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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
 
 
 
FORM 10-Q
 
 
 
 
 
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2016
or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 1-33556
 
 
 
 
 
g506200g36m25a01a01a01a01a03.jpg 
SPECTRA ENERGY PARTNERS, LP
(Exact Name of Registrant as Specified in its Charter)
 
 
 
 
 
Delaware
 
41-2232463
(State or other jurisdiction of incorporation)
 
(IRS Employer Identification No.)
5400 Westheimer Court
Houston, Texas 77056
(Address of principal executive offices, including zip code)
713-627-5400
(Registrant’s telephone number, including area code)
 
 
 
 
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  ý    Accelerated  filer  ¨    Non-accelerated filer  ¨    Smaller reporting company  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
At September 30, 2016, there were 305,960,001 Common Units and 6,244,082 General Partner Units outstanding.
 
 
 
 
 




SPECTRA ENERGY PARTNERS, LP
FORM 10-Q FOR THE QUARTER ENDED
September 30, 2016
INDEX
 
 
 
 
 
 
Page
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 6.
 
 
 
 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements represent management’s intentions, plans, expectations, assumptions and beliefs about future events. These forward-looking statements are identified by terms and phrases such as: anticipate, believe, intend, estimate, expect, continue, should, could, may, plan, project, predict, will, potential, forecast, and similar expressions. Forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Factors used to develop these forward-looking statements and that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to:
state, provincial, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an effect on rate structure, and affect the speed at and degree to which competition enters the natural gas and oil industries;
outcomes of litigation and regulatory investigations, proceedings or inquiries;
weather and other natural phenomena, including the economic, operational and other effects of hurricanes and storms;
the timing and extent of changes in interest rates and foreign currency exchange rates;
general economic conditions, including the risk of a prolonged economic slowdown or decline, or the risk of delay in a recovery, which can affect the long-term demand for natural gas and oil and related services;
potential effects arising from terrorist attacks and any consequential or other hostilities;
changes in environmental, safety and other laws and regulations;
the development of alternative energy resources;
results and costs of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings and general market and economic conditions;
increases in the cost of goods and services required to complete capital projects;
growth in opportunities, including the timing and success of efforts to develop U.S. and Canadian pipeline, storage, gathering and other related infrastructure projects and the effects of competition;
the performance of natural gas transmission, storage and gathering facilities, and crude oil transportation and storage;
the extent of success in connecting natural gas and oil supplies to transmission and gathering systems and in connecting to expanding gas and oil markets;
the effects of accounting pronouncements issued periodically by accounting standard-setting bodies;
conditions of the capital markets during the periods covered by forward-looking statements; and
the ability to successfully complete merger, acquisition or divestiture plans; regulatory or other limitations imposed as a result of a merger, acquisition or divestiture; and the success of the business following a merger, acquisition or divestiture.
In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than Spectra Energy Partners, LP has described. Spectra Energy Partners, LP undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements.

SPECTRA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per-unit amounts)

 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
Operating Revenues
 
 
 
 
 
 
 
Transportation of natural gas
$
482

 
$
461

 
$
1,441

 
$
1,379

Transportation of crude oil
89

 
93

 
262

 
267

Storage of natural gas and other
57

 
58

 
167

 
175

Total operating revenues
628

 
612

 
1,870

 
1,821

Operating Expenses
 
 
 
 
 
 
 
Operating, maintenance and other
225

 
184

 
594

 
543

Depreciation and amortization
78

 
74

 
232

 
220

Property and other taxes
45

 
35

 
135

 
106

Total operating expenses
348

 
293

 
961

 
869

Operating Income
280

 
319

 
909

 
952

Other Income and Expenses
 
 
 
 
 
 
 
Earnings from equity investments
35

 
49

 
92

 
134

Other income and expenses, net
38

 
23

 
89

 
49

Total other income and expenses
73

 
72

 
181

 
183

Interest Expense
53

 
59

 
165

 
179

Earnings Before Income Taxes
300

 
332

 
925

 
956

Income Tax Expense
4

 
1

 
13

 
8

Net Income
296

 
331

 
912

 
948

Net Income—Noncontrolling Interests
21

 
10

 
52

 
27

Net Income—Controlling Interests
$
275

 
$
321

 
$
860

 
$
921

Calculation of Limited Partners’ Interest in Net Income:
 
 
 
 
 
 
 
Net income—Controlling Interests
$
275

 
$
321

 
$
860

 
$
921

Less: General partner’s interest in net income
81

 
66

 
226

 
184

Limited partners’ interest in net income
$
194

 
$
255

 
$
634

 
$
737

Weighted-average limited partner units outstanding—basic and diluted
304

 
301

 
296

 
297

Net income per limited partner unit—basic and diluted
$
0.64

 
$
0.85

 
$
2.14

 
$
2.48

Distributions paid per limited partner unit
$
0.66375

 
$
0.61375

 
$
1.95375

 
$
1.80375





See Notes to Condensed Consolidated Financial Statements.
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SPECTRA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In millions)
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2016
 
2015
 
2016
 
2015
Net Income
 
$
296

 
$
331

 
$
912

 
$
948

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 
(4
)
 
(10
)
 
8

 
(23
)
       Total other comprehensive income (loss)
 
(4
)
 
(10
)
 
8

 
(23
)
Total Comprehensive Income
 
292

 
321

 
920

 
925

Less: Comprehensive Income—Noncontrolling Interests
 
21

 
10

 
52

 
27

Comprehensive Income—Controlling Interests
 
$
271

 
$
311

 
$
868

 
$
898

 


See Notes to Condensed Consolidated Financial Statements.
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SPECTRA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)

 
 
September 30,
2016
 
December 31,
2015
ASSETS
 
 
 
 
Current Assets
 
 
 
 
Cash and cash equivalents
 
$
365

 
$
168

Receivables, net
 
307

 
272

Inventory
 
42

 
37

Fuel tracker
 
19

 
41

Other
 
28

 
26

Total current assets
 
761

 
544

Investments and Other Assets
 
 
 
 
Investments in and loans to unconsolidated affiliates
 
1,049

 
904

Goodwill
 
3,235

 
3,232

Other
 
134

 
44

Total investments and other assets
 
4,418

 
4,180

Property, Plant and Equipment
 
 
 
 
Cost
 
19,137

 
17,491

Less accumulated depreciation and amortization
 
3,820

 
3,654

Net property, plant and equipment
 
15,317

 
13,837

Regulatory Assets and Deferred Debits
 
355

 
290

Total Assets
 
$
20,851

 
$
18,851


See Notes to Condensed Consolidated Financial Statements.
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SPECTRA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
 
 
September 30,
2016
 
December 31,
2015
LIABILITIES AND EQUITY
 
 
 
 
Current Liabilities
 
 
 
 
Accounts payable
 
$
425

 
$
322

Commercial paper
 
1,177

 
476

Taxes accrued
 
79

 
60

Interest accrued
 
33

 
72

Current maturities of long-term debt
 
422

 
283

Other
 
125

 
258

Total current liabilities
 
2,261

 
1,471

Long-term Debt
 
5,454

 
5,845

Deferred Credits and Other Liabilities
 
 
 
 
Deferred income taxes
 
42

 
38

Regulatory and other
 
162

 
151

Total deferred credits and other liabilities
 
204

 
189

Commitments and Contingencies
 


 


Equity
 
 
 
 
Partners’ Capital
 
 
 
 
Common units (306.0 million and 285.1 million units issued and outstanding at September 30, 2016 and December 31, 2015, respectively)
 
11,536

 
10,527

General partner units (6.2 million and 5.8 million units issued and outstanding at September 30, 2016 and December 31, 2015, respectively)
 
424

 
336

Accumulated other comprehensive loss
 
(42
)
 
(50
)
Total partners’ capital
 
11,918

 
10,813

Noncontrolling interests
 
1,014

 
533

Total equity
 
12,932

 
11,346

Total Liabilities and Equity
 
$
20,851

 
$
18,851


See Notes to Condensed Consolidated Financial Statements.
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SPECTRA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)

 
 
Nine Months Ended
September 30,
 
 
2016
 
2015
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
912

 
$
948

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
237

 
226

Deferred income tax expense
 
4

 
2

Earnings from equity investments
 
(92
)
 
(134
)
Distributions from equity investments
 
87

 
146

Other
 
(78
)
 
(58
)
Net cash provided by operating activities
 
1,070

 
1,130

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
Capital expenditures
 
(1,546
)
 
(1,161
)
Investments in and loans to unconsolidated affiliates
 
(181
)
 
(91
)
Purchase of intangible, net
 
(80
)
 

Distributions from equity investments
 
45

 
440

Distribution to equity investment
 
(148
)
 

Purchases of held-to-maturity securities
 
(31
)
 
(33
)
Proceeds from sales and maturities of held-to-maturity securities
 
26

 
25

Purchases of available-for-sale securities
 
(550
)
 

Proceeds from sales and maturities of available-for-sale securities
 
546

 

Other changes in restricted funds
 
7

 
(15
)
Other
 
(2
)
 

Net cash used in investing activities
 
(1,914
)
 
(835
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
Proceeds from the issuance of long-term debt
 

 
994

Payments for the redemption of long-term debt
 
(267
)
 
(16
)
Net increase (decrease) in commercial paper
 
701

 
(907
)
Distributions to noncontrolling interests
 
(22
)
 
(23
)
Contributions from noncontrolling interests
 
437

 
164

Proceeds from the issuances of units
 
972

 
358

Distributions to partners
 
(777
)
 
(705
)
Other
 
(3
)
 
(9
)
Net cash provided by (used in) financing activities
 
1,041

 
(144
)
Net increase in cash and cash equivalents
 
197

 
151

Cash and cash equivalents at beginning of period
 
168

 
140

Cash and cash equivalents at end of period
 
$
365

 
$
291

Supplemental Disclosures
 
 
 
 
Property, plant and equipment non-cash accruals
 
$
219

 
$
202




See Notes to Condensed Consolidated Financial Statements.
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SPECTRA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In millions)

 
Partners’ Capital
 
Noncontrolling Interests
 
Total
 
Common
 
General
Partner
 
Accumulated Other
Comprehensive Income (Loss)
December 31, 2015
$
10,527

 
$
336

 
$
(50
)
 
$
533

 
$
11,346

Net income
634

 
226

 

 
52

 
912

Other comprehensive income

 

 
8

 

 
8

Attributed deferred tax benefit

 
42

 

 
14

 
56

Issuances of units
952

 
20

 

 

 
972

Distributions to partners
(577
)
 
(200
)
 

 

 
(777
)
Contributions from noncontrolling interests

 

 

 
437

 
437

Distributions to noncontrolling interests

 

 

 
(22
)
 
(22
)
September 30, 2016
$
11,536

 
$
424

 
$
(42
)
 
$
1,014

 
$
12,932

December 31, 2014
$
10,474

 
$
284

 
$
(20
)
 
$
268

 
$
11,006

Net income
737

 
184

 

 
27

 
948

Other comprehensive loss

 

 
(23
)
 

 
(23
)
Attributed deferred tax benefit

 
25

 

 
4

 
29

Issuances of units
351

 
7

 

 

 
358

Distributions to partners
(537
)
 
(168
)
 

 

 
(705
)
Contributions from noncontrolling interests

 

 

 
164

 
164

Distributions to noncontrolling interests

 

 

 
(23
)
 
(23
)
September 30, 2015
$
11,025

 
$
332

 
$
(43
)
 
$
440

 
$
11,754




See Notes to Condensed Consolidated Financial Statements.
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SPECTRA ENERGY PARTNERS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General
The terms “we,” “our,” “us” and “Spectra Energy Partners” as used in this report refer collectively to Spectra Energy Partners, LP and its subsidiaries unless the context suggests otherwise. These terms are used for convenience only and are not intended as a precise description of any separate legal entity within Spectra Energy Partners.
Nature of Operations. Spectra Energy Partners, through its subsidiaries and equity affiliates, is engaged in the transmission, storage and gathering of natural gas and the transportation and storage of crude oil through interstate pipeline systems. We are a Delaware master limited partnership. As of September 30, 2016, Spectra Energy Corp (Spectra Energy) and its subsidiaries collectively owned 76% of us and the remaining 24% was publicly owned.
On September 6, 2016, Spectra Energy announced that they entered into a definitive merger agreement with Enbridge Inc. (Enbridge). Under this agreement, Enbridge and Spectra Energy will combine in a stock-for-stock merger transaction, which values Spectra Energy's stock at approximately $28 billion, based on the closing price of Enbridge common shares as of September 2, 2016. This transaction was unanimously approved by both boards of directors, and is expected to close in the first quarter of 2017, subject to shareholder and certain regulatory approvals and other customary conditions.
Upon completion of the proposed merger, Spectra Energy shareholders will receive 0.984 Enbridge common shares for each share of Spectra Energy stock they own. The consideration to be received is valued at $40.33 per Spectra Energy share, based on the closing price of Enbridge common shares as of September 2, 2016, representing an approximate 11.5% premium to the closing price of Spectra Energy stock as of September 2, 2016. Upon completion of the merger, Enbridge shareholders are expected to own approximately 57% of the combined company and Spectra Energy shareholders are expected to own approximately 43%.
As a result of this transaction, Enbridge and its subsidiaries will collectively own the interest in us currently held by Spectra Energy.
Basis of Presentation. The accompanying Condensed Consolidated Financial Statements include our accounts and the accounts of our majority-owned subsidiaries, after eliminating intercompany transactions and balances. These interim financial statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K, for the year ended December 31, 2015, and reflect all normal recurring adjustments that are, in our opinion, necessary to fairly present our results of operations and financial position. Amounts reported in the Condensed Consolidated Statements of Operations are not necessarily indicative of amounts expected for the respective annual periods.
Spectra Energy and its affiliates are solely responsible for providing the employees and other personnel necessary to conduct our operations. Our costs of doing business have been reflected in our financial accounting records for the periods presented. These costs include direct charges and allocations from Spectra Energy and its affiliates for business services, such as payroll, accounts payable and facilities management; corporate services, such as finance and accounting, legal, human resources, investor relations, public and regulatory policy, and senior executives; and pension and other post-retirement benefit costs.
Use of Estimates. To conform with generally accepted accounting principles (GAAP) in the United States, we make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements. Although these estimates are based on our best available knowledge at the time, actual results could differ.

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2. Business Segments
We manage our business in two reportable segments: U.S. Transmission and Liquids. The remainder of our business operations is presented as “Other,” and consists of certain corporate costs.
Our chief operating decision maker regularly reviews financial information about both segments in deciding how to allocate resources and evaluate performance. There is no aggregation of segments within our reportable business segments.
The U.S. Transmission segment provides interstate transmission, storage and gathering of natural gas. Substantially all of our operations are subject to the Federal Energy Regulatory Commission (FERC) and the Department of Transportation’s (DOT’s) rules and regulations. Our investments in Gulfstream Natural Gas System, LLC (Gulfstream), Southeast Supply Header, LLC (SESH) and Steckman Ridge, LP are included in U.S. Transmission.
The Liquids segment provides transportation of crude oil. The Express-Platte pipeline system (Express-Platte) is a crude oil pipeline system that connects Canadian and U.S. producers to refineries in the U.S. Rocky Mountain and Midwest regions. These operations are primarily subject to the rules and regulations of the FERC and the National Energy Board (NEB). We held direct one-third ownership interests in DCP Sand Hills Pipeline, LLC (Sand Hills) and DCP Southern Hills Pipeline, LLC (Southern Hills) until October 30, 2015.
Our reportable segments offer different products and services and are managed separately as business units. Management evaluates segment performance based on earnings before interest, taxes, and depreciation and amortization (EBITDA). Cash, cash equivalents and investments are managed centrally, so the gains and losses on foreign currency remeasurement, and interest and dividend income, are excluded from the segments’ EBITDA. Our segment EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate EBITDA in the same manner.

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Business Segment Data
Condensed Consolidated Statements of Operations
Total Operating Revenues
 
Depreciation and Amortization
 
Segment EBITDA/Consolidated Earnings Before Income Taxes
 
(in millions)
Three Months Ended September 30, 2016
 
 
 
 
 
U.S. Transmission
$
535

 
$
71

 
$
392

Liquids
93

 
7

 
60

Total reportable segments
628

 
78

 
452

Other

 

 
(21
)
Depreciation and amortization

 

 
78

Interest expense

 

 
53

Interest income and other

 

 

Total consolidated
$
628

 
$
78

 
$
300

Three Months Ended September 30, 2015
 
 
 
 
 
U.S. Transmission
$
515

 
$
67

 
$
401

Liquids
97

 
7

 
79

Total reportable segments
612

 
74

 
480

Other

 

 
(13
)
Depreciation and amortization

 

 
74

Interest expense

 

 
59

Interest income and other

 

 
(2
)
Total consolidated
$
612

 
$
74

 
$
332

Nine Months Ended September 30, 2016
 
 
 
 
 
U.S. Transmission
$
1,602

 
$
210

 
$
1,209

Liquids
268

 
22

 
174

Total reportable segments
1,870

 
232

 
1,383

Other

 

 
(63
)
Depreciation and amortization

 

 
232

Interest expense

 

 
165

Interest income and other

 

 
2

Total consolidated
$
1,870

 
$
232

 
$
925

Nine Months Ended September 30, 2015
 
 
 
 
 
U.S. Transmission
$
1,546

 
$
197

 
$
1,186

Liquids
275

 
23

 
221

Total reportable segments
1,821

 
220

 
1,407

Other

 

 
(48
)
Depreciation and amortization

 

 
220

Interest expense

 

 
179

Interest income and other

 

 
(4
)
Total consolidated
$
1,821

 
$
220

 
$
956

    

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3. Net Income Per Limited Partner Unit and Cash Distributions
The following table presents our net income per limited partner unit calculations:
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2016
 
2015
 
2016
 
2015
 
 
(in millions, except per unit amounts)
Net income—controlling interests
 
$
275

 
$
321

 
$
860

 
$
921

Less:
 
 
 
 
 
 
 
 
General partner’s interest in net income—2%
 
5

 
6

 
17

 
18

General partner’s interest in net income attributable to incentive distribution rights
 
76

 
60

 
209

 
166

Limited partners’ interest in net income
 
$
194

 
$
255

 
$
634

 
$
737

Weighted average limited partner units outstanding—basic and diluted
 
304

 
301

 
296

 
297

Net income per limited partner unit—basic and diluted
 
$
0.64

 
$
0.85

 
$
2.14

 
$
2.48

Our partnership agreement requires that, within 60 days after the end of each quarter, we distribute all of our Available Cash, as defined, to unitholders of record on the applicable record date.
Available Cash. Available Cash, for any quarter, consists of all cash and cash equivalents on hand at the end of that quarter:
less the amount of cash reserves established by the general partner to:
provide for the proper conduct of business,
comply with applicable law, any debt instrument or other agreement, or
provide funds for minimum quarterly distributions to the unitholders and to the general partner for any one or more of the next four quarters,
plus, if the general partner so determines, all or a portion of cash and cash equivalents on hand on the date of determination of Available Cash for the quarter.
Incentive Distribution Rights. The general partner holds incentive distribution rights beyond the first target distribution in accordance with the partnership agreement as follows:
 
 
 
Total Quarterly Distribution            
 
Marginal Percentage
Interest in Distributions
 
 
Target Per-Unit Amount
 
Common
Unitholders
 
General
Partner
Minimum Quarterly Distribution
 
$0.30
 
98
%
 
2
%
First Target Distribution
 
up to $0.345
 
98
%
 
2
%
Second Target Distribution
 
above $0.345 up to $0.375
 
85
%
 
15
%
Third Target Distribution
 
above $0.375 up to $0.45
 
75
%
 
25
%
Thereafter
 
above $0.45
 
50
%
 
50
%
To the extent these incentive distributions are made to the general partner, there will be more Available Cash proportionately allocated to our general partner than to holders of common units. A cash distribution of $0.67625 per limited partner unit was declared on November 2, 2016 and is payable on November 29, 2016 to unitholders of record at the close of business on November 14, 2016.
There is a reduction in the aggregate quarterly distributions, if any, to Spectra Energy, (as holder of incentive distribution rights), by $4 million per quarter for a period of 12 consecutive quarters ending on September 30, 2018 as a result of the sale of our interests in Sand Hills and Southern Hills to Spectra Energy.

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4. Transaction with Affiliate
During the third quarter of 2015, Gulfstream issued unsecured debt of $800 million to fund the repayment of its current debt. Gulfstream distributed $396 million, our proportionate share of proceeds, to us of which we contributed $248 million back to Gulfstream in the fourth quarter of 2015 and the remaining $148 million, classified as Cash Flow from Investing Activities — Distribution to Equity Investment, in the second quarter of 2016.
5. Variable Interest Entities
Sabal Trail. On April 1, 2016, NextEra Energy, Inc. (NextEra) purchased a 9.5% interest in Sabal Trail Transmission, LLC (Sabal Trail) from us. Consideration for this transaction consisted of approximately $110 million cash, $102 million of which is classified as Cash Flows from Financing Activities — Contributions from Noncontrolling Interests. See Note 6 for additional information related to this transaction. As of September 30, 2016, we owned a 50% interest in Sabal Trail, a joint venture that is constructing a natural gas pipeline to transport natural gas to Florida. Sabal Trail is a variable interest entity (VIE) due to insufficient equity at risk to finance its activities. We determined that we are the primary beneficiary because we direct the activities of Sabal Trail that most significantly impact its economic performance and we consolidate Sabal Trail in our financial statements. The current estimate of the total remaining construction cost is approximately $1.5 billion.
The following summarizes assets and liabilities for Sabal Trail:
Condensed Consolidated Balance Sheets
September 30, 2016
 
December 31, 2015
 
(in millions)
Assets
 
 
 
Current assets
$
303

 
$
118

Net property, plant and equipment
1,363

 
773

Regulatory assets and deferred debits
58

 
25

Total Assets
$
1,724

 
$
916

Liabilities and Equity
 
 
 
Current liabilities
$
128

 
$
84

Equity
1,596

 
832

Total Liabilities and Equity
$
1,724

 
$
916

Nexus. We own a 50% interest in Nexus Gas Transmission, LLC (Nexus), a joint venture that is constructing a natural gas pipeline from Ohio to Michigan and continuing on to Ontario, Canada. Nexus is a VIE due to insufficient equity at risk to finance its activities. We determined that we are not the primary beneficiary because the power to direct the activities of Nexus that most significantly impact its economic performance is shared. We account for Nexus under the equity method. Our maximum exposure to loss is $1.0 billion. We have an investment in Nexus of $281 million and $90 million as of September 30, 2016 and December 31, 2015, respectively, classified as Investments in and Loans to Unconsolidated Affiliates on our Condensed Consolidated Balance Sheets.
6. Intangible Asset
During the first quarter of 2016 we entered into a project coordination agreement (PCA) with NextEra, Duke Energy Corporation and Williams Partners L.P. In accordance with the agreement, payments will be made, based on our proportional ownership interest in the Sabal Trail project, as certain milestones of the project are met. During the first quarter of 2016, the first milestone was achieved and paid, consisting of $48 million.
On April 1, 2016, NextEra purchased an additional 9.5% interest in Sabal Trail, reducing our ownership interest in Sabal Trail to 50%. Upon purchase of the additional ownership interest, NextEra reimbursed us $8 million for NextEra’s proportional share of the first milestone payment, which reduced our total milestone payments to $40 million as of June 30, 2016.
During the third quarter of 2016, the second milestone was achieved and paid, consisting of an additional payment of $40 million, for total milestone payments of $80 million as of September 30, 2016. Both payments are classified as Cash Flows from Investing Activities — Purchase of Intangible, Net. This PCA is an intangible asset and is classified as Investments and Other Assets — Other on our Condensed Consolidated Balance Sheet. The intangible asset will be amortized over a period of 25 years beginning at the time of in-service of Sabal Trail, which is expected to occur during the first half of 2017.

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7. Goodwill
We perform our goodwill impairment test annually and evaluate goodwill when events or changes in circumstances indicate that its carrying value may not be recoverable. We completed our annual goodwill impairment test as of April 1, 2016 and no impairments were identified.
We perform our annual review for goodwill impairment at the reporting unit level, which is identified by assessing whether the components of our operating segments constitute businesses for which discrete financial information is available, whether segment management regularly reviews the operating results of those components and whether the economic and regulatory characteristics are similar. We determined that our reporting units are equivalent to our reportable segments.
As permitted under accounting guidance on testing goodwill for impairment, we perform either a qualitative assessment or a quantitative assessment of each of our reporting units based on management’s judgment. With respect to our qualitative assessments, we consider events and circumstances specific to us, such as macroeconomic conditions, industry and market considerations, cost factors and overall financial performance, when evaluating whether it is more likely than not that the fair values of our reporting units are less than their respective carrying amounts.
8. Marketable Securities and Restricted Funds
We routinely invest excess cash and various restricted balances in securities such as commercial paper, corporate debt securities, and other money market securities in the United States, as well as equity securities in Canada. We do not purchase marketable securities for speculative purposes, therefore we do not have any securities classified as trading securities. While we do not routinely sell marketable securities prior to their scheduled maturity dates, some of our investments may be held and restricted for the purposes of funding future capital expenditures and NEB regulatory requirements, so these investments are classified as available-for-sale (AFS) marketable securities as they may occasionally be sold prior to their scheduled maturity dates due to the unexpected timing of cash needs. Initial investments in securities are classified as purchases of the respective type of securities (AFS marketable securities or held-to-maturity (HTM) marketable securities). Maturities of securities are classified within proceeds from sales and maturities of securities in the Condensed Consolidated Statements of Cash Flows. 
AFS Securities. We had $15 million and $11 million of AFS securities classified as Investments and Other Assets — Other on the Condensed Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015, respectively. As of September 30, 2016, these investments include $14 million of restricted funds related to certain construction projects and $1 million are restricted funds held and collected from customers for Canadian pipeline abandonment in accordance with the NEB's regulatory requirements. The balance as of December 31, 2015 is all related to certain construction projects.
At September 30, 2016, the weighted-average contractual maturity of outstanding AFS securities was less than one year.
There were no material gross unrecognized holding gains or losses associated with investments in AFS securities at September 30, 2016 or December 31, 2015.
HTM Securities. All of our HTM securities are restricted funds. We had $8 million and $3 million of money market securities classified as Current Assets — Other on the Condensed Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015, respectively. These securities are restricted pursuant to certain Express-Platte debt agreements.
At September 30, 2016, the weighted-average contractual maturity of outstanding HTM securities was less than one year.
There were no material gross unrecognized holding gains or losses associated with investments in HTM securities at September 30, 2016 or December 31, 2015.
Other Restricted Funds. In addition to the AFS and HTM securities that were restricted funds as described above, we had other restricted funds totaling $7 million and $14 million classified as Investments and Other Assets — Other on the Condensed Consolidated Balance Sheets at September 30, 2016 and December 31, 2015, respectively. These restricted funds are related to certain construction projects.
Changes in restricted balances are presented within Cash Flows from Investing Activities on our Condensed Consolidated Statements of Cash Flows.

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9. Debt and Credit Facility
Available Credit Facility and Restricted Debt Covenants
 
 
Expiration Date
 
Total Credit Facility Capacity
 
Commercial
Paper Outstanding at
September 30, 2016
 
Available
Credit Facility
Capacity
 
 
 
 
(in millions)
Spectra Energy Partners, LP
 
2021
 
$
2,500

 
$
1,177

 
$
1,323

On April 29, 2016, we amended our credit agreement. The total capacity was increased to $2.5 billion and the expiration date was extended to April 2021.
The issuances of commercial paper, letters of credit and revolving borrowings reduce the amount available under the credit facility. As of September 30, 2016, there were no letters of credit issued or revolving borrowings outstanding under the credit facility.
Our credit agreements contain various covenants, including the maintenance of a consolidated leverage ratio, as defined in the agreements. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements. As of September 30, 2016, we were in compliance with those covenants. In addition, our credit agreements allow for acceleration of payments or termination of the agreements due to nonpayment, or in some cases, due to the acceleration of our other significant indebtedness or other significant indebtedness of some of our subsidiaries. Our debt and credit agreements do not contain provisions that trigger an acceleration of indebtedness based solely on the occurrence of a material adverse change in our financial condition or results of operations.
As noted above, the terms of our credit agreements require us to maintain a ratio of total Consolidated Indebtedness-to-Consolidated EBITDA, as defined in the agreement, of 5.0 to 1 or less. As of September 30, 2016, this ratio was 3.7 to 1.
10. Fair Value Measurements
The following presents, for each of the fair value hierarchy levels, assets that are measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015:
Description
Condensed Consolidated Balance Sheet Caption
 
September 30, 2016
Total
 
Level 1
 
Level 2
 
Level 3
 
 
 
(in millions)
Corporate debt securities
Cash and cash equivalents
 
$
302

 
$

 
$
302

 
$

Corporate debt securities
Investments and other assets — other
 
14

 

 
14

 

Canadian equity securities
Investments and other assets — other
 
1

 
1

 

 

Interest rate swaps
Investments and other assets — other
 
28

 

 
28

 

Total Assets
 
$
345

 
$
1

 
$
344

 
$


Description
Condensed Consolidated Balance Sheet Caption
 
December 31, 2015
Total
 
Level 1
 
Level 2
 
Level 3
 
 
 
(in millions)
Corporate debt securities
Cash and cash equivalents
 
$
112

 
$

 
$
112

 
$

Corporate debt securities
Investments and other assets — other
 
11

 

 
11

 

Interest rate swaps
Investments and other assets — other
 
14

 

 
14

 

Total Assets
 
$
137

 
$

 
$
137

 
$

Level 1
Level 1 valuations represent quoted unadjusted prices for identical instruments in active markets.

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Level 2 Valuation Techniques
Fair values of our financial instruments that are actively traded in the secondary market, including our long-term debt, are determined based on market-based prices. These valuations may include inputs such as quoted market prices of the exact or similar instruments, broker or dealer quotations, or alternative pricing sources that may include models or matrix pricing tools, with reasonable levels of price transparency.
For interest rate swaps, we utilize data obtained from a third-party source for the determination of fair value. Both the future cash flows for the fixed-leg and floating-leg of our swaps are discounted to present value.
Level 3 Valuation Techniques
Level 3 valuation techniques include the use of pricing models, discounted cash flow methodologies or similar techniques where at least one significant model assumption or input is unobservable. Level 3 financial instruments also include those for which the determination of fair value requires significant management judgment or estimation.
Financial Instruments
The fair values of financial instruments that are recorded and carried at book value are summarized in the following table. Judgment is required in interpreting market data to develop the estimates of fair value. These estimates are not necessarily indicative of the amounts we could have realized in current markets.
 
 
September 30, 2016
 
December 31, 2015
 
 
Book
Value
 
Approximate
Fair Value
 
Book
Value
 
Approximate
Fair Value
 
 
(in millions)
Note receivable, noncurrent (a)
 
$
71

 
$
71

 
$
71

 
$
71

Long-term debt, including current maturities (b)
 
5,885

 
6,300

 
6,152

 
5,906

________ 
(a)
Included within Investments in and Loans to Unconsolidated Affiliates.
(b)
Excludes commercial paper, unamortized items and fair value hedge carrying value adjustments.
The fair value of our long-term debt is determined based on market-based prices as described in the Level 2 valuation technique described above and is classified as Level 2.
The fair values of cash and cash equivalents, restricted cash, short-term investments, accounts receivable, note receivable-noncurrent, accounts payable, commercial paper and short-term money market securities are not materially different from their carrying amounts because of the short-term nature of these instruments or because the stated rates approximate market rates.
During the nine months ended September 30, 2016 and 2015, there were no material adjustments to assets and liabilities measured at fair value on a nonrecurring basis.
11. Risk Management and Hedging Activities
Changes in interest rates expose us to risk as a result of our issuance of variable and fixed-rate debt and commercial paper. We are exposed to foreign currency risk from the Canadian portion of Express-Platte. We employ established policies and procedures to manage our risks associated with these market fluctuations, which may include the use of derivatives, mostly around interest rate exposures. For interest rate derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk is recognized in the Condensed Consolidated Statements of Operations. There were no significant amounts of gains or losses recognized in net income during the nine months ended September 30, 2016.

At September 30, 2016, we had “pay floating — receive fixed” interest rate swaps outstanding with a total notional amount of $900 million to hedge against changes in the fair value of our fixed-rate debt that arise as a result of changes in market interest rates. These swaps also allow us to transform a portion of the underlying interest payments related to our long-term fixed-rate debt securities into variable-rate interest payments in order to achieve our desired mix of fixed and variable-rate debt.


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Information about our interest rate swaps that had netting or rights of offset arrangements are as follows:
 
September 30, 2016
 
December 31, 2015
 
Gross Amounts
Presented in
the Condensed
Consolidated
Balance Sheet
 
Amounts Not
Offset in the
Condensed
Consolidated
Balance Sheet
 
Net
Amount
 
Gross Amounts
Presented in
the Condensed
Consolidated
Balance Sheet
 
Amounts Not
Offset in the
Condensed
Consolidated
Balance Sheet
 
Net
Amount
Description
(in millions)
Assets
$
28

 
$

 
$
28

 
$
14

 
$

 
$
14

12. Commitments and Contingencies
Environmental
We are subject to various federal, state and local laws and regulations regarding air and water quality, hazardous and solid waste disposal and other environmental matters. These laws and regulations can change from time to time, imposing new obligations on us.
Like others in the energy industry, we and our affiliates are responsible for environmental remediation at various contaminated sites. These include some properties that are part of our ongoing operations, sites formerly owned or used by us, and sites owned by third parties. Remediation typically involves management of contaminated soils and may involve groundwater remediation. Managed in conjunction with relevant federal, state/provincial and local agencies, activities vary with site conditions and locations, remedial requirements, complexity and sharing of responsibility. If remediation activities involve statutory joint and several liability provisions, strict liability, or cost recovery or contribution actions, we or our affiliates could potentially be held responsible for contamination caused by other parties. In some instances, we may share liability associated with contamination with other potentially responsible parties, and may also benefit from contractual indemnities that cover some or all cleanup costs. All of these sites generally are managed in the normal course of business or affiliated operations.
Litigation
Litigation and Legal Proceedings. We are involved in legal, tax and regulatory proceedings in various forums arising in the ordinary course of business, including matters regarding contract and payment claims, some of which involve substantial monetary amounts. We have insurance coverage for certain of these losses should they be incurred. We believe that the final disposition of these proceedings will not have a material effect on our consolidated results of operations, financial position or cash flows.
Legal costs related to the defense of loss contingencies are expensed as incurred. We had no material reserves for legal matters recorded as of September 30, 2016 or December 31, 2015 related to litigation.
13. Issuances of Common Units
During the nine months ended September 30, 2016, we issued 10.4 million common units to the public under our at-the-market program, and approximately 212,000 general partner units to Spectra Energy. Total net proceeds were $483 million, including approximately $10 million of proceeds from Spectra Energy.
In April 2016, we issued 10.4 million common units and 0.2 million general partner units to Spectra Energy in a private placement transaction. Total net proceeds were $489 million, including $10 million for general partner units in order to maintain Spectra Energy's 2% general partner interest. We used the proceeds from this purchase for general partnership purposes, including the funding of our current expansion capital plan.
14. New Accounting Pronouncements
In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation,” which amends the consolidation guidance around reporting entities that invest in development stage entities. We adopted the consolidation guidance of this amendment on January 1, 2016 and applied it retrospectively with no material effect on our consolidated results of operations, financial position, or cash flows. This ASU did result in certain of our entities being classified as VIE. See Note 5 for discussion of our Variable Interest Entities.

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In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,” which makes changes to both the variable interest model and the voting model. These changes required reevaluation of certain entities for consolidation and required us to revise our documentation regarding the consolidation or deconsolidation of such entities. We adopted this standard on January 1, 2016 with no material effect on our consolidated operations, financial position, or cash flows.
In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, to simplify accounting for adjustments made to provisional amounts recognized in a business combination and to eliminate the retrospective accounting for those adjustments. We adopted this standard on January 1, 2016, and it has not had a material impact on our consolidated operations, financial position, or cash flows.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” to improve the financial reporting around leasing transactions. The new guidance requires companies to begin recording assets and liabilities arising from those leases classified as operating leases under previous guidance. Furthermore, the new guidance will require significant additional disclosures about the amount, timing and uncertainty of cash flows from leases. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in previous guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous guidance. This ASU is effective for us January 1, 2019. We are currently evaluating this ASU and its potential impact on us.
In March 2016, the FASB issued ASU No. 2016-05, “Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships,” which clarifies the hedge accounting impact when there is a change in one of the counterparties to the derivative contract (i.e. novation). This ASU is effective for us January 1, 2017. This ASU is not expected to have a material impact on our consolidated results of operations, financial position or cash flow.
In March 2016, the FASB issued ASU No. 2016-06, “Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments,” which simplifies the embedded derivative analysis for debt instruments containing contingent call or put options. This ASU is effective for us January 1, 2017. This ASU is not expected to have a material impact on our consolidated results of operations, financial position or cash flow.
In March 2016, the FASB issued ASU No. 2016-07, “Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting,” which eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. This ASU is effective for us January 1, 2017. We are currently evaluating this ASU and its potential impact on us.
In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” to clarify implementation guidance on principal versus agent considerations. This ASU is effective for us on January 1, 2018. We are currently evaluating this ASU and its potential impact on us.
In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” to clarify implementation guidance on performance obligations and licensing. This ASU is effective for us on January 1, 2018. We are currently evaluating this ASU and its potential impact on us.
In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, to clarify implementation guidance on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. This ASU is effective for us on January 1, 2018. We are currently evaluating this ASU and its potential impact on us.
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, to replace the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires the consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU is effective for us on January 1, 2020. We are currently evaluating this ASU and its potential impact on us.
In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," to provide guidance on specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU is effective for us on January 1, 2018. We are currently evaluating this ASU and its potential impact on us.

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15. Subsequent Events
On October 17, 2016 we issued $800 million aggregate principal amount of senior unsecured notes, comprised of $600 million of 3.375% senior notes due in 2026 and $200 million of 4.50% senior notes due in 2045. The new 2045 notes are an additional issuance of our 4.50% senior notes issued in March 2015. Net proceeds from the offering were used to repay a portion of outstanding commercial paper, to fund capital expenditures and for general partnership purposes.
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
INTRODUCTION
Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying Condensed Consolidated Financial Statements.
EXECUTIVE OVERVIEW
For the three months ended September 30, 2016 and 2015, we reported net income from controlling interests of $275 million and $321 million, respectively. For the nine months ended September 30, 2016 and 2015, we reported net income from controlling interests of $860 million and $921 million, respectively.
The highlights for the three months ended September 30, 2016 included increased earnings driven by expansion, primarily at Texas Eastern Transmission, LP (Texas Eastern), more than offset by pipeline inspection and repair costs related to the Texas Eastern incident near Delmont, Pennsylvania, and the absence of equity earnings from Sand Hills and Southern Hills which we owned until October 2015. The highlights for the nine months ended September 30, 2016 included increased earnings driven by expansion, more than offset by pipeline inspection and repair costs related to the Texas Eastern incident near Delmont, Pennsylvania, lower interruptible and short-term firm transportation revenue, a one-time property tax accrual adjustment in 2015, and the absence of equity earnings from Sand Hills and Southern Hills.
For both of the three months ended September 30, 2016 and 2015, distributable cash flow was $270 million. For the nine months ended September 30, 2016 and 2015, distributable cash flow was $916 million and $945 million, respectively.
A cash distribution of $0.67625 per limited partner unit was declared on November 2, 2016 and is payable on November 29, 2016. We intend to increase our quarterly distribution by one and a quarter cents per unit each quarter through 2018. Our Board of Directors evaluates each distribution decision within the confines of the Partnership agreement and based on an assessment of growth in distributable cash flow.
We are conducting an assessment of the Texas Eastern system across Pennsylvania and New Jersey. The assessment is the result of a corrective action order from the Pipeline and Hazardous Materials Safety Administration (PHMSA) as well as our own work plan related to an incident on the system on April 29, 2016 near Delmont, Pennsylvania. This assessment program and the related system repairs are expected to cost approximately $75 million to $100 million. Most of this program will be completed in 2016, with the remainder of the work to be performed in 2017. Additional inspections and repairs, if any, will be determined after the completion of this work. Importantly, as of November 1, 2016 we were in the position to fully meet our customer obligations.

For the nine months ended September 30, 2016, we had $1,727 million of capital and investment expenditures. We currently project $2.5 billion of capital and investment expenditures for the full year, including expansion capital expenditures of $2.2 billion. These projections exclude contributions from noncontrolling interests.

We are committed to an investment-grade balance sheet and continued prudent financial management of our capital structure. Therefore, financing growth activities will continue to be based on our strong and growing fee-based earnings and cash flows as well as the issuances of debt and equity securities. As of September 30, 2016, we have access to a $2.5 billion revolving credit facility which is used principally as a back-stop for our commercial paper program.

On September 6, 2016, Spectra Energy announced that they entered into a definitive merger agreement with Enbridge. Under this agreement, Enbridge and Spectra Energy will combine in a stock-for-stock merger transaction, which values Spectra Energy's stock at approximately $28 billion, based on the closing price of Enbridge common shares as of September 2, 2016. This transaction was unanimously approved by both boards of directors, and is expected to close in the first quarter of 2017, subject to shareholder and certain regulatory approvals and other customary conditions.

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Upon completion of the proposed merger, Spectra Energy shareholders will receive 0.984 Enbridge common shares for each share of Spectra Energy stock they own. The consideration to be received is valued at $40.33 per Spectra Energy share, based on the closing price of Enbridge common shares as of September 2, 2016, representing an approximate 11.5% premium to the closing price of Spectra Energy stock as of September 2, 2016. Upon completion of the merger, Enbridge shareholders are expected to own approximately 57% of the combined company and Spectra Energy shareholders are expected to own approximately 43%.
As a result of this transaction, Enbridge and its subsidiaries will collectively own the interest in us currently held by Spectra Energy.

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RESULTS OF OPERATIONS
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
 
(in millions)
Operating revenues
$
628

 
$
612

 
$
1,870

 
$
1,821

Operating expenses
348

 
293

 
961

 
869

Operating income
280

 
319

 
909

 
952

Earnings from equity investments
35

 
49

 
92

 
134

Other income and expenses, net
38

 
23

 
89

 
49

Interest expense
53

 
59

 
165

 
179

Earnings before income taxes
300

 
332

 
925

 
956

Income tax expense
4

 
1

 
13

 
8

Net income
296

 
331

 
912

 
948

Net income—noncontrolling interests
21

 
10

 
52

 
27

Net income—controlling interests
$
275

 
$
321

 
$
860

 
$
921

Three Months Ended September 30, 2016 Compared to Same Period in 2015
Operating Revenues. The $16 million increase was driven mainly by:
revenues from expansion, primarily on Texas Eastern, and
storage revenues due to new contracts at higher rates, partially offset by
lower processing revenues due mainly to lower volumes, net of higher prices,
lower crude oil transportation revenues, as a result of lower Platte pipeline volumes, net of increased tariff rates primarily on the Express pipeline, and
lower recoveries of electric power and other costs passed through to gas transmission customers.
Operating Expenses. The $55 million increase was driven mainly by:
pipeline inspection and repair costs related to the Texas Eastern incident near Delmont, Pennsylvania,
higher costs related to expansion, and
higher property tax accruals due to the absence of a 2015 tax benefit, partially offset by
lower maintenance costs on the Express and Platte pipelines, and
lower electric power and other costs passed through to gas transmission customers.
Earnings from Equity Investments. The $14 million decrease was primarily attributable to the absence of equity earnings from Sand Hills and Southern Hills owned until October 2015.
Other Income and Expenses, Net. The $15 million increase was primarily attributable to higher allowance for funds used
during construction (AFUDC) from higher capital spending on expansion projects.
Interest Expense. The $6 million decrease was mainly due to higher capitalized interest.
Nine Months Ended September 30, 2016 Compared to Same Period in 2015
Operating Revenues. The $49 million increase was driven mainly by:
higher revenues from expansion, primarily on Texas Eastern, and
storage revenues due to new contracts at higher rates, partially offset by
lower natural gas transportation revenues mainly from interruptible transportation on Texas Eastern and Maritimes and Northeast Pipeline, L.L.C. (M&N U.S.) and short-term firm transportation primarily on Algonquin Gas Transmission, L.L.C. (Algonquin),

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lower recoveries of electric power and other costs passed through to gas transmission customers,
lower processing revenues primarily due to lower prices and volumes, and
lower crude oil transportation revenues, as a result of lower volumes on the Platte and Express pipelines, substantially
offset by increased tariff rates mainly on the Express pipeline.
Operating Expenses. The $92 million increase was driven mainly by:
pipeline inspection and repair costs related to the Texas Eastern incident near Delmont, Pennsylvania,
higher costs related to expansion,
higher property tax accruals due to the absence of a 2015 tax benefit, and
higher operating costs, partially offset by
lower power costs due to lower usage in 2016 and lower maintenance costs on the Express and Platte pipeline,
lower electric power and other costs passed through to gas transmission customers, and
a prior year non-cash impairment charge on Ozark Gas Gathering, L.L.C. (Ozark Gas Gathering).
Earnings from Equity Investments. The $42 million decrease was primarily attributable to the absence of equity earnings from Sand Hills and Southern Hills owned until October 2015.
Other Income and Expenses, Net. The $40 million increase was primarily attributable to higher AFUDC from higher capital spending on expansion projects.
Interest Expense. The $14 million decrease was mainly due to higher capitalized interest, partially offset by higher average balances of long term debt.
Segment Results
Management evaluates segment performance based on EBITDA transactions. Cash, cash equivalents and investments are managed centrally, so the gains and losses on foreign currency remeasurement, and interest and dividend income, are excluded from the segments’ EBITDA. We consider segment EBITDA to be a good indicator of each segment’s operating performance from its continuing operations, as it represents the results of our operations without regard to financing methods or capital structures. Our segment EBITDA may not be comparable to similarly titled measures of other companies because other companies may not calculate EBITDA in the same manner.
Segment EBITDA is summarized in the following table. Detailed discussions follow.
EBITDA by Business Segment
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
 
(in millions)
U.S. Transmission
$
392

 
$
401

 
$
1,209

 
$
1,186

Liquids
60

 
79

 
174

 
221

Total reportable segment EBITDA
452

 
480

 
1,383

 
1,407

Other
(21
)
 
(13
)
 
(63
)
 
(48
)
Total reportable segment and other EBITDA
431

 
467

 
1,320

 
1,359

Depreciation and amortization
78

 
74

 
232

 
220

Interest expense
53

 
59

 
165

 
179

Interest income and other

 
(2
)
 
2

 
(4
)
Earnings before income taxes
$
300

 
$
332

 
$
925

 
$
956

The amounts discussed below are after eliminating intercompany transactions.

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U.S. Transmission
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
Increase (Decrease)
 
2016
 
2015
 
Increase (Decrease)
 
(in millions)
Operating revenues
$
535

 
$
515

 
$
20

 
$
1,602

 
$
1,546

 
$
56

Operating expenses
 
 
 
 
 
 
 
 
 
 
 
     Operating, maintenance and other
217

 
169

 
48

 
572

 
496

 
76

Other income and expenses
74

 
55

 
19

 
179

 
136

 
43

EBITDA
$
392

 
$
401

 
$
(9
)
 
$
1,209

 
$
1,186

 
$
23

 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2016 Compared to Same Period in 2015
Operating Revenues. The $20 million increase was driven by:
a $25 million increase due to expansion, primarily on Texas Eastern, and
a $3 million increase in storage revenues due to new contracts at higher rates, partially offset by
a $5 million decrease in processing revenues primarily due to lower volumes, net of higher prices, and
a $2 million decrease in recoveries of electric power and other costs passed through to gas transmission customers.
Operating Expenses. The $48 million increase was driven by:
a $38 million increase due to pipeline inspection and repair costs related to the Texas Eastern incident near
Delmont, Pennsylvania,
a $8 million increase in costs related to expansion, and
a $5 million increase in property taxes due to the absence of a 2015 tax benefit, partially offset by
a $2 million decrease in electric power and other costs passed through to gas transmission customers.
Other Income and Expenses. The $19 million increase was mainly due to higher AFUDC resulting from higher capital spending on expansion projects.
Nine Months Ended September 30, 2016 Compared to Same Period in 2015
Operating Revenues. The $56 million increase was driven by:
a $82 million increase due to expansion, primarily on Texas Eastern, and
a $5 million increase in storage revenues due to new contracts at higher rates, partially offset by
an $11 million decrease in natural gas transportation revenues mainly from interruptible transportation on Texas Eastern and M&N U.S. and short-term firm transportation primarily on Algonquin,
an $11 million decrease in recoveries of electric power and other costs passed through to gas transmission customers, and
a $9 million decrease in processing revenues primarily due to lower volumes and prices.
Operating Expenses. The $76 million increase was driven by:
a $44 million increase due to pipeline inspection and repair costs related to the Texas Eastern incident near
Delmont, Pennsylvania,
a $39 million increase in costs related to expansion,
a $10 million increase in property taxes mostly due to the absence of a 2015 tax benefit, and
a $4 million increase due to operating costs, partially offset by
an $11 million decrease in electric power and other costs passed through to gas transmission customers, and

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a $9 million decrease due to a prior year non-cash impairment charge on Ozark Gas Gathering.
Other Income and Expenses. The $43 million increase was mainly due to higher AFUDC resulting from higher capital spending on expansion projects.
Liquids
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
Increase (Decrease)
 
2016
 
2015
 
Increase (Decrease)
 
(in millions)
Operating revenues
$
93

 
$
97

 
$
(4
)
 
$
268

 
$
275

 
$
(7
)
Operating expenses
 
 
 
 
 
 
 
 
 
 
 
     Operating, maintenance and other
32

 
37

 
(5
)
 
94

 
105

 
(11
)
Other income and expenses
(1
)
 
19

 
(20
)
 

 
51

 
(51
)
EBITDA
$
60

 
$
79

 
$
(19
)
 
$
174

 
$
221

 
$
(47
)
Express pipeline revenue receipts, MBbl/d (a)
235

 
234

 
1

 
234

 
239

 
(5
)
Platte PADD II deliveries, MBbl/d
131

 
167

 
(36
)
 
131

 
169

 
(38
)
_______
(a)    Thousand barrels per day.
Three Months Ended September 30, 2016 Compared to Same Period in 2015
Operating Revenues. The $4 million decrease in operating revenues was driven by:
a $4 million decrease in crude oil transportation revenues, as a result of lower Platte pipeline volumes, partially offset by increased tariff rates mainly on the Express pipeline.
Operating Expenses. The $5 million decrease in operating expenses was primarily driven by lower maintenance costs on the Express and Platte pipelines.
Other Income and Expenses. The $20 million decrease was primarily due to the absence of equity earnings from Sand Hills and Southern Hills owned until October 2015.
Nine Months Ended September 30, 2016 Compared to Same Period in 2015
Operating Revenues. The $7 million decrease in operating revenues was driven by:
an $8 million decrease in crude oil transportation revenues, as a result of lower Platte and Express pipeline volumes, substantially offset by increased tariff rates mainly on the Express pipeline.
Operating Expenses. The $11 million decrease in operating expenses was mainly driven by:
a $6 million decrease in power costs due to lower usage in 2016 and
a $5 million decrease in maintenance costs on the Express and Platte pipelines.
Other Income and Expenses. The $51 million decrease was primarily due to the absence of equity earnings from Sand Hills and Southern Hills owned until October 2015.

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Table of Contents

Other
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
Increase (Decrease)
 
2016
 
2015
 
Increase (Decrease)
 
(in millions)
Operating expenses
$
21

 
$
13

 
$
8

 
$
63

 
$
48

 
$
15

EBITDA
$
(21
)
 
$
(13
)
 
$
(8
)
 
$
(63
)
 
$
(48
)
 
$
(15
)
Three Months Ended September 30, 2016 Compared to Same Period in 2015
Operating Expenses. The $8 million increase reflects higher allocated benefit costs.
Nine Months Ended September 30, 2016 Compared to Same Period in 2015
Operating Expenses. The $15 million increase reflects higher allocated benefit costs.


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Distributable Cash Flow
We define Distributable Cash Flow as EBITDA plus
distributions from equity investments,
other non-cash items affecting net income, less
earnings from equity investments,
interest expense,
equity AFUDC,
net cash paid for income taxes,
distributions to noncontrolling interests, and
maintenance capital expenditures.
Distributable Cash Flow does not reflect changes in working capital balances. Distributable Cash Flow should not be viewed as indicative of the actual amount of cash that we plan to distribute for a given period.
Distributable Cash Flow is the primary financial measure used by our management and by external users of our financial statements to assess the amount of cash that is available for distribution.
Distributable Cash Flow is a non-GAAP measure and should not be considered an alternative to Net Income, Operating Income, cash from operations or any other measure of financial performance or liquidity presented in accordance with GAAP. Distributable Cash Flow excludes some, but not all, items that affect Net Income and Operating Income and these measures may vary among other companies. Therefore, Distributable Cash Flow as presented may not be comparable to similarly titled measures of other companies.
Significant drivers of variances in Distributable Cash Flow between the periods presented are substantially the same as those previously discussed under Results of Operations. Other drivers include the timing of certain cash outflows, such as capital expenditures for maintenance.

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Reconciliation of Net Income to Non-GAAP “Distributable Cash Flow”
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
 
(in millions)
Net income
$
296

 
$
331

 
$
912

 
$
948

Add:
 
 
 
 
 
 
 
Interest expense
53

 
59

 
165

 
179

Income tax expense
4

 
1

 
13

 
8

Depreciation and amortization
78

 
74

 
232

 
220

Foreign currency (gain) loss

 
2

 

 
5

Less:
 
 
 
 
 
 
 
Third Party interest income

 

 
2

 
1

EBITDA
431

 
467

 
1,320

 
1,359

Add:
 
 
 
 
 
 
 
Earnings from equity investments
(35
)
 
(49
)
 
(92
)
 
(134
)
Distributions from equity investments (a)
35

 
59

 
132

 
183

Non-cash impairment on Ozark Gas Gathering

 

 

 
9

Other
9

 
2

 
12

 
8

Less:
 
 
 
 
 
 
 
Interest expense
53

 
59

 
165

 
179

Equity AFUDC
38

 
23

 
84

 
50

Net cash paid for income taxes
2

 
1

 
7

 
8

Distributions to noncontrolling interests
7

 
7

 
22

 
23

Maintenance capital expenditures
70

 
119

 
178

 
220

Distributable Cash Flow
$
270

 
$
270

 
$
916

 
$
945

________
(a)
Excludes $403 million of distributions from equity investments for the nine months ended September 30, 2015.


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Table of Contents

Annual Goodwill Impairment Test
As permitted under accounting guidance on testing goodwill for impairment, we perform either a qualitative assessment or a quantitative assessment of each of our reporting units based on management’s judgment. With respect to our qualitative assessments, we consider events and circumstances specific to us, such as macroeconomic conditions, industry and market considerations, cost factors and overall financial performance, when evaluating whether it is more likely than not that the fair values of our reporting units are less than their respective carrying amounts.
In connection with our quantitative assessments, we primarily use a discounted cash flow analysis to determine fair values of those reporting units. Key assumptions in the determination of fair value include the use of an appropriate discount rate and estimated future cash flows. In estimating cash flows, we incorporate expected long-term growth rates in key markets served by our operations, regulatory stability, the ability to renew contracts, commodity prices (where appropriate) and foreign currency exchange rates, as well as other factors that affect our reporting units’ revenue, expense and capital expenditure projections.
We performed either a quantitative assessment or a qualitative assessment for each of our reporting units to determine whether it is more likely than not that the respective fair values of these reporting units are less than their carrying amounts, including goodwill as of April 1, 2016 (our annual testing date). Based on the results of our annual goodwill impairment testing, no indicators of impairment were noted and the fair values of the reporting units that we assessed at April 1, 2016 were substantially in excess of their respective carrying values.
No triggering events have occurred with our reporting units since the April 1, 2016 test that would warrant re-testing for goodwill impairment.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2016, we had negative working capital of $1,500 million. This balance includes commercial paper liabilities totaling $1,177 million and current maturities of long-term debt of $422 million. We will rely upon cash flows from operations, including cash distributions received from our equity affiliates, and various financing transactions, which may include debt and/or equity issuances, to fund our liquidity and capital requirements for the next 12 months. We have access to a revolving credit facility, with available capacity of $1,323 million at September 30, 2016. This facility is used principally as a back-stop for our commercial paper program, which is used to manage working capital requirements and for temporary funding of capital expenditures. We expect to be self-funding and plan to continue to pursue expansion opportunities over the next several years. Capital resources may continue to include commercial paper, short-term borrowings under our current credit facility and possibly securing additional sources of capital including debt and/or equity. See Note 9 of Notes to Condensed Consolidated Financial Statements for a discussion of the available credit facility and Financing Cash Flows and Liquidity for a discussion of effective shelf registrations.
Cash Flow Analysis
The following table summarizes the changes in cash flows for each of the periods presented:
 
 
Nine Months Ended
September 30,
 
 
2016
 
2015
 
 
(in millions)
Net cash provided by (used in):
 
 
 
 
Operating activities
 
$
1,070

 
$
1,130

Investing activities
 
(1,914
)
 
(835
)
Financing activities
 
1,041

 
(144
)
Net increase in cash and cash equivalents
 
197

 
151

Cash and cash equivalents at beginning of the period
 
168

 
140

Cash and cash equivalents at end of the period
 
$
365

 
$
291

Operating Cash Flows
Net cash provided by operating activities decreased $60 million to $1,070 million in the nine months ended September 30, 2016 compared to the same period in 2015, driven mainly by the absence of distributions from Sand Hills and Southern Hills owned until October 2015.

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Table of Contents

Investing Cash Flows
Net cash used in investing activities increased $1,079 million to $1,914 million in the nine months ended September 30, 2016 compared to the same period in 2015. The change was mainly driven by:
a $475 million increase in capital and investment expenditures,
a $396 million distribution received from Gulfstream with proceeds from a Gulfstream debt offering in 2015, and
a $148 million distribution of the debt proceeds back to Gulfstream for payment of its matured debt in 2016.
Capital and Investment Expenditures by Business Segment
 
 
Nine Months Ended
September 30,
 
 
2016
 
2015
 
 
(in millions)
U.S. Transmission
 
$
1,673

 
$
1,206

Liquids
 
54

 
46

Total consolidated
 
$
1,727

 
$
1,252

Capital and investment expenditures for the nine months ended September 30, 2016 consisted of $1,549 million for expansion projects and $178 million for maintenance and other projects.
We project 2016 capital and investment expenditures of approximately $2.5 billion, consisting of $2.2 billion of expansion capital expenditures and $0.3 billion for maintenance and upgrades of existing plants, pipelines and infrastructure to serve growth. These projections exclude contributions from noncontrolling interests.
Financing Cash Flows and Liquidity
Net cash provided by financing activities totaled $1,041 million in the nine months ended September 30, 2016 compared to $144 million used in financing activities in the same period in 2015. The change was mainly driven by:
$701 million of net issuances of commercial paper in 2016, compared to $907 million of net redemptions in 2015,
a $614 million increase in proceeds from issuances of units, and
a $273 million increase in contributions from noncontrolling interests, partially offset by
$994 million of net issuances of long-term debt in 2015, and
a $251 million increase in payments for the redemption of long-term debt.
During the nine months ended September 30, 2016, we issued 10.4 million common units to the public under our at-the-market program and approximately 212,000 general partner units to Spectra Energy. Total net proceeds were $483 million, including approximately $10 million of proceeds from Spectra Energy. The net proceeds were used for general partnership purposes, which may have included debt repayment, capital expenditures and/or additions to working capital. In 2016, we have issued 10.9 million common units to the public under our at-the-market program and approximately 222,000 general partner units to Spectra Energy, for total net proceeds of approximately $503 million, including $10 million of proceeds from Spectra Energy.
In April 2016, we issued 10.4 million common units and 0.2 million general partner units to Spectra Energy in a private placement transaction. Total net proceeds were approximately $489 million. We used the net proceeds from this purchase for general partnership purposes, including the funding of our current expansion capital plan.
Available Credit Facility and Restrictive Debt Covenants. See Note 9 of Notes to Condensed Consolidated Financial Statements for a discussion of the available credit facility and related financial and other covenants.
Cash Distributions. A cash distribution of $0.67625 per limited partner unit was declared on November 2, 2016, payable on November 29, 2016, representing the thirty-sixth consecutive quarterly increase.
Debt Issuances. On October 17, 2016 we issued $800 million aggregate principal amount of senior unsecured notes, comprised of $600 million of 3.375% senior notes due in 2026 and $200 million of 4.50% senior notes due in 2045. The new 2045 notes are an additional issuance of our 4.50% senior notes issued in March 2015. Net proceeds from the offering were used to repay a portion of outstanding commercial paper, to fund capital expenditures and for general partnership purposes.

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Table of Contents

Other Financing Matters. We have an effective shelf registration statement on file with the Securities and Exchange Commission (SEC) to register the issuance of unspecified amounts of limited partner common units and various debt securities and another registration statement on file with the SEC to register the issuance of $1 billion, in the aggregate, of limited partner units over time. This registration has $466 million available as of September 30, 2016.


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Table of Contents

OTHER ISSUES
New Accounting Pronouncements. See Note 14 of Notes to Condensed Consolidated Financial Statements for discussion.
Item 3.
Quantitative and Qualitative Disclosures about Market Risk.
Our exposure to market risk is described in Item 7A of our Annual Report on Form 10-K, for the year ended December 31, 2015. We believe our exposure to market risk has not changed materially since then.
Item 4.
Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 (Exchange Act) is recorded, processed, summarized, and reported, within the time periods specified by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of the management of Spectra Energy Partners (DE) GP, LP (our General Partner), including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2016, and, based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
Under the supervision and with the participation of the management of our General Partner, including the Chief Executive Officer and Chief Financial Officer, we have evaluated changes in internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended September 30, 2016 and found no change that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

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Table of Contents

PART II. OTHER INFORMATION
Item 1.
Legal Proceedings.
We have no material pending legal proceedings that are required to be disclosed hereunder. For information regarding other legal proceedings and environmental matters, see Note 12 of Notes to Condensed Consolidated Financial Statements, which information is incorporated by reference into this Part II.
Item 1A.
Risk Factors.
In addition to the other information set forth in this report, careful consideration should be given to the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015, which could materially affect our financial condition or future results. There have been no material changes to those risk factors.
Item 6.
Exhibits.
Any agreements included as exhibits to this Form 10-Q may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
were not intended to be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement;
may apply contract standards of “materiality” that are different from “materiality” under the applicable securities laws; and
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement.
We acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, we are responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Form 10-Q not misleading.

33

Table of Contents

(a) Exhibits
 
 
Exhibit
Number
  
 
 
 
 
 
 
*31.1
  
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
*31.2
  
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
*32.1
  
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
*32.2
  
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
*101.INS
  
XBRL Instance Document.
 
 
*101.SCH
  
XBRL Taxonomy Extension Schema.
 
 
*101.CAL
  
XBRL Taxonomy Extension Calculation Linkbase.
 
 
*101.DEF
  
XBRL Taxonomy Extension Definition Linkbase.
 
 
*101.LAB
  
XBRL Taxonomy Extension Label Linkbase.
 
 
*101.PRE
  
XBRL Taxonomy Extension Presentation Linkbase.

*
Filed herewith

The total amount of securities of the registrant or its subsidiaries authorized under any instrument with respect to long-term debt not filed as an exhibit does not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees, upon request of the Securities and Exchange Commission, to furnish copies of any or all of such instruments to it.


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Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
 
 
 
 
 
SPECTRA ENERGY PARTNERS, LP
 
 
 
 
 
 
By:
 
Spectra Energy Partners (DE) GP, LP,
its general partner
 
 
 
 
 
 
By:
 
Spectra Energy Partners GP, LLC,
its general partner
 
 
 
 
Date: November 3, 2016
 
 
 
/S/    GREGORY L. EBEL       
 
 
 
 
Gregory L. Ebel
President and Chief Executive Officer
 
 
 
 
Date: November 3, 2016
 
 
 
/S/    J. PATRICK REDDY        
 
 
 
 
J. Patrick Reddy
Chief Financial Officer

35