||||||||
Balance as of end year at Sep. 30, 2015 | $ 1,205 | $ 97 | $ 29 | $ (4) | [1] | $ 1,327 | ||||||
Partners' Equity at End of Year (in units) at Sep. 30, 2015 | 64 | 1.9 | ||||||||||
[1] | Losses related to cash flow hedges reported in Accumulated Other Comprehensive Loss and expected to be reclassified to Net Income in the next 12 months are estimated to be $1 million. These estimates assume constant interest rates over time; however, the amounts reclassified will vary based on actual value of interest rates at the date of settlement. |
CONSOLIDATED STATEMENT OF CHAN9
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' EQUITY (Parenthetical) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Losses related to cash flow hedges reported in Accumulated Other Comprehensive Loss | |
Losses expected to be reclassified to net income in the next 12 months | $ 1 |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2015 | |
ORGANIZATION | |
ORGANIZATION | NOTE 1 ORGANIZATION TC PipeLines, LP and its subsidiaries are collectively referred to herein as the Partnership. The Partnership was formed by TransCanada PipeLines Limited, a wholly-owned subsidiary of TransCanada Corporation (TransCanada Corporation together with its subsidiaries collectively referred to herein as TransCanada), to acquire, own and participate in the management of energy infrastructure assets in North America. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements and related notes have been prepared in accordance with United States generally accepted accounting principles (GAAP) and amounts are stated in U.S. dollars. The results of operations for the three and nine months ended September 30, 2015 and 2014 are not necessarily indicative of the results that may be expected for the full fiscal year. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. That report contains a more comprehensive summary of the Partnership’s significant accounting policies. In the opinion of management, the accompanying financial statements contain all of the appropriate adjustments, all of which are normally recurring adjustments unless otherwise noted, and considered necessary to present fairly the financial position of the Partnership, the results of operations and cash flows for the respective periods. Our significant accounting policies are consistent with those disclosed in Note 2 of the financial statements in our Annual Report on Form 10-K for the year ended December 31, 2014. Certain items from that Note are repeated or updated below as necessary to assist in understanding the accompanying financial statements. (a) Basis of Presentation The Partnership accounts for business acquisitions between itself and TransCanada and its affiliates as transactions between entities under common control. Using this approach, the assets and liabilities of the acquired entities are recorded at TransCanada’s carrying value. In the event recasting is required, the Partnership’s historical financial information will be recast, except net income per common unit, to include the acquired entities for all periods presented. If the fair market value paid for the acquired entities is greater than the recorded net assets of the acquired entities, the excess purchase price paid is recorded as a reduction in Partners’ Equity. Similarly, if the fair market value paid for the acquired entities is less than the recorded net assets of the acquired entities, the excess of assets acquired is recorded as an increase in Partners’ Equity. The Partnership consolidates its investments in GTN, Bison, North Baja and Tuscarora, over which it is able to exercise control. To the extent there are interests owned by other parties, these interests are included in non-controlling interests. The Partnership uses the equity method of accounting for its investments in Northern Border and Great Lakes, over which it is able to exercise significant influence. (b) Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Although management believes these estimates are reasonable, actual results could differ from these estimates. |
ACCOUNTING PRONOUNCEMENTS
ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2015 | |
ACCOUNTING PRONOUNCEMENTS | |
ACCOUNTING PRONOUNCEMENTS | NOTE 3 ACCOUNTING PRONOUNCEMENTS Revenue from contracts with customers In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09 “Revenue from Contracts with Customers (Topic 606).” This guidance supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and most industry-specific guidance. This new guidance requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also voted to permit early adoption of the standard, but not before the original effective date of December 15, 2016. This new guidance, once effective, allows two methods in which the amendment can be applied: (1) retrospectively to each prior reporting period presented, or (2) retrospectively with the cumulative effect recognized at the date of initial application. The Partnership is currently evaluating the impact of the adoption of this ASU and has not yet determined the effect on its consolidated financial statements. Consolidation In February 2015, the FASB issued ASU No. 2015-02 “Consolidation (Topic 810),” an amendment of previously issued guidance on consolidation. This updated guidance requires that an entity evaluate whether it should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. This guidance is effective from January 1, 2016 and early application is permitted. Application of this amendment could be performed using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. Alternatively, the amendment could be applied retrospectively. The Partnership is currently evaluating the impact of the adoption of this ASU and has not yet determined the effect on its consolidated financial statements. Imputation of interest In April 2015, the FASB issued ASU No. 2015-03 “Interest – Imputation of Interest (Subtopic 835-30),” an amendment of previously issued guidance on imputation of interest. This updated guidance requires debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liabilities, consistent with debt discount or premiums. The recognition and measurement for debt issuance costs would not be affected. This guidance is effective from January 1, 2016 and early application is permitted. This guidance should be adopted on a retrospective basis, wherein the balance sheet of each individual period presented would be adjusted to reflect the period-specific effects of applying the new guidance. The application of this amendment will result in a reclassification of debt issuance costs currently recorded in Other Assets to an offset of their respective debt liabilities. Earnings Per Share In April 2015, the FASB issued ASU No.2015-06 “Earnings Per Share (Topic 260),” an amendment of previously issued guidance on earnings per share (EPS) as it is being calculated by master limited partnerships. This updated guidance specifies that for purposes of calculating historical EPS under the two-class method, the earnings (losses) of a transferred business before the date of a dropdown transaction should be allocated entirely to the general partner interest, and previously reported EPS of the limited partners would not change as a result of a dropdown transaction. Qualitative disclosures about how the rights to the earnings (losses) differ before and after the dropdown transaction occurs are also required. This guidance is effective from January 1, 2016 and early application is permitted. This guidance should be adopted on a retrospective basis to all financial statements presented. The Partnership is currently evaluating the impact of the adoption of this ASU and has not yet determined the effect on its consolidated financial statements. Business Combinations In September 2015, the FASB issued ASU No. 2015-16 “Business Combinations (Topic 805),” which replaces the requirement that an acquirer in a business combination account for measurement period adjustments retrospectively with a requirement that an acquirer recognize adjustments to the provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amended guidance requires that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The new guidance is effective January 1, 2016 and will be applied prospectively. |
INVESTMENTS IN UNCONSOLIDATED A
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 9 Months Ended |
Sep. 30, 2015 | |
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | |
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | NOTE 4 INVESTMENTS IN UNCONSOLIDATED AFFILIATES Northern Border and Great Lakes are regulated by FERC and are operated by TransCanada. The Partnership uses the equity method of accounting for its interests in its equity investees. Ownership Equity Earnings from Unconsolidated Affiliates Investments in Unconsolidated Affiliates Interest at Three months Nine Months (unaudited) September 30, ended September 30, ended September 30, September 30, December 31, (millions of dollars) 2015 2014 2015 2014 2015 2014 Northern Border (a) Great Lakes (a) Equity earnings from Northern Border is net of the 12-year amortization of a $10 million transaction fee paid to the operator of Northern Border at the time of the Partnership’s additional 20 percent interest acquisition in April 2006. Northern Border The Partnership does not have undistributed earnings from Northern Border for the nine months ended September 30, 2015 and 2014. The summarized financial information for Northern Border is as follows: (unaudited) (millions of dollars) September 30, 2015 December 31, 2014 ASSETS Cash and cash equivalents Other current assets Plant, property and equipment, net Other assets LIABILITIES AND PARTNERS’ EQUITY Current liabilities Deferred credits and other Long-term debt, including current maturities Partners’ equity Partners’ capital Accumulated other comprehensive loss Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars) 2014 Transmission revenues Operating expenses Depreciation Financial charges and other Net income Great Lakes The Partnership made an equity contribution to Great Lakes of $ 4 million in the first quarter of 2015. This amount represents the Partnership’s 46.45 percent share of a $9 million cash call from Great Lakes to make a scheduled debt repayment. The Partnership does not have undistributed earnings from Great Lakes for the nine months ended September 30, 2015 and 2014. The summarized financial information for Great Lakes is as follows: (unaudited) (millions of dollars) September 30, 2015 December 31, 2014 ASSETS Current assets Plant, property and equipment, net LIABILITIES AND PARTNERS’ EQUITY Current liabilities Long-term debt, including current maturities Partners’ equity Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars) Transmission revenues Operating expenses Depreciation Financial charges and other Net income |
DEBT AND CREDIT FACILITIES
DEBT AND CREDIT FACILITIES | 9 Months Ended |
Sep. 30, 2015 | |
DEBT AND CREDIT FACILITIES | |
DEBT AND CREDIT FACILITIES | NOTE 5 DEBT AND CREDIT FACILITIES (unaudited) (millions of dollars) September 30, 2015 December 31, 2014 Senior Credit Facility due 2017 2013 Term Loan Facility due 2018 Short Term Loan Facility due 2015 - 2015 Term Loan Facility due 2018 - 4.65% Unsecured Senior Notes due 2021, net of discount (2015 and 2014 – nil) 4.375% Unsecured Senior Notes due 2025, net of $1 million discount - 5.09% Unsecured Senior Notes due 2015 - 5.29% Unsecured Senior Notes due 2020 5.69% Unsecured Senior Notes due 2035 Unsecured Term Loan Facility due 2019 - 3.82% Series D Senior Notes due 2017 Less: current portion The Partnership’s Senior Credit Facility consists of a $500 million senior revolving credit facility with a banking syndicate, maturing November 20, 2017, under which $190 million was outstanding at September 30, 2015 (December 31, 2014 - $330 million), leaving $310 million available for future borrowing. The London Interbank Offered Rate (LIBOR) based interest rate on the Senior Credit Facility averaged 1.44 percent and 1.43 percent for the three and nine months ended September 30, 2015, respectively (2014 – 1.41 percent). The LIBOR-based interest rate was 1.45 percent at September 30, 2015 (December 31, 2014 – 1.41 percent). The LIBOR-based interest rate on the 2013 Term Loan Facility averaged 1.44 percent for the both three and nine months ended September 30, 2015 (2014 – 1.41 percent) . After hedging activity, the interest rate incurred on the 2013 Term Loan Facility averaged 1.85 percent and 1.84 percent for the three and nine months ended September 30, 2015, respectively (2014 – 1.83 percent). Prior to hedging activities, the LIBOR-based interest rate was 1.45 percent at September 30, 2015 (December 31, 2014 – 1.41 percent) . The LIBOR-based interest rate on the Short-Term Loan Facility averaged 1.32 percent and 1.31 percent for the three and nine months ended September 30, 2015, respectively and was 1.32 percent at September 30, 2015 (December 31, 2014 – 1.28 percent). On September 30, 2015, the Partnership entered into an agreement for a $170 million term loan credit facility (2015 Term Loan Facility). The Partnership borrowed $170 million under the 2015 Term Loan Facility to refinance its Short-Term Loan Facility which matured on September 30, 2015. The 2015 Term Loan Facility matures on October 1, 2018. The LIBOR-based interest rate on the 2015 Term Loan Facility was 3.40 percent at September 30, 2015 and reduced to a LIBOR plus a margin of 1.15 percent on October 5, 2015. The 2013 Term Loan Facility and the 2015 Term Loan Facility (Term Loan Facilities) and the Senior Credit Facility require the Partnership to maintain a certain leverage ratio (debt to adjusted cash flow [net income plus cash distributions received, extraordinary losses, interest expense, expense for taxes paid or accrued, and depreciation and amortization expense less equity earnings and extraordinary gains]). In the quarter in which an acquisition has occurred, and the two quarters following the acquisition, the allowable leverage ratio increases to 5.50 to 1.00. Thereafter, the ratio returns to 5.00 to 1.00. The allowable ratio for the quarter ended September 30, 2015 is 5.50 to 1.00. The leverage ratio was 4.71 to 1.00 as of September 30, 2015. On March 13, 2015, the Partnership closed a $350 million public offering of senior unsecured notes bearing an interest rate of 4.375 percent maturing March 13, 2025. The net proceeds of $346 million were used to fund a portion of the acquisition of the remaining 30 percent interest in GTN (refer to Note 6) and to reduce the amount outstanding under our Senior Credit Facility. The indenture for the notes contains customary investment grade covenants. On June 1, 2015, GTN’s 5.09 percent unsecured Senior Notes matured. Also, on June 1, 2015, GTN entered into a $75 million unsecured variable rate term loan facility (Unsecured Term Loan Facility), which requires yearly principal payments until its maturity on June 1, 2019. The variable interest is based on LIBOR plus an applicable margin. The LIBOR-based interest rate on the Unsecured Term Loan Facility for the three and nine months ended September 30, 2015 averaged 1.14 percent and was 1.15 percent at September 30, 2015. GTN’s Unsecured Senior Notes, along with this new Unsecured Term Loan Facility contain a covenant that limits total debt to no greater than 70 percent of GTN’s total capitalization. GTN’s total debt to total capitalization ratio at September 30, 2015 is 44 percent. The Series D Senior Notes, which require yearly principal payments until maturity, are secured by Tuscarora’s transportation contracts, supporting agreements and substantially all of Tuscarora’s property. The note purchase agreements contain certain provisions that include, among other items, limitations on additional indebtedness and distributions to partners. At September 30, 2015, the Partnership was in compliance with its financial covenants, in addition to the other covenants which include restrictions on entering into mergers, consolidations and sales of assets, granting liens, material amendments to the Third Amended and Restated Agreement of Limited Partnership (Partnership Agreement), incurring additional debt and distributions to unitholders. The principal repayments required of the Partnership on its debt are as follows: (unaudited) (millions of dollars) 2015 2016 2017 2018 2019 2020 Thereafter |
GTN ACQUISITION
GTN ACQUISITION | 9 Months Ended |
Sep. 30, 2015 | |
GTN ACQUISITION | |
GTN ACQUISITION | NOTE 6 GTN ACQUISITION On April 1, 2015, the Partnership acquired the remaining 30 percent interest in GTN from a subsidiary of TransCanada (2015 GTN Acquisition), which resulted in GTN being wholly-owned by the Partnership. The total purchase price of the 2015 GTN Acquisition was $446 million plus the final purchase price adjustment of $11 million, for a total of $457 million. The purchase price consisted of $264 million in cash (including the final purchase price adjustment of $11 million), the assumption of $98 million in proportional GTN debt and the issuance of 1,900,000 new Class B units to TransCanada valued at $50 each, representing a limited partner interest in the Partnership with a total value of $95 million. The Partnership funded the cash portion of the transaction using a portion of the proceeds received on our March 13, 2015 debt offering (refer to Note 5). The Class B units entitle TransCanada to a distribution based on 30 percent of GTN’s annual distributions as follows: (i) 100 percent of distributions above $20 million through March 31, 2020; and (ii) 25 percent of distributions above $20 million thereafter. Under the terms of the Partnership Agreement, the Class B distribution will be initially calculated to equal 30 percent of GTN’s distributable cash flow for the nine months ending December 31, 2015, less $15 million. Prior to this transaction, the remaining 30 percent interest held by a subsidiary of TransCanada was reflected as a non-controlling interest in the Partnership’s consolidated financial statements. The 2015 Acquisition of this already-consolidated entity was accounted as a transaction between entities under common control, similar to a pooling of interests, whereby the acquired interest was recorded at TransCanada’s carrying value and the total excess purchase price paid was recorded as a reduction in Partners’ Equity. The net purchase price was allocated as follows: (millions of dollars) Net Purchase Price (a) Less: TransCanada’s carrying value of non-controlling interest at April 1, 2015 Excess purchase price (b) (a) Total purchase price of $457 million less the assumption of $98 million of proportional GTN debt by the Partnership. (b) The excess purchase price of $127 million was recorded as a reduction in Partners’ Equity. Our General Partner also contributed approximately $2 million to maintain its effective 2 percent interest in the Partnership. |
PARTNERS' EQUITY
PARTNERS' EQUITY | 9 Months Ended |
Sep. 30, 2015 | |
PARTNERS' EQUITY | |
PARTNERS' EQUITY | NOTE 7 PARTNERS’ EQUITY ATM equity issuance program (ATM program) For the nine months ended September 30, 2015, we issued 396,205 common units under our ATM program generating net proceeds of approximately $25 million, plus $1 million from the General Partner to maintain its effective two percent interest. The commissions to our sales agents for the nine months ended September 30, 2015 were approximately $256,000. The net proceeds were used for general partnership purposes. Issuance of Class B units On April 1, 2015, we issued Class B units to TransCanada to finance a portion of the 2015 GTN Acquisition. The Class B units entitle TransCanada to an annual distribution which is an amount based on 30 percent of cash distributions from GTN above certain annual thresholds (refer to Note 6). The Class B units contain no mandatory or optional redemption features and are also non-convertible, non-exchangeable, non-voting and rank equally with common units upon liquidation. The Class B units’ equity account will be increased by the excess of 30 percent of GTN’s distributions over the annual threshold until such amount is declared for distribution and paid in the first quarter beginning 2016 and annually thereafter. |
NET INCOME PER COMMON UNIT
NET INCOME PER COMMON UNIT | 9 Months Ended |
Sep. 30, 2015 | |
NET INCOME PER COMMON UNIT | |
NET INCOME PER COMMON UNIT | NOTE 8 NET INCOME PER COMMON UNIT Net income per common unit is computed by dividing net income 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 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. Incentive distributions allocated to the General Partner for the three and nine months ended September 30, 2015, were $1 million and $2 million, respectively (2014 – nil). The amount allocable to the Class B units in 2015 equals an amount based upon 30 percent of GTN’s distributable cash flow during the nine months ending December 31, 2015 less $15 million (refer to Note 6). Net income per common unit was determined as follows: Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars, except per common unit amounts) Net income attributable to controlling interests Net income attributable to the General Partner Incentive distributions attributable to the General Partner (a) - - Net income attributable to the Class B units (b) - - Net income attributable to common units Weighted average common units outstanding (millions) – basic and diluted Net income per common unit – basic and diluted $ $ $ $ (a) 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 was based from the Partnership’s available cash during the current reporting period, but declared and paid in the subsequent reporting period. (b) As discussed in Notes 6 and 7, the Class B units entitle TransCanada to a distribution which is an amount based on 30 percent of GTN’s distributions after achieving certain annual thresholds. The distribution will be payable in the first quarter with respect to the prior year’s distributions. Consistent with the application of Accounting Standards Codification (ASC) Topic 260 - “Earnings per share,” the Partnership will allocate a portion of net income attributable to controlling interests to the Class B units upon 30 percent of GTN’s total distributable cash flows exceeding $15 million for the nine month period ending December 31, 2015. During the six months ended September 30, 2015, 30 percent of GTN’s total distributable cash flow was $17 million. As a result, $2 million of net income attributable to controlling interests was allocated to the Class B units for both the three and nine months ended September 30, 2015. |
CASH DISTRIBUTIONS
CASH DISTRIBUTIONS | 9 Months Ended |
Sep. 30, 2015 | |
CASH DISTRIBUTIONS | |
CASH DISTRIBUTIONS | NOTE 9 CASH DISTRIBUTIONS In the three and nine months ended September 30, 2015, the Partnership distributed $0.89 and $2.57 per common unit, respectively (2014 – $0.84 and $2.46 per common unit) for a total of $59 million and $169 million, respectively (2014 - $54 million and $157 million). The distributions paid in the three and nine months ended September 30, 2015 included an incentive distribution to the General Partner of approximately $0.9 million and $1.5 million, respectively (2014 - $0.3 million). |
CHANGE IN OPERATING WORKING CAP
CHANGE IN OPERATING WORKING CAPITAL | 9 Months Ended |
Sep. 30, 2015 | |
CHANGE IN OPERATING WORKING CAPITAL | |
CHANGE IN OPERATING WORKING CAPITAL | NOTE 10 CHANGE IN OPERATING WORKING CAPITAL (unaudited) Nine months ended September 30, (millions of dollars) Change in accounts receivable and other Change in accounts payable and accrued liabilities 4 (a) Change in accounts payable to affiliates Change in accrued interest Change in operating working capital (a) Excludes certain non-cash items primarily related to accruals of $3 million for construction of GTN’s Carty Lateral. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2015 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 11 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 million and $2 million for the three and nine months ended September 30, 2015, respectively (2014 – $1 million and $2 million). 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, 2015 and 2014 by TransCanada’s subsidiaries and amounts payable to TransCanada’s subsidiaries at September 30, 2015 and December 31, 2014 are summarized in the following tables: Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars) 2014 Capital and operating costs charged by TransCanada’s subsidiaries to: Great Lakes (a) Northern Border (a) GTN (a) Bison (a) North Baja Tuscarora Impact on the Partnership’s net income: Great Lakes Northern Border GTN (b) Bison (c) North Baja Tuscarora (a) Represents 100 percent of the costs. (b) In April 2015, the Partnership acquired the remaining 30 percent interest in GTN. (c) In October 2014, the Partnership acquired the remaining 30 percent interest in Bison. (unaudited) (millions of dollars) September 30, 2015 December 31, 2014 Amount payable to TransCanada’s subsidiaries for costs charged in the period by: Great Lakes (a) Northern Border (a) GTN Bison North Baja Tuscarora (a) Represents 100 percent of the costs. Great Lakes’ earns revenues from TransCanada and its affiliates under transportation contracts on multiple paths at various rates. Great Lakes earned $18 million and $65 million of transportation revenues under these contracts for the three and nine months ended September 30, 2015, respectively (2014 - $13 million and $48 million). These amounts represent 62 percent of total revenues earned by Great Lakes for the three and nine months ended September 30, 2015, respectively (2014 – 46 percent). Great Lakes also earned nil and $1 million of affiliated rental revenue for the three and nine months ended September 30, 2015, respectively (2014 – nil and $1 million). Revenue from TransCanada and its affiliates of $9 million and $31 million are included in the Partnership’s equity earnings from Great Lakes for the three and nine months ended September 30, 2015, respectively (2014 - $6 million and $23 million). At September 30, 2015, $30 million was included in Great Lakes’ receivables in regards to the transportation contracts with TransCanada and its affiliates (December 31, 2014 - $15 million). Effective November 1, 2014, Great Lakes executed contracts with an affiliate, ANR Pipeline Company (ANR), to provide firm service in Michigan and Wisconsin. These contracts were at the maximum FERC authorized rate and were intended to replace historical contracts. On December 3, 2014, the FERC accepted and suspended Great Lakes’ tariff records to become effective May 3, 2015, subject to refund. On February 2, 2015, FERC issued an Order granting a rehearing and clarification request submitted by Great Lakes, which allowed additional time for FERC to consider Great Lakes’ request. Following extensive discussions with numerous shippers and other stakeholders, on April 20, 2015, ANR filed a settlement with FERC that included an agreement by ANR to pay Great Lakes the difference between the historical and maximum rates (ANR Settlement). Great Lakes provided service to ANR under multiple service agreements and rates through May 3, 2015 when Great Lakes’ tariff records became effective and subject to refund. Great Lakes deferred an approximate $9 million of revenue related to services performed in 2014 and approximately $14 million of additional revenue related to services performed through May 3, 2015 under such agreements. On October 15, 2015, FERC accepted and approved the ANR Settlement. As a result, Great Lakes will recognize the deferred transportation revenue of approximately $23 million in the fourth quarter of 2015. In April 2014, the Partnership paid $25 million to a subsidiary of TransCanada as additional consideration on the 2013 Acquisition. The additional consideration paid was due to the transportation service agreement executed by Portland General Electric Company with GTN relating to the Carty Lateral project. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2015 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 12 FAIR VALUE MEASUREMENTS (a) Fair Value Hierarchy Under ASC 820, Fair Value Measurements and Disclosures, fair value measurements are characterized in one of three levels based upon the inputs used to arrive at the measurement. The three levels of the fair value hierarchy are as follows: · Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at the measurement date. · Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. · Level 3 inputs are unobservable inputs for the asset or liability. When appropriate, valuations are adjusted for various factors including credit considerations. Such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. (b) Fair Value of Financial Instruments The carrying value of cash and cash equivalents, accounts receivable and other, accounts payable and accrued liabilities, accounts payable to affiliates and accrued interest approximate their fair values because of the short maturity or duration of these instruments, or because the instruments bear a variable rate of interest or a rate that approximates current rates. The fair value of the Partnership’s debt is estimated by discounting the future cash flows of each instrument at estimated current borrowing rates. The fair value of interest rate derivatives is calculated using the income approach, which uses period-end market rates and applies a discounted cash flow valuation model. The estimated fair value of the Partnership’s debt as at September 30, 2015 and December 31, 2014 are as follows: (unaudited) September 30, 2015 December 31, 2014 (millions of dollars) Carrying Value Fair Value Carrying Value Fair Value Senior Credit Facility due 2017 2013 Term Loan Facility due 2018 Short-Term Loan Facility due 2015 - - 2015 Term Loan due 2018 - - 4.65% Senior Notes due 2021, net 4.375% Senior Notes due 2025, net - - 5.09% Unsecured Senior Notes due 2015 - - Unsecured Term Loan facility due 2019 - - 5.29% Unsecured Senior Notes due 2020 5.69% Unsecured Senior Notes due 2035 3.82% Series D Senior Notes due 2017 Long-term debt is recorded at amortized cost and classified in Level II of the fair value hierarchy for fair value disclosure purposes. Interest rate derivative assets and liabilities are classified in Level II for all periods presented where the fair value is determined by using valuation techniques that refer to observable market data or estimated market prices. Market risk is the risk that changes in market interest rates may result in fluctuations in the fair values or cash flows of financial instruments. The Partnership’s floating rate debt is subject to LIBOR benchmark interest rate risk. The Partnership uses interest rate derivatives to manage its exposure to interest rate risk. We regularly assess the impact of interest rate fluctuations on future cash flows and evaluate hedging opportunities to mitigate our interest rate risk. The interest rate swaps are structured such that the cash flows of the derivative instruments match those of the variable rate of interest on the 2013 Term Loan Facility. The Partnership hedged interest payments on $150 million of the variable-rate 2013 Term Loan Facility with interest rate swaps effective September 3, 2013 and maturing July 1, 2018, at a weighted average fixed interest rate of 2.79 percent. At September 30, 2015, the fair value of the interest rate swaps accounted for as cash flow hedges was a liability of $3 million (both on a gross and net basis) (December 31, 2014 - $1 million). The Partnership did not record any amounts in net income related to ineffectiveness for interest rate hedges for the three and nine months ended September 30, 2015 and 2014. The change in fair value of interest rate derivative instruments recognized in other comprehensive income was a loss of $1 million and $2 million for the three and nine months ended September 30, 2015, respectively (2014 – nil and a loss of $1 million). For the three and nine months ended September 30, 2015, the net realized loss related to the interest rate swaps was $1 million and $2 million, respectively, and was included in financial charges and other (2014 – $1 million and $2 million) (refer to Note 14). The Partnership has no master netting agreements; however, contracts contain provisions with rights of offset. The Partnership has elected to present the fair value of derivative instruments with the right to offset on a gross basis in the balance sheet. Had the Partnership elected to present these instruments on a net basis, there would be no effect on the consolidated balance sheet as of September 30, 2015 and December 31, 2014. |
ACCOUNTS RECEIVABLE AND OTHER
ACCOUNTS RECEIVABLE AND OTHER | 9 Months Ended |
Sep. 30, 2015 | |
ACCOUNTS RECEIVABLE AND OTHER | |
ACCOUNTS RECEIVABLE AND OTHER | NOTE 13 ACCOUNTS RECEIVABLE AND OTHER (unaudited) (millions of dollars) September 30, 2015 December 31, 2014 Trade accounts receivable, net of allowance of nil Accounts receivable from affiliates Other |
FINANCIAL CHARGES AND OTHER
FINANCIAL CHARGES AND OTHER | 9 Months Ended |
Sep. 30, 2015 | |
FINANCIAL CHARGES AND OTHER | |
FINANCIAL CHARGES AND OTHER | NOTE 14 FINANCIAL CHARGES AND OTHER Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars) Interest Expense Amortization of debt issue costs - - Net realized loss related to the interest rate swaps Other Income |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 30, 2015 | |
CONTINGENCIES | |
CONTINGENCIES | NOTE 15 CONTINGENCIES Employees Retirement System of the City of St. Louis v. TC PipeLines GP, Inc., et al . On October 13, 2015, an alleged unitholder of the Partnership filed a class action and derivative complaint in the Delaware Court of Chancery against the General Partner, TransCanada American Investments, Ltd. (TAIL) and TransCanada, and the Partnership as a nominal defendant. The complaint alleges direct and derivative claims for breach of contract, breach of the duty of good faith and fair dealing, aiding and abetting breach of contract, and tortious interference in connection with the 2015 GTN Acquisition, including the issuance by the Partnership of $95 million in Class B Units and amendments to the Partnership Agreement to provide for the issuance of the Class B Units. Plaintiff seeks, among other things, to enjoin future issuances of Class B Units to TransCanada or any of its subsidiaries, disgorgement of certain distributions to the General Partner, TransCanada and any related entities, return of some or all of the Class B Units to the Partnership, rescission of the amendments to the Partnership Agreement, monetary damages and attorney fees. The Partnership intends to defend vigorously against the claims asserted. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2015 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 16 SUBSEQUENT EVENTS Management of the Partnership has reviewed subsequent events through November 6, 2015, the date the financial statements were issued, and concluded there were no events or transactions during this period that would require recognition or disclosure in the consolidated financial statements other than what is disclosed here and/or those already disclosed in the preceding notes. On October 22, 2015, the board of directors of our General Partner declared the Partnership’s third quarter 2015 cash distribution in the amount of $0.89 per common unit payable on November 13, 2015 to unitholders of record as of November 3, 2015. Northern Border declared its third quarter 2015 distribution of $45 million on October 23, 2015, of which the Partnership will receive its 50 percent share or $23 million on November 2, 2015. Great Lakes declared its third quarter 2015 distribution of $7 million on October 23, 2015, of which the Partnership will receive its 46.45 percent share or $3 million on November 2, 2015. On October 9, 2015 Northern Border closed on the renewal and extension of its $200 million revolving credit facility that was to expire in 2016 for an additional five years, maturing October 9, 2020. On November 5, 2015, we entered into an agreement with TransCanada to acquire a 49.9 percent interest in the Portland Natural Gas Transmission System (PNGTS) for $223 million including approximately $35 million in proportionate PNGTS debt (PNGTS Acquisition). PNGTS is a high-capacity, high-pressure interstate natural gas pipeline which began serving New England’s energy needs in March, 1999. The pipeline connects with the TransQuebec and Maritimes Pipeline at the Canadian border and shares facilities with the Maritimes and Northeast Pipeline from Westbrook, Maine to a connection with the Tennessee Gas Pipeline System near Boston, MA. The purchase agreement provides for additional payments to TransCanada ranging from $5 million up to a total of $50 million if pipeline capacity is expanded to various thresholds during the fifteen year period following the date of closing. The transaction is expected to close at the end of 2015. The Partnership plans to finance the acquisition with a combination of debt and equity. The transaction was approved by the Board of Directors of the general partner, following approval and recommendation from the Board’s conflicts committee, which is comprised entirely of independent directors. |
SIGNIFICANT ACCOUNTING POLICI26
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation - Transactions between entities under common control | (a) Basis of Presentation The Partnership accounts for business acquisitions between itself and TransCanada and its affiliates as transactions between entities under common control. Using this approach, the assets and liabilities of the acquired entities are recorded at TransCanada’s carrying value. In the event recasting is required, the Partnership’s historical financial information will be recast, except net income per common unit, to include the acquired entities for all periods presented. If the fair market value paid for the acquired entities is greater than the recorded net assets of the acquired entities, the excess purchase price paid is recorded as a reduction in Partners’ Equity. Similarly, if the fair market value paid for the acquired entities is less than the recorded net assets of the acquired entities, the excess of assets acquired is recorded as an increase in Partners’ Equity. |
Basis of Presentation - Consolidation | (a) Basis of Presentation The Partnership consolidates its investments in GTN, Bison, North Baja and Tuscarora, over which it is able to exercise control. To the extent there are interests owned by other parties, these interests are included in non-controlling interests. The Partnership uses the equity method of accounting for its investments in Northern Border and Great Lakes, over which it is able to exercise significant influence. |
Use of Estimates | (b) Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Although management believes these estimates are reasonable, actual results could differ from these estimates. |
INVESTMENTS IN UNCONSOLIDATED27
INVESTMENTS IN UNCONSOLIDATED AFFILIATES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | |
Schedule of interests in equity investees | Ownership Equity Earnings from Unconsolidated Affiliates Investments in Unconsolidated Affiliates Interest at Three months Nine Months (unaudited) September 30, ended September 30, ended September 30, September 30, December 31, (millions of dollars) 2015 2014 2015 2014 2015 2014 Northern Border (a) Great Lakes (a) Equity earnings from Northern Border is net of the 12-year amortization of a $10 million transaction fee paid to the operator of Northern Border at the time of the Partnership’s additional 20 percent interest acquisition in April 2006. |
Northern Border | |
Investments in unconsolidated affiliates | |
Summarized financial information for equity investees | (unaudited) (millions of dollars) September 30, 2015 December 31, 2014 ASSETS Cash and cash equivalents Other current assets Plant, property and equipment, net Other assets LIABILITIES AND PARTNERS’ EQUITY Current liabilities Deferred credits and other Long-term debt, including current maturities Partners’ equity Partners’ capital Accumulated other comprehensive loss Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars) 2014 Transmission revenues Operating expenses Depreciation Financial charges and other Net income |
Great Lakes | |
Investments in unconsolidated affiliates | |
Summarized financial information for equity investees | (unaudited) (millions of dollars) September 30, 2015 December 31, 2014 ASSETS Current assets Plant, property and equipment, net LIABILITIES AND PARTNERS’ EQUITY Current liabilities Long-term debt, including current maturities Partners’ equity Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars) Transmission revenues Operating expenses Depreciation Financial charges and other Net income |
DEBT AND CREDIT FACILITIES (Tab
DEBT AND CREDIT FACILITIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
DEBT AND CREDIT FACILITIES | |
Schedule of debt and credit facilities | (unaudited) (millions of dollars) September 30, 2015 December 31, 2014 Senior Credit Facility due 2017 2013 Term Loan Facility due 2018 Short Term Loan Facility due 2015 - 2015 Term Loan Facility due 2018 - 4.65% Unsecured Senior Notes due 2021, net of discount (2015 and 2014 – nil) 4.375% Unsecured Senior Notes due 2025, net of $1 million discount - 5.09% Unsecured Senior Notes due 2015 - 5.29% Unsecured Senior Notes due 2020 5.69% Unsecured Senior Notes due 2035 Unsecured Term Loan Facility due 2019 - 3.82% Series D Senior Notes due 2017 Less: current portion |
Schedule of principal repayments required on debt | (unaudited) (millions of dollars) 2015 2016 2017 2018 2019 2020 Thereafter |
GTN ACQUISITION (Tables)
GTN ACQUISITION (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
GTN | |
GTN ACQUISITION | |
Schedule of purchase price | (millions of dollars) Net Purchase Price (a) Less: TransCanada’s carrying value of non-controlling interest at April 1, 2015 Excess purchase price (b) (a) Total purchase price of $457 million less the assumption of $98 million of proportional GTN debt by the Partnership. (b) The excess purchase price of $127 million was recorded as a reduction in Partners’ Equity. |
NET INCOME PER COMMON UNIT (Tab
NET INCOME PER COMMON UNIT (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
NET INCOME PER COMMON UNIT | |
Schedule of net income per common unit | Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars, except per common unit amounts) Net income attributable to controlling interests Net income attributable to the General Partner Incentive distributions attributable to the General Partner (a) - - Net income attributable to the Class B units (b) - - Net income attributable to common units Weighted average common units outstanding (millions) – basic and diluted Net income per common unit – basic and diluted $ $ $ $ (a) 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 was based from the Partnership’s available cash during the current reporting period, but declared and paid in the subsequent reporting period. (b) As discussed in Notes 6 and 7, the Class B units entitle TransCanada to a distribution which is an amount based on 30 percent of GTN’s distributions after achieving certain annual thresholds. The distribution will be payable in the first quarter with respect to the prior year’s distributions. Consistent with the application of Accounting Standards Codification (ASC) Topic 260 - “Earnings per share,” the Partnership will allocate a portion of net income attributable to controlling interests to the Class B units upon 30 percent of GTN’s total distributable cash flows exceeding $15 million for the nine month period ending December 31, 2015. During the six months ended September 30, 2015, 30 percent of GTN’s total distributable cash flow was $17 million. As a result, $2 million of net income attributable to controlling interests was allocated to the Class B units for both the three and nine months ended September 30, 2015. |
CHANGE IN OPERATING WORKING C31
CHANGE IN OPERATING WORKING CAPITAL (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
CHANGE IN OPERATING WORKING CAPITAL | |
Summary of change in operating working capital | (unaudited) Nine months ended September 30, (millions of dollars) Change in accounts receivable and other Change in accounts payable and accrued liabilities 4 (a) Change in accounts payable to affiliates Change in accrued interest Change in operating working capital (a) Excludes certain non-cash items primarily related to accruals of $3 million for construction of GTN’s Carty Lateral. |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
RELATED PARTY TRANSACTIONS | |
Summary of capital and operating costs charged to pipeline systems by related party | Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars) 2014 Capital and operating costs charged by TransCanada’s subsidiaries to: Great Lakes (a) Northern Border (a) GTN (a) Bison (a) North Baja Tuscarora Impact on the Partnership’s net income: Great Lakes Northern Border GTN (b) Bison (c) North Baja Tuscarora (a) Represents 100 percent of the costs. (b) In April 2015, the Partnership acquired the remaining 30 percent interest in GTN. (c) In October 2014, the Partnership acquired the remaining 30 percent interest in Bison. |
Summary of amount payable to related party for costs charged | (unaudited) (millions of dollars) September 30, 2015 December 31, 2014 Amount payable to TransCanada’s subsidiaries for costs charged in the period by: Great Lakes (a) Northern Border (a) GTN Bison North Baja Tuscarora (a) Represents 100 percent of the costs. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
FAIR VALUE MEASUREMENTS | |
Schedule of estimated fair value of debt | (unaudited) September 30, 2015 December 31, 2014 (millions of dollars) Carrying Value Fair Value Carrying Value Fair Value Senior Credit Facility due 2017 2013 Term Loan Facility due 2018 Short-Term Loan Facility due 2015 - - 2015 Term Loan due 2018 - - 4.65% Senior Notes due 2021, net 4.375% Senior Notes due 2025, net - - 5.09% Unsecured Senior Notes due 2015 - - Unsecured Term Loan facility due 2019 - - 5.29% Unsecured Senior Notes due 2020 5.69% Unsecured Senior Notes due 2035 3.82% Series D Senior Notes due 2017 |
ACCOUNTS RECEIVABLE AND OTHER (
ACCOUNTS RECEIVABLE AND OTHER (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
ACCOUNTS RECEIVABLE AND OTHER | |
Schedule of accounts receivable and other | (unaudited) (millions of dollars) September 30, 2015 December 31, 2014 Trade accounts receivable, net of allowance of nil Accounts receivable from affiliates Other |
FINANCIAL CHARGES AND OTHER (Ta
FINANCIAL CHARGES AND OTHER (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
FINANCIAL CHARGES AND OTHER | |
Schedule of components of financial charges and other | Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars) Interest Expense Amortization of debt issue costs - - Net realized loss related to the interest rate swaps Other Income |
INVESTMENTS IN UNCONSOLIDATED36
INVESTMENTS IN UNCONSOLIDATED AFFILIATES (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Apr. 30, 2006 | Sep. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Investments in unconsolidated affiliates | |||||||
Equity Earnings from Unconsolidated Affiliates | $ 17 | $ 15 | $ 63 | $ 66 | |||
Investments in Unconsolidated Affiliates | $ 1,151 | 1,151 | $ 1,177 | ||||
Equity contribution | $ 4 | 4 | |||||
Great Lakes | |||||||
Investments in unconsolidated affiliates | |||||||
Total cash call issued to fund debt repayment | $ 9 | ||||||
Northern Border | |||||||
Investments in unconsolidated affiliates | |||||||
Ownership interest (as a percent) | 50.00% | 50.00% | |||||
Equity Earnings from Unconsolidated Affiliates | $ 16 | 14 | $ 50 | 53 | |||
Investments in Unconsolidated Affiliates | 487 | 487 | 505 | ||||
Amortization period of transaction fee | 12 years | ||||||
Transaction fee | $ 10 | ||||||
Additional ownership interest acquired (as a percent) | 20.00% | ||||||
Assets | |||||||
Cash and cash equivalents | 40 | 40 | 41 | ||||
Other current assets | 33 | 33 | 34 | ||||
Plant, property and equipment, net | 1,135 | 1,135 | 1,163 | ||||
Other assets | 18 | 18 | 34 | ||||
Assets, total | 1,226 | 1,226 | 1,272 | ||||
LIABILITIES AND PARTNERS' EQUITY | |||||||
Current liabilities | 50 | 50 | 64 | ||||
Deferred credits and other | 25 | 25 | 22 | ||||
Long-term debt, including current maturities | 411 | 411 | 411 | ||||
Partners' equity | |||||||
Partners' equity | 742 | 742 | 777 | ||||
Accumulated other comprehensive loss | (2) | (2) | (2) | ||||
Liabilities and Partners' Equity, total | 1,226 | 1,226 | 1,272 | ||||
Revenues (expenses) | |||||||
Transmission revenues | 71 | 66 | 215 | 221 | |||
Operating expenses | (17) | (16) | (51) | (50) | |||
Depreciation | (16) | (15) | (45) | (44) | |||
Financial charges and other | (6) | (8) | (17) | (20) | |||
Net income | $ 32 | 27 | $ 102 | 107 | |||
Great Lakes | |||||||
Investments in unconsolidated affiliates | |||||||
Ownership interest (as a percent) | 46.45% | 46.45% | 46.45% | ||||
Equity Earnings from Unconsolidated Affiliates | $ 1 | 1 | $ 13 | 13 | |||
Investments in Unconsolidated Affiliates | 664 | 664 | 672 | ||||
Equity contribution | $ 4 | ||||||
Assets | |||||||
Current assets | 67 | 67 | 66 | ||||
Plant, property and equipment, net | 730 | 730 | 748 | ||||
Assets, total | 797 | 797 | 814 | ||||
LIABILITIES AND PARTNERS' EQUITY | |||||||
Current liabilities | 48 | 48 | 38 | ||||
Long-term debt, including current maturities | 307 | 307 | 316 | ||||
Partners' equity | |||||||
Partners' equity | 442 | 442 | 460 | ||||
Liabilities and Partners' Equity, total | 797 | 797 | $ 814 | ||||
Revenues (expenses) | |||||||
Transmission revenues | 29 | 29 | 105 | 106 | |||
Operating expenses | (15) | (14) | (40) | (38) | |||
Depreciation | (7) | (7) | (21) | (21) | |||
Financial charges and other | (5) | (6) | (17) | (19) | |||
Net income | $ 2 | $ 2 | $ 27 | $ 28 |
DEBT AND CREDIT FACILITIES (Det
DEBT AND CREDIT FACILITIES (Details) - USD ($) | Oct. 05, 2015 | Sep. 30, 2015 | Mar. 13, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 29, 2015 | Jun. 01, 2015 | Apr. 01, 2015 | Dec. 31, 2014 |
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Credit facilities and long-term debt | $ 1,904,000,000 | $ 1,904,000,000 | $ 1,904,000,000 | $ 1,904,000,000 | ||||||||
Short-term loan | $ 170,000,000 | |||||||||||
Total credit facilities, short-term loan facility and long-term debt | 1,904,000,000 | 1,904,000,000 | 1,904,000,000 | 1,904,000,000 | 1,695,000,000 | |||||||
Less: current portion | 14,000,000 | 14,000,000 | 14,000,000 | 14,000,000 | 249,000,000 | |||||||
Long-term debt | $ 1,890,000,000 | $ 1,890,000,000 | $ 1,890,000,000 | 1,890,000,000 | 1,446,000,000 | |||||||
Net proceeds | $ 598,000,000 | $ 15,000,000 | ||||||||||
GTN | Former parent, TransCanada subsidiaries | Transaction between entities under common control | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Interest acquired by Partnership (as a percent) | 30.00% | |||||||||||
Senior Credit Facility and the Term Loan Facilities due in 2018 | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Leverage ratio, actual (as a percent) | 4.71% | 4.71% | 4.71% | 4.71% | ||||||||
Senior Credit Facility and the Term Loan Facilities due in 2018 | Maximum | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Leverage ratio, covenant (as a percent) | 5.50% | |||||||||||
Senior Credit Facility and the Term Loan Facilities due in 2018 | Debt agreement covenants, initial period after occurrence of acquisition | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Additional period immediately following the fiscal quarter in which a specified material acquisition occurs | 6 months | |||||||||||
Senior Credit Facility and the Term Loan Facilities due in 2018 | Debt agreement covenants, initial period after occurrence of acquisition | Maximum | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Leverage ratio, covenant (as a percent) | 5.50% | |||||||||||
Senior Credit Facility and the Term Loan Facilities due in 2018 | Debt agreement covenants, periods subsequent to initial period after occurrence of acquisition | Maximum | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Leverage ratio, covenant (as a percent) | 5.00% | |||||||||||
Term loan | Short-Term Loan Facility due 2015 | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Short-term loan | $ 0 | $ 0 | $ 0 | $ 0 | $ 170,000,000 | |||||||
Term loan | Short-Term Loan Facility due 2015 | LIBOR | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Debt average interest rate (as a percent) | 1.32% | 1.31% | ||||||||||
Debt interest rate, at period end (as a percent) | 1.32% | 1.28% | ||||||||||
Revolving credit facility | Senior Credit Facility due 2017 | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Credit facilities and long-term debt | 190,000,000 | $ 190,000,000 | 190,000,000 | $ 190,000,000 | $ 330,000,000 | |||||||
Maximum borrowing capacity | 500,000,000 | 500,000,000 | 500,000,000 | 500,000,000 | ||||||||
Amount outstanding under credit facility | 190,000,000 | 190,000,000 | 190,000,000 | 190,000,000 | $ 330,000,000 | |||||||
Remaining borrowing capacity | $ 310,000,000 | $ 310,000,000 | $ 310,000,000 | $ 310,000,000 | ||||||||
Revolving credit facility | Senior Credit Facility due 2017 | LIBOR | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Debt average interest rate (as a percent) | 1.44% | 1.41% | 1.43% | 1.41% | ||||||||
Debt interest rate, at period end (as a percent) | 1.45% | 1.45% | 1.45% | 1.45% | 1.41% | |||||||
Term loan | 2013 Term Loan Facility due 2018 | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Credit facilities and long-term debt | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | |||||||
Term loan | 2013 Term Loan Facility due 2018 | LIBOR borrowings | LIBOR | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Debt average interest rate (as a percent) | 1.44% | 1.41% | 1.44% | 1.41% | ||||||||
Debt interest rate, at period end (as a percent) | 1.45% | 1.45% | 1.45% | 1.45% | 1.41% | |||||||
Term loan | 2013 Term Loan Facility due 2018 | LIBOR borrowings | LIBOR | Hedges of cash flows | Interest rate swaps | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Debt average interest rate (as a percent) | 1.85% | 1.83% | 1.84% | 1.83% | ||||||||
Term loan | 2015 Term Loan Facility due 2018 | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Credit facilities and long-term debt | $ 170,000,000 | $ 170,000,000 | $ 170,000,000 | $ 170,000,000 | ||||||||
Amount of debt | 170,000,000 | $ 170,000,000 | $ 170,000,000 | $ 170,000,000 | ||||||||
Amount borrowed | $ 170,000,000 | |||||||||||
Term loan | 2015 Term Loan Facility due 2018 | LIBOR | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Debt interest rate, at period end (as a percent) | 3.40% | 3.40% | 3.40% | 3.40% | ||||||||
Basis spread on variable rate (as a percent) | 1.15% | |||||||||||
Unsecured debt | 4.65% Senior Notes due 2021 | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Stated interest rate (as a percent) | 4.65% | 4.65% | 4.65% | 4.65% | 4.65% | |||||||
Discount | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | |||||||
Credit facilities and long-term debt | $ 350,000,000 | $ 350,000,000 | $ 350,000,000 | $ 350,000,000 | $ 350,000,000 | |||||||
Unsecured debt | 4.375% Senior Notes due 2025 | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Stated interest rate (as a percent) | 4.375% | 4.375% | 4.375% | 4.375% | 4.375% | |||||||
Discount | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | ||||||||
Credit facilities and long-term debt | $ 349,000,000 | $ 349,000,000 | $ 349,000,000 | $ 349,000,000 | ||||||||
Amount of debt | $ 350,000,000 | |||||||||||
Net proceeds | $ 346,000,000 | |||||||||||
Unsecured debt | 5.09% Senior Notes due 2015 | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Stated interest rate (as a percent) | 5.09% | |||||||||||
Credit facilities and long-term debt | $ 75,000,000 | |||||||||||
Unsecured debt | 5.29% Senior Notes due 2020 | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Stated interest rate (as a percent) | 5.29% | 5.29% | 5.29% | 5.29% | 5.29% | |||||||
Credit facilities and long-term debt | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | |||||||
Unsecured debt | 5.69% Senior Notes due 2035 | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Stated interest rate (as a percent) | 5.69% | 5.69% | 5.69% | 5.69% | 5.69% | |||||||
Credit facilities and long-term debt | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | |||||||
Unsecured debt | Term Loan Facility due 2019 | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Credit facilities and long-term debt | $ 75,000,000 | $ 75,000,000 | $ 75,000,000 | $ 75,000,000 | ||||||||
Secured debt | 3.82% Series D Senior Notes due 2017 | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Stated interest rate (as a percent) | 3.82% | 3.82% | 3.82% | 3.82% | 3.82% | |||||||
Credit facilities and long-term debt | $ 20,000,000 | $ 20,000,000 | $ 20,000,000 | $ 20,000,000 | $ 20,000,000 | |||||||
GTN | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Percentage of debt to total capitalization, actual | 44.00% | 44.00% | 44.00% | 44.00% | ||||||||
GTN | Unsecured debt | 5.09% Senior Notes due 2015 | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Stated interest rate (as a percent) | 5.09% | |||||||||||
GTN | Unsecured debt | Term Loan Facility due 2019 | Maximum | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Percentage of debt to total capitalization, covenant | 70.00% | |||||||||||
GTN | Unsecured debt | Term Loan Facility due 2019 | LIBOR | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Debt average interest rate (as a percent) | 1.14% | 1.14% | ||||||||||
Debt interest rate, at period end (as a percent) | 1.15% | 1.15% | 1.15% | 1.15% | ||||||||
Amount of debt | $ 75,000,000 | |||||||||||
GTN | Senior Notes | Maximum | ||||||||||||
Credit facilities, short-term loan facility and long-term debt | ||||||||||||
Percentage of debt to total capitalization, covenant | 70.00% |
DEBT AND CREDIT FACILITIES (D38
DEBT AND CREDIT FACILITIES (Details 2) $ in Millions | Sep. 30, 2015USD ($) |
Principal repayments required on debt | |
2,015 | $ 4 |
2,016 | 14 |
2,017 | 212 |
2,018 | 690 |
2,019 | 35 |
2,020 | 100 |
Thereafter | 849 |
Total debt | $ 1,904 |
GTN ACQUISITION (Details)
GTN ACQUISITION (Details) - USD ($) | Apr. 01, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | Mar. 31, 2015 |
Acquisition | ||||
Total cash consideration | $ 264,000,000 | |||
GTN | Former parent, TransCanada subsidiaries | Transaction between entities under common control | ||||
Acquisition | ||||
Interest acquired (as a percent) | 30.00% | |||
Purchase price adjustments | $ 11,000,000 | |||
Purchase price | 457,000,000 | |||
Total cash consideration | 264,000,000 | |||
Assumption of proportional debt | 98,000,000 | |||
GTN | Former parent, TransCanada subsidiaries | Transaction between entities under common control | Previously reported | ||||
Acquisition | ||||
Purchase price | $ 446,000,000 | |||
Partnership interest | Class B units | GTN | Former parent, TransCanada subsidiaries | Transaction between entities under common control | ||||
Acquisition | ||||
Units issued (in units) | 1,900,000 | |||
Value per unit (in dollars per unit) | $ 50 | |||
Equity issuance | $ 95,000,000 | |||
GTN | Class B units | TransCanada | Distributions | ||||
Distributions | ||||
Portion of GTN's annual distributions to which the Class B units are entitled to receive a percentage share of the distributions above threshold (as a percent) | 30.00% | |||
Percentage applied to 30 percent of GTN's distributions above threshold through March 31, 2020 | 100.00% | |||
Threshold of 30 percent of GTN's annual distributions for payment to Class B units at specified percentage | $ 20,000,000 | |||
Percentage applied to 30 percent of GTN's distributions above threshold after March 31, 2020 | 25.00% | |||
Percentage applied to GTN's distributable cash flow for the nine months ending December 31, 2015 | 30.00% | |||
Prorated threshold of GTN's distributions for payment to Class B units | $ 15,000,000 | |||
TransCanada | GTN | ||||
Noncontrolling interest | ||||
Remaining noncontrolling ownership interest (as a percent) | 30.00% |
GTN ACQUISITION (Details 2)
GTN ACQUISITION (Details 2) - USD ($) $ in Millions | Apr. 01, 2015 | Sep. 30, 2015 |
Net purchase price allocation | ||
Reduction in Partners' Equity | $ 359 | |
GTN | Former parent, TransCanada subsidiaries | Transaction between entities under common control | ||
Net purchase price allocation | ||
Net Purchase Price | $ 359 | |
Less: TransCanada's carrying value of non-controlling interest as April 1, 2015 | 232 | |
Excess purchase price | 127 | |
Purchase price | 457 | |
Assumption of proportional debt | 98 | |
GTN | Former parent, TransCanada subsidiaries | Transaction between entities under common control | Limited Partner and General Partner interests combined | ||
Net purchase price allocation | ||
Reduction in Partners' Equity | $ 127 |
GTN ACQUISITION (Details 3)
GTN ACQUISITION (Details 3) - USD ($) $ in Millions | Apr. 02, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
GTN ACQUISITION | |||||
Equity contribution | $ 2 | ||||
General Partner | |||||
GTN ACQUISITION | |||||
Equity contribution | $ 2 | ||||
General Partner | Partnership | |||||
GTN ACQUISITION | |||||
Equity contribution | $ 2 | ||||
General Partner | TC PipeLines GP, Inc. | |||||
GTN ACQUISITION | |||||
Ownership interest in the Partnership (as a percent) | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% |
PARTNERS' EQUITY (Details)
PARTNERS' EQUITY (Details) - USD ($) | Apr. 02, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Partners' Equity | |||||
Equity contribution | $ 2,000,000 | ||||
General Partner | |||||
Partners' Equity | |||||
Equity contribution | $ 2,000,000 | ||||
TC PipeLines GP, Inc. | General Partner | |||||
Partners' Equity | |||||
Ownership interest in the Partnership (as a percent) | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% |
ATM Equity Issuance Program | Common units | |||||
Partners' Equity | |||||
Units sold | 396,205 | ||||
Net proceeds from public offering of common units | $ 25,000,000 | ||||
Sales agent commissions | 256,000 | ||||
ATM Equity Issuance Program | TC PipeLines GP, Inc. | General Partner | |||||
Partners' Equity | |||||
Equity contribution | $ 1,000,000 |
PARTNERS' EQUITY (Details 2)
PARTNERS' EQUITY (Details 2) | Apr. 01, 2015 |
GTN | TransCanada | Distributions | Class B units | |
Partners' Equity | |
Portion of GTN's annual distributions to which the Class B units are entitled to receive a percentage share of the distributions above threshold (as a percent) | 30.00% |
NET INCOME PER COMMON UNIT (Det
NET INCOME PER COMMON UNIT (Details) - USD ($) $ in Millions | Apr. 02, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Partners' Equity | |||||
Incentive distributions allocated to the General Partner | $ 1 | $ 2 | |||
TC PipeLines GP, Inc. | General Partner | |||||
Partners' Equity | |||||
General partner interest (as a percent) | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% |
NET INCOME PER COMMON UNIT (D45
NET INCOME PER COMMON UNIT (Details 2) - USD ($) $ / shares in Units, shares in Millions | Apr. 01, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 |
Net income per common unit | ||||||
Net income attributable to controlling interests | $ 49,000,000 | $ 31,000,000 | $ 150,000,000 | $ 125,000,000 | ||
Net income attributable to the General Partner | (1,000,000) | (1,000,000) | (3,000,000) | (3,000,000) | ||
Incentive distributions attributable to the General Partner | (1,000,000) | (2,000,000) | ||||
Class B units | ||||||
Net income per common unit | ||||||
Net income allocated to limited partners | 2,000,000 | $ 2,000,000 | 2,000,000 | |||
Common units | ||||||
Net income per common unit | ||||||
Net income allocated to limited partners | $ 45,000,000 | $ 30,000,000 | $ 143,000,000 | $ 122,000,000 | ||
Weighted average common units outstanding (millions) - basic (in units) | 64 | 62.6 | 63.8 | 62.4 | ||
Weighted average common units outstanding (millions) - diluted (in units) | 64 | 62.6 | 63.8 | 62.4 | ||
Net income per common unit - basic (in dollars per unit) | $ 0.70 | $ 0.48 | $ 2.23 | $ 1.96 | ||
Net income per common unit - diluted (in dollars per unit) | $ 0.70 | $ 0.48 | $ 2.23 | $ 1.96 | ||
GTN | ||||||
Distributions | ||||||
30% of GTN's distributable cash flow | $ 17,000,000 | |||||
GTN | Class B units | TransCanada | Distributions | ||||||
Distributions | ||||||
Portion of GTN's annual distributions to which the Class B units are entitled to receive a percentage share of the distributions above threshold (as a percent) | 30.00% | |||||
Percentage applied to GTN's distributable cash flow for the nine months ending December 31, 2015 | 30.00% | |||||
Prorated threshold of GTN's distributions for payment to Class B units | $ 15,000,000 |
CASH DISTRIBUTIONS (Details)
CASH DISTRIBUTIONS (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Common units | ||||
Distributions | ||||
Partnership distribution (in dollars per unit) | $ 0.89 | $ 0.84 | $ 2.57 | $ 2.46 |
Limited Partner and General Partner interests combined | Common units | ||||
Distributions | ||||
Partnership distribution | $ 59 | $ 54 | $ 169 | $ 157 |
General Partner | ||||
Distributions | ||||
Incentive distribution paid to the General Partner | $ 0.9 | $ 0.3 | $ 1.5 | $ 0.3 |
CHANGE IN OPERATING WORKING C47
CHANGE IN OPERATING WORKING CAPITAL (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CHANGE IN OPERATING WORKING CAPITAL | ||
Change in accounts receivable and other | $ 4 | $ 5 |
Change in accounts payable and accrued liabilities | 4 | 10 |
Change in accounts payable to affiliates | (7) | 13 |
Change in accrued interest | 8 | 8 |
Change in operating working capital | $ 9 | $ 36 |
CHANGE IN OPERATING WORKING C48
CHANGE IN OPERATING WORKING CAPITAL (Details 2) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
GTN | |
Non-cash items | |
Accruals for capital expenditures | $ 3 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions | Oct. 15, 2015 | Dec. 31, 2014 | Apr. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | May. 03, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Apr. 01, 2015 | Oct. 01, 2014 |
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Accounts payable to affiliates | $ 15 | $ 8 | $ 8 | $ 15 | |||||||
Amount included in receivables from related party | 1 | 1 | 1 | 1 | |||||||
Additional acquisition consideration relating to Carty Lateral project | $ 25 | ||||||||||
General Partner | Reimbursement of costs of services provided | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Costs charged | 1 | $ 1 | 2 | 2 | |||||||
TransCanada's subsidiaries | Great Lakes | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Accounts payable to affiliates | 9 | 5 | 5 | 9 | |||||||
Amount included in receivables from related party | $ 15 | 30 | 30 | 15 | |||||||
TransCanada's subsidiaries | Great Lakes | Capital and operating costs | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Costs charged | 7 | 7 | 21 | 22 | |||||||
Impact on the Partnership's net income | $ 3 | $ 3 | $ 9 | $ 10 | |||||||
Percentage of capital and operating costs charged | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | ||||||
TransCanada's subsidiaries | Great Lakes | Transportation contracts | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Revenues from related party | $ 18 | $ 13 | $ 65 | $ 48 | |||||||
TransCanada's subsidiaries | Great Lakes | Transportation contracts | Total revenues | Major customers | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Percent of total revenues | 62.00% | 46.00% | 62.00% | 46.00% | |||||||
TransCanada's subsidiaries | Great Lakes | Affiliated rental revenue | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Revenues from related party | $ 0 | $ 0 | $ 1 | $ 1 | |||||||
TransCanada's subsidiaries | Northern Border | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Accounts payable to affiliates | $ 10 | 7 | 7 | 10 | |||||||
TransCanada's subsidiaries | Northern Border | Capital and operating costs | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Costs charged | 10 | 9 | 26 | 26 | |||||||
Impact on the Partnership's net income | $ 3 | $ 4 | $ 10 | $ 11 | |||||||
Percentage of capital and operating costs charged | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | ||||||
TransCanada's subsidiaries | GTN | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Accounts payable to affiliates | $ 10 | $ 5 | $ 5 | 10 | |||||||
TransCanada's subsidiaries | GTN | Capital and operating costs | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Costs charged | 8 | $ 8 | 22 | $ 21 | |||||||
Impact on the Partnership's net income | $ 6 | $ 5 | $ 17 | $ 14 | |||||||
Percentage of capital and operating costs charged | 100.00% | 100.00% | 100.00% | 100.00% | |||||||
TransCanada's subsidiaries | Bison | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Accounts payable to affiliates | 2 | $ 1 | $ 1 | 2 | |||||||
TransCanada's subsidiaries | Bison | Capital and operating costs | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Costs charged | 1 | $ 2 | 3 | $ 4 | |||||||
Impact on the Partnership's net income | $ 1 | $ 1 | $ 3 | $ 3 | |||||||
Percentage of capital and operating costs charged | 100.00% | 100.00% | 100.00% | 100.00% | |||||||
TransCanada's subsidiaries | North Baja Pipeline, LLC | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Accounts payable to affiliates | 1 | $ 1 | $ 1 | 1 | |||||||
TransCanada's subsidiaries | North Baja Pipeline, LLC | Capital and operating costs | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Costs charged | 1 | $ 1 | 4 | $ 3 | |||||||
Impact on the Partnership's net income | 1 | 1 | 4 | 3 | |||||||
TransCanada's subsidiaries | Tuscarora Gas Transmission Company | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Accounts payable to affiliates | $ 1 | 1 | 1 | 1 | |||||||
TransCanada's subsidiaries | Tuscarora Gas Transmission Company | Capital and operating costs | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Costs charged | 1 | 1 | 3 | 3 | |||||||
Impact on the Partnership's net income | 1 | 1 | 3 | 3 | |||||||
TransCanada's subsidiaries | Great Lakes | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Revenue from TransCanada and its affiliates included in the Partnership's equity earnings | $ 9 | $ 6 | $ 31 | $ 23 | |||||||
ANR Pipeline Company | Great Lakes | Firm service between Michigan and Wisconsin | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Deferred revenue related to services performed | $ 14 | $ 9 | |||||||||
ANR Pipeline Company | Great Lakes | Firm service between Michigan and Wisconsin | Expected | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Deferred revenue recognized | $ 23 | ||||||||||
Former parent, TransCanada subsidiaries | Transaction between entities under common control | GTN | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Interest acquired (as a percent) | 30.00% | ||||||||||
Additional acquisition consideration relating to Carty Lateral project | $ 25 | ||||||||||
Former parent, TransCanada subsidiaries | Transaction between entities under common control | Bison | |||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | |||||||||||
Interest acquired (as a percent) | 30.00% |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Mar. 13, 2015 | Dec. 31, 2014 |
Unsecured debt | 4.65% Senior Notes due 2021 | |||
Financial Instruments | |||
Stated interest rate (as a percent) | 4.65% | 4.65% | |
Unsecured debt | 4.375% Senior Notes due 2025 | |||
Financial Instruments | |||
Stated interest rate (as a percent) | 4.375% | 4.375% | |
Unsecured debt | 5.09% Senior Notes due 2015 | |||
Financial Instruments | |||
Stated interest rate (as a percent) | 5.09% | ||
Unsecured debt | 5.29% Senior Notes due 2020 | |||
Financial Instruments | |||
Stated interest rate (as a percent) | 5.29% | 5.29% | |
Unsecured debt | 5.69% Senior Notes due 2035 | |||
Financial Instruments | |||
Stated interest rate (as a percent) | 5.69% | 5.69% | |
Secured debt | 3.82% Series D Senior Notes due 2017 | |||
Financial Instruments | |||
Stated interest rate (as a percent) | 3.82% | 3.82% | |
Carrying Value | |||
Financial Instruments | |||
Debt | $ 1,904 | $ 1,695 | |
Carrying Value | Term loan | Short-Term Loan Facility due 2015 | |||
Financial Instruments | |||
Debt | 170 | ||
Carrying Value | Revolving credit facility | Senior Credit Facility due 2017 | |||
Financial Instruments | |||
Debt | 190 | 330 | |
Carrying Value | Term loan | 2013 Term Loan Facility due 2018 | |||
Financial Instruments | |||
Debt | 500 | 500 | |
Carrying Value | Term loan | 2015 Term Loan Facility due 2018 | |||
Financial Instruments | |||
Debt | 170 | ||
Carrying Value | Unsecured debt | 4.65% Senior Notes due 2021 | |||
Financial Instruments | |||
Debt | 350 | 350 | |
Carrying Value | Unsecured debt | 4.375% Senior Notes due 2025 | |||
Financial Instruments | |||
Debt | 349 | ||
Carrying Value | Unsecured debt | 5.09% Senior Notes due 2015 | |||
Financial Instruments | |||
Debt | 75 | ||
Carrying Value | Unsecured debt | Term Loan Facility due 2019 | |||
Financial Instruments | |||
Debt | 75 | ||
Carrying Value | Unsecured debt | 5.29% Senior Notes due 2020 | |||
Financial Instruments | |||
Debt | 100 | 100 | |
Carrying Value | Unsecured debt | 5.69% Senior Notes due 2035 | |||
Financial Instruments | |||
Debt | 150 | 150 | |
Carrying Value | Secured debt | 3.82% Series D Senior Notes due 2017 | |||
Financial Instruments | |||
Debt | 20 | 20 | |
Fair Value | Level 2 | |||
Financial Instruments | |||
Debt | 1,900 | 1,751 | |
Fair Value | Level 2 | Term loan | Short-Term Loan Facility due 2015 | |||
Financial Instruments | |||
Debt | 170 | ||
Fair Value | Level 2 | Revolving credit facility | Senior Credit Facility due 2017 | |||
Financial Instruments | |||
Debt | 190 | 330 | |
Fair Value | Level 2 | Term loan | 2013 Term Loan Facility due 2018 | |||
Financial Instruments | |||
Debt | 500 | 500 | |
Fair Value | Level 2 | Term loan | 2015 Term Loan Facility due 2018 | |||
Financial Instruments | |||
Debt | 170 | ||
Fair Value | Level 2 | Unsecured debt | 4.65% Senior Notes due 2021 | |||
Financial Instruments | |||
Debt | 347 | 375 | |
Fair Value | Level 2 | Unsecured debt | 4.375% Senior Notes due 2025 | |||
Financial Instruments | |||
Debt | 330 | ||
Fair Value | Level 2 | Unsecured debt | 5.09% Senior Notes due 2015 | |||
Financial Instruments | |||
Debt | 76 | ||
Fair Value | Level 2 | Unsecured debt | Term Loan Facility due 2019 | |||
Financial Instruments | |||
Debt | 75 | ||
Fair Value | Level 2 | Unsecured debt | 5.29% Senior Notes due 2020 | |||
Financial Instruments | |||
Debt | 109 | 111 | |
Fair Value | Level 2 | Unsecured debt | 5.69% Senior Notes due 2035 | |||
Financial Instruments | |||
Debt | 158 | 168 | |
Fair Value | Level 2 | Secured debt | 3.82% Series D Senior Notes due 2017 | |||
Financial Instruments | |||
Debt | $ 21 | $ 21 |
FAIR VALUE MEASUREMENTS (Deta51
FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Interest rate swaps from September 3, 2013 through July 1, 2018 | Term loan | 2013 Term Loan Facility due 2018 | |||||
Interest rate derivatives | |||||
Amount of variable-rate debt hedged | $ 150 | $ 150 | |||
Weighted average fixed interest rate (as a percent) | 2.79% | 2.79% | |||
Hedges of cash flows | Interest rate swaps | |||||
Interest rate derivatives | |||||
Change in fair value of interest rate derivative instruments recognized in other comprehensive income | $ 1 | $ 0 | $ 2 | $ 1 | |
Hedges of cash flows | Interest rate swaps | Financial charges and other | |||||
Interest rate derivatives | |||||
Net realized loss related to the interest rate swaps | 1 | $ 1 | 2 | $ 2 | |
Designated as hedge | Interest rate swaps | Recurring fair value measurement | Level 2 | |||||
Interest rate derivatives | |||||
Fair value of derivatives, gross | 3 | 3 | $ 1 | ||
Fair value of derivatives, net | $ 3 | $ 3 | $ 1 |
ACCOUNTS RECEIVABLE AND OTHER52
ACCOUNTS RECEIVABLE AND OTHER (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
ACCOUNTS RECEIVABLE AND OTHER | ||
Trade accounts receivable, net of allowance of nil | $ 27 | $ 30 |
Accounts receivable from affiliates | 1 | 1 |
Other | 3 | 4 |
Accounts receivable and other | 31 | 35 |
Trade accounts receivable, allowance | $ 0 | $ 0 |
FINANCIAL CHARGES AND OTHER (De
FINANCIAL CHARGES AND OTHER (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
FINANCIAL CHARGES AND OTHER | ||||
Interest Expense | $ 15 | $ 11 | $ 43 | $ 35 |
Amortization of debt issue costs | 1 | 1 | ||
Net realized loss related to the interest rate swaps | 1 | 1 | 2 | 2 |
Other Income | (4) | (1) | (5) | (1) |
Financial charges and other | $ 12 | $ 11 | $ 41 | $ 37 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) $ in Millions | Apr. 01, 2015USD ($) |
Former parent, TransCanada subsidiaries | Transaction between entities under common control | GTN | Partnership interest | Class B units | |
Contingencies | |
Equity issuance | $ 95 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Millions | Nov. 02, 2015 | Oct. 23, 2015 | Oct. 22, 2015 | Oct. 09, 2015 | Sep. 30, 2015 | Mar. 31, 2015 |
Northern Border | ||||||
Distributions | ||||||
Ownership interest (as a percent) | 50.00% | |||||
Great Lakes | ||||||
Distributions | ||||||
Ownership interest (as a percent) | 46.45% | 46.45% | ||||
Subsequent event | Northern Border | Revolving credit facility | Credit Facility renewal and extension maturing October 9, 2020 | ||||||
Distributions | ||||||
Maximum borrowing capacity | $ 200 | |||||
Term of the facility | 5 years | |||||
Subsequent event | Distribution declared | Northern Border | ||||||
Distributions | ||||||
Partnership distribution | $ 45 | |||||
Subsequent event | Distribution declared | Great Lakes | ||||||
Distributions | ||||||
Partnership distribution | $ 7 | |||||
Subsequent event | Cash Distribution Paid | Northern Border | ||||||
Distributions | ||||||
Partnership's share of distributions | $ 23 | |||||
Subsequent event | Cash Distribution Paid | Great Lakes | ||||||
Distributions | ||||||
Partnership's share of distributions | $ 3 | |||||
Subsequent event | Common units | ||||||
Distributions | ||||||
Cash distribution (in dollars per unit) | $ 0.89 |
SUBSEQUENTEVENTS (Details 2)
SUBSEQUENTEVENTS (Details 2) - Subsequent event - Expected - Portland Natural Gas Transmission System - TransCanada - Transaction between entities under common control $ in Millions | Nov. 05, 2015USD ($) |
Acquisition | |
Interest acquired (as a percent) | 49.90% |
Purchase price | $ 223 |
Assumption of proportional debt | 35 |
Additional contingent payment, minimum | 5 |
Additional contingent payment, maximum | $ 50 |
Period following closing date during which additional payments may be required | 15 years |