10. RELATED PARTY TRANSACTIONS

Administrative and Workforce Related Services

We do not directly employ any of the individuals responsible for managing or operating our business nor do we have any directors. Enbridge and its affiliates provide management and we obtain managerial, administrative, operational and workforce related services from our General Partner, Enbridge Management and affiliates of Enbridge pursuant to service agreements among our General Partner, Enbridge Management, affiliates of Enbridge, and us. Pursuant to these service agreements, we have agreed to reimburse our General Partner, Enbridge Management and affiliates of Enbridge, for the cost of managerial, administrative, operational and director services they provide to us. Where directly attributable, the cost of all compensation, benefits expenses and employer expenses for these employees are charged directly by Enbridge to the appropriate affiliate. Enbridge does not record any profit or margin for the administrative and operational services charged to us.

The affiliate amounts incurred by us for services received pursuant to the services agreements are reflected in “Operating and administrative — affiliate” on our consolidated statements of income.

Enbridge and its affiliates allocated direct workforce costs to us for our construction projects of $9.7 million and $7.3 million for the three months ended March 31, 2016 and 2015, respectively, that we recorded as additions to “Property, plant and equipment, net” on our consolidated statements of financial position.

Sale of Accounts Receivable

For the three months ended March 31, 2016 and 2015, we sold and derecognized receivables of $901.6 million and $1,095.9 million, respectively, to an indirect, wholly-owned subsidiary of Enbridge. As a result, for the three months ended March 31, 2016 and 2015, we received cash proceeds of $901.2 million and $1,095.6 million, respectively. Consideration for the receivables sold is equivalent to the carrying value of the receivables less a discount for credit risk. The difference between the carrying value of the receivables sold and the cash proceeds received is recognized in “Operating and administrative — affiliate” expense in our consolidated statements of income. For the three months ended March 31, 2016 and 2015, the expense stemming from the discount on the receivables sold was not material.

As of March 31, 2016 and December 31, 2015, we had $23.0 million and $19.0 million, respectively, in “Restricted cash” on our consolidated statements of financial position, for cash collections related to sold and derecognized receivables that have yet to be remitted to the Enbridge subsidiary. As of March 31, 2016 and December 31, 2015, outstanding receivables of $251.6 million and $317.0 million, respectively, which had been sold and derecognized, had not been collected on behalf of the Enbridge subsidiary.

Affiliate Revenues and Purchases

We purchase natural gas from third-parties, which subsequently generates operating revenues from sales to Enbridge and its affiliates. These transactions are entered into at the market price on the date of sale and are presented in “Commodity sales — affiliate” on our consolidated statements of income. We also record operating revenues in our Liquids segment for storage, transportation and terminaling services we provide to affiliates, which are presented in “Transportation and other services — affiliate” on our consolidated statements of income.

We also purchase natural gas from Enbridge and its affiliates for sale to third-parties at market prices on the date of purchase. Purchases of natural gas, NGLs, and crude oil from Enbridge and its affiliates are presented in “Commodity costs — affiliate” on our consolidated statements of income.

Related Party Transactions with Joint Ventures

We have a 35% aggregate indirect interest in the Texas Express NGL system, which is comprised of two joint ventures with third parties that together include a 593-mile NGL intrastate transportation pipeline and a related NGL gathering system. Our equity investment in the Texas Express NGL system at March 31, 2016 and December 31, 2015, was $368.0 million and $372.3 million, respectively, which is included on our consolidated statements of financial position in “Other assets, net.” For the three months ended March 31, 2016 and 2015, we recognized equity income of $7.1 million and $5.7 million, respectively, in “Other income” on our consolidated statements of income related to our investment in the system.

For the three months ended March 31, 2016 and 2015, we incurred $5.4 million and $5.8 million, respectively, of pipeline transportation and demand fees from the Texas Express NGL system for our Natural Gas segment. These expenses are recorded in “Commodity costs — affiliate” on our consolidated statements of income.

Our Natural Gas segment has made commitments to transport up to 120,000 barrels per day, or Bpd, of NGLs on the Texas Express NGL system through 2022. The current commitment level is 29,000 Bpd.

Financing Transactions with Affiliates

Distribution from MEP

The following table presents distributions paid by MEP during the three months ended March 31, 2016, to its public Class A common unitholders, representing the noncontrolling interest in MEP, and to us for our ownership of Class A common units.

Distribution Declaration Date	Distribution Payment Date	Amount Paid to EEP	Amount Paid to the noncontrolling interest	Total MEP Distribution
			(in millions)
January 28, 2016	February 12, 2016	$8.9	$7.6	$16.5

Omnibus Agreement

We, Midcoast Holdings, MEP and Enbridge are parties to the Omnibus Agreement under which we agreed to, among other things, indemnify MEP for certain matters, including environmental, right-of-way and permit matters. Our obligation to indemnify MEP for these matters is subject to a $500,000 aggregate deductible before MEP is entitled to indemnification. Additionally, there is a $15.0 million aggregate cap on the amounts for which we will indemnify MEP for under the Omnibus Agreement. For the three months ended March 31, 2016, we paid indemnification proceeds to MEP under the Omnibus Agreement of $12.2 million for the acquisition of title to right-of-way assets that were pending at the time of MEP’s initial public offering and associated legal fees.

Financial Support Agreement

At March 31, 2016, we provided $4.9 million of letters of credit outstanding and $23.3 million of guarantees to Midcoast Operating under a Financial Support Agreement with Midcoast Operating. At December 31, 2015, we provided $7.5 million of letters of credit outstanding and $21.7 million of guarantees to Midcoast Operating under this agreement.

Amendment of OLP Limited Partnership Agreement

On July 30, 2015, the partners amended and restated the limited partnership agreement of the OLP, pursuant to which our General Partner will temporarily forego Series EA and ME, collectively, the Series, distributions commencing in the quarter ended June 30, 2015 through the quarter ending March 31, 2016. The General Partner’s capital funding contribution requirements for each of those two Series, commencing in August 2015, will be reduced by the amount of its foregone cash distributions from the respective Series, until the earlier of December 31, 2016 and the date aggregate reductions in capital contributions for such Series are equal to the foregone cash distributions for such Series. To the extent that the General Partner’s portion of capital contributions prior to December 31, 2016 are insufficient to cover the General Partner’s foregone cash distributions for a Series, beginning with the distribution related to the first quarter of 2017 for that Series, we will receive reduced cash distributions by up to 50%, and the General Partner will receive a comparable increase in cash distributions each quarter until the General Partner has received an aggregate amount of contribution reductions and distribution increases equal to the amount of foregone cash distributions.

Joint Funding Arrangement for Eastern Access Projects

The OLP has a series of partnership interests, which we refer to as the EA interests. The EA interests were created to finance the Eastern Access Projects to increase access to refineries in the U.S. Upper Midwest and in Ontario, Canada for light crude oil produced in western Canada and the United States. Our General Partner owns 75% of the EA interests, and, except as described above in Amendment of OLP Limited Partnership Agreement, the projects are jointly funded by our General Partner at 75% and us at 25%.

Our General Partner made equity contributions totaling $7.2 million and $36.8 million to the OLP for the three months ended March 31, 2016 and 2015, respectively, to fund its equity portion of the construction costs associated with the Eastern Access Projects.

Distribution to Series EA Interests

The following table presents distributions paid by the OLP during the three months ended March 31, 2016, to our General Partner and its affiliate, representing the noncontrolling interest in the Series EA, and to us, as the holders of the Series EA general and limited partner interests. The distributions were declared by the board of directors of Enbridge Management, acting on behalf of Enbridge Pipelines (Lakehead), L.L.C., the managing general partner of the OLP and the Series EA interests.

Distribution Declaration Date	Distribution Payment Date	Amount Paid to EEP	Amount Paid to the noncontrolling interest	Total Series EA Distribution
			(in millions)
January 29, 2016	February 12, 2016	$79.2	$—	$79.2

Joint Funding Arrangement for U.S. Mainline Expansion Projects

The OLP also has a series of partnership interests, which we refer to as the ME interests. The ME interests were created to finance the Mainline Expansion Projects to increase access to the markets of North Dakota and western Canada for light oil production on our Lakehead System between Neche, North Dakota and Superior, Wisconsin. Our General Partner owns 75% of the ME interests, and, except as described above in Amendment of OLP Limited Partnership Agreement, the projects are jointly funded by our General Partner at 75% and us at 25%, under the Mainline Expansion Joint Funding Agreement, which is similar to the Eastern Access Joint Funding Agreement.

Our General Partner has made equity contributions totaling $42.8 million and $162.7 million to the OLP for the three months ended March 31, 2016, and 2015, respectively, to fund its equity portion of the construction costs associated with the Mainline Expansion Projects.

Distribution to Series ME Interests

The following table presents distributions paid by the OLP during the three months ended March 31, 2016, to our General Partner and its affiliate, representing the noncontrolling interest in the Series ME, and to us, as the holders of the Series ME general and limited partner interests. The distributions were declared by the board of directors of Enbridge Management, acting on behalf of Enbridge Pipelines (Lakehead), L.L.C., the managing general partner of the OLP and the Series ME interests.


Distribution Declaration Date	Distribution Payment Date	Amount Paid to EEP	Amount Paid to the noncontrolling interest	Total Series ME Distribution
			(in millions)
January 29, 2016	February 12, 2016	$40.8	$—	$40.8