RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2013

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 12      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, 2013 (2012 – $1 million and $2 million).

As operator, TransCanada’s subsidiaries provide capital and operating services to our pipeline systems. TransCanada’s subsidiaries incur costs on behalf of our pipeline systems, including, but not limited to, employee salary and benefit costs, and property and liability insurance costs.

Capital and operating costs charged to our pipeline systems for the three and nine months ended September 30, 2013 and 2012 by TransCanada’s subsidiaries and amounts payable to TransCanada’s subsidiaries at September 30, 2013 and December 31, 2012 are summarized in the following tables:

	Three months ended		Nine months ended
(unaudited)	September 30,		September 30,
(millions of dollars)	2013	2012	2013	2012
Capital and operating costs charged by TransCanada’s subsidiaries to:
Great Lakes (a)	7	8	23	24
Northern Border (a)	7	7	21	22
GTN (a)	7	7	21	21
Bison (a)	1	1	4	4
North Baja	1	1	3	3
Tuscarora	1	1	3	3
Impact on the Partnership’s net income:
Great Lakes	3	4	10	11
Northern Border	3	3	10	10
GTN	5	2	14	5
Bison	1	-	3	1
North Baja	1	1	3	3
Tuscarora	1	1	3	3

(a) Represents 100 percent of the costs.

(unaudited)
(millions of dollars)	September 30, 2013	December 31, 2012
Amount payable to TransCanada’s subsidiaries for costs charged in the period by:
Great Lakes (a)	2	4
Northern Border (a)	3	4
GTN (a)	3	3
Bison (a)	-	1
North Baja	-	1
Tuscarora	-	1

(a) Represents 100 percent of the costs.

Great Lakes earns transportation revenues from TransCanada and its affiliates under contracts, some of which are provided at discounted rates and some at maximum recourse rates. Great Lakes earned $14 million and $49 million of transportation revenues under these contracts for the three and nine months ended September 30, 2013 (2012 - $17 million and $58 million). These amounts represent 54 percent of total revenues earned by Great Lakes for the three and nine months ended September 30, 2013 (2012 – 37 percent and 41 percent). Great Lakes also earned $1 million of affiliated rental revenue for the three and nine months ended September 30, 2013 (2012 - $1 million and $1 million).

Revenue from TransCanada and its affiliates of $7 million and $23 million are included in the Partnership’s Equity earnings from Great Lakes for the three and nine months ended September 30, 2013 (2012 - $8 million and $27 million). At September 30, 2013, $5 million was included in Great Lakes’ receivables in regards to the transportation contracts with TransCanada and its affiliates (December 31, 2012 - $10 million).

Bison’s former parent made an equity contribution to Bison of $18 million in the second quarter of 2013. This amount represents former parent’s 75 percent share of a $24 million cash call from Bison to repay inter-affiliate debt primarily related to pipeline construction costs, including reclamation and restoration work.

Beginning October 1, 2013, GTN and Bison participate in the Partnership’s cash management program. Prior to this, GTN and Bison were part of TransCanada’s cash management program. This program matches short-term cash surpluses and borrowing requirements of participating subsidiaries, thus minimizing total borrowing from outside sources. Funds advanced under the program are considered to be a loan, accruing interest and repayable on demand. GTN and Bison will receive interest on funds advanced to the Partnership at the rate of interest earned by the Partnership on its short-term cash investments and will pay interest on funds advanced from the Partnership based on the Partnership’s short-term borrowing costs. At September 30, 2013, GTN and Bison had, in aggregate, a demand loan receivable from an affiliate and a demand loan payable to an affiliate of $45 million and nil, respectively (December 31, 2012 - $21 million and $15 million).