RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2014 |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | 12. RELATED PARTY TRANSACTIONS |
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Administrative and Workforce Related Services |
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We do not directly employ any of the individuals responsible for managing or operating our business, nor do we have any directors. Enbridge and its affiliates provide management and we obtain managerial, administrative, operational and workforce related services from our General Partner, Enbridge Management and affiliates of Enbridge pursuant to service agreements among our General Partner, Enbridge Management, affiliates of Enbridge, and us. Pursuant to these service agreements, we have agreed to reimburse our General Partner, Enbridge Management and affiliates of Enbridge for the cost of managerial, administrative, operational and director services they provide to us. Where directly attributable, the cost of all compensation, benefits expenses and employer expenses for these employees are charged directly by Enbridge to the appropriate affiliate. Enbridge does not record any profit or margin for the administrative and operational services charged to us. |
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The affiliate amounts incurred by us for services received pursuant to the services agreements are reflected in “Operating and administrative – affiliate” on our consolidated statements of income. |
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Service Agreements |
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Our General Partner, Enbridge Management, Enbridge and affiliates of Enbridge provide managerial, administrative, operational and director services to us pursuant to service agreements, and we reimburse them for the costs of those services. Through an operational services agreement among Enbridge, Enbridge Operational Services, Inc., or EOSI, and Enbridge Pipelines, both subsidiaries of Enbridge, all of whom we refer to as the Canadian service providers, and us, we are charged for the services of Enbridge employees resident in Canada. Through a general and administrative services agreement among us, our General Partner, Enbridge Management and Enbridge Employee Services, Inc., or EES, we are charged for the services of employees resident in the United States. The charges related to these service agreements are included in “Operating and administrative – affiliate” expenses on our consolidated statements of income. |
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Operational Services Agreement |
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We are charged an amount by the Canadian service providers for services we are provided under the operational services agreement. The amount we are charged is established as part of the annual budget and agreed upon by us and the Canadian service providers. The amount we are charged is computed based on an estimate of the pro-rata reimbursement of each Canadian service provider's estimated annual departmental costs, net of amounts charged to other affiliates and amounts identifiable as costs of that Canadian service provider. The Canadian service providers charge us a monthly fixed fee that is computed as one-twelfth of the annual budgeted amount. Under the operational services agreement, our General Partner and Enbridge Management pay the Canadian service providers a monthly fee determined in the manner described above. At the request of Enbridge Management, the fee for these operational services provided to it in its capacity as the delegate of our General Partner are billed directly to us. |
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Enbridge Management and our General Partner may request that the Canadian service providers provide special additional operational services for which each, as appropriate, agrees to pay costs and expenses incurred by the Canadian service provider in connection with providing the special additional operational services. The types of services provided under the operational services agreement include: |
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• Executive, administrative and other services on an “as required” basis; |
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• Monitoring transportation capacity, scheduling shipments, standardizing integrity, maintenance and other operational requirements; |
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• Addressing regulatory matters associated with the liquids pipeline operations; |
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• Providing monthly measurement information, forecasts, oil accounting, invoicing and related services; |
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• Computer application development and support services, including liquid pipelines' control center operations; |
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• Electrical power requirements and costs for system operations; |
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• Patrol and aircraft services; and |
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• Any other operational services required to operate existing systems and any additional systems acquired by us. |
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Each year, the Canadian service providers prepare annual budgets by departmental cost center for their respective operations. After establishing a budget for the following year, the costs associated with each department are allocated to us, our General Partner, Enbridge Management and other Enbridge affiliates using one of the following three methods: |
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• Capital assets employed as a percentage of Enbridge-wide capital assets; |
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• Time-based estimates; or |
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• Full-time-equivalent (FTE)/headcount as a percentage of Enbridge-wide FTEs. |
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The total amount we reimbursed the Canadian service providers pursuant to the operational services agreement for the years ended December 31, 2014, 2013 and 2012, was $150.9 million, $154.9 million and $133.0 million, respectively. |
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General and Administrative Services Agreement |
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We, Enbridge Management and our General Partner receive services from EES under the general and administrative services agreement. Under this agreement, EES provides services to us, Enbridge Management and our General Partner and charges each recipient for services, on a monthly basis, the actual costs that it incurs for those services. Our General Partner and Enbridge Management may request that EES provide special additional general services for which each, as appropriate, agrees to pay costs and expenses incurred by EES in connection with providing the special additional general services. The types of services provided under the general and administrative services agreement include: |
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• Accounting, tax planning and compliance services, including preparation of financial statements and income tax returns; |
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• Administrative, executive, legal, human resources and computer support services; |
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• Insurance coverage; |
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• All administrative and operational services required to operate existing systems and any additional systems acquired by us and operated by EES; and |
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• Facilitate the business and affairs of Enbridge Management and us, including, but not limited to, public and government affairs, engineering, environmental, finance, audit, operations and operational support, safety/compliance and other services. |
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EES captures all costs that it incurs for providing the services by cost center in its financial system. The cost centers are determined to be “Shared Service”, “Enbridge Energy Partners, L.P. only” or “Non-Enbridge Energy Partners, L.P.” Shared Service cost centers are used to capture costs that are not specific to a single United States Enbridge entity but are shared among multiple United States Enbridge entities. The costs captured in the cost centers that are specific to us are charged in full to us. The costs captured in cost centers that are outside of our business unit are charged to other Enbridge entities. |
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The general method used to allocate the Shared Service costs is established through the budgeting process and reimbursed as follows: |
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• Each cost center establishes a budget. |
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• Each cost center manager estimates the amount of time the department spends on us and entities that are not directly affiliated with us. |
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• Costs are accumulated monthly for each cost center. |
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• The actual costs accumulated monthly by each cost center are allocated to us or entities that are not directly affiliated with us based on the allocation model. |
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• We reimburse EES for its share of the allocated costs. |
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The total amount reimbursed by us for services received pursuant to the general and administrative services agreement for the years ended December 31, 2014, 2013 and 2012, was $179.0 million, $284.1 million and $291.1 million, respectively. |
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Enbridge and its affiliates allocated direct workforce costs to us for our construction projects of $44.3 million, $51.7 million and $33.1 million during 2014, 2013 and 2012, respectively, that we recorded as additions to “Property, plant and equipment, net” on our consolidated statements of financial position. |
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Insurance Allocation Agreement |
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We participate in the comprehensive insurance program that is maintained by Enbridge for it and its subsidiaries. In December 2012, the Partnership entered into an insurance allocation agreement with Enbridge and another Enbridge subsidiary, which was amended and restated on November 13, 2013, to add MEP as a party. Under this agreement, in the unlikely event multiple insurable incidents occur which exceed coverage limits within the same insurance period, the total insurance coverage will be allocated among the Enbridge entities on an equitable basis. |
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Sale of Accounts Receivable |
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Certain of our subsidiaries entered into a receivables purchase agreement, dated June 28, 2013, and amended on September 20, 2013 and December 2, 2013, which we refer to as the Receivables Agreement, with an indirect wholly-owned subsidiary of Enbridge. The Receivables Agreement and the transactions contemplated thereby were approved by the special committee of the board of directors of Enbridge Management. Pursuant to the Receivables Agreement, the Enbridge subsidiary will purchase on a monthly basis, for cash, current accounts receivable and accrued receivables, or the receivables, of the respective subsidiaries initially up to a monthly maximum of $450.0 million. Following the sale and transfer of the receivables to the Enbridge subsidiary, the receivables are deposited in an account of that subsidiary, and ownership and control are vested in that subsidiary. The Enbridge subsidiary has no recourse with respect to the receivables acquired from these operating subsidiaries under the terms of and subject to the conditions stated in the Receivables Agreement. |
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We and MEP act in an administrative capacity as collection agents on behalf of the Enbridge subsidiary and can be removed at any time in the sole discretion of the Enbridge subsidiary. We have no other involvement with the purchase and sale of the receivables pursuant to the Receivables Agreement. The Receivables Agreement terminates on December 30, 2016. |
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Consideration for the receivables sold is equivalent to the carrying value of the receivables less a discount for credit risk. The difference between the carrying value of the receivables sold and the cash proceeds received is recognized in “Operating and administrative-affiliate” expense in our consolidated statements of income. For the years ended December 31, 2014 and 2013, the cost stemming from the discount on the receivables sold was not material. |
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For the years ended December 31, 2014 and 2013, we sold and derecognized receivables of $4,987.0 million and $2,241.5 million, respectively. For the years ended December 31, 2014 and 2013, the cash proceeds were $4,985.7 million and $2,235.7 million, respectively, which was remitted to us through our centralized treasury system. As of December 31, 2014 and 2013, $378.0 million and $380.1 million, respectively, of the receivables were outstanding and had not been collected on behalf of the Enbridge subsidiary. |
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As of December 31, 2014, and December 31, 2013, we had $71.9 million and $69.4 million, respectively, included in “Restricted cash” on our consolidated statements of financial position, consisting of cash collections related to the Receivables sold that have yet to be remitted to the Enbridge subsidiary as of December 31, 2014. |
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Line 6A and 6B Expense Reimbursement |
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For the years ended December 31, 2014, 2013 and 2012, we have reimbursed Enbridge $0.4 million, $0.5 million and $4.1 million, respectively, for its assistance with the administration and clean-up efforts for our Line 6A and 6B crude oil releases. For further details related to our Line 6A and 6B crude oil releases, refer to Note 13. Commitments and Contingencies—Lakehead Lines 6A and 6B Crude Oil Releases. |
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Affiliate Revenues and Purchases |
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We purchase natural gas from third-parties, which subsequently generates operating revenues from sales to Enbridge and its affiliates. These transactions are entered into at the market price on the date of sale and are presented in “Commodity sales - affiliate” on our Consolidated Statements of Income. We also record operating revenues in our Liquids segment for storage, transportation and terminaling services we provide to affiliates, which are presented in “Transportation and other services – affiliate” on our Consolidated Statements of Income. |
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We also purchase natural gas from Enbridge and its affiliates for sale to third-parties at market prices on the date of purchase. Included in our results for the years ended December 31, 2014, 2013 and 2012, are costs for natural gas purchases of $119.2 million, $119.5 million and $287.9 million, respectively, related to these purchases. Purchases of natural gas, NGLs, and crude oil from Enbridge and its affiliates are presented in “Commodity costs - affiliate” on our consolidated statements of income. |
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Facilities Cost Reimbursement Agreement |
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In 2007, we entered into an agreement with Enbridge Pipelines to install and operate certain sampling and related facilities for the purpose of improving the quality of crude oil and the transportation services on our Lakehead system, which directly increases the transportation services revenue of Enbridge Pipelines. As compensation for installing and operating these transportation facilities, Enbridge Pipelines makes annual payments to us on a cost of service basis. The income we recorded for providing these transportation services in 2014, 2013 and 2012 was approximately $0.8 million, $0.8 million and $0.8 million, respectively. |
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General Partner Equity Transactions |
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Our General Partner owns an effective 2% general partner interest in us. Pursuant to our partnership agreement we paid cash distributions to our General Partner of $79.5 million, $139.3 million and $122.3 million for the years ended December 31, 2014, 2013 and 2012, respectively. The cash distributions we make to our General Partner exclude an amount equal to 2% of the i-units, which we retain from the General Partner to maintain its 2% general partner interest in us. |
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As of December 31, 2014, and 2013, our General Partner owned 46,518,336 Class A common units, representing a 10.4% and 12.3% limited partner voting interest in us for the respective years. We paid the General Partner cash distributions of $102.2 million, $101.1 million and $100.1 million for the years ended December 31, 2014, 2013 and 2012, respectively, with respect to its ownership of Class A common units. |
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As of December 31, 2014, and 2013, our General Partner also owned 7,825,500 Class B common units, representing a 1.7% and 2.1% limited partner voting interest in us for the respective years. We paid the General Partner cash distributions of $17.2 million, $17.0 million and $16.8 million for the years ended December 31, 2014, 2013 and 2012, respectively, with respect to its ownership of Class B common units. |
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As of December 2014, our General Partner also owned 48,000,000 Series 1 Preferred Units, representing 9.6% and 11.5% of limited partner voting interests in the partnership for December 31, 2014, and 2013, respectively. |
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The following table presents our issuances of limited partner interests where our General Partner made a contribution to retain its 2% general partner interest: |
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Issuance Dates | | Number of Class A common | | Offering Price | | Net Proceeds | | General | | Net Proceeds Including General Partner Contribution | |
units Issued | | | | |
| per Class A | to the | Partner | |
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| common unit (1) | Partnership (2) | Contribution | |
| | | | (in millions, except units and per unit amount) |
2012 | | | | | | | | | | | |
September | | | | 16,100,000 | | | $ | 28.64 | | | $ | 446.8 | | | $ | 9.4 | | | $ | 456.2 | | |
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(1) The offering price per unit listed for the Equity Distribution Agreement, or EDA, issuances is a calculated average unit price for the periods indicated. | |
(2)Net of underwriters' fees and discounts, commissions and issuance expenses. | |
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Conflicts of Interest |
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Enbridge Management makes all decisions relating to the management of our business and affairs through a delegation of control agreement with our General Partner and us. Our General Partner owns the voting shares of Enbridge Management and elects all of its directors. Enbridge, through its wholly-owned subsidiary, Enbridge Pipelines, owns all the common stock of our General Partner. Some of our General Partner's directors and officers are also directors and officers of Enbridge and Enbridge Management and have fiduciary duties to manage the business of Enbridge and Enbridge Management in a manner that may not be in the best interests of our unitholders. Certain conflicts of interest could arise as a result of the relationships among Enbridge Management, our General Partner, Enbridge and us. Our partnership agreement and the delegation of control agreement contain provisions that allow Enbridge Management to take into account the interest of all parties in addition to those of our unitholders in resolving conflicts of interest, thereby limiting its fiduciary duties to our unitholders, as well as provisions that may restrict the remedies available to our unitholders for actions taken that might, without such limitations, constitute breaches of fiduciary duty. |
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Enbridge Management |
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Pursuant to the delegation of control agreement between Enbridge Management, our General Partner and us, and our partnership agreement, we pay all expenses relating to Enbridge Management. This includes Texas franchise taxes and other capital-based foreign, state and local taxes not otherwise paid or reimbursed pursuant to a tax indemnification agreement between Enbridge and Enbridge Management on behalf of Enbridge Management. |
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Related Party Transactions with Joint Ventures |
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We have a 35% aggregate indirect interest in the Texas Express NGL system, which is comprised of two joint ventures with third parties that together include a 593-mile NGL intrastate transportation pipeline and a related NGL gathering system that was placed into service in the fourth quarter of 2013. Our equity investment in the Texas Express NGL system at December 31, 2014 and 2013, was $380.6 million and $371.3 million, respectively, which is included on our consolidated statements of financial position in “Other assets, net.” For the year ended December 31, 2014 and 2013, we recognized $13.2 million and $(1.0) million of equity earnings (losses), respectively, in “Other income (expense)” on our consolidated statements of income related to our investment in the system. |
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For the year ended December 31, 2014 and 2013, we incurred $21.9 million and $3.2 million, respectively, of pipeline transportation and demand fees from Texas Express NGL system for our Natural Gas business. We did not incur any fees from the Texas Express NGL system for the year ended December 31, 2012. These expenses are recorded in “Commodity costs – affiliate” on our consolidated statements of income. |
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Our Natural Gas business has made commitments to transport up to 120,000 bpd of NGLs on the Texas Express NGL system from 2014 to 2022. |
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Financing Transactions with Affiliates |
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Distribution from MEP |
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The following table presents distributions paid by MEP to its public Class A common unitholders and us during the year ended December 31, 2014, representing the noncontrolling interest in MEP. |
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Distribution | | Distribution | | | Amount Paid to | | Amount Paid to the | | Total MEP | | | | | | | |
Declaration Date | | Payment Date | | | EEP | | noncontrolling interest | | Distribution | | | | | | | |
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30-Oct-14 | | 14-Nov-14 | | | $ | 8.4 | | | $ | 7.2 | | | $ | 15.6 | | | | | | | | |
31-Jul-14 | | 14-Aug-14 | | | | 8.1 | | | | 6.9 | | | | 15 | | | | | | | | |
29-Apr-14 | | 15-May-14 | | | | 7.8 | | | | 6.6 | | | | 14.4 | | | | | | | | |
29-Jan-14 | | 14-Feb-14 | | | | 4.2 | | | | 3.5 | | | | 7.7 | | | | | | | | |
| | | | | $ | 28.5 | | | $ | 24.2 | | | $ | 52.7 | | | | | | | | |
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Joint Funding Arrangement for Alberta Clipper Pipeline |
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In July 2009, we entered into a joint funding arrangement to finance the construction of the United States segment of the Alberta Clipper Pipeline with several of our affiliates and affiliates of Enbridge, which we refer to as the Series AC. As part of the joint funding arrangement, we have borrowings outstanding and payable to our General Partner under a promissory note, which we refer to as the A1 Term Note. The A1 Term Note bears interest at a fixed rate of 5.20% and has a maximum loan amount of $400.0 million. Pursuant to the terms of the A1 Term Note, we are required to make semi-annual payments of principal and accrued interest. The semi-annual principal payments are based upon a straight-line amortization of the principal balance over a 30 year period as set forth in the approved terms of the cost of service recovery model associated with the Alberta Clipper Pipeline, with the unpaid balance due in 2020. The A1 Term Note has recourse only to the assets of the United States portion of the Alberta Clipper Pipeline and is subordinate to all of our senior indebtedness. |
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A summary of the cash activity for the A1 Term Note for the years ended December 31, 2014, 2013 and 2012, are as follows: |
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| | A1 Term | | | | | | | | | | | | | | | | | | | |
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| | (in millions) | | | | | | | | | | | | | | | | | | | |
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Balance at December 31, 2012 | | $ | 330 | | | | | | | | | | | | | | | | | | | |
Repayments | | | (12.0 | ) | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2013 | | | 318 | | | | | | | | | | | | | | | | | | | |
Repayments | | | (12.0 | ) | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2014 | | $ | 306 | | | | | | | | | | | | | | | | | | | |
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We incurred interest expense under the A1 Term Note of $24.3 million, $25.2, and $26.2 million for the years ended December 31, 2014, 2013 and 2012, respectively. We have presented the amounts in “Interest expense, net” on our consolidated statements of income. |
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On January 2, 2015, we completed a transaction pursuant to which the General Partner and its affiliates contributed to us the remaining 66.7% interest in the U.S. segment of the Alberta Clipper Pipeline in exchange for approximately 18,114,975 units of a new class of limited partner interests designated as Class E units with an aggregate value of $694.0 million. As part of this transaction, we repaid the borrowings outstanding of $306.0 million on the A1 Term Note. See Note 21. Subsequent Events for more information about this transaction. |
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Distribution to Series AC Interests |
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The following table presents distributions paid by the OLP to our General Partner and its affiliate during the years ended December 31, 2014, 2013 and 2012, representing the noncontrolling interest in the Series AC and to us, as the holders of the Series AC general and limited partner interests. The distributions were declared by the board of directors of Enbridge Management, acting on behalf of Enbridge Pipelines (Lakehead) L.L.C., the managing general partner of the OLP and the Series AC interests. |
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Distribution | | Distribution | | | Amount Paid to | | Amount Paid to the | | Total Series AC | | | | | | | |
Declaration Date | Payment Date | | | | | | | | | | |
| | Partnership | noncontrolling interest | Distribution | | | | | | | |
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2014 | | | | | | | | | | | | | | | | |
31-Oct | | 14-Nov | | | $ | 10.1 | | | $ | 20.3 | | | $ | 30.4 | | | | | | | | |
31-Jul | | 14-Aug | | | | 7.4 | | | | 14.8 | | | | 22.2 | | | | | | | | |
30-Apr | | 15-May | | | | 6.6 | | | | 13.1 | | | | 19.7 | | | | | | | | |
30-Jan | | 14-Feb | | | | 6.4 | | | | 12.8 | | | | 19.2 | | | | | | | | |
| | | | | $ | 30.5 | | | $ | 61 | | | $ | 91.5 | | | | | | | | |
2013 | | | | | | | | | | | | | | | | | | | | | | |
31-Oct | | 14-Nov | | | $ | 7 | | | $ | 14.1 | | | $ | 21.1 | | | | | | | | |
29-Jul | | 14-Aug | | | | 5.5 | | | | 11 | | | | 16.5 | | | | | | | | |
30-Apr | | 15-May | | | | 7.5 | | | | 14.9 | | | | 22.4 | | | | | | | | |
30-Jan | | 14-Feb | | | | 6.9 | | | | 13.8 | | | | 20.7 | | | | | | | | |
| | | | | $ | 26.9 | | | $ | 53.8 | | | $ | 80.7 | | | | | | | | |
2012 | | | | | | | | | | | | | | | | | | | | | | |
31-Oct | | 14-Nov | | | $ | 6.5 | | | $ | 12.9 | | | $ | 19.4 | | | | | | | | |
30-Jul | | 14-Aug | | | | 7.2 | | | | 14.4 | | | | 21.6 | | | | | | | | |
30-Apr | | 15-May | | | | 8.4 | | | | 16.8 | | | | 25.2 | | | | | | | | |
30-Jan | | 14-Feb | | | | 7.9 | | | | 15.8 | | | | 23.7 | | | | | | | | |
| | | | | $ | 30 | | | $ | 59.9 | | | $ | 89.9 | | | | | | | | |
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Joint Funding Arrangement for Eastern Access Projects |
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In May 2012, we amended and restated partnership agreement of the OLP to establish an additional series of partnership interests, which we refer to as the EA interests. The EA interests were created to finance projects to increase access to refineries in the United States Upper Midwest and in Ontario, Canada for light crude oil produced in western Canada and the United States, which we refer to as the Eastern Access Projects. From May 2012 through June 27, 2013, our General Partner indirectly owned 60% all assets, liabilities and operations related to the Eastern Access Projects. |
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On June 28, 2013, we and our affiliates entered into an agreement with our General Partner pursuant to which we exercised our option to decrease our economic interest and funding of the Eastern Access Projects from 40% to 25%. Additionally, within one year of the in-service date, scheduled for early 2016, we have the option to increase our economic interest by up to 15 percentage points. We received $90.2 million from our General Partner in consideration for our assignment to it of this portion of our interest, determined based on the capital we had funded prior to June 28, 2013 pursuant to Eastern Access Projects. Our General Partner now owns 75% of the EA interests, and the Eastern Access Projects are jointly funded by our General Partner at 75% and us at 25%. |
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Our General Partner made equity contributions totaling $622.5 million and $609.2 million to the OLP for the years ended December 31, 2014 and 2013, respectively to fund its equity portion of the construction costs associated with the Eastern Access Projects. |
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Distribution to Series EA Interests |
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The following table presents distributions paid by the OLP to our General Partner and its affiliate during the year ended December 31, 2014, representing the noncontrolling interest in the Series EA, and to us, as the holders of the Series EA general and limited partner interests. The distributions were declared by the board of directors of Enbridge Management, acting on behalf of Enbridge Pipelines (Lakehead), L.L.C., the managing general partner of the OLP and the Series EA interests. |
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Distribution | | Distribution | | | Amount Paid to | | Amount Paid to the | | Total Series EA | | | | | | | |
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Declaration Date | | Payment Date | | | EEP | | noncontrolling interest | | Distribution | | | | | | | |
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| | | | | (in millions) | | | | | | | |
31-Oct-14 | | 14-Nov-14 | | | $ | 14.6 | | | $ | 43.7 | | | $ | 58.3 | | | | | | | | |
31-Jul-14 | | 14-Aug-14 | | | | 5.6 | | | | 16.7 | | | | 22.3 | | | | | | | | |
29-Apr-14 | | 15-May-14 | | | | 2.5 | | | | 6.5 | | | | 9 | | | | | | | | |
| | | | | $ | 22.7 | | | $ | 66.9 | | | $ | 89.6 | | | | | | | | |
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Joint Funding Arrangement for U.S. Mainline Expansion Projects |
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In December 2012, the OLP further amended and restated its limited partnership agreement to establish another series of partnership interests, which we refer to as the ME interests. The ME interests were created to finance projects to increase access to the markets of North Dakota and western Canada for light oil production on our Lakehead System between Neche, North Dakota and Superior, Wisconsin, which we refer to as our Mainline Expansion Projects. From December 2012 through June 27, 2013, the projects were jointly funded by our General Partner at 60% and the Partnership at 40%, under the Mainline Expansion Joint Funding Agreement, which parallels the Eastern Access Joint Funding Agreement. |
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On June 28, 2013, we and our affiliates entered into an agreement with our General Partner pursuant to which we exercised our option to decrease our economic interest and funding in the projects from 40% to 25%. Additionally, within one year of the in-service date, currently scheduled for 2016, we have the option to increase our economic interest held at that time by up to 15 percentage points. All other operations are captured by the Lakehead interests. We received $12.0 million from our General Partner in consideration for our economic interest. Our General Partner now owns 75% of the ME interests, and the U.S. Mainline Expansion Projects are jointly funded by our General Partner at 75% and us at 25%. |
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Our General Partner has made equity contributions totaling $577.5 million and $159.9 million to the OLP for the years ended December 31, 2014 and 2013, respectively to fund its equity portion of the construction costs associated with the U.S. Mainline Expansion Projects. |
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Distribution to Series ME Interests |
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The following table presents distributions paid by the OLP to our General Partner and its affiliate during the year ended December 31, 2014, representing the noncontrolling interest in the Series ME, and to us, as the holders of the Series ME general and limited partner interests. The distributions were declared by the board of directors of Enbridge Management, acting on behalf of Enbridge Pipelines (Lakehead), L.L.C., the managing general partner of the OLP and the Series ME interests. |
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Distribution | | Distribution | | | Amount Paid to | | Amount Paid to the | | Total Series EA | | | | | | | |
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Declaration Date | | Payment Date | | | EEP | | noncontrolling interest | | Distribution | | | | | | | |
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| | | | | (in millions) | | | | | | | |
31-Oct-14 | | 14-Nov-14 | | | $ | 0.6 | | | $ | 1.9 | | | $ | 2.5 | | | | | | | | |
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Noncontrolling Interests |
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The following table presents the components of net income attributable to noncontrolling interests as presented on our Consolidated Statements of Income: |
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| | | For the year ended December 31 | | | | | | | | | |
| | | 2014 | | 2013 | | 2012 | | | | | | | | | |
| | | | (in millions) | | | | | | | | |
Alberta Clipper Interests | | | $ | 54.6 | | | $ | 52.6 | | | $ | 53.9 | | | | | | | | | | |
Eastern Access Interests | | | | 145.3 | | | | 32.1 | | | | 3.4 | | | | | | | | | | |
U.S. Mainline Expansion Interests | | | | 33.8 | | | | 4.3 | | | | (0.3 | ) | | | | | | | | | |
Midcoast Energy Partners, L.P. | | | | 29.6 | | | | (0.7 | ) | | | - | | | | | | | | | | |
Total | | | $ | 263.3 | | | $ | 88.3 | | | $ | 57 | | | | | | | | | | |
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Midcoast Energy Partners, L.P. |
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On November 13, 2013, MEP completed its initial public offering of Class A common units, representing limited partner interests in MEP. On the same date, in connection with the closing of that offering, certain transactions, among others, occurred pursuant to which we effectively conveyed to MEP all of our limited liability company interests in the general partner of the operating subsidiary of MEP, or Midcoast Operating and a 39% limited partner interest in Midcoast Operating, in exchange for certain MEP Class A common units and MEP Subordinated Units, approximately $304.5 million in cash as reimbursement for certain capital expenditures with respect to the contributed businesses, and a right to receive $323.4 million in cash. Also in connection with the closing of that offering, on November 13, 2013, we entered into the following agreements: |
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Omnibus Agreement |
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We, Midcoast Holdings, L.L.C., or the MEP General Partner, MEP, and Enbridge, entered in the Omnibus Agreement to which we agreed to indemnify MEP for certain matters, including environmental, right-of-way and permit matters, and we granted MEP a license to use the Enbridge logo and certain other trademarks and tradenames. The Omnibus Agreement may be terminated by the mutual agreement of the parties, or by either Enbridge or MEP in the event that we cease to control the MEP General Partner, provided that our indemnification obligations will remain in full force and effect until they expire in accordance with their respective terms. |
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Under the Omnibus Agreement, we also agreed to indemnify MEP for all known and certain unknown environmental liabilities that are associated with the ownership or operation of MEP's assets arising prior to the closing of that offering, in each case that are identified prior to the third anniversary of the closing of that offering. Our obligation to indemnify MEP for any environmental liabilities is subject to a $500,000 aggregate deductible before MEP is entitled to indemnification. We will also indemnify MEP for failure to have certain rights-of-way, consents, licenses and permits necessary to own and operate its assets in substantially the same manner in which they were owned and operated prior to the closing of the Offering, including the cost of curing certain such failures that do not allow its assets to be operated in accordance with prudent industry practice, in each case that are identified prior to the third anniversary of the closing of the Offering. Our obligation to indemnify MEP for any right-of-way, consent, license or permit matters will be subject to a $500,000 aggregate deductible before MEP is entitled to indemnification. There will be a $15 million aggregate cap on the amounts for which we will indemnify MEP for environmental, right-of-way, consents, licenses and permit matters under the Omnibus Agreement. |
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Intercorporate Services Agreement |
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We entered into an Intercorporate Service Agreement, or the Intercorporate Services Agreement, with MEP, pursuant to which we will provide MEP with the following services: |
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• executive, management, business development, administrative, legal, human resources, records and information management, public affairs, investor relations, government relations and computer support services; |
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• accounting and tax planning and compliance services, including preparation of financial statements and income tax returns, unitholder tax reporting and audit and treasury services; |
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• strategic insurance advice, planning and claims management and related support services, and arrangement of insurance coverage as required; |
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• facilitation of capital markets access and financing services, cash management and related banking services, financial structuring and advisory services, as well as credit support for MEP's subsidiaries and affiliates on an as-needed basis for projects, transactions or other purposes; |
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• operational and technical services, including integrity, safety, environmental, project management, engineering, fundamentals analysis and regulatory, and pipeline control and field operations; and |
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• such other services as MEP may request. |
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Under the Intercorporate Services Agreement, MEP will reimburse the Partnership and its affiliates for the costs and expenses incurred in providing such services to MEP; however, we have agreed to reduce the amounts payable for general and administrative expenses that otherwise would have been allocable to Midcoast Operating by $25.0 million annually. |
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Financial Support Agreement |
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We entered into a Financial Support Agreement with Midcoast Operating, or the Financial Support Agreement, pursuant to which we will provide letters of credit and guarantees, not to exceed $700.0 million in the aggregate at any time outstanding, in support of Midcoast Operating's and its wholly owned subsidiaries' financial obligations under derivative agreements and natural gas and NGL purchase agreements to which Midcoast Operating, or one or more of its wholly owned subsidiaries, is a party. Under the Financial Support Agreement, our support of Midcoast Operating's and its wholly owned subsidiaries' obligations will terminate on the earlier to occur of (1) November 13, 2017, and (2) the date on which EEP owns, directly or indirectly (other than through its ownership interests in MEP), less than 20% of the total outstanding limited partner interests in Midcoast Operating. |
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The Financial Support Agreement also provides that if MEPs bank credit agreement is secured, the Financial Support Agreement also will be secured to the same extent on a second-lien basis. We also have agreed to subordinate our right to payment on obligations owed under the Financial Support Agreement and Working Capital Credit Facility (defined below) and liens, if secured, to the rights of the lenders under the MEP credit agreement. |
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Amended and Restated Allocation Agreement |
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MEP entered into an Amended and Restated Allocation Agreement, or the Insurance Allocation Agreement, by and among MEP, Enbridge, EEP and Enbridge Income Fund Holdings Inc., in order to participate in the comprehensive insurance program that is maintained by Enbridge for it and its subsidiaries. Under the Insurance Allocation Agreement, in the unlikely event that multiple insurable incidents occur that exceed coverage limits within the same insurance period, the total insurance coverage available to Enbridge and its subsidiaries under the insurance program will be allocated among the participating Enbridge entities on an equitable basis. |
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Working Capital Credit Facility |
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On November 13, 2013, we entered into a $250.0 million Working Capital Loan Agreement, or the Working Capital Credit Facility, by and between Midcoast Operating, as borrower, and us, as lender. On October 30, 2014, Midcoast Operating notified us that it was exercising its right to terminate the Working Capital Agreement upon 30-days' notice, and such termination occurred in the fourth quarter of 2014. As of December 31, 2014, there were no outstanding borrowings under the Working Capital Agreement. |
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