REVENUE

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

REVENUE

REVENUE

REVENUE FROM CONTRACTS WITH CUSTOMERS

Major Products and Services

	Liquids Pipelines	Gas Transmission and Midstream		Gas Distribution	Green Power and Transmission	Energy Services	Eliminations and Other		Consolidated
Three months ended September 30, 2018
(millions of Canadian dollars)
Transportation revenue	2,190	979		97	—	—	—		3,266
Storage and other revenue	31	53		55	—	—	—		139
Gas gathering and processing revenue	—	200		—	—	—	—		200
Gas distribution revenue	—	—		478	—	—	—		478
Electricity and transmission revenue	—	—		—	115	—	—		115
Commodity sales	—	298		—	—	—	—		298
Total revenue from contracts with customers	2,221	1,530		630	115	—	—		4,496
Commodity sales	—	—		—	—	6,621	—		6,621
Other revenue1	222	(6	)	11	2	—	(1	)	228
Intersegment revenue	86	4		4	—	25	(119	)	—
Total revenue	2,529	1,528		645	117	6,646	(120	)	11,345

	Liquids Pipelines		Gas Transmission and Midstream	Gas Distribution	Green Power and Transmission	Energy Services	Eliminations and Other		Consolidated
Nine months ended September 30, 2018
(millions of Canadian dollars)
Transportation revenue	6,327		2,889	487	—	—	—		9,703
Storage and other revenue	113		164	173	—	—	—		450
Gas gathering and processing revenue	—		636	—	—	—	—		636
Gas distribution revenue	—		—	3,260	—	—	—		3,260
Electricity and transmission revenue	—		—	—	417	—	—		417
Commodity sales	—		1,630	—	—	—	—		1,630
Total revenue from contracts with customers	6,440		5,319	3,920	417	—	—		16,096
Commodity sales	—		—	—	—	19,008	—		19,008
Other revenue1	(308	)	2	22	6	—	(10	)	(288	)
Intersegment revenue	256		8	10	—	106	(380	)	—
Total revenue	6,388		5,329	3,952	423	19,114	(390	)	34,816

1  Includes mark-to-market gains/(losses) from our hedging program.

We disaggregate revenue into categories which represent our principal performance obligations within each business segment because these revenue categories represent the most significant revenue streams in each segment and consequently are considered to be the most relevant revenue information for management to consider in evaluating performance.

Contract Balances

	Receivables	Contract Assets	Contract Liabilities
(millions of Canadian dollars)
Balance as at January 1, 2018	2,475	290	992
Balance as at September 30, 2018	1,625	267	1,203

Contract assets represent the amount of revenue which has been recognized in advance of payments received for performance obligations we have fulfilled (or partially fulfilled) and prior to the point in time at which our right to the payment is unconditional. Amounts included in contract assets are transferred to accounts receivable when our right to the consideration becomes unconditional.

Contract liabilities represent payments received for performance obligations which have not been fulfilled. Contract liabilities primarily relate to make-up rights and deferred revenue. Revenue recognized during the three and nine months ended September 30, 2018 included in contract liabilities at the beginning of the period is $19 million and $143 million, respectively. Increases in contract liabilities from cash received, net of amounts recognized as revenue during the three and nine months ended September 30, 2018 were $147 million and $345 million, respectively.

Performance Obligations

Segment	Nature of Performance Obligation
Liquids Pipelines	• Transportation and storage of crude oil and natural gas liquids (NGL)
Gas Transmission and Midstream	• Sale of crude oil, natural gas and NGLs
	• Transportation, storage, gathering, compression and treating of natural gas
	• Transportation of NGLs
Gas Distribution	• Supply and delivery of natural gas
	• Transportation of natural gas
	• Storage of natural gas
Green Power and Transmission	• Generation and transmission of electricity
	• Delivery of electricity from renewable energy generation facilities

There was no material revenue recognized in the three and nine months ended September 30, 2018 from performance obligations satisfied in previous periods.

Payment Terms

Payments are received monthly from customers under long-term transportation, commodity sales, and gas gathering and processing contracts. Payments from Gas Distribution customers are received on a continuous basis based on established billing cycles.

Certain contracts in the United States offshore business provide for us to receive a series of fixed monthly payments (FMPs) for a specified period which is less than the period during which the performance obligations are satisfied. As a result, a portion of the FMPs is recorded as a contract liability. The FMPs are not considered to be a financing arrangement because the payments are scheduled to match the production profiles of offshore oil and gas fields, which generate greater revenue in the initial years of their productive lives.

Revenue to be Recognized from Unfulfilled Performance Obligations

Total revenue from performance obligations expected to be fulfilled in future periods is $64.7 billion, of which $1.7 billion and $5.8 billion is expected to be recognized during the three months ending December 31, 2018, and the year ending December 31, 2019, respectively.

The revenues excluded from the amounts above based on optional exemptions available under ASC 606, as explained below, represent a significant portion of our overall revenues and revenues from contracts with customers. Certain revenues such as flow-through operating costs charged to shippers are recognized at the amount for which we have the right to invoice our customers and are excluded from the amounts for revenue to be recognized in the future from unfulfilled performance obligations above. Variable consideration is excluded from the amounts above due to the uncertainty of the associated consideration, which is generally resolved when actual volumes and prices are determined. For example, we consider interruptible transportation service revenues to be variable revenues since volumes cannot be estimated. Additionally, the effect of escalation on certain tolls which are contractually escalated for inflation has not been reflected in the amounts above as it is not possible to reliably estimate future inflation rates. Revenues for periods extending beyond the current rate settlement term for regulated contracts where the tolls are periodically reset by the regulator are excluded from the amounts above since future tolls remain unknown. Finally, revenues from contracts with customers which have an original expected duration of one year or less are excluded from the amounts above.

SIGNIFICANT JUDGMENTS MADE IN RECOGNIZING REVENUE

Long-Term Transportation Agreements

For long-term transportation agreements, significant judgments pertain to the period over which revenue is recognized and whether the agreement provides for make-up rights for the shippers. Transportation revenue earned from firm contracted capacity arrangements is recognized ratably over the contract period. Transportation revenue from interruptible or volumetric-based arrangements is recognized when services are performed.

Estimates of Variable Consideration

Revenue from arrangements subject to variable consideration is recognized only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Uncertainties associated with variable consideration relate principally to differences between estimated and actual volumes and prices. These uncertainties are resolved each month when actual volumes are sold or transported and actual tolls and prices are determined.

Recognition and Measurement of Revenue

	Liquids Pipelines	Gas Transmission and Midstream	Gas Distribution	Green Power and Transmission	Energy Services	Consolidated
Three months ended September 30, 2018
(millions of Canadian dollars)
Revenue from products transferred at a point in time1	—	298	20	—	—	318
Revenue from products and services transferred over time2	2,221	1,232	610	115	—	4,178
Total revenue from contracts with customers	2,221	1,530	630	115	—	4,496

	Liquids Pipelines	Gas Transmission and Midstream	Gas Distribution	Green Power and Transmission	Energy Services	Consolidated
Nine months ended September 30, 2018
(millions of Canadian dollars)
Revenue from products transferred at a point in time1	—	1,630	65	—	—	1,695
Revenue from products and services transferred over time2	6,440	3,689	3,855	417	—	14,401
Total revenue from contracts with customers	6,440	5,319	3,920	417	—	16,096

1 Revenue from sales of crude oil, natural gas and NGLs.

2 Revenue from crude oil and natural gas pipeline transportation, storage, natural gas gathering, compression and treating, natural gas distribution, natural gas storage services and electricity sales.

Performance Obligations Satisfied at a Point in Time

Revenue from commodity sales where the commodity is not immediately consumed prior to use is recognized at the point in time when the contractually specified volume of the commodity has been delivered, as control over the commodity transfers to the customer upon delivery.

Performance Obligations Satisfied Over Time

For arrangements involving the transportation and sale of petroleum products and natural gas where the transportation services or commodities are simultaneously received and consumed by the shipper or customer, we recognize revenue over time using an output method based on volumes of commodities delivered or transported. The measurement of the volumes transported or delivered corresponds directly to the benefits received by the shippers or customers during that period.

Determination of Transaction Prices

Prices for gas processing and transportation services are determined based on the capital cost of the facilities, pipelines and associated infrastructure required to provide such services plus a rate of return on capital invested that is determined either through negotiations with customers or through regulatory processes for those operations that are subject to rate regulation.

Prices for commodities sold are determined by reference to market price indices plus or minus a negotiated differential and in certain cases a marketing fee.

Prices for natural gas sold and distribution services provided by regulated natural gas distribution operations are prescribed by regulation.