Delaware
|
52-2135448
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification Number)
|
|
|
13710
FNB Parkway
|
||||
Omaha, Nebraska
|
68154-5200
|
|||
(Address
of principal executive offices)
|
(Zip
code)
|
877-290-2772
|
||
(Registrant's telephone number, including area code) |
Page
No.
|
||
TABLE
OF CONTENTS
|
||
PART
I
|
FINANCIAL
INFORMATION
|
|
Glossary
|
3
|
|
Item
1.
|
Financial
Statements
|
|
Consolidated
Statement of Income – Three months ended March 31, 2009 and
2008
|
4
|
|
Consolidated
Statement of Comprehensive Income – Three months ended March 31, 2009 and
2008
|
4
|
|
Consolidated
Balance Sheet – March 31, 2009 and December 31, 2008
|
5
|
|
Consolidated
Statement of Cash Flows – Three months ended March 31, 2009 and
2008
|
6
|
|
Consolidated
Statement of Changes in Partners’ Equity – Three months ended March
31, 2009
|
7
|
|
Notes
to Consolidated Financial Statements
|
8
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
14
|
Results
of Operations of TC PipeLines
|
19
|
|
Liquidity
and Capital Resources of TC PipeLines
|
22
|
|
Liquidity
and Capital Resources of our Pipeline Systems
|
23
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
25
|
Item
4.
|
Controls
and Procedures
|
27
|
PART
II
|
OTHER
INFORMATION
|
|
Item
1A.
|
Risk
Factors
|
27
|
Item
6.
|
Exhibits
|
28
|
Collar Agreement………………...... | Northern Border's interest rate collar agreement |
EPA……………………………......
|
United
States Environmental Protection Agency
|
FASB…………………………..........
|
Financial
Accounting Standards Board
|
FERC…………………………..........
|
Federal
Energy Regulatory Commission
|
GAAP…………………………........
|
U.S.
generally accepted accounting principles
|
GLGT.............…………………........
|
Great
Lakes Gas Transmission Limited Partnership
|
Great Lakes...................................... |
Great
Lakes Gas Transmission Limited Partnership
|
IDRs…………………………........
|
Incentive
Distribution Rights
|
LIBOR…………………………........
|
London
Interbank Offered Rate
|
MMcf/d……………………….........
|
Million
cubic feet per day
|
NBPC……………………….............
|
Northern
Border Pipeline Company
|
Net WCSB Flows to Markets.......... | Net of the supply of and demand for WCSB natural gas that is available for transportation to downstream markets; where supply represents WCSB production adjusted for injections into and withdrawals from WCSB storage |
Northern
Border……………….......
|
Northern
Border Pipeline Company
|
Our
pipeline systems………….......
|
Great
Lakes, Northern Border and Tuscarora
|
Partnership…………………............ | TC PipeLines, LP and its subsidiaries |
PipeLP ............................................... | TC PipeLines, LP and its subsidiaries |
REX East…………………………... | Eastern segment of the Rockies Express Pipeline |
REX West………………………….. | Western segment of the Rockies Express Pipeline |
Senior Credit Facility…………….... | TC PipeLine's revolving credit and term loan agreement |
SFAS…………………………..........
|
Statement
of Financial Accounting Standards
|
TC PipeLines…………………….. | TC PipeLines, LP and its subsidiaries |
TGTC.................................................. | Tuscarora Gas Transmission Company |
TransCanada…………………........
|
TransCanada
Corporation and its subsidiaries
|
Tuscarora………………………......
|
Tuscarora
Gas Transmission Company
|
U.S……………………………..........
|
United
States of America
|
WCSB…………………………........
|
Western
Canada Sedimentary Basin
|
(unaudited)
|
Three
months ended March 31,
|
|||||||
(millions
of dollars except per common unit amounts)
|
2009
|
2008
|
||||||
Equity
income from investment in Great Lakes (Note 2)
|
19.5 | 18.6 | ||||||
Equity
income from investment in Northern Border (Note 3)
|
15.6 | 19.5 | ||||||
Transmission
revenues
|
8.4 | 6.9 | ||||||
Operating
expenses
|
(2.6 | ) | (2.2 | ) | ||||
Depreciation
|
(1.8 | ) | (1.6 | ) | ||||
Financial
charges, net and other
|
(7.3 | ) | (7.6 | ) | ||||
Net
income
|
31.8 | 33.6 | ||||||
Net
income allocation
|
||||||||
Common
units
|
28.5 | 30.4 | ||||||
General
partner
|
3.3 | 3.2 | ||||||
31.8 | 33.6 | |||||||
Net income per common
unit (Note 6)
|
$ | 0.82 | $ | 0.87 | ||||
Weighted average common units
outstanding (millions)
|
34.9 | 34.9 | ||||||
Common units outstanding, end
of the period (millions)
|
34.9 | 34.9 | ||||||
(unaudited)
|
Three
months ended March 31,
|
|||||||
(millions
of dollars)
|
2009
|
2008
|
||||||
Net
income
|
31.8 | 33.6 | ||||||
Other
comprehensive income/(loss)
|
||||||||
Change
associated with hedging transactions (Note 9)
|
1.4 | (12.3 | ) | |||||
Change
associated with hedging transactions of investees
|
(0.1 | ) | (1.6 | ) | ||||
1.3 | (13.9 | ) | ||||||
Total
comprehensive income
|
33.1 | 19.7 | ||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
(unaudited)
|
||||||||
(millions
of dollars)
|
March
31, 2009
|
December
31, 2008
|
||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
and cash equivalents
|
13.0 | 8.4 | ||||||
Accounts
receivable and other
|
2.8 | 3.4 | ||||||
15.8 | 11.8 | |||||||
Investment
in Great Lakes (Note 2)
|
711.5 | 704.5 | ||||||
Investment
in Northern Border (Note 3)
|
510.5 | 514.8 | ||||||
Plant,
property and equipment (net of $70.3 accumulated
|
132.5 | 134.2 | ||||||
depreciation,
2008 - $68.5)
|
||||||||
Goodwill
|
81.7 | 81.7 | ||||||
Other
assets
|
1.4 | 1.5 | ||||||
1,453.4 | 1,448.5 | |||||||
LIABILITIES
AND PARTNERS' EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable
|
2.2 | 2.2 | ||||||
Accrued
interest
|
2.9 | 2.1 | ||||||
Current
portion of long-term debt (Note 5)
|
4.4 | 4.4 | ||||||
Current
portion of fair value of derivative contracts (Note 9)
|
12.0 | 11.8 | ||||||
21.5 | 20.5 | |||||||
Fair
value of derivative contracts and other (Note 9)
|
18.5 | 20.0 | ||||||
Long-term
debt (Note 5)
|
532.4 | 532.4 | ||||||
572.4 | 572.9 | |||||||
Partners'
Equity
|
||||||||
Common
units
|
895.4 | 891.4 | ||||||
General
partner
|
19.2 | 19.1 | ||||||
Accumulated
other comprehensive loss
|
(33.6 | ) | (34.9 | ) | ||||
881.0 | 875.6 | |||||||
1,453.4 | 1,448.5 | |||||||
Subsequent
events (Note 12)
|
||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
(unaudited)
|
Three
months ended March 31,
|
|||||||
(millions
of dollars)
|
2009
|
2008
|
||||||
CASH
GENERATED FROM OPERATIONS
|
||||||||
Net
income
|
31.8 | 33.6 | ||||||
Depreciation
|
1.8 | 1.6 | ||||||
Amortization
of other assets
|
0.1 | 0.1 | ||||||
Equity
income in excess of distributions received from Great
Lakes
|
(7.0 | ) | (7.0 | ) | ||||
Increase
in long-term liabilities
|
- | 0.1 | ||||||
Equity
allowance for funds used during construction
|
- | (0.2 | ) | |||||
Decrease/(increase)
in operating working capital (Note 10)
|
1.5 | (0.2 | ) | |||||
28.2 | 28.0 | |||||||
INVESTING
ACTIVITIES
|
||||||||
Cumulative
distributions in excess of equity earnings:
|
||||||||
Northern
Border
|
8.6 | 3.6 | ||||||
Investment
in Northern Border (Note 3)
|
(4.3 | ) | - | |||||
Capital
expenditures
|
(0.1 | ) | (4.5 | ) | ||||
(Increase)/decrease
in investing working capital (Note 10)
|
(0.1 | ) | 0.6 | |||||
4.1 | (0.3 | ) | ||||||
FINANCING
ACTIVITIES
|
||||||||
Distributions
paid (Note 7)
|
(27.7 | ) | (25.6 | ) | ||||
Long-term
debt repaid (Note 5)
|
- | (8.0 | ) | |||||
(27.7 | ) | (33.6 | ) | |||||
Increase/(decrease)
in cash and cash equivalents
|
4.6 | (5.9 | ) | |||||
Cash
and cash equivalents, beginning of period
|
8.4 | 7.5 | ||||||
Cash
and cash equivalents, end of period
|
13.0 | 1.6 | ||||||
Interest
payments made
|
3.2 | 7.0 | ||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
||||||||
(unaudited)
|
Common
Units
|
General
Partner
|
Accumulated
Other Comprehensive
(Loss)/Income
(1)
|
Partners'
Equity
|
||||||||||||||||||||
(millions
|
(millions
|
(millions
|
(millions
|
(millions
|
(millions
|
|||||||||||||||||||
of
units)
|
of
dollars)
|
of
dollars)
|
of
dollars)
|
of
units)
|
of
dollars)
|
|||||||||||||||||||
Partners'
equity at December 31, 2008
|
34.9 | 891.4 | 19.1 | (34.9 | ) | 34.9 | 875.6 | |||||||||||||||||
Net
income
|
- | 28.5 | 3.3 | - | - | 31.8 | ||||||||||||||||||
Distributions
paid
|
- | (24.5 | ) | (3.2 | ) | - | - | (27.7 | ) | |||||||||||||||
Other
comprehensive income
|
- | - | - | 1.3 | - | 1.3 | ||||||||||||||||||
Partners'
equity at March 31, 2009
|
34.9 | 895.4 | 19.2 | (33.6 | ) | 34.9 | 881.0 | |||||||||||||||||
(1)
TC PipeLines, LP uses derivatives to assist in managing its exposure to
interest rate risk. Based on interest rates at March 31, 2009, the amount
of losses related to cash flow hedges reported in accumulated other
comprehensive income that will be reclassified to net income in the next
12 months is $12.0 million, which will be offset by a reduction to
interest expense of a similar amount.
|
||||||||||||||||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
||||||||||||||||||||||||
Summarized
Consolidated Great Lakes Income Statement
|
||||||||
|
||||||||
(unaudited)
|
Three
months ended March 31,
|
|||||||
(millions
of dollars)
|
2009
|
2008
|
||||||
Transmission
revenues
|
82.5 | 79.7 | ||||||
Operating
expenses
|
(16.0 | ) | (15.1 | ) | ||||
Depreciation
|
(14.6 | ) | (14.6 | ) | ||||
Financial
charges, net and other
|
(8.2 | ) | (8.2 | ) | ||||
Michigan
business tax
|
(1.8 | ) | (1.7 | ) | ||||
Net
income
|
41.9 | 40.1 | ||||||
Summarized
Consolidated Great Lakes Balance Sheet
|
||||||||
(unaudited)
|
March
31,
|
December
31,
|
||||||
(millions
of dollars)
|
2009
|
2008
|
||||||
Assets
|
||||||||
Cash
and cash equivalents
|
3.1 | 1.6 | ||||||
Other
current assets
|
93.0 | 80.2 | ||||||
Plant,
property and equipment, net
|
909.8 | 923.4 | ||||||
1,005.9 | 1,005.2 | |||||||
Liabilities
and Partners' Equity
|
||||||||
Current
liabilities
|
37.4 | 43.0 | ||||||
Deferred
credits
|
2.7 | 2.3 | ||||||
Long-term
debt, including current maturities
|
421.0 | 430.0 | ||||||
Partners'
capital
|
544.8 | 529.9 | ||||||
1,005.9 | 1,005.2 | |||||||
Summarized Northern Border
Income Statement
|
||||||||
(unaudited)
|
Three
months ended March 31,
|
|||||||
(millions
of dollars)
|
2009
|
2008
|
||||||
Transmission
revenues
|
74.5 | 83.8 | ||||||
Operating
expenses
|
(18.5 | ) | (19.4 | ) | ||||
Depreciation
|
(15.3 | ) | (15.2 | ) | ||||
Financial
charges, net and other
|
(9.1 | ) | (9.7 | ) | ||||
Net
income
|
31.6 | 39.5 | ||||||
Summarized
Northern Border Balance Sheet
|
||||||||
(unaudited)
|
March
31,
|
December
31,
|
||||||
(millions
of dollars)
|
2009
|
2008
|
||||||
Assets
|
||||||||
Cash
and cash equivalents
|
23.1 | 21.6 | ||||||
Other
current assets
|
30.2 | 39.1 | ||||||
Plant,
property and equipment, net
|
1,379.8 | 1,390.8 | ||||||
Other
assets
|
24.9 | 24.5 | ||||||
1,458.0 | 1,476.0 | |||||||
Liabilities
and Partners' Equity
|
||||||||
Current
liabilities
|
44.1 | 48.7 | ||||||
Deferred
credits and other
|
11.1 | 11.2 | ||||||
Long-term
debt, including current maturities
|
625.5 | 630.4 | ||||||
Partners'
equity
|
||||||||
Partners'
capital
|
783.2 | 791.4 | ||||||
Accumulated
other comprehensive loss
|
(5.9 | ) | (5.7 | ) | ||||
1,458.0 | 1,476.0 | |||||||
Summarized
Tuscarora Income Statement
|
||||||||
(unaudited)
|
Three
months ended March 31,
|
|||||||
(millions
of dollars)
|
2009
|
2008
|
||||||
Transmission
revenues
|
8.4 | 6.9 | ||||||
Operating
expenses
|
(1.4 | ) | (1.2 | ) | ||||
Depreciation
|
(1.8 | ) | (1.6 | ) | ||||
Financial
charges, net and other
|
(1.1 | ) | (0.9 | ) | ||||
Net
income
|
4.1 | 3.2 | ||||||
Summarized
Tuscarora Balance Sheet
|
||||||||
(unaudited)
|
March
31,
|
December
31,
|
||||||
(millions
of dollars)
|
2009
|
2008
|
||||||
Assets
|
||||||||
Other
current assets
|
10.0 | 3.1 | ||||||
Plant,
property and equipment, net
|
132.5 | 134.2 | ||||||
Other
assets
|
0.3 | 0.3 | ||||||
142.8 | 137.6 | |||||||
Liabilities
and Partners' Equity
|
||||||||
Current
liabilities
|
3.1 | 2.0 | ||||||
Long-term
debt, including current maturities
|
61.8 | 61.8 | ||||||
Partners'
capital
|
77.9 | 73.8 | ||||||
142.8 | 137.6 | |||||||
Summarized
Tuscarora Cash Flow Statement
|
||||||||
(unaudited)
|
Three
months ended March 31,
|
|||||||
(millions
of dollars)
|
2009
|
2008
|
||||||
Cash
flows provided by operating activities
|
7.2 | 6.0 | ||||||
Cash
flows used in investing activities
|
(0.2 | ) | (4.0 | ) | ||||
Cash
flows used in financing activities
|
(7.0 | ) | (8.1 | ) | ||||
Decrease
in cash and cash equivalents
|
- | (6.1 | ) | |||||
Cash
and cash equivalents, beginning of period
|
- | 6.1 | ||||||
Cash
and and cash equivalents, end of period
|
- | - | ||||||
(unaudited)
|
March
31,
|
December
31,
|
||||||
(millions
of dollars)
|
2009
|
2008
|
||||||
Senior
Credit Facility
|
475.0 | 475.0 | ||||||
7.13%
Series A Senior Notes due 2010
|
51.3 | 51.3 | ||||||
7.99%
Series B Senior Notes due 2010
|
5.0 | 5.0 | ||||||
6.89%
Series C Senior Notes due 2012
|
5.5 | 5.5 | ||||||
536.8 | 536.8 | |||||||
(unaudited)
|
|
(millions
of dollars)
|
|
2009
|
4.4
|
2010
|
53.5
|
2011
|
475.8
|
2012
|
3.1
|
536.8
|
(unaudited)
|
Three
months ended March 31,
|
|||||||
(millions
of dollars except per unit)
|
2009
|
2008
|
||||||
Net
income
|
31.8 | 33.6 | ||||||
Net
income allocated to general partner
|
||||||||
General
partner interest
|
(0.6 | ) | (0.7 | ) | ||||
Incentive
distribution income allocation
|
(2.7 | ) | (2.5 | ) | ||||
(3.3 | ) | (3.2 | ) | |||||
Net
income allocable to common units
|
28.5 | 30.4 | ||||||
Weighted
average common units outstanding (millions)
|
34.9 | 34.9 | ||||||
Net
income per common unit
|
$ | 0.82 | $ | 0.87 | ||||
(unaudited)
|
Three
months ended March 31,
|
|||||||
(millions
of dollars)
|
2009
|
2008
|
||||||
Costs
charged by TransCanada and its affiliates:
|
||||||||
Great
Lakes
|
7.3 | 7.3 | ||||||
Northern
Border
|
6.3 | 6.8 | ||||||
Tuscarora
|
0.7 | 1.1 | ||||||
Impact
on the Partnership's net income:
|
||||||||
Great
Lakes
|
3.2 | 3.4 | ||||||
Northern
Border
|
2.9 | 3.3 | ||||||
Tuscarora
|
0.7 | 0.7 | ||||||
(unaudited)
|
March
31,
|
December
31,
|
||||||
(millions
of dollars)
|
2009
|
2008
|
||||||
Amount
owed to TransCanada and its affiliates:
|
||||||||
Great
Lakes
|
3.4 | 4.5 | ||||||
Northern
Border
|
2.8 | 2.8 | ||||||
Tuscarora
|
0.9 | 0.8 | ||||||
(unaudited)
|
Three
months ended March 31,
|
|||||||
(millions
of dollars)
|
2009
|
2008
|
||||||
Decrease
in accounts receivable and other
|
0.6 | 0.7 | ||||||
Decrease
in bank indebtedness
|
- | (1.4 | ) | |||||
Increase
in accounts payable
|
- | 0.5 | ||||||
Increase
in accrued interest
|
0.8 | 0.6 | ||||||
1.4 | 0.4 | |||||||
(Increase)/decrease
in investing working capital
|
(0.1 | ) | 0.6 | |||||
Decrease/(increase)
in operating working capital
|
1.5 | (0.2 | ) | |||||
·
|
the
ability of Great Lakes and Northern Border to continue to make
distributions at their current
levels;
|
·
|
the
impact of unsold capacity on Great Lakes and Northern Border being greater
or less than expected;
|
·
|
competitive
conditions in our industry and the ability of our pipeline systems to
market pipeline capacity on favorable terms, which is affected
by:
|
o
|
future
demand for and prices of natural
gas;
|
o
|
level
of natural gas basis differentials;
|
o
|
competitive
conditions in the overall natural gas and electricity
markets;
|
o
|
availability
of supplies of Canadian and United States (U.S.) natural gas,
including newly discovered natural gas developments such as the Horn
River and Montney shale gas developments in Western Canada, U.S. Rockies
and U.S. Mid-Continent shale gas developments, and the Marcellus shale gas
developments;
|
o
|
availability
of additional storage capacity and current storage
levels;
|
o
|
level
of liquefied natural gas imports;
|
o
|
weather
conditions that impact supply and
demand;
|
o
|
ability
of shippers to meet credit worthiness requirements;
and
|
o
|
competitive
developments by Canadian and U.S. natural gas transmission
companies;
|
·
|
changes
in relative cost structures of natural gas producing basins, such as
changes in royalty programs, that may prejudice the development of the
Western Canada Sedimentary Basin
(WCSB);
|
·
|
the
decision by other pipeline companies to advance projects which will affect
our pipeline systems and the regulatory, financing and construction risks
related to construction of interstate natural gas
pipelines;
|
·
|
performance
of contractual obligations by customers of our pipeline
systems;
|
·
|
the
imposition of entity level taxation by states on
partnerships;
|
·
|
operating
hazards, natural disasters, weather-related delays, casualty losses and
other matters beyond our control;
|
·
|
the
impact of current and future laws, rulings and governmental regulations,
particularly Federal Energy Regulatory Commission (FERC) regulations, and
proposed and pending legislation by Congress and the Environmental
Protection Agency (EPA) related to green house gas emissions on us and our
pipeline systems;
|
·
|
our
ability to control operating costs;
and
|
·
|
the
severity and length of the current economic downturn, which
impacts:
|
o
|
the
debt and equity capital markets and our ability to access these
markets;
|
o
|
the
overall demand for natural gas by end users;
and
|
o
|
natural
gas prices
|
The
shaded areas in the tables below disclose the results from Great Lakes and
Northern Border, representing 100 per cent of each entity's operations for
the given period.
|
||||||||||||||||||||
(unaudited)
|
For
the three months ended March 31, 2009
|
|||||||||||||||||||
(millions
of dollars)
|
PipeLP
|
TGTC
|
Other
|
GLGT
|
NBPC(1)
|
|||||||||||||||
Transmission
revenues
|
8.4 | 8.4 | - | 82.5 | 74.5 | |||||||||||||||
Operating
expenses
|
(2.6 | ) | (1.4 | ) | (1.2 | ) | (16.0 | ) | (18.5 | ) | ||||||||||
5.8 | 7.0 | (1.2 | ) | 66.5 | 56.0 | |||||||||||||||
Depreciation
|
(1.8 | ) | (1.8 | ) | - | (14.6 | ) | (15.3 | ) | |||||||||||
Financial
charges, net and other
|
(7.3 | ) | (1.1 | ) | (6.2 | ) | (8.2 | ) | (9.1 | ) | ||||||||||
Michigan
business tax
|
- | - | - | (1.8 | ) | - | ||||||||||||||
41.9 | 31.6 | |||||||||||||||||||
Equity
income
|
35.1 | - | - | 19.5 | 15.6 | |||||||||||||||
Net
income
|
31.8 | 4.1 | (7.4 | ) | 19.5 | 15.6 | ||||||||||||||
(unaudited)
|
For
the three months ended March 31, 2008
|
|||||||||||||||||||
(millions
of dollars)
|
PipeLP
|
TGTC
|
Other
|
GLGT
|
NBPC(1)
|
|||||||||||||||
Transmission
revenues
|
6.9 | 6.9 | - | 79.7 | 83.8 | |||||||||||||||
Operating
expenses
|
(2.2 | ) | (1.2 | ) | (1.0 | ) | (15.1 | ) | (19.4 | ) | ||||||||||
4.7 | 5.7 | (1.0 | ) | 64.6 | 64.4 | |||||||||||||||
Depreciation
|
(1.6 | ) | (1.6 | ) | - | (14.6 | ) | (15.2 | ) | |||||||||||
Financial
charges, net and other
|
(7.6 | ) | (0.9 | ) | (6.7 | ) | (8.2 | ) | (9.7 | ) | ||||||||||
Michigan
business tax
|
- | - | - | (1.7 | ) | - | ||||||||||||||
40.1 | 39.5 | |||||||||||||||||||
Equity
income
|
38.1 | - | - | 18.6 | 19.5 | |||||||||||||||
Net
income
|
33.6 | 3.2 | (7.7 | ) | 18.6 | 19.5 | ||||||||||||||
(1)
TC PipeLines owns a 50 per cent general partner interest in Northern
Border. Equity income from Northern Border includes amortization of a
$10.0 million transaction fee paid to the operator of Northern Border at
the time of the additional 20 per cent acquisition in April
2006.
|
||||||||||||||||||||
(unaudited)
|
Three
months ended March 31,
|
|||||||
(millions
of dollars except per common unit amounts)
|
2009
|
2008
|
||||||
Net
Income
|
31.8 | 33.6 | ||||||
Add:
|
||||||||
Cash
flows provided by Tuscarora's operating activities
|
7.2 | 6.0 | ||||||
Cash
distributions from Great Lakes (1)
|
12.5 | 11.6 | ||||||
Cash
distributions from Northern Border (1)
|
24.2 | 23.1 | ||||||
43.9 | 40.7 | |||||||
Less:
|
||||||||
Tuscarora's
net income
|
(4.1 | ) | (3.2 | ) | ||||
Equity
income from investment in Great Lakes
|
(19.5 | ) | (18.6 | ) | ||||
Equity
income from investment in Northern Border
|
(15.6 | ) | (19.5 | ) | ||||
(39.2 | ) | (41.3 | ) | |||||
Partnership
cash flows
|
36.5 | 33.0 | ||||||
Partnership
cash flows allocated to general partner (2)
|
(3.2 | ) | (3.0 | ) | ||||
Partnership
cash flows allocated to common units
|
33.3 | 30.0 | ||||||
Cash
distributions declared
|
(27.7 | ) | (27.4 | ) | ||||
Cash
distributions declared per common unit (3)
|
$ | 0.705 | $ | 0.700 | ||||
Cash
distributions paid
|
(27.7 | ) | (25.6 | ) | ||||
Cash
distributions paid per common unit (3)
|
$ | 0.705 | $ | 0.665 | ||||
Weighted
average common units outstanding (millions)
|
34.9 | 34.9 | ||||||
(1)
In accordance with the cash distribution policies of the respective
pipeline assets, cash distributions from Great Lakes and Northern Border
are based on their respective prior quarter financial
results.
|
||||
(2)
Partnership cash flows allocated to general partner represents the cash
distributions declared to the general partner with respect to its two per
cent interest plus an amount equal to incentive distributions. Previously,
Partnership cash flows allocated to general partner were based on the cash
distributions paid to the general partner during the quarter; however,
this has been changed to align with the requirements of EITF 07-4. As a
result, Partnership cash flows allocated to general partner in first
quarter of 2008 increased from $2.4 million to $3.0
million.
|
||||
(3)
Cash distributions declared per common unit and cash distributions paid
per common unit are computed by dividing cash distributions, after the
deduction of the general partner's allocation, by the number of common
units outstanding. The general partner's allocation is computed based upon
the general partner's two per cent interest plus an amount equal to
incentive distributions.
|
||||
Payments
Due by Period
|
|||||
(unaudited)
(millions
of dollars)
|
Total
|
Less
Than 1 Year
|
Long-term
Portion
|
||
Senior
Credit Facility due 2011
|
475.0
|
-
|
475.0
|
||
7.13%
Series A Senior Notes due 2010
|
51.3
|
3.1
|
48.2
|
||
7.99%
Series B Senior Notes due 2010
|
5.0
|
0.5
|
4.5
|
||
6.89%
Series C Senior Notes due 2012
|
5.5
|
0.8
|
4.7
|
||
Total
|
536.8
|
4.4
|
532.4
|
||
Payments
Due by Period
|
|||||
(unaudited)
(millions
of dollars)
|
Total
|
Less
than 1 year
|
Long-term
Portion
|
||
8.74%
series Senior Notes due 2007 to 2011
|
30.0
|
10.0
|
20.0
|
||
6.73%
series Senior Notes due 2009 to 2018
|
81.0
|
9.0
|
72.0
|
||
9.09%
series Senior Notes due 2012 to 2021
|
100.0
|
-
|
100.0
|
||
6.95%
series Senior Notes due 2019 to 2028
|
110.0
|
-
|
110.0
|
||
8.08%
series Senior Notes due 2021 to 2030
|
100.0
|
-
|
100.0
|
||
Total
|
421.0
|
19.0
|
402.0
|
||
Payments
Due by Period
|
|||||
(unaudited)
(millions
of dollars)
|
Total
|
Less
than 1 year
|
Long-term
Portion
|
||
7.75%
senior notes due 2009
|
200.0
|
200.0
|
-
|
||
7.50%
senior notes due 2021
|
250.0
|
-
|
250.0
|
||
$250
million credit agreement due 2012 (a)
|
176.0
|
-
|
176.0
|
||
Total
|
626.0
|
200.0
|
426.0
|
||
(a)
Northern Border is required to pay a facility fee of 0.05% on the
principal commitment amount of its credit agreement.
|
|||||
·
|
Swaps
– contractual agreements between two parties to exchange streams of
payments over time according to specified terms. The Partnership and our
pipeline systems enter into interest rate swaps to mitigate the impact of
changes in interest rates.
|
·
|
Options
– contractual agreements to convey the right, but not the obligation, for
the purchaser to buy or sell a specific amount of a financial instrument
at a fixed price, either at a fixed date or at any time within a specified
period. The Partnership and our pipeline systems enter into option
agreements to mitigate the impact of changes in interest
rates.
|
10.1
|
Market
Center Service Agreement MC11987 between Great Lakes Gas Transmission
Limited Partnership and TransCanada Gas Storage USA Inc., dated February
27, 2009.
|
10.2
|
Transportation
Service Agreement IT11986 between Great Lakes Gas Transmission Limited
Partnership and TransCanada Gas Storage USA Inc., dated February 27,
2009.
|
31.1
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act
of 2002.
|
31.2
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification
of Principal Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification
of Principal Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
99.1
|
Consolidated
Balance Sheets of TC PipeLines GP, Inc. as of December 31, 2008 and
2007.
|
TC
PipeLines, LP
|
|||
(a
Delaware Limited Partnership)
|
|||
By:
|
TC
PipeLines GP, Inc., its general partner
|
||
Date:
|
April
30, 2009
|
By:
|
/s/ Russell
K. Girling
Russell
K. Girling
Chairman,
Chief Executive Officer and Director
TC
PipeLines GP, Inc. (Principal Executive Officer)
|
Date:
|
April
30, 2009
|
By:
|
/s/ Amy W.
Leong
Amy
W. Leong
Controller
TC
PipeLines GP, Inc. (Principal Financial
Officer)
|
1.
|
EFFECTIVE DATE: February 27,
2009
|
2.
|
CONTRACT IDENTIFICATION: MC11987
|
3.
|
RATE SCHEDULE:
MC
|
4.
|
SHIPPER TYPE:
Other
|
5.
|
STATE/PROVINCE OF
INCORPORATION: Delaware
|
6.
|
TERM:
March
01, 2009 to October 31, 2009, and then month to month thereafter unless
terminated by either party, upon a minimum of 30 days written
notice.
|
7.
|
EFFECT ON PREVIOUS
CONTRACTS:
This
Agreement supersedes, cancels and terminates, as of the effective date
stated above, the following contract(s):
N/A
|
8.
|
MAXIMUM DAILY QUANTITY
(Dth/Day):
|
Begin
Date
|
End
Date
|
Point(s) of Primary
Receipt
|
Point(s) of Primary
Delivery
|
MDQ
|
|
03/01/2009 | 10/31/2009 | All Locations | All Locations | 500,000 |
9.
|
MAXIMUM QUANTITY (Dth):
N/A
|
10.
|
RATES:
|
|
Unless
Shipper and Transporter have agreed to a rate other than the maximum rate,
rates shall be Transporter's maximum rates and charges plus all applicable
surcharges in effect from time to time under the applicable Rate Schedule
(as stated above) on file with the Commission unless otherwise agreed to
by the parties in writing. Provisions governing a rate other than maximum
shall be set forth in this Paragraph 10 and/or on Appendix A
hereto.
|
|
The
actual rate(s) to be charged on any particular Gas Day shall be posted on
Great Lakes’ Web Site in accordance with Section 4.1 of Rate Schedule MC
of Great Lakes’ FERC Gas Tariff, Second Revised Volume No 1. Shipper’s
nomination for service under Rate Schedule MC shall evidence Shipper’s
acceptance of the actual rate(s) to be charged for the service being
nominated and shall obligate Shipper to pay all charges calculated using
those rates as applied to quantities
scheduled.
|
11.
|
POINTS OF RECEIPT AND
DELIVERY:
|
|
Shipper
may nominate any receipt or delivery point on Transporter’s system as a
Market Center Point under this rate
schedule.
|
12.
|
INCORPORATION OF TARIFF INTO
AGREEMENT:
|
|
This
MC Service Agreement shall incorporate and in all respects be subject to
the "General Terms and Conditions" and Rate Schedule MC set forth in
Transporter's FERC Gas Tariff, Second Revised Volume No. 1, as may be
revised from time to time. Transporter may file and seek Commission
approval under Section 4 of the Natural Gas Act (NGA) at any time and from
time to time to change any rates, charges or provisions set forth in Rate
Schedule MC and the "General Terms and Conditions" in Transporter's FERC
Gas Tariff, Second Revised Volume No. 1, and Transporter shall have the
right to place such changes in effect in accordance with the NGA, and this
MC Service Agreement shall be deemed to include such changes and any such
changes which become effective by operation of law and Commission Order,
without prejudice to Shipper's right to protest the
same.
|
13.
|
MISCELLANEOUS:
|
|
No
waiver by either party to this MC Service Agreement of any one or more
defaults by the other in the performance of this MC Service Agreement
shall operate or be construed as a waiver of any continuing or future
default(s), whether of a like or a different character.
Any controversy between the parties arising
under this MC Service Agreement and not resolved by the parties shall be
determined in accordance with the laws of the State of
Michigan.
|
14.
|
OTHER
PROVISIONS:
|
|
It
is agreed that no personal liability whatsoever shall attach to, be
imposed on or otherwise be incurred by any Partner, agent, management
official or employee of the Transporter or any director, officer or
employee of any of the foregoing, for any obligation of the Transporter
arising under this MC Service Agreement or for any claim based on such
obligation and that the sole recourse of Shipper under this MC Service
Agreement is limited to assets of the Transporter.
Upon termination of this MC Service
Agreement, Shipper's and Transporter's obligations to each other arising
under this MC Service Agreement, prior to the date of termination, remain
in effect and are not being terminated by any provision of this MC Service
Agreement.
Pursuant to Subsection 2.1(I) of Rate
Schedule MC, failure by Shipper to comply with notice from Transporter to
remove and/or return Gas within the time frame specified may result in the
termination of Shipper’s MC Service
Agreement.
|
15.
|
NOTICES AND
COMMUNICATIONS:
All notices and communications with respect to
this MC Service Agreement shall be in writing and sent to the addresses
stated below or at any other such address(es) as may be designated in
writing:
|
ADMINISTRATIVE
MATTERS
Great
Lakes Gas Transmission Limited
Partnership
5250
Corporate Drive
Troy,
MI 48098
Attn: Transportation
Services
|
TRANSCANADA
GAS STORAGE U.S.A. INC.
450
1st
Street SW
Calgary,
AB T2P
5H1
Canada
Att: Mike
Speed
|
|
PAYMENT
BY ELECTRONIC TRANSFER
Great
Lakes Gas Transmission Limited
Partnership
Citibank,
NA, New York, NY
ABA
No: 021000089
Account
No: 3076-5207
|
TRANSCANADA
GAS STORAGE U.S.A. INC.
Att:
|
AGREED
TO BY:
GREAT
LAKES GAS TRANSMISSION
LIMITED
PARTNERSHIP
By:
Great Lakes Gas Transmission Company
|
TRANSCANADA
GAS STORAGE U.S.A. INC.
|
|
Operator
and Agent for Great Lakes Gas Transmission Limited
Partnership
|
||
By: /s/ Joseph E.
Pollard
|
By: /s/ Brandon
Anderson
|
|
Joseph E. Pollard
Title:
Director, Transportation Services
|
Brandon Anderson
Title:
Vice President, Gas Storage
|
|
By: /s/ Karl
Johannson
Karl Johannson
Title:
Sr. Vice President, Power Commercial
|
||
1.
|
EFFECTIVE DATE: February
27, 2009
|
2.
|
CONTRACT IDENTIFICATION:
IT11986
|
3.
|
RATE SCHEDULE:
IT
|
4.
|
SHIPPER TYPE:
Other
|
5.
|
STATE/PROVINCE OF
INCORPORATION: Delaware
|
6.
|
TERM:
March
01, 2009 to October 31, 2009, and then month to month thereafter unless
terminated by either party, upon a minimum of 30 days written
notice.
|
7.
|
EFFECT ON PREVIOUS
CONTRACTS:
This Agreement supersedes, cancels and
terminates, as of the effective date stated above, the following
contract(s): N/A
|
8.
|
MAXIMUM DAILY QUANTITY (Dth/Day): 100,000
Please
see Appendix A for further
detail.
|
9.
|
RATES:
Unless
Shipper and Transporter have agreed to a rate other than the maximum rate,
rates shall be Transporter's maximum rates and charges plus all applicable
surcharges in effect from time to time under the applicable Rate Schedule
(as stated above) on file with the Commission unless otherwise agreed to
by the parties in writing. Provisions governing a rate other than maximum
shall be set forth in this Paragraph 9 and/or on Appendix B
hereto.
|
10.
|
POINTS OF RECEIPT AND
DELIVERY: The primary receipt and delivery
points are set forth on Appendix
A. |
11.
|
RELEASED CAPACITY:
N/A
|
12.
|
INCORPORATION OF TARIFF INTO
AGREEMENT:
This
Agreement shall incorporate and in all respects be subject to the "General
Terms and Conditions" and the applicable Rate Schedule (as stated above)
set forth in Transporter's FERC Gas Tariff, Second Revised Volume No. 1,
as may be revised from time to time. Transporter may file and seek
Commission approval under Section 4 of the Natural Gas Act (NGA) at any
time and from time to time to change any rates, charges or provisions set
forth in the applicable Rate Schedule (as stated above) and the "General
Terms and Conditions" in Transporter's FERC Gas Tariff, Second Revised
Volume No. 1, and Transporter shall have the right to place such changes
in effect in accordance with the NGA, and this Agreement shall be deemed
to include such changes and any such changes which become effective by
operation of law and Commission Order, without prejudice to Shipper's
right to protest the same.
|
13.
|
MISCELLANEOUS:
No waiver by
either party to this Agreement of any one or more defaults by the other in
the performance of this Agreement shall operate or be construed as
a waiver of any continuing or future default(s), whether of a like or a
different character.
Any
controversy between the parties arising under this Agreement and not
resolved by the parties shall be determined in accordance with the laws of
the State of Michigan.
|
15.
|
OTHER
PROVISIONS:
It
is agreed that no personal liability whatsoever shall attach to, be
imposed on or otherwise be incurred by any Partner, agent, management
official or employee of the Transporter or any director, officer or
employee of any of the foregoing, for any obligation of the Transporter
arising under this Agreement or for any claim based on such obligation and
that the sole recourse of Shipper under this Agreement is limited to
assets of the Transporter.
Upon
termination of this Agreement, Shipper's and Transporter's obligations to
each other arising under this Agreement, prior to the date of termination,
remain in effect and are not being terminated by any provision of this
Agreement.
|
16.
|
NOTICES AND
COMMUNICATIONS:
All
notices and communications with respect to this Agreement shall be in
writing and sent to the addresses stated below or at any other such
address(es) as may be designated in
writing:
|
ADMINISTRATIVE
MATTERS
Great
Lakes Gas Transmission Limited
Partnership
5250
Corporate Drive
Troy,
MI 48098
Attn: Transportation
Services
|
TRANSCANADA
GAS STORAGE U.S.A. INC.
450
1st
Street SW
Calgary,
AB T2P
5H1
Canada
Att: Mike
Speed
|
|
PAYMENT
BY ELECTRONIC TRANSFER
Great
Lakes Gas Transmission Limited
Partnership
Citibank,
NA, New York, NY
ABA
No: 021000089
Account
No: 3076-5207
|
TRANSCANADA
GAS STORAGE U.S.A. INC.
Att:
|
AGREED
TO BY:
GREAT
LAKES GAS TRANSMISSION
LIMITED
PARTNERSHIP
By:
Great Lakes Gas Transmission Company
|
TRANSCANADA
GAS STORAGE U.S.A. INC.
|
Operator
and Agent for Great Lakes Gas Transmission Limited
Partnership
|
|
By: /s/ Joseph E.
Pollard
|
By: /s/ Brandon
Anderson
|
Joseph E. Pollard
Title:
Director, Transportation Services
|
Brandon Anderson
Title:
Vice President, Gas Storage
|
By: /s/ Karl
Johannson
Karl Johannson
Title:
Sr. Vice President, Power Commercial
|
|
Begin Date
|
End Date
|
Point(s) of Primary Receipt
|
Point(s) of Primary
Delivery
|
MDQ
|
03/01/2009 | 10/31/2009 | All Locations | All Locations | 100,000 |
1.
|
I
have reviewed this quarterly report on Form 10-Q of TC PipeLines,
LP;
|
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(s) 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)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) 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)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c)
|
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 evaluations;
and
|
d)
|
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(s) 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.
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of TC PipeLines,
LP;
|
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(s) 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)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) 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)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c)
|
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 evaluations;
and
|
d)
|
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(s) 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.
|
·
|
the
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
·
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Partnership.
|
·
|
the
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
·
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Partnership.
|
December 31 (millions of
dollars)
|
2008
|
2007
|
||||||
Assets
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
8.4 | 8.8 | ||||||
Accounts
receivables and other
|
3.4 | 4.2 | ||||||
Due
from affiliates (Note
10)
|
2.0 | 1.8 | ||||||
13.8 | 14.8 | |||||||
Investment
in Great Lakes (Note
3)
|
704.5 | 721.1 | ||||||
Investment
in Northern Border (Note
4)
|
514.8 | 541.9 | ||||||
Plant,
property and equipment
(Note 5)
|
134.2 | 134.1 | ||||||
Goodwill
(Note
6)
|
81.7 | 81.7 | ||||||
Other
assets
|
1.5 | 2.1 | ||||||
1,450.5 | 1,495.7 | |||||||
Liabilities
and Stockholder's Equity
|
||||||||
Current
liabilities
|
||||||||
Bank
indebtedness
|
- | 1.4 | ||||||
Accounts
payable
|
2.2 | 4.8 | ||||||
Accrued
interest
|
2.1 | 3.0 | ||||||
Due
to affiliates (Note
10)
|
- | 4.4 | ||||||
Current
portion of long-term debt (Note
7)
|
4.4 | 4.6 | ||||||
Current
portion of fair value of derivative contracts (Note
12)
|
11.8 | 2.5 | ||||||
20.5 | 20.7 | |||||||
Long-term
debt (Note
7)
|
532.4 | 568.8 | ||||||
Fair
value of derivative contracts and other (Note
12)
|
20.0 | 7.4 | ||||||
Deferred
income tax (Note
8)
|
24.4 | 21.7 | ||||||
597.3 | 618.6 | |||||||
Non-controlling
interests (Note
6)
|
811.6 | 832.6 | ||||||
Stockholder's
equity (Note
9)
|
||||||||
Common
stock ($0.01 par value per share; 1,000 shares authorized; 100 shares
issued)
|
- | - | ||||||
Additional
paid-in capital
|
22.2 | 22.2 | ||||||
Retained
earnings
|
24.2 | 23.7 | ||||||
Accumulated
other comprehensive loss
|
(4.8 | ) | (1.4 | ) | ||||
41.6 | 44.5 | |||||||
1,450.5 | 1,495.7 | |||||||
The
accompanying notes are an integral part of these consolidated balance
sheets.
|
a)
|
Basis
of Presentation and Use of Estimates
The
accompanying consolidated balance sheets and related notes present the
financial position of the Company as of December 31, 2008 and 2007. The
preparation of consolidated balance sheets in conformity with generally
accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the balance sheets. Although management
believes these estimates are reasonable, actual results could differ from
these estimates. Amounts are stated in United States dollars. Certain
comparative figures have been reclassified to conform to the current
year’s presentation.
|
b)
|
Principles
of Consolidation
The
consolidated balance sheets include the accounts of the GP and the LP. The
GP controls the operations of the LP through its two per cent general
partner interest. All significant intercompany transactions and accounts
have been eliminated on consolidation. The Company uses the equity method
of accounting for its investments in Great Lakes and Northern Border, over
which it is able to exercise significant influence. The Company has owned
a controlling interest in Tuscarora since December 19, 2006 and, as a
result, consolidates Tuscarora’s
operations.
|
c)
|
Cash
and Cash Equivalents
The Company’s short-term investments with
original maturities of three months or less are considered to be cash
equivalents and are recorded at cost, which approximates market
value.
|
d)
|
Plant,
Property and Equipment
|
e)
|
Revenue
Recognition
|
f)
|
Income
Taxes
|
g)
|
Acquisitions
and Goodwill
The
Company accounts for business acquisitions using the purchase method of
accounting and accordingly the assets and liabilities of the acquired
entities are recorded at their estimated fair values at the date of
acquisition. The excess of the purchase price over the fair value of net
assets acquired is attributed to goodwill. Goodwill is not amortized for
accounting purposes; however, it is tested on an annual basis for
impairment, or more frequently if any indicators of impairment are
evident.
|
h)
|
Derivative
Financial Instruments and Hedging
Activities
|
i)
|
Asset
Retirement Obligation
|
j)
|
Government
Regulation
|
Summarized
Consolidated Great Lakes Balance Sheet
|
||||||||
December 31 (millions of
dollars)
|
2008
|
2007
|
||||||
Assets
|
||||||||
Cash
and cash equivalents
|
1.6 | 32.0 | ||||||
Other
current assets
|
80.2 | 55.5 | ||||||
Plant,
property and equipment, net
|
923.4 | 969.2 | ||||||
1,005.2 | 1,056.7 | |||||||
Liabilities
and Partners' Equity
|
||||||||
Current
liabilities
|
43.0 | 50.7 | ||||||
Deferred
credits and other
|
2.3 | 0.4 | ||||||
Long-term
debt, including current maturities
|
430.0 | 440.0 | ||||||
Partners'
capital
|
529.9 | 565.6 | ||||||
1,005.2 | 1,056.7 | |||||||
Summarized
Northern Border Balance Sheet
|
||||||||
December 31 (millions of
dollars)
|
2008
|
2007
|
||||||
Assets
|
||||||||
Cash
and cash equivalents
|
21.6 | 22.9 | ||||||
Other
current assets
|
39.1 | 39.8 | ||||||
Plant,
property and equipment, net
|
1,390.8 | 1,428.3 | ||||||
Other
assets
|
24.5 | 23.9 | ||||||
1,476.0 | 1,514.9 | |||||||
Liabilities
and Partners' Equity
|
||||||||
Current
liabilities
|
48.7 | 53.4 | ||||||
Deferred
credits and other
|
11.2 | 8.1 | ||||||
Long-term
debt, including current maturities
|
630.4 | 615.3 | ||||||
Partners'
equity
|
||||||||
Partners'
capital
|
791.4 | 840.5 | ||||||
Accumulated
other comprehensive loss
|
(5.7 | ) | (2.4 | ) | ||||
1,476.0 | 1,514.9 |
2008
|
2007
|
||||||||||
Accumulated
|
Net
Book
|
Accumulated
|
Net
Book
|
||||||||
December 31 (millions of
dollars)
|
Cost
|
Depreciation
|
Value
|
Cost
|
Depreciation
|
Value
|
|||||
Tuscarora
|
|||||||||||
Pipeline
|
146.6
|
57.9
|
88.7
|
146.6
|
53.1
|
93.5
|
|||||
Compression
|
45.1
|
7.0
|
38.1
|
25.0
|
5.5
|
19.5
|
|||||
Metering
and other
|
11.0
|
3.6
|
7.4
|
11.0
|
3.1
|
7.9
|
|||||
Under
construction
|
-
|
-
|
-
|
13.2
|
-
|
13.2
|
|||||
202.7
|
68.5
|
134.2
|
195.8
|
61.7
|
134.1
|
||||||
December 31 (millions of
dollars)
|
2008
|
2007
|
|
Senior
Credit Facility
|
475.0
|
507.0
|
|
7.13%
Series A Senior Notes due 2010
|
51.3
|
54.5
|
|
7.99%
Series B Senior Notes due 2010
|
5.0
|
5.5
|
|
6.89%
Series C Senior Notes due 2012
|
5.5
|
6.4
|
|
536.8
|
573.4
|
(millions
of dollars)
|
|
2009
|
4.4
|
2010
|
53.5
|
2011
|
475.8
|
2012
|
3.1
|
536.8
|
Year ended December
31 (millions
of dollars)
|
2008
|
2007
(1)
|
||||||
Costs
charged by TransCanada and its affiliates:
|
||||||||
Great
Lakes
|
34.3 | 25.6 | ||||||
Northern
Border (2)
|
30.5 | 22.5 | ||||||
Tuscarora
|
3.7 | 1.8 | ||||||
Impact
on the Partnership's net income:
|
||||||||
Great
Lakes
|
14.2 | 11.2 | ||||||
Northern
Border
|
12.9 | 11.0 | ||||||
Tuscarora
|
2.7 | 0.9 | ||||||
(1)
The amounts disclosed for Great Lakes are for the period February 23 to
December 31, 2007. The amounts disclosed for Northern Border are for the
period April 1 to December 31, 2007.
|
||||||||
(2)
Northern Border's costs charged by TransCanada and its affiliates
include $2.0 million of charges related to Bison Pipeline LLC through the
effective date of the sale.
|
||||||||
December 31 (millions of
dollars)
|
2008
|
2007
|
||||||
Amount
owed to TransCanada and its affiliates:
|
||||||||
Great
Lakes
|
4.5 | 1.9 | ||||||
Northern
Border
|
2.8 | 3.0 | ||||||
Tuscarora
|
0.8 | 3.5 | ||||||
2008
|
2007
|
||||||
December 31 (millions of
dollars)
|
Carrying
Value
|
Fair
Value
|
Carrying
Value
|
Fair
Value
|
|||
Senior
Credit Facility
|
475.0
|
475.0
|
507.0
|
507.0
|
|||
Series
A Senior Notes
|
51.3
|
|
52.3
|
54.5
|
|
58.7
|
|
Series
B Senior Notes
|
5.0
|
|
5.2
|
5.5
|
6.0
|
||
Series
C Senior Notes
|
5.5
|
5.4
|
6.4
|
7.0
|
|||
536.8
|
537.9
|
573.4
|
578.7
|
||||