NONCONTROLLING INTERESTS

The following table provides additional information regarding Noncontrolling interests as presented in our Consolidated Statements of Financial Position:



December 31,	2017	2016
(millions of Canadian dollars)
Enbridge Energy Management, L.L.C.¹	34	36
Enbridge Energy Partners, L.P.²	157	(99	)
Enbridge Gas Distribution Inc.³	100	100
Renewable energy assets⁴	806	516
Spectra Energy Partners, LP^5,8	5,385	—
Union Gas Limited^6,8	110	—
Westcoast Energy Inc.^7,8	1,005	—
Other	—	24
	7,597	577


1	Represents the 88.3% of the listed shares of Enbridge Energy Management, L.L.C. (EEM) not held by us as at December 31, 2017 and 2016.


2	Represents the 68.2% and 80.2% interest in EEP held by public unitholders as well as interests of third parties in subsidiaries of EEP as at December 31, 2017 and 2016, respectively.


3	Represents the four million cumulative redeemable preferred shares held by third parties in EGD as at December 31, 2017 and 2016.


4	Represents the tax equity investors' interests in our Magic Valley, Wildcat, Keechi, New Creek and Chapman Ranch wind farms, which are accounted for using the HLBV method, with an additional 20.0% noncontrolling interest in each of the Magic Valley and Wildcat wind farms held by third parties as at December 31, 2017 and 2016.


5	Represents the 25.7% interest in SEP held by public unitholders as at December 31, 2017.


6	Represents the four million cumulative redeemable preferred shares held by third parties in Union Gas as at December 31, 2017.


7	Represents the 16.6 million cumulative redeemable preferred shares and 12 million cumulative first preferred shares as at December 31, 2017 held by third parties in Westcoast Energy Inc., and the 22.0% interest in Maritimes & Northeast Pipeline Limited Partnership held by third parties.


8	Represents noncontrolling interests resulting from the Merger Transaction (Note 7).

Enbridge Energy Partners, L.P.

United States Sponsored Vehicle Strategy

On April 28, 2017, we completed a strategic review of EEP and took the actions described below. As a result of these actions, we recorded an increase in Noncontrolling interests of $458 million, inclusive of foreign currency translation adjustments, and a decrease in Additional paid-in capital of $421 million, net of deferred income taxes of $253 million.

Acquisition of Midcoast Assets and Privatization of Midcoast Energy Partners, L.P.

On April 27, 2017, we completed our previously-announced merger through a wholly-owned subsidiary, through which we privatized MEP by acquiring all of the outstanding publicly-held common units of MEP for total consideration of approximately US$170 million.

On June 28, 2017, we acquired, through a wholly-owned subsidiary, all of EEP’s interest in the Midcoast gas gathering and processing business for cash consideration of US$1.3 billion plus existing indebtedness of MEP of US$953 million.

As a result of the above transactions, 100% of the Midcoast gas gathering and processing business is now owned by us.

EEP Strategic Restructuring Actions

On April 27, 2017, EEP redeemed all of its outstanding Series 1 Preferred Units held by us at face value of US$1.2 billion through the issuance of 64.3 million Class A common units to us. We also irrevocably waived all of our rights associated with our ownership of 66.1 million Class D units and 1,000 Incentive Distribution Units of EEP, in exchange for the issuance of 1,000 Class F units. The Class F units are entitled to (i) 13% of all distributions in excess of US$0.295 per EEP unit, but equal to or less than US$0.35 per EEP unit, and (ii) 23% of all distributions in excess of US$0.35 per EEP unit. The irrevocable waiver was effective with respect to distributions declared with a record date after April 27, 2017. In connection with these strategic restructuring actions, EEP reduced its quarterly distribution from US$0.583 per unit to US$0.35 per unit. Further, in conjunction with the restructuring actions, EEP terminated a receivable purchase agreement with a special purpose entity wholly-owned by us.

Finalization of Bakken Pipeline System Joint Funding Agreement

On April 27, 2017, we entered into a joint funding arrangement with EEP. Pursuant to this joint funding arrangement, we own 75% and EEP owns 25% of the combined 27.6% effective interest in the Bakken Pipeline System. Under this arrangement, EEP retains a five-year option to acquire an additional 20% interest in the Bakken Pipeline System. Upon the execution of the joint funding arrangement, EEP repaid the outstanding balance on its US$1.5 billion credit agreement with us, which it had drawn upon to fund the initial purchase.

Drop Down of Interest to Enbridge Energy Partners, L.P.

On January 2, 2015, we transferred our 66.7% interest in the United States segment of the Alberta Clipper pipeline, held through a wholly-owned subsidiary, to EEP for aggregate consideration of $1.1 billion (US$1 billion), consisting of approximately $814 million (US$694 million) of Class E equity units issued to us by EEP and the repayment of approximately $359 million (US$306 million) of indebtedness owed to us. Prior to the transfer, EEP owned the remaining 33.3% interest in the United States segment of the Alberta Clipper pipeline. As a result of this transfer, we recorded a decrease in Noncontrolling interests of $304 million and increases in Additional paid-in capital and Deferred income tax liabilities of $218 million and $86 million, respectively.

Other

The EEP partnership agreement does not permit capital deficits to accumulate in the capital accounts of any limited partner and thus requires that such capital account deficits be "cured" by additional allocations from the positive capital accounts of the other limited partners and the General Partner, generally on a pro-rata basis. Further, as outlined in the EEP partnership agreement, when a limited partner's capital accounts have positive capital balances, such limited partner must allocate its earnings to the General Partner of EEP to reimburse them for previous curing allocations. As a result, earnings attributable to noncontrolling interests in the Consolidated Statements of Earnings for the years ended December 31, 2017 and 2016 were lower by $73 million and higher by $816 million, respectively, due to these reallocations.

On March 13, 2015, EEP completed a public common unit issuance. We participated only to the extent to maintain our 2% general partner interest. The common unit issuance resulted in contributions of $366 million (US$289 million) from noncontrolling interest holders.

REDEEMABLE NONCONTROLLING INTERESTS

The following table presents additional information regarding Redeemable noncontrolling interests as presented in our Consolidated Statements of Financial Position:



Year ended December 31,	2017		2016		2015
(millions of Canadian dollars)
Balance at beginning of year	3,392		2,141		2,249
Earnings/(loss) attributable to redeemable noncontrolling interests	175		268		(3	)
Other comprehensive income/(loss), net of tax
Change in unrealized loss on cash flow hedges	(21	)	(17	)	(7	)
Other comprehensive loss from equity investees	—		—		(12	)
Reclassification to earnings of loss on cash flow hedges	57		9		4
Foreign currency translation adjustments	(6	)	(3	)	18
Other comprehensive income/(loss), net of tax	30		(11	)	3
Distributions to unitholders	(247	)	(202	)	(114	)
Contributions from unitholders	1,178		591		670
Reversal of cumulative redemption value adjustment attributable to ECT preferred units	—		—		(541	)
Net dilution loss	(169	)	(81	)	(482	)
Redemption value adjustment	(292	)	686		359
Balance at end of year	4,067		3,392		2,141

Redeemable noncontrolling interests in the Fund as at December 31, 2017, 2016 and 2015 represented 56.5%, 45.6% and 40.7%, respectively, of interests in the Fund’s trust units that are held by third parties.

Common Share Issuances

During the years ended December 31, 2017, 2016 and 2015, the following occurred:



Year ended December 31,	2017		2016		2015
(millions of Canadian dollars)
ENF issuance of common shares¹:
Gross proceeds from the public	575		575		700
Gross proceeds from us²	143		143		174
ENF purchase of Fund trust units^1,3:
Contributions from redeemable noncontrolling interest holders, net of share issue costs	552		551		670
Dilution gain/(loss) for redeemable noncontrolling interests	5		(4	)	(355	)
Dilution gain/(loss) in Additional paid-in capital	(5	)	4		355
ECT purchase of EIPLP Class A units^1,4:
Proceeds used by ECT to purchase EIPLP Class A units	718		718		874
Dilution loss for redeemable noncontrolling interests	(123	)	(103	)	(132	)
Dilution gain in Additional paid-in capital	123		103		132
ENF purchase of Fund trust units⁵:
Contributions from redeemable noncontrolling interest holders	51		40		—
Dilution gain/(loss) for redeemable noncontrolling interests	(5	)	(4	)	—
Dilution gain/(loss) in Additional paid-in capital	5		4		—


1	These transactions occurred in December 2017, April 2016 and November 2015.


2	Concurrent with the public offerings, we subscribed for ENF common shares on a private placement basis to maintain our 19.9% ownership interest in ENF.


3	ENF used the proceeds from the common share issuances to purchase additional trust units of the Fund. We did not participate in these offerings, resulting in increases in redeemable noncontrolling interests (2017 - 53.6% to 56.5%; 2016 - 40.7% to 45.6%; 2015 - 34.3% to 40.7%).

The Fund used a portion of the proceeds from the trust unit issuances to purchase additional common units of ECT, and ECT used the proceeds to purchase additional Class A units of EIPLP, resulting in dilution losses for ECT. These dilution losses resulted in dilution losses for the Fund’s equity investment in ECT and the above-noted dilution gains/(losses) for redeemable noncontrolling interests and Additional paid-in capital.


5	For the years ended December 31, 2017, 2016 and 2015, ENF used cash in respect of reinvested dividends and option cash payments from its Dividend Reinvestment Plan (DRIP) to purchase 1.6 million, 1.3 million and nil Fund trust units, respectively, on behalf of the public.

Further to the above, in April 2017, Enbridge and ENF completed the secondary public offering of ENF common shares for gross proceeds of $575 million (the Secondary Offering). To effect the Secondary Offering, we exchanged 21,657,617 Fund units we owned for an equivalent amount of ENF common shares. In order to maintain our 19.9% interest in ENF, we retained 4,309,867 of the common shares we received in the exchange, and sold the balance through the Secondary Offering. Upon closing of the Secondary Offering, our total economic interest in ENF decreased from 86.9% to 84.6% and redeemable noncontrolling interests increased from 45.6% to 53.7%. As a result of the Secondary Offering, we recorded a dilution loss for redeemable noncontrolling interests of $87 million and a dilution gain in Additional paid-in capital of $87 million.

Canadian Restructuring Plan

In September 2015, our unitholdings in the Fund increased upon closing of the Canadian Restructuring Plan (Note 1), resulting in a decrease in redeemable noncontrolling interests.

Upon closing of the Canadian Restructuring Plan, ECT, an equity investment of the Fund, reclassified its Preferred Units from mezzanine equity to liabilities. Accordingly, ECT reduced the recorded redemption value of its Preferred Units to their aggregate par value, resulting in an increase to the Fund’s equity investment in ECT. This resulted in an adjustment to redeemable noncontrolling interests of approximately $541 million.

Upon closing of the Canadian Restructuring Plan, EIPLP, an indirect equity investment of the Fund, issued Special Interest Rights to us which are entitled to Temporary Performance Distribution Rights (TPDR) distributions. TPDR distributions occur when the Fund distribution rate exceeds a payout target and are paid in the form of Class D units. The Class D unitholders receive a distribution each month equal to the per unit amount paid on Class C units of EIPLP, but to be paid in kind in additional Class D units. The issuances of TPDR and additional Class D units resulted in a dilution gain for the Fund’s indirect equity investment in EIPLP, a dilution gain for redeemable noncontrolling interests of $41 million, $30 million and $5 million for the years ended December 31, 2017, 2016 and 2015, respectively, with offsetting dilution losses in Additional paid-in capital.