RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2013

RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

Schedule of the balance sheet location and carrying value of the Company's derivative instruments

June 30, 2013	Derivative Instruments Used as Cash Flow Hedges		Derivative Instruments Used as Net Investment Hedges		Non- Qualifying Derivative Instruments		Total Gross Derivative Instruments as Presented		Amounts Available for Offset		Total Net Derivative Instruments
(millions of Canadian dollars)
Accounts receivable and other
Foreign exchange contracts	13		13		73		99		(63	)	36
Interest rate contracts	69		-		10		79		(10	)	69
Commodity contracts	14		-		208		222		(91	)	131
Other contracts	2		-		9		11		-		11
	98		13		300		411		(164	)	247
Deferred amounts and other assets
Foreign exchange contracts	8		39		48		95		(75	)	20
Interest rate contracts	285		-		5		290		(41	)	249
Commodity contracts	11		-		63		74		(37	)	37
Other contracts	2		-		2		4		-		4
	306		39		118		463		(153	)	310
Accounts payable and other
Foreign exchange contracts	(2	)	-		(99	)	(101	)	63		(38	)
Interest rate contracts	(366	)	-		(7	)	(373	)	20		(353	)
Commodity contracts	(6	)	-		(187	)	(193	)	91		(102	)
	(374	)	-		(293	)	(667	)	174		(493	)
Other long-term liabilities
Foreign exchange contracts	(6	)	(29	)	(411	)	(446	)	75		(371	)
Interest rate contracts	(101	)	-		(7	)	(108	)	31		(77	)
Commodity contracts	(1	)	-		(483	)	(484	)	37		(447	)
	(108	)	(29	)	(901	)	(1,038	)	143		(895	)
Total net derivative asset/(liability)
Foreign exchange contracts	13		23		(389	)	(353	)	-		(353	)
Interest rate contracts	(113	)	-		1		(112	)	-		(112	)
Commodity contracts	18		-		(399	)	(381	)	-		(381	)
Other contracts	4		-		11		15		-		15
	(78	)	23		(776	)	(831	)	-		(831	)

December 31, 2012	Derivative Instruments Used as Cash Flow Hedges		Derivative Instruments Used as Net Investment Hedges		Non- Qualifying Derivative Instruments		Total Gross Derivative Instruments as Presented		Amounts Available for Offset		Total Net Derivative Instruments
(millions of Canadian dollars)
Accounts receivable and other
Foreign exchange contracts	4		16		210		230		(101	)	129
Interest rate contracts	7		-		9		16		(9	)	7
Commodity contracts	9		-		119		128		(28	)	100
Other contracts	3		-		6		9		-		9
	23		16		344		383		(138	)	245
Deferred amounts and other assets
Foreign exchange contracts	11		79		225		315		(40	)	275
Interest rate contracts	18		-		12		30		(25	)	5
Commodity contracts	1		-		59		60		(32	)	28
Other contracts	2		-		1		3		-		3
	32		79		297		408		(97	)	311
Accounts payable and other
Foreign exchange contracts	(5	)	-		(100	)	(105	)	101		(4	)
Interest rate contracts	(673	)	-		-		(673	)	9		(664	)
Commodity contracts	(3	)	-		(294	)	(297	)	28		(269	)
	(681	)	-		(394	)	(1,075	)	138		(937	)
Other long-term liabilities
Foreign exchange contracts	(41	)	(5	)	(23	)	(69	)	40		(29	)
Interest rate contracts	(290	)	-		(15	)	(305	)	25		(280	)
Commodity contracts	(2	)	-		(387	)	(389	)	32		(357	)
	(333	)	(5	)	(425	)	(763	)	97		(666	)
Total net derivative asset/(liability)
Foreign exchange contracts	(31	)	90		312		371		-		371
Interest rate contracts	(938	)	-		6		(932	)	-		(932	)
Commodity contracts	5		-		(503	)	(498	)	-		(498	)
Other contracts	5		-		7		12		-		12
	(959	)	90		(178	)	(1,047	)	-		(1,047	)

Schedule of the maturity and notional principal or quantity outstanding related to the Company's derivative instruments

June 30, 2013	2013	2014	2015	2016	2017	2018	Thereafter
Foreign exchange contracts - United States dollar forwards - purchase (millions of United States dollars)	955	468	25	25	413	2	4
Foreign exchange contracts - United States dollar forwards - sell (millions of United States dollars)	2,120	2,402	2,751	2,323	2,557	1,649	3,771
Foreign exchange contracts - Euro forwards - purchase (millions of Euros)	4	-	-	-	-	-	-
Interest rate contracts - short-term borrowings (millions of Canadian dollars)	1,408	3,613	3,487	3,179	2,870	150	53
Interest rate contracts - long-term debt (millions of Canadian dollars)	3,273	3,861	1,776	1,168	-	-	-
Equity contracts (millions of Canadian dollars)	41	38	38	-	-	-	-
Commodity contracts - natural gas (billions of cubic feet)	26	41	11	10	11	3	-
Commodity contracts - crude oil (millions of barrels)	10	36	29	23	18	9	-
Commodity contracts - NGL (millions of barrels)	3	3	-	-	-	-	-
Commodity contracts - power (megawatt hours (MWH))	51	55	5	20	40	30	16

December 31, 2012	2013	2014	2015	2016	2017	Thereafter
Foreign exchange contracts - United States dollar forwards - purchase (millions of United States dollars)	558	468	25	25	413	6
Foreign exchange contracts - United States dollar forwards - sell (millions of United States dollars)	2,088	2,402	2,751	2,323	2,557	158
Foreign exchange contracts - Euro forwards - purchase (millions of Euros)	6	-	-	-	-	-
Interest rate contracts - short-term borrowings (millions of Canadian dollars)	3,644	3,591	3,455	3,157	2,841	171
Interest rate contracts - long-term debt (millions of Canadian dollars)	4,590	3,055	1,760	1,142	-	-
Equity contracts (millions of Canadian dollars)	39	36	-	-	-	-
Commodity contracts - natural gas (billions of cubic feet)	55	19	10	10	11	3
Commodity contracts - crude oil (millions of barrels)	37	38	29	23	18	9
Commodity contracts - NGL (millions of barrels)	1	2	-	-	-	-
Commodity contracts - power (MWH)	51	67	48	63	83	66

Schedule of effect of cash flow hedges and net investment hedges on the Company's consolidated earnings and consolidated comprehensive income, before the effect of income taxes

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
(millions of Canadian dollars)
Amount of unrealized gains/(loss) recognized in OCI
Cash flow hedges
Foreign exchange contracts	33		(10	)	47		9
Interest rate contracts	710		(369	)	789		(189	)
Commodity contracts	17		89		17		81
Other contracts	(3	)	1		(1	)	-
Net investment hedges
Foreign exchange contracts	(45	)	(21	)	(67	)	(18	)
	712		(310	)	785		(117	)
Amount of (gains)/loss reclassified from AOCI to earnings (effective portion)
Foreign exchange contracts1	(3	)	(1	)	(3	)	(1	)
Interest rate contracts2	33		10		46		24
Commodity contracts3	(4	)	(5	)	(4	)	(3	)
	26		4		39		20
Amount of (gains)/loss reclassified from AOCI to earnings (ineffective portion and amount excluded from effectiveness testing)
Interest rate contracts2	(15	)	4		23		4
Commodity contracts3	(1	)	(3	)	(2	)	(5	)
	(16	)	1		21		(1	)

1 Reported within Other income in the Consolidated Statements of Earnings.

2 Reported within Interest expense in the Consolidated Statements of Earnings.

3 Reported within Commodity costs in the Consolidated Statements of Earnings.

Schedule of unrealized gains and losses associated with changes in the fair value of the Company's non-qualifying derivatives

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
(millions of Canadian dollars)
Foreign exchange contracts1	(508	)	(76	)	(701	)	(61	)
Interest rate contracts2	(1	)	1		(5	)	(1	)
Commodity contracts3	157		(239	)	104		(442	)
Other contracts4	(2	)	5		4		5
Total unrealized derivative fair value loss	(354	)	(309	)	(598	)	(499	)

1 Reported within Transportation and other services revenues and Other income in the Consolidated Statements of Earnings.

2 Reported within Interest expense in the Consolidated Statements of Earnings.

3 Reported within Transportation and other services revenues, Commodity costs and Operating and administrative expense in the Consolidated Statements of Earnings.

4 Reported within Operating and administrative expense in the Consolidated Statements of Earnings.

Schedule of group credit concentrations and maximum credit exposure, with respect to derivative instruments

	June 30, 2013	December 31, 2012
(millions of Canadian dollars)
Canadian financial institutions	304	306
United States financial institutions	214	129
European financial institutions	180	244
Other1	117	128
	815	807

1 Other is comprised of commodity clearing house and physical natural gas and crude oil counterparties.

Schedule of derivative assets and liabilities measured at fair value

June 30, 2013	Level 1		Level 2		Level 3		Total Gross Derivative Instruments
(millions of Canadian dollars)
Financial assets
Current derivative assets
Foreign exchange contracts	-		99		-		99
Interest rate contracts	-		79		-		79
Commodity contracts	3		97		122		222
Other contracts	-		11		-		11
	3		286		122		411
Long-term derivative assets
Foreign exchange contracts	-		95		-		95
Interest rate contracts	-		290		-		290
Commodity contracts	-		60		14		74
Other contracts	-		4		-		4
	-		449		14		463
Financial liabilities
Current derivative liabilities
Foreign exchange contracts	-		(101	)	-		(101	)
Interest rate contracts	-		(373	)	-		(373	)
Commodity contracts	(5	)	(121	)	(67	)	(193	)
	(5	)	(595	)	(67	)	(667	)
Long-term derivative liabilities
Foreign exchange contracts	-		(446	)	-		(446	)
Interest rate contracts	-		(108	)	-		(108	)
Commodity contracts	-		(336	)	(148	)	(484	)
	-		(890	)	(148	)	(1,038	)
Total net financial asset/(liability)
Foreign exchange contracts	-		(353	)	-		(353	)
Interest rate contracts	-		(112	)	-		(112	)
Commodity contracts	(2	)	(300	)	(79	)	(381	)
Other contracts	-		15		-		15
	(2	)	(750	)	(79	)	(831	)

December 31, 2012	Level 1		Level 2		Level 3		Total Gross Derivative Instruments
(millions of Canadian dollars)
Financial assets
Current derivative assets
Foreign exchange contracts	-		230		-		230
Interest rate contracts	-		16		-		16
Commodity contracts	3		7		118		128
Other contracts	-		9		-		9
	3		262		118		383
Long-term derivative assets
Foreign exchange contracts	-		315		-		315
Interest rate contracts	-		30		-		30
Commodity contracts	-		51		9		60
Other contracts	-		3		-		3
	-		399		9		408
Financial liabilities
Current derivative liabilities
Foreign exchange contracts	-		(105	)	-		(105	)
Interest rate contracts	-		(673	)	-		(673	)
Commodity contracts	(9	)	(212	)	(76	)	(297	)
	(9	)	(990	)	(76	)	(1,075	)
Long-term derivative liabilities
Foreign exchange contracts	-		(69	)	-		(69	)
Interest rate contracts	-		(305	)	-		(305	)
Commodity contracts	-		(314	)	(75	)	(389	)
	-		(688	)	(75	)	(763	)
Total net financial asset/(liability)
Foreign exchange contracts	-		371		-		371
Interest rate contracts	-		(932	)	-		(932	)
Commodity contracts	(6	)	(468	)	(24	)	(498	)
Other contracts	-		12		-		12
	(6	)	(1,017	)	(24	)	(1,047	)

Schedule of significant unobservable inputs used in the fair value measurement of Level 3 derivative instruments

June 30, 2013	Fair Value		Unobservable Input	Minimum Price	Maximum Price	Weighted Average Price
(fair value in millions of Canadian dollars)
Commodity contracts - financial1
Natural gas	3		Forward gas price	3.30	4.27	3.81	$/mmbtu3
Crude	10		Forward crude price	68.66	116.46	98.15	$/barrel
NGL	24		Forward NGL price	0.24	1.99	1.21	$/gallon
Power	(133	)	Forward power price	40.50	95.50	58.73	$/MWH
Commodity contracts - physical1
Natural gas	(17	)	Forward gas price	2.89	5.45	3.84	$/mmbtu3
Crude	15		Forward crude price	69.70	116.20	97.47	$/barrel
NGL	12		Forward NGL price	0.02	2.49	1.37	$/gallon
Power	(1	)	Forward power price	30.74	39.91	33.06	$/MWH
Commodity options2
Natural gas	1		Option volatility	29%	36%	31%
NGL	7		Option volatility	25%	108%	47%
	(79	)

1 Financial and physical forward commodity contracts are valued using a market approach valuation technique.

2 Commodity options contracts are valued using an option model valuation technique.

3 One million British thermal units (mmbtu).

Schedule of changes in net fair value of derivative assets and liabilities classified as Level 3 in the fair value hierarchy

	Six months ended June 30,
	2013		2012
(millions of Canadian dollars)
Level 3 net derivative asset/(liability) at beginning of period	(24	)	32
Total gains/(loss)
Included in earnings1	(74	)	65
Included in OCI	11		50
Settlements	8		(6	)
Level 3 net derivative asset/(liability) at end of period	(79	)	141

1 Reported within Transportation and other services revenues, Commodity costs and Operating and administrative expense in the Consolidated Statements of Earnings.

- Definition

Tabular disclosure related to assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a recurring and/or nonrecurring basis in periods after initial recognition. Disclosures include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3) as well as transfers between levels 1 and 2.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19279-110258

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19190-110258

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 6

-Footnote 4

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2

-Subparagraph (a,b,bb)

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2C

-URI http://asc.fasb.org/extlink&oid=7578670&loc=SL7498348-110258

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 33

-Subparagraph a, b

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

- Definition

Tabular disclosure of all significant concentrations of risk, including credit risk and market risk, arising from all financial instruments (as defined), whether from an individual counterparty or groups of counterparties. The disclosure concerning concentrations of risk may consist of the following information: (1) for concentrations of credit risk disclosure may include: (a) information about the (shared) activity, region, or economic characteristic that identifies the concentration, (b) the maximum amount of loss due to credit risk that, based on the gross fair value of the financial instrument, the entity would incur if parties to the financial instruments that make up the concentration failed completely to perform according to the terms of the contracts and the collateral or other security, if any, for the amount due proved to be of no value to the entity, (c) the policy of requiring collateral or other security to support financial instruments subject to credit risk, information about the entity's access to that collateral or other security, and the nature and a brief description of the collateral or other security supporting those financial instruments, and (d) the policy of entering into master netting arrangements to mitigate the credit risk of financial instruments, information about the arrangements for which the entity is a party, and a brief description of the terms of those arrangements, including the extent to which they would reduce the entity's maximum amount of loss due to credit risk and (2) for disclosure of quantitative information about the market risks of financial instruments that is consistent with the way the company manages or adjusts those risks, disclosure may include: (a) more details about current positions and perhaps activity during the period, (b) the hypothetical effects on comprehensive income (or net assets), or annual income, of several possible changes in market prices, (c) a gap analysis of interest rate re-pricing or maturity dates, (d) the duration of the financial instruments, (e) the entity's value at risk from derivatives and from other positions at the end of the reporting period and the average value at risk during the year, or (f) other ways of reporting quantitative information as internally developed.

+ References+ Details

- Definition

Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

+ References+ Details

- Definition

Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position.

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