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 March 31, 2015
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
 
 
 
 
 
 
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 March 31, 2015, there were 295,435,903 Common Units and 6,029,304 General Partner Units outstanding.
 
 
 
 
 



SPECTRA ENERGY PARTNERS, LP
FORM 10-Q FOR THE QUARTER ENDED
March 31, 2015
INDEX
 
 
 
 
 
 
Page
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 6.
 
 
 
 

2

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.

3

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
March 31,
 
2015
 
2014
Operating Revenues
 
 
 
Transportation of natural gas
$
464

 
$
426

Transportation of crude oil
84

 
71

Storage of natural gas and other
58

 
84

Total operating revenues
606

 
581

Operating Expenses
 
 
 
Operating, maintenance and other
181

 
156

Depreciation and amortization
73

 
73

Property and other taxes
41

 
44

Total operating expenses
295

 
273

Operating Income
311

 
308

Other Income and Expenses
 
 
 
Equity in earnings of unconsolidated affiliates
40

 
28

Other income and expenses, net
9

 
3

Total other income and expenses
49

 
31

Interest Expense
57

 
67

Earnings Before Income Taxes
303

 
272

Income Tax Expense
2

 
26

Net Income
301

 
246

Net Income—Noncontrolling Interests
8

 
4

Net Income—Controlling Interests
$
293

 
$
242

Calculation of Limited Partners’ Interest in Net Income:
 
 
 
Net income—Controlling Interests
$
293

 
$
242

Less: General partner’s interest in net income
57

 
42

Limited partners’ interest in net income
$
236

 
$
200

Weighted-average limited partner units outstanding—basic and diluted
295

 
284

Net income per limited partner unit—basic and diluted
$
0.80

 
$
0.70

Distributions paid per limited partner unit
$
0.58875

 
$
0.54625





See Notes to Condensed Consolidated Financial Statements.
4


SPECTRA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In millions)
 
 
 
Three Months Ended
March 31,
 
 
2015
 
2014
Net Income
 
$
301

 
$
246

Other comprehensive loss:
 
 
 
 
Foreign currency translation adjustments
 
(15
)
 
(5
)
       Total other comprehensive loss
 
(15
)
 
(5
)
Total Comprehensive Income
 
286

 
241

Less: Comprehensive Income—Noncontrolling Interests
 
8

 
4

Comprehensive Income—Controlling Interests
 
$
278

 
$
237

 


See Notes to Condensed Consolidated Financial Statements.
5

SPECTRA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)

 
 
March 31,
2015
 
December 31,
2014
ASSETS
 
 
 
 
Current Assets
 
 
 
 
Cash and cash equivalents
 
$
242

 
$
140

Receivables, net
 
310

 
306

Inventory
 
41

 
42

Fuel tracker
 
58

 
44

Other
 
21

 
23

Total current assets
 
672

 
555

Investments and Other Assets
 
 
 
 
Investments in and loans to unconsolidated affiliates
 
1,584

 
1,589

Goodwill
 
3,238

 
3,244

Other
 
16

 
8

Total investments and other assets
 
4,838

 
4,841

Property, Plant and Equipment
 
 
 
 
Cost
 
15,792

 
15,594

Less accumulated depreciation and amortization
 
3,523

 
3,459

Net property, plant and equipment
 
12,269

 
12,135

Regulatory Assets and Deferred Debits
 
277

 
262

Total Assets
 
$
18,056

 
$
17,793


See Notes to Condensed Consolidated Financial Statements.
6

SPECTRA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
 
 
March 31,
2015
 
December 31,
2014
LIABILITIES AND EQUITY
 
 
 
 
Current Liabilities
 
 
 
 
Accounts payable
 
$
167

 
$
246

Commercial paper
 
121

 
907

Taxes accrued
 
58

 
63

Interest accrued
 
36

 
60

Current maturities of long-term debt
 
36

 
36

Other
 
175

 
170

Total current liabilities
 
593

 
1,482

Long-term Debt
 
6,147

 
5,149

Deferred Credits and Other Liabilities
 
 
 
 
Deferred income taxes
 
38

 
37

Regulatory and other
 
114

 
119

Total deferred credits and other liabilities
 
152

 
156

Commitments and Contingencies
 


 


Equity
 
 
 
 
Partners’ Capital
 
 
 
 
Common units (295.4 million and 294.7 million units issued and outstanding at March 31, 2015 and December 31, 2014, respectively)
 
10,576

 
10,474

General partner units (6.0 million units issued and outstanding at March 31, 2015 and December 31, 2014)
 
296

 
284

Accumulated other comprehensive loss
 
(35
)
 
(20
)
Total partners’ capital
 
10,837

 
10,738

Noncontrolling interests
 
327

 
268

Total equity
 
11,164

 
11,006

Total Liabilities and Equity
 
$
18,056

 
$
17,793


See Notes to Condensed Consolidated Financial Statements.
7

SPECTRA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)

 
 
Three Months Ended
March 31,
 
 
2015
 
2014
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
301

 
$
246

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
75

 
75

Deferred income tax expense
 
1

 
24

Equity in earnings of unconsolidated affiliates
 
(40
)
 
(28
)
Distributions received from unconsolidated affiliates
 
38

 
27

Other
 
(94
)
 
10

Net cash provided by operating activities
 
281

 
354

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
Capital expenditures
 
(240
)
 
(181
)
Investments in and loans to unconsolidated affiliates
 
(15
)
 
(18
)
Purchases of held-to-maturity securities
 
(10
)
 
(11
)
Proceeds from sales and maturities of held-to-maturity securities
 
3

 
3

Distributions received from unconsolidated affiliates
 
18

 
22

Other
 
—

 
15

Net cash used in investing activities
 
(244
)
 
(170
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
Proceeds from the issuance of long-term debt
 
994

 
—

Net decrease in commercial paper
 
(786
)
 
(54
)
Distributions to noncontrolling interests
 
(7
)
 
(5
)
Contributions from noncontrolling interests
 
58

 
6

Proceeds from the issuances of units
 
40

 
53

Distributions to partners
 
(226
)
 
(195
)
Other
 
(8
)
 
—

Net cash provided by (used in) financing activities
 
65

 
(195
)
Net increase (decrease) in cash and cash equivalents
 
102

 
(11
)
Cash and cash equivalents at beginning of period
 
140

 
121

Cash and cash equivalents at end of period
 
$
242

 
$
110

Supplemental Disclosures
 
 
 
 
Property, plant and equipment non-cash accruals
 
$
67

 
$
57




See Notes to Condensed Consolidated Financial Statements.
8

SPECTRA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In millions)

 
Partners’ Capital
 
Noncontrolling Interests
 
Total
 
Common
 
General
Partner
 
Accumulated Other
Comprehensive
Loss
December 31, 2014
$
10,474

 
$
284

 
$
(20
)
 
$
268

 
$
11,006

Net income
236

 
57

 
—

 
8

 
301

Other comprehensive loss
—

 
—

 
(15
)
 
—

 
(15
)
Attributed deferred tax benefit
—

 
7

 
—

 
—

 
7

Issuances of units
39

 
1

 
—

 
—

 
40

Distributions to partners
(173
)
 
(53
)
 
—

 
—

 
(226
)
Contributions from noncontrolling interests
—

 
—

 
—

 
58

 
58

Distributions to noncontrolling interests
—

 
—

 
—

 
(7
)
 
(7
)
March 31, 2015
$
10,576

 
$
296

 
$
(35
)
 
$
327

 
$
11,164

December 31, 2013
$
9,778

 
$
241

 
$
(5
)
 
$
127

 
$
10,141

Net income
200

 
42

 
—

 
4

 
246

Other comprehensive loss
—

 
—

 
(5
)
 
—

 
(5
)
Adjustment to purchase price under net acquired assets from dropdowns
28

 
1

 
—

 
—

 
29

Attributed deferred tax benefit
1

 
—

 
—

 
—

 
1

Issuances of units
52

 
1

 
—

 
—

 
53

Distributions to partners
(156
)
 
(39
)
 
—

 
—

 
(195
)
Contributions from noncontrolling interests
—

 
—

 
—

 
6

 
6

Distributions to noncontrolling interests
—

 
—

 
—

 
(5
)
 
(5
)
Other, net
(2
)
 
—

 
—

 
—

 
(2
)
March 31, 2014
$
9,901

 
$
246

 
$
(10
)
 
$
132

 
$
10,269




See Notes to Condensed Consolidated Financial Statements.
9

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, the transportation and storage of crude oil, and the transportation of natural gas liquids (NGLs) through interstate pipeline systems. We are a Delaware master limited partnership. As of March 31, 2015, Spectra Energy Corp (Spectra Energy) and its subsidiaries collectively owned 82% of us and the remaining 18% was publicly owned.
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, 2014, 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.
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 and storage 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 (Steckman Ridge) are included in U.S. Transmission.
The Liquids segment provides transportation of crude oil and NGLs. These operations are primarily subject to the rules and regulations of the FERC and the National Energy Board (NEB). The Express-Platte pipeline system (Express-Platte) and our investments in DCP Sand Hills Pipeline, LLC (Sand Hills) and DCP Southern Hills Pipeline, LLC (Southern Hills) are included in Liquids.
Our reportable segments offer different products and services and are managed separately as business units. Management evaluates segment performance based on earnings from continuing operations before interest, taxes, and depreciation and amortization (EBITDA). Cash, cash equivalents and short-term investments are managed centrally, so the associated gains and losses from 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.

10

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 March 31, 2015
 
 
 
 
 
U.S. Transmission
$
522

 
$
65

 
$
389

Liquids
84

 
8

 
64

Total reportable segments
606

 
73

 
453

Other
—

 
—

 
(17
)
Depreciation and amortization
—

 
—

 
73

Interest expense
—

 
—

 
57

Other income
—

 
—

 
(3
)
Total consolidated
$
606

 
$
73

 
$
303

Three Months Ended March 31, 2014
 
 
 
 
 
U.S. Transmission
$
500

 
$
65

 
$
374

Liquids
81

 
8

 
58

Total reportable segments
581

 
73

 
432

Other
—

 
—

 
(19
)
Depreciation and amortization
—

 
—

 
73

Interest expense
—

 
—

 
67

Other income
—

 
—

 
(1
)
Total consolidated
$
581

 
$
73

 
$
272


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
March 31,
 
 
2015
 
2014
 
 
(in millions, except per unit amounts)
Net income—controlling interests
 
$
293

 
$
242

Less:
 
 
 
 
General partner’s interest in net income—2%
 
6

 
5

General partner’s interest in net income attributable to incentive distribution rights
 
51

 
37

Limited partners’ interest in net income
 
$
236

 
$
200

Weighted average limited partner units outstanding—basic and diluted
 
295

 
284

Net income per limited partner unit—basic and diluted
 
$
0.80

 
$
0.70

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,

11

•
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 $0.60125 per limited partner unit was declared on May 6, 2015 and is payable on May 29, 2015 to unitholders of record at the close of business on May 15, 2015.
4. Marketable Securities and Restricted Funds
We routinely invest excess cash and various restricted balances in securities such as commercial paper, bankers acceptances, corporate debt securities, treasury bills and money market funds in the United States. We do not purchase marketable securities for speculative purposes, therefore we do not have any securities classified as trading securities. Initial investments in securities are classified as purchases of the respective type of securities (available-for-sale 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. 
HTM Securities. All of our HTM securities are restricted funds. We had $10 million and $3 million of money market securities classified as Current Assets - Other on the Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014, respectively. These securities are restricted pursuant to certain Express-Platte debt agreements.
At March 31, 2015, 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 March 31, 2015 or December 31, 2014.
5. Debt and Credit Facility
Available Credit Facility and Restricted Debt Covenants

 
 
Expiration Date
 
Total Credit Facility Capacity
 
Commercial
Paper Outstanding at
March 31,
2015
 
Available
Credit Facility
Capacity
 
 
 
 
(in millions)
Spectra Energy Partners, LP
 
2019
 
$
2,000

 
$
121

 
$
1,879

The issuances of commercial paper, letters of credit and revolving borrowings reduce the amount available under the credit facility. As of March 31, 2015, there were no letters of credit issued or revolving borrowings outstanding under the credit facility.

12

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 March 31, 2015, 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 March 31, 2015, this ratio was 3.8 to 1.
Debt Issuances. On March 12, 2015, we issued $1.0 billion aggregate principal amount of senior unsecured notes, comprised of $500 million of 3.50% senior notes due in 2025 and $500 million of 4.50% senior notes due in 2045. Net proceeds from the offering were used to repay a portion of outstanding commercial paper, to fund capital expenditures and for general partnership purposes.
6. 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. There were no liabilities measured at fair value on a recurring basis at March 31, 2015 and December 31, 2014.

Description
Condensed Consolidated Balance Sheet Caption
 
March 31, 2015
Total
 
Level 1
 
Level 2
 
Level 3
 
 
 
(in millions)
Corporate debt securities
Cash and cash equivalents
 
$
153

 
$
—

 
$
153

 
$
—

Interest rate swaps
Investments and other assets — other
 
13

 
—

 
13

 
—

Total Assets
 
$
166

 
$
—

 
$
166

 
$
—


Description
Condensed Consolidated Balance Sheet Caption
 
December 31, 2014
Total
 
Level 1
 
Level 2
 
Level 3
 
 
 
(in millions)
Corporate debt securities
Cash and cash equivalents
 
$
43

 
$
—

 
$
43

 
$
—

Interest rate swaps
Investments and other assets — other
 
5

 
—

 
5

 
—

Total Assets
 
$
48

 
$
—

 
$
48

 
$
—


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

13

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.
 
 
March 31, 2015
 
December 31, 2014
 
 
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)
 
6,184

 
6,685

 
5,184

 
5,554

 
(a)
Included within Investments in and Loans to Unconsolidated Affiliates.
(b)
Excludes 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, notes receivable-noncurrent, accounts payable, commercial paper and short-term money market securities - affiliates 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 three month periods ended March 31, 2015 and 2014, there were no material adjustments to assets and liabilities measured at fair value on a nonrecurring basis.
7. 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 three months ended March 31, 2015.
At March 31, 2015, we had “pay floating — receive fixed” interest rate swaps outstanding with a total notional amount of $300 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.
8. Commitments and Contingencies
Environmental
We are subject to various U.S. federal, state and local laws and regulations, as well as Canadian federal and provincial laws, 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

14

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 March 31, 2015 or December 31, 2014 related to litigation.

9. Issuances of Common Units
During the three months ended March 31, 2015, we issued 0.8 million common units to the public under our at-the-market program, and approximately 16,000 general partner units to Spectra Energy. Total net proceeds were $40 million, including $1 million of proceeds from Spectra Energy.
10. New Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” which supersedes the revenue recognition requirements of “Revenue Recognition (Topic 605)” and clarifies the principles of recognizing revenue. This ASU is effective for us January 1, 2017. In April 2015, the FASB tentatively decided to defer the effective date of the new revenue standard for one year and to permit entities to early adopt the standard as of the original effective date. We are currently evaluating this ASU and its potential impact on us.

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 will require re-evaluation of certain entities for consolidation and will require us to revise our documentation regarding the consolidation or deconsolidation of such entities. ASU No. 2015-02 is effective for us January 1, 2016. We are currently evaluating this ASU and its potential impact on us.

In April 2015, the FASB issued ASU No. 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” which requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, rather than as a deferred charge asset. ASU No. 2015-03 is effective for us January 1, 2016 and is to be applied retrospectively. This ASU is not expected to have a material impact on our consolidated results of operations, financial position or cash flow.

In April 2015, the FASB issued ASU No. 2015-06, “Earnings Per Share (Topic 260): Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions (a consensus of the FASB Emerging Issues Task Force),” which applies to master limited partnerships that receive net assets through a dropdown transaction. ASU 2015-06 specifies that for purposes of calculating historical earnings per unit under the two-class method, the earnings (losses) of a transferred business before the date of a dropdown transaction should be allocated entirely to the general partner. Qualitative disclosures about how the rights to the earnings (losses) differ before and after the dropdown transaction occurs for purposes of computing earnings per unit under the two-class method also are required. ASU 2015-06 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years and will be applied retrospectively. Earlier application is permitted. We are currently evaluating this ASU and its potential impact on us.



15

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 March 31, 2015 and 2014, we reported net income from controlling interests of $293 million and $242 million, respectively. The increased earnings were driven by expansion projects, primarily at Texas Eastern Transmission, LP (Texas Eastern) and higher equity earnings from Sand Hills as a result of increased volumes.
For the three months ended March 31, 2015 and 2014, distributable cash flow was $354 million and $324 million, respectively.
A cash distribution of $0.60125 per limited partner unit was declared on May 6, 2015 and is payable on May 29, 2015. We intend to increase our quarterly distribution by one and a quarter cents per unit each quarter through 2017. 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.
For the three months ended March 31, 2015, we had $255 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.
We are committed to an investment-grade balance sheet and continued prudent financial management of our capital structure. Therefore, financing these 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 March 31, 2015, we have access to a $2.0 billion revolving credit facility which is used principally as a back-stop for our commercial paper program.

16

RESULTS OF OPERATIONS
 
Three Months Ended
March 31,
 
2015
 
2014
 
(in millions)
Operating revenues
$
606

 
$
581

Operating expenses
295

 
273

Operating income
311

 
308

Equity in earnings of unconsolidated affiliates
40

 
28

Other income and expenses
9

 
3

Interest expense
57

 
67

Earnings before income taxes
303

 
272

Income tax expense
2

 
26

Net income
301

 
246

Net income—noncontrolling interests
8

 
4

Net income—controlling interests
$
293

 
$
242

Operating Revenues. The $25 million or 4% increase was driven mainly by:
•
revenues from expansion projects, primarily on Texas Eastern and East Tennessee Natural Gas, LLC (East Tennessee),
•
higher crude oil transportation revenues for both Express and Platte pipelines as a result of higher contracted volumes and increased tariff rates, and
•
higher recoveries of electric power and other costs passed through to customers, partially offset by
•
lower processing revenues primarily due to lower prices,
•
lower natural gas transportation revenues from lower firm demand and commodity revenues on Texas Eastern,
•
tank oil sales on the Platte pipeline in 2014,
•
lower inventory settlement revenues due to timing of inventory changes and lower oil prices on the Express and Platte pipelines, and
•
a decrease in gas storage revenues due to lower rates.
Operating Expenses. The $22 million or 8% increase was driven mainly by:
•
higher electric power and other costs passed through to customers, and
•
a non-cash impairment charge on Ozark Gas Gathering, L.LC. (Ozark Gas Gathering).
Equity in Earnings of Unconsolidated Affiliates. The $12 million or 43% increase was attributable to higher earnings from Sand Hills due to increased volumes and the dropdown of an additional 24.95% ownership interest in SESH in 2014.
Other Income and Expenses. The $6 million increase was mainly attributable to higher allowance for funds used during construction (AFUDC) resulting from higher capital spending on expansion projects.
Interest Expense. The $10 million or 15% decrease was driven mainly by lower average long-term debt balances and lower average interest rates.
Income Tax Expense. The $24 million decrease reflects an adjustment to deferred income tax liabilities in 2014, as a result of the final purchase price adjustments related to the acquisition of Express-Platte.

17

Segment Results
Management evaluates segment performance based on EBITDA transactions. Cash, cash equivalents and short-term investments are managed centrally, so the gains and losses from 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
March 31,
 
2015
 
2014
 
(in millions)
U.S. Transmission
$
389

 
$
374

Liquids
64

 
58

Total reportable segment EBITDA
453

 
432

Other
(17
)
 
(19
)
Total reportable segment and other EBITDA
436

 
413

Depreciation and amortization
73

 
73

Interest expense
57

 
67

Other income
(3
)
 
(1
)
Earnings before income taxes
$
303

 
$
272

The amounts discussed below are after eliminating intercompany transactions.
U.S. Transmission
 
Three Months Ended
March 31,
 
2015
 
2014
 
Increase (Decrease)
 
(in millions)
Operating revenues
$
522

 
$
500

 
$
22

Operating expenses
 
 
 
 
 
     Operating, maintenance and other
171

 
151

 
20

Other income and expenses
38

 
25

 
13

EBITDA
$
389

 
$
374

 
$
15

 
 
 
 
 
 
Operating Revenues. The $22 million increase was driven by:
•
a $33 million increase due to expansion projects, primarily on Texas Eastern and East Tennessee, and
•
a $14 million increase in recoveries of electric power and other costs passed through to customers, partially offset by
•
an $11 million decrease in processing revenues primarily due to lower prices,
•
a $10 million decrease in natural gas transportation revenues from lower firm demand and commodity revenues on Texas Eastern, and
•
a $4 million decrease in gas storage revenues due to lower rates.
Operating Expenses. The $20 million increase was driven by:
•
a $14 million increase in electric power and other costs passed through to customers, and

18

•
a $9 million increase due to the non-cash impairment charge on Ozark Gas Gathering, partially offset by
•
a $4 million decrease in ad valorem taxes.
Other Income and Expenses. The $13 million increase was mainly due to higher AFUDC resulting from higher capital spending on expansion projects and higher equity earnings due to the dropdown of an additional 24.95% interest in SESH in 2014.
Liquids
 
Three Months Ended
March 31,
 
2015
 
2014
 
Increase (Decrease)
 
(in millions)
Operating revenues
$
84

 
$
81

 
$
3

Operating expenses
 
 
 
 
 
     Operating, maintenance and other
34

 
30

 
4

Other income and expenses
14

 
7

 
7

EBITDA
$
64

 
$
58

 
$
6

 
 
 
 
 
 
Express pipeline revenue receipts, MBbl/d (a)
246

 
225

 
21

Platte PADD II deliveries, MBbl/d
169

 
166

 
3

              
(a)    Thousand barrels per day.
Our Liquids segment is comprised of the Express and Platte pipelines and our investments in Sand Hills and Southern Hills.
Operating Revenues. The $3 million increase in operating revenues was driven by:
•
a $15 million increase in crude oil transportation revenues as a result of higher contracted volumes and increased tariff rates on both the Express and Platte pipelines, partially offset by
•
a $6 million decrease due to tank oil sales on the Platte pipeline in 2014, and
•
a $4 million decrease in inventory settlement revenues due to timing of inventory changes and lower oil prices on the Express and Platte pipelines.
Operating Expenses. The $4 million increase in operating expenses was driven by:
•
a $2 million increase in power costs due primarily to higher usage in 2015, and
•
a $2 million increase in maintenance costs.
Other Income and Expenses. The $7 million increase was primarily due to higher earnings from Sand Hills due to increased volumes.
Other
 
Three Months Ended
March 31,
 
2015
 
2014
 
Increase (Decrease)
 
(in millions)
Operating expenses
$
17

 
$
19

 
$
(2
)
EBITDA
$
(17
)
 
$
(19
)
 
$
2

Operating Expenses. The $2 million decrease was driven by lower outside services related to professional fees primarily due to timing.


19

Distributable Cash Flow
We define Distributable Cash Flow as EBITDA plus
•
distributions from equity investments,
•
other non-cash items affecting net income, less
•
equity in earnings of unconsolidated affiliates,
•
interest expense,
•
equity AFUDC,
•
net cash paid for income taxes,
•
distributions to noncontrolling interests, and
•
maintenance capital expenditures, excluding the effect of reimbursable projects.
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.

20

Reconciliation of Net Income to Non-GAAP “Distributable Cash Flow”
 
 
Three Months Ended
March 31,
 
2015
 
2014
 
(in millions)
Net income
$
301

 
$
246

Add:
 
 
 
Interest expense
57

 
67

Income tax expense
2

 
26

Depreciation and amortization
73

 
73

Foreign currency loss
3

 
1

EBITDA
436

 
413

Add:
 
 
 
Equity in earnings of unconsolidated affiliates
(40
)
 
(28
)
Distributions from equity investments (a)
54

 
37

Non-cash impairment on Ozark Gas Gathering
9

 
—

Other
3

 
2

Less:
 
 
 
Interest expense
57

 
67

Equity AFUDC
11

 
4

Net cash paid for income taxes
5

 
—

Distributions to noncontrolling interests
7

 
5

Maintenance capital expenditures (b)
28

 
24

Distributable Cash Flow
$
354

 
$
324

              
(a)
Excludes $2 million and $12 million in distributions of investment in equity method affiliates for the three month period ended March 31, 2015 and 2014, respectively.
(b)
Excludes reimbursable expenditures.


21

LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2015, we had net working capital of $79 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 $1,879 million at March 31, 2015. 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 our 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 5 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:
 
 
Three Months Ended
March 31,
 
 
2015
 
2014
 
 
(in millions)
Net cash provided by (used in):
 
 
 
 
Operating activities
 
$
281

 
$
354

Investing activities
 
(244
)
 
(170
)
Financing activities
 
65

 
(195
)
Net increase (decrease) in cash and cash equivalents
 
102

 
(11
)
Cash and cash equivalents at beginning of the period
 
140

 
121

Cash and cash equivalents at end of the period
 
$
242

 
$
110

Operating Cash Flows
Net cash provided by operating activities decreased $73 million to $281 million in the three months ended March 31, 2015 compared to the same period in 2014, driven mainly by changes in working capital, partially offset by higher distributions from unconsolidated affiliates and higher earnings.
Investing Cash Flows
Net cash used in investing activities increased $74 million to $244 million in the three months ended March 31, 2015 compared to the same period in 2014. The change was mainly driven by a $56 million net increase in capital and investment expenditures.
Capital and Investment Expenditures by Business Segment
 
 
Three Months Ended
March 31,
 
 
2015
 
2014
 
 
(in millions)
U.S. Transmission
 
$
237

 
$
177

Liquids
 
18

 
22

Total consolidated
 
$
255

 
$
199

Capital and investment expenditures for the three months ended March 31, 2015 consisted of $231 million for expansion projects and $24 million for maintenance and other projects.
We project 2015 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.

22

Financing Cash Flows and Liquidity
Net cash provided by financing activities totaled $65 million in the three months ended March 31, 2015 compared to $195 million used in financing activities during the same period in 2014. This $260 million change was driven mainly by:
•
$994 million of net proceeds from the issuances of long-term debt in 2015, and
•
a $52 million increase in contributions from noncontrolling interests, partially offset by
•
a $732 million increase in net repayments of commercial paper in 2015,
•
a $31 million increase in distributions to partners, and
•
a $13 million decrease in proceeds from issuances of units.
During the three months ended March 31, 2015, we issued 0.8 million common units to the public under our at-the-market program and approximately 16,000 general partner units to Spectra Energy. Total net proceeds were $40 million, including $1 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 2015 through the date of this report, we have issued 0.9 million common units to the public and approximately 19,000 general partner units to Spectra Energy, for total net proceeds of $48 million, including $1 million of proceeds from Spectra Energy.
On March 12, 2015, we issued $1.0 billion aggregate principal amount of senior unsecured notes, comprised of $500 million of 3.50% senior notes due in 2025 and $500 million of 4.50% senior notes due in 2045. Net proceeds from the offering were used to repay a portion of outstanding commercial paper, to fund capital expenditures and for general partnership purposes.
Available Credit Facility and Restrictive Debt Covenants. See Note 5 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 $0.60125 per limited partner unit was declared on May 6, 2015, payable on May 29, 2015, representing the thirtieth consecutive quarterly increase.
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 $500 million, in the aggregate, of limited partner units over time. This registration has $499 million available as of March 31, 2015.


23

OTHER ISSUES
New Accounting Pronouncements. See Note 10 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, 2014. 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 March 31, 2015, 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 March 31, 2015 and found no change that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

24

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 8 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, 2014, 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.

25

(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.


26

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: May 7, 2015
 
 
 
/S/    GREGORY L. EBEL       
 
 
 
 
Gregory L. Ebel
President and Chief Executive Officer
 
 
 
 
Date: May 7, 2015
 
 
 
/S/    J. PATRICK REDDY        
 
 
 
 
J. Patrick Reddy
Chief Financial Officer

27




EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Gregory L. Ebel, certify that:

1)
I have reviewed this quarterly report on Form 10-Q of Spectra Energy Partners, 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 evaluation; 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.
 
Date: May 7, 2015
 
 
/s/ Gregory L. Ebel
 
 
 
Gregory L. Ebel
President and Chief Executive Officer
Spectra Energy Partners GP, LLC
General Partner of Spectra Energy Partners (DE) GP, LP
General Partner of Spectra Energy Partners, LP






EXHIBIT 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, J. Patrick Reddy, certify that:

1)
I have reviewed this quarterly report on Form 10-Q of Spectra Energy Partners, 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 evaluation; 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.
 
Date: May 7, 2015
 
 
/s/ J. Patrick Reddy
 
 
 
J. Patrick Reddy
Chief Financial Officer
Spectra Energy Partners GP, LLC
General Partner of Spectra Energy Partners (DE) GP, LP
General Partner of Spectra Energy Partners, LP






EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Spectra Energy Partners, LP on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory L. Ebel, President and Chief Executive Officer of Spectra Energy Partners GP, LLC, general partner of Spectra Energy Partners (DE) GP, LP, general partner of Spectra Energy Partners, LP, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Spectra Energy Partners, LP.

Date: May 7, 2015
 
 
/s/ Gregory L. Ebel
 
 
 
Gregory L. Ebel
President and Chief Executive Officer
Spectra Energy Partners GP, LLC
General Partner of Spectra Energy Partners (DE) GP, LP
General Partner of Spectra Energy Partners, LP






EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Spectra Energy Partners, LP on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, J. Patrick Reddy, Chief Financial Officer of Spectra Energy Partners GP, LLC, general partner of Spectra Energy Partners (DE) GP, LP, general partner of Spectra Energy Partners, LP, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Spectra Energy Partners, LP.

Date: May 7, 2015
 
 
/s/ J. Patrick Reddy
 
 
 
J. Patrick Reddy
Chief Financial Officer
Spectra Energy Partners GP, LLC
General Partner of Spectra Energy Partners (DE) GP, LP
General Partner of Spectra Energy Partners, LP


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