10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

F O R M   10-Q

þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIESEXCHANGEACT OF 1934

For the quarterly period ended March 31, 2018

or

oTRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to_____

Commission file number: 000-55864

Kinder Morgan Canada Limited

(Exact name of registrant as specified in its charter)

Alberta, Canada	N/A
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Suite 2700, 300 - 5th Avenue S.W. Calgary, Alberta T2P 5J2

(Address of principal executive offices) (zip code)

Registrant’s telephone number, including area code: 403-514-6780

____________

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Restricted Voting Shares

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes o  No þ

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   þ   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” (in Rule 12b-2 of the Exchange Act).

Large accelerated filer o Accelerated filer o  Non-accelerated filer þ   Smaller reporting company o Emerging growth company þ

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes o  No þ

 As of April 24, 2018, the registrant had 103,661,302 Restricted Voting Shares and 243,455,654 Special Voting Shares outstanding.

KINDER MORGAN CANADA LIMITED TABLE OF CONTENTS
		Page Number
	Glossary	1
	Information Regarding Forward-Looking Statements	2
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Income - Three Months Ended March 31, 2018 and 2017	3
	Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2018 and 2017	4
	Consolidated Balance Sheets - March 31, 2018 and December 31, 2017	5
	Consolidated Statements of Cash Flows - Three Months Ended March 31, 2018 and 2017	6
	Consolidated Statements of Equity - Three Months Ended March 31, 2018 and 2017	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
	Recent Business Developments	23
	Outlook	24
	Results of Operations	24
	Liquidity and Capital Resources	29
	Equity, Dividends and Distributions	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
Signatures		35

EXPLANATORY NOTE

Capitalized terms used throughout this document are defined in “Glossary” below. References to “we,” “us,” “our” and the “Company” are to Kinder Morgan Canada Limited and its majority-owned and/or controlled subsidiaries. We state our financial statements in Canadian dollars. References in this document to “dollars,” “$” or “CAD$” are to the currency of Canada, and references to “U.S.$” or “U.S. dollar” are to the currency of the United States. See “Conversions.”

GLOSSARY
Company Abbreviations
Class A Units	=	the Class A limited partnership units of the Limited Partnership
Class B Units	=	the Class B limited partnership units of the Limited Partnership
Cochin	=	Canadian portion of the U.S. and Canadian Cochin pipeline system
General Partner	=	Kinder Morgan Canada GP Inc.
IPO	=	Initial Public Offering of KML’s Restricted Voting Shares in May 2017
Jet Fuel	=	Jet Fuel pipeline system
KMCI	=	Kinder Morgan Canada Inc.
KML	=	Kinder Morgan Canada Limited and its majority-owned and/or controlled subsidiaries
Kinder Morgan or KMI	=	Kinder Morgan, Inc.
Limited Partnership	=	Kinder Morgan Canada Limited Partnership
LP Units	=	collectively, the Class A Units and the Class B Units
Preferred LP Units	=	the preferred limited partnership units in the Limited Partnership
Puget Sound	=	Puget Sound pipeline system
Restricted Voting Shares	=	the restricted voting shares in the capital of KML
Series 1 Preferred Shares	=	the 12,000,000 cumulative redeemable minimum rate reset Preferred Shares, Series 1 in the capital of KML
Series 3 Preferred Shares	=	the 10,000,000 cumulative redeemable minimum rate reset Preferred Shares, Series 3 in the capital of KML
Preferred Shares	=	collectively all outstanding preferred shares in the capital of KML (if and when issued)
Special Voting Shares	=	the special voting shares in the capital of KML
TMEP	=	Trans Mountain Expansion Project
TMPL	=	Trans Mountain pipeline system
Trans Mountain	=	Trans Mountain Pipeline ULC
Common Industry and Other Terms
/d	=	per day
Adjusted EBITDA	=	adjusted earnings before interest expense, taxes, depreciation and amortization
B.C.	=	the Province of British Columbia
bpd	=	barrels per day
DCF	=	distributable cash flow
D&A	=	depreciation and amortization
EBDA	=	earnings before depreciation and amortization expenses
FASB	=	Financial Accounting Standards Board
FERC	=	Federal Energy Regulatory Commission
GAAP or U.S. GAAP	=	United States Generally Accepted Accounting Principles
LLC	=	limited liability company
MBbl	=	thousand barrels
MMBbl	=	million barrels
MMtonnes	=	million metric tonnes.
NEB	=	National Energy Board
U.S.	=	United States of America

1

Information Regarding Forward-Looking Statements

This report includes forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. They use words such as “anticipate,” “believe,” “intend,” “plan,” “projection,” “forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” or the negative of those terms or other variations of them or comparable terminology. In particular, expressed or implied statements concerning future actions, conditions or events, future operating results or the ability to generate sales, income or cash flow or to pay dividends are forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future actions, conditions or events and future results of operations may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond our ability to control or predict.

Our business, financial condition and results of operations, including our ability to pay cash dividends, are substantially

dependent on our financial condition and results of operations and our successful development of TMEP. As a result, factors or

events that impact our business as well as the costs associated with and the time required to complete (if completed) TMEP are

likely to have a commensurate impact on us, the market price and value of the Restricted Voting Shares and our ability to pay

dividends.

See Item 2. “Management’s Discussion and Analysis—Recent Business Developments—Suspension of Non-Essential Spending on Trans Mountain Expansion Project” included in this report, and“Information Regarding Forward-Looking Statements” and Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017 (2017 Form 10-K) for a more detailed description of factors that may affect the forward-looking statements. You should keep these risk factors in mind when considering forward-looking statements. These risk factors could cause our actual results to differ materially from those contained in any forward-looking statement. Because of these risks and uncertainties, you should not place undue reliance on any forward-looking statement. We will provide updates to projections included in this report when we believe previously disclosed projections no longer have a reasonable basis.

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

KINDER MORGAN CANADA LIMITED CONSOLIDATED STATEMENTS OF INCOME (In millions of Canadian dollars, except per share amounts) (Unaudited)
	Three Months Ended March 31,
	2018		2017
Revenues
Services	163.9		164.0
Product sales and other	0.3		0.5
Total Revenues	164.2		164.5
Operating Costs, Expenses and Other
Operations and maintenance	49.1		49.0
Depreciation and amortization	36.8		34.8
General and administrative	18.4		17.0
Taxes, other than income taxes	9.3		9.8
Other expense, net	0.1		1.8
Total Operating Costs, Expenses and Other	113.7		112.4
Operating Income	50.5		52.1
Other Income (Expense)
Interest, net	(0.3	)	(6.7	)
Foreign exchange (loss) gain	(0.2	)	10.9
Capitalized equity financing costs	11.6		5.5
Other, net	(0.7	)	(0.8	)
Total Other Income	10.4		8.9
Income Before Income Taxes	60.9		61.0
Income Tax Expense	(16.5	)	(14.2	)
Net Income	44.4		46.8
Preferred share dividends	(7.2	)	—
Net Income Attributable to Kinder Morgan Interest	(26.4	)	(46.8	)
Net Income Available to Restricted Voting Stockholders	10.8		—
Restricted Voting Shares
Basic and Diluted Earnings Per Restricted Voting Share	0.10		—
Basic and Diluted Weighted Average Restricted Voting Shares Outstanding	103.5		—
Dividends Per Restricted Voting Share Declared for the Period	0.1625		—

The accompanying notes are an integral part of these consolidated financial statements.

3

KINDER MORGAN CANADA LIMITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions of Canadian dollars)

(Unaudited)

	Three Months Ended March 31,
	2018		2017
Net income	44.4		46.8
Other comprehensive income (loss)
Benefit plans	0.7		0.4
Foreign currency translation adjustments	1.2		(0.5	)
Total other comprehensive income (loss)	1.9		(0.1	)
Comprehensive income	46.3		46.7
Comprehensive income attributable to Kinder Morgan interest	(27.7	)	(46.7	)
Comprehensive income attributable to Kinder Morgan Canada Limited	18.6		—

The accompanying notes are an integral part of these consolidated financial statements.

4

KINDER MORGAN CANADA LIMITED CONSOLIDATED BALANCE SHEETS (In millions of Canadian dollars, except share and per share amounts) (Unaudited)
	March 31, 2018		December 31, 2017
ASSETS
Current assets
Cash and cash equivalents	210.3		238.8
Accounts receivable	74.4		60.3
Accounts receivable-affiliates	3.6		9.0
Inventories	13.2		13.1
Other current assets	21.3		19.4
Total current assets	322.8		340.6
Property, plant and equipment, net	3,921.1		3,708.0
Goodwill	248.0		248.0
Regulatory assets	26.1		22.7
Deferred charges and other assets	118.5		133.4
Total Assets	4,636.5		4,452.7
LIABILITIES AND EQUITY
Current liabilities
Current portion of debt	100.0		—
Accounts payable	191.6		151.4
Accounts payable-affiliates	1.8		0.7
Regulatory liabilities	115.0		107.9
Other current liabilities	47.5		38.3
Total current liabilities	455.9		298.3
Long-term liabilities and deferred credits
Deferred income taxes	342.1		339.5
Pension and postretirement benefits	75.4		75.4
Regulatory liabilities	65.7		43.3
Deferred revenues	56.7		53.5
Other deferred credits	4.4		5.1
Total long-term liabilities and deferred credits	544.3		516.8
Total Liabilities	1,000.2		815.1
Commitments and contingencies (Notes 1, 2 and 11)
Equity
Preferred share capital, 12,000,000 shares of Series 1 and 10,000,000 shares of Series 3, issued and outstanding (Note 3)	537.2		537.2
Restricted Voting Share capital, 103,661,302 and 103,366,905 Restricted Voting Shares, respectively, issued and outstanding (Note 3)	1,713.6		1,707.5
Retained deficit	(775.0	)	(770.0	)
Accumulated other comprehensive loss	(8.2	)	(8.8	)
Total Kinder Morgan Canada Limited equity	1,467.6		1,465.9
Kinder Morgan interest, 243,455,654 and 242,882,897 Special Voting Shares, respectively, issued and outstanding (Note 3)	2,168.7		2,171.7
Total Equity	3,636.3		3,637.6
Total Liabilities and Equity	4,636.5		4,452.7

The accompanying notes are an integral part of these consolidated financial statements.

5

KINDER MORGAN CANADA LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of Canadian dollars)

(Unaudited)

	Three Months Ended March 31,
	2018		2017
Operating Activities
Net income	44.4		46.8
Non-cash items:
Depreciation and amortization	36.8		34.8
Deferred income tax	2.4		14.3
Capitalized equity financing costs	(11.6	)	(5.5	)
Unrealized foreign exchange gain	(0.5	)	(10.9	)
Other non-cash items	5.3		2.5
Change in operating assets and liabilities (Note 10)	25.6		(24.8	)
Cash provided by operating activities	102.4		57.2
Investing Activities
Capital expenditures	(173.9	)	(42.1	)
Contributions to trusts	(2.8	)	(4.4	)
Cash used in investing activities	(176.7	)	(46.5	)
Financing Activities
Issuances of debt	100.0		—
Cash dividends - restricted shares	(11.8	)	—
Dividends - preferred shares	(6.1	)	—
Distributions - Kinder Morgan interest	(31.0	)	—
Debt and preferred shares issuance costs	(4.5	)	—
Cash provided by financing activities	46.6		—
Effect of exchange rate changes on cash, cash equivalents and restricted deposits	(0.6	)	(0.3	)
Net (decrease) increase in Cash, Cash Equivalents and Restricted Deposits	(28.3	)	10.4
Cash, Cash Equivalents and Restricted Deposits, beginning of period	239.5		160.3
Cash, Cash Equivalents and Restricted Deposits, end of period	211.2		170.7
Cash and Cash Equivalents, beginning of period	238.8		159.0
Restricted Deposits, beginning of period	0.7		1.3
Cash, Cash Equivalents, and Restricted Deposits, beginning of period	239.5		160.3
Cash and Cash Equivalents, end of period	210.3		170.2
Restricted Deposits, end of period	0.9		0.5
Cash, Cash Equivalents, and Restricted Deposits, end of period	211.2		170.7
Net (decrease) increase in Cash, Cash Equivalents and Restricted Deposits	(28.3	)	10.4
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for income taxes	7.4		0.2
Non-cash Investing and Financing Activities
Increase in property, plant and equipment from both accruals and contractor retainage	62.7		22.1
Increase (decrease) in property, plant and equipment due to foreign currency translation adjustments	1.1		(1.4	)

The accompanying notes are an integral part of these consolidated financial statements.

6

KINDER MORGAN CANADA LIMITED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)
	Issued shares (in millions)			Canadian dollars (in millions)
	Preferred shares	Restricted Voting Shares	Kinder Morgan Interest - Special Voting Shares	Preferred share capital	Restricted Voting Share capital		Retained deficit		Accumulated other comprehensive loss		Kinder Morgan interest		Total
Balance at December 31, 2017	22.0	103.4	242.9	537.2	1,707.5		(770.0	)	(8.8	)	2,171.7		3,637.6
Net income							18.0				26.4		44.4
Preferred share dividend							(6.1	)					(6.1	)
Restricted voting share dividends							(16.9	)					(16.9	)
Special voting share distributions											(40.9	)	(40.9	)
Dividend/Distribution reinvestment plan		0.3	0.5		5.1						9.9		15.0
Stock-based compensation					1.3								1.3
Other					(0.3	)					0.3		—
Other comprehensive income									0.6		1.3		1.9
Balance at March 31, 2018	22.0	103.7	243.4	537.2	1,713.6		(775.0	)	(8.2	)	2,168.7		3,636.3

	Equity attributable to Kinder Morgan pre-IPO	Retained earnings (deficit)		Accumulated other comprehensive loss		Total
(In millions of Canadian dollars)
Balance at December 31, 2016	1,475.0	(13.1	)	(25.9	)	1,436.0
Net income		46.8				46.8
Other comprehensive loss				(0.1	)	(0.1	)
Balance at March 31, 2017	1,475.0	33.7		(26.0	)	1,482.7

The accompanying notes are an integral part of these consolidated financial statements.

7

KINDER MORGAN CANADA LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  General

The Company was incorporated under the Business Corporations Act (Alberta) on April 7, 2017. On May 30, 2017, we completed an IPO of our Restricted Voting Shares and used the net proceeds of $1,671.0 million to acquire an approximate 30% indirect interest in the Limited Partnership from certain affiliates of Kinder Morgan, who retained an approximate 70% ownership of the limited partnership units in the Limited Partnership.

We have two business segments: (i) the Pipelines segment, which includes the TMPL that currently transports approximately 300,000 bpd of crude oil and refined petroleum from Edmonton, Alberta to Burnaby, B.C.; Puget Sound serving the state of Washington; Jet Fuel serving the Vancouver International Airport; KMCI, the employer of Canadian staff; and Cochin, a 12-inch diameter multi-product pipeline which spans approximately 1,000 kilometers in Saskatchewan and Alberta; and (ii) the Terminals segment, which includes the ownership and operation of liquid product merchant storage and rail terminals in the Edmonton, Alberta market as well as a predominantly dry cargo import/export facility in Vancouver, B.C.

Suspension of Non-Essential Spending on Trans Mountain Expansion Project

On April 8, 2018, we announced that we were suspending all non-essential activities and related spending on TMEP. We also announced that under current circumstances, specifically including the continued actions in opposition to TMEP by B.C., we will not commit additional shareholder resources to TMEP. We further announced that we will consult with various stakeholders in an effort to reach agreements by May 31, 2018 that may allow TMEP to proceed without putting further KML shareholder capital at risk. The Company stated it is difficult to conceive of any scenario in which it would proceed with TMEP if an agreement is not reached by May 31, 2018. The focus in those consultations will be on two principles: clarity on the path forward, particularly with respect to the ability to construct through B.C., and adequate protection of KML shareholders.

We had previously announced a “primarily permitting” strategy for the first half of 2018, focused on advancing the permitting process, rather than spending at full construction levels, until we had obtained greater clarity on outstanding permits, approvals and judicial reviews. Rather than achieving greater clarity, TMEP is now facing unquantifiable risk. Previously, opposition by B.C. was manifesting itself largely through B.C.’s participation in an ongoing judicial review. Unfortunately, B.C. has now been asserting broad jurisdiction and reiterating its intention to use that jurisdiction to stop TMEP. B.C.’s intention in that regard has been neither validated nor quashed, and B.C. has continued to threaten unspecified additional actions to prevent TMEP success. Those actions have created even greater, and growing, uncertainty with respect to the regulatory landscape facing TMEP. In addition, the parties still await judicial decisions on challenges to the original Order in Council and the B.C. Environmental Assessment Certificate approving TMEP. These items, combined with the impending approach of critical construction windows, the lead-time required to ramp up spending, and the imperative that the Company avoid incurring significant debt while lacking the necessary clarity, brought us to the decision we announced on April 8, 2018. Given the current uncertain conditions, we are not updating our cost and schedule estimate at this time. However, construction delays are likely to entail increased costs due to a variety of factors including extended personnel, equipment and facilities charges, storage charges for unused material and equipment, extended debt service, and inflation, among others.

In the event that TMEP is terminated, resulting impairments, foregone capitalized equity costs, and potential wind down costs would have a significant effect on our results of operations. Potential impairments would be recognized primarily in the period in which a decision to terminate is made.

Also, see Note 11 for further information on TMEP.

Basis of Presentation

General

In January 2018, we completed the registration of our Restricted Voting Shares pursuant to Section 12(g) of the United States Securities Exchange Act of 1934 (the “Exchange Act”) and are subject to the reporting requirements of Section 13(a) of the Exchange Act.

We have prepared the accompanying unaudited consolidated financial statements in accordance with the accounting principles contained in the FASB Accounting Standards Codification, the single source of U.S. GAAP and referred to in this report

8

as the Codification. U.S. GAAP means generally accepted accounting principles that the Securities Exchange Commission (“SEC”) has identified as having substantial authoritative support, as supplemented by Regulation S-X under the Exchange Act, as amended from time to time. Under such rules and regulations, all significant intercompany items have been eliminated in consolidation.

In our opinion, all adjustments, which are of a normal and recurring nature, considered necessary for a fair statement of our financial position and operating results for the interim periods have been included in the accompanying consolidated financial statements. Interim results are not necessarily indicative of results for a full year; accordingly, you should read these consolidated financial statements in conjunction with our consolidated financial statements and related notes included in our 2017 Form 10-K.

Amounts are stated in Canadian dollars unless otherwise noted which is the functional currency of most of our operations.

Presentation of Kinder Morgan Interest

As of and for the reporting periods after May 30, 2017, Kinder Morgan’s economic interest in the Limited Partnership is reflected within “Kinder Morgan interest” in our consolidated balance sheets and earnings attributable to Kinder Morgan’s economic ownership interest in the Limited Partnership is presented in “Net Income Attributable to Kinder Morgan Interest” in our consolidated statements of income.

Prior to the IPO, Kinder Morgan controlled all of our equity which is presented as “Equity attributable to Kinder Morgan pre-IPO” in our statement of equity for the three months ended March 31, 2017. For the periods after the IPO, “Kinder Morgan interest” is separately presented in our consolidated statement of equity for the three months ended March 31, 2018, and includes its share of our net income and other comprehensive loss, along with its Class B Units distributions and distribution reinvestment plan activities.

Accounting Policy Changes

Adoption of New Accounting Pronouncements

On January 1, 2018, we adopted Accounting Standards Updates (ASU) No. 2014-09, “Revenue from Contracts with Customers,” and a series of related accounting standard updates designed to create improved revenue recognition and disclosure comparability in financial statements. For more information, see Note 6.

On January 1, 2018, we retroactively adopted ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” This ASU requires the statements of cash flows to present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents are now included with cash and cash equivalents when reconciling the beginning of period and end of period amounts presented on the statements of cash flows. The retrospective application of this new accounting guidance resulted in a decrease of $0.8 million in “Cash used in investing activities,” an increase of $1.3 million in “Cash, Cash Equivalents, and Restricted Deposits, beginning of the period,” and an increase of $0.5 million in “Cash, Cash Equivalents, and Restricted Deposits, end of period” in our accompanying consolidated statement of cash flows from what was previously presented for the three months ended March 31, 2017.

On January 1, 2018, we adopted ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715).”  This ASU requires an employer to disaggregate the service cost component from the other components of net benefit cost, allows only the service cost component of net benefit cost to be eligible for capitalization, and establishes how to present the service cost component and the other components of net benefit cost in the income statement.  Topic 715 required us to retrospectively reclassify $1.0 million of other components of net benefit credits (excluding the service cost component) from “General and administrative” to “Other, net” in our accompany consolidated statement of income for three months ended March 31, 2017.  We prospectively applied Topic 715 related to net benefit costs eligible for capitalization.

2. Debt

Credit Facility

As of March 31, 2018, we were in compliance with all required covenants under our Credit Facility. As of March 31, 2018 and December 31, 2017, we had $100.0 million and no outstanding borrowings on our Credit Facility, respectively. As of March 31, 2018, the weighted average interest rate on our Credit Facility borrowings was 3.14%. For the three months ended March 31, 2018 and 2017, we incurred standby fees of $4.0 million and none, respectively.

9

On January 23, 2018, we entered into an agreement amending certain terms of our Credit Facility to, among other things, provide additional funding certainty with respect to each tranche under our Credit Facility. Material terms of the Credit Facility are further described in Note 9 to our consolidated financial statements included in our 2017 Form 10-K.

Fair Value of Financial Instruments

The carrying value and estimated fair value of our debt balances are disclosed below: 

	March 31, 2018		December 31, 2017
	Carrying value	Estimated fair value	Carrying value	Estimated fair value
(In millions of Canadian dollars)
Total debt	100.0	100.0	—	—

Level 2 input values were used to measure the estimated fair value of the long term debt balance as of March 31, 2018.

3. Equity

As of March 31, 2018, we had (i) 103.7 million and 243.4 million of Restricted Voting Shares and Special Voting Shares outstanding, respectively, with no par value for an aggregate of 347.1 million voting shares outstanding (ii) 12.0 million and 10.0 million of Series 1 Preferred Shares and Series 3 Preferred Shares outstanding, respectively, and (iii) 0.8 million of restricted stock awards outstanding.

Preferred Share Dividends

The following table provides information regarding dividends paid, and declared, but not yet paid, as applicable, on our Preferred Shares during the three months ended March 31, 2018:

Period	Total Series 1 quarterly dividend per share for the period	Total Series 3 quarterly dividend per share for the period(a)	Date of declaration	Date of record	Date of dividend	Total amount of dividends paid in cash
(In millions of Canadian dollars, except per share amounts)
November 15, 2017 to February 14, 2018 (a)	0.328125	0.22082	January 17, 2018	January 31, 2018	February 15, 2018	6.1
February 15, 2018 to May 14, 2018	0.328125	0.325	April 18, 2018	April 30, 2018	May 15, 2018

________

(a) Series 3 per share amount reflects that the shares were outstanding for 62 days during the period ended February 14, 2018.

Restricted Voting Share Dividends

The following table provides information regarding dividends paid and declared, but not yet paid, as applicable, on our Restricted Voting Share during the three months ended March 31, 2018.

For the three month period ended	Dividend rate per share	Date of declaration	Date of record	Date of dividend	Total amount of dividends paid in cash(a)	Total amount of dividends paid in form of additional shares
					(In millions of Canadian dollars)
December 31, 2017	0.1625	January 17, 2018	January 31, 2018	February 15, 2018	11.8	5.1
March 31, 2018	0.1625	April 18, 2018	April 30, 2018	May 15, 2018

________

(a) Amount includes notional dividends on outstanding restricted stock awards of $0.1 million.

10

Kinder Morgan Interest Distributions

The following table provides information regarding distributions paid and declared, but not yet paid, as applicable, to Kinder Morgan during the three months ended March 31, 2018.

For the three month period ended	Dividend rate per share	Date of declaration	Date of distribution	Total amount of distribution paid in cash	Total amount of distribution paid in form of additional shares
				(In millions of Canadian dollars)
December 31, 2017	0.1625	January 17, 2018	February 15, 2018	31.0	9.9
March 31, 2018	0.1625	April 18, 2018	May 15, 2018

Earnings per Restricted Voting Share

We calculate earnings per share using the two-class method. Earnings were allocated to Restricted Voting Shares and participating securities based on the amount of dividends paid in the current period plus an allocation of the undistributed earnings or excess distributions over earnings to the extent that each security participates in earnings or excess distributions over earnings. Our unvested restricted stock awards, which may be settled in Restricted Voting Shares issued to employees and non-employee directors and include dividend equivalent payments, do not participate in excess distributions over earnings.

The following table sets forth the allocation of net income available to shareholders of Restricted Voting Shares and participating securities:

	Three Months Ended March 31, 2018
(In millions of Canadian dollars)
Net Income Available to Restricted Voting Stockholders	10.8
Participating securities:
Less: Net income allocated to restricted stock awards(a)	(0.1	)
Net Income Allocated to Restricted Voting Stockholders	10.7
Basic Weighted Average Restricted Voting Shares Outstanding	103.5
Basic Earnings Per Restricted Voting Share	0.10

_______

(a) As of March 31, 2018, there were approximately 0.8 million unvested restricted stock awards.

For the three months ended March 31, 2018, the weighted average maximum number of potential Restricted Voting Share equivalents of 0.8 million unvested restricted stock awards are antidilutive and, accordingly, are excluded from the determination of diluted earnings per Restricted Voting Share.

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4. Transactions with Related Parties

Affiliate Activities

The following table summarizes our related party income statement activity. Revenues, operating costs and capitalized costs are under normal trade terms.

	Three Months Ended March 31,
	2018	2017
(In millions of Canadian dollars)
Income Statement location
Revenues-Services(a)	15.4	14.8
Operations and maintenance and general and administrative expenses	1.9	1.1
Interest expense(b)	—	11.7
Other
Capitalized costs from affiliates in property, plant and equipment	0.2	2.0

______

(a) Amounts represent sales to a customer who is a related party through joint ownership of a joint venture.

(b) 2017 primarily represents interest on long-term debt with affiliates (“KMI Loans”) that was repaid with proceeds form our IPO.

Accounts receivable and payable

Accounts receivable-affiliate and accounts payable-affiliate are non-interest bearing and are settled on demand and, since our IPO, settled monthly.

Other current assets

As of March 31, 2018, we had an affiliate contract account receivable balance of approximately $1.0 million included in “Other current assets” on our accompanying consolidated balance sheets.

5.  Risk Management and Financial Instruments

Credit risk

We are exposed to credit risk, which is the risk that a customer or other counterparty will fail to perform an obligation or settle a liability, resulting in a financial loss to our business, which is primarily concentrated in the crude oil and refined products transportation industry and is dependent upon the ability of our customers to pay for these services. A majority of our customers operate in the oil and gas exploration and development, or energy marketing or transportation industries. We may be exposed to long-term downturns in energy commodity prices, including the price for crude oil, or other credit events impacting these industries. We limit our exposure to credit risk by requiring shippers who fail to maintain specified credit ratings or a suitable financial position to provide acceptable security, generally in the form of guarantees from credit worthy parties or letters of credit from well rated financial institutions. Our cash and cash equivalents are held with major financial institutions, minimizing the risk of non-performance by counter parties.

Interest Rate Risk

We are exposed to interest rate risk attributed to floating rate debt, which is used to finance capital expansion projects, including the TMEP, and general corporate operations. The changes in interest rates may impact future cash flows and the fair value of our financial instruments.

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Foreign Currency Transactions and Translation

Foreign currency transaction gains or losses result from a change in exchange rates between the functional currency of an entity and the currency in which a transaction is denominated. Unrealized and realized gains and losses generated from these transactions are recorded in foreign exchange (loss) gain in the accompanying consolidated statements of income and include:

• Prior to repayment of the KMI Loans utilizing proceeds from our IPO, we were exposed to foreign currency risk related to the U.S. dollar denominated KMI Loans. For the three months ended March 31, 2017, we had unrealized foreign exchange gain of $10.1 million related to the KMI Loans.

• Unrealized foreign exchange gains for the three months ended March 31, 2018 and 2017 were $0.5 million and $0.8 million, respectively, due to changes in exchange rates between the Canadian dollar and the U.S. dollar on U.S. dollar denominated balances. These currency exchange rate fluctuations affect the expected Canadian dollar cash flows on unsettled U.S. dollar denominated transactions, primarily related to cash bank accounts that are denominated in U.S. dollars and affiliate receivables or payables that are denominated in U.S. dollars. We translate the assets and liabilities of Puget Sound that has the U.S. dollar as its functional currency to Canadian dollars at period-end exchange rates.

• Puget Sound operates in the state of Washington, and earns its revenues and incurs most of its expenses in U.S. dollars and Cochin earns its revenues in U.S. dollars. Therefore, fluctuations in the U.S. dollar to Canadian dollar exchange rate can affect the earnings contributed by Puget Sound and Cochin to our overall results. For the three months ended March 31, 2018, we had a realized foreign exchange loss of $0.7 million.

Liquidity risk

Liquidity risk is the risk that we will not be able to meet our financial obligations, including commitments, as they become due. We manage our liquidity risk by ensuring access to sufficient funds to meet our obligations. We forecast cash requirements to ensure funding is available to settle financial liabilities when they become due. Our primary sources of liquidity and capital resources are funds generated from operations and our Credit Facility, see Note 2.

6.  Revenue Recognition

Adoption of Topic 606

Effective January 1, 2018, we adopted ASU No. 2014-09, “Revenue from Contracts with Customers” and the series of related accounting standard updates that followed (collectively referred to as “Topic 606”). We utilized the modified retrospective method to adopt Topic 606, which required us to apply the new revenue standard to (i) all new revenue contracts entered into after January 1, 2018, and (ii) revenue contracts which were not completed as of January 1, 2018. In accordance with this approach, our consolidated revenues for periods prior to January 1, 2018 were not revised. The cumulative effect of the adoption of Topic 606 as of January 1, 2018 and the impact to the financial statement line items for the current year was not material.

Revenue from Contracts with Customers

Beginning in 2018, we account for revenue from contracts with customers in accordance with Topic 606. The unit of account in Topic 606 is a performance obligation, which is a promise in a contract to transfer to a customer either a distinct good or service (or bundle of goods and services) or a series of distinct goods or services provided over a period of time. Topic 606 requires that a contract’s transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each performance obligation in the contract based on relative standalone selling prices and recognized as revenue when (point in time) or as (over time) the performance obligation is satisfied.

Our customer service contracts primarily include transportation service and terminaling service contracts, as described below. Generally, for the majority of these contracts: (i) our promise is to transfer (or stand ready to transfer) a series of distinct integrated services over a period of time, which is a single performance obligation; (ii) the transaction price includes fixed and/or variable consideration, which amount is determinable at contract inception and/or at each month end based on our right to invoice at month end for the value of services provided to the customer that month; and (iii) the transaction price is recognized as revenue over the service period specified in the contract (which can be a day, including each day in a series of promised daily services, a month, a year, or other time increment, including a deficiency makeup period) as the services are rendered using a time-based (passage of time) or units-based (units of service transferred) method for measuring transfer of control of the services

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and progress towards satisfying our performance obligation, based on the nature of the promised service (e.g., firm or non-firm) and the terms and conditions of the contract (e.g., contracts with or without makeup rights).

Firm Services

Firm services (also called uninterruptible services) are services that are promised to be available to the customer at all times during the period(s) covered by the contract, with limited exceptions. Our firm service contracts are typically structured with take-or-pay or minimum volume provisions, which specify minimum service quantities a customer will pay for even if it chooses not to receive or use them in the specified service period (referred to as “deficiency quantities”). We typically recognize the portion of the transaction price associated with such provisions, including any deficiency quantities, as revenue depending on whether the contract prohibits the customer from making up deficiency quantities in subsequent periods, or the contract permits this practice, as follows:

• Contracts without Makeup Rights: If contractually the customer cannot make up deficiency quantities in future periods, our performance obligation is satisfied, and revenue associated with any deficiency quantities is generally recognized as each service period expires. Because a service period may exceed a reporting period, we determine at inception of the contract and at each subsequent reporting period if we expect the customer to take the minimum volume associated with the service period. If we expect the customer to make up all deficiencies in the specified service period (i.e., we expect the customer to take the minimum service quantities), the minimum volume provision is deemed not substantive and we will recognize the transaction price as revenue in the specified service period as the promised units of services are transferred to the customer. Alternatively, if we expect that there will be any deficiency quantities that the customer cannot or will not make up in the specified service period (referred to as “breakage”), we will recognize the estimated breakage amount (subject to the constraint on variable consideration) as revenue ratably over such service period in proportion to the revenue that we will recognize for actual units of service transferred to the customer in the service period. For certain take-or-pay contracts where we make the service, or a part of the service, continuously available over the service period, we typically recognize the take-or-pay amount as revenue ratably over such period based on the passage of time.

• Contracts with Makeup Rights: If contractually the customer can acquire the promised service in a future period and make up the deficiency quantities in such future period (the “deficiency makeup period”), we have a performance obligation to deliver those services at the customer’s request (subject to contractual and/or capacity constraints) in the deficiency makeup period. At inception of the contract, and at each subsequent reporting period, we estimate if we expect that there will be deficiency quantities that the customer will or will not make up. If we expect the customer will make up all deficiencies it is contractually entitled to, any consideration received relating to temporary deficiencies that will be made up in the deficiency makeup period will be deferred as a contract liability, and we will recognize that amount as revenue in the deficiency makeup period when either of the following occurs: (i) the customer makes up the volumes; or (ii) the likelihood that the customer will exercise its right for deficiency volumes then becomes remote (e.g., there is insufficient capacity to make up the volumes, the deficiency makeup period expires). Alternatively, if we expect at inception of the contract, or at the beginning of any subsequent reporting period, that there will be any deficiency quantities that the customer cannot or will not make up (i.e., breakage), we will recognize the estimated breakage amount (subject to the constraint on variable consideration) as revenue ratably over the specified service periods in proportion to the revenue that we will recognize for actual units of service transferred to the customer in those service periods.

Non-Firm Services

Non-firm services (also called interruptible services) are the opposite of firm services in that such services are provided to a customer on an “as available” basis. Generally, we do not have an obligation to perform these services until we accept a customer’s periodic request for service. For the majority of our non-firm service contracts, the customer will pay only for the actual quantities of services it chooses to receive or use, and we typically recognize the transaction price as revenue as those units of service are transferred to the customer in the specified service period (typically a daily or monthly period).

Nature of Revenue by Segment

Pipelines Segment

We provide crude oil and refined petroleum transportation and storage services on a firm or non-firm basis. The regulated tariffs for TMPL, Cochin and Puget Sound are designed to provide revenues sufficient to recover the costs of providing transportation and storage services to shippers, including a return on invested capital. TMPL and Puget Sound are common carrier pipelines, generally providing services on a non-firm basis. The majority of Cochin’s transportation service is provided on a firm basis under

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its current contracts.

TMPL’s revenue is adjusted according to terms prescribed in its toll settlement with shippers as approved by the NEB. Differences between transportation revenue recognized pursuant to its toll settlement and actual toll receipts are recognized as regulatory assets or liabilities and are settled in future tolls.

For Cochin’s firm transportation service, we typically promise to transport on a stand-ready basis the shipper’s minimum volume commitment amount. The shipper is obligated to pay for its volume commitment amount, regardless of whether or not it flows quantities in Cochin’s pipeline. The shipper pays a transaction price typically based on a per-unit rate for quantities transported, including amounts attributable to deficiency quantities.

Our non-firm, interruptible transportation and storage services are provided on TMPL, Cochin and Puget Sound pipelines when and to the extent we determine capacity is available in these pipeline systems and/or terminal storage facilities. The shippers typically pay a per-unit rate for actual quantities of product injected into/withdrawn from storage and/or transported.

Terminals Segment

We provide various types of liquid tank and bulk terminal services. These services are generally comprised of inbound, storage and outbound handling of customer products.

Our liquid tank storage and handling service contracts generally include a promised tank storage capacity provision and prepaid volume throughput of the stored product. In these contracts, we have a stand-ready obligation to perform this contracted service each day over the life of the contract. The customer pays a transaction price typically in the form of a fixed monthly charge and is obligated to pay whether or not it uses the storage capacity and throughput service (i.e., a take-or-pay payment obligation). These contracts generally include a per-unit rate for any quantities we handle at the request of the customer in excess of the prepaid volume throughput amount and also typically include per-unit rates for additional, ancillary services that may be periodically requested by the customer.

Our bulk storage and handling contracts generally include inbound handling of our customers’ dry bulk material product into our storage facility and outbound handling of these products from our storage facility. These services are provided on both a firm and non-firm basis. In our firm bulk storage and handling contracts, we are committed to handle and store on a stand-ready basis the minimum throughput quantity of bulk materials contracted by the customer. The customer is obligated to pay for its minimum volume commitment amount, regardless of whether or not it uses the storage and handling service. The customer pays a transaction price typically based on a per-unit rate for quantities handled, including amounts attributable to deficiency quantities. For non-firm storage and handling services, the customer pays a transaction price typically based on a per-unit rate for quantities handled on an as requested, non-guaranteed basis.

Disaggregation of Revenues

The following table presents our revenues disaggregated by revenue source and type of revenue for each revenue source:

	Three Months Ended March 31, 2018
	Pipelines		Terminals	Total
(In millions of Canadian dollars)
Revenue from contracts with customers
Services
Firm services(a)	12.7		54.6	67.3
Fee-based services	80.9		16.5	97.4
Total revenue from contracts with customers	93.6		71.1	164.7
Other revenues(b)	(3.6	)	3.1	(0.5	)
Total revenues	90.0		74.2	164.2

______

(a) Includes non-cancellable firm service customer contracts with take-or-pay or minimum volume commitment elements, including those contracts where both the price and quantity amount are fixed. In these arrangements, the customer is obligated to pay for the rendered service whether or not the customer chooses to utilize the service. Excludes service contracts with indexed-based pricing, which along with revenues from other contracts are reported as Fee-based services.

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(b) Amounts recognized as revenue under guidance prescribed in Topics of the Accounting Standards Codification other than in Topic 606 and primarily includes regulatory-based adjustments for TMPL and leases.

Contract Balances

Contract assets and contract liabilities are the result of timing differences between revenue recognition, billings and cash collections. We recognize contract assets in those instances where billing occurs subsequent to revenue recognition and our right to invoice the customer is conditioned on something other than the passage of time. Our contract liabilities are substantially related to (i) capital improvements paid for in advance by certain customers generally in our non-regulated businesses, which we subsequently recognize as revenue on a straight-line basis over the initial term of the related customer contracts, and (ii) consideration received from customers for temporary deficiency quantities under minimum volume contracts that we expect will be made up in a future period, which we subsequently recognize as revenue when the customer makes up the volumes or the likelihood that the customer will exercise its right for deficiency volumes becomes remote (e.g., there is insufficient capacity to make up the volumes, the deficiency makeup period expires).

The following table presents the activity in our contract assets and liabilities for the three months ended March 31, 2018:

(In millions of Canadian dollars)
Contract Assets (a)
Balance at December 31, 2017	9.1
Additions	3.8
Transfer to Accounts receivable	(11.6	)
Balance at March 31, 2018	1.3
Contract Liabilities (b)
Balance at December 31, 2017	67.9
Additions	38.1
Transfer to Revenues	(37.6	)
Balance at March 31, 2018	68.4

______

(a) Includes current balances reported within “Other current assets” in our accompanying consolidated balance sheets at March 31, 2018 and December 31, 2017.

(b) Includes current balances of $11.7 million and $14.4 million reported within “Other current liabilities” in our accompanying consolidated balance sheets at March 31, 2018 and December 31, 2017, respectively, and includes non-current balances of $56.7 million and $53.5 million reported within “Deferred revenues” in our accompanying consolidated balance sheets at March 31, 2018 and December 31, 2017, respectively.

Revenue Allocated to Remaining Performance Obligations

The following table presents our estimated revenue allocated to remaining performance obligations for contracted revenue that has not yet been recognized, representing our “contractually committed” revenue as of March 31, 2018 that we will invoice or transfer from contract liabilities and recognize in future periods (in millions of Canadian dollars):

Year	Estimated Revenue
Nine months ended December 31, 2018	252.2
2019	258.5
2020	203.1
2021	185.8
2022	151.5
Thereafter	523.6
Total	1,574.7

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Our contractually committed revenue for purposes of the tabular presentation above is generally limited to service customer contracts which have fixed pricing and fixed volume terms and conditions, generally including contracts with take-or-pay or minimum volume commitment payment obligations. Our contractually committed revenue amounts generally exclude, based on the following practical expedients that we elected to apply, remaining performance obligations for: (i) contracts with index-based pricing or variable volume attributes in which such variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct service that forms part of a series of distinct services; (ii) contracts with an original expected duration of one year or less; and (iii) contracts for which we recognize revenue at the amount for which we have the right to invoice for services performed.

7.  Reportable Segments

Our reportable business segments are based on the way management organizes the enterprise. Each of our reportable business segments represent a component of the enterprise that engages in a separate business activity and for which discrete financial information is available.

Our reportable business segments are:

• Pipelines - the ownership and operation of (i) TMPL that currently transports approximately 300,000 bpd of crude oil and refined petroleum from Edmonton, Alberta to Burnaby, B.C.; (ii) Puget Sound serving the state of Washington; (iii) Jet Fuel serving Vancouver International Airport; (iv) KMCI, the employer of Canadian staff; and (v) Cochin, a 12-inch diameter multi-product pipeline which spans approximately 1,000 kilometers in Saskatchewan and Alberta; and

• Terminals - the ownership and operation of liquid product merchant storage and rail terminals in the Edmonton, Alberta market as well as a predominantly dry cargo import/export facility in North Vancouver, B.C.

We evaluate the performance of our reportable business segments by evaluating our Segment earnings before depreciation and amortization expenses (“Segment EBDA”). We believe that Segment EBDA is a useful measure of our operating performance because it measures segment operating results before D&A and certain expenses that are generally not controllable by the operating managers of our respective business segments, such as general and administrative expense, interest expense, income tax expense and prior to May 2017, the foreign exchange losses (or gains) on the KMI Loans. Our general and administrative expenses include such items as employee benefits, insurance, rentals, certain litigation and shared corporate services including accounting, information technology, human resources and legal services. Certain general and administrative expenses attributable to Trans Mountain are billable as flow through items to shippers and result in incremental revenues.

We consider each period’s earnings before all non-cash D&A expenses to be an important measure of business segment performance for our reporting segments. We account for intersegment sales at market prices, while we account for asset transfers at either market value or, in some instances, book value. Intercompany transactions are eliminated in consolidation.

Financial information by segment follows: 

	Three Months Ended March 31,
	2018	2017
(In millions of Canadian dollars)
Revenues
Pipelines	90.0	89.5
Terminals	74.2	75.0
Total consolidated revenues	164.2	164.5

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	Three Months Ended March 31,
	2018		2017
(In millions of Canadian dollars)
Segment EBDA(a)(b)(c)
Pipelines	63.6		56.3
Terminals	53.6		54.1
Total Segment EBDA	117.2		110.4
D&A	(36.8	)	(34.8	)
Foreign exchange gain (loss) on KMI Loans(c)	—		10.1
General and administrative expenses and corporate charges	(19.2	)	(18.0	)
Interest expense, net	(0.3	)	(6.7	)
Income tax expense	(16.5	)	(14.2	)
Total consolidated net income	44.4		46.8

	March 31, 2018	December 31, 2017
(In millions of Canadian dollars)
Assets
Pipelines	3,245.5	3,077.0
Terminals	1,391.0	1,375.7
Total consolidated assets	4,636.5	4,452.7

_______

(a) Includes operations and maintenance expenses, and taxes, other than income taxes.

(b) Includes revenues and other (income) expense less operating expenses and other, net. Segment EBDA for the three months ended March 31, 2018, and 2017 includes (i) $(0.2) million and $0.7 million, respectively, of foreign exchange gains (losses) due to changes in exchange rates between our Canadian dollar and the U.S. dollar on U.S. dollar denominated balances, and (ii) $11.6 million and $5.5 million, respectively, of capitalized equity financing costs.

(c) The KMI Loans, which represented U.S. dollar denominated long-term notes payable to Kinder Morgan, were settled with proceeds from our IPO.

8.  Income Taxes

Income tax expense included in our accompanying consolidated statements of income is as follows:

	Three Months Ended March 31,
	2018		2017
(In millions of Canadian dollars, except percentages)
Income tax expense	16.5		14.2
Effective tax rate	27.1	%	23.4	%

The effective tax rate for the three months ended March 31, 2018 was consistent with the statutory federal and provincial rate of 27%. The effective tax rate for the three months ended March 31, 2017 was lower than the statutory federal and provincial rate of 27% primarily due to the impact of exchange rate fluctuations in respect of the KMI Loans which resulted in the release of the valuation allowance.

As a result of our IPO and subsequent revaluation (or rebalancing) of our investment in the Limited Partnership, our tax basis exceeds our accounting basis in our investment in the Limited Partnership by approximately $858.0 million. This excess tax basis results in a deferred tax asset of approximately $116.0 million.  A full valuation allowance was taken against this deferred tax asset as we determined it was more likely than not to not be realized.

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9.  Benefit Plans

Components of net benefit cost related to our pension plans and other postretirement benefit (OPEB) plans are as follows:

	Pension				OPEB
	Three Months Ended March 31,
	2018		2017		2018	2017
(In millions of Canadian dollars)
Service cost	2.7		2.1		0.2	0.2
Interest cost	2.1		2.0		0.2	0.2
Expected return on assets	(2.3	)	(1.9	)	—	—
Amortization of net actuarial losses	0.8		1.0		—	—
Total net benefit cost	3.3		3.2		0.4	0.4

10.  Change in Operating Assets and Liabilities

	Three Months Ended March 31,
	2018		2017
(In millions of Canadian dollars)	Cash inflow (outflow)
Accounts receivable	(14.0	)	(22.8	)
Accounts receivable-affiliates	5.4		(29.2	)
Prepaid expenses and deposits	(2.3	)	(4.9	)
Inventories	(0.1	)	(0.3	)
Other current assets	0.4		(3.8	)
Deferred charges and other assets	(3.7	)	(6.7	)
Accounts payable	(4.2	)	(5.6	)
Accounts payable-affiliates	1.1		27.5
Accrued interest-affiliates	—		11.7
Other current liabilities	17.6		15.5
Pension and postretirement benefits	(0.9	)	(0.9	)
Regulatory liabilities and other deferred credits	26.3		(5.3	)
	25.6		(24.8	)

11.  Litigation and Contingencies

Legal Proceedings

We and our subsidiaries are parties to various legal, regulatory and other matters arising from the day-to-day operations of our businesses or certain predecessor operations that may result in claims against the Company. Although no assurance can be given, we believe, based on our experiences to date and taking into account established reserves and insurance, that the ultimate resolution of such items will not have a material adverse impact on our business, financial position, results of operations, cash flows, or dividends to our shareholders. We believe we have meritorious defenses to the matters to which we are a party and intend to vigorously defend the Company. When we determine a loss is probable of occurring and is reasonably estimable, we accrue an undiscounted liability for such contingencies based on our best estimate using information available at that time. If the estimated loss is a range of potential outcomes and there is no better estimate within the range, we accrue the amount at the low end of the range. We disclose contingencies where an adverse outcome may be material, or in the judgment of management, we conclude the matter should otherwise be disclosed. We had no accruals for any outstanding legal proceedings as of March 31, 2018 and December 31, 2017.

Base Line Terminal Project Litigation

On March 2, 2018, Arnett & Burgess Oilfield Construction Limited (“A&B”) filed a statement of claim and certificate of lis pendens, in the Court of Queen’s Bench of Alberta, against Alberta Envirofuels Inc. and Base Line Terminal East Limited Partnership, by its general partner, KM Canada Rail Holdings GP Limited (“BLTELP”). A&B was a contractor on the Base Line

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Terminal Project (the “BTT Project”) and has claimed it is owed $21.2 million, inclusive of goods and services tax, asserting that BLTELP failed to pay A&B for work performed on the BTT Project under a construction services agreement.

On March 26, 2018, A&B filed a separate statement of claim, in the Court of Queen’s Bench of Alberta, against BLTELP solely, asserting that BLTELP failed to pay for work performed under a separate construction services agreement also related to the BTT Project. With respect to the second claim, A&B has claimed it is owed approximately $1 million, inclusive of goods and services tax. We intend to defend both claims vigorously.

TMEP Litigation

There are numerous legal challenges pending before the Federal Court of Appeal which have been filed by various governmental and non-governmental organizations, First Nations or other parties that seek judicial review of the recommendation of the NEB and subsequent decision by the Federal Governor in Council to conditionally approve TMEP. The petitions allege, among other things, that additional consultation, engagement or accommodation is required and that various non-economic impacts of TMEP were not adequately considered. The remedies sought include requests that the NEB recommendation be quashed, that additional consultations be undertaken, and that the order of the Governor in Council approving TMEP be quashed. After provincial elections in B.C. on May 9, 2017, the New Democratic Party and Green Party formed a majority government. The new B.C. government sought and was granted limited intervenor status in the Federal Court of Appeal proceedings to argue against the government’s approval of TMEP.  A hearing was conducted by the Federal Court of Appeal from October 2 through October 13, 2017. A decision is expected in the coming months, and is subject to potential further appeal to the Supreme Court of Canada. Although we believe that each of the foregoing appeals lacks merit, in the event an applicant is successful at the Supreme Court of Canada, among other potential impacts, the NEB recommendation or Governor in Council’s approval may be quashed, permits may be revoked, TMEP may be subject to additional significant regulatory reviews, there may be significant changes to TMEP plans, further obligations or restrictions may be implemented, or TMEP may be stopped altogether, which could materially impact the overall feasibility or economic benefits of TMEP, which in turn would have a material adverse effect on us.

In addition to the judicial reviews of the NEB recommendation report and Governor in Council’s order, two judicial review proceedings have been commenced at the Supreme Court of B.C. (the Squamish Nation and the City of Vancouver). The petitions allege a duty and failure to consult or accommodate First Nations, and generally, among other claims, that the B.C. government ought not to have approved TMEP. Each applicant seeks to quash the Environmental Assessment Certificate (“EAC”) that was issued by the B.C. Environmental Assessment Office. On September 29, 2017, the B.C. government filed evidence in support of the EAC in the judicial review proceeding involving the Squamish Nation. Hearings were conducted in October and November 2017, respectively, for the City of Vancouver and the Squamish Nation judicial review proceedings and the Court took the matters under consideration with decisions expected in the coming months. Although we believe that each of the foregoing appeals lacks merit, in the event that an applicant for judicial review is successful, among other potential impacts, the EAC may be quashed, provincial permits may be revoked, TMEP may be subject to additional significant regulatory reviews, there may be significant changes to TMEP plans, further obligations or restrictions may be imposed, or TMEP may be stopped altogether. In the event that an applicant is unsuccessful at the Supreme Court of B.C., they may further seek to appeal the decision to the B.C. Court of Appeal. Any decision of the B.C. Court of Appeal may be appealed to the Supreme Court of Canada. A successful appeal at either of these levels could result in the same types of consequences described above.

On October 26, 2017 and November 14, 2017, Trans Mountain filed motions with the NEB. The first motion sought to resolve delays experienced by Trans Mountain in obtaining preliminary plan approvals from the City of Burnaby. The second motion sought to establish an NEB process to backstop provincial and municipal processes in a fair, transparent and expedited fashion. On December 7, 2017, the NEB issued an order granting the relief requested by Trans Mountain in respect of its motion related to Burnaby (the “Burnaby Order”). On January 19, 2018, the NEB granted, in part, Trans Mountain’s second motion by establishing a generic process to hear any future motions as they relate to provincial and municipal permitting issues. On February 16, 2018, Burnaby and B.C. applied to the Federal Court of Appeal for leave to appeal the Burnaby Order. On March 23, 2018, the Federal Court of Appeal denied the application. Burnaby or B.C., or both of them, may appeal the decision to the Supreme Court of Canada. A successful appeal at the Supreme Court of Canada could result in the Burnaby Order being quashed.

On April 18, 2018, the Attorney General for British Columbia announced that B.C. will file a reference case by April 30, 2018 presenting a constitutional question to the B.C. Court of Appeal. It is anticipated that the question presented will seek to define the extent of B.C.’s constitutional jurisdiction, if any, to regulate marine or environmental risks or the flow of certain petroleum products into B.C. via federally regulated pipelines. The reference question has yet to be publicly disclosed and must be approved by the cabinet of the B.C. government before filing with the court. The federal government as well as all other provinces in Canada and interested parties will be provided with notice of the reference question and an opportunity to participate in the case. A decision by the B.C. Court of Appeal may be appealed to the Supreme Court of Canada. As a result of the filing or resolution of this or any related reference question, among other potential impacts, the project may be stopped altogether or there

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may be significant changes to TMEP plans. These changes could include further obligations or restrictions on the construction or operation of TMEP, or the prohibition of the construction and operation of TMEP, any one of which could materially impact the overall feasibility or economic benefits of TMEP, which in turn would have a material adverse effect on us. See Note 1 “Suspension of Non-Essential Spending on Trans Mountain Expansion Project.”

Contingencies

We are subject to various legal and regulatory actions and proceedings which arise in the normal course of business. While the final outcome of such actions and proceedings cannot be predicted with certainty, we believe that the resolution of such actions and proceedings will not have a material impact on our financial position or results of operations.

We and our subsidiaries are also subject to environmental cleanup and enforcement actions from time to time. Although we believe our operations are in substantial compliance with applicable environmental law and regulations, risks of additional costs and liabilities are inherent in pipeline and terminal operations, and there can be no assurance that we will not incur significant costs and liabilities. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and enforcement policies under the terms of authority of those laws, and claims for damages to property or persons resulting from our operations, could result in substantial costs and liabilities to us.

Although it is not possible to predict the ultimate outcomes, we believe that the resolution of the environmental matters to which we and our subsidiaries are a party, will not have a material adverse effect on our business, financial position, results of operations or cash flows. As of March 31, 2018 and December 31, 2017, we had $7.1 million and $7.3 million, respectively, accrued for our outstanding matters.

TMEP

The proposed estimated $7.4 billion expansion, which includes capitalized equity and debt financing costs, would increase throughput capacity of the TMPL from approximately 300,000 bpd to 890,000 bpd. Construction related delays could result in increases to the estimated total costs. TMEP has transportation service agreements for a total of 707,500 bpd, representing approximately 80% of the expanded system’s capacity (the maximum amount under the regulated limit imposed by the NEB).

On May 19, 2016, the NEB recommended that the Governor in Council approve TMEP, subject to 157 conditions. On November 29, 2016, the Governor in Council approved TMEP, and directed the NEB to issue Amending Orders AO-003-OC-2 and AO-002-OC-49, and Certificate of Public Convenience and Necessity OC-064, authorizing the construction of TMEP. On January 11, 2017, the government of B.C. announced the issuance of the EAC to Trans Mountain for the B.C. portion of TMEP. The EAC includes 37 conditions that are in addition to, and designed to supplement, the 157 conditions required by the NEB. We have spent a cumulative total, net of contributions in aid of construction, of approximately $1,135.0 million on development of TMEP as of March 31, 2018 (December 31, 2017 - $930.0 million).

We would expect to fund TMEP capital expenditures through: (i) additional borrowings under our Credit Facility; (ii) the issuance of additional Preferred Shares; (iii) the issuance of long-term notes payable; (iv) retained cash flow from operations; and (v) the issuance of additional Restricted Voting Shares; or a combination thereof. See Note 1 “Suspension of Non-Essential Spending on Trans Mountain Expansion Project.”

12.  Recent Accounting Pronouncements

ASU No. 2016-02

On February 25, 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This ASU requires that a lessee recognizes assets and liabilities on the balance sheet for the present value of the rights and obligations created by all leases with terms of more than 12 months. The ASU also will require disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. ASU No. 2016-02 will be effective for us as of January 1, 2019. We are currently reviewing the effect of this ASU to our financial statements.

ASU No. 2016-13

On June 16, 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326).” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology,

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which will result in the more timely recognition of losses. ASU No. 2016-13 will be effective for us as of January 1, 2020. We are currently reviewing the effect of this ASU to our financial statements.

ASU No. 2017-04

On January 26, 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment (Topic 350)” to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU No. 2017-04 will be effective for us as of January 1, 2020. We are currently reviewing the effect of this ASU to our financial statements.

ASU No. 2018-01

On January 25, 2018, the FASB issued ASU No. 2018-01, “Land Easement Practical Expedient for Transition to Topic

842.” This ASU provides an optional transition on practical expedient that, if elected, would not require companies to reconsider its accounting for existing or expired land easements before the adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. ASU No. 2018-01 will be effective for us as of January 1, 2019, and earlier adoption is permitted. We are currently reviewing the effect of this ASU to our financial statements.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 The following discussion and analysis should be read in conjunction with our accompanying interim consolidated financial statements and related notes included elsewhere in this report, and in conjunction with (i) our consolidated financial statements and related notes, and (ii) our management’s discussion and analysis of financial condition and results of operations included in our 2017 Form 10-K.

Subsequent to our IPO, Kinder Morgan retained control of us and the Limited Partnership. As a result we accounted for our acquisition of an approximate 30% economic interest in the Limited Partnership as a transfer of net assets among entities under common control. Therefore, our consolidated financial statements presented herein were derived from the consolidated financial statements and accounting records of Kinder Morgan. The assets and liabilities in these consolidated financial statements have been reflected at historical carrying value of the immediate parents within the Kinder Morgan organization structure including goodwill and purchase price assigned amounts, as applicable. Prior to May 30, 2017, our historical financial statements were presented as combined consolidated financial statements derived from information included within the consolidated financial statements and accounting records of Kinder Morgan. All significant intercompany balances between the companies included in our accompanying consolidated financial statements have been eliminated.

In addition, as of and for the reporting periods after our IPO, Kinder Morgan’s economic interest in the Limited Partnership is reflected within “Kinder Morgan interest” in our consolidated statements of equity and consolidated balance sheets and earnings attributable to Kinder Morgan’s economic ownership interest in the Limited Partnership are presented in “Net Income Attributable to Kinder Morgan Interest” in our consolidated statements of income.

On January 1, 2018, we adopted ASU No. 2014-09, “Revenue from Contracts with Customers” and a series of related

accounting standard updates (collectively referred to as “Topic 606”) designed to create improved revenue recognition and disclosure comparability in financial statements. For more information, see Note 6 “Revenue Recognition” to our accompanying consolidated financial statements.

Recent Business Developments

Suspension of Non-Essential Spending on Trans Mountain Expansion Project

On April 8, 2018, we announced that we were suspending all non-essential activities and related spending on TMEP. We also announced that under current circumstances, specifically including the continued actions in opposition to TMEP by the B.C. government, we will not commit additional shareholder resources to TMEP. We further announced that we will consult with various stakeholders in an effort to reach agreements by May 31, 2018 that may allow TMEP to proceed without putting further KML shareholder capital at risk. The Company stated it is difficult to conceive of any scenario in which it would proceed with TMEP if an agreement is not reached by May 31, 2018. The focus in those consultations will be on two principles: clarity on the path forward, particularly with respect to the ability to construct through B.C., and adequate protection of KML shareholders.

We had previously announced a “primarily permitting” strategy for the first half of 2018, focused on advancing the permitting process, rather than spending at full construction levels, until we had obtained greater clarity on outstanding permits, approvals and judicial reviews. Rather than achieving greater clarity, TMEP is now facing unquantifiable risk. Previously, opposition by B.C. was manifesting itself largely through B.C.’s participation in an ongoing judicial review. Unfortunately, B.C. has now been asserting broad jurisdiction and reiterating its intention to use that jurisdiction to stop TMEP. B.C.’s intention in that regard has been neither validated nor quashed, and B.C. has continued to threaten unspecified additional actions to prevent TMEP success. Those actions have created even greater, and growing, uncertainty with respect to the regulatory landscape facing TMEP. In addition, the parties still await judicial decisions on challenges to the original Order in Council and the EAC approving TMEP. These items, combined with the impending approach of critical construction windows, the lead-time required to ramp up spending, and the imperative that the Company avoid incurring significant debt while lacking the necessary clarity, brought us to the decision we announced on April 8, 2018. Given the current uncertain conditions, we are not updating our cost and schedule estimate at this time. However, construction delays are likely to entail increased costs due to a variety of factors including extended personnel, equipment and facilities charges, storage charges for unused material and equipment, extended debt service, and inflation, among others.

In the event that TMEP is terminated, resulting impairments, foregone capitalized equity costs, and potential wind down costs would have a significant effect on our results of operations. Potential impairments would be recognized primarily in the period in which a decision to terminate is made.

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Also, see Note 11 “Litigation and Contingencies” to our accompanying consolidated financial statements for more information on TMEP, “Information Regarding Forward Looking Statements” and Part I, Item 1A. “Risk Factors” in our 2017 Form 10-K for a more detailed description of risks related to operating our business.

Base Line Terminal Construction Progress

In January 2018, we commenced operation of the 4.8 million barrel Base Line Terminal, a 50-50 crude oil merchant terminal joint venture between us and Keyera Corp., in Sherwood Park, Alberta (near Edmonton). The first six of twelve crude oil storage tanks were placed in service in the first quarter of 2018 with the balance of the tanks expected to be phased into service throughout the year. The facility, which is expected to be completed on-time and on-budget, is fully contracted with long-term, firm take-or-pay agreements with credit-worthy customers. Our total investment in the project is approximately $398 million, including costs associated with the construction of a pipeline segment solely funded by us. Up to an additional 1.8 million barrels may be added in a phase-two expansion of the terminal, depending on future demand.

Outlook

Our budget for 2018 contemplates that we will generate $474 million of Adjusted EBITDA and $349 million of DCF, respectively, and generate DCF to holders of Restricted Voting Shares of $0.96 per Restricted Voting Share, with an expected declared dividend of $0.65 per Restricted Voting Share. Excluding capitalized equity financing costs, Adjusted EBITDA and DCF are budgeted to be $403 million and $278 million, respectively. As previously announced, we expect to generate results for 2018 consistent with our budget, excluding the effects of capitalized financing costs.  However, actual capitalized financing costs will vary depending on the amount and timing of TMEP expenditures.

Results of Operations

Overview

We evaluate the performance of our reportable business segments by evaluating Segment EBDA. We believe that Segment EBDA is a useful measure of our operating performance because it measures segment operating results before D&A and certain expenses that are generally not controllable by our business segment operating managers, such as certain general and administrative expense, interest expense, net, and income tax expense, and prior to their pay off in the second quarter of 2017, the foreign exchange losses (or gains) on the long-term debt with affiliates (“KMI Loans”). Our general and administrative expenses include such items as employee benefits, insurance, rentals, certain litigation, and shared corporate services including accounting, information technology, human resources, and legal services. Certain general and administrative expenses attributable to Trans Mountain are billable as flow through items to shippers and result in incremental revenues.

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Consolidated Earnings Results

Three Months Ended March 31,	2018		2017		Earnings increase/(decrease)
(In millions of Canadian dollars, except percentages)
Segment EBDA(a)
Pipelines	63.6		56.3		7.3		13	%
Terminals	53.6		54.1		(0.5	)	(1	)%
Total Segment EBDA(a)	117.2		110.4		6.8		6	%
D&A	(36.8	)	(34.8	)	(2.0	)	6	%
Foreign exchange gain on the KMI Loans(b)	—		10.1		(10.1	)	(100	)%
General and administrative and corporate charges(c)	(19.2	)	(18.0	)	(1.2	)	7	%
Interest, net	(0.3	)	(6.7	)	6.4		(96	)%
Income before income taxes	60.9		61.0		(0.1	)	—	%
Income tax expense	(16.5	)	(14.2	)	(2.3	)	16	%
Net income	44.4		46.8		(2.4	)	(5	)%
Preferred share dividends	(7.2	)	—		(7.2	)	n/a
Net income attributable to Kinder Morgan interest	(26.4	)	(46.8	)	20.4		n/a
Net income available to Restricted Voting Stockholders	10.8		—		10.8		n/a

_________

n/a - not applicable

(a) Includes revenues and other (income) expense less operating expenses and other, net. Operating expenses primarily include operations and maintenance expenses, and taxes, other than income taxes. Segment EBDA for the three months ended March 31, 2018 and 2017 includes (i) $11.6 million and $5.5 million, respectively, of capitalized equity financing costs, and (ii) $(0.2) million and $0.8 million, respectively, of foreign exchange (losses) gains due to changes in exchange rates between the Canadian dollar and the U.S. dollar on U.S. dollar denominated balances.

(b) The KMI Loans, which represented U.S. dollar denominated long-term notes payable with Kinder Morgan, were settled with proceeds from our IPO.

(c) 2017 amount includes $(1.2) million of certain items.

Three Months Ended March 31, 2018 vs Three Months Ended March 31, 2017

The decrease of $2.4 million (5%) from the prior year quarter in net income is primarily attributable to the change in foreign exchange gains on the KMI Loans and increased D&A, general and administrative expense and income tax expense, which was partially offset by lower interest expense primarily due to the 2017 settlement of the KMI Loans and increased earnings on the TMPL in our Pipelines business segment.

Non-GAAP Financial Measures

In addition to using financial measures prescribed by GAAP, references are made in this report to DCF, both in the aggregate and per share, and Adjusted EBITDA, which are measures that do not have any standardized meaning as prescribed by GAAP. Neither DCF nor Adjusted EBITDA should be considered an alternative to GAAP net income or any other GAAP measures and such non-GAAP measures have important limitations as an analytical tool. The computation of DCF and Adjusted EBITDA may differ from similarly titled measures used by others. Accordingly, use of such terms may not be comparable to similarly defined measures presented by other entities. Investors should not consider these non-GAAP performance measures in isolation or as a substitute for an analysis of results as reported under GAAP. The limitations of these non-GAAP performance measures are compensated for by reviewing the comparable GAAP measures, understanding the differences between the measures, and taking this information into account in our analysis and our decision making processes. Any use of DCF or Adjusted EBITDA in this management’s discussion and analysis is expressly qualified by this cautionary statement.

DCF is net income before D&A adjusted for: (i) income tax expense and cash income taxes (paid) refunded; (ii) sustaining capital expenditures (also referred to as ‘‘maintenance’’ capital expenditures); and (iii) certain items that are items required by GAAP to be reflected in net income, but typically either (a) do not have a cash impact, or (b) by their nature are separately identifiable from the normal business operations and in our view are likely to occur only sporadically (for example, certain legal settlements and casualty losses).

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DCF is an important performance measure used by us and by external users of our financial statements to evaluate our performance and in measuring and estimating our ability to generate cash earnings after servicing our debt and preferred share dividends, paying cash taxes and expending sustaining capital, that could be used for discretionary purposes such as distributions or expansion capital expenditures (also referred to as ‘‘discretionary’’ capital expenditures). We use this performance measure and believe it provides users of our financial statements a useful performance measure reflective of our ability to generate cash earnings to supplement the comparable GAAP measure. DCF should not be used as an alternative to net cash provided by operating activities computed under GAAP. We believe the GAAP measure most directly comparable to DCF is net income. A reconciliation of net income to DCF is provided in the table below. DCF per Restricted Voting Share is DCF divided by average outstanding Restricted Voting Shares, including restricted stock awards that participate in dividends.

Reconciliation of Net Income to DCF

Three Months Ended March 31,	2018		2017
(In millions of Canadian dollars, except per share amounts)
Net income(a)	44.4		46.8
Add/(Subtract):
Certain items(b)	—		(6.5	)
D&A	36.8		34.8
Total book taxes(c)	16.5		11.8
Cash income taxes paid	(6.8	)	(0.2	)
Preferred share dividends	(7.2	)	—
Sustaining capital expenditures	(6.7	)	(3.3	)
DCF	77.0		83.4
DCF to KMI interest	(54.0	)	n/a
Cash taxes attributable to Restricted Voting Stockholders	(0.6	)	n/a
DCF to Restricted Voting Stockholders	22.4		n/a
Weighted average Restricted Voting Shares outstanding for dividends (in millions)(d)	104.3		n/a
DCF per Restricted Voting Share	0.215		n/a
Declared dividend per Restricted Voting Share	0.1625		n/a

Adjusted EBITDA is used by us and by external users of our financial statements, in conjunction with net debt, to evaluate certain leverage metrics. Adjusted EBITDA is earnings before interest expense, taxes, depreciation and amortization adjusted for certain items, as applicable. We believe the GAAP measure most directly comparable to Adjusted EBITDA is net income. A reconciliation of net income to Adjusted EBITDA is provided in the table below. We do not allocate Adjusted EBITDA amongst equity interest holders as we view total Adjusted EBITDA as a measure against our overall leverage.

Reconciliation of Net Income to Adjusted EBITDA

Three Months Ended March 31,	2018	2017
(In millions of Canadian dollars)
Net income(a)	44.4	46.8
Add/(Subtract):
Total certain items(b)	—	(6.5	)
D&A	36.8	34.8
Total book taxes(c)	16.5	11.8
Interest, net	0.3	6.7
Adjusted EBITDA	98.0	93.6

_________

n/a - not applicable

(a) Net income for the three months ended March 31, 2018 and 2017, includes capitalized equity financing costs of $11.6 million, and $5.5 million, respectively.

(b) 2017 amount includes foreign currency gain on the KMI Loans of $10.1 million, and General and administrative and book tax expense (income tax provision on certain items) of $1.2 million and $2.4 million, respectively.

(c) 2017 amount excludes book tax certain item of $2.4 million.

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(d) The weighted average Restricted Voting Shares outstanding for dividends calculation includes stock awards of Restricted Voting Shares that participate in dividends. Therefore, the amounts differ from the GAAP weighted average Restricted Voting Shares outstanding from the date of our formation.

Segment Earnings Results

Pipelines Segment

Three Months Ended December 31,	2018		2017
(In millions of Canadian dollars, except operating statistics)
Revenues	90.0		89.5
Operating expenses, except D&A	(37.8	)	(38.7	)
Other income and unrealized foreign exchange loss, net	11.4		5.5
Segment EBDA	63.6		56.3
Change from prior period	Increase/(Decrease)
Revenues	0.5		1	%
Segment EBDA	7.3		13	%
Operating statistics	2018		2017
TMPL transport volumes (MBbl/d)	289		307
Puget Sound transport volumes (MBbl/d)	164		157
Cochin transport volumes (MBbl/d)	85		79

Below are the changes in both Segment EBDA and revenues, in the comparable three month periods ended March 31, 2018 and 2017:

Three months ended March 31, 2018 versus Three months ended March 31, 2017
	Segment EBDA increase/(decrease)				Revenues  increase/(decrease)
(In millions of Canadian dollars, except percentages)
TMPL	5.3		11	%	0.1	—	%
Cochin	2.3		79	%	0.4	3	%
All others (including eliminations)	(0.3	)	(5	)%	—	—	%
Total Pipelines	7.3		13	%	0.5	1	%

The changes in Segment EBDA for our Pipelines business segment are further explained by the following discussion of the significant factors driving Segment EBDA in the comparable three month periods ended March 31, 2018 and 2017:

• increase of $5.3 million (11%) from TMPL primarily due to an increase in capitalized equity financing costs due to spending on TMEP partially offset by unfavorable timing of operating costs in 2018; and

• increase of $2.3 million (79%) from Cochin primarily due to lower in pipeline integrity expenses and outside services costs in 2018.

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Terminals Segment

Three months ended March 31,	2018		2017
(In millions of Canadian dollars, except operating statistics)
Revenues	74.2		75.0
Operating expenses, except D&A	(20.6	)	(20.1	)
Other expense, net	(0.1	)	(1.8	)
Other income and unrealized foreign exchange loss, net	0.1		1.0
Segment EBDA	53.6		54.1
Change from prior period	Increase/(Decrease)
Revenues	(0.8	)	(1	)%
Segment EBDA	(0.5	)	(1	)%
Operating statistics	2018		2017
Bulk transload tonnage (MMtonnes)(a)	0.8		1.0
Liquids leaseable capacity (MMBbl)	8.2		7.3
Liquids utilization %(b)	100	%	100	%

________

(a) Includes our share of joint venture tonnage.

(b) The ratio of our storage capacity under contract to our estimated storage capacity.

Below are the changes in both Segment EBDA and revenues in the comparable three month periods ended March 31, 2018 and 2017:

Three months ended March 31, 2018 versus Three months ended March 31, 2017
	Segment EBDA increase/(decrease)				Revenues  increase/(decrease)
(In millions of Canadian dollars, except percentages)
Vancouver Wharves Terminal	(3.3	)	(35	)%	(5.4	)	(22	)%
Base Line joint venture	3.1		n/a		3.5		n/a
All others (including eliminations)	(0.3	)	(1	)%	1.1		2	%
Total Terminals	(0.5	)	(1	)%	(0.8	)	(1	)%

________

n/a - not applicable

The changes in Segment EBDA for our Terminals business segment are further explained by the following discussion of the significant factors driving Segment EBDA in the comparable three month periods ended March 31, 2018 and 2017:

• decrease of $3.3 million (35%) from Vancouver Wharves Terminal primarily due to lower revenues as a result of lower bulk handling volumes driven by temporary third-party rail service disruptions and the impact of a customer contract buy-out, net of associated project write-off costs, recognized in first quarter 2017; and

• increase of $3.1 million from Base Line joint venture as a result of terminal being placed into service in January 2018.

Foreign Exchange Gain on the KMI Loans

Prior to repayment of the KMI Loans utilizing proceeds from our IPO, we were exposed to foreign currency risk related to the U.S. dollar denominated KMI Loans.

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General and Administrative Expense

The $2.4 million increase in general and administrative expense before certain items of $1.2 million in 2017 for the comparable quarters 2018 and 2017 was primarily driven by increased legal and audit fees related to TMEP financing activities and increased benefit costs.

Interest, net

Interest expense is presented as net of interest income and capitalized interest.

Interest, net for the first quarter of 2018 when compared with the same quarter in the prior year decreased $6.4 million, which was driven primarily by a $11.7 million decrease due to the 2017 repayment of the KMI Loans with proceeds from our IPO and a $3.0 million increase in capitalized debt financing costs partially offset by an increase of $8.2 million in interest expense, including, commitment fees, amortization of debt issue costs and interest on revolver associated with our June 2017 Credit Facility, See —“Liquidity and Capital Resources” below.

Net Income Attributable to Kinder Morgan Interest

Net income attributable to Kinder Morgan interest represents the allocation of our consolidated net income attributable to the outstanding ownership interests in our consolidated subsidiaries that are owned by Kinder Morgan’s wholly owned subsidiaries. The decrease in net income attributable to Kinder Morgan interest for the three months ended March 31, 2018 when compared with the respective prior period was $20.4 million, which was primarily attributable to the IPO and associated reduction in Kinder Morgan’s interest in us.

Income Taxes

Three Months Ended March 31, 2018 vs Three Months Ended March 31, 2017

Income tax expense for the three months ended March 31, 2018 was $16.5 million, as comparable with the 2017 income tax expense of $14.3 million. The $2.2 million increase in tax expense was primarily due to a tax valuation allowance release in 2017 related to foreign exchange gains, which had the effect of lowering 2017 income tax expense. 

Liquidity and Capital Resources

General

As of March 31, 2018 and December 31, 2017, we had $100.0 million of and no outstanding borrowings under our $5.5 billion Credit Facility, respectively. As of March 31, 2018, we had $210.3 million of cash and cash equivalents, a decrease of $28.5 million (11.9%) from December 31, 2017. Our five-year Credit Facility includes: (i) a $4.0 billion Revolving Construction Facility; (ii) a $1.0 billion Revolving Contingent Facility; and (iii) a $500.0 million Revolving Working Capital Facility. On January 23, 2018, we entered into an agreement amending certain terms of the Credit Facility to, among other things, provide additional funding certainty with respect to each tranche of the Credit Facility.

We generated cash flows from operating activities of $102.4 million and $57.2 million in the three months ended March 31, 2018 and 2017, respectively (the increase of 79% is further discussed below in ‘‘—Cash Flows — Operating Activities’’).

We believe that our cash position, our cash flows from operating activities and our access to cash through our $500.0 million Working Capital Facility are adequate to manage our day-to-day cash requirements.

Short-term Liquidity and Long-term Financing

As of March 31, 2018 and December 31, 2017, our principal source of short-term liquidity was cash from operating activities. We had a working capital (defined as current assets less current liabilities) deficit of $133.1 million and excess of $42.3 million as of March 31, 2018 and December 31, 2017, respectively. Generally, our working capital balance varies due to factors such as timing differences in the collection and payment of receivables and payables, and changes in our cash and cash equivalent balances after payments for investing activities net of cash received from operating and financing activities.

Since the IPO, we have utilized our own funding sources for TMEP’s capital expenditures. However, on April 8, 2018, we announced that we had suspended non-essential spending on TMEP (see “—Recent Business Developments—Suspension of

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Non-Essential Spending on Trans Mountain Expansion Project”). If the suspension is lifted and a decision is made to proceed with TMEP construction after May 31, 2018, we expect to operate with a working capital deficit during its construction and fund TMEP capital expenditures with (i) additional borrowings under our Credit Facility; (ii) the issuance of additional Preferred Shares; (iii) the issuance of long-term notes payable; (iv) retained cash flow from operations; and (v) the issuance of additional Restricted Voting Shares; or (vi) a combination thereof. We are also in a position to utilize the $500.0 million Working Capital Facility, of which $447.0 million is available after reducing the capacity for the $53.0 million in letters of credit, for general corporate purposes, including the funding of growth capital expenditures for expansion projects other than TMEP. In the event that TMEP is terminated, we are prepared to replace the Credit Facility with alternative funding sources for capital expenditures and general corporate purposes.

Capital Expenditures

We account for our capital expenditures in accordance with GAAP. We also distinguish between capital expenditures that are maintenance/sustaining capital expenditures and those that are expansion capital expenditures. Expansion capital expenditures are those expenditures which increase throughput or capacity from that which existed immediately prior to the addition or improvement, and are not deducted in calculating DCF. Sustaining capital expenditures are those which maintain throughput or capacity. The distinction between maintenance and expansion capital expenditures is a physical determination rather than an economic one, irrespective of the amount by which the throughput or capacity is increased.

Budgeting of sustaining capital expenditures is done annually on a bottom-up basis. For each of our assets, we budget for and make those sustaining capital expenditures that are necessary to maintain safe and efficient operations, meet customer needs and comply with our operating policies and applicable law. We may budget for and make additional sustaining capital expenditures that we expect will produce economic benefits such as increasing efficiency and/or lowering future expenses. Budgeting and approval of expansion capital expenditures are generally made periodically throughout the year on a project-by-project basis in response to specific investment opportunities identified by our business segments from which we generally expect to receive sufficient returns to justify the expenditures. Generally, the determination of whether a capital expenditure is classified as sustaining or as expansion capital expenditures is made on a project level. The classification of capital expenditures as expansion capital expenditures or as sustaining capital expenditures is made consistent with our accounting policies and is generally a straightforward process, but in certain circumstances can be a matter of management judgment and discretion. The classification of capital expenditures has an impact on DCF because capital expenditures that are classified as expansion capital expenditures are not deducted from DCF, while those classified as sustaining capital expenditures are.

Our capital expenditures for the nine months ended March 31, 2018, and the amount that is expected to be spent to sustain and grow KML for the remainder of 2018 are as follows assuming a decision is made to proceed with the TMEP construction:

	Three Months Ended March 31, 2018	2018 Remaining	Total 2018
(In millions of Canadian dollars)
Sustaining capital expenditures	6.7	55.3	62.0
Expansion capital expenditures(a)(b)	239.7	1,436.6	1,676.3

________

(a) Three months ended March 31, 2018 includes $72.5 million of net changes from accrued capital expenditures, contractor retainage, capitalized equity financing costs and other.

(b) Three months ended March 31, 2018, 2018 Remaining and Total 2018 amounts include approximately $205.0 million, $1,328.3 million and $1,537.7 million, respectively, on development of TMEP.

Off Balance Sheet Arrangements

There have been no material changes in our contractual obligations that would affect the disclosures presented in our audited consolidated financial statements as of December 31, 2017 in our 2017 Form 10-K.

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Cash Flows

The following table summarizes our net cash flows from operating, investing and financing activities for each period presented:

Three months ended March 31,	2018		2017
(In millions of Canadian dollars)
Net cash provided by (used in):
Operating activities	102.4		57.2
Investing activities	(176.7	)	(46.5	)
Financing activities	46.6		—
Effect of exchange rate changes on cash, cash equivalents and restricted deposits	(0.6	)	(0.3	)
Net (decrease) increase in cash, cash equivalents and restricted deposits	(28.3	)	10.4

Operating Activities

The net increase of $45.2 million (79%) in cash provided by operating activities in the three months ended March 31, 2018 compared to the same period in 2017 was primarily attributable to:

• a $50.4 million net increase in cash associated with net changes in operating assets and liabilities, primarily attributable to increases in cash due to favorable changes in the collections and refunds of Westridge Marine Terminal dock premiums, and due to net favorable changes in the collection of trade and affiliate receivables and payables. These increases are partially offset by a decrease in cash due to the timing of interest payments made on the KMI Loans that were paid off in the second quarter of 2017; and

• a $5.2 million decrease in operating cash flow resulting from the combined effects of adjusting the $2.4 million decrease in net income for the period-to-period increase in non-cash items primarily consisting of the following: (i) the change in the foreign exchange rate primarily on the KMI Loans; (ii) D&A expense; (iii) deferred income taxes; (iv) capitalized equity financing costs; and (v) other non-cash items.

Investing Activities

The $130.2 million net increase in cash used in investing activities in the three months ended March 31, 2018 compared to the same period in 2017 was primarily attributable to a $131.8 million increase in capital expenditures for TMEP and other expansion projects.

Financing Activities

The net increase of $46.6 million in cash provided by financing activities in the three months ended March 31, 2018, compared to the same period in 2017 was primarily attributable to:

• $100.0 million of proceeds from issuances of debt under our Credit Facility in the 2018 period; partially offset by,

• $31.0 million of cash distributions paid to the Kinder Morgan interests in the 2018 period;

• $11.8 million of cash dividends paid to Restricted Voting Stockholders in the 2018 period;

• $6.1 million of cash dividends paid to preferred shareholders in the 2018 period; and

• $4.5 million of payments associated with debt and preferred shares issuance costs in the 2018 period.

Equity, Dividends and Distributions

As of both March 31 and April 24, 2018, we had (i) 103.7 million and 243.4 million of Restricted Voting Shares and Special Voting Shares outstanding, respectively, with no par value for an aggregate of 347,100,000.0 million voting shares outstanding (ii) 12.0 million and 10.0 million of Series 1 Preferred Shares and Series 3 Preferred Shares outstanding, respectively, and (iii) 0.8 million of restricted stock awards outstanding.

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Dividends and Distributions on Restricted Voting Shares and Special Voting Shares

The Limited Partnership currently makes quarterly cash distributions to the Company (as an indirect holder of Class A

Units and Preferred LP Units, through the General Partner) and to Kinder Morgan (as an indirect holder of Class B Units) in

accordance with the terms of the Limited Partnership Agreement. Distributions are not guaranteed and are subject to the approval of the General Partner. To the extent distributions are approved, all distributions on the Class A Units and Preferred LP Units are immediately distributed by the General Partner to the Company, which then uses such distributions to pay dividends to the holders of (i) then outstanding Preferred Shares of the Company (currently being Series 1 Preferred Shares and Series 3 Preferred Shares) pursuant to the terms of such Preferred Shares, and (ii) Restricted Voting Shares pursuant to the Company's dividend policy.

The Company has implemented a dividend and distributions reinvestment plan (“DRIP”) pursuant to which Canadian-resident holders of Restricted Voting Shares may elect to have all cash dividends of the Company payable to any such shareholder automatically reinvested in additional Restricted Voting Shares at a discount. Kinder Morgan, as the sole indirect holder of Class B Units, has the right to reinvest all or a portion of its distributions into additional Class B Units on the same economic terms as a holder of Restricted Voting Shares that participates in the DRIP.

For 2018, we expect to pay a dividend of $0.65 per Restricted Voting Share.

Dividends on Series 1 Preferred Shares and Series 3 Preferred Shares

We also pay dividends on our 12,000,000 Series 1 Preferred Shares and 10,000,000 Series 3 Preferred Shares which are fixed, cumulative, preferential, and payable quarterly in the annual amount of $1.3125 per share and $1.3000 per share, respectively, on the 15th day of February, May, August and November, as and when declared by our board of directors, for the initial fixed rate period to but excluding November 15, 2022 and February 15, 2023, respectively.

Also, see Note 3. “Equity” to our consolidated financial statements for information concerning outstanding Restricted Voting Shares (and associated restricted stock awards), Special Voting Shares and Preferred Shares, and 2018 paid and declared dividends and distributions.

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in market risk exposures that would affect the quantitative and qualitative disclosures presented as of December 31, 2017, in Item 7A in our 2017 Form 10-K. For more information on our risk management activities, see Item 1, Note 5 “Risk Management and Financial Instruments” to our consolidated financial statements.

Item 4. Controls and Procedures.

As of March 31, 2018, our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934.  There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.  Based upon and as of the date of the evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported as and when required, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. There has been no change in our internal control over financial reporting during the quarter ended March 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.

See Part I, Item 1, Note 11 “Litigation, Commitments and Contingencies” to our interim consolidated financial statements.

Item 1A. Risk Factors.

See Item 2. “Management’s Discussion and Analysis—Recent Business Developments—Suspension of Non-Essential Spending on Trans Mountain Expansion Project” included elsewhere in this report. There have been no other material changes to the risk factors disclosed in Part I, Item 1A in our 2017 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4.  Mine Safety Disclosures.

Not applicable.

Item 5.  Other Information.

None.

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Item 6.  Exhibits

Exhibit NumberDescription
10.1	2017 Restricted Share Unit Plan for Employees
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) our Consolidated Statements of Income for the three months ended March 31, 2018 and 2017; (ii) our Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018 and 2017; (iii) our Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017; (iv) our Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017; (v) our Consolidated Statements of Equity for the three months ended March 31, 2018 and 2017; and (vi) the notes to our Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		KINDER MORGAN CANADA LIMITED Registrant
		By: /s/ DAX A. SANDERS
		Dax A. Sanders Chief Financial Officer (principal financial and accounting officer)
Date:	April 25, 2018

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EX-10.1

KINDER MORAN CANADA LIMITED

2017 RESTRICTED SHARE UNIT PLAN FOR EMPLOYEES

1.PURPOSE OF THE PLAN. The purpose of the 2017 Restricted Share Unit Plan for Employees (the “Plan”) of Kinder Morgan Canada Limited, an Alberta corporation (the “Company”), its Affiliates and Entities (as defined below) selected by the Board in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest, is to provide certain Employees (as defined below) incentive for future endeavors and to advance the interests of the Company and its shareholders and to enable the Company to compete effectively with other enterprises for the services of such employees as may be needed for the continued improvement of the Company’s business, through the grant of hypothetical Restricted Voting Shares of the Company (a “Restricted Share Unit”).

2.PARTICIPANTS.

Awards may be granted under the Plan to any Employees of the Company, its Affiliates (as defined below, including Affiliates that become such after adoption of the Plan) and Entities (as defined below) selected by the Board in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest, all as shall be determined by the Board (each, a “Grantee”).

3.EFFECTIVE DATE. The Plan is effective as of May 23, 2017 (the “Effective Date”).

4.DEFINITIONS.

(a)“Affiliate” means any Person that is directly or indirectly controlled by the Company. As used in this definition of "Affiliate," referred to in the last proviso of the preceding sentence, the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities or contract.

(b)“Award” means a grant of Restricted Share Units under the Plan.

(c)“Award Agreement” means a written agreement between the Company and a Grantee evidencing the terms and conditions of an individual Award grant. Each Award Agreement shall be subject to the terms and conditions of the Plan.

(d)“Board” means the Board of Directors of the Company.

(e)“Change in Control” means:

(i)the acquisition by any Person (other than a Permitted Holder) or group acting jointly or in concert, in a single transaction or a series of related transactions, by way of merger, amalgamation, consolidation or other business combination or purchase of beneficial ownership of more than 50% of the total voting power of the Company (or the surviving or resulting entity thereof) after giving effect to such transaction;

(ii)a sale, merger or similar transaction or related series of transactions involving the Company, as a result of which the Permitted Holders do not collectively hold (either directly or indirectly) more than 50% of the voting power of the Company (or the surviving or resulting entity thereof) after giving effect to such transaction or related series of transactions; provided, however, that such sale, merger or similar transaction shall not constitute a Change in Control in the event that, following such sale, merger or similar transaction (a) the Permitted Holders continue to collectively own at least 35% of the voting power of the Company (or the surviving or resulting entity thereof), (b) no other Person or group acting jointly or in concert owns more than 35% of the voting power of the Company (or the surviving or resulting entity thereof), and (c) Steven Kean is a senior executive officer of the Company (or the surviving or resulting entity thereof);

(iii)the sale or transfer of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, in a single transaction or a series of related transactions, in any case, other than to an entity of which more than 50% of the voting power is held (either directly or indirectly) by the Permitted Holders or by Persons who held (either directly or indirectly) more than 50% of the voting power of the Company immediately prior to such transaction (or in each case their Affiliates);

(iv)during any period of two consecutive years following the closing of the IPO, individuals who at the beginning of such period constitute the Board, and any new director whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason other than normal retirement, death or disability to constitute at least a majority of the Board then in office; or

(v)the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets (or any transaction having a similar effect).

(f)“Code” means the Internal Revenue Code of 1986, as it may be amended from time to time.

(g)“Company” means Kinder Morgan Canada Limited, an Alberta corporation.

(h)“Company Voting Shares” means, collectively, the Restricted Voting Shares and the Special Voting Shares.

(i)“Date of Grant” means the date on which the Board adopts a resolution, or takes other appropriate action, expressly granting an Award to a Grantee that specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution or other appropriate action, then such date as is set forth in such resolution or other appropriate action. In no event shall a Date of Grant be a date prior to the date of any such action by the Board.

(j)“Director” means a member of the Board.

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(k)“Employee” means any individual who is employed by the Company, an Affiliate or an Entity selected by the Board in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest.

(l)“Entity” means a corporation, limited liability company, venture, partnership (general or limited), trust, unincorporated organization, cooperative, association or other entity.

(m)“Fair Market Value” means, as of any date, the value of the Restricted Voting Shares as determined below. The Fair Market Value on any date on which the Restricted Voting Shares are listed on any national securities exchange shall be the closing price of a Restricted Voting Share on any national securities exchange on such date (if such national securities exchange is not open for trading on such date, then the closing price per Restricted Voting Share on such national securities exchange on the next preceding day on which the national securities exchange was open for trading), and thereafter (i) if the Restricted Voting Shares are admitted to quotation on the over the counter market or any interdealer quotation system, the Fair Market Value on any given date shall not be less than the average of the highest bid and lowest asked prices of the Restricted Voting Shares reported for such date or, if no bid and asked prices were reported for such date, for the last day preceding such date for which such prices were reported, or (ii) in the absence of an established market for the Restricted Voting Shares, the Fair Market Value determined in good faith by the Board and such determination shall be conclusive and binding on all persons. Notwithstanding the foregoing, the determination of fair market value in all cases shall be in accordance with the requirements set forth under Code Section 409A and the regulations thereunder.

(n)“Grantee” means an Employee to whom an Award is granted pursuant to the Plan or, if applicable, such other Employee who holds an outstanding Award.

(o)“Income Tax Act” means the Income Tax Act (Canada).

(p)“Insider” has the meaning ascribed to this term for the purposes of the TSX rules relating to Securities Based Compensation Arrangements.

(q)“IPO” means the initial underwritten public offering of Restricted Voting Shares for cash pursuant to a prospectus offering filed by the Company.

(r)“Kinder Morgan, Inc.” means Kinder Morgan, Inc., a Delaware corporation.

(s)“Performance Criteria” means the criterion or criteria that the Board shall select for purposes of establishing the Performance Goal(s) for a Performance Period with respect to any Restricted Share Units. The Performance Criteria that will be used to establish the Performance Goal(s) shall be based on the attainment of specific levels of performance of the Company (or Affiliate, division or operational unit of the Company) and which may include one or more of the following:

(i)the price of a Restricted Voting Share or of the equities of a subsidiary or business unit designated by the Board;

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(ii)the earnings per share or earnings per share of a subsidiary or business unit designated by the Board;

(iii)the total shareholder or unitholder value of the Company or a subsidiary or business unit designated by the Board;

(iv)dividends or distributions of the Company or a subsidiary or business unit designated by the Board;

(v)revenues of the Company or a subsidiary or business unit designated by the Board;

(vi)debt/equity, interest coverage, or indebtedness/earnings before or after interest, taxes, depreciation and amortization ratios of the Company or a subsidiary or business unit designated by the Board;

(vii)cash coverage ratio of the Company or a subsidiary or business unit designated by the Board;

(viii)net income (before or after taxes) of the Company or a subsidiary or business unit designated by the Board;

(ix)cash flow or cash flow return on investment of the Company or a subsidiary or business unit designated by the Board;

(x)earnings before or after interest, taxes, depreciation, and/or amortization of the Company or a subsidiary or business unit designated by the Board;

(xi)economic value added by the Company or a subsidiary or business unit designated by the Board;

(xii)distributable cash flow of the Company or a subsidiary or business unit designated by the Board (on a Company, subsidiary, business unit or per share basis);

(xiii)return on shareholders' or unitholders' equity achieved by the Company or a subsidiary or business unit designated by the Board; or

(xiv)any other performance measure established by the Board.

Any one or more of the Performance Criteria may be used on an absolute or relative basis to measure the performance of the Company and/or an Affiliate as a whole or any business unit of the Company and/or an Affiliate or any combination thereof, as the Board may deem appropriate, or any of the above Performance Criteria may be used on a comparison basis to measure the performance of the Company and/or an Affiliate as a whole or any business unit of the Company and/or an Affiliate or any combination thereof against a group of comparable companies, or published or special index that the Board, in its sole discretion, deems appropriate. The Board also

4

has the authority to provide for accelerated vesting of Restricted Share Units based on the achievement of Performance Goals pursuant to the Performance Criteria specified in this paragraph.

(t)“Performance Formula” means, for a Performance Period, one or more objective formulas applied against the relevant Performance Goal to determine, with regard to the Restricted Share Units of a particular Grantee, whether all, some portion but less than all, or none of the Restricted Share Units shall vest in respect of such Performance Period.

(u)“Performance Goals” means, for a Performance Period, one or more goals established by the Board for the Performance Period based upon the Performance Criteria. The Board is authorized, in its sole and absolute discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period.

(v)“Performance Period” means one or more periods of time as the Board may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining the vesting of a Grantee’s Restricted Share Units.

(w)“Permitted Holder” means, at any time, Kinder Morgan, Inc., or any entity that is directly or indirectly controlled by Kinder Morgan, Inc., where the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or contract.

(x)“Person” means a natural person or an entity.

(y)“Plan” means this Kinder Morgan Canada Limited 2017 Restricted Share Unit Plan for Canadian Employees.

(z)“Restricted Period” has the meaning set forth in Section 7(a).

(aa)“Restricted Voting Shares” means restricted voting shares of Kinder Morgan Canada Limited.

(ab)“Share Compensation Arrangement” means any stock option, stock option plan, employee stock purchase plan, share unit plan, deferred share unit plan or any other compensation or incentive mechanism involving the issuance or potential issuance of Company Voting Shares, including a share purchase from treasury which is financially assisted by the Company by way of loan, guarantee or otherwise.

(ac)“Special Voting Shares” means special voting shares of Kinder Morgan Canada Limited.

(ad)“TSX” means The Toronto Stock Exchange.

5.ADMINISTRATION OF THE PLAN.

(a)The Plan shall be administered by the Board.

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(b)The Board shall have the power and authority: (i) to construe and interpret the Plan and apply its provisions; (ii) to promulgate, amend, and rescind rules and regulations relating to the administration of the Plan; (iii) to authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan; (iv) to delegate its authority to one or more officers of the Company with respect to awards; (v) to determine when Awards are to be granted under the Plan and the applicable Date of Grant; (vi) from time to time to select, subject to the limitations set forth in this Plan, those Grantees to whom Awards shall be granted and to make any such grants; (vii) to determine the number of Restricted Share Units to be made subject to each Award; (viii) to prescribe the terms and conditions of each Award, including, without limitation, method of settlement of Restricted Share Units, vesting provisions and to specify the provisions of the Award Agreement relating to the grant of Restricted Share Units; (ix) to amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term of any outstanding Award; (x) to determine the duration and purpose of leaves of absences which may be granted to a Grantee without constituting termination of his or her employment for purposes of the Plan, which periods shall be no shorter than the periods generally applicable to Employees under the Company’s employment policies; (xi) to make decisions with respect to outstanding Awards that may become necessary upon a change in corporate control or an event that triggers anti-dilution adjustments; and (xii) to exercise discretion to make any and all other determinations which it determines to be necessary or advisable for administration of the Plan.

(c)The interpretation and construction of any provision of the Plan or of any Award granted under it by the Board shall be final, conclusive and binding upon all parties, including the Company and its shareholders and Directors, and the executives and employees of the Company, the Company’s Affiliates and Entities in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest. No member of the Board shall be liable to the Company, any shareholder, any Grantee or any employee of the Company, its Affiliates or Entities in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest for any action or determination made in good faith with respect to the Plan or any Award granted under it. No member of the Board may vote on any Award to be granted to him or her.

(d)The expenses of administering the Plan shall be borne by the Company.

6.SHARES SUBJECT TO THE PLAN

(a)Subject to adjustment as provided for in Section 8 hereof, the maximum number of Restricted Voting Shares that may be issued or issuable under the Plan shall be 5,000,000, provided that the number of Restricted Voting Shares issued or issuable under all Share Compensation Arrangements shall not exceed 5,000,000. If any Award is terminated, cancelled, or is settled for cash, any unissued Restricted Voting Shares which have been reserved to be issued upon the settlement of the Award shall become available to be issued upon the settlement of Restricted Share Units subsequently granted under the Plan.

(b)No fractional Restricted Voting Shares shall be issued upon the settlement of any Award and, if as a result of any adjustment, a Grantee would become entitled to a fractional Restricted

6

Voting Share, such Grantee shall have the right to receive only the next lowest whole number of Restricted Voting Shares and no payment or other adjustment will be made for the fractional interest.

(c)Notwithstanding any other provision of this Plan or any Award Agreement, no Restricted Share Units shall be granted under this Plan if, together with any other Share Compensation Arrangement established or maintained by the Company, such grant of Restricted Share Units could result, at any time, in the aggregate number of Restricted Voting Shares (i) issued to Insiders, within any one-year period and (ii) issuable to Insiders, at any time, exceeding the lesser of 5,000,000 or 10% of the issued and outstanding Restricted Voting Shares.

7.RESTRICTED SHARE UNITS

(a)A Restricted Share Unit is an award of a hypothetical Restricted Voting Share having a value equal to the Fair Market Value of one Restricted Voting Share. The terms and conditions of a grant of Restricted Share Units shall be reflected in a written Award Agreement. Restricted Share Units granted under an Award will be subject to forfeiture and may not be sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose for such period (the "Restricted Period") as the Board shall determine. No Restricted Voting Shares shall be issued at the time an Award is made, and the Company will not be required to set aside a fund for the payment of any such Award. At the discretion of the Board, each Restricted Share Unit (representing one Restricted Voting Share) may be paid or credited with cash dividend equivalents and stock dividend equivalents paid by the Company in respect of one Restricted Voting Share (“Dividend Equivalents”). At the discretion of the Board, Dividend Equivalents may be either currently paid to the Grantee or withheld by the Company for the Grantee's account, and interest may be credited on the amount of cash Dividend Equivalents withheld at a rate and subject to such terms as determined by the Board. Dividend Equivalents credited to a Grantee’s account and attributable to any particular Restricted Share Unit (and earnings thereon, if applicable) shall be distributed in cash equal to the amount of such Dividend Equivalents and earnings, if applicable, to the Grantee upon settlement of such Restricted Share Unit and, if such Restricted Share Unit is forfeited, the Grantee shall have no right to such Dividend Equivalents.

(b)Restricted Share Units awarded to any Grantee shall be subject to (A) forfeiture until the expiration of the Restricted Period, and satisfaction of any applicable Performance Goals during such period, to the extent provided in the applicable Award Agreement, and to the extent such Restricted Share Units are forfeited, all rights of the Grantee to such Restricted Share Units shall terminate without further obligation on the part of the Company and (B) such other terms and conditions as may be set forth in the applicable Award Agreement.

(c)Each Grantee granted Restricted Share Units shall execute and deliver to the Company an Award Agreement with respect to the Restricted Share Units setting forth the restrictions and other terms and conditions applicable to such Restricted Share Units. If a Grantee shall fail to execute an agreement evidencing an Award, the Award shall be null and void.

(d)Upon termination of employment with or service to the Company, any of its Affiliates or any Entity in which the Company and/or any of its Affiliates directly or indirectly has an ownership

7

interest (including by reason of such Affiliate or other Entity ceasing to be an Affiliate of the Company or an Entity in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest), during the applicable Restricted Period, Restricted Share Units shall be forfeited; provided, that the Board may provide in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Share Units will be waived in whole or in part in the event of terminations resulting from specified causes, and the Board may in other cases waive in whole or in part the forfeiture restrictions of Restricted Share Units.

(e)With respect to Restricted Share Units, the Restricted Period shall commence on the Date of Grant and end at the time or times set forth on a schedule established by the Board in the applicable Award Agreement.

(f) Upon the expiration of the Restricted Period with respect to any outstanding Restricted Share Units, and subject to the satisfaction of any Performance Goals applicable to such Restricted Share Units (as adjusted, if necessary, to reflect the achievement of the Performance Goals, the “Vested Units”), the Company shall, subject to Section 9, deliver to the Grantee, or his beneficiary, in settlement of such Restricted Share Units either (i) a number of Restricted Voting Shares equal to the number of Vested Units issued from the treasury of the Company, or (ii) a cash amount equal to the Fair Market Value of a Restricted Voting Share as of the date on which the Restricted Period lapsed multiplied by the number of Vested Units, and an amount equal to any Dividend Equivalents credited with respect to each such Vested Unit in accordance with Section 7(a) hereof and the interest thereon. The Board may specify, in a particular Award Agreement, the method of settlement of such Award in advance, or retain the discretion to determine the method of settlement upon the expiration of the Restricted Period.

8.ADJUSTMENT OF AND CHANGES IN CAPITALIZATION.

(a)In the event that the outstanding Restricted Voting Shares shall be changed in number or class by reason of split-ups, spin-offs, combinations, mergers, consolidations or recapitalizations, or by reason of stock dividends, the number of Restricted Share Units which thereafter may be issued pursuant to Awards granted under the Plan, both in the aggregate and as to any individual, and the number of Restricted Share Units then subject to Awards theretofore granted shall be adjusted so as to reflect such change, all as determined by the Board. In the event there shall be any other change in the number or kind of the outstanding Restricted Voting Shares, or of any stock or other securities or property into which such Restricted Voting Shares shall have been changed, or for which they shall have been exchanged, then if the Board shall determine that such change equitably requires an adjustment in any outstanding Award theretofore granted or which may be granted under the Plan, such adjustment shall be made in accordance with such determination. Any adjustment to an Award made pursuant to this Section 8 shall be subject to the approval of the TSX.

(b)Notice of any adjustment shall be given by the Company to each Grantee with an Award which shall have been so adjusted and such adjustment (whether or not such notice is given) shall be effective and binding for all purposes of the Plan.

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(c)Fractional Restricted Share Units resulting from any adjustment of Awards pursuant to this Section 8 may be settled in cash or otherwise as the Board may determine.

(d)Notwithstanding the above, in the event of any of the following: (i) the Company is merged or consolidated with another corporation or entity and, in connection therewith, consideration is received by shareholders of the Company in a form other than stock or other equity interests of the surviving entity or outstanding Awards are not to be assumed upon consummation of the proposed transaction; (ii) all or substantially all of the assets of the Company are acquired by another person; (iii) the reorganization or liquidation of the Company; or (iv) the Company shall consummate a transaction pursuant to a written agreement to undergo an event described in clause (i), (ii) or (iii) above, then the Board may, in its discretion and upon at least 10 days’ advance notice to the affected persons, cancel any outstanding Awards and cause the holders thereof to be paid in cash the value of such Awards based upon the price per Restricted Voting Share received or to be received by common shareholders of the Company in the event. The terms of this Section 8 may be varied by the Board in any particular Award Agreement.

(e)In the event of a Change in Control, the Board, in its discretion, may take any action with respect to outstanding Awards that it deems appropriate, which action may vary among Awards granted to individual Grantees; provided, however, that such action shall not reduce the value of an Award.

9.WITHHOLDING OBLIGATIONS. To the extent provided by the terms of an Award Agreement and subject to the discretion of the Board, the Company, an Affiliate, or an Entity, as applicable, shall be entitled to satisfy any federal, state, provincial or local tax withholding obligation, including withholding obligations under the Income Tax Act, relating to the grant of Restricted Share Units and the payment of Restricted Share Unit amounts, including any Dividend Equivalents, in any form or manner satisfactory to the Company, including by deducting such taxes from any amount otherwise payable to the Grantee.

10.AMENDMENT OF THE PLAN and awards.

(a)The Board may, at any time, without the approval of the holders of Company Voting Shares, suspend, discontinue or amend the Plan or an Award hereunder.  However, the Board may not amend the Plan or an Award without the approval of the holders of a majority of Company Voting Shares who vote at a shareholder meeting to:

(i)increase the number of Restricted Voting Shares, or the percentage of the issued and outstanding Company Voting Shares, reserved for issuance pursuant to the Plan;

(ii)expand the categories of individuals who are eligible to participate in the Plan;

(iii)remove or increase the limits on the number of Restricted Voting Shares issuable to any individual holder or to Insiders as described under Section 6(c) above;

9

(iv)permit the transfer or assignment of Restricted Share Units, except to permit a transfer to a family member, an entity controlled by the holder of the Restricted Share Units or a family member, a charity or for estate planning or estate settlement purposes; or

(v)amend the amendment provisions of the Plan;

unless the change to the Plan or an Award results from the application of the customary anti-dilution provisions of the Plan. Additionally, no suspension, discontinuance or amendment may be made by the Board in respect of previously issued Awards that would adversely alter or impair those Awards without the consent of the affected Grantee.  For greater certainty, the exercise by the Board of any discretion provided for in the Plan, including to set or amend applicable Performance Goals, will not be considered to be an amendment to the Plan or an Award. Any amendments to the Plan are also subject to the requirements of the TSX or other applicable regulatory bodies.

11.NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any instrument executed or Award granted pursuant thereto shall confer upon any Grantee any right to continue to serve the Company, an Affiliate, or an Entity in the capacity in effect at the time the Award was granted or shall affect the right of the Company, an Affiliate or an Entity in which the Company and/or any of its Affiliates directly or indirectly has an ownership interest to terminate the employment of an Employee with or without notice and with or without cause, and any applicable provisions of the law of the jurisdiction in which the Company, the Affiliate or the Entity is incorporated, as the case may be.

12.CHANGES IN LAW. The Board may amend the Plan and any outstanding Awards granted thereunder in such respects as the Board shall, in its sole discretion, deem advisable in order to incorporate in the Plan or any such Awards any new provision or change designed to comply with or take advantage of requirements or provisions of the Income Tax Act, the Code or any other statute, or any federal, state, provincial or governmental agency enacted or promulgated after the adoption of the Plan.

13.CLAWBACKS. To the extent required by applicable laws, rules, regulations or securities exchange listing requirements, the Company shall have the right, and shall take all actions necessary, to recover any amounts paid to any individual under this Plan.

14.LEGAL MATTERS. This Plan and all determinations made and actions taken pursuant hereto shall be governed by the law of the Province of Alberta (including the federal laws of Canada applicable therein) and any applicable provincial laws for Employees, applied without giving effect to any conflicts-of-law principles, and construed accordingly.

15.ELECTRONIC DELIVERY AND ACCEPTANCE. The Company may, in its sole discretion, deliver any documents related to the Award by electronic means. To participate in the Plan, a Grantee consents to receive all applicable documentation by electronic delivery and through an on-line (and/or voice activated) system established and maintained by the Company, or a third party vendor designated by the Company.

10

16.FOREIGN EMPLOYEES. Without the amendment of this Plan, the Board may provide for the participation in the Plan by employees who are subject to the laws of foreign countries or jurisdictions, and such participation may be on such terms and conditions different from those specified in this Plan as may be administratively necessary or necessary or desirable to foster and promote achievement of the purposes of this Plan and, in furtherance of such purposes the Board or its designee may make such modifications, amendments, procedures, subprograms and the like as may be necessary or advisable to comply with the provisions of laws of other countries or jurisdictions in which Affiliates operate or have employees.

11

EX-31.1

Exhibit 31.1

KINDER MORGAN CANADA LIMITED AND SUBSIDIARIES

CERTIFICATION PURSUANT TO RULE 13A-14(A) OR 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven J. Kean, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kinder Morgan Canada Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	April 25, 2018	/s/ Steven J. Kean
		Steven J. Kean
		Chief Executive Officer

EX-31.2

Exhibit 31.2

KINDER MORGAN CANADA LIMITED AND SUBSIDIARIES

CERTIFICATION PURSUANT TO RULE 13A-14(A) OR 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dax A. Sanders, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Kinder Morgan Canada Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	April 25, 2018	/s/ Dax A. Sanders
		Dax A. Sanders
		Chief Financial Officer

EX-32.1

Exhibit 32.1

KINDER MORGAN CANADA LIMITED AND SUBSIDIARIES

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906

OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Kinder Morgan Canada Limited (the "Company") for the quarterly period ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	April 25, 2018	/s/ Steven J. Kean
		Steven J. Kean
		Chief Executive Officer

EX-32.2

Exhibit 32.2

KINDER MORGAN CANADA LIMITED

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906

OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Kinder Morgan Canada Limited (the "Company") for the quarterly period ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	April 25, 2018	/s/ Dax A. Sanders
		Dax A. Sanders
		Chief Financial Officer

XML

Document And Entity Information - CAD ($)	3 Months Ended
	Mar. 31, 2018	Apr. 24, 2018	Jun. 30, 2017
Entity Registrant Name	Kinder Morgan Canada Ltd
Entity Central Index Key	0001714973
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Public Float			$ 1,631,630,700
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2018
Restricted Voting Shares [Member]
Entity Common Stock, Shares Outstanding		103,661,302
Special Voting Shares [Member]
Entity Common Stock, Shares Outstanding		243,455,654

XML

CONSOLIDATED STATEMENTS OF INCOME (In millions of Canadian dollars, except per share amounts) (Unaudited) - CAD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenues
Services	$ 163.9	$ 164.0
Product sales and other	0.3	0.5
Total Revenues	164.2	164.5
Operating Costs, Expenses and Other
Operations and maintenance	49.1	49.0
Depreciation and amortization	36.8	34.8
General and administrative	18.4	17.0
Taxes, other than income taxes	9.3	9.8
Other expense, net	0.1	1.8
Total Operating Costs, Expenses and Other	113.7	112.4
Operating Income	50.5	52.1
Other Income (Expense)
Interest, net	(0.3)	(6.7)
Foreign exchange (loss) gain	(0.2)	10.9
Capitalized equity financing costs	11.6	5.5
Other, net	(0.7)	(0.8)
Total Other Income	10.4	8.9
Income Before Income Taxes	60.9	61.0
Income Tax Expense	(16.5)	(14.2)
Net Income	44.4	46.8
Preferred share dividends	(7.2)	0.0
Net Income Attributable to Kinder Morgan Interest	(26.4)	(46.8)
Net Income Available to Restricted Voting Stockholders	$ 10.8	$ 0.0
Restricted Voting Shares
Basic and Diluted Earnings Per Restricted Voting Share	$ 0.10	$ 0.00
Basic and Diluted Weighted Average Restricted Voting Shares Outstanding	103.5	0.0
Dividend Per Restricted Voting Share Declared for the Period	$ 0.1625	$ 0.0000

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions of Canadian dollars) (Unaudited) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net Income
Net income	$ 44.4	$ 46.8
Other comprehensive income (loss)
Benefit plans	0.7	0.4
Foreign currency translation adjustments	1.2	(0.5)
Total other comprehensive income (loss)	1.9	(0.1)
Comprehensive income	46.3	46.7
Comprehensive income attributable to Kinder Morgan interest	(27.7)	(46.7)
Comprehensive income attributable to Kinder Morgan Canada Limited	$ 18.6	$ 0.0

XML

CONSOLIDATED BALANCE SHEETS (In millions of Canadian dollars, except share and per share amounts) (Unaudited) - CAD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 210.3	$ 238.8
Accounts receivable	74.4	60.3
Accounts receivable-affiliates	3.6	9.0
Inventories	13.2	13.1
Other current assets	21.3	19.4
Total current assets	322.8	340.6
Property, plant and equipment, net	3,921.1	3,708.0
Goodwill	248.0	248.0
Regulatory assets	26.1	22.7
Deferred charges and other assets	118.5	133.4
Total Assets	4,636.5	4,452.7
Current liabilities
Current potion of debt	100.0	0.0
Accounts payable	191.6	151.4
Accounts payable-affiliates	1.8	0.7
Regulatory liabilities	115.0	107.9
Other current liabilities	47.5	38.3
Total current liabilities	455.9	298.3
Long-term liabilities and deferred credits
Deferred income taxes	342.1	339.5
Pension and postretirement benefits	75.4	75.4
Regulatory liabilities	65.7	43.3
Deferred revenues	56.7	53.5
Other deferred credits	4.4	5.1
Total long-term liabilities and deferred credits	544.3	516.8
Total Liabilities	1,000.2	815.1
Equity
Preferred share capital, 12,000,000 shares of Series 1 and 10,000,000 shares of Series 3, issued and outstanding(Note 3)	537.2	537.2
Restricted Voting Share capital, 103,661,302 and 103,366,905 Restricted Voting Shares, respectively, issued and outstanding(Note 3)	1,713.6	1,707.5
Retained deficit	(775.0)	(770.0)
Accumulated other comprehensive loss	(8.2)	(8.8)
Total Kinder Morgan Canada Limited equity	1,467.6	1,465.9
Kinder Morgan interest, 243,455,654 and 242,882,897 Special Voting Shares, respectively, issued and outstanding(Note 3)	2,168.7	2,171.7
Total Equity	3,636.3	3,637.6
Total Liabilities and Equity	$ 4,636.5	$ 4,452.7

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares	Mar. 31, 2018	Dec. 31, 2017
Equity
Restricted voting shares issued	103,661,302	103,366,905
Restricted voting shares outstanding	103,661,302	103,366,905
Special Voting Shares, issued and outstanding	243,455,654	242,882,897
Series 1 [Member]
Preferred shares issued	12,000,000	12,000,000
Preferred shares outstanding	12,000,000	12,000,000
Series 3 [Member]
Preferred shares issued	10,000,000	10,000,000
Preferred shares outstanding	10,000,000	10,000,000

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating Activities
Net income	$ 44.4	$ 46.8
Non-cash items
Depreciation and amortization	36.8	34.8
Deferred income tax	2.4	14.3
Capitalized equity financing costs	(11.6)	(5.5)
Unrealized foreign exchange gain	(0.5)	(10.9)
Other non-cash items	5.3	2.5
Change in operating assets and liabilities	25.6	(24.8)
Cash provided by operating activities	102.4	57.2
Investing Activities
Capital expenditures	(173.9)	(42.1)
Contributions to trusts	(2.8)	(4.4)
Cash used in investing activities	(176.7)	(46.5)
Financing Activities
Issuances of debt	100.0	0.0
Cash dividends - restricted shares	(11.8)	0.0
Dividends - preferred shares	(6.1)	0.0
Distributions - Kinder Morgan interest	(31.0)	0.0
Debt and preferred shares issuance costs	4.5	0.0
Cash provided by financing activities	46.6	0.0
Effect of exchange rate changes on cash, cash equivalents and restricted deposits	(0.6)	(0.3)
Net (decrease) increase in Cash, Cash Equivalents and Restricted Deposits	(28.3)	10.4
Cash, Cash Equivalents and Restricted Deposits, beginning of period	239.5	160.3
Cash, Cash Equivalents and Restricted Deposits, end of period	211.2	170.7
Cash and Cash Equivalents, beginning of period	238.8	159.0
Restricted Deposits, beginning of period	0.7	1.3
Cash and Cash Equivalents, end of period	210.3	170.2
Restricted Cash and Cash Equivalents, end of period	0.9	0.5
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for income taxes	7.4	0.2
Noncash Investing and Financing Activities
Increase in property, plant and equipment from both accruals and contractor retainage	62.7	22.1
Increase (decrease) in property, plant and equipment due to foreign currency translation adjustments	$ 1.1	$ (1.4)

XML

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - CAD ($) shares in Millions, $ in Millions	Total	Equity attributable to Kinder Morgan pre-IPO [Member]	Preferred share capital [Member]	Restricted Voting Share capital [Member]	Retained earnings (deficit)	Accumulated other comprehensive loss	Kinder Morgan interest	Preferred Shares [Member] Preferred Shares [Member]	Restricted Voting Shares [Member] Voting Shares	Kinder Morgan interest - Special Voting Shares [Member] Voting Shares
Parent's capital, beginning balance at Dec. 31, 2016	$ 1,436.0	$ 1,475.0			$ (13.1)	$ (25.9)
Net income	46.8				46.8
Net income including portion attributable to Kinder Morgan interest	46.8
Other comprehensive income (loss)	(0.1)					(0.1)
Parent's capital,ending balance at Mar. 31, 2017	1,482.7	$ 1,475.0			33.7	(26.0)
Preferred stock, shares outstanding (in shares), beginning balance at Dec. 31, 2017								22.0
Voting shares, shares outstanding (in shares), beginning balance at Dec. 31, 2017									103.4	242.9
Parent's capital, beginning balance at Dec. 31, 2017	1,465.9
Stockholders' Equity, beginning balance at Dec. 31, 2017	3,637.6		$ 537.2	$ 1,707.5	(770.0)	(8.8)	$ 2,171.7
Net income	26.4				18.0
Net Income attributable to Kinder Morgan interest							26.4
Net income including portion attributable to Kinder Morgan interest	44.4
Preferred share dividends	(6.1)				(6.1)
Restricted voting share dividends	(16.9)				(16.9)
Special voting share distributions	(40.9)						(40.9)
Dividend/Distribution reinvestment plan, shares									0.3	0.5
Dividend reinvestment plan, voting shares	15.0			5.1
Distribution reinvestment plan, Kinder Morgan interests							9.9
Stock-based compensation	1.3			1.3
Other	0.0			(0.3)			0.3
Other comprehensive income (loss)	1.9					0.6	1.3
Parent's capital,ending balance at Mar. 31, 2018	1,467.6
Preferred stock, shares outstanding (in shares), ending balance at Mar. 31, 2018								22.0
Voting shares, shares outstanding (in shares), ending balance at Mar. 31, 2018									103.7	243.4
Stockholders' Equity, ending balance at Mar. 31, 2018	$ 3,636.3		$ 537.2	$ 1,713.6	$ (775.0)	$ (8.2)	$ 2,168.7

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Litigation, Environmental and Other Contingencies Litigation Phantom (Details) - CAD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Estimated Litigation Liability	$ 0.0	$ 0.0

XML

General (Notes)

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

General

The Company was incorporated under the Business Corporations Act (Alberta) on April 7, 2017. On May 30, 2017, we completed an IPO of our Restricted Voting Shares and used the net proceeds of $1,671.0 million to acquire an approximate 30% indirect interest in the Limited Partnership from certain affiliates of Kinder Morgan, who retained an approximate 70% ownership of the limited partnership units in the Limited Partnership.

We have two business segments: (i) the Pipelines segment, which includes the TMPL that currently transports approximately 300,000 bpd of crude oil and refined petroleum from Edmonton, Alberta to Burnaby, B.C.; Puget Sound serving the state of Washington; Jet Fuel serving the Vancouver International Airport; KMCI, the employer of Canadian staff; and Cochin, a 12-inch diameter multi-product pipeline which spans approximately 1,000 kilometers in Saskatchewan and Alberta; and (ii) the Terminals segment, which includes the ownership and operation of liquid product merchant storage and rail terminals in the Edmonton, Alberta market as well as a predominantly dry cargo import/export facility in Vancouver, B.C.

Suspension of Non-Essential Spending on Trans Mountain Expansion Project

On April 8, 2018, we announced that we were suspending all non-essential activities and related spending on TMEP. We also announced that under current circumstances, specifically including the continued actions in opposition to TMEP by B.C., we will not commit additional shareholder resources to TMEP. We further announced that we will consult with various stakeholders in an effort to reach agreements by May 31, 2018 that may allow TMEP to proceed without putting further KML shareholder capital at risk. The Company stated it is difficult to conceive of any scenario in which it would proceed with TMEP if an agreement is not reached by May 31, 2018. The focus in those consultations will be on two principles: clarity on the path forward, particularly with respect to the ability to construct through B.C., and adequate protection of KML shareholders.

We had previously announced a “primarily permitting” strategy for the first half of 2018, focused on advancing the permitting process, rather than spending at full construction levels, until we had obtained greater clarity on outstanding permits, approvals and judicial reviews. Rather than achieving greater clarity, TMEP is now facing unquantifiable risk. Previously, opposition by B.C. was manifesting itself largely through B.C.’s participation in an ongoing judicial review. Unfortunately, B.C. has now been asserting broad jurisdiction and reiterating its intention to use that jurisdiction to stop TMEP. B.C.’s intention in that regard has been neither validated nor quashed, and B.C. has continued to threaten unspecified additional actions to prevent TMEP success. Those actions have created even greater, and growing, uncertainty with respect to the regulatory landscape facing TMEP. In addition, the parties still await judicial decisions on challenges to the original Order in Council and the B.C. Environmental Assessment Certificate approving TMEP. These items, combined with the impending approach of critical construction windows, the lead-time required to ramp up spending, and the imperative that the Company avoid incurring significant debt while lacking the necessary clarity, brought us to the decision we announced on April 8, 2018. Given the current uncertain conditions, we are not updating our cost and schedule estimate at this time. However, construction delays are likely to entail increased costs due to a variety of factors including extended personnel, equipment and facilities charges, storage charges for unused material and equipment, extended debt service, and inflation, among others.

In the event that TMEP is terminated, resulting impairments, foregone capitalized equity costs, and potential wind down costs would have a significant effect on our results of operations. Potential impairments would be recognized primarily in the period in which a decision to terminate is made.

Also, see Note 11 for further information on TMEP.

Basis of Presentation

General

In January 2018, we completed the registration of our Restricted Voting Shares pursuant to Section 12(g) of the United States Securities Exchange Act of 1934 (the “Exchange Act”) and are subject to the reporting requirements of Section 13(a) of the Exchange Act.

We have prepared the accompanying unaudited consolidated financial statements in accordance with the accounting principles contained in the FASB Accounting Standards Codification, the single source of U.S. GAAP and referred to in this report as the Codification. U.S. GAAP means generally accepted accounting principles that the Securities Exchange Commission (“SEC”) has identified as having substantial authoritative support, as supplemented by Regulation S-X under the Exchange Act, as amended from time to time. Under such rules and regulations, all significant intercompany items have been eliminated in consolidation.

In our opinion, all adjustments, which are of a normal and recurring nature, considered necessary for a fair statement of our financial position and operating results for the interim periods have been included in the accompanying consolidated financial statements. Interim results are not necessarily indicative of results for a full year; accordingly, you should read these consolidated financial statements in conjunction with our consolidated financial statements and related notes included in our 2017 Form 10-K.

Amounts are stated in Canadian dollars unless otherwise noted which is the functional currency of most of our operations.

Presentation of Kinder Morgan Interest

As of and for the reporting periods after May 30, 2017, Kinder Morgan’s economic interest in the Limited Partnership is reflected within “Kinder Morgan interest” in our consolidated balance sheets and earnings attributable to Kinder Morgan’s economic ownership interest in the Limited Partnership is presented in “Net Income Attributable to Kinder Morgan Interest” in our consolidated statements of income.

Prior to the IPO, Kinder Morgan controlled all of our equity which is presented as “Equity attributable to Kinder Morgan pre-IPO” in our statement of equity for the three months ended March 31, 2017. For the periods after the IPO, “Kinder Morgan interest” is separately presented in our consolidated statement of equity for the three months ended March 31, 2018, and includes its share of our net income and other comprehensive loss, along with its Class B Units distributions and distribution reinvestment plan activities.

Accounting Policy Changes

Adoption of New Accounting Pronouncements

On January 1, 2018, we adopted Accounting Standards Updates (ASU) No. 2014-09, “Revenue from Contracts with Customers,” and a series of related accounting standard updates designed to create improved revenue recognition and disclosure comparability in financial statements. For more information, see Note 6.

On January 1, 2018, we retroactively adopted ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” This ASU requires the statements of cash flows to present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents are now included with cash and cash equivalents when reconciling the beginning of period and end of period amounts presented on the statements of cash flows. The retrospective application of this new accounting guidance resulted in a decrease of $0.8 million in “Cash used in investing activities,” an increase of $1.3 million in “Cash, Cash Equivalents, and Restricted Deposits, beginning of the period,” and an increase of $0.5 million in “Cash, Cash Equivalents, and Restricted Deposits, end of period” in our accompanying consolidated statement of cash flows from what was previously presented for the three months ended March 31, 2017.

On January 1, 2018, we adopted ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715).”  This ASU requires an employer to disaggregate the service cost component from the other components of net benefit cost, allows only the service cost component of net benefit cost to be eligible for capitalization, and establishes how to present the service cost component and the other components of net benefit cost in the income statement.  Topic 715 required us to retrospectively reclassify $1.0 million of other components of net benefit credits (excluding the service cost component) from “General and administrative” to “Other, net” in our accompany consolidated statement of income for three months ended March 31, 2017.  We prospectively applied Topic 715 related to net benefit costs eligible for capitalization.

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Debt (Notes)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Debt

Credit Facility

As of March 31, 2018, we were in compliance with all required covenants under our Credit Facility. As of March 31, 2018 and December 31, 2017, we had $100.0 million and no outstanding borrowings on our Credit Facility, respectively. As of March 31, 2018, the weighted average interest rate on our Credit Facility borrowings was 3.14%. For the three months ended March 31, 2018 and 2017, we incurred standby fees of $4.0 million and none, respectively.

On January 23, 2018, we entered into an agreement amending certain terms of our Credit Facility to, among other things, provide additional funding certainty with respect to each tranche under our Credit Facility. Material terms of the Credit Facility are further described in Note 9 to our consolidated financial statements included in our 2017 Form 10-K.

Fair Value of Financial Instruments

The carrying value and estimated fair value of our debt balances are disclosed below: 

	March 31, 2018		December 31, 2017
	Carrying value	Estimated fair value	Carrying value	Estimated fair value
(In millions of Canadian dollars)
Total debt	100.0	100.0	—	—

Level 2 input values were used to measure the estimated fair value of the long term debt balance as of March 31, 2018.

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Equity (Notes)

3 Months Ended

Mar. 31, 2018

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Equity

As of March 31, 2018, we had (i) 103.7 million and 243.4 million of Restricted Voting Shares and Special Voting Shares outstanding, respectively, with no par value for an aggregate of 347.1 million voting shares outstanding (ii) 12.0 million and 10.0 million of Series 1 Preferred Shares and Series 3 Preferred Shares outstanding, respectively, and (iii) 0.8 million of restricted stock awards outstanding.

Preferred Share Dividends

The following table provides information regarding dividends paid, and declared, but not yet paid, as applicable, on our Preferred Shares during the three months ended March 31, 2018:

Period	Total Series 1 quarterly dividend per share for the period	Total Series 3 quarterly dividend per share for the period(a)	Date of declaration	Date of record	Date of dividend	Total amount of dividends paid in cash
(In millions of Canadian dollars, except per share amounts)
November 15, 2017 to February 14, 2018 (a)	0.328125	0.22082	January 17, 2018	January 31, 2018	February 15, 2018	6.1
February 15, 2018 to May 14, 2018	0.328125	0.325	April 18, 2018	April 30, 2018	May 15, 2018

________

(a) Series 3 per share amount reflects that the shares were outstanding for 62 days during the period ended February 14, 2018.

Restricted Voting Share Dividends

The following table provides information regarding dividends paid and declared, but not yet paid, as applicable, on our Restricted Voting Share during the three months ended March 31, 2018.

For the three month period ended	Dividend rate per share	Date of declaration	Date of record	Date of dividend	Total amount of dividends paid in cash(a)	Total amount of dividends paid in form of additional shares
					(In millions of Canadian dollars)
December 31, 2017	0.1625	January 17, 2018	January 31, 2018	February 15, 2018	11.8	5.1
March 31, 2018	0.1625	April 18, 2018	April 30, 2018	May 15, 2018

________

(a) Amount includes notional dividends on outstanding restricted stock awards of $0.1 million.

Kinder Morgan Interest Distributions

The following table provides information regarding distributions paid and declared, but not yet paid, as applicable, to Kinder Morgan during the three months ended March 31, 2018.

For the three month period ended	Dividend rate per share	Date of declaration	Date of distribution	Total amount of distribution paid in cash	Total amount of distribution paid in form of additional shares
				(In millions of Canadian dollars)
December 31, 2017	0.1625	January 17, 2018	February 15, 2018	31.0	9.9
March 31, 2018	0.1625	April 18, 2018	May 15, 2018

Earnings per Restricted Voting Share

We calculate earnings per share using the two-class method. Earnings were allocated to Restricted Voting Shares and participating securities based on the amount of dividends paid in the current period plus an allocation of the undistributed earnings or excess distributions over earnings to the extent that each security participates in earnings or excess distributions over earnings. Our unvested restricted stock awards, which may be settled in Restricted Voting Shares issued to employees and non-employee directors and include dividend equivalent payments, do not participate in excess distributions over earnings.

The following table sets forth the allocation of net income available to shareholders of Restricted Voting Shares and participating securities:

	Three Months Ended March 31, 2018
(In millions of Canadian dollars)
Net Income Available to Restricted Voting Stockholders	10.8
Participating securities:
Less: Net income allocated to restricted stock awards(a)	(0.1	)
Net Income Allocated to Restricted Voting Stockholders	10.7
Basic Weighted Average Restricted Voting Shares Outstanding	103.5
Basic Earnings Per Restricted Voting Share	0.10

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(a) As of March 31, 2018, there were approximately 0.8 million unvested restricted stock awards.

For the three months ended March 31, 2018, the weighted average maximum number of potential Restricted Voting Share equivalents of 0.8 million unvested restricted stock awards are antidilutive and, accordingly, are excluded from the determination of diluted earnings per Restricted Voting Share.

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Related Party Transactions (Notes)

3 Months Ended

Mar. 31, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Transactions with Related Parties

Affiliate Activities

The following table summarizes our related party income statement activity. Revenues, operating costs and capitalized costs are under normal trade terms.

	Three Months Ended March 31,
	2018	2017
(In millions of Canadian dollars)
Income Statement location
Revenues-Services(a)	15.4	14.8
Operations and maintenance and general and administrative expenses	1.9	1.1
Interest expense(b)	—	11.7
Other
Capitalized costs from affiliates in property, plant and equipment	0.2	2.0

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(a) Amounts represent sales to a customer who is a related party through joint ownership of a joint venture.

(b) 2017 primarily represents interest on long-term debt with affiliates (“KMI Loans”) that was repaid with proceeds form our IPO.

Accounts receivable and payable

Accounts receivable-affiliate and accounts payable-affiliate are non-interest bearing and are settled on demand and, since our IPO, settled monthly.

Other current assets

As of March 31, 2018, we had an affiliate contract account receivable balance of approximately $1.0 million included in “Other current assets” on our accompanying consolidated balance sheets.

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Risk Management (Notes)

3 Months Ended

Mar. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Risk Management

Risk Management and Financial Instruments

Credit risk

We are exposed to credit risk, which is the risk that a customer or other counterparty will fail to perform an obligation or settle a liability, resulting in a financial loss to our business, which is primarily concentrated in the crude oil and refined products transportation industry and is dependent upon the ability of our customers to pay for these services. A majority of our customers operate in the oil and gas exploration and development, or energy marketing or transportation industries. We may be exposed to long-term downturns in energy commodity prices, including the price for crude oil, or other credit events impacting these industries. We limit our exposure to credit risk by requiring shippers who fail to maintain specified credit ratings or a suitable financial position to provide acceptable security, generally in the form of guarantees from credit worthy parties or letters of credit from well rated financial institutions. Our cash and cash equivalents are held with major financial institutions, minimizing the risk of non-performance by counter parties.

Interest Rate Risk

We are exposed to interest rate risk attributed to floating rate debt, which is used to finance capital expansion projects, including the TMEP, and general corporate operations. The changes in interest rates may impact future cash flows and the fair value of our financial instruments.

Foreign Currency Transactions and Translation

Foreign currency transaction gains or losses result from a change in exchange rates between the functional currency of an entity and the currency in which a transaction is denominated. Unrealized and realized gains and losses generated from these transactions are recorded in foreign exchange (loss) gain in the accompanying consolidated statements of income and include:

• Prior to repayment of the KMI Loans utilizing proceeds from our IPO, we were exposed to foreign currency risk related to the U.S. dollar denominated KMI Loans. For the three months ended March 31, 2017, we had unrealized foreign exchange gain of $10.1 million related to the KMI Loans.

• Unrealized foreign exchange gains for the three months ended March 31, 2018 and 2017 were $0.5 million and $0.8 million, respectively, due to changes in exchange rates between the Canadian dollar and the U.S. dollar on U.S. dollar denominated balances. These currency exchange rate fluctuations affect the expected Canadian dollar cash flows on unsettled U.S. dollar denominated transactions, primarily related to cash bank accounts that are denominated in U.S. dollars and affiliate receivables or payables that are denominated in U.S. dollars. We translate the assets and liabilities of Puget Sound that has the U.S. dollar as its functional currency to Canadian dollars at period-end exchange rates.

• Puget Sound operates in the state of Washington, and earns its revenues and incurs most of its expenses in U.S. dollars and Cochin earns its revenues in U.S. dollars. Therefore, fluctuations in the U.S. dollar to Canadian dollar exchange rate can affect the earnings contributed by Puget Sound and Cochin to our overall results. For the three months ended March 31, 2018, we had a realized foreign exchange loss of $0.7 million.

Liquidity risk

Liquidity risk is the risk that we will not be able to meet our financial obligations, including commitments, as they become due. We manage our liquidity risk by ensuring access to sufficient funds to meet our obligations. We forecast cash requirements to ensure funding is available to settle financial liabilities when they become due. Our primary sources of liquidity and capital resources are funds generated from operations and our Credit Facility, see Note 2.

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Revenue Recognition Revenue Recognition (Notes)

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

Revenue Recognition

Adoption of Topic 606

Effective January 1, 2018, we adopted ASU No. 2014-09, “Revenue from Contracts with Customers” and the series of related accounting standard updates that followed (collectively referred to as “Topic 606”). We utilized the modified retrospective method to adopt Topic 606, which required us to apply the new revenue standard to (i) all new revenue contracts entered into after January 1, 2018, and (ii) revenue contracts which were not completed as of January 1, 2018. In accordance with this approach, our consolidated revenues for periods prior to January 1, 2018 were not revised. The cumulative effect of the adoption of Topic 606 as of January 1, 2018 and the impact to the financial statement line items for the current year was not material.

Revenue from Contracts with Customers

Beginning in 2018, we account for revenue from contracts with customers in accordance with Topic 606. The unit of account in Topic 606 is a performance obligation, which is a promise in a contract to transfer to a customer either a distinct good or service (or bundle of goods and services) or a series of distinct goods or services provided over a period of time. Topic 606 requires that a contract’s transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each performance obligation in the contract based on relative standalone selling prices and recognized as revenue when (point in time) or as (over time) the performance obligation is satisfied.

Our customer service contracts primarily include transportation service and terminaling service contracts, as described below. Generally, for the majority of these contracts: (i) our promise is to transfer (or stand ready to transfer) a series of distinct integrated services over a period of time, which is a single performance obligation; (ii) the transaction price includes fixed and/or variable consideration, which amount is determinable at contract inception and/or at each month end based on our right to invoice at month end for the value of services provided to the customer that month; and (iii) the transaction price is recognized as revenue over the service period specified in the contract (which can be a day, including each day in a series of promised daily services, a month, a year, or other time increment, including a deficiency makeup period) as the services are rendered using a time-based (passage of time) or units-based (units of service transferred) method for measuring transfer of control of the services and progress towards satisfying our performance obligation, based on the nature of the promised service (e.g., firm or non-firm) and the terms and conditions of the contract (e.g., contracts with or without makeup rights).

Firm Services

Firm services (also called uninterruptible services) are services that are promised to be available to the customer at all times during the period(s) covered by the contract, with limited exceptions. Our firm service contracts are typically structured with take-or-pay or minimum volume provisions, which specify minimum service quantities a customer will pay for even if it chooses not to receive or use them in the specified service period (referred to as “deficiency quantities”). We typically recognize the portion of the transaction price associated with such provisions, including any deficiency quantities, as revenue depending on whether the contract prohibits the customer from making up deficiency quantities in subsequent periods, or the contract permits this practice, as follows:

• Contracts without Makeup Rights: If contractually the customer cannot make up deficiency quantities in future periods, our performance obligation is satisfied, and revenue associated with any deficiency quantities is generally recognized as each service period expires. Because a service period may exceed a reporting period, we determine at inception of the contract and at each subsequent reporting period if we expect the customer to take the minimum volume associated with the service period. If we expect the customer to make up all deficiencies in the specified service period (i.e., we expect the customer to take the minimum service quantities), the minimum volume provision is deemed not substantive and we will recognize the transaction price as revenue in the specified service period as the promised units of services are transferred to the customer. Alternatively, if we expect that there will be any deficiency quantities that the customer cannot or will not make up in the specified service period (referred to as “breakage”), we will recognize the estimated breakage amount (subject to the constraint on variable consideration) as revenue ratably over such service period in proportion to the revenue that we will recognize for actual units of service transferred to the customer in the service period. For certain take-or-pay contracts where we make the service, or a part of the service, continuously available over the service period, we typically recognize the take-or-pay amount as revenue ratably over such period based on the passage of time.

• Contracts with Makeup Rights: If contractually the customer can acquire the promised service in a future period and make up the deficiency quantities in such future period (the “deficiency makeup period”), we have a performance obligation to deliver those services at the customer’s request (subject to contractual and/or capacity constraints) in the deficiency makeup period. At inception of the contract, and at each subsequent reporting period, we estimate if we expect that there will be deficiency quantities that the customer will or will not make up. If we expect the customer will make up all deficiencies it is contractually entitled to, any consideration received relating to temporary deficiencies that will be made up in the deficiency makeup period will be deferred as a contract liability, and we will recognize that amount as revenue in the deficiency makeup period when either of the following occurs: (i) the customer makes up the volumes; or (ii) the likelihood that the customer will exercise its right for deficiency volumes then becomes remote (e.g., there is insufficient capacity to make up the volumes, the deficiency makeup period expires). Alternatively, if we expect at inception of the contract, or at the beginning of any subsequent reporting period, that there will be any deficiency quantities that the customer cannot or will not make up (i.e., breakage), we will recognize the estimated breakage amount (subject to the constraint on variable consideration) as revenue ratably over the specified service periods in proportion to the revenue that we will recognize for actual units of service transferred to the customer in those service periods.

Non-Firm Services

Non-firm services (also called interruptible services) are the opposite of firm services in that such services are provided to a customer on an “as available” basis. Generally, we do not have an obligation to perform these services until we accept a customer’s periodic request for service. For the majority of our non-firm service contracts, the customer will pay only for the actual quantities of services it chooses to receive or use, and we typically recognize the transaction price as revenue as those units of service are transferred to the customer in the specified service period (typically a daily or monthly period).

Nature of Revenue by Segment

Pipelines Segment

We provide crude oil and refined petroleum transportation and storage services on a firm or non-firm basis. The regulated tariffs for TMPL, Cochin and Puget Sound are designed to provide revenues sufficient to recover the costs of providing transportation and storage services to shippers, including a return on invested capital. TMPL and Puget Sound are common carrier pipelines, generally providing services on a non-firm basis. The majority of Cochin’s transportation service is provided on a firm basis under its current contracts.

TMPL’s revenue is adjusted according to terms prescribed in its toll settlement with shippers as approved by the NEB. Differences between transportation revenue recognized pursuant to its toll settlement and actual toll receipts are recognized as regulatory assets or liabilities and are settled in future tolls.

For Cochin’s firm transportation service, we typically promise to transport on a stand-ready basis the shipper’s minimum volume commitment amount. The shipper is obligated to pay for its volume commitment amount, regardless of whether or not it flows quantities in Cochin’s pipeline. The shipper pays a transaction price typically based on a per-unit rate for quantities transported, including amounts attributable to deficiency quantities.

Our non-firm, interruptible transportation and storage services are provided on TMPL, Cochin and Puget Sound pipelines when and to the extent we determine capacity is available in these pipeline systems and/or terminal storage facilities. The shippers typically pay a per-unit rate for actual quantities of product injected into/withdrawn from storage and/or transported.

Terminals Segment

We provide various types of liquid tank and bulk terminal services. These services are generally comprised of inbound, storage and outbound handling of customer products.

Our liquid tank storage and handling service contracts generally include a promised tank storage capacity provision and prepaid volume throughput of the stored product. In these contracts, we have a stand-ready obligation to perform this contracted service each day over the life of the contract. The customer pays a transaction price typically in the form of a fixed monthly charge and is obligated to pay whether or not it uses the storage capacity and throughput service (i.e., a take-or-pay payment obligation). These contracts generally include a per-unit rate for any quantities we handle at the request of the customer in excess of the prepaid volume throughput amount and also typically include per-unit rates for additional, ancillary services that may be periodically requested by the customer.

Our bulk storage and handling contracts generally include inbound handling of our customers’ dry bulk material product into our storage facility and outbound handling of these products from our storage facility. These services are provided on both a firm and non-firm basis. In our firm bulk storage and handling contracts, we are committed to handle and store on a stand-ready basis the minimum throughput quantity of bulk materials contracted by the customer. The customer is obligated to pay for its minimum volume commitment amount, regardless of whether or not it uses the storage and handling service. The customer pays a transaction price typically based on a per-unit rate for quantities handled, including amounts attributable to deficiency quantities. For non-firm storage and handling services, the customer pays a transaction price typically based on a per-unit rate for quantities handled on an as requested, non-guaranteed basis.

Disaggregation of Revenues

The following table presents our revenues disaggregated by revenue source and type of revenue for each revenue source:

	Three Months Ended March 31, 2018
	Pipelines		Terminals	Total
(In millions of Canadian dollars)
Revenue from contracts with customers
Services
Firm services(a)	12.7		54.6	67.3
Fee-based services	80.9		16.5	97.4
Total revenue from contracts with customers	93.6		71.1	164.7
Other revenues(b)	(3.6	)	3.1	(0.5	)
Total revenues	90.0		74.2	164.2

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(a) Includes non-cancellable firm service customer contracts with take-or-pay or minimum volume commitment elements, including those contracts where both the price and quantity amount are fixed. In these arrangements, the customer is obligated to pay for the rendered service whether or not the customer chooses to utilize the service. Excludes service contracts with indexed-based pricing, which along with revenues from other contracts are reported as Fee-based services.

(b) Amounts recognized as revenue under guidance prescribed in Topics of the Accounting Standards Codification other than in Topic 606 and primarily includes regulatory-based adjustments for TMPL and leases.

Contract Balances

Contract assets and contract liabilities are the result of timing differences between revenue recognition, billings and cash collections. We recognize contract assets in those instances where billing occurs subsequent to revenue recognition and our right to invoice the customer is conditioned on something other than the passage of time. Our contract liabilities are substantially related to (i) capital improvements paid for in advance by certain customers generally in our non-regulated businesses, which we subsequently recognize as revenue on a straight-line basis over the initial term of the related customer contracts, and (ii) consideration received from customers for temporary deficiency quantities under minimum volume contracts that we expect will be made up in a future period, which we subsequently recognize as revenue when the customer makes up the volumes or the likelihood that the customer will exercise its right for deficiency volumes becomes remote (e.g., there is insufficient capacity to make up the volumes, the deficiency makeup period expires).

The following table presents the activity in our contract assets and liabilities for the three months ended March 31, 2018:

(In millions of Canadian dollars)
Contract Assets (a)
Balance at December 31, 2017	9.1
Additions	3.8
Transfer to Accounts receivable	(11.6	)
Balance at March 31, 2018	1.3
Contract Liabilities (b)
Balance at December 31, 2017	67.9
Additions	38.1
Transfer to Revenues	(37.6	)
Balance at March 31, 2018	68.4

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(a) Includes current balances reported within “Other current assets” in our accompanying consolidated balance sheets at March 31, 2018 and December 31, 2017.

(b) Includes current balances of $11.7 million and $14.4 million reported within “Other current liabilities” in our accompanying consolidated balance sheets at March 31, 2018 and December 31, 2017, respectively, and includes non-current balances of $56.7 million and $53.5 million reported within “Deferred revenues” in our accompanying consolidated balance sheets at March 31, 2018 and December 31, 2017, respectively.

Revenue Allocated to Remaining Performance Obligations

The following table presents our estimated revenue allocated to remaining performance obligations for contracted revenue that has not yet been recognized, representing our “contractually committed” revenue as of March 31, 2018 that we will invoice or transfer from contract liabilities and recognize in future periods (in millions of Canadian dollars):

Year	Estimated Revenue
Nine months ended December 31, 2018	252.2
2019	258.5
2020	203.1
2021	185.8
2022	151.5
Thereafter	523.6
Total	1,574.7

Our contractually committed revenue for purposes of the tabular presentation above is generally limited to service customer contracts which have fixed pricing and fixed volume terms and conditions, generally including contracts with take-or-pay or minimum volume commitment payment obligations. Our contractually committed revenue amounts generally exclude, based on the following practical expedients that we elected to apply, remaining performance obligations for: (i) contracts with index-based pricing or variable volume attributes in which such variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct service that forms part of a series of distinct services; (ii) contracts with an original expected duration of one year or less; and (iii) contracts for which we recognize revenue at the amount for which we have the right to invoice for services performed.

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Reportable Segments (Notes)

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Reportable Segments

Reportable Segments

Our reportable business segments are based on the way management organizes the enterprise. Each of our reportable business segments represent a component of the enterprise that engages in a separate business activity and for which discrete financial information is available.

Our reportable business segments are:

• Pipelines - the ownership and operation of (i) TMPL that currently transports approximately 300,000 bpd of crude oil and refined petroleum from Edmonton, Alberta to Burnaby, B.C.; (ii) Puget Sound serving the state of Washington; (iii) Jet Fuel serving Vancouver International Airport; (iv) KMCI, the employer of Canadian staff; and (v) Cochin, a 12-inch diameter multi-product pipeline which spans approximately 1,000 kilometers in Saskatchewan and Alberta; and

• Terminals - the ownership and operation of liquid product merchant storage and rail terminals in the Edmonton, Alberta market as well as a predominantly dry cargo import/export facility in North Vancouver, B.C.

We evaluate the performance of our reportable business segments by evaluating our Segment earnings before depreciation and amortization expenses (“Segment EBDA”). We believe that Segment EBDA is a useful measure of our operating performance because it measures segment operating results before D&A and certain expenses that are generally not controllable by the operating managers of our respective business segments, such as general and administrative expense, interest expense, income tax expense and prior to May 2017, the foreign exchange losses (or gains) on the KMI Loans. Our general and administrative expenses include such items as employee benefits, insurance, rentals, certain litigation and shared corporate services including accounting, information technology, human resources and legal services. Certain general and administrative expenses attributable to Trans Mountain are billable as flow through items to shippers and result in incremental revenues.

We consider each period’s earnings before all non-cash D&A expenses to be an important measure of business segment performance for our reporting segments. We account for intersegment sales at market prices, while we account for asset transfers at either market value or, in some instances, book value. Intercompany transactions are eliminated in consolidation.

Financial information by segment follows: 

	Three Months Ended March 31,
	2018	2017
(In millions of Canadian dollars)
Revenues
Pipelines	90.0	89.5
Terminals	74.2	75.0
Total consolidated revenues	164.2	164.5

	Three Months Ended March 31,
	2018		2017
(In millions of Canadian dollars)
Segment EBDA(a)(b)(c)
Pipelines	63.6		56.3
Terminals	53.6		54.1
Total Segment EBDA	117.2		110.4
D&A	(36.8	)	(34.8	)
Foreign exchange gain (loss) on KMI Loans(c)	—		10.1
General and administrative expenses and corporate charges	(19.2	)	(18.0	)
Interest expense, net	(0.3	)	(6.7	)
Income tax expense	(16.5	)	(14.2	)
Total consolidated net income	44.4		46.8

	March 31, 2018	December 31, 2017
(In millions of Canadian dollars)
Assets
Pipelines	3,245.5	3,077.0
Terminals	1,391.0	1,375.7
Total consolidated assets	4,636.5	4,452.7

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(a) Includes operations and maintenance expenses, and taxes, other than income taxes.

(b) Includes revenues and other (income) expense less operating expenses and other, net. Segment EBDA for the three months ended March 31, 2018, and 2017 includes (i) $(0.2) million and $0.7 million, respectively, of foreign exchange gains (losses) due to changes in exchange rates between our Canadian dollar and the U.S. dollar on U.S. dollar denominated balances, and (ii) $11.6 million and $5.5 million, respectively, of capitalized equity financing costs.

(c) The KMI Loans, which represented U.S. dollar denominated long-term notes payable to Kinder Morgan, were settled with proceeds from our IPO.

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Income Taxes (Notes)

3 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

 Income Taxes

Income tax expense included in our accompanying consolidated statements of income is as follows:

	Three Months Ended March 31,
	2018		2017
(In millions of Canadian dollars, except percentages)
Income tax expense	16.5		14.2
Effective tax rate	27.1	%	23.4	%

The effective tax rate for the three months ended March 31, 2018 was consistent with the statutory federal and provincial rate of 27%. The effective tax rate for the three months ended March 31, 2017 was lower than the statutory federal and provincial rate of 27% primarily due to the impact of exchange rate fluctuations in respect of the KMI Loans which resulted in the release of the valuation allowance.

As a result of our IPO and subsequent revaluation (or rebalancing) of our investment in the Limited Partnership, our tax basis exceeds our accounting basis in our investment in the Limited Partnership by approximately $858.0 million. This excess tax basis results in a deferred tax asset of approximately $116.0 million.  A full valuation allowance was taken against this deferred tax asset as we determined it was more likely than not to not be realized.

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Benefit Plans (Notes)

3 Months Ended

Mar. 31, 2018

Retirement Benefits [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

 Benefit Plans

Components of net benefit cost related to our pension plans and other postretirement benefit (OPEB) plans are as follows:

	Pension				OPEB
	Three Months Ended March 31,
	2018		2017		2018	2017
(In millions of Canadian dollars)
Service cost	2.7		2.1		0.2	0.2
Interest cost	2.1		2.0		0.2	0.2
Expected return on assets	(2.3	)	(1.9	)	—	—
Amortization of net actuarial losses	0.8		1.0		—	—
Total net benefit cost	3.3		3.2		0.4	0.4

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Changes in Operating Assets and Liabilities (Notes)

3 Months Ended

Mar. 31, 2018

Supplemental Cash Flow Elements [Abstract]

Cash Flow, Supplemental Disclosures [Text Block]

Change in Operating Assets and Liabilities

	Three Months Ended March 31,
	2018		2017
(In millions of Canadian dollars)	Cash inflow (outflow)
Accounts receivable	(14.0	)	(22.8	)
Accounts receivable-affiliates	5.4		(29.2	)
Prepaid expenses and deposits	(2.3	)	(4.9	)
Inventories	(0.1	)	(0.3	)
Other current assets	0.4		(3.8	)
Deferred charges and other assets	(3.7	)	(6.7	)
Accounts payable	(4.2	)	(5.6	)
Accounts payable-affiliates	1.1		27.5
Accrued interest-affiliates	—		11.7
Other current liabilities	17.6		15.5
Pension and postretirement benefits	(0.9	)	(0.9	)
Regulatory liabilities and other deferred credits	26.3		(5.3	)
	25.6		(24.8	)

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Litigation, Environmental and Other Contingencies (Notes)

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Litigation, Environmental and Other Contingencies

Litigation and Contingencies

Legal Proceedings

We and our subsidiaries are parties to various legal, regulatory and other matters arising from the day-to-day operations of our businesses or certain predecessor operations that may result in claims against the Company. Although no assurance can be given, we believe, based on our experiences to date and taking into account established reserves and insurance, that the ultimate resolution of such items will not have a material adverse impact on our business, financial position, results of operations, cash flows, or dividends to our shareholders. We believe we have meritorious defenses to the matters to which we are a party and intend to vigorously defend the Company. When we determine a loss is probable of occurring and is reasonably estimable, we accrue an undiscounted liability for such contingencies based on our best estimate using information available at that time. If the estimated loss is a range of potential outcomes and there is no better estimate within the range, we accrue the amount at the low end of the range. We disclose contingencies where an adverse outcome may be material, or in the judgment of management, we conclude the matter should otherwise be disclosed. We had no accruals for any outstanding legal proceedings as of March 31, 2018 and December 31, 2017.

Base Line Terminal Project Litigation

On March 2, 2018, Arnett & Burgess Oilfield Construction Limited (“A&B”) filed a statement of claim and certificate of lis pendens, in the Court of Queen’s Bench of Alberta, against Alberta Envirofuels Inc. and Base Line Terminal East Limited Partnership, by its general partner, KM Canada Rail Holdings GP Limited (“BLTELP”). A&B was a contractor on the Base Line Terminal Project (the “BTT Project”) and has claimed it is owed $21.2 million, inclusive of goods and services tax, asserting that BLTELP failed to pay A&B for work performed on the BTT Project under a construction services agreement.

On March 26, 2018, A&B filed a separate statement of claim, in the Court of Queen’s Bench of Alberta, against BLTELP solely, asserting that BLTELP failed to pay for work performed under a separate construction services agreement also related to the BTT Project. With respect to the second claim, A&B has claimed it is owed approximately $1 million, inclusive of goods and services tax. We intend to defend both claims vigorously.

TMEP Litigation

There are numerous legal challenges pending before the Federal Court of Appeal which have been filed by various governmental and non-governmental organizations, First Nations or other parties that seek judicial review of the recommendation of the NEB and subsequent decision by the Federal Governor in Council to conditionally approve TMEP. The petitions allege, among other things, that additional consultation, engagement or accommodation is required and that various non-economic impacts of TMEP were not adequately considered. The remedies sought include requests that the NEB recommendation be quashed, that additional consultations be undertaken, and that the order of the Governor in Council approving TMEP be quashed. After provincial elections in B.C. on May 9, 2017, the New Democratic Party and Green Party formed a majority government. The new B.C. government sought and was granted limited intervenor status in the Federal Court of Appeal proceedings to argue against the government’s approval of TMEP.  A hearing was conducted by the Federal Court of Appeal from October 2 through October 13, 2017. A decision is expected in the coming months, and is subject to potential further appeal to the Supreme Court of Canada. Although we believe that each of the foregoing appeals lacks merit, in the event an applicant is successful at the Supreme Court of Canada, among other potential impacts, the NEB recommendation or Governor in Council’s approval may be quashed, permits may be revoked, TMEP may be subject to additional significant regulatory reviews, there may be significant changes to TMEP plans, further obligations or restrictions may be implemented, or TMEP may be stopped altogether, which could materially impact the overall feasibility or economic benefits of TMEP, which in turn would have a material adverse effect on us.

In addition to the judicial reviews of the NEB recommendation report and Governor in Council’s order, two judicial review proceedings have been commenced at the Supreme Court of B.C. (the Squamish Nation and the City of Vancouver). The petitions allege a duty and failure to consult or accommodate First Nations, and generally, among other claims, that the B.C. government ought not to have approved TMEP. Each applicant seeks to quash the Environmental Assessment Certificate (“EAC”) that was issued by the B.C. Environmental Assessment Office. On September 29, 2017, the B.C. government filed evidence in support of the EAC in the judicial review proceeding involving the Squamish Nation. Hearings were conducted in October and November 2017, respectively, for the City of Vancouver and the Squamish Nation judicial review proceedings and the Court took the matters under consideration with decisions expected in the coming months. Although we believe that each of the foregoing appeals lacks merit, in the event that an applicant for judicial review is successful, among other potential impacts, the EAC may be quashed, provincial permits may be revoked, TMEP may be subject to additional significant regulatory reviews, there may be significant changes to TMEP plans, further obligations or restrictions may be imposed, or TMEP may be stopped altogether. In the event that an applicant is unsuccessful at the Supreme Court of B.C., they may further seek to appeal the decision to the B.C. Court of Appeal. Any decision of the B.C. Court of Appeal may be appealed to the Supreme Court of Canada. A successful appeal at either of these levels could result in the same types of consequences described above.

On October 26, 2017 and November 14, 2017, Trans Mountain filed motions with the NEB. The first motion sought to resolve delays experienced by Trans Mountain in obtaining preliminary plan approvals from the City of Burnaby. The second motion sought to establish an NEB process to backstop provincial and municipal processes in a fair, transparent and expedited fashion. On December 7, 2017, the NEB issued an order granting the relief requested by Trans Mountain in respect of its motion related to Burnaby (the “Burnaby Order”). On January 19, 2018, the NEB granted, in part, Trans Mountain’s second motion by establishing a generic process to hear any future motions as they relate to provincial and municipal permitting issues. On February 16, 2018, Burnaby and B.C. applied to the Federal Court of Appeal for leave to appeal the Burnaby Order. On March 23, 2018, the Federal Court of Appeal denied the application. Burnaby or B.C., or both of them, may appeal the decision to the Supreme Court of Canada. A successful appeal at the Supreme Court of Canada could result in the Burnaby Order being quashed.

On April 18, 2018, the Attorney General for British Columbia announced that B.C. will file a reference case by April 30, 2018 presenting a constitutional question to the B.C. Court of Appeal. It is anticipated that the question presented will seek to define the extent of B.C.’s constitutional jurisdiction, if any, to regulate marine or environmental risks or the flow of certain petroleum products into B.C. via federally regulated pipelines. The reference question has yet to be publicly disclosed and must be approved by the cabinet of the B.C. government before filing with the court. The federal government as well as all other provinces in Canada and interested parties will be provided with notice of the reference question and an opportunity to participate in the case. A decision by the B.C. Court of Appeal may be appealed to the Supreme Court of Canada. As a result of the filing or resolution of this or any related reference question, among other potential impacts, the project may be stopped altogether or there may be significant changes to TMEP plans. These changes could include further obligations or restrictions on the construction or operation of TMEP, or the prohibition of the construction and operation of TMEP, any one of which could materially impact the overall feasibility or economic benefits of TMEP, which in turn would have a material adverse effect on us. See Note 1 “Suspension of Non-Essential Spending on Trans Mountain Expansion Project.”

Contingencies

We are subject to various legal and regulatory actions and proceedings which arise in the normal course of business. While the final outcome of such actions and proceedings cannot be predicted with certainty, we believe that the resolution of such actions and proceedings will not have a material impact on our financial position or results of operations.

We and our subsidiaries are also subject to environmental cleanup and enforcement actions from time to time. Although we believe our operations are in substantial compliance with applicable environmental law and regulations, risks of additional costs and liabilities are inherent in pipeline and terminal operations, and there can be no assurance that we will not incur significant costs and liabilities. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and enforcement policies under the terms of authority of those laws, and claims for damages to property or persons resulting from our operations, could result in substantial costs and liabilities to us.

Although it is not possible to predict the ultimate outcomes, we believe that the resolution of the environmental matters to which we and our subsidiaries are a party, will not have a material adverse effect on our business, financial position, results of operations or cash flows. As of March 31, 2018 and December 31, 2017, we had $7.1 million and $7.3 million, respectively, accrued for our outstanding matters.

TMEP

The proposed estimated $7.4 billion expansion, which includes capitalized equity and debt financing costs, would increase throughput capacity of the TMPL from approximately 300,000 bpd to 890,000 bpd. Construction related delays could result in increases to the estimated total costs. TMEP has transportation service agreements for a total of 707,500 bpd, representing approximately 80% of the expanded system’s capacity (the maximum amount under the regulated limit imposed by the NEB).

On May 19, 2016, the NEB recommended that the Governor in Council approve TMEP, subject to 157 conditions. On November 29, 2016, the Governor in Council approved TMEP, and directed the NEB to issue Amending Orders AO-003-OC-2 and AO-002-OC-49, and Certificate of Public Convenience and Necessity OC-064, authorizing the construction of TMEP. On January 11, 2017, the government of B.C. announced the issuance of the EAC to Trans Mountain for the B.C. portion of TMEP. The EAC includes 37 conditions that are in addition to, and designed to supplement, the 157 conditions required by the NEB. We have spent a cumulative total, net of contributions in aid of construction, of approximately $1,135.0 million on development of TMEP as of March 31, 2018 (December 31, 2017 - $930.0 million).

We would expect to fund TMEP capital expenditures through: (i) additional borrowings under our Credit Facility; (ii) the issuance of additional Preferred Shares; (iii) the issuance of long-term notes payable; (iv) retained cash flow from operations; and (v) the issuance of additional Restricted Voting Shares; or a combination thereof.

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Recent Accounting Pronoucements (Notes)

3 Months Ended

Mar. 31, 2018

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent New Accounting Pronouncements

Recent Accounting Pronouncements

ASU No. 2016-02

On February 25, 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This ASU requires that a lessee recognizes assets and liabilities on the balance sheet for the present value of the rights and obligations created by all leases with terms of more than 12 months. The ASU also will require disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. ASU No. 2016-02 will be effective for us as of January 1, 2019. We are currently reviewing the effect of this ASU to our financial statements.

ASU No. 2016-13

On June 16, 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326).” This ASU modifies the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. ASU No. 2016-13 will be effective for us as of January 1, 2020. We are currently reviewing the effect of this ASU to our financial statements.

ASU No. 2017-04

On January 26, 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment (Topic 350)” to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU No. 2017-04 will be effective for us as of January 1, 2020. We are currently reviewing the effect of this ASU to our financial statements.

ASU No. 2018-01

On January 25, 2018, the FASB issued ASU No. 2018-01, “Land Easement Practical Expedient for Transition to Topic

842.” This ASU provides an optional transition on practical expedient that, if elected, would not require companies to reconsider its accounting for existing or expired land easements before the adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. ASU No. 2018-01 will be effective for us as of January 1, 2019, and earlier adoption is permitted. We are currently reviewing the effect of this ASU to our financial statements.

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General General (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

General

In January 2018, we completed the registration of our Restricted Voting Shares pursuant to Section 12(g) of the United States Securities Exchange Act of 1934 (the “Exchange Act”) and are subject to the reporting requirements of Section 13(a) of the Exchange Act.

We have prepared the accompanying unaudited consolidated financial statements in accordance with the accounting principles contained in the FASB Accounting Standards Codification, the single source of U.S. GAAP and referred to in this report as the Codification. U.S. GAAP means generally accepted accounting principles that the Securities Exchange Commission (“SEC”) has identified as having substantial authoritative support, as supplemented by Regulation S-X under the Exchange Act, as amended from time to time. Under such rules and regulations, all significant intercompany items have been eliminated in consolidation.

In our opinion, all adjustments, which are of a normal and recurring nature, considered necessary for a fair statement of our financial position and operating results for the interim periods have been included in the accompanying consolidated financial statements. Interim results are not necessarily indicative of results for a full year; accordingly, you should read these consolidated financial statements in conjunction with our consolidated financial statements and related notes included in our 2017 Form 10-K.

Amounts are stated in Canadian dollars unless otherwise noted which is the functional currency of most of our operations.

Revenue Recognition, Policy [Policy Text Block]

Revenue from Contracts with Customers

Beginning in 2018, we account for revenue from contracts with customers in accordance with Topic 606. The unit of account in Topic 606 is a performance obligation, which is a promise in a contract to transfer to a customer either a distinct good or service (or bundle of goods and services) or a series of distinct goods or services provided over a period of time. Topic 606 requires that a contract’s transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each performance obligation in the contract based on relative standalone selling prices and recognized as revenue when (point in time) or as (over time) the performance obligation is satisfied.

Our customer service contracts primarily include transportation service and terminaling service contracts, as described below. Generally, for the majority of these contracts: (i) our promise is to transfer (or stand ready to transfer) a series of distinct integrated services over a period of time, which is a single performance obligation; (ii) the transaction price includes fixed and/or variable consideration, which amount is determinable at contract inception and/or at each month end based on our right to invoice at month end for the value of services provided to the customer that month; and (iii) the transaction price is recognized as revenue over the service period specified in the contract (which can be a day, including each day in a series of promised daily services, a month, a year, or other time increment, including a deficiency makeup period) as the services are rendered using a time-based (passage of time) or units-based (units of service transferred) method for measuring transfer of control of the services and progress towards satisfying our performance obligation, based on the nature of the promised service (e.g., firm or non-firm) and the terms and conditions of the contract (e.g., contracts with or without makeup rights).

Firm Services

Firm services (also called uninterruptible services) are services that are promised to be available to the customer at all times during the period(s) covered by the contract, with limited exceptions. Our firm service contracts are typically structured with take-or-pay or minimum volume provisions, which specify minimum service quantities a customer will pay for even if it chooses not to receive or use them in the specified service period (referred to as “deficiency quantities”). We typically recognize the portion of the transaction price associated with such provisions, including any deficiency quantities, as revenue depending on whether the contract prohibits the customer from making up deficiency quantities in subsequent periods, or the contract permits this practice, as follows:

• Contracts without Makeup Rights: If contractually the customer cannot make up deficiency quantities in future periods, our performance obligation is satisfied, and revenue associated with any deficiency quantities is generally recognized as each service period expires. Because a service period may exceed a reporting period, we determine at inception of the contract and at each subsequent reporting period if we expect the customer to take the minimum volume associated with the service period. If we expect the customer to make up all deficiencies in the specified service period (i.e., we expect the customer to take the minimum service quantities), the minimum volume provision is deemed not substantive and we will recognize the transaction price as revenue in the specified service period as the promised units of services are transferred to the customer. Alternatively, if we expect that there will be any deficiency quantities that the customer cannot or will not make up in the specified service period (referred to as “breakage”), we will recognize the estimated breakage amount (subject to the constraint on variable consideration) as revenue ratably over such service period in proportion to the revenue that we will recognize for actual units of service transferred to the customer in the service period. For certain take-or-pay contracts where we make the service, or a part of the service, continuously available over the service period, we typically recognize the take-or-pay amount as revenue ratably over such period based on the passage of time.

• Contracts with Makeup Rights: If contractually the customer can acquire the promised service in a future period and make up the deficiency quantities in such future period (the “deficiency makeup period”), we have a performance obligation to deliver those services at the customer’s request (subject to contractual and/or capacity constraints) in the deficiency makeup period. At inception of the contract, and at each subsequent reporting period, we estimate if we expect that there will be deficiency quantities that the customer will or will not make up. If we expect the customer will make up all deficiencies it is contractually entitled to, any consideration received relating to temporary deficiencies that will be made up in the deficiency makeup period will be deferred as a contract liability, and we will recognize that amount as revenue in the deficiency makeup period when either of the following occurs: (i) the customer makes up the volumes; or (ii) the likelihood that the customer will exercise its right for deficiency volumes then becomes remote (e.g., there is insufficient capacity to make up the volumes, the deficiency makeup period expires). Alternatively, if we expect at inception of the contract, or at the beginning of any subsequent reporting period, that there will be any deficiency quantities that the customer cannot or will not make up (i.e., breakage), we will recognize the estimated breakage amount (subject to the constraint on variable consideration) as revenue ratably over the specified service periods in proportion to the revenue that we will recognize for actual units of service transferred to the customer in those service periods.

Non-Firm Services

Non-firm services (also called interruptible services) are the opposite of firm services in that such services are provided to a customer on an “as available” basis. Generally, we do not have an obligation to perform these services until we accept a customer’s periodic request for service. For the majority of our non-firm service contracts, the customer will pay only for the actual quantities of services it chooses to receive or use, and we typically recognize the transaction price as revenue as those units of service are transferred to the customer in the specified service period (typically a daily or monthly period).

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Debt Fair value of long-term debt (Tables)

3 Months Ended

Mar. 31, 2018

Far value of financial instruments [Abstract]

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments [Table Text Block]

The carrying value and estimated fair value of our debt balances are disclosed below: 

	March 31, 2018		December 31, 2017
	Carrying value	Estimated fair value	Carrying value	Estimated fair value
(In millions of Canadian dollars)
Total debt	100.0	100.0	—	—

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Equity Equity (Tables)

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Schedule of Preferred Stock Dividends [Table Text Block]

Preferred Share Dividends

The following table provides information regarding dividends paid, and declared, but not yet paid, as applicable, on our Preferred Shares during the three months ended March 31, 2018:

Period	Total Series 1 quarterly dividend per share for the period	Total Series 3 quarterly dividend per share for the period(a)	Date of declaration	Date of record	Date of dividend	Total amount of dividends paid in cash
(In millions of Canadian dollars, except per share amounts)
November 15, 2017 to February 14, 2018 (a)	0.328125	0.22082	January 17, 2018	January 31, 2018	February 15, 2018	6.1
February 15, 2018 to May 14, 2018	0.328125	0.325	April 18, 2018	April 30, 2018	May 15, 2018

________

(a) Series 3 per share amount reflects that the shares were outstanding for 62 days during the period ended February 14, 2018.

Schedule of Common Stock Dividends [Table Text Block]

Restricted Voting Share Dividends

The following table provides information regarding dividends paid and declared, but not yet paid, as applicable, on our Restricted Voting Share during the three months ended March 31, 2018.

For the three month period ended	Dividend rate per share	Date of declaration	Date of record	Date of dividend	Total amount of dividends paid in cash(a)	Total amount of dividends paid in form of additional shares
					(In millions of Canadian dollars)
December 31, 2017	0.1625	January 17, 2018	January 31, 2018	February 15, 2018	11.8	5.1
March 31, 2018	0.1625	April 18, 2018	April 30, 2018	May 15, 2018

________

(a) Amount includes notional dividends on outstanding restricted stock awards of $0.1 million.

Kinder Morgan Interest Distributions

The following table provides information regarding distributions paid and declared, but not yet paid, as applicable, to Kinder Morgan during the three months ended March 31, 2018.

For the three month period ended	Dividend rate per share	Date of declaration	Date of distribution	Total amount of distribution paid in cash	Total amount of distribution paid in form of additional shares
				(In millions of Canadian dollars)
December 31, 2017	0.1625	January 17, 2018	February 15, 2018	31.0	9.9
March 31, 2018	0.1625	April 18, 2018	May 15, 2018

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The following table sets forth the allocation of net income available to shareholders of Restricted Voting Shares and participating securities:

	Three Months Ended March 31, 2018
(In millions of Canadian dollars)
Net Income Available to Restricted Voting Stockholders	10.8
Participating securities:
Less: Net income allocated to restricted stock awards(a)	(0.1	)
Net Income Allocated to Restricted Voting Stockholders	10.7
Basic Weighted Average Restricted Voting Shares Outstanding	103.5
Basic Earnings Per Restricted Voting Share	0.10

_______

(a) As of March 31, 2018, there were approximately 0.8 million unvested restricted stock awards.

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Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2018

Related Party Transactions [Abstract]

Schedule of Related Party Transactions [Table Text Block]

The following table summarizes our related party income statement activity. Revenues, operating costs and capitalized costs are under normal trade terms.

	Three Months Ended March 31,
	2018	2017
(In millions of Canadian dollars)
Income Statement location
Revenues-Services(a)	15.4	14.8
Operations and maintenance and general and administrative expenses	1.9	1.1
Interest expense(b)	—	11.7
Other
Capitalized costs from affiliates in property, plant and equipment	0.2	2.0

______

(a) Amounts represent sales to a customer who is a related party through joint ownership of a joint venture.

(b) 2017 primarily represents interest on long-term debt with affiliates (“KMI Loans”) that was repaid with proceeds form our IPO.

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Revenue Recognition Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue [Table Text Block]

The following table presents our revenues disaggregated by revenue source and type of revenue for each revenue source:

	Three Months Ended March 31, 2018
	Pipelines		Terminals	Total
(In millions of Canadian dollars)
Revenue from contracts with customers
Services
Firm services(a)	12.7		54.6	67.3
Fee-based services	80.9		16.5	97.4
Total revenue from contracts with customers	93.6		71.1	164.7
Other revenues(b)	(3.6	)	3.1	(0.5	)
Total revenues	90.0		74.2	164.2

______

(a) Includes non-cancellable firm service customer contracts with take-or-pay or minimum volume commitment elements, including those contracts where both the price and quantity amount are fixed. In these arrangements, the customer is obligated to pay for the rendered service whether or not the customer chooses to utilize the service. Excludes service contracts with indexed-based pricing, which along with revenues from other contracts are reported as Fee-based services.

(b) Amounts recognized as revenue under guidance prescribed in Topics of the Accounting Standards Codification other than in Topic 606 and primarily includes regulatory-based adjustments for TMPL and leases.

Contract with Customer, Asset and Liability [Table Text Block]

The following table presents the activity in our contract assets and liabilities for the three months ended March 31, 2018:

(In millions of Canadian dollars)
Contract Assets (a)
Balance at December 31, 2017	9.1
Additions	3.8
Transfer to Accounts receivable	(11.6	)
Balance at March 31, 2018	1.3
Contract Liabilities (b)
Balance at December 31, 2017	67.9
Additions	38.1
Transfer to Revenues	(37.6	)
Balance at March 31, 2018	68.4

______

(a) Includes current balances reported within “Other current assets” in our accompanying consolidated balance sheets at March 31, 2018 and December 31, 2017.

(b) Includes current balances of $11.7 million and $14.4 million reported within “Other current liabilities” in our accompanying consolidated balance sheets at March 31, 2018 and December 31, 2017, respectively, and includes non-current balances of $56.7 million and $53.5 million reported within “Deferred revenues” in our accompanying consolidated balance sheets at March 31, 2018 and December 31, 2017, respectively.

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block]

The following table presents our estimated revenue allocated to remaining performance obligations for contracted revenue that has not yet been recognized, representing our “contractually committed” revenue as of March 31, 2018 that we will invoice or transfer from contract liabilities and recognize in future periods (in millions of Canadian dollars):

Year	Estimated Revenue
Nine months ended December 31, 2018	252.2
2019	258.5
2020	203.1
2021	185.8
2022	151.5
Thereafter	523.6
Total	1,574.7

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Reportable Segments (Tables)

3 Months Ended

Mar. 31, 2018

Segment Reporting Information [Line Items]

Schedule of Segment Reporting Information, by Segment

Financial information by segment follows: 

	Three Months Ended March 31,
	2018	2017
(In millions of Canadian dollars)
Revenues
Pipelines	90.0	89.5
Terminals	74.2	75.0
Total consolidated revenues	164.2	164.5

	Three Months Ended March 31,
	2018		2017
(In millions of Canadian dollars)
Segment EBDA(a)(b)(c)
Pipelines	63.6		56.3
Terminals	53.6		54.1
Total Segment EBDA	117.2		110.4
D&A	(36.8	)	(34.8	)
Foreign exchange gain (loss) on KMI Loans(c)	—		10.1
General and administrative expenses and corporate charges	(19.2	)	(18.0	)
Interest expense, net	(0.3	)	(6.7	)
Income tax expense	(16.5	)	(14.2	)
Total consolidated net income	44.4		46.8

	March 31, 2018	December 31, 2017
(In millions of Canadian dollars)
Assets
Pipelines	3,245.5	3,077.0
Terminals	1,391.0	1,375.7
Total consolidated assets	4,636.5	4,452.7

_______

(a) Includes operations and maintenance expenses, and taxes, other than income taxes.

(b) Includes revenues and other (income) expense less operating expenses and other, net. Segment EBDA for the three months ended March 31, 2018, and 2017 includes (i) $(0.2) million and $0.7 million, respectively, of foreign exchange gains (losses) due to changes in exchange rates between our Canadian dollar and the U.S. dollar on U.S. dollar denominated balances, and (ii) $11.6 million and $5.5 million, respectively, of capitalized equity financing costs.

(c) The KMI Loans, which represented U.S. dollar denominated long-term notes payable to Kinder Morgan, were settled with proceeds from our IPO.

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Income Taxes schedule of effective income tax rate reconciliation (Tables)

3 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

Income tax expense included in our accompanying consolidated statements of income is as follows:

	Three Months Ended March 31,
	2018		2017
(In millions of Canadian dollars, except percentages)
Income tax expense	16.5		14.2
Effective tax rate	27.1	%	23.4	%

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Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2018

Retirement Benefits [Abstract]

Schedule of Net Benefit Costs [Table Text Block]

Components of net benefit cost related to our pension plans and other postretirement benefit (OPEB) plans are as follows:

	Pension				OPEB
	Three Months Ended March 31,
	2018		2017		2018	2017
(In millions of Canadian dollars)
Service cost	2.7		2.1		0.2	0.2
Interest cost	2.1		2.0		0.2	0.2
Expected return on assets	(2.3	)	(1.9	)	—	—
Amortization of net actuarial losses	0.8		1.0		—	—
Total net benefit cost	3.3		3.2		0.4	0.4

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Changes in Operating Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2018

Supplemental Cash Flow Elements [Abstract]

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

	Three Months Ended March 31,
	2018		2017
(In millions of Canadian dollars)	Cash inflow (outflow)
Accounts receivable	(14.0	)	(22.8	)
Accounts receivable-affiliates	5.4		(29.2	)
Prepaid expenses and deposits	(2.3	)	(4.9	)
Inventories	(0.1	)	(0.3	)
Other current assets	0.4		(3.8	)
Deferred charges and other assets	(3.7	)	(6.7	)
Accounts payable	(4.2	)	(5.6	)
Accounts payable-affiliates	1.1		27.5
Accrued interest-affiliates	—		11.7
Other current liabilities	17.6		15.5
Pension and postretirement benefits	(0.9	)	(0.9	)
Regulatory liabilities and other deferred credits	26.3		(5.3	)
	25.6		(24.8	)

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General General Additional Detail (Details) $ in Millions		3 Months Ended
	May 30, 2017 CAD ($)	Mar. 31, 2018 bbl / d km in
Number of Operating Segments		2
ALBERTA
Pipeline Transportation Activity | bbl / d		300,000
SASKATCHEWAN
Pipeline Diameter | in		12
Kilometers of Pipeline | km		1,000
Common shares [Member]
Net Proceeds from Issuance Initial Public Offering | $	$ 1,671.0
Kinder Morgan, Inc. [Member] | Common shares [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners	70.00%
Kinder Morgan Canada Limited Partnership [Member] | Common shares [Member]
Controlling Interest, Ownership Percentage by Parent	30.00%

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General Adoption of ASU (Details) (Details) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2016
Net Cash Provided by (Used in) Investing Activities, decrease		$ 0.8
Restricted Cash Equivalents, increase		$ 0.5	$ 1.3
Other Nonoperating Income (Expense) [Member]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification	$ 1.0

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Credit Facility (Details) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Debt Disclosure [Abstract]
Long-Term Line of Credit, Amount Outstanding	$ 100.0		$ 0.0
Credit Facility, weighted average interest rate	3.14%
Credit Facility, Stand by fees	$ 4.0	$ 0.0

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Fair Value of Debt (Details) - CAD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Reported Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Instrument, Fair Value Disclosure	$ 100.0	$ 0.0
Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Instrument, Fair Value Disclosure	$ 100.0	$ 0.0

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Equity Equity Note Additional Details (Details) shares in Millions	Mar. 31, 2018 shares
Voting Shares
Voting Shares, Outstanding	347.1
Restricted Voting Shares [Member] | Voting Shares
Voting Shares, Outstanding	103.7
Special Voting Shares [Member] | Voting Shares
Voting Shares, Outstanding	243.4
Cumulative Redeemable Minimum Rate Reset Preferred Shares, Series 1 [Member]
Preferred Stock, Shares Outstanding	12.0
Cumulative Redeemable Minimum Rate Reset Preferred Shares, Series 3 [Member]
Preferred Stock, Shares Outstanding	10.0
Participating Securities [Member]
Unvested Restricted Stock Awards, Issued and Non Issued	0.8

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Equity Preferred Stock (Details) - CAD ($) $ / shares in Units, $ in Millions	3 Months Ended
	May 14, 2018	Mar. 31, 2018	Feb. 14, 2018
Cumulative Redeemable Minimum Rate Reset Preferred Shares, Series 1 [Member]
Class of Stock [Line Items]
Preferred Stock, Dividends, Per Share, Cash Paid			$ 0.328125
Preferred Stock, Dividends Paid in Cash to the Public		$ 6.1
Cumulative Redeemable Minimum Rate Reset Preferred Shares, Series 1 [Member] | Subsequent Event [Member]
Class of Stock [Line Items]
Dividends Per Share Declared, Preferred Stock	$ 0.328125
Cumulative Redeemable Minimum Rate Reset Preferred Shares, Series 3 [Member]
Class of Stock [Line Items]
Preferred Stock, Dividends, Per Share, Cash Paid			$ 0.22082
Cumulative Redeemable Minimum Rate Reset Preferred Shares, Series 3 [Member] | Subsequent Event [Member]
Class of Stock [Line Items]
Dividends Per Share Declared, Preferred Stock	$ 0.325

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Equity Common Stock (Details) - CAD ($) $ / shares in Units, $ in Millions		3 Months Ended
	Apr. 18, 2018	Mar. 31, 2018	Mar. 31, 2017
Class of Stock [Line Items]
Restricted Voting Shares, Dividends Per Share, Declared		$ 0.1625	$ 0.0000
Restricted Stock Awards, Dividends Paid in Cash		$ 0.1
Restricted Voting Shares [Member]
Class of Stock [Line Items]
Restricted Voting Shares, Dividends Per Share, Cash Paid		$ 0.1625
Restricted Voting Shares, Dividends Paid in Cash to the Public		$ 11.8
Stock Issued During Period, Value, Dividend Reinvestment Plan		5.1
Restricted Voting Shares [Member] | Subsequent Event [Member]
Class of Stock [Line Items]
Restricted Voting Shares, Dividends Per Share, Declared	$ 0.1625
Special Voting Shares [Member]
Class of Stock [Line Items]
Stock Issued During Period, Value, Dividend Reinvestment Plan		9.9
Special Voting Shares, Dividends Paid in Cash		$ 31.0
Kinder Morgan Canada Limited [Member] | Special Voting Shares [Member]
Class of Stock [Line Items]
Special Voting Shares, Dividends Per Share, Cash Paid		$ 0.1625
Kinder Morgan Canada Limited [Member] | Special Voting Shares [Member] | Subsequent Event [Member]
Class of Stock [Line Items]
Special Voting Shares, Dividends Per Share, Declared	$ 0.1625

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Equity Equity Earnings Per Share (Details) - CAD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net Income Available to Restricted Voting Stockholders	$ 10.8	$ 0.0
Weighted Average Number of Shares Outstanding, Basic	103.5
Earnings Per Share, Basic	$ 0.10
Restricted Stock [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	0.8
Participating Securities [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net Income Available to Restricted Voting Stockholders	$ (0.1)
Unvested Restricted Stock Awards, Issued and Non Issued	0.8
Restricted Voting Shares [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net Income Available to Restricted Voting Stockholders	$ 10.7

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Related Party Transactions Affiliated Activities (Details) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Related Party Transaction [Line Items]
Revenues-Services(a)	$ 163.9	$ 164.0
Operations and maintenance and general and administrative expenses	49.1	49.0
Affiliated Entity [Member]
Related Party Transaction [Line Items]
Revenues-Services(a)	15.4	14.8
Operations and maintenance and general and administrative expenses	1.9	1.1
Interest expense(b)	0.0	11.7
Capitalized costs from affiliates in property, plant and equipment	$ 0.2	$ 2.0

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Related Party Transactions Other current assets (Details) $ in Millions	Mar. 31, 2018 CAD ($)
Affiliated Entity [Member]
Contract with Customer, Asset, Net, Current	$ 1.0

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Risk Management Foreign Currency Transactions and Translation - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Foreign Currency Transactions and Translation [Line Items]
Foreign Currency Transaction Gain (Loss), Realized	$ 0.7
Foreign Currency Transaction Gain (Loss), Unrealized	0.5	$ 10.9
Kinder Morgan, Inc. [Member]
Foreign Currency Transactions and Translation [Line Items]
Foreign Currency Transaction Gain (Loss), Unrealized		10.1
Puget Sound [Member]
Foreign Currency Transactions and Translation [Line Items]
Foreign Currency Transaction Gain (Loss), Unrealized	$ 0.5	$ 0.8

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Revenue Recognition Revenue Recognition Disaggregation of Revenue (Details) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	$ 164.2
Other revenues	0.3	$ 0.5
Pipelines [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	90.0
Terminals [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	74.2
Revenue from Contract with Customer [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	164.7
Revenue from Contract with Customer [Member] | Pipelines [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	93.6
Revenue from Contract with Customer [Member] | Terminals [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	71.1
Firm service | Service Revenue [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	67.3
Firm service | Service Revenue [Member] | Pipelines [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	12.7
Firm service | Service Revenue [Member] | Terminals [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	54.6
Fee-based services | Service Revenue [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	97.4
Fee-based services | Service Revenue [Member] | Pipelines [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	80.9
Fee-based services | Service Revenue [Member] | Terminals [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	16.5
Other revenues | Other revenue [Member]
Disaggregation of Revenue [Line Items]
Other revenues	(0.5)
Other revenues | Other revenue [Member] | Pipelines [Member]
Disaggregation of Revenue [Line Items]
Other revenues	(3.6)
Other revenues | Other revenue [Member] | Terminals [Member]
Disaggregation of Revenue [Line Items]
Other revenues	$ 3.1

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Revenue Recognition Revenue Recognition Contract Balances (Details) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Revenue Recognition and Deferred Revenue [Abstract]
Balance at December 31, 2017	$ 9.1
Additions	3.8
Transfer to Accounts receivable	(11.6)
Balance at March 31, 2018	1.3
Balance at December 31, 2017	67.9
Additions	38.1
Transfer to Revenues	(37.6)
Balance at March 31, 2018	68.4
Contract with Customer, Liability, Current	11.7	$ 14.4
Contract with Customer, Liability, Noncurrent	$ 56.7	$ 53.5

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Revenue Recognition Revenue Recognition Revenue Allocated to Remaining Performance Obligations (Details) $ in Millions	Mar. 31, 2018 CAD ($)
Revenue Recognition and Deferred Revenue [Abstract]
Nine months ended December 31, 2018	$ 252.2
2019	258.5
2020	203.1
2021	185.8
2022	151.5
Thereafter	523.6
Total	$ 1,574.7

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Reportable Segments Reportable Segments General (Details) - Pipelines [Member]	Mar. 31, 2018 bbl / d km in
Segment Reporting Information [Line Items]
Pipeline Transportation Activity | bbl / d	300,000
Pipeline Diameter | in	12
Kilometers of Pipeline | km	1,000

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Reportable Segments Revenues (Details) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Segment Reporting Information [Line Items]
Revenues	$ 164.2	$ 164.5
Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues	164.2	164.5
Pipelines [Member]
Segment Reporting Information [Line Items]
Revenues	90.0	89.5
Terminals [Member]
Segment Reporting Information [Line Items]
Revenues	$ 74.2	$ 75.0

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Reportable Segments Reportable Segments Segment EBDA (Details) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Segment Reporting Information [Line Items]
D&A	$ (36.8)	$ (34.8)
Foreign exchange gain (loss) on KMI Loans(c)	0.0	10.1
General and administrative expenses and corporate charges	(18.4)	(17.0)
Income tax expense	(16.5)	(14.2)
Capitalized equity financing costs	11.6	5.5
Net Income	44.4	46.8
Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
D&A	(36.8)	(34.8)
General and administrative expenses and corporate charges	(19.2)	(18.0)
Interest expense, net	(0.3)	(6.7)
Income tax expense	(16.5)	(14.2)
Operating Segments [Member]
Segment Reporting Information [Line Items]
Segment EBDA(a)(b)(c)	117.2	110.4
Pipelines [Member]
Segment Reporting Information [Line Items]
Foreign exchange gains (losses), other	(0.2)	0.7
Pipelines [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Segment EBDA(a)(b)(c)	63.6	56.3
Terminals | Operating Segments [Member]
Segment Reporting Information [Line Items]
Segment EBDA(a)(b)(c)	$ 53.6	$ 54.1

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Reportable Segments Reportable Segments Assets (Details) - CAD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Assets	$ 4,636.5	$ 4,452.7
Pipelines [Member]
Segment Reporting Information [Line Items]
Assets	3,245.5	3,077.0
Terminals
Segment Reporting Information [Line Items]
Assets	$ 1,391.0	$ 1,375.7

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Income Taxes Income Tax Effective Tax Rate (Details) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Income Taxes [Abstract]
Income tax expense	$ 16.5	$ 14.2
Effective tax rate	27.10%	23.40%

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Income Taxes Income Tax (Details) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Income Tax Disclosure [Abstract]
Effective tax rate	27.00%	27.00%
Excess tax basis of investment	$ 858.0
Deferred tax assets, investment	$ 116.0

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Benefit Plans Benefit Planss (Details) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Pension Plan [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	$ 2.7	$ 2.1
Interest cost	2.1	2.0
Expected return on plan assets	(2.3)	(1.9)
Amortization of net actuarial (gains) losses	0.8	1.0
Total net benefit cost	3.3	3.2
Other Postretirement Benefits Plan [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	0.2	0.2
Interest cost	0.2	0.2
Expected return on plan assets	0.0	0.0
Amortization of net actuarial (gains) losses	0.0	0.0
Total net benefit cost	$ 0.4	$ 0.4

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Changes in Operating Assets and Liabilities (Details) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Supplemental Cash Flow Elements [Abstract]
Accounts receivable	$ (14.0)	$ (22.8)
Accounts receivable-affiliates	5.4	(29.2)
Prepaid expenses and deposits	(2.3)	(4.9)
Inventories	(0.1)	(0.3)
Other current assets	0.4	(3.8)
Deferred charges and other assets	(3.7)	(6.7)
Accounts payable	(4.2)	(5.6)
Accounts payable-affiliates	1.1	27.5
Accrued interest-affiliates	0.0	11.7
Other current liabilities	17.6	15.5
Pension and postretirement benefits	(0.9)	(0.9)
Regulatory liabilities and other deferred credits	26.3	(5.3)
Change in operating assets and liabilities	$ 25.6	$ (24.8)

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Litigation, Environmental and Other Contingencies Litigation General (Details) - CAD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Loss Contingencies [Line Items]
Estimated Litigation Liability	$ 0.0	$ 0.0
Accrual for Environmental Loss Contingencies	7.1	$ 7.3
Baseline Terminal Project Litigation [Member] | Initial claim [Member]
Loss Contingencies [Line Items]
Loss Contingency, Damages Sought, Value	21.2
Baseline Terminal Project Litigation [Member] | 2nd claim [Member]
Loss Contingencies [Line Items]
Loss Contingency, Damages Sought, Value	$ 1.0

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Litigation, Environmental and Other Contingencies TMEP (Details) - TMEP [Member] $ in Millions	Mar. 31, 2018 CAD ($) bbl / d	Dec. 31, 2017 CAD ($)	Jan. 11, 2017	May 19, 2016
Loss Contingencies [Line Items]
Expansion project costs, estimated | $	$ 7,400.0
Number of conditions required by the NEB, initial				157
Number of conditions required by the NEB, additional			37
Construction costs net of contribution in aid of construction, cumulative | $	$ 1,135.0	$ 930.0
Minimum [Member]
Loss Contingencies [Line Items]
Pipeline Transportation Activity	300,000
Transportation capacity, subscribed	707,500
Capacity Subscribed, Percent	80.00%
Maximum [Member]
Loss Contingencies [Line Items]
Pipeline Transportation Activity	890,000