Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 02, 2016 | |
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, 2016 | |
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 | 67,011,999 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Transmission revenues | $ 91 | $ 83 | $ 266 | $ 255 |
Equity earnings (Note 4) | 24 | 17 | 88 | 63 |
Operation and maintenance expenses | (14) | (12) | (36) | (36) |
Property taxes | (4) | (5) | (14) | (16) |
General and administrative | (1) | (1) | (5) | (5) |
Depreciation | (21) | (21) | (64) | (63) |
Financial charges and other (Note 14) | (17) | (12) | (50) | (41) |
Net income | 58 | 49 | 185 | 157 |
Net income attributable to non-controlling interests | 7 | |||
Net income attributable to controlling interests | 58 | 49 | 185 | 150 |
Net income attributable to controlling interest allocation | ||||
General Partner | 4 | 2 | 9 | 5 |
Net income attributable to controlling interests | 58 | 49 | 185 | 150 |
Common units | ||||
Net income attributable to controlling interest allocation | ||||
Limited partners | $ 43 | $ 45 | $ 164 | $ 143 |
Net income per common unit (Note 8) - basic (in dollars per unit) | $ 0.65 | $ 0.70 | $ 2.51 | $ 2.23 |
Net income per common unit (Note 8) - diluted (in dollars per unit) | $ 0.65 | $ 0.70 | $ 2.51 | $ 2.23 |
Weighted average common units outstanding - basic (in units) | 66.1 | 64 | 65.3 | 63.8 |
Weighted average common units outstanding - diluted (in units) | 66.1 | 64 | 65.3 | 63.8 |
Common units outstanding, end of period (in units) | 66.6 | 64 | 66.6 | 64 |
Class B units | ||||
Net income attributable to controlling interest allocation | ||||
Limited partners | $ 11 | $ 2 | $ 12 | $ 2 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 58 | $ 49 | $ 185 | $ 157 |
Other comprehensive income | ||||
Change in fair value of cash flow hedges (Note 12) | 2 | (1) | (1) | (2) |
Comprehensive income | 60 | 48 | 184 | 155 |
Comprehensive income attributable to non-controlling interests | 7 | |||
Comprehensive income attributable to controlling interests | $ 60 | $ 48 | $ 184 | $ 148 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 72 | $ 39 |
Accounts receivable and other (Note 13) | 35 | 35 |
Inventories | 7 | 7 |
Total current assets | 114 | 81 |
Equity investments (Note 4) | 1,042 | 965 |
Plant, property and equipment (Net of $871 accumulated depreciation; 2015 - $811) | 1,895 | 1,949 |
Goodwill | 130 | 130 |
Other assets (Note 3) | 1 | |
Total assets | 3,181 | 3,126 |
Current Liabilities | ||
Accounts payable and accrued liabilities | 28 | 32 |
Accounts payable to affiliates (Note 11) | 5 | 5 |
Accrued interest | 13 | 8 |
Current portion of long-term debt (Note 5) | 27 | 14 |
Total current liabilities | 73 | 59 |
Long-term debt (Notes 3 and 5) | 1,896 | 1,889 |
Other liabilities | 28 | 27 |
Total liabilities | 1,997 | 1,975 |
Common units subject to rescission | 83 | |
Partners' Equity | ||
General partner | 26 | 25 |
Accumulated other comprehensive loss | (3) | (2) |
Controlling interests | 1,101 | 1,151 |
Total liabilities and partners' equity | 3,181 | 3,126 |
Common units | ||
Partners' Equity | ||
Limited partner | 971 | 1,021 |
Class B units | ||
Partners' Equity | ||
Limited partner | $ 107 | $ 107 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
CONSOLIDATED BALANCE SHEETS | ||
Accumulated depreciation | $ 871 | $ 811 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash Generated From Operations | ||
Net income | $ 185 | $ 157 |
Depreciation | 64 | 63 |
Amortization of debt issue costs reported as interest expense (Note 3) | 1 | 1 |
Equity allowance for funds used during construction | (1) | |
Change in operating working capital (Note 10) | 8 | 9 |
Total cash generated from operations | 256 | 229 |
Investing Activities | ||
Acquisition of the remaining 30 percent interest in GTN | (264) | |
Capital expenditures | (21) | (45) |
Other | 3 | 1 |
Total investing activities | (165) | (282) |
Financing Activities | ||
Distributions paid to non-controlling interests | (9) | |
Common unit issuance, net | 35 | 26 |
Common unit issuance subject to rescission, net (Note 7) | 83 | |
Equity contribution by the General Partner | 2 | |
Long-term debt issued, net of discount (Note 5) | 200 | 598 |
Long-term debt repaid (Note 5) | (180) | (390) |
Debt issuance costs | (3) | |
Total financing activities | (58) | 55 |
Increase in cash and cash equivalents | 33 | 2 |
Cash and cash equivalents, beginning of period | 39 | 26 |
Cash and cash equivalents, end of period | 72 | 28 |
Class B units | ||
Financing Activities | ||
Distributions paid (Note 7) | (12) | |
Common units and General Partner interest combined | ||
Financing Activities | ||
Distributions paid (Note 9) | (184) | (169) |
Northern Border | ||
Investing Activities | ||
Cumulative distributions in excess of equity earnings | 31 | 18 |
Great Lakes | ||
Investing Activities | ||
Cumulative distributions in excess of equity earnings | 19 | 12 |
Investment in Great Lakes / Acquisition of49.9 percent interest in PNGTS (Note 6) | (4) | $ (4) |
Portland Natural Gas Transmission System | ||
Cash Generated From Operations | ||
Equity earnings in excess of cumulative distributions | (2) | |
Investing Activities | ||
Investment in Great Lakes / Acquisition of49.9 percent interest in PNGTS (Note 6) | $ (193) |
CONSOLIDATED STATEMENTS OF CAS7
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - Transaction between entities under common control - Former parent, TransCanada subsidiaries | Sep. 30, 2016 | Apr. 01, 2015 |
Portland Natural Gas Transmission System | ||
Acquisitions | ||
Interest acquired (as a percent) | 49.90% | |
GTN | ||
Acquisitions | ||
Interest acquired (as a percent) | 30.00% | 30.00% |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' EQUITY - 9 months ended Sep. 30, 2016 - USD ($) shares in Millions, $ in Millions | Limited PartnersCommon units | Limited PartnersClass B units | General Partner | Accumulated Other Comprehensive Loss | [1] | Total |
Partners' Equity at beginning of period at Dec. 31, 2015 | $ 1,021 | $ 107 | $ 25 | $ (2) | $ 1,151 | |
Partners' Equity at beginning of period (in units) at Dec. 31, 2015 | 64.3 | 1.9 | ||||
Increase (Decrease) in Partners' Equity | ||||||
Net income | $ 164 | $ 12 | 9 | 185 | ||
Other Comprehensive Loss | (1) | (1) | ||||
ATM Equity Issuance, net (Note 7) | $ 35 | 35 | ||||
ATM Equity Issuance (Note 7) (in units) | 0.7 | |||||
Common unit issuance subject to rescission, net (Note 7) | $ 81 | 2 | 83 | |||
Common unit issuance subject to rescission, net (Note 7) (in units) | 1.6 | |||||
Reclassification of common unit issuance subject to rescission, net (Note 7) | $ (81) | (2) | (83) | |||
Reclassification of common unit issuance subject to rescission, net (Note 7) (in units) | (1.6) | |||||
Acquisition of 49.9 percent interest in PNGTS (Note 6) | $ (72) | (1) | (73) | |||
Distributions | (177) | (12) | (7) | (196) | ||
Partners' Equity at end of period at Sep. 30, 2016 | $ 971 | $ 107 | $ 26 | $ (3) | $ 1,101 | |
Partners' Equity at end of period (in units) at Sep. 30, 2016 | 65 | 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, 2016USD ($) | |
Losses expected to be reclassified to Net Income in the next 12 months | $ 1 |
Transaction between entities under common control | Former parent, TransCanada subsidiaries | Portland Natural Gas Transmission System | |
Business Acquisition, Percentage of Voting Interests Acquired | 49.90% |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2016 | |
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. The Partnership owns its pipeline assets through three intermediate limited partnerships (ILPs), TC GL Intermediate Limited Partnership, TC PipeLines Intermediate Limited Partnership and TC Tuscarora Intermediate Limited Partnership. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
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, 2016 and 2015 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, 2015. 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 our Annual Report on Form 10-K for the year ended December 31, 2015, except as described in Note 3, Accounting Pronouncements. 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, 2016 | |
ACCOUNTING PRONOUNCEMENTS | |
ACCOUNTING PRONOUNCEMENTS | NOTE 3 ACCOUNTING PRONOUNCEMENTS Effective January 1, 2016 Consolidation In February 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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 became effective beginning January 1, 2016 and was applied retrospectively to all financial statements presented. The application of this guidance did not result in any change to the Partnership’s consolidation conclusions. Refer to Note 17, Variable Interest Entities. 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. In addition, amortization of debt issuance costs should be reported as interest expense. The recognition and measurement for debt issuance costs would not be affected. This guidance is effective from January 1, 2016 and was applied retrospectively resulting in a reclassification of debt issuance costs previously recorded in other assets to an offset of their respective debt liabilities on the Partnership’s consolidated balance sheet. Amortization of debt issuance costs was reported as interest expense in all periods presented in the Partnership’s consolidated statement of income. As a result of the application of ASU No. 2015-03 and similar to the presentation of debt discounts, debt issuance costs of $7 million at December 31, 2015 previously reported as other assets in the balance sheet were reclassified as an offset against 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 became effective from January 1, 2016 and applies to all dropdown transactions requiring recast. The retrospective application of this guidance did not have a material impact on the Partnership’s consolidated financial statements as our current accounting policy is consistent with the new guidance. 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 was applied prospectively. The application of this guidance did not have a material impact on the Partnership’s consolidated financial statements. Future accounting changes Statement of Cash Flows In August 2016, the FASB issued ASU No. 2016-15 “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” an amendment of previously issued guidance, which intends to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The amendment provides guidance on several items such as debt pre-payment or extinguishment costs, proceeds from the settlement of insurance claims, contingent consideration payments made after a business combination and distributions received from equity method investments. The new guidance is effective January 1, 2018 and requires application using a retrospective approach. The Partnership is currently evaluating the impact of adoption of this guidance and has not yet determined the impact on its consolidated financial statements. Revenue from contracts with customers In May 2014, the FASB issued 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. This guidance supersedes the current revenue recognition requirements and most industry-specific guidance. The core principle relating to the new guidance requires that an entity recognize 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. To achieve the core principle, a five step process is required: 1) Identify the contract with the customer 2) Identify the performance obligations in the contract 3) Determine the transaction price 4) Allocate the transaction price to the performance obligations 5) Recognize revenue when (or as) each performance obligations is satisfied The new guidance also specifies the accounting for some costs to obtain or fulfill a contract, as well as enhanced disclosure requirements. The Partnership is currently identifying existing customer contracts and groups of contracts that are within the scope of the new guidance and has begun analyzing individual contracts in order to determine any impact on its consolidated financial statements. Leases In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842).” The new guidance requires lessees to recognize most leases, including operating leases, on the balance sheet as lease assets and lease liabilities. In addition, lessees will be required to reassess assumptions associated with existing leases as well as to provide expanded qualitative and quantitative disclosures. The new standard does not make extensive changes to lessor accounting. The new guidance is effective January 1, 2019 and will be applied using a modified retrospective approach. The Partnership is currently identifying existing lease agreements that are within the scope of the new guidance that may have an impact on its consolidated financial statements. Equity method and joint ventures In March 2016, the FASB issued ASU No. 2016-07 “Investments — Equity Method and Joint Ventures (Topic 323)” that simplifies the transition to equity method accounting. The new guidance eliminates the requirement to retroactively apply the equity method of accounting when an increase in ownership interest in an investment qualifies for equity method accounting. This new guidance is effective January 1, 2017 and will be applied prospectively. The Partnership does not expect the adoption of this new standard to have a material impact on its consolidated financial statements. |
EQUITY INVESTMENTS
EQUITY INVESTMENTS | 9 Months Ended |
Sep. 30, 2016 | |
EQUITY INVESTMENTS | |
EQUITY INVESTMENTS | NOTE 4 EQUITY INVESTMENTS Northern Border, Great Lakes and PNGTS are regulated by FERC and are operated by subsidiaries of TransCanada. The Partnership uses the equity method of accounting for its interests in its equity investees. The Partnership’s equity investments are held through our ILPs that are considered to be variable interest entities (VIEs). Refer to Note 3, Accounting Pronouncements and Note 17, Variable Interest Entities. Ownership Equity Earnings from Unconsolidated Affiliates Investments in Unconsolidated Interest at Three months Nine Months (unaudited) September 30, ended September 30, ended September 30, September 30, December 31, (millions of dollars) 2016 2016 2015 2016 2015 2016 2015 Northern Border (a) % Great Lakes % PNGTS (b) % — — — (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. (b) On January 1, 2016, the Partnership acquired a 49.9 percent interest in PNGTS (Refer to Note 6). For the three and nine months ended September 30, 2016, the Partnership recorded no undistributed earnings from PNGTS. Northern Border The Partnership did not have undistributed earnings from Northern Border for the three and nine months ended September 30, 2016 and 2015. The summarized financial information for Northern Border is as follows: (unaudited) (millions of dollars) September 30, 2016 December 31, 2015 ASSETS Cash and cash equivalents Other current assets Plant, property and equipment, net Other assets (a) LIABILITIES AND PARTNERS’ EQUITY Current liabilities Deferred credits and other Long-term debt, net (a), (b) Partners’ equity Partners’ capital Accumulated other comprehensive loss ) ) (a) As a result of the application of ASU No. 2015-03 and similar to the presentation of debt discounts, debt issuance costs of $2 million at December 31, 2015 previously reported as other assets in the balance sheet were reclassified as an offset against their respective debt liabilities. (b) Includes current maturities of $100 million senior notes at December 31, 2015. During August 2016, the $100 million senior notes were refinanced with a draw on Northern Border’s $200 million revolving credit agreement that expires in 2020. Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars) 2016 2015 2016 2015 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 2016. 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 did not have undistributed earnings from Great Lakes for the three and nine months ended September 30, 2016 and 2015. The summarized financial information for Great Lakes is as follows: (unaudited) (millions of dollars) September 30, 2016 December 31, 2015 ASSETS Current assets Plant, property and equipment, net LIABILITIES AND PARTNERS’ EQUITY Current liabilities Long-term debt, net (a), (b) Partners’ equity (a) The application of ASU No. 2015-03 did not have a material effect on Great Lakes’ financial statements. (b) Includes current maturities of $19 million as of September 30, 2016 (December 31, 2015 - $19 million). Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars) 2016 2015 2016 2015 Transmission revenues Operating expenses ) ) ) ) Depreciation ) ) ) ) Financial charges and other ) ) ) ) Net income |
DEBT AND CREDIT FACILITIES
DEBT AND CREDIT FACILITIES | 9 Months Ended |
Sep. 30, 2016 | |
DEBT AND CREDIT FACILITIES | |
DEBT AND CREDIT FACILITIES | NOTE 5 DEBT AND CREDIT FACILITIES (unaudited) September 30, December 31, Weighted Average (millions of dollars) 2016 2015 September 30, 2016 TC PipeLines, LP Senior Credit Facility due 2017 % TC PipeLines, LP 2013 Term Loan Facility due 2018 % TC PipeLines, LP 2015 Term Loan Facility due 2018 % TC PipeLines, LP 4.65% Unsecured Senior Notes due 2021 % (b) TC PipeLines, LP 4.375% Unsecured Senior Notes due 2025 % (b) GTN 5.29% Unsecured Senior Notes due 2020 % (b) GTN 5.69% Unsecured Senior Notes due 2035 % (b) GTN Unsecured Term Loan Facility due 2019 % Tuscarora Unsecured Term Loan due 2019 — % Tuscarora 3.82% Series D Senior Notes due 2017 % (b) Less: unamortized debt issuance costs and debt discount (a) Less: current portion (a) As a result of the application of ASU No. 2015-03 and similar to the presentation of debt discounts, debt issuance costs of $7 million at December 31, 2015 previously reported as other assets in the balance sheet were reclassified as an offset against debt. Refer to Note 3, Accounting Pronouncements. (b) Fixed interest rate. 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 $220 million was outstanding at September 30, 2016 (December 31, 2015 - $200 million), leaving $280 million available for future borrowing. After hedging activity, the interest rate incurred on the 2013 Term Loan Facility averaged 2.27 percent and 2.31 percent for the three and nine months ended September 30, 2016, respectively (2015 — 1.85 percent and 1.84 percent). Prior to hedging activities, the LIBOR-based interest rate was 1.78 percent at September 30, 2016 (December 31, 2015 — 1.50 percent). 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]) no greater than: · 5.50 to 1.00 for the quarter ending September 30, 2016; · 5.00 to 1.00 for the quarter ending December 31, 2016 and each subsequent fiscal quarter, except for the fiscal quarter and the two following fiscal quarters in which one or more acquisitions has been executed, in which case the leverage ratio is to be no greater than 5.50 to 1.00. The leverage ratio was 4.23 to 1.00 as of September 30, 2016. GTN’s Unsecured Senior Notes, along with GTN’s 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, 2016 was 43.9 percent. On April 29, 2016, Tuscarora entered into a $9.5 million unsecured variable rate term loan facility which requires yearly principal payments until its maturity on April 29, 2019. The variable interest is based on LIBOR plus an applicable margin and was 1.66 percent at September 30, 2016. Tuscarora’s 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. The Series D Senior Notes contain a covenant that limits total debt to no greater than 45 percent of Tuscarora’s total capitalization. Tuscarora’s total debt to total capitalization ratio at September 30, 2016 was 24.1 percent. Additionally, the Series D Senior Notes require Tuscarora to maintain a Debt Service Coverage Ratio (cash available from operations divided by a sum of interest expense and principal payments) of greater than 3.00 to 1.00. The ratio was 4.35 to 1.00 as of September 30, 2016. At September 30, 2016, 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) 2016 2017 2018 2019 2020 Thereafter |
ACQUISITION
ACQUISITION | 9 Months Ended |
Sep. 30, 2016 | |
ACQUISITION | |
ACQUISITION | NOTE 6 ACQUISITION PNGTS Acquisition On January 1, 2016, the Partnership acquired a 49.9 percent interest in PNGTS from a subsidiary of TransCanada (PNGTS Acquisition). The total purchase price of the PNGTS Acquisition was $228 million and consisted of $193 million in cash (including the final purchase price adjustment of $5 million) and the assumption of $35 million in proportional PNGTS debt. The Partnership funded the cash portion of the transaction using proceeds received in 2015 from our ATM Program and additional borrowings under our Senior Credit Facility. 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 acquisition was accounted for as a transaction between entities under common control, whereby the equity investment in PNGTS was recorded at TransCanada’s carrying value. The net purchase price was allocated as follows: (unaudited) Net Purchase Price (a) Less: TransCanada’s carrying value of PNGTS’ net assets at January 1, 2016 Excess purchase price (b) (a) Total purchase price of $228 million less the assumption of $35 million of proportional PNGTS debt by the Partnership. (b) The excess purchase price of $73 million was recorded as a reduction in Partners’ Equity. |
PARTNERS' EQUITY
PARTNERS' EQUITY | 9 Months Ended |
Sep. 30, 2016 | |
PARTNERS' EQUITY | |
PARTNERS' EQUITY | NOTE 7 PARTNERS’ EQUITY ATM equity issuance program During the nine months ended September 30, 2016, we issued 2,270,150 common units under our ATM Program generating net proceeds of approximately $116 million, plus approximately $2 million from the General Partner to maintain its effective two percent general partner interest. The commissions to our sales agents in the nine months ended September 30, 2016 were approximately $1.2 million. The net proceeds were used to repay a portion of the borrowings under the Senior Credit Facility for the PNGTS Acquisition and for general partnership purposes. On August 5, 2016, the Partnership entered into an Equity Distribution Agreement ($400 Million EDA) with six financial institutions (the Managers). Pursuant to the terms of the $400 Million EDA, the Partnership may sell from time to time through the Managers, as the Partnership’s sales agents, the Partnership’s common units at an aggregate offering price up to $400,000,000. Sales of the common units will be made by means of ordinary brokers’ transactions through the NYSE at market prices, in block transactions or as otherwise agreed by the Partnership and one or more of the Managers. The common units will be issued pursuant to the Partnership’s shelf registration statement on Form S-3 (Registration No. 333-211907), which was declared effective by the SEC on August 4, 2016. Common unit issuance subject to rescission On July 17, 2014, the SEC declared effective a registration statement (the Registration Statement) that we had filed to cover sales of Common Units under our ATM program. On February 26, 2016, at the time of the filing of the 2015 Form 10-K, we believed that the Partnership continued to be eligible to use the effective Registration Statement to sell Common Units under our ATM program. However, we have been advised by the SEC on June 23, 2016 that as a result of the untimely filing of an employee-related Form 8-K on October 28, 2015, which was not filed via EDGAR until 6:02 p.m. Eastern Time (32 minutes after the 5:30 p.m. Eastern Time cutoff), the Partnership was ineligible to use the Registration Statement after the filing of the 2015 Form 10-K. Because the Partnership was ineligible to continue using the Registration Statement following the filing of the 2015 Form 10-K, it is possible that the sales of an aggregate 1,619,631 Common Units under the Registration Statement (the ATM Common Units), which were sold between March 8, 2016 and May 19, 2016 at per Common Unit prices ranging from $47.00 to $54.95, may be deemed to have been unregistered sales of securities. If it is determined that persons who purchased the ATM Common Units from the Partnership after February 26, 2016, purchased such Common Units in an offering deemed to be unregistered, then to the extent there may have been a violation of federal securities laws such persons may be entitled to rescission rights, pursuant to which they could be entitled to recover the amount paid for such ATM Common Units, plus interest (based on the statutory rate under applicable state law), less the amount of any distributions. If such investor has sold any of the ATM Common Units purchased by the investor, then the investor would be entitled to recover the difference between the amount paid for such ATM Common Units and the amount at which such ATM Common Units were sold, assuming the investor’s ATM Common Units were sold at a loss, plus interest and less the amount of any distributions. If all of the investors who purchased the ATM Common Units from the Partnership after February 26, 2016 continue to own all of the ATM Common Units and were to demand rescission of their purchases, and such investors were in fact found to be entitled to such rescission, then we would be obligated to repay approximately $82,334,015, plus interest, less the amount of any distributions. The Securities Act generally requires that any claim brought for a violation of Section 5 of the Securities Act be brought within one year of the violation. No unitholder has claimed or attempted to exercise any rescission rights to date. At September 30, 2016, the Partnership classified all the 1.6 million common units issued under its ATM program after February 26, 2016 up to and including May 19, 2016, which may be subject to rescission rights, outside of equity given the potential redemption feature which is not within the control of the Partnership. These units are treated as outstanding for financial reporting purposes. The total amount transferred outside of equity was approximately $83 million which includes interest, less distributions paid, and includes our General Partner’s share to maintain its effective two percent interest. Class B units issued to TransCanada The Class B Units we issued on April 1, 2015 to finance a portion of the 2015 GTN Acquisition represent a limited partner interest in us and entitle TransCanada to an annual 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. For the year ending December 31, 2016, the Class B units’ equity account will be increased by the excess of 30 percent of GTN’s distributions over the annual threshold of $20 million until such amount is declared for distribution and paid in the first quarter of 2017. During the nine months ended September 30, 2016, 30 percent of GTN’s total distributable cash flow was $32 million. As a result of exceeding the $20 million threshold, the Class B units’ equity account was increased by $12 million (Refer to Note 8). For the year ended December 31, 2015, the Class B distribution was $12 million and was declared and paid in the first quarter of 2016. |
NET INCOME PER COMMON UNIT
NET INCOME PER COMMON UNIT | 9 Months Ended |
Sep. 30, 2016 | |
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. The amount allocable to the Class B units in 2016 will equal an amount based upon 30 percent of GTN’s distributable cash flow during the year ending December 31, 2016 less $20 million (2015 — less $15 million). 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) 2016 2015 2016 2015 Net income attributable to controlling interests Net income attributable to the General Partner ) ) ) ) Incentive distributions allocated to the General Partner (a) ) ) ) ) Net income attributable to the Class B units (b) ) ) ) ) Net income allocated to common units Weighted average common units outstanding (millions) — basic and diluted (c) (c) 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 are based on the Partnership’s available cash during the current reporting period, but declared and paid in the subsequent reporting period. (b) As discussed in Note 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 allocates a portion of net income attributable to controlling interests to the Class B units in an amount equal to 30 percent of GTN’s total distributable cash flows during the year ending December 31, 2016 less the threshold level of $20 million (2015 - less 15 million). During the six months ended June 30, 2016, the threshold was exceeded and during the nine months ended September 30, 2016, 30 percent of GTN’s total distributable cash flow was $32 million. As a result, $12 million of net income attributable to controlling interests was allocated to the Class B units at September 30, 2016, of which $1 million and $11 million were allocated during the three months ended June 30, 2016 and September 30, 2016, respectively (Refer to Note 7). From April 1, 2015 to 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. (c) Includes the common units subject to rescission. These units are treated as outstanding for financial reporting purposes (Refer to Note 7). |
CASH DISTRIBUTIONS TO COMMON UN
CASH DISTRIBUTIONS TO COMMON UNITS | 9 Months Ended |
Sep. 30, 2016 | |
CASH DISTRIBUTIONS TO COMMON UNITS | |
CASH DISTRIBUTIONS TO COMMON UNITS | NOTE 9 CASH DISTRIBUTIONS TO COMMON UNITS During the three and nine months ended September 30, 2016, the Partnership distributed $0.94 and $2.72 per common unit, respectively (2015 — $0.89 and $2.57 per common unit) for a total of $65 million and $184 million, respectively (2015 - $59 million and $169 million). The distribution paid to our General Partner during the three months ended September 30, 2016 for its effective two percent general partner interest was $1 million along with an IDR payment of $2 million for a total distribution of $3 million (2015 - $ 1 million for the effective two percent interest and a $1 million IDR payment). The distribution paid to our General Partner during the nine months ended September 30, 2016 for its effective two percent general partner interest was $3 million along with an IDR payments of $4 million for a total distribution of $7 million (2015 - $ 3 million for the effective two percent interest and a $2 million IDR payment) |
CHANGE IN OPERATING WORKING CAP
CHANGE IN OPERATING WORKING CAPITAL | 9 Months Ended |
Sep. 30, 2016 | |
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) 2016 2015 Change in accounts receivable and other — Change in accounts payable and accrued liabilities (a) Change in accounts payable to affiliates — ) Change in accrued interest Change in operating working capital (a) The accrual of $10 million for the construction of GTN’s Carty Lateral in December 31, 2015 was paid during the first quarter 2016. Accordingly, the payment was reported as capital expenditures in our cash flow statement during the current period. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2016 | |
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 $3 million for the three and nine months ended September 30, 2016, respectively. 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. As operator of our pipelines, 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, 2016 and 2015 by TransCanada’s subsidiaries and amounts payable to TransCanada’s subsidiaries at September 30, 2016 and December 31, 2015 are summarized in the following tables: Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars) 2016 2015 2016 2015 Capital and operating costs charged by TransCanada’s subsidiaries to: Great Lakes (a) Northern Border (a) PNGTS (a), (c) — — GTN (a), (b) Bison (d) North Baja Tuscarora Impact on the Partnership’s net income: Great Lakes Northern Border PNGTS (c) — — GTN (b) Bison North Baja Tuscarora (unaudited) (millions of dollars) September 30, 2016 December 31, 2015 Net amounts payable to TransCanada’s subsidiaries is as follows: Great Lakes (a) Northern Border (a) PNGTS (a) — GTN Bison — — 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 January 2016, the Partnership acquired 49.9 percent interest in PNGTS. (d) Net of proceeds of $1 million from the sale of excess pipe (at cost) to an affiliate. Great Lakes earns transportation revenues from TransCanada and its affiliates, some of which are provided at discounted rates and some of which are at maximum recourse rates. Great Lakes earned $22 million and $91 million of transportation revenues under these contracts for the three and nine months ended September 30, 2016, respectively (2015 - $18 million and $65 million). These amounts represent 62 percent and 69 percent of total revenues earned by Great Lakes for the three and nine months ended September 30, 2016, respectively (2015 — 62 percent for both periods). Great Lakes also earned nil and $1 million of affiliated rental revenue for three and nine months ended September 30, 2016, respectively (2015 — nil and $1 million). Accordingly, revenue from TransCanada and its affiliates of $11 million and $43 million are included in the Partnership’s equity earnings from Great Lakes for the three and nine months ended September 30, 2016, respectively (2015 - $9 million and $31 million). At September 30, 2016, $9 million was included in Great Lakes’ receivables in regards to the transportation contracts with TransCanada and its affiliates (December 31, 2015 - $17 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 recognized the deferred transportation revenue of approximately $23 million in the fourth quarter of 2015. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2016 | |
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. Long-term debt is recorded at amortized cost and classified in Level 2 of the fair value hierarchy for fair value disclosure purposes. Interest rate derivative assets and liabilities are classified in Level 2 for all periods presented where the fair value is determined by using valuation techniques that refer to observable market data or estimated market prices. The estimated fair value of the Partnership’s debt as at September 30, 2016 and December 31, 2015 was $1,991 million and $1,873 million, respectively. The ATM common units which may be subject to rescission rights, as discussed more fully in Note 7, were measured using the original issuance price, plus statutory interest and less any distributions paid. This fair value measurement is classified as Level 2. 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 the variable-rate 2013 Term Loan Facility with interest rate swaps maturing July 1, 2018, at a weighted average fixed interest rate of 2.31 percent. At September 30, 2016, the fair value of the interest rate swaps accounted for as cash flow hedges was a liability of $2 million (both on a gross and net basis) (December 31, 2015 - $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, 2016 and 2015. The change in fair value of interest rate derivative instruments recognized in other comprehensive income was a gain of $2 million and a loss of $1 million for the three and nine months ended September 30, 2016, respectively (2015 — loss of $1 million and a loss of $2 million). For the three and nine months ended September 30, 2016, 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 (2015 — $1 million and $2 million). Refer to Note 14 — Financial Charges and Other. The Partnership has no master netting agreements; however, it has derivative contracts containing 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, 2016 and December 31, 2015. (c) Other As discussed more fully in Note 16, during the second quarter of 2016, we performed a discounted cash flow analysis to assess, for possible impairment, the $82 million of goodwill related to our acquisition of Tuscarora. The estimated fair value measurement is classified as Level 3. In the determination of the fair value, we used internal forecasts for expected future cash flows and applied appropriate discount rates. The determination of expected future cash flows involved significant assumptions and estimates regarding revenue, operating and maintenance costs and future growth capital. |
ACCOUNTS RECEIVABLE AND OTHER
ACCOUNTS RECEIVABLE AND OTHER | 9 Months Ended |
Sep. 30, 2016 | |
ACCOUNTS RECEIVABLE AND OTHER | |
ACCOUNTS RECEIVABLE AND OTHER | NOTE 13 ACCOUNTS RECEIVABLE AND OTHER (unaudited) (millions of dollars) September 30, 2016 December 31, 2015 Trade accounts receivable, net of allowance of nil Other |
FINANCIAL CHARGES AND OTHER
FINANCIAL CHARGES AND OTHER | 9 Months Ended |
Sep. 30, 2016 | |
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) 2016 2015 2016 2015 Interest Expense (a) Net realized loss related to the interest rate swaps Other Income — ) ) ) (a) Effective January 1, 2016, interest expense includes amortization of debt issuance costs and discount costs. Refer to Note 3, - Accounting Pronouncements. |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
CONTINGENCIES | |
CONTINGENCIES | NOTE 15 CONTINGENCIES Great Lakes v. Essar Steel Minnesota LLC, et al . — On October 29, 2009, Great Lakes filed suit in the U.S. District Court, District of Minnesota, against Essar Minnesota LLC and certain Essar affiliates (collectively, Essar) for breach of its monthly payment obligation under its transportation services agreement with Great Lakes. Great Lakes sought to recover approximately $33 million for past and future payments due under the agreement. On September 16, 2015, following a jury trial, the federal district court judge entered a judgment in the amount of $32.9 million in favor of Great Lakes. On September 20, 2015, Essar appealed the decision to the United States Court of Appeals for the 8 th Circuit (8 th Circuit) based on an allegation of improper jurisdiction and a number of other rulings by the federal district judge. Essar was required to post a performance bond for the full value of the judgment pending appeal. Both parties have filed their briefs. In July 2016, Essar filed for Bankruptcy and asked the 8th Circuit Court of Appeals to stay the appeal pending the bankruptcy proceeding. Great Lakes filed a request with the 8th Circuit Court of Appeals to deny the stay. The stay was denied and the 8 th Circuit heard the appeal on October 20, 2016. A decision on the appeal is expected in the first quarter of 2017. If successful on appeal, because Great Lakes has a performance bond for the full amount of the judgment, the bankruptcy proceeding is not expected to impact the ability of Great Lakes recover the full amount of the judgment. Essar could, however, appeal an adverse decision from the 8 th Circuit Court of Appeals to the U.S. Supreme Court on Certiorari. 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 (Chancery Court) 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. To the extent the claims are derivative, the Partnership would be the beneficiary of any monetary award. The Partnership does not expect legal fees or the impact of the decision on plaintiffs’ other requests to be material. In April 2016, the Chancery Court granted the Partnership and other defendants’ motion to dismiss the plaintiffs’ complaint. The plaintiff has appealed the decision to dismiss its claims. The appeal is expected to be heard in late-2016. |
GOODWILL AND REGULATORY
GOODWILL AND REGULATORY | 9 Months Ended |
Sep. 30, 2016 | |
GOODWILL AND REGULATORY | |
GOODWILL AND REGULATORY | NOTE 16 GOODWILL AND REGULATORY On January 21, 2016, the FERC issued an Order (the January 21 Order) initiating an investigation pursuant to Section 5 of the Natural Gas Act of 1938 (NGA) to determine whether Tuscarora’s existing rates for jurisdictional services are just and reasonable. On July 15, 2016, Tuscarora filed a petition with FERC requesting approval of the Stipulation and Agreement of Settlement (Tuscarora Settlement) that resolved the Section 5 rate review initiated by FERC in January 2016. Under the terms of the Tuscarora Settlement, Tuscarora’s system-wide unit rate will initially decrease by 17 percent, effective August 1, 2016. Unless superseded by a subsequent rate case or settlement, this rate will remain in effect for three years, after which time the unit rate will decrease an additional seven percent for an additional three years. The settlement does not contain a rate moratorium and requires Tuscarora to file to establish new rates no later than six years following the effective date of the initial settlement rates. The expected reduction in Tuscarora’s future cash flows due to the high probability of approval of the Tuscarora Settlement as filed constituted a triggering event in the second quarter of 2016 that led us to evaluate, for possible impairment, the $82 million of goodwill related to our acquisition of Tuscarora. Our analysis in the second quarter resulted in the estimated fair value of Tuscarora exceeding its carrying value but the excess was less than 10 percent. The fair value was measured using a discounted cash flow analysis and included revenue expected from Tuscarora’s current contracting level together with other opportunities on the system. There is a risk that reductions in future cash flow forecasts as a result of Tuscarora not being able to maintain its current contracting level and/or not being able to realize other opportunities on the system, together with adverse changes in other key assumptions such as projected operating costs and other future growth capital, could result in a future impairment of the goodwill balance relating to Tuscarora. On September 22, 2016, the Tuscarora Settlement was approved by the FERC as filed. No other conditions or triggering events existed during the third quarter of 2016 that would require us to perform another interim goodwill impairment analysis on Tuscarora. |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 9 Months Ended |
Sep. 30, 2016 | |
VARIABLE INTEREST ENTITIES | |
VARIABLE INTEREST ENTITIES | NOTE 17 VARIABLE INTEREST ENTITIES In the normal course of business, the Partnership must re-evaluate its legal entities under the newly effective consolidation guidance to determine if those that are considered to be VIEs are appropriately consolidated or if they should be accounted for under other GAAP. A variable interest entity (VIE) is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not substantively participate in the gains or losses of the entity. A VIE is appropriately consolidated if the Partnership is considered to be the primary beneficiary. The VIE’s primary beneficiary is the entity that has both (1) the power to direct the activities of the VIE that most significantly impact the VIEs economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. As a result of its analysis, the Partnership continues to consolidate all legal entities in which it has a variable interest and for which it is considered to be the primary beneficiary. VIEs where the Partnership is not the primary beneficiary, but has a variable interest in the entity, are accounted for as equity investments. Consolidated VIEs The Partnership’s consolidated VIEs consist of the Partnership’s ILPs that hold interests in the Partnership’s pipeline systems. After considering the purpose and design of the ILPs and the risks that they were designed to create and pass through to the Partnership, the Partnership has concluded that it is the primary beneficiary of these ILPs because of the significant amount of variability that it absorbs from the ILPs’ economic performance. The assets and liabilities held through these VIEs that are not available to creditors of the Partnership and whose investors have no recourse to the credit of the Partnership are held through GTN, Tuscarora, Northern Border, Great Lakes and PNGTS due to their third party debt. The following table presents the total assets and liabilities of these entities that are included in the Partnership’s Consolidated Balance Sheets: (unaudited) (millions of dollars) September 30, 2016 December 31, 2015 ASSETS (LIABILITIES) * Accounts receivable and other Inventories Equity investments Plant, property and equipment Other assets Accounts payable and accrued liabilities ) ) Accounts payable to affiliates, net ) ) Accrued interest ) ) Current portion of long-term debt ) ) Long-term debt ) ) Other liabilities ) ) *North Baja and Bison, which are also assets held through our consolidated VIEs, are excluded as the assets of these entities can be used for purposes other than the settlement of the VIE’s obligations. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2016 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 18 SUBSEQUENT EVENTS Management of the Partnership has reviewed subsequent events through November 4, 2016, 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 20, 2016, the board of directors of our General Partner declared the Partnership’s third quarter 2016 cash distribution in the amount of $0.94 per common unit payable on November 14, 2016 to unitholders of record as of November 1, 2016. The declared distribution to our General Partner will include a $1.3 million distribution for its effective two percent general partner interest and an IDR payment amounting to $1.9 million for a total distribution of $3.2 million. Northern Border declared its September 2016 distribution of $14 million on October 7, 2016, of which the Partnership will receive its 50 percent share or $7 million on October 31, 2016. Great Lakes declared its third quarter 2016 distribution of $11 million on October 25, 2016, of which the Partnership will receive its 46.45 percent share or $5 million on November 1, 2016. |
SIGNIFICANT ACCOUNTING POLICI28
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates | 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. |
EQUITY INVESTMENTS (Tables)
EQUITY INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
EQUITY INVESTMENTS | |
Schedule of equity investments and summarized financial information for equity investees | Ownership Equity Earnings from Unconsolidated Affiliates Investments in Unconsolidated Interest at Three months Nine Months (unaudited) September 30, ended September 30, ended September 30, September 30, December 31, (millions of dollars) 2016 2016 2015 2016 2015 2016 2015 Northern Border (a) % Great Lakes % PNGTS (b) % — — — (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. (b) On January 1, 2016, the Partnership acquired a 49.9 percent interest in PNGTS (Refer to Note 6). For the three and nine months ended September 30, 2016, the Partnership recorded no undistributed earnings from PNGTS. |
Northern Border | |
EQUITY INVESTMENTS | |
Schedule of equity investments and summarized financial information for equity investees | (unaudited) (millions of dollars) September 30, 2016 December 31, 2015 ASSETS Cash and cash equivalents Other current assets Plant, property and equipment, net Other assets (a) LIABILITIES AND PARTNERS’ EQUITY Current liabilities Deferred credits and other Long-term debt, net (a), (b) Partners’ equity Partners’ capital Accumulated other comprehensive loss ) ) (a) As a result of the application of ASU No. 2015-03 and similar to the presentation of debt discounts, debt issuance costs of $2 million at December 31, 2015 previously reported as other assets in the balance sheet were reclassified as an offset against their respective debt liabilities. (b) Includes current maturities of $100 million senior notes at December 31, 2015. During August 2016, the $100 million senior notes were refinanced with a draw on Northern Border’s $200 million revolving credit agreement that expires in 2020. Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars) 2016 2015 2016 2015 Transmission revenues Operating expenses ) ) ) ) Depreciation ) ) ) ) Financial charges and other ) ) ) ) Net income |
Great Lakes | |
EQUITY INVESTMENTS | |
Schedule of equity investments and summarized financial information for equity investees | (unaudited) (millions of dollars) September 30, 2016 December 31, 2015 ASSETS Current assets Plant, property and equipment, net LIABILITIES AND PARTNERS’ EQUITY Current liabilities Long-term debt, net (a), (b) Partners’ equity (a) The application of ASU No. 2015-03 did not have a material effect on Great Lakes’ financial statements. (b) Includes current maturities of $19 million as of September 30, 2016 (December 31, 2015 - $19 million). Three months ended Nine months ended (unaudited) September 30, September 30, (millions of dollars) 2016 2015 2016 2015 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, 2016 | |
DEBT AND CREDIT FACILITIES | |
Schedule of debt and credit facilities | (unaudited) September 30, December 31, Weighted Average (millions of dollars) 2016 2015 September 30, 2016 TC PipeLines, LP Senior Credit Facility due 2017 % TC PipeLines, LP 2013 Term Loan Facility due 2018 % TC PipeLines, LP 2015 Term Loan Facility due 2018 % TC PipeLines, LP 4.65% Unsecured Senior Notes due 2021 % (b) TC PipeLines, LP 4.375% Unsecured Senior Notes due 2025 % (b) GTN 5.29% Unsecured Senior Notes due 2020 % (b) GTN 5.69% Unsecured Senior Notes due 2035 % (b) GTN Unsecured Term Loan Facility due 2019 % Tuscarora Unsecured Term Loan due 2019 — % Tuscarora 3.82% Series D Senior Notes due 2017 % (b) Less: unamortized debt issuance costs and debt discount (a) Less: current portion (a) As a result of the application of ASU No. 2015-03 and similar to the presentation of debt discounts, debt issuance costs of $7 million at December 31, 2015 previously reported as other assets in the balance sheet were reclassified as an offset against debt. Refer to Note 3, Accounting Pronouncements. (b) Fixed interest rate. |
Schedule of principal repayments required on debt | (unaudited) (millions of dollars) 2016 2017 2018 2019 2020 Thereafter |
ACQUISITION (Tables)
ACQUISITION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Portland Natural Gas Transmission System | |
EQUITY INVESTMENTS | |
Schedule of net purchase price of equity investment in PNGTS | (unaudited) Net Purchase Price (a) Less: TransCanada’s carrying value of PNGTS’ net assets at January 1, 2016 Excess purchase price (b) (a) Total purchase price of $228 million less the assumption of $35 million of proportional PNGTS debt by the Partnership. (b) The excess purchase price of $73 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, 2016 | |
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) 2016 2015 2016 2015 Net income attributable to controlling interests Net income attributable to the General Partner ) ) ) ) Incentive distributions allocated to the General Partner (a) ) ) ) ) Net income attributable to the Class B units (b) ) ) ) ) Net income allocated to common units Weighted average common units outstanding (millions) — basic and diluted (c) (c) 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 are based on the Partnership’s available cash during the current reporting period, but declared and paid in the subsequent reporting period. (b) As discussed in Note 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 allocates a portion of net income attributable to controlling interests to the Class B units in an amount equal to 30 percent of GTN’s total distributable cash flows during the year ending December 31, 2016 less the threshold level of $20 million (2015 - less 15 million). During the six months ended June 30, 2016, the threshold was exceeded and during the nine months ended September 30, 2016, 30 percent of GTN’s total distributable cash flow was $32 million. As a result, $12 million of net income attributable to controlling interests was allocated to the Class B units at September 30, 2016, of which $1 million and $11 million were allocated during the three months ended June 30, 2016 and September 30, 2016, respectively (Refer to Note 7). From April 1, 2015 to 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. (c) Includes the common units subject to rescission. These units are treated as outstanding for financial reporting purposes (Refer to Note 7). |
CHANGE IN OPERATING WORKING C33
CHANGE IN OPERATING WORKING CAPITAL (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
CHANGE IN OPERATING WORKING CAPITAL | |
Schedule of change in operating working capital | (unaudited) Nine months ended September 30, (millions of dollars) 2016 2015 Change in accounts receivable and other — Change in accounts payable and accrued liabilities (a) Change in accounts payable to affiliates — ) Change in accrued interest Change in operating working capital (a) The accrual of $10 million for the construction of GTN’s Carty Lateral in December 31, 2015 was paid during the first quarter 2016. Accordingly, the payment was reported as capital expenditures in our cash flow statement during the current period. |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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) 2016 2015 2016 2015 Capital and operating costs charged by TransCanada’s subsidiaries to: Great Lakes (a) Northern Border (a) PNGTS (a), (c) — — GTN (a), (b) Bison (d) North Baja Tuscarora Impact on the Partnership’s net income: Great Lakes Northern Border PNGTS (c) — — GTN (b) Bison North Baja Tuscarora |
Summary of amount payable to related party for costs charged | (unaudited) (millions of dollars) September 30, 2016 December 31, 2015 Net amounts payable to TransCanada’s subsidiaries is as follows: Great Lakes (a) Northern Border (a) PNGTS (a) — GTN Bison — — 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 January 2016, the Partnership acquired 49.9 percent interest in PNGTS. (d) Net of proceeds of $1 million from the sale of excess pipe (at cost) to an affiliate. |
ACCOUNTS RECEIVABLE AND OTHER (
ACCOUNTS RECEIVABLE AND OTHER (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
ACCOUNTS RECEIVABLE AND OTHER | |
Schedule of accounts receivable and other | (unaudited) (millions of dollars) September 30, 2016 December 31, 2015 Trade accounts receivable, net of allowance of nil Other |
FINANCIAL CHARGES AND OTHER (Ta
FINANCIAL CHARGES AND OTHER (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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) 2016 2015 2016 2015 Interest Expense (a) Net realized loss related to the interest rate swaps Other Income — ) ) ) (a) Effective January 1, 2016, interest expense includes amortization of debt issuance costs and discount costs. Refer to Note 3, - Accounting Pronouncements. |
VARIABLE INTEREST ENTITIES (Tab
VARIABLE INTEREST ENTITIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
VARIABLE INTEREST ENTITIES | |
Schedule of assets and liabilities held through VIEs whose assets cannot be used for purposes other settlement of their obligations | (unaudited) (millions of dollars) September 30, 2016 December 31, 2015 ASSETS (LIABILITIES) * Accounts receivable and other Inventories Equity investments Plant, property and equipment Other assets Accounts payable and accrued liabilities ) ) Accounts payable to affiliates, net ) ) Accrued interest ) ) Current portion of long-term debt ) ) Long-term debt ) ) Other liabilities ) ) *North Baja and Bison, which are also assets held through our consolidated VIEs, are excluded as the assets of these entities can be used for purposes other than the settlement of the VIE’s obligations. |
ORGANIZATION - Ownership Intere
ORGANIZATION - Ownership Interests in Natural Gas Pipeline Systems (Details) | 9 Months Ended |
Sep. 30, 2016LimitedPartnership | |
ORGANIZATION | |
Number of intermediate limited partnerships through which pipeline assets are owned | 3 |
ACCOUNTING PRONOUNCEMENTS - Imp
ACCOUNTING PRONOUNCEMENTS - Imputation of Interest (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
ACCOUNTING PRONOUNCEMENTS | ||
Other assets | $ 1 | |
Long-term debt | $ 1,896 | 1,889 |
ASU 2015-03, Interest - Imputation of Interest | Adjustment | ||
ACCOUNTING PRONOUNCEMENTS | ||
Other assets | (7) | |
Long-term debt | $ (7) |
EQUITY INVESTMENTS (Details)
EQUITY INVESTMENTS (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Aug. 31, 2016 | Apr. 30, 2006 | Sep. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Jan. 01, 2016 | Dec. 31, 2015 | |
EQUITY INVESTMENTS | |||||||||
Equity Earnings | $ 24 | $ 17 | $ 88 | $ 63 | |||||
Equity Investments | 1,042 | 1,042 | $ 965 | ||||||
LIABILITIES AND PARTNERS' EQUITY | |||||||||
Current portion of long-term debt | 27 | 27 | 14 | ||||||
Amount borrowed | 200 | 598 | |||||||
Northern Border | |||||||||
LIABILITIES AND PARTNERS' EQUITY | |||||||||
Current portion of long-term debt | $ 100 | 100 | |||||||
Northern Border | Revolving credit facility | Revolving Credit Agreement Expiring 2020 | |||||||||
LIABILITIES AND PARTNERS' EQUITY | |||||||||
Amount borrowed | $ 200 | ||||||||
Great Lakes | |||||||||
EQUITY INVESTMENTS | |||||||||
Total cash call issued to fund debt repayment | $ 9 | ||||||||
LIABILITIES AND PARTNERS' EQUITY | |||||||||
Current portion of long-term debt | $ 19 | $ 19 | 19 | ||||||
Northern Border | |||||||||
EQUITY INVESTMENTS | |||||||||
Ownership interest (as a percent) | 50.00% | 50.00% | |||||||
Equity Earnings | $ 18 | 16 | $ 52 | 50 | |||||
Equity Investments | 449 | 449 | 480 | ||||||
Amortization period of transaction fee | 12 years | ||||||||
Transaction fee | $ 10 | ||||||||
Additional ownership interest acquired (as a percent) | 20.00% | ||||||||
Assets | |||||||||
Cash and cash equivalents | 17 | 17 | 27 | ||||||
Other current assets | 35 | 35 | 33 | ||||||
Plant, property and equipment, net | 1,100 | 1,100 | 1,124 | ||||||
Other assets | 15 | 15 | 16 | ||||||
Assets, total | 1,167 | 1,167 | 1,200 | ||||||
LIABILITIES AND PARTNERS' EQUITY | |||||||||
Current liabilities | 43 | 43 | 39 | ||||||
Deferred credits and other | 28 | 28 | 26 | ||||||
Long-term debt, net | 430 | 430 | 409 | ||||||
Partners' equity | |||||||||
Partners' equity | 668 | 668 | 728 | ||||||
Accumulated other comprehensive loss | (2) | (2) | (2) | ||||||
Liabilities and Partners' Equity, total | 1,167 | 1,167 | 1,200 | ||||||
Revenues (expenses) | |||||||||
Transmission revenues | 74 | 71 | 218 | 215 | |||||
Operating expenses | (18) | (17) | (53) | (51) | |||||
Depreciation | (15) | (16) | (44) | (45) | |||||
Financial charges and other | (5) | (6) | (16) | (17) | |||||
Net income | $ 36 | 32 | $ 105 | 102 | |||||
Great Lakes | |||||||||
EQUITY INVESTMENTS | |||||||||
Ownership interest (as a percent) | 46.45% | 46.45% | 46.45% | ||||||
Equity Earnings | $ 4 | 1 | $ 23 | 13 | |||||
Equity Investments | 470 | 470 | 485 | ||||||
Equity contribution | $ 4 | 4 | 4 | ||||||
Assets | |||||||||
Current assets | 48 | 48 | 86 | ||||||
Plant, property and equipment, net | 718 | 718 | 727 | ||||||
Assets, total | 766 | 766 | 813 | ||||||
LIABILITIES AND PARTNERS' EQUITY | |||||||||
Current liabilities | 25 | 25 | 31 | ||||||
Long-term debt, net | 288 | 288 | 297 | ||||||
Partners' equity | |||||||||
Partners' equity | 453 | 453 | 485 | ||||||
Liabilities and Partners' Equity, total | 766 | 766 | 813 | ||||||
Revenues (expenses) | |||||||||
Transmission revenues | 36 | 29 | 133 | 105 | |||||
Operating expenses | (15) | (15) | (45) | (40) | |||||
Depreciation | (7) | (7) | (21) | (21) | |||||
Financial charges and other | (6) | (5) | (17) | (17) | |||||
Net income | $ 8 | $ 2 | $ 50 | $ 27 | |||||
Portland Natural Gas Transmission System | |||||||||
EQUITY INVESTMENTS | |||||||||
Ownership interest (as a percent) | 49.90% | 49.90% | 49.90% | ||||||
Equity Earnings | $ 2 | $ 13 | |||||||
Equity Investments | 123 | 123 | |||||||
Undistributed earnings | $ 0 | 0 | |||||||
Equity contribution | $ 193 | ||||||||
ASU 2015-03, Interest - Imputation of Interest | Adjustment | Northern Border | |||||||||
Assets | |||||||||
Other assets | (2) | ||||||||
LIABILITIES AND PARTNERS' EQUITY | |||||||||
Long-term debt, net | $ (2) |
DEBT AND CREDIT FACILITIES - Am
DEBT AND CREDIT FACILITIES - Amounts Outstanding and Description of Terms (Details) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016USD ($) | Sep. 30, 2015 | Sep. 30, 2016USD ($)entity | Sep. 30, 2015USD ($) | Apr. 29, 2016USD ($) | Dec. 31, 2015USD ($) | |
Credit facilities, short-term loan facility and long-term debt | ||||||
Other assets | $ 1,000,000 | |||||
Debt and credit facilities | $ 1,931,000,000 | $ 1,931,000,000 | 1,911,000,000 | |||
Less: unamortized debt issuance costs and debt discount | 8,000,000 | 8,000,000 | 8,000,000 | |||
Less: current portion | 27,000,000 | 27,000,000 | 14,000,000 | |||
Long-term debt | $ 1,896,000,000 | 1,896,000,000 | 1,889,000,000 | |||
Amount borrowed | $ 200,000,000 | $ 598,000,000 | ||||
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) | 423.00% | 423.00% | ||||
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 | Minimum | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Number of acquisitions | entity | 1 | |||||
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) | 550.00% | |||||
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) | 500.00% | |||||
Revolving credit facility | TC PipeLines, LP Senior Credit Facility due 2017 | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Debt and credit facilities | $ 220,000,000 | $ 220,000,000 | 200,000,000 | |||
Weighted Average Interest Rate (as a percent) | 1.70% | |||||
Maximum borrowing capacity | 500,000,000 | $ 500,000,000 | ||||
Amount outstanding under credit facility | 220,000,000 | 220,000,000 | 200,000,000 | |||
Remaining borrowing capacity | 280,000,000 | 280,000,000 | ||||
Term loan | TC PipeLines, LP 2013 Term Loan Facility due 2018 | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Debt and credit facilities | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | |||
Weighted Average Interest Rate (as a percent) | 1.71% | |||||
Term loan | TC PipeLines, LP 2013 Term Loan Facility due 2018 | LIBOR borrowings | LIBOR | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Debt interest rate, at period end (as a percent) | 1.78% | 1.78% | 1.50% | |||
Term loan | TC PipeLines, LP 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 | ||||||
Weighted Average Interest Rate (as a percent) | 2.27% | 1.85% | 2.31% | 1.84% | ||
Term loan | TC PipeLines, LP 2015 Term Loan Facility due 2018 | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Debt and credit facilities | $ 170,000,000 | $ 170,000,000 | $ 170,000,000 | |||
Weighted Average Interest Rate (as a percent) | 1.60% | |||||
Unsecured debt | TC PipeLines, LP 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% | |||
Debt and credit facilities | $ 350,000,000 | $ 350,000,000 | $ 350,000,000 | |||
Weighted Average Interest Rate (as a percent) | 4.65% | |||||
Unsecured debt | TC PipeLines, LP 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% | |||
Debt and credit facilities | $ 350,000,000 | $ 350,000,000 | $ 350,000,000 | |||
Weighted Average Interest Rate (as a percent) | 4.375% | |||||
Unsecured debt | GTN 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% | |||
Debt and credit facilities | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | |||
Weighted Average Interest Rate (as a percent) | 5.29% | |||||
Unsecured debt | GTN 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% | |||
Debt and credit facilities | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | |||
Weighted Average Interest Rate (as a percent) | 5.69% | |||||
Unsecured debt | GTN Term Loan Facility due 2019 | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Debt and credit facilities | 65,000,000 | $ 65,000,000 | $ 75,000,000 | |||
Weighted Average Interest Rate (as a percent) | 1.40% | |||||
Unsecured debt | Tuscarora Term Loan due 2019 | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Debt and credit facilities | $ 10,000,000 | $ 10,000,000 | ||||
Weighted Average Interest Rate (as a percent) | 1.58% | |||||
Secured debt | Tuscarora 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% | |||
Debt and credit facilities | $ 16,000,000 | $ 16,000,000 | $ 16,000,000 | |||
Weighted Average Interest Rate (as a percent) | 3.82% | |||||
GTN | Unsecured debt | Senior Notes and Term Loan Facility due 2019 | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Percentage of debt to total capitalization, actual | 43.90% | 43.90% | ||||
GTN | Unsecured debt | Senior Notes and 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% | |||||
Tuscarora Gas Transmission Company | Unsecured debt | Tuscarora Term Loan due 2019 | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Amount of debt | $ 9,500,000 | |||||
Tuscarora Gas Transmission Company | Unsecured debt | Tuscarora Term Loan due 2019 | LIBOR | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Debt interest rate, at period end (as a percent) | 1.66% | 1.66% | ||||
Tuscarora Gas Transmission Company | Unsecured debt | Tuscarora 3.82% Series D Senior Notes due 2017 | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Percentage of debt to total capitalization, actual | 24.10% | 24.10% | ||||
Debt Service Coverage, Actual (as a percent) | 435.00% | |||||
Tuscarora Gas Transmission Company | Unsecured debt | Tuscarora 3.82% Series D Senior Notes due 2017 | Minimum | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Debt Service Coverage, covenant (as a percent) | 300.00% | |||||
Tuscarora Gas Transmission Company | Unsecured debt | Tuscarora 3.82% Series D Senior Notes due 2017 | Maximum | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Percentage of debt to total capitalization, covenant | 45.00% | |||||
ASU 2015-03, Interest - Imputation of Interest | Adjustment | ||||||
Credit facilities, short-term loan facility and long-term debt | ||||||
Other assets | (7,000,000) | |||||
Long-term debt | $ (7,000,000) |
DEBT AND CREDIT FACILITIES - Pr
DEBT AND CREDIT FACILITIES - Principal Payments Required (Details) $ in Millions | Sep. 30, 2016USD ($) |
Principal repayments required on debt | |
2,016 | $ 4 |
2,017 | 243 |
2,018 | 691 |
2,019 | 43 |
2,020 | 100 |
Thereafter | 850 |
Total debt | $ 1,931 |
ACQUISITION - Acquisition of Ow
ACQUISITION - Acquisition of Ownership Interest in PNGTS (Details) - Portland Natural Gas Transmission System - USD ($) $ in Millions | Jan. 01, 2016 | Sep. 30, 2016 |
Acquisition | ||
Interest acquired (as a percent) | 49.90% | 49.90% |
Net purchase price | $ 193 | |
TransCanada | Transaction between entities under common control | ||
Acquisition | ||
Total purchase price | $ 228 | |
Net purchase price | 193 | |
Purchase price adjustments | 5 | |
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 |
ACQUISITION - Net Purchase Pric
ACQUISITION - Net Purchase Price of PNGTS (Details) - USD ($) $ in Millions | Jan. 01, 2016 | Sep. 30, 2016 |
EQUITY INVESTMENTS | ||
Reduction in Partners' Equity | $ 73 | |
Portland Natural Gas Transmission System | ||
EQUITY INVESTMENTS | ||
Net purchase price | $ 193 | |
Transaction between entities under common control | TransCanada | Portland Natural Gas Transmission System | ||
EQUITY INVESTMENTS | ||
Net purchase price | $ 193 | |
Less: TransCanada's carrying value of PNGTS' net assets | (120) | |
Excess purchase price | 73 | |
Total purchase price | 228 | |
Proportional debt | 35 | |
Common units and General Partner interest combined | Transaction between entities under common control | TransCanada | Portland Natural Gas Transmission System | ||
EQUITY INVESTMENTS | ||
Reduction in Partners' Equity | $ 73 |
PARTNERS' EQUITY - ATM Equity I
PARTNERS' EQUITY - ATM Equity Issuance Program (Details) | Aug. 05, 2016USD ($)itemInstitution | Jun. 30, 2016USD ($)$ / shares | Jun. 30, 2016 | Jun. 30, 2016shares | Sep. 30, 2016USD ($)shares | Sep. 30, 2015 |
Partners' Equity | ||||||
Net proceeds from public offering of common units | $ 83,000,000 | |||||
Common units issuance subject to rescission net | 83,000,000 | |||||
General Partner | ||||||
Partners' Equity | ||||||
Net proceeds from public offering of common units | 2,000,000 | |||||
Common units issuance subject to rescission net | $ 2,000,000 | |||||
TC PipeLines GP, Inc. | General Partner | ||||||
Partners' Equity | ||||||
Ownership interest in the Partnership (as a percent) | 2.00% | 2.00% | ||||
ATM Equity Issuance Program | Common units | ||||||
Partners' Equity | ||||||
Units sold | shares | 1,619,631 | 2,270,150 | ||||
Net proceeds from public offering of common units | $ 116,000,000 | |||||
Sales agent commissions | 1,200,000 | |||||
Common units issuance subject to rescission net | $ 82,334,015 | 83,000,000 | ||||
ATM Equity Issuance Program | TC PipeLines GP, Inc. | General Partner | ||||||
Partners' Equity | ||||||
Equity contribution | $ 2,000,000 | |||||
ATM Equity Issuance Program | Minimum | Common units | ||||||
Partners' Equity | ||||||
Common units (price per unit) | $ / shares | $ 47 | |||||
ATM Equity Issuance Program | Maximum | Common units | ||||||
Partners' Equity | ||||||
Common units (price per unit) | $ / shares | $ 54.95 | |||||
Period of time for Section 5 Securities violations to be filed within | 1 year | |||||
Equity Distribution Agreement (EDA) | Common units | ||||||
Partners' Equity | ||||||
Number of financial institutions | Institution | 6 | |||||
Amended shelf registration with SEC | $ 400,000,000 | |||||
Equity Distribution Agreement (EDA) | Minimum | Common units | ||||||
Partners' Equity | ||||||
Number of managers to agree with equity sale method | item | 1 | |||||
Equity Distribution Agreement (EDA) | Maximum | Common units | ||||||
Partners' Equity | ||||||
Aggregate offering price of units | $ 400,000,000 |
PARTNERS' EQUITY - Class B Unit
PARTNERS' EQUITY - Class B Units (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Class B units | |||||||
Partners' Equity | |||||||
Net income allocated to limited partners | $ 11,000,000 | $ 1,000,000 | $ 2,000,000 | $ 12,000,000 | $ 2,000,000 | ||
Distribution declared | $ 12,000,000 | ||||||
Distribution paid | $ 12,000,000 | 12,000,000 | |||||
GTN | |||||||
Partners' Equity | |||||||
30% of GTN's distributable cash flow | $ 32,000,000 | ||||||
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% | ||||||
Percentage applied to 30 percent of GTN's distributions above threshold through March 31, 2020 | 100.00% | ||||||
Threshold of GTN's total distributable cash flows for payment to Class B units | $ 20,000,000 | ||||||
Percentage applied to GTN's distributions above threshold after March 31, 2020 | 25.00% | ||||||
Percentage applied to GTN's distributable cash flow for the twelve month period ending December 31, 2016 | 30.00% | ||||||
30% of GTN's distributable cash flow | $ 17,000,000 | $ 32,000,000 |
NET INCOME PER COMMON UNIT - Ge
NET INCOME PER COMMON UNIT - General Partner Effective Interest and Allocated Incentive Distributions (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Partners' Equity | ||||
Incentive distributions allocated to the General Partner | $ 2 | $ 1 | $ 5 | $ 2 |
TC PipeLines GP, Inc. | General Partner | ||||
Partners' Equity | ||||
General partner interest (as a percent) | 2.00% | 2.00% |
NET INCOME PER COMMON UNIT - Te
NET INCOME PER COMMON UNIT - Terms of Class B Unit Distributions and Determination of Net Income per Common Unit (Details) - USD ($) $ / shares in Units, shares in Millions | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net income (loss) per common unit | ||||||||
Net income attributable to controlling interests | $ 58,000,000 | $ 49,000,000 | $ 185,000,000 | $ 150,000,000 | ||||
Net income attributable to the General Partner | (2,000,000) | (1,000,000) | (4,000,000) | (3,000,000) | ||||
Incentive distributions attributable to the General Partner | (2,000,000) | (1,000,000) | (5,000,000) | (2,000,000) | ||||
Class B units | ||||||||
Net income (loss) per common unit | ||||||||
Net income allocated to limited partners | 11,000,000 | $ 1,000,000 | 2,000,000 | 12,000,000 | 2,000,000 | |||
Common units | ||||||||
Net income (loss) per common unit | ||||||||
Net income allocated to limited partners | $ 43,000,000 | $ 45,000,000 | $ 164,000,000 | $ 143,000,000 | ||||
Weighted average common units outstanding - basic (in units) | 66.1 | 64 | 65.3 | 63.8 | ||||
Weighted average common units outstanding - diluted (in units) | 66.1 | 64 | 65.3 | 63.8 | ||||
Net income per common unit - basic (in dollars per unit) | $ 0.65 | $ 0.70 | $ 2.51 | $ 2.23 | ||||
Net income per common unit - diluted (in dollars per unit) | $ 0.65 | $ 0.70 | $ 2.51 | $ 2.23 | ||||
GTN | ||||||||
Distributions | ||||||||
30% of GTN's distributable cash flow | $ 32,000,000 | |||||||
GTN | Class B units | TransCanada | Distributions | ||||||||
Distributions | ||||||||
Percentage applied to GTN's distributable cash flow for the twelve month period ending December 31, 2016 | 30.00% | |||||||
Threshold of GTN's total distributable cash flows for payment to Class B units | $ 20,000,000 | |||||||
Prorated threshold of GTN's distributions for payment to Class B units | $ 20,000,000 | $ 15,000,000 | ||||||
30% of GTN's distributable cash flow | $ 17,000,000 | $ 32,000,000 |
CASH DISTRIBUTIONS TO COMMON 49
CASH DISTRIBUTIONS TO COMMON UNITS - Distributions Paid (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Common units | ||||
Distributions | ||||
Per Unit Distribution, paid (in dollars per unit) | $ 0.94 | $ 0.89 | $ 2.72 | $ 2.57 |
Common units and General Partner interest combined | ||||
Distributions | ||||
Total cash distribution | $ 65 | $ 59 | $ 184 | $ 169 |
Total distribution of general partner interest and IDR payment | 3 | 7 | ||
TC PipeLines GP, Inc. | General Partner | ||||
Distributions | ||||
Total distribution for General Partner interest | 1 | 1 | $ 3 | $ 3 |
General partner interest (as a percent) | 2.00% | 2.00% | ||
TC PipeLines GP, Inc. | Common units and General Partner interest combined | ||||
Distributions | ||||
Incentive distribution paid to the General Partner | $ 2 | $ 1 | $ 4 | $ 2 |
CHANGE IN OPERATING WORKING C50
CHANGE IN OPERATING WORKING CAPITAL - Components (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
CHANGE IN OPERATING WORKING CAPITAL | ||
Change in accounts receivable and other | $ 4 | |
Change in accounts payable and accrued liabilities | $ 3 | 4 |
Change in accounts payable to affiliates | (7) | |
Change in accrued interest | 5 | 8 |
Change in operating working capital | $ 8 | $ 9 |
CHANGE IN OPERATING WORKING C51
CHANGE IN OPERATING WORKING CAPITAL - GTN's Carty Lateral Construction Accrual (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Non-cash items | ||||
Capital expenditures | $ 21 | $ 45 | ||
GTN | ||||
Non-cash items | ||||
Accruals for capital expenditures | $ 10 | |||
Capital expenditures | $ 10 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions | 3 Months Ended | 4 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | May 03, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2014 | Mar. 31, 2016 | Jan. 01, 2016 | Apr. 01, 2015 | |
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Net amounts payable | $ 5 | $ 5 | $ 5 | |||||||
Great Lakes | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Interest acquired (as a percent) | 46.45% | 46.45% | 46.45% | |||||||
Northern Border | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Interest acquired (as a percent) | 50.00% | 50.00% | ||||||||
Portland Natural Gas Transmission System | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Interest acquired (as a percent) | 49.90% | 49.90% | 49.90% | |||||||
General Partner | Reimbursement of costs of services provided | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Costs charged | $ 1 | $ 1 | $ 3 | $ 2 | ||||||
TransCanada's subsidiaries | Great Lakes | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Net amounts payable | 3 | 3 | 3 | |||||||
Net amounts (receivable) | (9) | (17) | $ (9) | |||||||
Percentage of capital and operating costs charged | 100.00% | |||||||||
Amount included in receivables from related party | 9 | 17 | $ 9 | |||||||
TransCanada's subsidiaries | Great Lakes | Capital and operating costs | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Costs charged | $ 8 | $ 7 | $ 22 | $ 21 | ||||||
Percentage of capital and operating costs charged | 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 | $ 22 | $ 18 | $ 91 | $ 65 | ||||||
TransCanada's subsidiaries | Great Lakes | Transportation contracts | Total revenues | Customer concentration risk | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Percent of total revenues | 62.00% | 62.00% | 69.00% | 62.00% | ||||||
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 | ||||||||||
Net amounts payable | 3 | 5 | $ 3 | |||||||
Percentage of capital and operating costs charged | 100.00% | |||||||||
TransCanada's subsidiaries | Northern Border | Capital and operating costs | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Costs charged | $ 9 | $ 10 | $ 25 | $ 26 | ||||||
Percentage of capital and operating costs charged | 100.00% | 100.00% | 100.00% | 100.00% | ||||||
TransCanada's subsidiaries | Portland Natural Gas Transmission System | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Net amounts payable | $ 1 | $ 1 | ||||||||
Percentage of capital and operating costs charged | 100.00% | |||||||||
TransCanada's subsidiaries | Portland Natural Gas Transmission System | Capital and operating costs | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Costs charged | 2 | $ 6 | ||||||||
Percentage of capital and operating costs charged | 100.00% | |||||||||
TransCanada's subsidiaries | GTN | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Net amounts payable | 3 | 3 | $ 3 | |||||||
TransCanada's subsidiaries | GTN | Capital and operating costs | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Costs charged | 8 | $ 8 | 20 | $ 22 | ||||||
Impact on the Partnership's net income attributable to controlling interests | $ 7 | $ 6 | $ 18 | $ 17 | ||||||
Percentage of capital and operating costs charged | 100.00% | 100.00% | 100.00% | 100.00% | ||||||
TransCanada's subsidiaries | Bison | Capital and operating costs | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Costs charged | $ 1 | $ 1 | $ 1 | $ 3 | ||||||
Impact on the Partnership's net income attributable to controlling interests | 1 | 1 | 2 | 3 | ||||||
Net proceeds from the sale of excess pipe to an affiliate | 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 | 3 | 4 | ||||||
Impact on the Partnership's net income attributable to controlling interests | 1 | 1 | 3 | 4 | ||||||
TransCanada's subsidiaries | Tuscarora Gas Transmission Company | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Net amounts payable | 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 attributable to controlling interests | 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 | 11 | 9 | 43 | 31 | ||||||
TransCanada's subsidiaries | Great Lakes | Capital and operating costs | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Impact on the Partnership's net income attributable to controlling interests | 3 | 3 | 9 | 9 | ||||||
TransCanada's subsidiaries | Northern Border | Capital and operating costs | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Impact on the Partnership's net income attributable to controlling interests | 3 | $ 3 | 9 | $ 10 | ||||||
TransCanada's subsidiaries | Portland Natural Gas Transmission System | Capital and operating costs | ||||||||||
Capital and operating costs charged to the pipeline systems and amount payable | ||||||||||
Impact on the Partnership's net income attributable to controlling interests | $ 1 | $ 3 | ||||||||
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% | 30.00% | 30.00% | |||||||
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 | ||||||||
Deferred revenue recognized | $ 23 |
RELATED PARTY TRANSACTIONS - Di
RELATED PARTY TRANSACTIONS - Distribution from Affiliate (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Jan. 01, 2016 | |
Related party transactions | ||
Partnership distribution | $ 196 | |
Portland Natural Gas Transmission System | ||
Related party transactions | ||
Ownership interest (as a percent) | 49.90% | 49.90% |
FAIR VALUE MEASUREMENTS - Estim
FAIR VALUE MEASUREMENTS - Estimated Fair Value of Debt (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value | Level 2 | ||
Financial Instruments | ||
Fair value of debt | $ 1,991 | $ 1,873 |
FAIR VALUE MEASUREMENTS - Inter
FAIR VALUE MEASUREMENTS - Interest Rate Swaps (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Interest rate derivatives | |||||
Goodwill | $ 130 | $ 130 | $ 130 | ||
Tuscarora Gas Transmission Company | |||||
Interest rate derivatives | |||||
Goodwill | $ 82 | $ 82 | |||
Interest rate swaps | Term loan | TC PipeLines, LP 2013 Term Loan Facility due 2018 | |||||
Interest rate derivatives | |||||
Weighted average fixed interest rate (as a percent) | 2.31% | 2.31% | |||
Hedges of cash flows | Interest rate swaps | |||||
Interest rate derivatives | |||||
Change in fair value of interest rate derivative instruments recognized in other comprehensive income | $ (2) | $ 1 | $ 1 | $ 2 | |
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 | 2 | 2 | 1 | ||
Fair value of derivatives, net | $ 2 | $ 2 | $ 1 |
ACCOUNTS RECEIVABLE AND OTHER56
ACCOUNTS RECEIVABLE AND OTHER (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
ACCOUNTS RECEIVABLE AND OTHER | ||
Trade accounts receivable, net of allowance of nil | $ 31 | $ 31 |
Other | 4 | 4 |
Accounts receivable and other | 35 | 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, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
FINANCIAL CHARGES AND OTHER | ||||
Interest Expense | $ 16 | $ 15 | $ 49 | $ 44 |
Net realized loss related to the interest rate swaps | 1 | 1 | 2 | 2 |
Other Income | (4) | (1) | (5) | |
Financial charges and other | $ 17 | $ 12 | $ 50 | $ 41 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) - USD ($) $ in Millions | Sep. 16, 2015 | Apr. 01, 2015 | Oct. 29, 2009 |
Former parent, TransCanada subsidiaries | Transaction between entities under common control | GTN | Partnership interest | Class B units | |||
Contingencies | |||
Equity issuance | $ 95 | ||
Great Lakes v. Essar Steel Minnesota LLC, et al. | Great Lakes | Essar | |||
Contingencies | |||
Recovery sought | $ 33 | ||
Judgement awarded | $ 32.9 |
GOODWILL AND REGULATORY (Detail
GOODWILL AND REGULATORY (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Aug. 01, 2016 | Dec. 31, 2015 |
Goodwill and Regulatory Matters | |||
Goodwill | $ 130 | $ 130 | |
Tuscarora Gas Transmission Company | |||
Goodwill and Regulatory Matters | |||
Goodwill | 82 | ||
Tuscarora Gas Transmission Company | Tuscarora Settlement | FERC | |||
Goodwill and Regulatory Matters | |||
Decrease of system-wide unit rate (as a percent) | 17.00% | ||
Terms of the settlement | Unless superseded by a subsequent rate case or settlement, this rate will remain in effect for three years, after which time the unit rate will decrease an additional seven percent for an additional three years. | ||
Goodwill | $ 82 | ||
Tuscarora Gas Transmission Company | Tuscarora Settlement | FERC | Maximum | |||
Goodwill and Regulatory Matters | |||
Estimated Fair value over carrying value (as a percent) | 10.00% | ||
Tuscarora Gas Transmission Company | Tuscarora Settlement | FERC | Minimum | |||
Goodwill and Regulatory Matters | |||
Term to establish new rates | 6 years |
VARIABLE INTEREST ENTITIES - Co
VARIABLE INTEREST ENTITIES - Consolidated VIEs (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
ASSETS (LIABILITIES) | ||
Accounts receivable and other | $ 35 | $ 35 |
Inventories | 7 | 7 |
Equity investments | 1,042 | 965 |
Plant, property and equipment | 1,895 | 1,949 |
Other assets | 1 | |
Accounts payable and accrued liabilities | (28) | (32) |
Accounts payable to affiliates | (5) | (5) |
Accrued interest | (13) | (8) |
Current portion of long-term debt | (27) | (14) |
Long-term debt | (1,896) | (1,889) |
Other liabilities | (28) | (27) |
Consolidated VIEs | Restricted VIEs | ||
ASSETS (LIABILITIES) | ||
Accounts receivable and other | 24 | 25 |
Inventories | 6 | 6 |
Equity investments | 1,042 | 965 |
Plant, property and equipment | 852 | 872 |
Other assets | 2 | 2 |
Accounts payable and accrued liabilities | (18) | (26) |
Accounts payable to affiliates | (14) | (6) |
Accrued interest | (5) | (1) |
Current portion of long-term debt | (27) | (14) |
Long-term debt | (313) | (326) |
Other liabilities | $ (25) | $ (24) |
SUBSEQUENT EVENTS - Quarter Dis
SUBSEQUENT EVENTS - Quarter Distribution per Common Unit (Details) | Oct. 20, 2016$ / shares |
Subsequent event | Common units | |
Distributions | |
Distribution (in dollars per unit) | $ 0.94 |
SUBSEQUENT EVENTS - Unconsolida
SUBSEQUENT EVENTS - Unconsolidated Affiliate Distributions (Details) - USD ($) $ in Millions | Nov. 01, 2016 | Oct. 31, 2016 | Oct. 25, 2016 | Oct. 20, 2016 | Oct. 07, 2016 | Sep. 30, 2016 | Mar. 31, 2016 |
Subsequent events | |||||||
Partnership distribution | $ 196 | ||||||
Northern Border | |||||||
Subsequent events | |||||||
Ownership interest (as a percent) | 50.00% | ||||||
Great Lakes | |||||||
Subsequent events | |||||||
Ownership interest (as a percent) | 46.45% | 46.45% | |||||
Subsequent event | Distribution declared | |||||||
Subsequent events | |||||||
Total Distribution For General Partner Interest | $ 1.3 | ||||||
General Partner IDRs paid | $ 1.9 | ||||||
Subsequent event | Distribution declared | Northern Border | |||||||
Subsequent events | |||||||
Partnership distribution | $ 14 | ||||||
Subsequent event | Distribution declared | Great Lakes | |||||||
Subsequent events | |||||||
Partnership distribution | $ 11 | ||||||
Subsequent event | Cash Distribution Paid | |||||||
Subsequent events | |||||||
Ownership interest (as a percent) | 2.00% | ||||||
Total distribution of general partner interest and IDR payment | $ 3.2 | ||||||
Subsequent event | Cash Distribution Paid | Northern Border | |||||||
Subsequent events | |||||||
Partnership's share of distributions | $ 7 | ||||||
Subsequent event | Cash Distribution Paid | Great Lakes | |||||||
Subsequent events | |||||||
Partnership's share of distributions | $ 5 |