UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2016

¨ 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 001-36838

Columbia Pipeline Group, Inc.

(Exact name of registrant as specified in its charter)



Delaware		47-1982552
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5151 San Felipe St., Suite 2500 Houston, Texas		77056
(Address of principal executive offices)		(Zip Code)

(713) 386-3701

(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¨ þ No þ*¨

*On July 1, 2016, Columbia Pipeline Group, Inc. merged with and into Taurus Merger Sub Inc. with Columbia Pipeline Group, Inc. surviving the merger as an indirect, wholly owned subsidiary of TransCanada Corporation.

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 þ 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 þ 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 þ

At ~~July~~October 2631, 2016, there is no market for CPGX shares of common stock.

COLUMBIA PIPELINE GROUP, INC.

FORM 10-Q QUARTERLY REPORT

FOR THE QUARTER ENDED ~~JUNE~~SEPTEMBER 30, 2016

Table of Contents

			Page
	Defined Terms		3
PART I	FINANCIAL INFORMATION
	Item 1.	Financial Statements - unaudited
		Condensed Consolidated Balance Sheets (unaudited)	5
		Condensed Statements of Consolidated Operations (unaudited)	7
		Condensed Statements of Consolidated Comprehensive Income (unaudited)	8
		Condensed Statements of Consolidated Cash Flows (unaudited)	9
		Condensed Statement of Consolidated Equity (unaudited)	10
		Notes to Condensed Consolidated Financial Statements (unaudited)	11
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4143
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5154
	Item 4.	Controls and Procedures	5154
PART II	OTHER INFORMATION
	Item 1.	Legal Proceedings	5255
	Item 1A.	Risk Factors	5256
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5356
	Item 3.	Defaults Upon Senior Securities	5356
	Item 4.	Mine Safety Disclosures	5357
	Item 5.	Other Information	5357
	Item 6.	Exhibits	5458
	Signature		5559

Table of Contents

Columbia Pipeline Group, Inc.

DEFINED TERMSThe following is a list of frequently used abbreviations or acronyms that are found in this report:
Affiliates and Subsidiaries of Columbia Pipeline Group, Inc.
CEG	Columbia Energy Group
CEVCO	Columbia Energy Ventures, LLC
CNS Microwave	CNS Microwave, LLC
Columbia Gas Transmission	Columbia Gas Transmission, LLC
Columbia Gulf	Columbia Gulf Transmission, LLC
Columbia Midstream	Columbia Midstream Group, LLC
Columbia OpCo	CPG OpCo LP
Columbia Remainder Corporation	Columbia Remainder Corporation
CPGSC	Columbia Pipeline Group Services Company
CPP GP LLC	CPP GP LLC
CPPL	Columbia Pipeline Partners LP
Crossroads	Crossroads Pipeline Company
Hardy Storage	Hardy Storage Company, LLC
Millennium Pipeline	Millennium Pipeline Company, L.L.C.
MLP GP	CPP GP LLC
OpCo GP	CPG OpCo GP LLC
Pennant	Pennant Midstream, LLC
TCPL	TransCanada PipeLines Limited
TransCanada	TransCanada Corporation
US Parent	TransCanada PipeLine USA Ltd.
Abbreviations
AFUDC	Allowance for funds used during construction, is the method prescribed by the FERC for inclusion in our tariff rates as reimbursement for the cost of financing construction projects with investor capital and borrowed funds until a project is placed into operation
AOCI	Accumulated Other Comprehensive Income (Loss)
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
Btu	British Thermal Unit
CAA	Clean Air Act
CCRM	Capital Cost Recovery Mechanism, which is an approved demand charge under the Columbia Gas Transmission modernization settlement
condensate	A natural gas liquid with a low vapor pressure, mainly composed of propane, butane, pentane and heavier hydrocarbon functions
Dth/d	Dekatherms per day
EPA	United States Environmental Protection Agency
EPS	Earnings per share
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
GAAP	Generally Accepted Accounting Principles
IPO	Initial public offering of Columbia Pipeline Partners LP, which was completed on February 11, 2015
LDC	Local distribution companies are involved in the delivery of natural gas to consumers within a specific geographic area
IT	Information Technology
LIBOR	London Interbank Offered Rate
LNG	Natural gas that has been cooled to minus 161 degrees Celsius for transportation, typically by ship. The cooling process reduces the volume of natural gas by 600 times

Table of Contents

Columbia Pipeline Group, Inc.

DEFINED TERMS (continued)
LDC	Local distribution companies are involved in the delivery of natural gas to consumers within a specific geographic area
LIBOR	London Interbank Offered Rate
LNG	Natural gas that has been cooled to minus 161 degrees Celsius for transportation, typically by ship. The cooling process reduces the volume of natural gas by 600 times
MMBtu	One million British Thermal Units
MMDth	One million Dekatherms
MMDth/d	One million Dekatherms per day
NAAQS	National Ambient Air Quality Standards
NGA	Natural Gas Act of 1938
NGL	Hydrocarbons in natural gas that are separated from the natural gas as liquids through the process of absorption, condensation, adsorption or other methods in natural gas processing or cycling plants. Generally such liquids consist of propane and heavier hydrocarbons and are commonly referred to as lease condensate, natural gasoline and liquefied petroleum gases. Natural gas liquids include natural gas plant liquids (primarily ethane, propane, butane and isobutane) and lease condensate (primarily pentanes produced from natural gas at lease separators and field facilities)
NiSource	NiSource Inc.
NiSource Corporate Services	NiSource Corporate Services Company
NiSource Finance	NiSource Finance Corp.
OCI	Other Comprehensive Income (Loss)
OPEB	Other postretirement benefits
ppb	Parts per billion
SEC	Securities and Exchange Commission
throughput	The volume of natural gas transported or passing through a pipeline, plant, terminal or other facility during a particular period

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Columbia Pipeline Group, Inc.Condensed Consolidated Balance Sheets (unaudited)
(in millions)	~~June~~September 30, 2016			December 31, 2015
ASSETS
Current Assets
Cash and cash equivalents	$	~~374~~132.56		$	930.9
Accounts receivable (less reserve of $0.3 and $0.6, respectively)	~~163~~159.85			152.4
Materials and supplies, at average cost	26.5			32.8
Accounts receivable-affiliated	40.7			—
Exchange gas receivable	11.5			19.0
Materials and supplies, at average cost	26.4			32.8
Deferred property taxes	36.4			52.0
Exchange gas receivable	14.3			19.0
Prepayments and other	45.6			48.5
Deferred property taxes	17.7			52.0
Total Current Assets	658.3			1,235.6
Prepayments and other	43.5			48.5
Total Current Assets	434.7			1,235.6
Investments
Unconsolidated affiliates	441.34			438.1
Other investments	141.08			13.8
Total Investments	~~455~~443.32			451.9
Property, Plant and Equipment
Property, plant and equipment	910,~~805~~200.05			9,052.3
Accumulated depreciation and amortization	(3,~~057~~092.98		)	(2,988.6		)
Net Property, Plant and Equipment	67,~~747~~107.17			6,063.7
Other Noncurrent Assets
Regulatory assets	~~183~~197.17			177.7
Goodwill	1,975.5			1,975.5
Postretirement and postemployment benefits assets	~~120~~111.48			115.7
Deferred charges and other	11.32			15.5
Total Other Noncurrent Assets	2,~~290~~296.32			2,284.4
Total Assets	$	10,~~151~~281.08		$	10,035.6

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc. Condensed Consolidated Balance Sheets (unaudited) (continued)
(in millions, except share amounts)	~~June~~September 30, 2016			December 31, 2015
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings	$	—		$	15.0
Accounts payable	118.8			56.8
Short-term borrowings-affiliated	250.0			—
Dividends payable	55.6			—
Accounts payable	84.1			56.8
Customer deposits	15.4			17.9
Accounts payable-affiliated	9.6			—
Taxes accrued	89.0			106.0
Customer deposits	16.7			17.9
Interest accrued	9.5			9.5
Taxes accrued	67.1			106.0
Exchange gas payable	11.7			18.6
Interest accrued	37.1			9.5
Deferred revenue	6.6			15.0
Exchange gas payable	14.2			18.6
Accrued capital expenditures	134.5			100.1
Deferred revenue	5.6			15.0
Accrued compensation and related costs	35.4			51.9
Accrued capital expenditures	171.6			100.1
Other accruals	120.9			70.0
Accrued compensation and related costs	45.1			51.9
Total Current Liabilities	597.4			460.8
Other accruals	101.4			70.0
Total Current Liabilities	802.5			460.8
Noncurrent Liabilities
Long-term debt	2,~~726~~727.7			2,725.6
Deferred income taxes	1,~~419~~446.06			1,348.1
Accrued liability for postretirement and postemployment benefits	4043.65			49.4
Regulatory liabilities	~~295~~284.92			321.6
Asset retirement obligations	2423.30			25.7
Other noncurrent liabilities	7570.31			91.4
Total Noncurrent Liabilities	4,~~581~~595.81			4,561.8
Total Liabilities	5,~~179~~397.26			5,022.6
Commitments and Contingencies (Refer to Note 17)
Commitments and Contingencies (Refer to Note 16)
Equity
Common stock, $0.01 par value, 2,000,000,000 shares authorized; 400,656,369 and 399,841,350 shares outstanding, respectively	4.0			4.0
Common stock, $0.01 par value, 10,000,100 and 2,000,000,000 shares authorized, respectively; 10,000,000 and 399,841,350 shares outstanding, respectively	0.1			4.0
Additional paid-in capital	4,~~041~~013.8			4,032.7
(Accumulated deficit) Retained earnings	(256.67		)	46.9
Treasury stock	(6.2		)	—
Accumulated other comprehensive loss	(26.3		)	(27.0		)
Accumulated other comprehensive loss	(26.2		)	(27.0		)
Total CPG Equity	3,930.9			4,056.6
Total CPG Equity	4,010.8			4,056.6
Noncontrolling Interest	953.3			956.4
Noncontrolling Interest	961.0			956.4
Total Equity	4,884.2			5,013.0
Total Equity	4,971.8			5,013.0
Total Liabilities and Equity	$	10,281.8		$	10,035.6
Total Liabilities and Equity	$	10,151.0		$	10,035.6

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Condensed Statements of Consolidated Operations (unaudited)

	Three Months EndedJune 30,						Six Months EndedJune 30,
	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
(in millions, except per share amounts)	2016			2015			2016			2015
Operating Revenues
Transportation revenues	$	~~259~~270.43		$	~~237~~266.82		$	~~567~~838.92		$	~~486~~752.24
Transportation revenues-affiliated	—			~~18.5~~—			—			47.5
Storage revenues	48.9			3649.25			98147.87			72122.83
Storage revenues-affiliated	—			~~12.9~~—			—			26.2
Other revenues	57.69			105.72			1119.76			2328.46
Total Operating Revenues	~~313~~327.91			~~316~~320.19			~~678~~1,005.45			~~656~~977.10
Operating Expenses
Operation and maintenance	~~179~~322.9			~~151~~186.15			~~349~~671.09			~~269~~456.50
Operation and maintenance-affiliated	—			~~24.9~~—			—			52.9
Depreciation and amortization	4143.26			3335.90			81125.62			66101.4
Gain on sale of assets and impairment, net	(3.4		)	(6.5		)	(6.0		)	(11.8		)
Gain on sale of assets	(9.3		)	(39.0		)	(15.3		)	(52.6		)
Property and other taxes	21.0			19.1			42.8			38.2
Impairment of long-lived assets	19.1			0.6			19.1			2.4
Total Operating Expenses	238.7			222.5			467.4			415.2
Property and other taxes	19.8			17.3			62.6			55.5
Equity Earnings in Unconsolidated Affiliates	16.3			13.7			32.2			29.1
Total Operating Expenses	396.1			200.4			863.5			615.6
Operating Income	91.5			107.3			243.2			270.0
Equity Earnings in Unconsolidated Affiliates	16.0			15.4			48.2			44.5
Operating (Loss) Income	(53.0		)	135.9			190.2			405.9
Other Income (Deductions)
Interest expense	(3031.64		)	(1229.94		)	(6091.04		)	(1242.93		)
Interest expense-affiliated	—(0.5		)	~~(11.0~~—		)	—(0.5		)	(29.3		)
Other, net	913.87			56.37			1630.85			916.96
Total Other Deductions, net	(2018.82		)	(1822.67		)	(4361.24		)	(3255.30		)
Income from Continuing Operations before Income Taxes	70.7			88.7			200.0			237.7
(Loss) Income from Continuing Operations before Income Taxes	(71.2		)	113.2			128.8			350.9
Income Taxes	22(21.16		)	2838.63			6443.82			80118.58
Income from Continuing Operations	48.6			60.1			135.2			157.2
(Loss) Income from Continuing Operations	(49.6		)	74.9			85.6			232.1
Income (Loss) from Discontinued Operations-net of taxes	—			(0.3		)	0.2			(0.3		)
(Loss) Income from Discontinued Operations-net of taxes	—			(0.1		)	0.2			(0.4		)
Net Income	48.6			59.8			135.4			156.9
Net (Loss) Income	(49.6		)	74.8			85.8			231.7
Less: Net income attributable to noncontrolling interest	92.79			911.08			2427.32			1627.19
Net income attributable to CPG	$	38.9		$	50.8		$	111.1		$	140.8
Net (loss) income attributable to CPG	$	(52.5	)	$	63.0		$	58.6		$	203.8
Amounts attributable to CPG:
Income from continuing operations	$	38.9		$	51.1		$	110.9		$	141.1
(Loss) income from continuing operations	$	(52.5	)	$	63.1		$	58.4		$	204.2
Income (loss) from discontinued operations-net of taxes	—			(0.3		)	0.2			(0.3		)
(Loss) income from discontinued operations-net of taxes	—			(0.1		)	0.2			(0.4		)
Net income attributable to CPG	$	38.9		$	50.8		$	111.1		$	140.8
Net (loss) income attributable to CPG	$	(52.5	)	$	63.0		$	58.6		$	203.8
Basic Earnings Per Share
Continuing operations	$	0.10		$	0.16		$	0.28		$	0.44
Discontinued operations	—			—			—			—
Basic Earnings Per Share	$	0.10		$	0.16		$	0.28		$	0.44
Diluted Earnings Per Share
Continuing operations	$	0.10		$	0.16		$	0.28		$	0.44
Discontinued operations	—			—			—			—
Diluted Earnings Per Share	$	0.10		$	0.16		$	0.28		$	0.44
Basic Average Common Shares Outstanding	400.6			317.6			400.4			317.6
Diluted Average Common Shares	401.5			317.6			401.1			317.6
Dividends Declared Per Common Share	$	0.14		$	—		$	0.40		$	—

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Condensed Statements of Consolidated Comprehensive Income (unaudited)

	Three Months EndedJune 30,						Six Months EndedJune 30,
	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
(in millions, net of taxes)	2016			2015			2016			2015
Net Income	$	48.6		$	59.8		$	135.4		$	156.9
Net (Loss) Income	$	(49.6	)	$	74.8		$	85.8		$	231.7
Other comprehensive income
Net unrealized gain on cash flow hedges(1)	0.3			0.3			0.7			0.5
Net unrealized gain (loss) on cash flow hedges(1)	0.3			(0.7		)	1.0			(0.2		)
Unrecognized pension and OPEB benefit(2)(3)	0.1			0.3			0.2			7.3
Unrecognized pension and OPEB benefit (cost)(2)(3)	(0.4		)	(0.1		)	(0.2		)	7.2
Total other comprehensive income	0.4			0.6			0.9			7.8
Total other comprehensive (loss) income	(0.1		)	(0.8		)	0.8			7.0
Total Comprehensive Income	49.0			60.4			136.3			164.7
Total Comprehensive (Loss) Income	(49.7		)	74.0			86.6			238.7
Less: Comprehensive Income-noncontrolling interest	92.79			911.08			2427.43			1627.19
Comprehensive Income-controlling interests	$	39.3		$	51.4		$	111.9		$	148.6
Comprehensive (Loss) Income-controlling interests	$	(52.6	)	$	62.2		$	59.3		$	210.8

(1) Net unrealized ~~gains~~gain (loss) on derivatives qualifying as cash flow hedges, net of $0.13 million and $01.21 million tax expense for the three months ended ~~June~~September 30, 2016 and 2015, respectively, and $0.36 million and $1.4 million tax expense for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively.

(2) Unrecognized pension and ~~other~~OPEB ~~postretirement~~ benefit (~~“OPEB”~~cost) ~~benefits~~, net of ~~zero~~$0.2 million and $0.1 million tax ~~expense~~benefit for the three months ended ~~June~~September 30, 2016 and 2015, respectively, and $0.1 million ~~and zero~~ tax ~~expense~~benefit for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015~~, respectively~~.

(3) Unrecognized pension and OPEB benefits are primarily related to pension and OPEB remeasurements recorded during 2016 and 2015.

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.Condensed Statements of Consolidated Cash Flows (unaudited)
Six Months Ended June 30, (in millions)	2016			2015
Nine Months Ended September 30, (in millions)	2016			2015
Operating Activities
Net Income	$	~~135~~85.48		$	~~156~~231.97
Adjustments to Reconcile Net Income to Net Cash from Continuing Operations:
Depreciation and amortization	81125.62			66101.4
Deferred income taxes and investment tax credits	6181.75			3177.97
Deferred revenue	(2.47		)	(0.14		)
Equity-based compensation expense and profit sharing contribution	101.56			34.94
Gain on sale of assets and impairment, net	(6.0		)	(11.8		)
Gain on sale of assets	(15.3		)	(52.6		)
Equity earnings in unconsolidated affiliates	(32.2		)	(29.1		)
Impairment of long-lived assets	19.1			2.4
(Income) loss from discontinued operations-net of taxes	(0.2		)	0.3
Equity earnings in unconsolidated affiliates	(48.2		)	(44.5		)
Amortization of debt related costs	4.0			0.6
(Income) loss from discontinued operations-net of taxes	(0.2		)	0.4
AFUDC equity	(15.9		)	(8.5		)
Amortization of debt related costs	9.3			1.8
Distributions of earnings received from equity investees	31.1			27.9
AFUDC equity	(29.7		)	(15.0		)
Distributions of earnings received from equity investees	51.0			44.1
Changes in Assets and Liabilities:
Accounts receivable	(50.39		)	131.96
Accounts receivable-affiliated	—(40.7		)	134.7
Accounts payable	920.5			220.36
Accounts payable-affiliated	—9.5			(2653.96		)
Customer deposits	(21.52		)	1(23.08		)
Taxes accrued	(2042.34		)	(027.46		)
Exchange gas receivable/payable	0.6			0.2
Interest accrued	27.8			40.3
Other accruals	20.3			13.5
Exchange gas receivable/payable	0.3			0.1
Prepayments and other current assets	24.9			7.8
Other accruals	(17.3		)	37.1
Regulatory assets/liabilities	(0.7		)	25.5
Prepayments and other current assets	45.6			9.5
Postretirement and postemployment benefits	(8.2		)	(15.5		)
Regulatory assets/liabilities	(10.5		)	38.2
Deferred charges and other noncurrent assets	(2.7		)	(2.2		)
Postretirement and postemployment benefits	(6.8		)	(26.0		)
Other noncurrent liabilities	(14.7		)	7.6
Deferred charges and other noncurrent assets	1.3			3.8
Net Operating Activities from Continuing Operations	268.5			266.9
Other noncurrent liabilities	(11.7		)	7.2
Net Operating Activities from Continuing Operations	252.7			414.3
Net Operating Activities from (used for) Discontinued Operations	0.3			(0.1		)
Net Cash Flows from Operating Activities	~~268~~253.80			~~266~~414.82
Investing Activities
Capital expenditures	(~~673~~1,095.8		)	(~~470~~833.20		)
Insurance recoveries	—			2.1
Change in short-term lendings-affiliated	—			~~(500~~145.25		)
Proceeds from disposition of assets	09.19			1753.3
Contributions to equity investees	(16.92		)	—(1.4		)
Distributions from equity investees	01.86			215.21
Other investing activities	(3.78		)	(1724.02		)
Net Cash Flows used for Investing Activities	(~~678~~1,086.57		)	(~~965~~642.86		)
Financing Activities
Change in short-term borrowings	(15.0		)	20245.0
Change in short-term borrowings-affiliated	—250.0			~~466~~(252.35		)
Issuance of long-term debt	—			2,745.9
Debt related costs	(0.7		)	(22.5		)
Payments of capital lease obligations and other debt related costs	(2.5		)	(23.6		)
Issuance of long-term debt-affiliated	—			1,217.3
Payments of long-term debt-affiliated, including current portion	—			(2,806.0		)
Proceeds from the issuance of common units, net of offering costs	—			1,168.4
Distribution of IPO proceeds to parent	—			(500.0		)
Common stock issuances associated with the Merger	0.1			—
Distribution to parent	—			(1,450.0		)
Distribution of IPO proceeds to NiSource	—			(500.0		)
Distribution to noncontrolling interest	(19.8		)	(4.9		)
Distribution to NiSource	—			(1,450.0		)
Distribution to noncontrolling interest	(30.4		)	(13.9		)
Acquisition of treasury stock	(6.2		)	—
Dividends paid - common stock	(105.01		)	—(39.7		)
Transfer from parent	—			0.8
Dividends paid to TransCanada	(55.5		)	—
Net Cash Flows (used for) from Financing Activities	(146.7		)	835.3
Transfer from NiSource	—			0.8
Change in cash and cash equivalents	(556.4		)	136.3
Net Cash Flows from Financing Activities	35.4			291.7
Change in cash and cash equivalents	(798.3		)	63.3
Cash and cash equivalents at beginning of period	930.9			0.5
Cash and Cash Equivalents at End of Period	$	~~374~~132.56		$	~~136~~63.8

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Condensed Statements of Consolidated Equity (unaudited)

(in millions)	Common Stock			Treasury Stock			Additional Paid-in Capital			(Accumulated Deficit) Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interest			Total
Balance as of January 1, 2016	$	4.0		$	—		$	4,032.7		$	46.9		$	(27.0	)	$	956.4		$	5,013.0
Net Income	—			—			—			~~111~~58.16			—			2427.32			~~135~~85.48
Other comprehensive income, net of tax	—			—			—			—			0.87			0.1			0.98
Common stock dividends	—			—			—			(~~160~~105.61		)	—			—			(~~160~~105.61		)
Dividend to TransCanada	—			—			—			(55.5		)	—			—			(55.5		)
Common stock purchased by TransCanada and retired	(4.0		)	—			(10,212.7		)	—			—			—			(10,216.7		)
Common stock issuances associated with the Merger	0.1			—			10,216.7			—			—			—			10,216.8
Treasury stock acquired	—			(6.2		)	—			—			—			—			(6.2		)
Distributions to noncontrolling interest	—			—			—			—			—			(19.8		)	(19.8		)
Treasury stock retirement	—			6.2			(4.6		)	(1.6		)	—			—			—
Long-term incentive plan	—			—			9.1			—			—			—			9.1
Distributions to noncontrolling interest	—			—			—			—			—			(30.4		)	(30.4		)
Balance as of June 30, 2016	$	4.0		$	(6.2	)	$	4,041.8		$	(2.6	)	$	(26.2	)	$	961.0		$	4,971.8
Long-term incentive plan	—			—			(18.3		)	—			—			—			(18.3		)
Balance as of September 30, 2016	$	0.1		$	—		$	4,013.8		$	(56.7	)	$	(26.3	)	$	953.3		$	4,884.2

(in millions)	~~Net~~Common ~~Parent Investment~~Stock			~~Accumulated~~Additional ~~Other~~Paid-in ~~Comprehensive Loss~~Capital			~~Noncontrolling~~Accumulated ~~Interest~~deficit			~~Total~~Net Parent Investment			Accumulated Other Comprehensive Loss			Noncontrolling Interest			Total
Balance as of January 1, 2015	$	~~4,210.8~~—		$	~~(34.5~~—	)	$	—		$	4,~~176~~210.38		$	(34.5	)	$	—		$	4,176.3
Net Income	~~140.8~~—			—			1663.10			~~156~~140.98			—			27.9			231.7
Other comprehensive income, net of tax	—			~~7.8~~—			—			~~7.8~~—			7.0			—			7.0
Allocation of AOCI to noncontrolling interest	—			~~2.2~~—			~~(2.2~~—		)	—			2.2			(2.2		)	—
Issuance of common units of CPPL	—			—			~~1,168.4~~—			~~1,168.4~~—			—			1,168.4			1,168.4
Distribution of IPO proceeds to NiSource	~~(500.0~~—		)	—			—			(500.0		)	—			—			(500.0		)
Distribution to parent	(1,450.0		)	—			—			(1,450.0		)
Distribution to NiSource	—			—			—			(1,450.0		)	—			—			(1,450.0		)
Sale of interest in Columbia OpCo to CPPL(1)	~~227.1~~—			—			~~(227.1~~—		)	—227.1			—			(227.1		)	—
Distribution to noncontrolling interest	—			—			~~(4.9~~—		)	~~(4.9~~—		)	—			(13.9		)	(13.9		)
Net transfers from NiSource	~~6.3~~—			—			—			6.3			—			—			6.3
Balance as of June 30, 2015	$	2,635.0		$	(24.5	)	$	950.3		$	3,560.8
Reclassification of net parent investment to additional paid-in capital	—			2,635.0			—			(2,635.0		)	—			—			—
Issuance of common stock at Separation	3.2			(3.2		)	—			—			—			—			—
Net transfers from NiSource	—			1.2			—			—			—			0.2			1.4
Long-term incentive plan	—			1.9			—			—			—			—			1.9
Common stock dividends	—			—			(79.5		)	—			—			—			(79.5		)
Balance as of September 30, 2015	$	3.2		$	2,634.9		$	(16.5	)	$	—		$	(25.3	)	$	953.3		$	3,549.6

⁽¹⁾Represents the sale of an additional 8.4% limited partner interest in Columbia OpCo, recorded at the historical carrying value of Columbia OpCo's net assets after giving effect to the $1,168.4 million equity contribution. This decreases the noncontrolling interest by the same amount it increases the net parent investment because CPPL's purchase price for its additional 8.4% interest in Columbia OpCo exceeded book value.

The accompanying Notes to Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

1. Basis of Accounting Presentation

Columbia Pipeline Group, Inc. ("CPG") is a growth-oriented Delaware corporation formed on September 26, 2014 to own, operate and develop a portfolio of pipelines, storage and related midstream assets. CPG owns and operates, through its subsidiaries, approximately 15,000 miles of strategically located interstate gas pipelines extending from New York to the Gulf of Mexico and one of the nation's largest underground natural gas storage systems, with approximately 300 MMDth of working gas capacity, as well as related gathering and processing assets. CPG indirectly owns the general partner of CPPL and all of CPPL's subordinated units and incentive distribution rights. CPG did not have any material assets or liabilities as a separate corporate entity until the contribution of CEG from NiSource on February 11, 2015. As a result of this contribution, the financial statements for periods as of and subsequent to September 26, 2014 reflect the consolidated financial position, results of operations and cash flows for CPG.

CPG is engaged in regulated gas transportation and storage services for LDCs, marketers, producers and industrial and commercial customers located in northeastern, mid-Atlantic, Midwestern and southern states and the District of Columbia along with unregulated businesses ~~that~~such ~~include~~ as midstream services, including gathering, treating, conditioning, processing, compression and liquids handling, and development of mineral rights positions. The regulated services are performed under a tariff at rates subject to FERC approval.

Separation. On June 2, 2015, NiSource announced that its board of directors approved the separation of CPG from NiSource (the "Separation") through the distribution of CPG common stock to holders of NiSource common stock as of June 19, 2015 (the "Record Date"). On July 1, 2015, NiSource distributed, pursuant to an effective registration statement on Form 10, 317.6 million shares, one share of CPG common stock for every one share of NiSource common stock held by NiSource stockholders on the Record Date. As of July 1, 2015, CPG was an independent, publicly traded company, and NiSource did not retain any ownership interest in CPG. CPG's common stock began trading "regular-way" under the ticker symbol "CPGX" on the NYSE on July 2, 2015. In connection with the Separation, CPG completed the following transactions:


•	In May 2015, CPG completed its private placement of senior notes and received proceeds of approximately $2,722.3 million. CPG utilized a portion of the proceeds to repay approximately $1,087.3 million of intercompany debt and short-term borrowings, including, net amounts due from the money pool between CPG and NiSource Finance Corp. ("NiSource Finance");


•	CPG further utilized the proceeds from the senior notes to make a cash distribution of approximately $1,450.0 million to NiSource; and


•	Accounts related to NiSource and its subsidiaries, including accounts receivable and accounts payable, were reclassified from affiliated to non-affiliated.

Agreements with NiSource following the Separation. CPG entered into the Separation and Distribution Agreement and several other agreements with NiSource to effect the Separation and provide a framework for CPG's relationship with NiSource, and its subsidiaries, after the Separation. The Separation and Distribution Agreement contains many of the key provisions related to CPG's separation from NiSource and the distribution of CPG's shares of common stock to NiSource's stockholders, including cross-indemnities between CPG and NiSource. In general, NiSource has agreed to indemnify CPG for any liabilities relating to NiSource's business and CPG has agreed to indemnify NiSource for any liabilities relating to CPG's business. In addition to the Separation and Distribution Agreement, CPG entered into the following agreements with NiSource related to the Separation:


•	Tax Allocation Agreement - Provides for the respective rights, responsibilities, and obligations of NiSource and CPG with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, tax contests, and certain other matters regarding taxes.


•	Employee Matters Agreement - Provides for the respective obligations to employees and former employees who are or were associated with CPG (including those employees who transferred employment from NiSource to CPG prior to the Separation) and for other employment and employee benefits matters.


•	Transition Services Agreement - Provides for the provision of certain transitional services by NiSource to CPG, and vice versa. The services may include the provision of administrative and other services identified by the parties. The charge for these services is expected to be based on actual costs incurred by the party rendering the services without profit.

Merger. On March 17, 2016, CPG entered into an Agreement and Plan of Merger (the "Merger Agreement"), among CPG, ~~TransCanada PipeLines Limited~~TCPL, aUS ~~Canadian corporation ("~~Parent"), ~~TransCanada~~Taurus ~~PipeLine~~Merger ~~USA~~Sub ~~Ltd~~Inc., a ~~Nevada~~Delaware corporation and a wholly owned subsidiary of US Parent ("USMerger ~~Parent~~Sub"), ~~Taurus~~and, ~~Merger~~solely ~~Sub~~for ~~Inc~~purposes of Section 3.02, aSection ~~Delaware~~5.02, ~~corporation~~Section 5.09 and aArticle ~~wholly~~VIII ~~owned~~of ~~subsidiary~~the Merger Agreement, TransCanada. Upon the

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

of US Parent ("Merger Sub"), and, solely for purposes of Section 3.02, Section 5.02, Section 5.09 and Article VIII of the Merger Agreement, TransCanada Corporation, a Canadian corporation and the direct parent company of Parent ("TransCanada"). Upon the terms and subject to the conditions set forth in the Merger Agreement, effective July 1, 2016, Merger Sub was merged with and into CPG (the "Merger") with CPG surviving the Merger as an indirect wholly owned subsidiary of TransCanada.

On July 1, 2016, TransCanada closed the acquisition of CPG valued at $13.0 billion, comprised of a purchase price of approximately $10.3 billion and CPG debt of approximately $2.7 billion. CPG became an indirect, wholly owned subsidiary of TransCanada as a result of the Merger. Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of CPG common stock, par value $0.01 per share, was canceled and converted into the right to receive $25.50 per share in cash, without interest. Upon completion of the transaction, TransCanada owns the general partner of CPPL, all of CPPL’s incentive distribution rights and all of CPPL's subordinated units, which represent a 46.5% limited partnership interest in CPPL. As a result, CPPL is now effectively managed by TransCanada.

For the three and ~~six~~nine months ended ~~June~~September 30, 2016, CPG incurred Merger transaction costs of $1243.31 million and $2366.23 million, respectively, including legal, advisory and other related fees. These costs are included in "Operation and maintenance" on the Condensed Statements of Consolidated Operations (unaudited). AsApproximately ~~the~~$101.5 ~~Merger~~million ~~was~~of ~~not~~employee ~~consummated~~related ~~until~~costs ~~July~~were 1,incurred ~~2016,~~subsequent noto ~~adjustments~~the ~~have~~Merger. ~~been~~Additionally ~~made~~as toa result of the ~~Condensed~~Merger, ~~Consolidated~~CPG ~~Financial~~recognized ~~Statements~~an ~~(unaudited).~~impairment ~~Subsequent~~charge toof ~~June~~$19.1 ~~30,~~million ~~2016,~~related ~~approximately~~to ~~$100~~the ~~million~~cancellation of ~~employee~~IT ~~related~~system ~~costs~~upgrades that were ~~accrued~~in ~~upon~~process ~~consummation~~prior ofto the Merger.

CPG has suspended its obligation to file periodic reports with the SEC based on ~~account of~~ its common stock as a result of the Merger,. ~~but~~CPG will continue to have reporting obligations with respect to its senior notes. Refer to Note 76, "Long-Term Debt" for additional information on CPG's senior notes.

The Condensed Consolidated Financial Statements (unaudited) have been prepared pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although CPG believes that the disclosures made are adequate to make the information not misleading. These financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2015 (the "2015 Form 10-K"). These financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary to fairly present CPG's results of operations and financial position. Amounts reported in the Condensed Statements of Consolidated Operations (unaudited) are not necessarily indicative of amounts expected for the respective annual periods.

CPG's accompanying Condensed Consolidated Financial Statements (unaudited) have been prepared in accordance with GAAP ~~on the basis of NiSource's historical ownership of CPG's assets and its operations~~. These financial statements include the accounts of the following subsidiaries: Columbia Gas Transmission, Columbia Gulf, Columbia Midstream, CEVCO, CNS Microwave, Crossroads, CPGSC, CEG, Columbia Remainder Corporation, CPP GP LLC, CPPL, OpCo GP, and Columbia OpCo ~~and CPG~~. All intercompany transactions and balances have been eliminated. Also included in the Condensed Consolidated Financial Statements (unaudited) are equity method investments Hardy Storage, Millennium Pipeline and Pennant.

2. CPPL Initial Public Offering

On December 5, 2007, NiSource formed CPPL (NYSE: CPPL) to own, operate and develop a portfolio of pipelines, storage and related assets.

On February 11, 2015, CPPL completed its offering of 53.8 million common units representing limited partner interests, constituting 53.5% of CPPL's outstanding limited partner interests. CPPL received $1,168.4 million of net proceeds from the IPO. CPG owns the general partner of CPPL and all of CPPL's subordinated units and incentive distribution rights. The assets of CPPL consist of a 15.7% limited partner interest in Columbia OpCo, which prior to the Separation, consisted of substantially all of NiSource's Columbia Pipeline Group Operations segment. The operations of CPPL are consolidated in CPG's results. As of ~~June~~September 30, 2016, the portion of CPPL owned by the public is reflected as a noncontrolling interest in the Condensed Consolidated Financial Statements (unaudited).

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

The table below summarizes the effects of changes in CPG’s ownership interest in Columbia OpCo on equity:

	Three Months EndedJune 30,					Six Months EndedJune 30,
	Three Months EndedSeptember 30,					Nine Months EndedSeptember 30,
(in millions)	2016			2015		2016		2015
Net income attributable to CPG	$	38.9		$	50.8	$	111.1	$	140.8
Net (loss) income attributable to CPG	$	(52.5	)	$	63.0	$	58.6	$	203.8
Increase in CPG's net parent investment for the sale of 8.4% of Columbia OpCo	—			—		—		227.1
Change from net income attributable to CPG and transfers to noncontrolling interest	$	38(52.95	)	$	5063.80	$	~~111~~58.16	$	~~367~~430.9

3. Recent Accounting Pronouncements

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 amends the guidance in ASC 230 on the classification of certain cash receipts and payments in the statement of cash flows. CPG is required to adopt ASU 2016-15 for periods beginning after December 15, 2017, including interim periods, and the guidance is to be applied retrospectively, with early adoption permitted. CPG is currently evaluating the impact the adoption of ASU 2016-15 will have on the Condensed Consolidated Financial Statements (unaudited) or Notes to Condensed Consolidated Financial Statements (unaudited).

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 outlines a single, comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14 to extend the adoption date for ASU 2014-09 to periods beginning after December 15, 2017, including interim periods, and the new standard is to be applied retrospectively, with early adoption permitted on the original effective date of ASU 2014-09 on a limited basis. In March 2016, the FASB issued ASU 2016-08, which amends the principal-versus-agent implementation guidance and illustrations in ASU 2014-09. Among other things, ASU 2016-08 clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. In April 2016, the FASB issued ASU 2016-10, which clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in ASU 2014-09. In May 2016, the FASB issued ASU 2016-12, which contains narrow scope improvements for certain aspects of ASU 2014-09 including collectability, presentation of sales tax and other similar taxes collected from customers, noncash consideration, contract modifications and completed contracts at transition and transition technical correction. CPG is currently evaluating the impact the adoption of ASU 2014-09, and the related ASUs, will have on the Condensed Consolidated Financial Statements (unaudited) or Notes to Condensed Consolidated Financial Statements (unaudited).

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718). ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. CPG is required to adopt ASU 2016-09 for periods beginning after December 15, 2016, including interim periods, with early adoption permitted. CPG is currently evaluating the impact the adoption of ASU 2016-09 will have on the Condensed Consolidated Financial Statements (unaudited) or Notes to Condensed Consolidated Financial Statements (unaudited).

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 introduces a lessee model that brings most leases on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in ASC 606, the FASB's new revenue recognition standard (e.g., those related to evaluating when profit can be recognized). Furthermore, ASU 2016-02 addresses other concerns related to the current leases model. For example, ASU 2016-02 eliminates the requirement in current U.S. GAAP for an entity to use bright-line tests in determining lease classification. The standard also requires lessors to increase the transparency of their exposure to changes in value of their residual assets and how they manage that exposure. CPG is required to adopt ASU 2016-02 for periods beginning after December 15, 2018, including interim periods, with early adoption permitted. CPG is currently evaluating the impact the adoption of ASU 2016-02 will have on the Condensed Consolidated Financial Statements (unaudited) or Notes to Condensed Consolidated Financial Statements (unaudited).

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 changes the way entities present debt issuance costs in financial statements by presenting issuance costs on the balance sheet as a direct deduction from the related liability rather than as a deferred charge. Amortization of these costs will continue to be reported as interest expense. In August 2015, the FASB issued ASU 2015-15 to clarify the SEC staff's position on these costs in relation to line-of-credit agreements stating that the SEC staff would not object to an entity deferring and presenting debt issuance costs related to a line-of-credit arrangement as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of such arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit. CPG adopted ASU 2015-03 and ASU 2015-15 as of January 1, 2016, resulting in the reclassification of unamortized balance of debt issuance costs from "Deferred charges and other" to "Long-term debt." This change in accounting principle was applied retrospectively. As of December 31, 2015, the balance of unamortized debt issuance costs recorded in "Deferred charges and other" was $20.6 million. As a result of the retrospective adjustment, the December 31, 2015 balances of "Deferred charges and other" and "Long-term debt" were reduced by $20.6 million on the Condensed Consolidated Balance Sheets (unaudited) and Notes to Condensed Consolidated Financial Statements (unaudited).

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 amends consolidation guidance by including changes to the variable and voting interest models used by entities to evaluate whether an entity should be consolidated. CPG retrospectively adopted ASU 2015-02 as of January 1, 2016. The adoption of this guidance did not have a material impact on the Condensed Consolidated Financial Statements (unaudited) or Notes to Condensed Consolidated Financial Statements (unaudited).

4. ~~Earnings~~Transactions ~~Per~~with ~~Share~~Affiliates

~~Basic~~Transactions ~~EPS~~with is based on net income attributable to CPG and is calculated based upon the daily weighted-average number of common shares outstanding during the periods presented. Also, this calculation includes fully vested awards that have not yet been issued as common stock. Diluted EPS includes the above, plus unvested stock awards granted under CPG's compensation plans, but only to the extent these instruments dilute earnings per share.TransCanada

OnSubsequent ~~July~~to 1,the ~~2015,~~completion ~~317.6~~of ~~million~~the ~~shares~~Merger, of CPG ~~common~~engaged ~~stock were distributed to NiSource stockholders~~ in ~~conjunction~~transactions with ~~the~~subsidiaries ~~Separation.~~of ~~For comparative purposes~~TransCanada, ~~and~~which toare ~~provide~~deemed ~~a more meaningful calculation for weighted average shares, CPG has assumed this amount~~ to be ~~outstanding~~affiliates as of ~~the~~CPG. ~~beginning~~Transactions ofwith ~~each~~affiliates ~~period~~subsequent ~~prior~~ to the ~~Separation~~Merger ~~presented~~are insummarized ~~the calculation of weighted average shares outstanding.~~below:

~~The~~Interest ~~calculation~~Expense. CPG was charged interest for short-term borrowings of ~~diluted~~$0.5 ~~average~~million ~~common~~for ~~shares~~the isthree asand ~~follows:~~nine months ended September 30, 2016.

	Three Months EndedJune 30,		Six Months EndedJune 30,
(in millions)	2016	2015	2016	2015
Basic average common shares outstanding	400.6	317.6	400.4	317.6
Dilutive potential common shares:
Shares restricted under stock plans	0.9	—	0.7	—
Diluted average common shares	401.5	317.6	401.1	317.6

Accounts Receivable. The affiliated accounts receivable balance of $40.7 million due from TransCanada represents amounts allocated to CPG pursuant to TransCanada's tax allocation agreement.

~~Dividends.~~Accounts ~~CPG paid a dividend of $0~~Payable.~~13375~~ ~~per~~The ~~share~~affiliated toaccounts ~~stockholders~~payable onbalance ~~May 20, 2016. On May 10, 2016, CPG declared a dividend~~ of $09.~~13875~~6 ~~per~~million ~~share~~primarily toincludes ~~stockholders~~amounts ofdue ~~record~~for atinsurance ~~July 29,~~coverage ~~2016,~~and interest payable ~~August 19,~~to ~~2016~~TransCanada. ~~As a result of the Merger, this dividend was canceled.~~

CPG-TransCanada PipeLine USA Ltd. Revolving Credit Facility. Subsequent to the completion of the Merger, CPG entered into a $2,000.0 million revolving credit facility with US Parent. The revolving credit facility became effective as of July 1, 2016, with no termination date. The revolving credit facility is available for general corporate purposes, including capital expenditures.

Loans under the revolving credit facility bear interest at CPG’s option at either (i) the greatest of (a) the federal funds effective rate plus 0.500 percent, (b) the reference prime rate as defined by Bloomberg Professional Service or (c) the Eurodollar rate which is based on the one month LIBOR, plus 1.000 percent, each of which is subject to a margin of 0.250 percent per annum, or (ii) the Eurodollar rate plus a margin of 1.250 percent per annum.

As of September 30, 2016, CPG had $250.0 million in outstanding borrowings under the revolving credit facility, with a weighted average interest rate of 1.87%.

Given their maturity and turnover is three months or less, cash flows related to the borrowings and repayments of the revolving credit facilities are presented net in the Condensed Statements of Consolidated Cash Flows (unaudited).

Dividends to TransCanada. During the three months ended September 30, 2016, CPG distributed $55.5 million to TransCanada for the dividend of $0.13875 per share declared on May 10, 2016.

Transactions with NiSource

Prior to the Separation, CPG engaged in transactions with subsidiaries of NiSource, which at that time were deemed to be affiliates of CPG. The Separation occurred on July 1, 2015 and for periods after this date CPG and the subsidiaries of NiSource are no longer affiliates. Transactions with affiliates prior to the Separation are summarized below:

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Transportation, Storage and Other Revenues. CPG provided natural gas transportation, storage and other services to subsidiaries of NiSource, former affiliates. For the nine months ended September 30, 2015, CPG recognized transportation revenues of $47.5 million, storage revenues of $26. ~~Transactions~~2 ~~with~~million ~~Affiliates~~and other revenues of $0.2 million.

~~Prior~~Operation toand ~~the~~Maintenance ~~Separation,~~Expense. CPG ~~engaged~~received inexecutive, ~~transactions~~financial, ~~with~~legal, ~~subsidiaries~~information oftechnology ~~NiSource~~and other administrative and general services from a former affiliate, ~~which~~NiSource atCorporate ~~that~~Services. ~~time~~Expenses ~~were~~incurred ~~deemed~~as toa beresult ~~affiliates~~of these services consisted of ~~CPG~~employee compensation and benefits, outside services and other expenses. ~~The~~CPG ~~Separation~~was ~~occurred~~charged directly or allocated using various allocation methodologies based on ~~July~~a 1combination of gross fixed assets, ~~2015~~total operating expense, number of employees and ~~for~~other ~~periods~~measures. ~~after~~Management ~~this~~believes ~~date~~the ~~CPG~~allocation methodologies are reasonable. However, these allocations and estimates may not represent the ~~subsidiaries~~amounts ofthat ~~NiSource~~would ~~are~~have nobeen ~~longer~~incurred ~~affiliates.~~had ~~Transactions~~the ~~with~~services ~~affiliates~~been ~~prior~~provided toby an outside entity. For the ~~Separation~~nine ~~are~~months ~~summarized~~ended ~~below:~~September 30, 2015, operation and maintenance expense was $52.9 million.

~~Statement~~Interest Expense and Income. Prior to the private placement of ~~Operations~~senior notes on May 22, 2015, CPG paid NiSource interest for intercompany long-term debt outstanding. For the nine months ended September 30, 2015, CPG was charged interest for long-term debt of $31.0 million, offset by associated AFUDC of $2.4 million.

	Three Months EndedJune 30,				Six Months EndedJune 30,
(in millions)	2016		2015		2016		2015
Transportation revenues	$	—	$	18.5	$	—	$	47.5
Storage revenues	—		12.9		—		26.2
Other revenues	—		0.1		—		0.2
Operation and maintenance expense	—		24.9		—		52.9
Interest expense	—		11.0		—		29.3
Interest income	—		3.4		—		4.4

Columbia OpCo and its subsidiaries entered into an intercompany money pool agreement with NiSource Finance, which became effective on the closing date of CPPL's IPO. Following the Separation, the agreement is with CPG. The money pool is available for Columbia OpCo and its subsidiaries' general purposes, including capital expenditures and working capital. This intercompany money pool agreement is discussed in connection with Short-term Borrowings below. Prior to CPPL's IPO, the subsidiaries of CPG participated in a similar money pool agreement with NiSource Finance. Prior to the Separation, NiSource Corporate Services administered the money pools. Prior to the Separation, the cash accounts maintained by the subsidiaries of Columbia OpCo and CPG were swept into a NiSource corporate account on a daily basis, creating an affiliated receivable or decreasing an affiliated payable, as appropriate, between NiSource and the subsidiary. The amount of interest expense and income for short-term borrowings was determined by the net position of each subsidiary in the money pool. Subsequent to the Separation, the intercompany money pool balances and related interest expense and income are eliminated as intercompany activity. The money pool weighted-average interest rate at September 30, 2015 was 1.21%. For the nine months ended September 30, 2015, the interest expense for short-term borrowings charged was $0.7 million. For the nine months ended September 30, 2015, interest income for short-term borrowings was $2.5 million.

~~Transportation~~Dividends to NiSource. During the nine months ended September 30, ~~Storage~~2015, ~~and~~CPG ~~Other~~distributed ~~Revenues~~$500.0 ~~CPG~~million ~~provided~~of ~~natural~~the ~~gas~~proceeds ~~transportation,~~from ~~storage~~CPPL's IPO to NiSource as a reimbursement of preformation capital expenditures with respect to the assets contributed to Columbia OpCo and ~~other~~$1,450.0 ~~services~~million of proceeds related to ~~subsidiaries~~the issuance of ~~NiSource,~~senior ~~former~~notes ~~affiliates~~in May 2015. There were no restrictions on the payment by CPG of dividends to NiSource.

~~Operation and Maintenance Expense~~5. Short-Term CPG received executive, financial, legal, information technology and other administrative and general services from a former affiliate, NiSource Corporate Services. Expenses incurred as a result of these services consisted of employee compensation and benefits, outside services and other expenses. CPG was charged directly or allocated using various allocation methodologies based on a combination of gross fixed assets, total operating expense, number of employees and other measures. Management believes the allocation methodologies are reasonable. However, these allocations and estimates may not represent the amounts that would have been incurred had the services been provided by an outside entity.Borrowings

~~Interest~~CPG ~~Expense~~Revolving ~~and~~Credit ~~Income~~Facility. ~~Prior~~As toof ~~the~~December 31, ~~private~~2015, ~~placement~~CPG had no outstanding borrowings and had $18.1 million in letters of ~~senior~~credit ~~notes~~under onthe ~~May~~revolving 22credit facility. On July 1, ~~2015~~2016, ~~CPG~~in ~~paid~~connection ~~NiSource~~with ~~interest~~the ~~for~~Merger, ~~intercompany~~all ~~long-term~~existing ~~debt~~letters ~~outstanding.~~of ~~For~~credit ~~the~~were ~~three~~migrated ~~months~~to ~~ended~~a ~~June 30,~~TransCanada ~~2015,~~credit ~~CPG~~facility ~~was~~and ~~charged~~the ~~interest~~CPG ~~for~~revolving ~~long-term~~credit ~~debt~~facility ofwas ~~$12~~terminated.0 ~~million~~As a result, ~~offset~~CPG byaccelerated ~~associated~~the ~~AFUDC~~amortization of $1.4.3 million. ~~For~~of ~~the~~deferred ~~six~~costs ~~months~~associated ~~ended~~with ~~June 30,~~the ~~2015,~~revolving ~~CPG~~credit ~~was~~facility, ~~charged~~which ~~interest~~are ~~for~~included ~~long-term~~in ~~debt~~interest ofexpense ~~$31.0~~for ~~million,~~the ~~offset~~three byand ~~associated~~nine ~~AFUDC~~months ofended ~~$2.4~~September 30, ~~million~~2016.

~~Columbia~~CPPL ~~OpCo~~Revolving ~~and~~Credit ~~its~~Facility. ~~subsidiaries~~As ~~entered~~of ~~into~~December 31, an2015, ~~intercompany~~CPPL ~~money~~had ~~pool~~$15.0 ~~agreement~~million ~~with~~in ~~NiSource~~outstanding ~~Finance~~borrowings, ~~which~~with ~~became~~a ~~effective~~weighted onaverage ~~the~~interest ~~closing~~rate ~~date~~ of ~~CPPL's IPO~~1. ~~Following the Separation~~28%, ~~the agreement is with CPG. The money pool is available for Columbia OpCo~~ and ~~its~~issued ~~subsidiaries'~~no ~~general~~letters ~~purposes,~~of ~~including~~credit ~~capital~~under ~~expenditures~~the ~~and~~revolving ~~working~~credit ~~capital~~facility. ~~This~~On ~~intercompany~~June ~~money~~29, ~~pool~~2016, ~~agreement is discussed~~ in ~~connection~~anticipation ~~with Short-term Borrowings below. Prior to CPPL's IPO, the subsidiaries~~ of ~~CPG participated in a similar money pool agreement with NiSource Finance. Prior to~~ the ~~Separation~~Merger, ~~NiSource~~all ~~Corporate~~outstanding ~~Services administered the money pools. Prior to the Separation~~borrowings, ~~the~~facility ~~cash~~fees ~~accounts~~and ~~maintained~~interest bywere ~~the~~paid ~~subsidiaries~~in offull ~~Columbia OpCo~~ and ~~CPG~~the ~~were~~revolving ~~swept~~credit ~~into~~facility awas ~~NiSource~~terminated. ~~corporate~~As ~~account on~~ a ~~daily basis~~result, ~~creating~~CPPL anaccelerated ~~affiliated~~the ~~receivable~~amortization orof ~~decreasing an affiliated payable, as appropriate, between NiSource and the subsidiary~~$1.4 ~~The~~million ~~amount~~ of ~~interest~~deferred ~~expense~~costs ~~and~~associated ~~income~~with ~~for short-term borrowings was determined by~~ the ~~net~~revolving ~~position~~credit ~~of each subsidiary in the money pool. Subsequent to the Separation~~facility, ~~the~~which ~~intercompany money pool balances and related interest expense and income~~ are ~~eliminated~~included asin ~~intercompany activity. The money pool weighted-average~~ interest ~~rate at June 30, 2015 was 1.21%. For the three months ended June 30, 2015, the interest~~ expense for ~~short-term borrowings charged was $0.4 million. For~~ the ~~six~~nine months ended ~~June~~September 30, ~~2015, the interest expense for short-term borrowings charged was $0~~2016.7 ~~million.~~

~~Dividends~~CPG toCommercial ~~NiSource~~Paper Program. ~~During~~CPG's commercial paper program (the ~~six~~"Program") ~~months~~had ~~ended~~a ~~June 30,~~Program ~~2015,~~limit ~~CPG~~of ~~distributed~~up to $~~500~~1,000.0 million. ofCEG, ~~the~~OpCo ~~proceeds~~GP ~~from~~and ~~CPPL's~~Columbia ~~IPO~~OpCo toeach ~~NiSource~~agreed, asjointly aand ~~reimbursement~~severally, ofunconditionally ~~preformation~~and ~~capital~~irrevocably ~~expenditures~~to ~~with~~guarantee ~~respect~~payment toin full of the ~~assets~~principal ~~contributed~~of toand ~~Columbia~~interest ~~OpCo~~(if ~~and~~any) ~~$1,450.0~~on ~~million~~the promissory notes. As of ~~proceeds~~December 31, ~~related~~2015, toCPG had no promissory notes outstanding under the ~~issuance~~Program. ofOn ~~senior~~June ~~notes~~30, 2016, in ~~May~~anticipation ~~2015~~of the Merger, the Program was terminated. ~~There~~CPG ~~were~~had no ~~restrictions~~promissory onnotes ~~the~~outstanding ~~payment~~under bythe ~~CPG~~Program ofat ~~dividends~~the totime ~~NiSource~~of termination.

Given their maturity and turnover is three months or less, cash flows related to the borrowings and repayments of the CPG and CPPL revolving credit facilities and the Program are presented net in the Condensed Statements of Consolidated Cash Flows (unaudited).

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

6. ~~Short~~Long-Term ~~Borrowings~~Debt

~~CPG~~Senior ~~Revolving~~notes ~~Credit Facility~~issuance. On ~~December 5~~May 22, ~~2014~~2015, CPG ~~entered~~issued ~~into~~ a private placement of $12,~~500~~750.0 million ~~senior~~in ~~revolving~~aggregate ~~credit~~principal ~~facility,~~amount of ~~which~~senior notes, comprised of $~~250~~500.0 million inof ~~letters~~2.45% ofsenior ~~credit~~notes isdue ~~available~~2018 (the "2018 Notes"), $750.0 ~~The~~million ~~revolving~~of ~~credit~~3.30% ~~facility~~senior ~~became~~notes ~~effective~~due as2020 (the "2020 Notes"), $1,000.0 million of 4.50% senior notes due 2025 (the ~~Separation~~"2025 ~~with~~Notes") aand ~~termination~~$500.0 ~~date~~million of ~~July~~5.80% 2senior notes due 2045 (the "2045 Notes" and, together with the 2018 Notes, 2020. Notes and 2025 Notes, the "Notes").

As of June 30, 2016 and December 31, 2015, CPG had no outstanding borrowings and had $18.1 million in letters of credit under the revolving credit facility, respectively. On July 1, 2016, in connection with the Merger, all existing letters of credit were migrated to a TransCanada credit facility and the CPG revolving credit facility was terminated.

CPG-TransCanada Pipeline USA Ltd. Revolving Credit Facility. Subsequent to the completion of the Merger, CPG entered into a $2,000.0 million revolving credit facility with US Parent. The revolving credit facility became effective as of July 1, 2016, with no termination date. The revolving credit facility will be available for general corporate purposes, including capital expenditures.

Loans under the revolving credit facility will bear interest at CPG’s option at either (i) the greatest of (a) the federal funds effective rate plus 0.500 percent, (b) the reference prime rate as defined by Bloomberg Professional Service or (c) the Eurodollar rate which is based on the one month LIBOR, plus 1.000 percent, each of which is subject to a margin of 0.250 percent per annum, or (ii) the Eurodollar rate plus a margin of 1.250 percent per annum.

CPPL Revolving Credit Facility. As of December 31, 2015, CPPL had $15.0 million in outstanding borrowings, with a weighted average interest rate of 1.28%, and issued no letters of credit under the revolving credit facility. On June 29, 2016, in anticipation of the Merger, all outstanding borrowings, facility fees and interest were paid in full and the revolving credit facility was terminated. As a result, CPPL accelerated the amortization of $1.4 million of deferred costs associated with the revolving credit facility, which are included in interest expense for the three and six months ended June 30, 2016.

CPG Commercial Paper Program. CPG's commercial paper program (the "Program") had a Program limit of up to $1,000.0 million. CEG, OpCo GP and Columbia OpCo each agreed, jointly and severally, unconditionally and irrevocably to guarantee payment in full of the principal of and interest (if any) on the promissory notes. As of December 31, 2015, CPG had no promissory notes outstanding under the Program. On June 30, 2016, in anticipation of the Merger, the Program was terminated. CPG had no promissory notes outstanding under the Program at the time of termination.

Given their maturity and turnover is less than 90 days, cash flows related to the borrowings and repayments of the CPG and CPPL revolving credit facilities and the Program are presented net in the Condensed Statements of Consolidated Cash Flows (unaudited).

7. Long-Term Debt

Senior notes issuance. On May 22, 2015, CPG issued its private placement of $2,750.0 million in aggregated principal amount of its senior notes, comprised of $500.0 million of 2.45% senior notes due 2018 (the "2018 Notes"), $750.0 million of 3.30% senior notes due 2020 (the "2020 Notes"), $1,000.0 million of 4.50% senior notes due 2025 (the "2025 Notes") and $500.0 million of 5.80% senior notes due 2045 (the "2045 Notes" and, together with the 2018 Notes, 2020 Notes and 2025 Notes, the "Notes").

The initial guarantors are three subsidiaries of CPG, CEG, Columbia OpCo and OpCo GP (the "Guarantors"). The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by all of the Guarantors. Each guarantee of CPG's obligations under the Notes is a direct, unsecured and unsubordinated obligation of the applicable Guarantor and has the same ranking with respect to indebtedness of that Guarantor as the Notes have with respect to CPG's indebtedness. The guarantees of any Guarantor may be released under certain circumstances.

The Notes and the guarantees are (a) unsecured, (b) effectively junior in right of payment to any future secured indebtedness of CPG and the Guarantors, (c) equal in right of payment with any existing and future unsubordinated indebtedness of CPG and the Guarantors and (d) senior in right of payment to any future subordinated indebtedness of CPG and the Guarantors.

The 2018 Notes will mature on June 1, 2018, the 2020 Notes will mature on June 1, 2020, the 2025 Notes will mature on June 1, 2025 and the 2045 Notes will mature on June 1, 2045. Interest on the Notes of each series will be payable semi-annually in arrears on June 1 and December 1.

On February 23, 2016, CPG filed an exchange offer registration statement with the SEC. The registration statement was declared effective as of April 14, 2016.

7. Gain on Sale of Assets

CPG recognizes gains on conveyances of mineral rights positions into earnings as any obligation associated with conveyance is satisfied. For the three months ended September 30, 2016 and 2015, gains on conveyances amounted to $9.7 million and $36.0 million, respectively, and are included in "Gain on sale of assets" on the Condensed Statements of Consolidated Operations (unaudited). For the nine months ended September 30, 2016 and 2015, gains on conveyances amounted to $15.7 million and $49.6 million, respectively, and are included in "Gain on sale of assets" on the Condensed Statements of Consolidated Operations (unaudited). Included in the gains on conveyances is a cash bonus payment of $9.0 million and $35.8 million received by CEVCO from CNX Gas Company LLC during the three and nine months ended September 30, 2016 and 2015, respectively, for the lease of Utica Shale and Upper Devonian gas rights in Greene and Washington Counties in Pennsylvania and Marshall and Ohio Counties in West Virginia. As of September 30, 2016 and December 31, 2015, deferred gains of approximately $1.3 million and $8.1 million, respectively, were deferred pending performance of future obligations and recorded within "Deferred revenue," on the Condensed Consolidated Balance Sheets (unaudited).

8. Goodwill

CPG tests its goodwill for impairment annually as of May 1 unless indicators, events or circumstances would require an immediate review. Goodwill is tested for impairment using financial information at the reporting unit level, referred to as the Columbia Gas Transmission Operations reporting unit, which is consistent with the level of discrete financial information reviewed by management. The Columbia Gas Transmission Operations reporting unit includes the following entities: Columbia Gas Transmission (including its equity method investment in the Millennium Pipeline joint venture), Columbia Gulf and the equity method investment in Hardy Storage. All of CPG's goodwill relates to NiSource's acquisition of CEG in 2000, which was contributed to CPG prior to the Separation. CPG’s goodwill assets at September 30, 2016 were $1,975.5 million.

CPG's predecessor completed a quantitative (“step 1”) fair value measurement of the reporting unit during the May 1, 2012 goodwill test. The test indicated that the fair value of the reporting unit substantially exceeded the carrying value, indicating that no impairment existed.

GAAP allows entities testing goodwill for impairment the option of performing a qualitative (“step 0”) assessment before calculating the fair value of a reporting unit for the goodwill impairment test. If a step 0 assessment is performed, an entity is no longer required to calculate the fair value of a reporting unit unless the entity determines that, based on that assessment, it is more likely than not that its fair value is less than its carrying amount.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

8CPG applied the qualitative step 0 analysis to its reporting unit for the annual impairment test performed as of May 1, 2016. ~~Gain~~ onFor ~~Sale~~the current year test, CPG assessed various assumptions, events and circumstances that would have affected the estimated fair value of ~~Assets~~the reporting unit as compared to its base line May 1, 2012 step 1 fair value measurement. The recent Merger Agreement and acquisition price were incorporated into the current year testing. The results of this assessment indicated that it is not more likely than not that its reporting unit fair value is less than the reporting unit carrying value.

CPG ~~recognizes~~considered ~~gains~~whether onthere ~~conveyances~~were ~~of mineral rights positions into earnings as~~ any ~~obligation~~events ~~associated~~or ~~with~~changes ~~conveyance~~in iscircumstances ~~satisfied.~~subsequent ~~For~~to the ~~three~~annual ~~months~~test ~~ended~~that ~~June 30,~~would ~~2016~~reduce ~~and 2015, gains on conveyances amounted to $3.4 million and $8.3 million, respectively, and are included in "Gain on sale of assets and impairment, net" on~~ the ~~Condensed~~fair ~~Statements~~value of ~~Consolidated Operations (unaudited). For~~ the ~~six~~reporting ~~months~~unit ~~ended~~below ~~June 30,~~its ~~2016~~carrying ~~and~~amount ~~2015, gains on conveyances amounted to $6.0 million~~ and ~~$13.6~~necessitate ~~million,~~another ~~respectively,~~goodwill ~~and are included in "Gain on sale of assets and~~ impairment, ~~net" on the Condensed Statements of Consolidated Operations (unaudited)~~test. AsIn ofconsideration ~~June 30, 2016 and December 31, 2015, deferred gains~~ of ~~approximately~~all ~~$2.0~~relevant ~~million and $8.1 million~~factors, ~~respectively,~~there were ~~deferred~~no ~~pending~~indicators ~~performance~~that ofwould ~~future~~require ~~obligations~~a ~~and~~subsequent ~~recorded~~goodwill ~~within~~impairment ~~"Deferred~~test ~~revenue,"~~during on the ~~Condensed~~third ~~Consolidated~~quarter ~~Balance~~of ~~Sheets (unaudited)~~2016.

9. ~~Goodwill~~Asset Retirement Obligations

~~CPG~~Changes ~~tests~~in ~~its~~CPG's ~~goodwill~~liability for ~~impairment~~asset ~~annually~~retirement asobligations ~~of May 1 unless indicators, events or circumstances would require an immediate review. Goodwill is tested~~ for ~~impairment using financial information at~~ the ~~reporting~~nine ~~unit~~months ~~level,~~ended ~~referred to as the Columbia Gas Transmission Operations reporting unit~~September 30, ~~which~~2016 is consistent with the level of discrete financial information reviewed by management. The Columbia Gas Transmission Operations reporting unit includes the following entities: Columbia Gas Transmission (including its equity method investment in the Millennium Pipeline joint venture), Columbia Gulf and ~~the~~2015 ~~equity~~are ~~method~~presented ~~investment~~ in ~~Hardy Storage. All of CPG's goodwill relates to NiSource's acquisition of CEG in 2000, which was contributed to CPG prior to~~ the ~~Separation.~~table ~~CPG’s goodwill assets at June 30, 2016 were $1,975.5 million.~~ below:



(in millions)	2016			2015
Balance as of January 1,	$	25.7		$	23.2
Accretion expense	0.8			0.9
Additions	—			0.4
Settlements	—			—
Change in estimated cash flows	(3.5		)	(1.6		)
Balance as of September 30,	$	23.0		$	22.9

~~GAAP~~CPG's ~~allows~~asset ~~entities~~retirement ~~testing~~obligations ~~goodwill~~above ~~for~~relate ~~impairment~~to the ~~option~~modernization program of ~~performing~~pipelines aand ~~qualitative~~transmission ~~(“step~~facilities, ~~0”)~~the ~~assessment~~retiring ~~before~~of ~~calculating~~offshore ~~the~~facilities, ~~fair~~polychlorinated ~~value~~biphenyl of("PCB") aremediation ~~reporting~~and ~~unit~~asbestos ~~for~~removal ~~the~~at ~~goodwill~~several ~~impairment~~compressor ~~test.~~and Ifmeasuring astations. ~~step~~CPG 0recognizes ~~assessment~~that iscertain ~~performed~~assets, anwhich ~~entity~~include isgas nopipelines ~~longer~~and ~~required~~natural togas ~~calculate~~storage ~~the~~wells, ~~fair~~will ~~value~~operate offor aan ~~reporting~~indeterminate ~~unit~~future ~~unless~~period ~~the~~when ~~entity~~properly ~~determines~~maintained. ~~that,~~A ~~based~~liability onfor ~~that~~these ~~assessment,~~asset itretirement isobligations ~~more~~will ~~likely~~be ~~than~~recorded ~~not~~only ~~that~~if ~~its~~and ~~fair~~when ~~value~~a isfuture ~~less~~retirement ~~than~~obligation ~~its~~with ~~carrying~~a ~~amount~~determinable life is identified.

~~CPG applied the qualitative step 0 analysis to its reporting unit for the annual impairment test performed as of May 1, 2016~~10. Regulatory For the current year test, CPG assessed various assumptions, events and circumstances that would have affected the estimated fair value of the reporting unit as compared to its base line May 1, 2012 step 1 fair value measurement. The recent Merger Agreement and proposed acquisition price were incorporated into the current year testing. The results of this assessment indicated that it is not more likely than not that its reporting unit fair value is less than the reporting unit carrying value.Matters

~~CPG~~Columbia ~~considered~~Gas ~~whether~~Transmission ~~there~~Modernization ~~were~~Program. ~~any~~In ~~events~~November or2015, ~~changes~~Columbia inGas ~~circumstances~~Transmission ~~subsequent~~commenced to the ~~annual~~fourth ~~test~~year ~~that~~of ~~would~~the ~~reduce~~Columbia ~~the~~Gas ~~fair~~Transmission ~~value~~long-term ofsystem ~~the~~modernization ~~reporting~~program. ~~unit~~Columbia ~~below~~Gas ~~its~~Transmission ~~carrying~~expects ~~amount~~to ~~and~~place ~~necessitate~~approximately ~~another~~$300 ~~goodwill~~million ~~impairment~~in ~~test.~~modernization Ininvestments ~~consideration~~into ofservice ~~all~~during ~~relevant~~the ~~factors,~~year. ~~there~~Recovery ~~were~~of nothe ~~indicators~~revenue ~~that~~requirement ~~would~~on ~~require~~approximately a$320 ~~subsequent~~million ~~goodwill~~of ~~impairment~~investments ~~test~~made ~~during~~in ~~the~~2015 ~~second~~began ~~quarter~~on ofFebruary 1, 2016.

10In December 2015, Columbia Gas Transmission filed an extension of this settlement and received the FERC's approval of the customer agreement in March 2016. ~~Asset~~ ~~Retirement~~This ~~Obligations~~extension will allow Columbia Gas Transmission to invest an additional $1.1 billion over an additional three-year period through 2020. This agreement also expands the scope of facility investments covered by the program.

~~Changes~~Columbia inGulf. ~~CPG~~On January 21, 2016, the FERC issued an Order (the "January 21 Order") initiating an investigation pursuant to Section 5 of the NGA to determine whether Columbia Gulf's ~~liability~~existing rates for ~~asset~~jurisdictional ~~retirement~~services ~~obligations~~are ~~for~~unjust and unreasonable. Columbia Gulf filed a cost and revenue study with the ~~six~~FERC ~~months~~on ~~ended~~April 5, 2016, as required by the January 21 Order. The January 21 Order directed that a hearing be conducted pursuant to an accelerated timeline and that an initial decision be issued by February 28, 2017. On June 30 13, 2016, the FERC trial staff, Columbia Gulf, and ~~2015~~all ~~are~~of ~~presented~~the active parties filed a Joint Motion to Suspend the Procedural Schedule and Waive Answer Period (the "Motion"). The Motion represents that the parties unanimously support the Motion and requested waiver of the answer period, which was granted. The parties reached an agreement in principle during a June 2, 2016 settlement conference that would fully resolve all matters set for hearing by the ~~table~~FERC. ~~below:~~The Motion represents that the parties expect to file an offer of settlement memorializing the agreement in principle no later than July 29, 2016, and suspension of the procedural schedule will promote an efficient and speedy resolution of this matter by allowing the participants to focus their efforts on drafting the necessary settlement documents. Columbia Gulf filed the offer of settlement with the FERC in accordance with the agreement noted above.

(in millions)	2016			2015
Balance as of January 1,	$	25.7		$	23.2
Accretion expense	0.5			0.6
Additions	—			0.4
Settlements	—			—
Change in estimated cash flows	(1.9		)	—
Balance as of June 30,	$	24.3		$	24.2

CPG's asset retirement obligations above relate to the modernization program of pipelines and transmission facilities, the retiring of offshore facilities, polychlorinated biphenyl ("PCB") remediation and asbestos removal at several compressor and measuring

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

~~stations.~~On ~~CPG~~August ~~recognizes~~15, ~~that~~2016, ~~certain~~the ~~assets~~administrative law judge issued a Certification of Uncontested Settlement, which ~~include~~noted ~~gas~~that ~~pipelines~~no ~~and~~parties ~~natural~~objected ~~gas~~to ~~storage~~the ~~wells~~provisions in the offer of settlement. On September 22, ~~will~~2016, ~~operate~~the ~~for~~FERC issued an ~~indeterminate~~order ~~future~~approving ~~period~~the ~~when~~uncontested ~~properly~~settlement, ~~maintained.~~which Arequires ~~liability~~a ~~for~~reduction ~~these~~in ~~asset~~Columbia ~~retirement~~Gulf’s ~~obligations~~daily ~~will~~maximum berecourse ~~recorded~~rate ~~only~~and ifaddresses Columbia Gulf’s treatment of postretirement benefits other than pensions, pension expenses, and ~~when~~regulatory aexpenses. ~~future~~The ~~retirement~~order ~~obligation~~also ~~with~~requires Columbia Gulf to file a ~~determinable~~general ~~life~~rate iscase ~~identified~~under section 4 of the NGA by January 31, 2020, for rates to take effect by August 1, 2020. Other terms of the settlement are included in FERC Docket No. RP16-302-000.

11. Regulatory Matters

Columbia Gas Transmission Customer Settlement. In November 2015, Columbia Gas Transmission commenced the fourth year of the Columbia Gas Transmission long-term system modernization program. Columbia Gas Transmission expects to place approximately $300 million in modernization investments into service during the year. Recovery of the revenue requirement on approximately $320 million of investments made in 2015 began on February 1, 2016.

In December 2015, Columbia Gas Transmission filed an extension of this settlement and received the FERC's approval of the customer agreement in March 2016. This extension will allow Columbia Gas Transmission to invest an additional $1.1 billion over an additional three-year period through 2020. This agreement also expands the scope of facility investments covered by the program.

Columbia Gulf. On January 21, 2016, the FERC issued an Order (the "January 21 Order") initiating an investigation pursuant to Section 5 of the NGA to determine whether Columbia Gulf's existing rates for jurisdictional services are unjust and unreasonable. Columbia Gulf filed a cost and revenue study with the FERC on April 5, 2016, as required by the January 21 Order. The January 21 Order directed that a hearing be conducted pursuant to an accelerated timeline and that an initial decision be issued by February 28, 2017. On June 13, 2016, the FERC trial staff, Columbia Gulf, and all of the active parties filed a Joint Motion to Suspend the Procedural Schedule and Waive Answer Period (the "Motion"). The Motion represents that the parties unanimously support the Motion and requested waiver of the answer period, which was granted. The parties reached an agreement in principle during a June 2, 2016 settlement conference that would fully resolve all matters set for hearing by the FERC. The Motion represents that the parties expect to file an offer of settlement memorializing the agreement in principle no later than July 29, 2016, and suspension of the procedural schedule will promote an efficient and speedy resolution of this matter by allowing the participants to focus their efforts on drafting the necessary settlement documents. Columbia Gulf filed the offer of settlement with the FERC in accordance with the agreement noted above.

Cost Recovery Trackers and other similar mechanisms. A significant portion of the transmission and storage regulated companies' revenue is related to the recovery of their operating costs, the review and recovery of which occurs via standard regulatory proceedings with the FERC under Section 4 of the NGA. However, certain operating costs of the Columbia OpCo regulated transmission and storage companies are significant and recurring in nature, such as fuel for compression and lost and unaccounted for gas. The FERC allows for the recovery of such costs via cost tracking mechanisms. These tracking mechanisms allow the transmission and storage companies' rates to fluctuate in response to changes in certain operating costs or conditions as they occur to facilitate the timely recovery of its costs incurred. The tracking mechanisms involve a rate adjustment that is filed at a predetermined frequency, typically annually, with the FERC and is subject to regulatory review before new rates go into effect. Other such costs under regulatory tracking mechanisms include upstream pipeline transmission, electric compression, operational purchases and sales of natural gas, and the revenue requirement for capital investments made under Columbia Gas Transmission's long-term plan to modernize its interstate transmission system as discussed above.

1211. Equity Method Investments

Certain investments of CPG are accounted for under the equity method of accounting. These investments are recorded within "Unconsolidated affiliates" on the Condensed Consolidated Balance Sheets (unaudited) and CPG's portion of the results is reflected in "Equity Earnings in Unconsolidated Affiliates" on the Condensed Statements of Consolidated Operations (unaudited). These investments are integral to CPG's business. Contributions are made to these equity investees to fund CPG's share of capital projects.

The following table contains contribution and distribution data representing CPG's portion based on CPG's ownership percentage of each investment:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2016		2015		2016		2015
Millennium Pipeline
Contributions to Millennium Pipeline	$	4.3	$	1.4	$	6.2	$	1.4
Distributions of earnings from Millennium Pipeline	17.5		13.3		41.3		37.5
Hardy Storage
Contributions to Hardy Storage	—		—		—		—
Distributions of earnings from Hardy Storage	—		—		1.4		1.0
Pennant
Contributions to Pennant	—		—		—		—
Distributions of earnings from Pennant	2.3		2.9		8.3		5.6
Return of capital from Pennant	0.8		0.2		1.6		2.4

During the third quarter of 2015, an additional member joined the Pennant joint venture. The member's initial ownership investment in Pennant is 5.00%, and by funding specified, disproportionate investment amounts for future growth projects, the member can invest directly in the growth of Pennant. Such funding will potentially increase the member's ownership in Pennant up to 33.33% over a defined investment period. As a result of the buy-in, Columbia Midstream received $12.7 million in cash and recorded a gain of $2.9 million, and its ownership interest in Pennant decreased from 50.00% to 47.50%.

12. Income Taxes

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Refer to Note 1, "Basis of Accounting Presentation" for additional information on the Merger. The ~~following~~effective ~~table~~tax ~~contains~~rates ~~contribution~~for the nine months ended September 30, 2016 and ~~distribution~~2015 ~~data~~were ~~representing~~33.5% ~~CPG~~and 33.9%, respectively. The effective tax rates for 2016 and 2015 differ from the Federal tax rate of 35% primarily due to the effects of tax credits, state income taxes, utility rate-making, other permanent book-to-tax differences and income received following CPPL's ~~portion~~IPO ~~based~~that onis ~~CPG~~not subject to income tax at the partnership level. The effective tax rate is impacted by CPPL's IPO, which modified the ownership ~~percentage~~structure and now reflects CPPL earnings for which the noncontrolling public limited partners are directly responsible for the related income taxes. CPG consolidates the pre-tax income related to the noncontrolling public limited partners’ share of ~~each~~partnership ~~investment:~~earnings but excludes the related tax provision.

	Three Months EndedJune 30,				Six Months EndedJune 30,
(in millions)	2016		2015		2016		2015
Millennium Pipeline
Contributions to Millennium Pipeline	$	—	$	—	$	1.9	$	—
Distributions of earnings from Millennium Pipeline	8.6		7.6		23.8		24.2
Hardy Storage
Contributions to Hardy Storage	—		—		—		—
Distributions of earnings from Hardy Storage	0.7		0.5		1.4		1.0
Pennant
Contributions to Pennant	—		—		—		—
Distributions of earnings from Pennant	3.0		1.5		6.0		2.7
Return of capital from Pennant	0.6		0.9		0.8		2.2

Subsequent to the Merger, CPG is party to a Federal tax allocation agreement with US Parent and as a result will be included in the consolidated Federal income tax return filed by US Parent. The tax allocation arrangement allocates to CPG an amount of Federal income tax liabilities and benefits similar to that which would be if CPG had filed a separate return. For states that require consolidated or combined returns, CPG will be included with certain TransCanada affiliates and will settle its state income tax liabilities and benefits with US Parent.

13. ~~Income~~Pension ~~Taxes~~and Other Postretirement Benefits

CPG's interim effective tax rates reflect the estimated annual effective tax rates for 2016 and 2015, adjusted for tax expense associated with certain discrete items. The effective tax rates for the three months ended June 30, 2016 and 2015 were 31.3% and 32.2%, respectively. The effective tax rates for the six months ended June 30, 2016 and 2015 were 32.4% and 33.9%, respectively. The effective tax rates for 2016 and 2015 differ from the Federal tax rate of 35% primarily due to the effects of tax credits, state income taxes, utility rate-making, other permanent book-to-tax differences and income received following CPPL's IPO that is not subject to income tax at the partnership level. The effective tax rate is impacted by CPPL's IPO, which modified the ownership structure and now reflects CPPL earnings for which the noncontrolling public limited partners are directly responsible for the related income taxes. CPG consolidates the pre-tax income related to the noncontrolling public limited partners’ share of partnership earnings but excludes the related tax provision.

14. Pension and Other Postretirement Benefits

CPG provides defined contribution plans and noncontributory defined benefit retirement plans that cover its employees. Benefits under the defined benefit retirement plans reflect the employees' compensation, years of service and age at retirement. Additionally, CPG provides health care and life insurance benefits for certain retired employees. The majority of employees may become eligible for these benefits if they reach retirement age while working for CPG. The expected cost of such benefits is accrued during the employees' years of service. Current rates charged to customers of CPG include postretirement benefit costs. Cash contributions are remitted to trusts, including a grantor trust used to fund benefits of the CPG non-qualified defined benefit plan.

Prior to the Separation, CPG was a participant in the consolidated NiSource defined benefit retirement plans and was allocated a ratable portion of NiSource's trusts for the plans in which its employees and retirees participated. As a result, CPG followed multiple employer accounting under the provisions of GAAP. CPG continues to follow multiple employer accounting following the Separation.

For the nine months ended September 30, 2016, CPG has made no contributions to its pension plans and contributed $1.6 million to its other postretirement benefit plans.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

The following table provides the components of CPG's net periodic benefits cost for the three and ~~six~~nine months ended ~~June~~September 30, 2016 and 2015:

	Pension Benefits						Other PostretirementBenefits
Three Months Ended June 30, (in millions)	2016			2015			2016			2015
Three Months Ended September 30, (in millions)	2016			2015			2016			2015
Components of Net Periodic Benefit Cost (Income)
Service cost	$	1.6		$	1.46		$	0.32		$	0.32
Interest cost	3.97			34.50			1.1			1.12
Expected return on assets	(65.69		)	(7.0		)	(43.15		)	(4.6		)
Amortization of prior service credit	(0.3		)	(0.3		)	(0.12		)	(0.12		)
Recognized actuarial loss	3.1			2.3			0.1			—
Recognized actuarial loss (gain)	3.0			2.6			0.1			(0.1		)
Total Net Periodic Benefit Cost (Income)	$	1.7		$	(0.1	)	$	(2.7	)	$	(3.3	)
Net Periodic Benefit Cost (Income)	2.1			0.9			(2.3		)	(3.5		)
Additional loss recognized due to:
Settlement loss	2.6			—			—			—
Total Net Periodic Benefit Cost (Income)	$	4.7		$	0.9		$	(2.3	)	$	(3.5	)
	Pension Benefits						Other PostretirementBenefits
Six Months Ended June 30, (in millions)	2016			2015			2016			2015
Nine Months Ended September 30, (in millions)	2016			2015			2016			2015
Components of Net Periodic Benefit Cost (Income)
Service cost	$	34.28		$	24.73		$	0.57		$	0.68
Interest cost	711.85			711.0			2.3.4			2.3.5
Expected return on assets	(1319.32		)	(1421.0		)	(811.16		)	(913.28		)
Amortization of prior service credit	(0.69		)	(0.69		)	(0.35		)	(0.35		)
Recognized actuarial loss	6.2			4.7			0.1			—
Recognized actuarial loss (gain)	9.2			7.3			0.2			(0.1		)
Total Net Periodic Benefit Cost (Income)	$	3.3		$	(0.2	)	$	(5.5	)	$	(6.6	)
Net Periodic Benefit Cost (Income)	5.4			0.7			(7.8		)	(10.1		)
Additional loss recognized due to:
Settlement loss	2.6			—			—			—
Total Net Periodic Benefit Cost (Income)	$	8.0		$	0.7		$	(7.8	)	$	(10.1	)

15. Fair Value

CPG has certain financial instruments that are not measured at fair value on a recurring basis but nevertheless are recorded at amounts that approximate fair value due to their liquid or short-term nature, including cash and cash equivalents, customer deposits and short-term borrowings. CPG's long-term debt is recorded at historical amounts.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate fair value.

Long-term debt. The fair value of these securities is estimated based on the quoted market prices for similar issues or on the rates offered for securities of the same remaining maturities. These fair value measurements are classified as Level 2 within the fair value hierarchy. For the six months ended June 30, 2016 and for the year ended December 31, 2015, there were no changes in the method or significant assumptions used to estimate the fair value of the financial instruments.

The carrying amount and estimated fair values of financial instruments were as follows:

(in millions)	CarryingAmount as ofJune 30, 2016(1)				Estimated FairValue as ofJune 30, 2016				CarryingAmount as ofDecember 31, 2015(1)				Estimated FairValue as ofDecember 31, 2015
Long-term debt	$	2,750.0			$	2,784.8			$	2,750.0			$	2,592.1

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

16As of July 1, 2016, the CPG pension and other postretirement benefit plans were remeasured as a result of the acquisition by TransCanada. ~~Share~~The remeasurement resulted in a decrease to the pension benefit obligation, net of plan assets, of $4.9 million, and a decrease to regulatory assets and accumulated other comprehensive loss of $1.2 million and $0.3 million, respectively. Net periodic pension cost for the remainder of 2016 increased by $0.9 million as a result of the remeasurement. A settlement charge of $2.6 million was recorded as a result of the non-~~Based~~qualified ~~Compensation~~pension plan being terminated in connection with the Merger.

~~Prior~~The toother ~~the~~postretirement ~~Separation~~benefits obligation, ~~CPG~~net ~~employees~~of ~~participated~~plan inassets, ~~NiSource's~~decreased ~~Omnibus~~by ~~Incentive~~$11.2 ~~Plan~~million ~~(the~~as ~~"NiSource~~a ~~Plan")~~result ~~and~~of ~~had outstanding awards under~~ the ~~NiSource Director Stock Incentive Plan ("NiSource Director Plan"), which was terminated in 2010~~remeasurement. ~~Upon the Separation~~Additionally, ~~outstanding CPG employee restricted stock units, performance units and non-employee director awards previously issued under~~ the ~~NiSource~~remeasurement ~~Plan~~resulted ~~and~~in ~~NiSource~~an ~~Director~~increase ~~Plan~~to ~~were~~regulatory ~~adjusted~~assets ~~and~~of ~~converted~~$8.6 ~~into new CPG share-based awards under the Columbia Pipeline Group~~million, ~~Inc. 2015 Omnibus Incentive Plan (the "Omnibus Plan") using~~ a ~~formula~~decrease ~~designed~~ to ~~preserve~~regulatory ~~the~~liabilities ~~intrinsic value and fair value~~ of ~~the awards immediately prior to the Separation~~$1.8 ~~The~~million ~~performance~~and ~~targets~~a ~~applicable~~decrease to ~~the~~accumulated ~~performance~~other ~~units~~comprehensive ~~were~~loss ~~frozen~~of at$0.5 ~~the~~million. ~~levels~~Net ~~achieved~~periodic asother ofpostretirement ~~the~~benefit ~~Separation~~cost ~~and~~for ~~pro-rated to reflect~~ the ~~proportion~~remainder of ~~the~~2016 ~~service~~increased ~~period~~by ~~completed~~$1.1 ~~Under~~million ~~the~~as ~~Omnibus~~a ~~Plan,~~result ~~these awards represent restricted stock units with no performance contingencies. All adjusted awards retained the vesting schedule~~ of the ~~original awards~~remeasurement.

The ~~Omnibus~~following ~~Plan~~table ~~term~~provides ~~began on~~ the ~~effective~~key ~~date~~assumptions ofthat ~~the~~were ~~Separation.~~used ~~The Omnibus Plan provides for awards~~ to ~~employees~~calculate ~~and~~the ~~non-employee~~pension ~~directors of incentive~~ and ~~nonqualified~~other ~~stock~~postretirement ~~options,~~benefit ~~stock~~obligation ~~appreciation rights, restricted stock~~ and ~~restricted~~the ~~stock~~net ~~units,~~periodic ~~performance~~benefit ~~shares,~~cost ~~performance~~at ~~units, cash-based awards and other stock-based awards. The Omnibus Plan provides that~~ the ~~number~~measurement ofdates ~~shares~~ of ~~common~~July ~~stock of CPG available for awards is 8~~1,~~000,000.~~ ~~At June 30,~~ 2016, ~~there~~and ~~were~~December 431,~~262,793~~ ~~shares reserved for future awards under the Omnibus Plan~~2015.

CPG recognized stock-based employee compensation expense of $3.8 million and $1.2 million for the three months ended June 30, 2016 and 2015, respectively, as well as related tax benefits of $1.3 million and $0.5 million, respectively. For the six months ended June 30, 2016 and 2015, CPG recognized stock-based employee compensation expense of $7.6 million and $3.0 million, respectively, as well as related tax benefits of $2.7 million and $1.1 million, respectively.



	Pension Benefits				Other Postretirement Benefits
	July 1, 2016		December 31, 2015		July 1, 2016		December 31, 2015
Actuarial Assumptions
Discount Rate	3.75	%	4.05	%	3.95	%	4.29	%
Expected return on assets	6.75	%	8.20	%	6.36	%	8.05	%
Health Care Trend Rates
Trend for 2016					8.81	%	8.39	%
Ultimate Trend					4.50	%	4.50	%
Year Ultimate Trend Reached					2023		2022

~~As of June 30, 2016, the total remaining unrecognized compensation cost related to nonvested awards amounted to $29~~14.2 Fair ~~million.~~Value

~~Restricted Stock Units and Restricted Stock. During the six months ended June 30, 2016,~~ CPG ~~granted~~has ~~12,144~~certain ~~restricted~~financial ~~stock~~instruments ~~units~~that ~~and~~are ~~shares~~not ofmeasured ~~restricted~~at ~~stock, subject to service conditions. The total grant date~~ fair- value ~~of the shares of restricted stock units and shares of restricted stock was $0.2 million, based~~ on ~~the~~a ~~average~~recurring ~~market~~basis ~~price~~but ofnevertheless ~~CPG's~~are ~~common~~recorded ~~stock~~ at ~~the~~amounts ~~date~~that ofapproximate ~~each~~fair ~~grant less the present~~ value ofdue ~~any~~to ~~dividends~~their ~~not~~liquid ~~received~~or ~~during~~short-term ~~the vesting period~~nature, ~~which~~including ~~will~~cash beand ~~expensed,~~cash ~~net of forfeitures~~equivalents, ~~over~~customer ~~the~~deposits ~~vesting~~and ~~period~~short-term ~~which is generally three years~~borrowings. AsCPG's oflong-term ~~June 30,~~debt ~~2016,~~is ~~1,356,774~~recorded ~~nonvested~~at ~~(all~~historical ~~of which are expected to vest) restricted stock units and shares of restricted stock were granted and outstanding~~amounts.

~~Performance Shares. During the six months ended June 30, 2016, CPG granted 955,848 performance shares, subject to performance and service conditions.~~ The ~~grant~~following ~~date~~methods fair-value of the awards was $17.0 million, based on the average market price of CPG's common stock at the date of grant less the present value of dividends not received during the vesting period which will be expensed, net of forfeitures, over the three year requisite service period. The performance conditions are based on achievement of relative total shareholder return, Adjusted EBITDA and ~~CPPL~~assumptions ~~Distributable~~were ~~Cash~~used Flow. Relative total shareholder return is a non-GAAP market measure that CPG defines as the annualized growth in the dividends and share price of a share of CPG's common stock (calculated using a 20 trading day average of CPG's closing price, over a period beginning January 1, 2016 and ending on December 31, 2018) compared to ~~the~~estimate total shareholder return performance of a predetermined peer group of companies. Adjusted EBITDA is a non-GAAP performance measure that CPG defines as net income before interest expense, income taxes, and depreciation and amortization, plus distributions of earnings received from equity investees, less equity earnings in unconsolidated affiliates and other, net. In addition, to the ~~extent~~fair ~~transactions~~value ~~occur that are considered unusual, infrequent or not representative~~ of ~~underlying~~each ~~trends,~~class ~~we will remove the effect~~ of ~~these~~financial ~~items~~instruments ~~from~~for ~~Adjusted~~which ~~EBITDA.~~it ~~Examples of these transactions include impairments, costs associated with the Separation and costs associated with the Merger. CPPL Distributable Cash Flow~~ is apracticable ~~non-GAAP performance measure that CPG defines as Adjusted EBITDA less interest expense, maintenance capital expenditures, gain on sale of assets and distributable cash flow attributable~~ to ~~noncontrolling~~estimate ~~interest~~fair ~~plus proceeds from the sale of assets, interest income, capital costs related to the Separation and any other known differences between cash and income~~value. The service conditions lapse on February 28, 2019 when the shares vest provided the performance criteria are satisfied. As of June 30, 2016, 1,117,352 nonvested performance shares were granted and outstanding.

~~Non~~Long-~~employee~~term ~~Director Awards~~debt. ~~Currently,~~The ~~restricted~~fair ~~stock~~value ~~units are granted annually to non-employee directors, subject to a non-employee director's election to defer receipt~~ of ~~such~~these ~~restricted~~securities ~~stock~~is ~~unit~~estimated ~~award.~~based ~~The non-employee director's restricted stock units vest~~ on the ~~first~~quoted ~~anniversary~~market ofprices ~~the~~for ~~grant~~similar ~~thereof~~issues ~~subject~~or toon ~~special~~the ~~pro-rata~~rates ~~vesting~~offered ~~rules~~for insecurities ~~the event~~ of ~~Retirement or Disability (as defined in~~ the ~~award~~same ~~agreement),~~remaining ~~or death~~maturities. ~~The~~These ~~vested~~fair ~~restricted~~value ~~stock~~measurements ~~units~~ are ~~payable~~classified as ~~soon~~Level as2 ~~practicable~~within ~~following~~the ~~vesting~~fair ~~except~~value ashierarchy. ~~otherwise~~For ~~provided~~the ~~pursuant~~nine tomonths ~~the~~ended ~~non-employee~~September 30, ~~director's~~2016 ~~election~~and tofor ~~defer.~~the Asyear ofended ~~June~~December 3031, ~~2016~~2015, athere ~~total~~were ofno ~~66,281~~changes ~~units~~in ~~are~~the ~~outstanding~~method or significant assumptions used to ~~non-employee~~estimate ~~directors~~the ~~under~~fair value of the ~~Omnibus~~financial ~~Plan~~instruments.

The carrying amount and estimated fair values of financial instruments were as follows:



(in millions)	Carrying Amount as of September 30, 2016⁽¹⁾		Estimated Fair Value as of September 30, 2016		Carrying Amount as of December 31, 2015⁽¹⁾		Estimated Fair Value as of December 31, 2015
Long-term debt	$	2,750.0	$	2,987.8	$	2,750.0	$	2,592.1

⁽¹⁾The carrying amount of the Notes differs from the Long-term debt balance on the Condensed Consolidated Balance Sheets (unaudited) due to the related unamortized discount and unamortized debt issuance costs, both of which are being amortized over the weighted average life of the Notes.


15.	Share-Based Compensation

Merger. On July 1, 2016, at the effective time of the Merger, each outstanding restricted stock unit, performance share and phantom unit, whether or not vested, was deemed to be fully vested (in the case of performance shares, based on performance deemed satisfied at the greater of actual performance for the relevant period and the target level of 100%), canceled and converted into the

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

~~Fully~~right ~~vested restricted stock units that remained outstanding under the NiSource Plan and NiSource Director Plan as~~ of the ~~Separation~~holder ~~date~~to ~~were~~receive ~~converted into CPG awards~~$25.50 ~~All~~in ~~such~~cash, ~~awards~~without ~~shall~~interest, bein ~~distributed~~respect ~~to the directors upon their separation from CPG's board~~ of ~~directors~~each orshare ~~such later date as elected. As~~ of ~~June 30,~~CPG ~~2016,~~common ~~238,486 restricted~~ stock ~~units~~underlying ~~remain~~such ~~outstanding~~award.

~~401(k) Match, Profit Sharing and Company Contribution.~~ CPG ~~has~~recognized astock-based ~~voluntary~~employee ~~401(k)~~compensation ~~savings~~expense ~~plan covering eligible employees that allows for periodic discretionary matches as a percentage~~ of ~~each participant's contributions~~$56.3 ~~CPG~~million ~~also~~and ~~has~~$0.1 amillion ~~retirement savings plan that provides~~ for ~~discretionary~~the ~~profit~~three ~~sharing~~months ~~contributions~~ended toSeptember 30, ~~eligible~~2016 ~~employees based on earnings results;~~ and ~~eligible exempt employees hired after January 1~~2015, ~~2010~~respectively, ~~receive~~as awell ~~non-elective~~as ~~company~~related ~~contribution~~tax benefits of ~~three~~$18.8 ~~percent~~million ofand ~~eligible~~zero, ~~pay~~respectively. For the ~~three~~nine months ended ~~June~~September 30, 2016 and 2015, CPG recognized ~~401(k) match, profit sharing and non~~stock-~~elective~~based ~~contribution~~employee compensation expense of $363.09 million and $23.72 million, respectively~~. For the six months ended June 30~~, ~~2016~~as ~~and~~well ~~2015,~~as ~~CPG~~related ~~recognized~~tax ~~401(k)~~benefits ~~match, profit sharing and non-elective contribution expense~~ of $621.25 million and $41.42 million, respectively.

~~Merger.~~Restricted OnStock ~~July~~Units 1,and ~~2016,~~Restricted atStock. During the ~~effective~~nine ~~time~~months ofended ~~the~~September 30, ~~Merger~~2016, ~~each~~CPG ~~outstanding~~granted 12,144 restricted stock ~~unit,~~units ~~performance share~~ and ~~phantom~~shares ~~unit,~~of ~~whether~~restricted ~~or not vested~~stock, ~~was~~subject ~~deemed~~ to beservice ~~fully~~conditions. ~~vested~~The ~~(in~~total ~~the~~grant ~~case~~date fair-value of ~~performance~~the shares, ~~based on performance deemed satisfied at the greater~~ of ~~actual~~restricted ~~performance~~stock ~~for~~units ~~the relevant period~~ and ~~the~~shares ~~target level~~ of ~~100%),~~restricted ~~canceled~~stock ~~and~~was ~~converted into the right of the holder to receive~~ $250.502 inmillion. ~~cash,~~There ~~without~~are ~~interest,~~no inrestricted ~~respect~~stock ofunits ~~each~~or ~~share~~shares of ~~CPG~~restricted ~~common~~ stock ~~underlying~~outstanding ~~such~~following ~~award.~~the ~~CPG~~effective ~~recognized~~time ~~stock-based employee compensation expense~~ of ~~approximately $56.7 million subsequent to~~ the Merger.

17Performance Shares. ~~Other~~ ~~Commitments~~During the nine months ended September 30, 2016, CPG granted 955,848 performance shares, subject to performance and ~~Contingencies~~service conditions. The grant date fair-value of the awards was $17.0 million. There are no performance shares outstanding following the effective time of the Merger.

~~A. Guarantees~~Non-employee ~~and~~Director ~~Indemnities~~Awards. InRestricted ~~the~~stock ~~normal~~units ~~course~~were ofgranted ~~its~~annually ~~business,~~to ~~CPG~~non-employee ~~and~~directors, ~~certain~~subject ~~subsidiaries~~to ~~enter~~a ~~into~~non-employee ~~various~~director's ~~agreements~~election ~~providing~~to ~~financial~~defer orreceipt ~~performance~~of ~~assurance~~such torestricted ~~third~~stock ~~parties~~unit onaward. ~~behalf~~The ofnon-employee ~~certain~~director's ~~subsidiaries.~~restricted ~~Such~~stock ~~agreements~~units ~~include~~would ~~guarantees~~vest ~~and~~on ~~stand-by~~the ~~letters~~first anniversary of ~~credit.~~the ~~These~~grant ~~agreements~~thereof ~~are~~subject ~~entered~~to ~~into~~special ~~primarily~~pro-rata tovesting ~~support~~rules in the event of Retirement or ~~enhance~~Disability (as defined in the ~~creditworthiness~~award ~~otherwise~~agreement), ~~attributed~~or todeath. aThe ~~parent~~vested orrestricted ~~subsidiary~~stock onunits awere ~~stand-alone~~payable ~~basis,~~as ~~thereby~~soon ~~facilitating~~as ~~the~~practicable ~~extension~~following ofvesting ~~sufficient~~except ~~credit~~as tootherwise ~~accomplish~~provided ~~the~~pursuant ~~parent~~to orthe ~~subsidiaries~~non-employee director's ~~intended~~election ~~commercial~~to ~~purposes~~defer. ~~The~~There ~~total~~are ~~guarantees~~no ~~and~~units ~~indemnities~~outstanding into ~~existence~~non-employee atdirectors ~~June 30,~~following ~~2016 and~~ the ~~years~~effective intime ~~which~~of ~~they~~the ~~expire were:~~Merger.

(in millions)	Total		2016		2017		2018		2019		2020		After
Letters of credit	$	18.1	$	18.1	$	—	$	—	$	—	$	—	$	—
Other guarantees	45.4		—		2.4		—		—		—		43.0
Total commercial commitments	$	63.5	$	18.1	$	2.4	$	—	$	—	$	—	$	43.0

Fully vested restricted stock units that remained outstanding under the NiSource Plan and NiSource Director Plan as of the Separation date were converted into CPG awards. All such awards were distributed to the directors upon their separation from CPG's board of directors. There are no restricted stock units outstanding following the effective time of the Merger.

~~Guarantees~~401(k) Match, ofProfit ~~Debt~~Sharing and Company Contribution. ~~Certain~~CPG has a voluntary 401(k) savings plan covering eligible employees that allows for periodic discretionary matches as a percentage of ~~CPG~~each participant's ~~subsidiaries,~~contributions. ~~including~~CPG ~~OpCo~~also ~~GP,~~has ~~Columbia~~a ~~OpCo~~retirement savings plan that provides for discretionary profit sharing contributions to eligible employees based on earnings results; and ~~CEG~~eligible ~~have~~exempt ~~guaranteed~~employees ~~payment~~hired ofafter $2January 1,~~750.0~~ ~~million~~2013, inreceive ~~aggregated~~a ~~principal~~non-elective ~~amount~~company contribution of ~~CPG's~~three ~~senior~~percent ~~notes~~of eligible pay. ~~Each~~For ~~guarantor~~the ofthree ~~CPG's~~months ~~obligations~~ended isSeptember 30, ~~required~~2016 toand ~~comply~~2015, ~~with~~CPG ~~covenants~~recognized ~~under~~401(k) ~~the~~match, ~~debt~~profit ~~indenture~~sharing and innon-elective ~~the~~contribution ~~event~~expense of ~~default~~$3.0 ~~the~~million ~~guarantors~~and ~~would~~$2.2 bemillion, ~~obligated~~respectively. toFor ~~pay~~ the ~~debt's~~nine ~~principal~~months ~~and~~ended ~~related~~September 30, ~~interest.~~2016 and 2015, CPG ~~does~~recognized ~~not~~401(k) ~~anticipate~~match, ~~its~~profit ~~subsidiaries~~sharing ~~will~~and ~~have~~non-elective ~~any~~contribution ~~difficulty~~expense ~~maintaining~~of ~~compliance~~$9.2 million and $6.6 million, respectively.

~~Lines and Letters of Credit~~16. Other ~~CPG~~Commitments ~~maintains a $1,500.0 million senior revolving credit facility, of which $250.0 million in letters of credit is available. As of June 30, 2016, CPG had no borrowings outstanding~~ and $18.1 million in letters of credit outstanding under its revolving credit facility. On July 1, 2016, in connection with the Merger, all existing letters of credit were migrated to a TransCanada credit facility and the CPG revolving credit facility was terminated. CPPL maintained a $500.0 million senior revolving credit facility, of which $50.0 million was available for issuance of letters of credit. On June 29, 2016, in anticipation of the Merger, all outstanding borrowings, facility fees and interest were paid in full and the revolving credit facility was terminated.Contingencies

~~CPG's~~A. Guarantees ~~commercial~~and ~~paper~~Indemnities. ~~program~~In (the ~~"Program")~~normal ~~had~~course aof ~~Program~~its ~~limit~~business, ofCPG upand certain subsidiaries enter into various agreements providing financial or performance assurance to ~~$1,000.0~~third ~~million~~parties on behalf of certain subsidiaries. ~~CEG,~~Such ~~OpCo~~agreements GPinclude guarantees and ~~Columbia~~stand-by ~~OpCo~~letters ~~each~~of ~~agreed,~~credit. ~~jointly~~These ~~and~~agreements ~~severally,~~are ~~unconditionally~~entered ~~and~~into ~~irrevocably~~primarily to ~~guarantee~~support ~~payment~~or inenhance ~~full~~the ofcreditworthiness ~~the~~otherwise ~~principal~~attributed ofto ~~and~~a ~~interest~~parent ~~(if~~or ~~any)~~subsidiary on ~~the promissory~~a ~~notes.~~stand-alone ~~On June 30~~basis, ~~2016,~~thereby infacilitating ~~anticipation~~the extension of ~~the~~sufficient ~~Merger,~~credit to accomplish the ~~Program~~parent ~~was~~or ~~terminated.~~subsidiaries' ~~CPG~~intended ~~had~~commercial nopurposes. ~~promissory~~The ~~notes~~total ~~outstanding~~guarantees ~~under~~and ~~the~~indemnities ~~Program~~in existence at September 30, 2016 and the ~~time~~years ofin ~~termination.~~which they expire were:

Other Guarantees or Obligations. CPG has purchase and sale agreement guarantees totaling $45.4 million, which guarantee purchaser performance or seller performance under covenants, obligations, liabilities, representations or warranties under the agreements. No amounts related to the purchase and sale agreement guarantees are reflected in the Condensed Consolidated Balance Sheets (unaudited). Management believes that the likelihood CPG would be required to perform or otherwise incur any significant losses associated with any of the aforementioned guarantees is remote.



(in millions)	Total		2016		2017		2018		2019		2020		After
Other guarantees	$	45.3	$	—	$	2.4	$	—	$	—	$	—	$	42.9

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

~~CPG~~Guarantees ~~has on deposit a letter~~ of ~~credit with MUFG Union Bank, N~~Debt.~~A.,~~ ~~Collateral~~Certain ~~Agent,~~of ~~in a debt service reserve account in association with Millennium Pipeline~~CPG's ~~notes~~subsidiaries, asincluding ~~required~~OpCo ~~under~~GP, ~~the~~Columbia ~~Deposit~~OpCo and ~~Disbursement~~CEG ~~Agreement~~have ~~that~~guaranteed ~~governs~~payment ~~the~~of ~~Millennium Pipeline notes~~$2,750.0 ~~This~~million ~~account is to be drawn upon by the note holders~~ in ~~the~~aggregated ~~event that Millennium Pipeline is delinquent on its~~ principal ~~and~~amount ~~interest payments. The value~~ of CPG's ~~letter~~senior ofnotes. ~~credit~~Each ~~represents~~guarantor ~~47.5%~~of (CPG's ~~ownership~~obligations ~~interest~~is inrequired ~~Millennium~~to ~~Pipeline)~~comply ofwith covenants under the debt ~~service~~indenture ~~reserve~~and ~~account~~in ~~requirement,~~the orevent ~~$16.2~~of ~~million.~~default ~~The~~the ~~total~~guarantors ~~exposure~~would ~~for~~be ~~CPG~~obligated isto ~~$16.2~~pay ~~million.~~the ~~CPG~~debt's ~~has~~principal anand ~~accrued~~related ~~liability of $1~~interest.5 ~~million~~CPG ~~related~~does tonot ~~the~~anticipate ~~inception~~its ~~date~~subsidiaries ~~fair~~will ~~value~~have ofany ~~this~~difficulty ~~guarantee~~maintaining ~~as of June 30, 2016~~compliance.

BLines and Letters of Credit. ~~Other~~ ~~Legal~~CPG ~~Proceedings~~maintained a $1,500.0 Inmillion ~~the~~senior ~~normal~~revolving ~~course~~credit facility, of ~~its~~which ~~business~~$250.0 million in letters of credit was available. On July 1, 2016, in connection with the Merger, all existing letters of credit were migrated to a TransCanada credit facility and the CPG ~~has~~revolving ~~been~~credit ~~named~~facility aswas terminated. CPPL maintained a ~~defendant~~$500.0 inmillion ~~various~~senior ~~legal~~revolving ~~proceedings~~credit facility, of which $50.0 Inmillion ~~the~~was ~~opinion~~available for issuance of ~~CPG~~letters of credit. On June 29, ~~the~~2016, ~~ultimate~~in ~~disposition~~anticipation of ~~these~~the ~~currently~~Merger, ~~asserted~~all ~~claims~~outstanding ~~will~~borrowings, ~~not~~facility ~~have~~fees aand ~~material~~interest ~~impact~~were onpaid ~~CPG's~~in ~~condensed~~full ~~consolidated~~and ~~financial~~the ~~statements~~revolving credit facility was terminated.

~~Litigation Relating to the Merger. On March 30, 2016, two purported stockholders of~~ CPG's ~~filed~~commercial anpaper ~~action~~program ~~challenging~~had ~~the Merger on behalf of~~ a ~~putative~~Program ~~class~~limit of ~~CPG~~up ~~stockholders~~to ~~in the Court of Chancery of the State of Delaware~~$1, ~~captioned Vann v~~000.0 ~~Columbia Pipeline Group, Inc~~million., ~~et al. The action names as defendants CPG~~CEG, ~~the~~OpCo ~~members~~GP ofand ~~the~~Columbia ~~Board,~~OpCo ~~Parent,~~each ~~US Parent~~agreed, ~~Merger~~jointly ~~Sub~~ and ~~TransCanada. On April 7~~severally, ~~2016,~~unconditionally aand ~~second,~~irrevocably ~~substantially~~to ~~identical~~guarantee ~~action~~payment ~~was filed~~ in ~~the~~full ~~same court on behalf~~ of the ~~same~~principal ~~putative~~of ~~class, captioned Baldino v. Skaggs, Jr., et al.,~~ and ~~naming~~interest as(if ~~defendants~~any) ~~only~~on the promissory ~~members of the Board~~notes. On ~~May~~June 2530, 2016, ~~the~~in ~~Delaware~~anticipation ~~Court~~ of ~~Chancery entered an order that, among other things, consolidated~~ the actions into a single action, captioned as In re Columbia Pipeline Group, Inc. Stockholder Litigation, and appointed the Vann plaintiffs as lead plaintiffs and the Vann plaintiffs’ counsel as lead counsel. The Vann plaintiffs’ amended complaint, filed May 12, 2016, alleges that members of the CPG Board breached their fiduciary duties by, among other things, agreeing to the Merger ~~following an inadequate sale process and at an unfair price~~, ~~and because~~ the ~~sale~~Program ~~process purportedly~~ was affected by conflicts of interest on the part of the Board, the management of CPG and/or CPG’s largest stockholder as a result of their substantial stockholdings in CPG, and on the part of one of CPG’s financial advisors as a result of its alleged holdings in TransCanada stockterminated. The amended complaint also alleges that the preliminary proxy filed in respect of the Merger omits or misstates various facts concerning, among other things, the sale process and the financial analyses performed by CPG’s ~~financial~~had ~~advisors.~~no ~~The~~promissory ~~amended~~notes ~~complaint~~outstanding ~~purports~~under ~~to seek injunctive and other equitable relief regarding~~ the ~~Merger.~~Program Onat ~~July 5, 2016,~~ the ~~defendants~~time ~~filed a motion to dismiss the action and a motion to stay discovery pending resolution~~ of ~~the motion to dismiss~~termination. ~~Both motions remain pending. On July 18, 2016, Vice Chancellor Laster entered the briefing schedule deferring briefing on the motion to dismiss until the motion to stay is resolved.~~

OnOther ~~May~~Guarantees 2,or ~~2016,~~Obligations. ~~a purported stockholder of~~ CPG ~~filed~~has ~~another~~purchase ~~action~~and onsale ~~behalf~~agreement ofguarantees atotaling $45.3 ~~putative~~million, ~~class~~which ofguarantee ~~CPG~~purchaser ~~stockholders~~performance inor ~~the~~seller ~~United~~performance ~~States~~under ~~District~~covenants, ~~Court~~obligations, ~~for the Southern District of Texas~~liabilities, ~~captioned~~representations asor ~~Ftikas~~warranties v.under ~~Columbia~~the ~~Pipeline Group, Inc~~agreements., No amounts ~~alleging~~related ~~that~~to the ~~preliminary~~purchase ~~proxy~~and ~~filed~~sale byagreement ~~CPG~~guarantees inare ~~respect~~reflected ofin the ~~Merger~~Condensed ~~omits~~Consolidated orBalance ~~misstates~~Sheets ~~various~~(unaudited). ~~facts~~Management ~~concerning,~~believes ~~among~~that ~~other things,~~ the ~~sale~~likelihood ~~process and the financial analyses performed by~~ CPG’s ~~financial~~would ~~advisors~~be ~~filed~~required into ~~respect~~perform ofor ~~the~~otherwise ~~merger~~incur inany ~~violation~~significant oflosses ~~the~~associated ~~Securities~~with ~~Exchange~~any ~~Act~~ of ~~1934. Defendants have not been served with~~ the ~~complaint~~aforementioned inguarantees ~~this~~is ~~action~~remote.

B. Other Legal Proceedings. In the normal course of its business, CPG has been named as a defendant in various legal proceedings. In the opinion of CPG, the ultimate disposition of these currently asserted claims will not have a material impact on CPG's condensed consolidated financial statements. Please see Item 1 of Part II, Legal Proceedings, for more information.

Litigation Relating to the Merger. On March 30, 2016, two purported stockholders of CPG filed an action challenging the Merger on behalf of a putative class of CPG stockholders in the Court of Chancery of the State of Delaware, captioned Vann v. Columbia Pipeline Group, Inc., et al. The action names as defendants CPG, the members of the Board, Parent, US Parent, Merger Sub and TransCanada. On April 7, 2016, a second, substantially identical action was filed in the same court on behalf of the same putative class, captioned Baldino v. Skaggs, Jr., et al., and naming as defendants only the members of the Board. On May 25, 2016, the Delaware Court of Chancery entered an order that, among other things, consolidated the actions into a single action, captioned as In re Columbia Pipeline Group, Inc. Stockholder Litigation, and appointed the Vann plaintiffs as lead plaintiffs and the Vann plaintiffs’ counsel as lead counsel. The Vann plaintiffs’ amended complaint, filed May 12, 2016, alleges that members of the CPG Board breached their fiduciary duties by, among other things, agreeing to the Merger following an inadequate sale process and at an unfair price, and because the sale process purportedly was affected by conflicts of interest on the part of the Board, the management of CPG and/or CPG’s largest stockholder as a result of their substantial stockholdings in CPG, and on the part of one of CPG’s financial advisors as a result of its alleged holdings in TransCanada stock. The amended complaint also alleges that the preliminary proxy filed in respect of the Merger omits or misstates various facts concerning, among other things, the sale process and the financial analyses performed by CPG’s financial advisors. The amended complaint purports to seek injunctive and other equitable relief regarding the Merger. On July 5, 2016, the defendants filed a motion to dismiss the action and a motion to stay discovery pending resolution of the motion to dismiss. Both motions remain pending. On July 18, 2016, Vice Chancellor Laster entered the briefing schedule deferring briefing on the motion to dismiss until the motion to stay is resolved. On September 6, 2016, Vice Chancellor Laster granted TransCanada and CPG’s motion to stay discovery while the motion to dismiss was pending. On October 6, 2016, the Vann plaintiffs filed an amended claim which removed all TransCanada parties, limiting the action to the CPG Board and CFO. Its revised claim alleges that the Board and officers entered into a secret scheme to benefit directors and insiders via change in control benefits and payments originating when NiSource first spun off the Columbia assets. They continue their allegations that conflict of interest tainted the acquisition, the acquisition undervalued CPG and that the proxy statement was materially deficient. The new claim seeks rescissory damages in an amount to be proven at trial and disgorgement of profits from the sale. At this early stage of the litigation, no outcome or possible loss or range of losses, if any, arising from the litigation is able to be estimated.

C. Environmental Matters. CPG's operations are subject to environmental statutes and regulations related to air quality, water quality, hazardous waste and solid waste. CPG believes that it is in substantial compliance with those environmental regulations currently applicable to its operations and believes that it has all necessary material permits to conduct its operations.

It is CPG's continued intent to address environmental issues in cooperation with regulatory authorities in such a manner as to achieve mutually acceptable compliance plans. However, there can be no assurance that CPG will not incur fines and penalties.

As of June 30, 2016 and December 31, 2015, CPG had liabilities recorded of approximately $8.2 million and $8.3 million, respectively, to cover environmental remediation at various sites. The current portion of these liabilities is included in "Other accruals" in the Condensed Consolidated Balance Sheets (unaudited). The noncurrent portion is included in "Other noncurrent liabilities" in the Condensed Consolidated Balance Sheets (unaudited). CPG accrues for costs associated with environmental remediation obligations when the incurrence of such costs is probable and the amounts can be reasonably estimated. The original estimates for cleanup can differ materially from the amount ultimately expended. The actual future expenditures depend on many factors, including currently enacted laws and regulations, the nature and extent of contamination, the method of cleanup, and the availability of cost recovery from customers. As of the date of these financial statements, these expenditures are not estimable at some sites. CPG periodically adjusts its accrual as information is collected and estimates become more refined.

Air

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

~~air~~It ~~emissions;~~is ~~application~~CPG's ~~for,~~continued ~~and~~intent ~~strict~~to ~~compliance~~address ~~with,~~environmental ~~air~~issues ~~permits~~in ~~containing~~cooperation ~~various~~with ~~emissions~~regulatory ~~and~~authorities ~~operational~~in ~~limitations;~~such ora ~~the~~manner ~~utilization~~as ofto ~~specific~~achieve ~~emission~~mutually ~~control~~acceptable ~~technologies~~compliance ~~to limit emissions~~plans. ~~The~~ ~~actions~~However, ~~listed~~there ~~below~~can ~~could~~be ~~require~~no ~~further~~assurance ~~reductions~~that ~~in emissions from various emission sources.~~ CPG will ~~continue~~not toincur ~~closely~~fines ~~monitor~~and ~~developments in these matters~~penalties.

As of September 30, 2016 and December 31, 2015, CPG had liabilities recorded of approximately $8.0 million and $8.3 million, respectively, to cover environmental remediation at various sites. The current portion of these liabilities is included in "Other accruals" in the Condensed Consolidated Balance Sheets (unaudited). The noncurrent portion is included in "Other noncurrent liabilities" in the Condensed Consolidated Balance Sheets (unaudited). CPG accrues for costs associated with environmental remediation obligations when the incurrence of such costs is probable and the amounts can be reasonably estimated. The original estimates for cleanup can differ materially from the amount ultimately expended. The actual future expenditures depend on many factors, including currently enacted laws and regulations, the nature and extent of contamination, the method of cleanup, and the availability of cost recovery from customers. As of the date of these financial statements, these expenditures are not estimable at some sites. CPG periodically adjusts its accrual as information is collected and estimates become more refined.

Air

The CAA and comparable state laws regulate emissions of air pollutants from various industrial sources, including compressor stations, and also impose various monitoring and reporting requirements. Such laws and regulations may require pre-approval for the construction or modification of certain projects or facilities expected to produce air emissions or result in an increase of existing air emissions; application for, and strict compliance with, air permits containing various emissions and operational limitations; or the utilization of specific emission control technologies to limit emissions. The actions listed below could require further reductions in emissions from various emission sources. CPG will continue to closely monitor developments in these matters.

National Ambient Air Quality Standards. The federal CAA requires the EPA to set NAAQS for particulate matter and five other pollutants considered harmful to public health and the environment. Periodically, the EPA imposes new or modifies existing NAAQS. States that contain areas that do not meet the new or revised standards must take steps to maintain or achieve compliance with the standards. These steps could include additional pollution controls on boilers, engines, turbines, and other facilities owned by gas transmission operations.

The following NAAQS were recently added or modified:

Ozone: On October 1, 2015, the EPA issued a final rule lowering the NAAQS for ground-level ozone to 70 ppb under both the primary and secondary standards to provide requisite protection of public health and welfare, respectively. The EPA is required to include an adequate margin of safety in establishing the primary ozone standard for protection of public health, whereas the secondary ozone standard is intended to improve protection for trees, plants and ecosystems. The final rule becomes effective sixty days after the rule is published in the Federal Register. The EPA is required to make attainment and non-attainment designations for specific geographic locations under the revised standards by October 1, 2017 and, depending on the severity of the ozone present, non-attainment areas will have until between 2020 and 2037 to meet the health standard. With the EPA lowering the ground-level ozone standard, states may be required to implement more stringent regulations. Based on the current version of the rule, CPG does not expect a material impact on its operations.

Nitrogen Dioxide (NO2): The EPA revised the NO2 NAAQS by adding a one-hour standard while retaining the annual standard. The new standard could impact some CPG combustion sources. The EPA designated all areas of the country as unclassifiable/attainment in January 2012. After the establishment of a new monitoring network and possible modeling implementation, areas will potentially be re-designated sometime in 2016. States with areas that do not meet the standard will be required to develop rules to bring areas into compliance within five years of designation. Additionally, under certain permitting circumstances, emissions from some existing CPG combustion sources may need to be assessed and mitigated. CPG will continue to monitor this matter and cannot estimate the impact of these rules at this time.

Climate Change. Future legislative and regulatory programs could significantly restrict emissions of greenhouse gases including methane.

New Source Performance Standards: On May 12, 2016, the EPA finalized the rule to regulate fugitive methane emissions for compressor stations in the natural gas transmission and storage sector. The final rule was subsequently published in the Federal Register on June 3, 2016. ~~Semiannual~~CPG ~~leak~~is ~~detection~~working ~~and~~with ~~repair~~industry ~~requirements~~groups ~~using~~to ~~optical~~litigate ~~gas imaging are required for all components at new or existing compressor stations. Existing compressor stations trigger leak detection~~ and ~~repair~~clarify ~~requirements~~ambiguities ifwithin ~~any unit at~~ the ~~facility is modified~~rule. ~~The~~CPG ~~EPA~~does ~~established~~not ~~additional~~have ~~requirements~~any ~~for~~existing ~~any~~sites ~~new~~that orwill ~~modified~~be ~~centrifugal~~impacted orby ~~reciprocating~~this ~~compressors~~rule. Replacement of wet seals with dry seals or demonstrating a 95% reduction of methane emissions from wet seals is required for centrifugal compressors and rod packing replacement for reciprocating compressors is required every 26However,~~000~~ ~~hours~~the ofEPA ~~operation~~has orannounced ~~every~~that ~~three~~it ~~years.~~intends ~~CPG~~to ispropose ~~working~~additional ~~with~~regulations ~~industry~~related ~~groups~~ to ~~clarify ambiguities within~~ the ~~rule~~emission ~~and~~of tomethane ~~develop~~from anexisting ~~assessment~~sources onin the ~~impacts~~oil ~~to CPG~~ and ~~cannot~~natural ~~estimate~~gas ~~the impact of these rules at this time~~sector.

Pipeline Safety

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

~~the~~Pipeline "outlet of" a gas treatment facility (not associated with a processing plant or compressor station); the "[o]utlet of the furthermost downstream compressor" leading to a pipeline, or the "point where separate production fields are commingled." Other new requirements proposed by PHMSA under the rulemaking would require pipeline operators to: report to PHMSA in the event of certain MAOP exceedances; strengthen PHMSA integrity management requirements; consider seismicity in evaluating threats to a pipeline; conduct hydrostatic testing for all pipeline segments manufactured using longitudinal seam welds; and use more detailed guidance from PHMSA in the selection of assessment methods to inspect pipelines. CPG will continue to monitor this matter and cannot estimate the impact of these rules at this time.Safety

On March 17, 2016, the federal Pipeline and Hazardous Materials Safety Administration ("PHMSA") announced a proposed rulemaking that would, if adopted, impose more stringent requirements for certain gas lines and gathering lines under varying circumstances. Among other things, the proposed rulemaking would extend certain of PHMSA's current regulatory safety programs for gas pipelines beyond "high consequence areas" to cover gas pipelines found in newly defined "moderate consequence areas" that contain as few as 5 dwellings within the potential impact area; require gas pipelines installed before 1970 that are currently exempted from certain pressure testing obligations to be tested to determine their maximum allowable operating pressures ("MAOP"); and require gathering lines in Class I areas, both onshore and offshore, to comply with standards regarding damage prevention, corrosion control (for metallic pipe), public education, MAOP limits, line markers and emergency planning if such gathering lines' nominal design is 8 inches or more. In order to provide clarity and greater certainty on what may constitute a "gathering line," PHMSA is proposing a new definition of that term under the rulemaking, which term would now encompass "a pipeline, or a connected series of pipelines, and equipment used to collect gas from the endpoint of a production facility/operation and transport it to the furthermost point downstream of the following endpoints" including the "inlet of 1^st gas processing plant;" the "outlet of" a gas treatment facility (not associated with a processing plant or compressor station); the "[o]utlet of the furthermost downstream compressor" leading to a pipeline, or the "point where separate production fields are commingled." Other new requirements proposed by PHMSA under the rulemaking would require pipeline operators to: report to PHMSA in the event of certain MAOP exceedances; strengthen PHMSA integrity management requirements; consider seismicity in evaluating threats to a pipeline; conduct hydrostatic testing for all pipeline segments manufactured using longitudinal seam welds; and use more detailed guidance from PHMSA in the selection of assessment methods to inspect pipelines. CPG will continue to monitor this matter and cannot estimate the impact of these rules at this time.

On June 22, 2016, President Obama signed new pipeline safety legislation, the “Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016" (the “PIPES Act”). Extending PHMSA’s statutory mandate through 2019, the PIPES Act establishes or continues the development of stringent requirements affecting pipeline safety including: (i) providing PHMSA with additional authority to address imminent hazards by imposing emergency restrictions, prohibitions and safety measures on owners and operators of gas or hazardous liquid pipeline facilities without prior notice or an opportunity for a hearing; (ii) having pipeline operators that experience a spill from a liquids pipeline provide safety data sheets for the spilled liquid to the on-scene coordinator predesignated by the EPA and state and local officials within six hours of a telephonic notice; (iii) obligating PHMSA to develop safety standards for natural gas storage facilities by June 22, 2018; (iv) obligating PHMSA to provide feedback to pipeline operators after an inspection, including a briefing within thirty days and a written report with written preliminary findings within ninety days to the extent practicable; (v) requiring annual internal inspection of certain underwater hazardous liquid pipeline facilities in high consequence areas located at depths greater than 150 feet under the surface of the water; and (vi) requiring PHMSA to complete certain of the outstanding mandates under existing legislation and to report to Congress on the status of overdue rulemakings. CPG will continue to monitor this matter and cannot estimate the impact of these rules at this time.

On October 3, 2016, PHMSA announced a temporary rule authorizing the agency to issue Emergency Orders to address what it deems imminent safety hazards for both liquid and gas pipes. The new rule allows PHMSA to impose restrictions, prohibitions, and require safety measures without giving operators prior notice or an opportunity for a hearing. In contrast to PHMSA’s past practice of issuing Corrective Action Orders to an individual owner, operator, or facility, under the new rule PHMSA can issue an Emergency Order for numerous entities. PHMSA has until March 19, 2017 to issue a permanent final rule, when this temporary rule expires. CPG will continue to monitor this matter and cannot estimate the impact of these rules at this time.

Waste

CPG has liabilities associated with the cleanup of various former operations. Four sites are associated with its former propane operations and ten sites associated with former petroleum operations. The total liability related to these sites was $6.43 million and $6.5 million at ~~June~~September 30, 2016 and December 31, 2015, respectively. The liability represents CPG's best estimate of the cost to remediate the facilities.

CPG has liabilities associated with the remaining PCB remediation of its existing facilities. The total liability related to these sites was $1.7 million and $1.8 million at ~~June~~September 30, 2016 and December 31, 2015, respectively. The liability represents CPG's best estimate of the cost to remediate the facilities.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

1817. Accumulated Other Comprehensive Loss

The following tables display the components of Accumulated Other Comprehensive Loss for the three and ~~six~~nine months ended ~~June~~September 30, 2016 and 2015:

Three Months Ended June 30, 2016 (in millions)	Gains and Losses on Cash Flow Hedges(1)			Pension and OPEB Items(1)			AccumulatedOtherComprehensiveLoss(1)
Three Months Ended September 30, 2016 (in millions)	Gains and Losses on Cash Flow Hedges(1)			Pension and OPEB Items(1)			AccumulatedOtherComprehensiveLoss(1)
Balance as of April 1, 2016	$	(14.0	)	$	(12.6	)	$	(26.6	)
Balance as of July 1, 2016	$	(13.7	)	$	(12.5	)	$	(26.2	)
Other comprehensive income before reclassifications	—			0.14			0.14
Amounts reclassified from accumulated other comprehensive income(2)	0.3			—			0.3
Amounts reclassified from accumulated other comprehensive income	0.3			(0.8		)	(0.5		)
Net current-period other comprehensive income	0.3			(0.14		)	(0.41		)
Balance as of June 30, 2016	$	(13.7	)	$	(12.5	)	$	(26.2	)
Balance as of September 30, 2016	$	(13.4	)	$	(12.9	)	$	(26.3	)
(1)All amounts are net of tax. Amounts in parentheses indicate debits.(2)Includes amounts allocated to noncontrolling interest.
(1)All amounts are net of tax. Amounts in parentheses indicate debits.
Six Months Ended June 30, 2016 (in millions)	Gains and Losses on Cash Flow Hedges(1)			Pension and OPEB Items(1)			AccumulatedOtherComprehensiveLoss(1)
Nine Months Ended September 30, 2016 (in millions)	Gains and Losses on Cash Flow Hedges(1)			Pension and OPEB Items(1)			AccumulatedOtherComprehensiveLoss(1)
Balance as of January 1, 2016	$	(14.3	)	$	(12.7	)	$	(27.0	)
Other comprehensive income before reclassifications	—			0.26			0.26
Amounts reclassified from accumulated other comprehensive income(2)	01.70			—(0.8		)	0.72
Net current-period other comprehensive income	01.70			(0.2		)	0.98
Allocation of accumulated other comprehensive loss to noncontrolling interest	0.1			—			0.1
Balance as of June 30, 2016	$	(13.7	)	$	(12.5	)	$	(26.2	)
Balance as of September 30, 2016	$	(13.4	)	$	(12.9	)	$	(26.3	)

⁽¹⁾All amounts are net of tax. Amounts in parentheses indicate debits.

⁽²⁾Includes amounts allocated to noncontrolling interest.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

Three Months Ended June 30, 2015 (in millions)	Gains and Losses on Cash Flow Hedges(1)			Pension and OPEB Items(1)			AccumulatedOtherComprehensiveLoss(1)
Three Months Ended September 30, 2015 (in millions)	Gains and Losses on Cash Flow Hedges(1)			Pension and OPEB Items(1)			AccumulatedOtherComprehensiveLoss(1)
Balance as of April 1, 2015	$	(14.2	)	$	(10.9	)	$	(25.1	)
Balance as of July 1, 2015	$	(13.9	)	$	(10.6	)	$	(24.5	)
Other comprehensive income before reclassifications	—(0.9		)	0(1.34		)	0(2.3		)
Amounts reclassified from accumulated other comprehensive income(2)	0.3			—			0.3
Amounts reclassified from accumulated other comprehensive income	0.2			1.3			1.5
Net current-period other comprehensive income	(0.37		)	(0.31		)	(0.68		)
Balance as of June 30, 2015	$	(13.9	)	$	(10.6	)	$	(24.5	)
Balance as of September 30, 2015	$	(14.6	)	$	(10.7	)	$	(25.3	)
(1)All amounts are net of tax. Amounts in parentheses indicate debits.(2)Includes amounts allocated to noncontrolling interest.
(1)All amounts are net of tax. Amounts in parentheses indicate debits.
Six Months Ended June 30, 2015 (in millions)	Gains and Losses on Cash Flow Hedges(1)			Pension and OPEB Items(1)			AccumulatedOtherComprehensiveLoss(1)
Nine Months Ended September 30, 2015 (in millions)	Gains and Losses on Cash Flow Hedges(1)			Pension and OPEB Items(1)			AccumulatedOtherComprehensiveLoss(1)
Balance as of January 1, 2015	$	(16.6	)	$	(17.9	)	$	(34.5	)
Other comprehensive income before reclassifications	—(0.9		)	75.28			74.29
Amounts reclassified from accumulated other comprehensive income(2)	0.57			0.1.4			02.61
Net current-period other comprehensive income	(0.52		)	7.32			7.80
Allocation of accumulated other comprehensive loss to noncontrolling interest	2.2			—			2.2
Balance as of June 30, 2015	$	(13.9	)	$	(10.6	)	$	(24.5	)
Balance as of September 30, 2015	$	(14.6	)	$	(10.7	)	$	(25.3	)

⁽¹⁾All amounts are net of tax. Amounts in parentheses indicate debits.

⁽²⁾Includes amounts allocated to noncontrolling interest.

Equity Investment

Millennium Pipeline is an equity method investment, and, therefore, CPG is required to recognize a proportional share of Millennium Pipeline’s OCI. The remaining unrecognized loss at ~~June~~September 30, 2016 of $13.74 million, after tax, related to terminated interest rate swaps is being amortized over a 15 year period ending June 2025 into earnings using the effective interest method through interest expense as interest payments are made by Millennium Pipeline. The unrecognized loss of $13.74 million and $14.3 million, after tax, at ~~June~~September 30, 2016 and December 31, 2015, respectively, is included in gains and losses on cash flow hedges above.

18. Other, Net

	Three Months EndedJune 30,					Six Months EndedJune 30,
	Three Months EndedSeptember 30,					Nine Months EndedSeptember 30,
(in millions)	2016			2015		2016		2015
AFUDC Equity	$	913.8		$	56.05	$	1529.97	$	815.50
Miscellaneous	—(0.1		)	0.32		0.98		1.46
Total Other, net	$	913.87		$	56.37	$	1630.85	$	916.96

2019. Supplemental Cash Flow Information

The following table provides additional information regarding CPG’s Condensed Statements of Consolidated Cash Flows (unaudited) for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015:

(in millions)	2016		2015
Supplemental Disclosures of Cash Flow Information
Non-cash transactions:
Capital expenditures included in current liabilities(1)	$	~~216~~212.12	$	~~184~~219.59
Schedule of interest and income taxes paid:
Cash paid for interest, net of interest capitalized amounts	$	5654.09	$	3941.79
Cash paid for income taxes	2.0		27.8
Cash paid for income taxes(2)	3.6		30.8

⁽¹⁾Capital expenditures included in current liabilities is comprised of "Accrued capital expenditures" and certain other amounts included within "Accounts payable" on the Condensed Consolidated Balance Sheets (unaudited).

⁽²⁾Cash paid for income taxes for the nine months ended September 30, 2015 includes $20.9 million paid to NiSource under the Tax Allocation Agreement.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

2120. Concentration of Credit Risk

Columbia Gas of Ohio, an affiliated party prior to the Separation, accounted for greater than 10% of total operating revenues for the three and ~~six~~nine months ended ~~June~~September 30, 2016 and 2015. The following tables provide this customer's operating revenues and percentage of total operating revenues for the three and ~~six~~nine months ended ~~June~~September 30, 2016 and 2015:

Three Months Ended June 30,	2016				2015
Three Months Ended September 30,	2016				2015
(in millions)	Total Operating Revenues		Percentage of Total Operating Revenues		Total Operating Revenues		Percentage of Total Operating Revenues
Columbia Gas of Ohio(1)	$	35.16	1110.29	%	$	3635.23	11.50	%
Six Months Ended June 30,	2016				2015
Nine Months Ended September 30,	2016				2015
(in millions)	Total Operating Revenues		Percentage of Total Operating Revenues		Total Operating Revenues		Percentage of Total Operating Revenues
Columbia Gas of Ohio(1)	$	85121.51	12.60	%	$	85120.14	1312.03	%

⁽¹⁾Represents the gross amount of revenue contracted for with Columbia Gas of Ohio and, therefore, subject to risk at the loss of this customer. Columbia Gas of Ohio has entered into certain capacity release arrangements with third parties which ultimately can decrease the net revenue amount CPG receives from Columbia Gas of Ohio in any given period.

The loss of a significant portion of operating revenues from this customer could have a material adverse effect on the business of CPG.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

2221. Condensed Consolidating Financial Information

On May 22, 2015, CPG closed its private placement of $2,750.0 million in aggregated principal amount of its senior notes (the "Notes"). Please see Note 7, "Long-Term Debt" for further discussion of the Notes. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by three of CPG's subsidiaries, CEG, Columbia OpCo and OpCo GP. CEG is a 100% owned subsidiary of CPG. In lieu of providing separate financial statements for CEG, the accompanying condensed consolidating financial statements based on Rule 3-10 of the SEC's Regulation S-X have been included.

The following supplemental condensed consolidating financial information reflects CPG's separate accounts, the combined accounts of CEG and Other Subsidiaries of CEG and CPG, including guarantors Columbia OpCo and OpCo GP, the consolidating adjustments and eliminations and the Issuer's consolidated accounts for the dates and periods indicated. Separate financial statements have been provided for Columbia OpCo and OpCo GP based on Rule 3-10 of the SEC's Regulation S-X. For purposes of the following consolidating information, CPG's and CEG's investment in its subsidiaries is accounted for under the equity method of accounting.

CONDENSED CONSOLIDATING BALANCE SHEETS

As of June 30, 2016 (in millions)	CPG		CEG		Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
As of September 30, 2016 (in millions)	CPG		CEG		Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
ASSETS
Current Assets
Cash and cash equivalents	$	~~177~~99.39	$	~~136~~23.21	$	—	$	—	$	619.06		$	—		$	~~374~~132.56
Accounts receivable, net	~~0.4~~—		1.40		—		—		~~162~~158.05			—			~~163~~159.85
Accounts receivable-affiliated	~~346~~577.75		~~266~~487.4		—		—		~~120~~181.10			(~~733~~1,205.2		)	—40.7
Materials and supplies, at average cost	—		—		—		—		26.54			—			26.54
Exchange gas receivable	—		—		—		—		1114.53			—			1114.53
Deferred property taxes	—		—		—		—		3617.47			—			3617.47
Prepayments and other	3254.74		044.29		—		—		4043.80			(2898.18		)	4543.65
Total Current Assets	~~557~~731.18		~~404~~556.24		—		—		~~458~~450.35			(~~761~~1,304.30		)	~~658~~434.37
Investments
Unconsolidated affiliates	—		—		—		—		441.34			—			441.34
Consolidated affiliates	5,~~348~~347.57		7,~~569~~474.6		5,~~924~~948.80		—		—			(18,~~842~~770.93		)	—
Other investments	~~12.2~~—		0.3		—		—		1.5			—			141.08
Total Investments	5,~~360~~347.7		7,~~569~~474.9		5,~~924~~948.80		—		442.89			(18,~~842~~770.93		)	~~455~~443.32
Property, Plant and Equipment
Property, plant and equipment	—		—		—		—		910,~~805~~200.05			—			910,~~805~~200.05
Accumulated depreciation and amortization	—		—		—		—		(3,~~057~~092.98		)	—			(3,~~057~~092.98		)
Net Property, Plant and Equipment	—		—		—		—		67,~~747~~107.17			—			67,~~747~~107.17
Other Noncurrent Assets
Regulatory assets	—		4653.39		—		—		~~136~~143.8			—			~~183~~197.17
Goodwill	—		—		1,975.5		—		—			—			1,975.5
Notes receivable-affiliated	1,848.2		—		—		—		—			(1,848.2		)	—
Postretirement and postemployment benefits assets	—		~~0.9~~—		—		—		~~119~~112.81			(0.3		)	~~120~~111.48
Deferred income taxes	~~22.6~~—		—		—		—		—70.1			(2270.61		)	—
Deferred charges and other	1.24		—		—		—		109.18			—			11.32
Total Other Noncurrent Assets	1,~~872~~849.06		4753.29		1,975.5		—		~~266~~335.78			(1,~~871~~918.16		)	2,~~290~~296.32
Total Assets	$	7,~~789~~929.81	$	8,~~021~~085.32	$	7,~~900~~923.35	$	—	$	78,~~914~~336.9		$	(21,~~475~~992.39	)	$	10,~~151~~281.08

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

CONDENSED CONSOLIDATING BALANCE SHEETS (continued)

As of June 30, 2016 (in millions)	CPG			CEG			Columbia OpCo			OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
As of September 30, 2016 (in millions)	CPG			CEG			Columbia OpCo			OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings-affiliated	$	—250.0		$	—		$	~~323~~439.02		$	—	$	~~392~~739.3		$	(~~715~~1,178.35	)	$	—250.0
Accounts payable	40.41			—0.1			—			—		~~114~~83.49			—			~~118~~84.81
Accounts payable-affiliated	97.65			415.62			0.17			—		312.69			(1726.97		)	—9.6
Dividends payable	55.6			—			—			—		—			—			55.6
Customer deposits	—			—			—			—		16.7			—			16.7
Customer deposits	—			—			—			—		15.4			—			15.4
Taxes accrued	—			—			—			—		165.9			(98.8		)	67.1
Taxes accrued	—			3.5			—			—		113.6			(28.1		)	89.0
Interest accrued	37.0			—			—			—		0.1			—			37.1
Interest accrued	9.3			—			—			—		0.2			—			9.5
Exchange gas payable	—			—			—			—		14.2			—			14.2
Exchange gas payable	—			—			—			—		11.7			—			11.7
Deferred revenue	—			—			—			—		5.6			—			5.6
Deferred revenue	—			—			—			—		6.6			—			6.6
Accrued capital expenditures	—			—			—			—		171.6			—			171.6
Accrued capital expenditures	—			—			—			—		134.5			—			134.5
Accrued compensation and related costs	—			—			—			—		45.1			—			45.1
Accrued compensation and related costs	—			—			—			—		35.4			—			35.4
Other accruals	0.3			0.3			—			—		100.8			—			101.4
Other accruals	10.6			0.3			—			—		110.0			—			120.9
Total Current Liabilities	294.9			15.6			439.9			—		1,356.1			(1,304.0		)	802.5
Total Current Liabilities	89.5			8.4			323.1			—		937.7			(761.3		)	597.4
Noncurrent Liabilities
Long-term debt	2,~~726~~727.7			—			—			—		—			—			2,~~726~~727.7
Long-term debt-affiliated	—			1,217.3			—			—		630.9			(1,848.2		)	—
Deferred income taxes	—22.1			1,~~440~~494.46			—			—		~~1.2~~—			(2270.61		)	1,~~419~~446.06
Accrued liability for postretirement and postemployment benefits	0.32			78.67			—			—		3334.09			(0.3		)	4043.65
Regulatory liabilities	—			10.3			—			—		~~285~~273.69			—			~~295~~284.92
Asset retirement obligations	—			—			—			—		2423.30			—			2423.30
Other noncurrent liabilities	~~1.5~~—			1.3			—			—		7268.58			—			7570.31
Total Noncurrent Liabilities	2,~~728~~750.50			2,~~676~~732.92			—			—		1,~~047~~031.5			(1,~~871~~918.16		)	4,~~581~~595.81
Total Liabilities	23,~~818~~044.09			2,~~685~~747.38			~~323~~439.19			—		12,~~985~~387.26			(23,~~632~~222.46		)	5,~~179~~397.26
Equity
Common stock	4.0.1			—			—			—		—			—			4.0.1
Additional paid-in capital	4,~~041~~013.8			—			—			—		—			—			4,~~041~~013.8
Accumulated deficit	(256.67		)	—			—			—		—			—			(256.67		)
Net parent investment	—			4,~~401~~410.02			7,~~601~~507.64			—		5,~~958~~977.10			(17,~~960~~894.76		)	—
Treasury stock	(6.2		)	—			—			—		—			—			(6.2		)
Accumulated other comprehensive loss	(26.3		)	(26.1		)	(23.8		)	—		(27.7		)	77.6			(26.3		)
Accumulated other comprehensive loss	(26.2		)	(26.0		)	(24.4		)	—		(28.4		)	78.8			(26.2		)
Total CPG Equity	3,930.9			4,384.1			7,483.6			—		5,949.3			(17,817.0		)	3,930.9
Total CPG Equity	4,010.8			4,375.0			7,577.2			—		5,929.7			(17,881.9		)	4,010.8
Noncontrolling Interest	953.3			953.3			—			—		—			(953.3		)	953.3
Noncontrolling Interest	961.0			961.0			—			—		—			(961.0		)	961.0
Total Equity	4,884.2			5,337.4			7,483.6			—		5,949.3			(18,770.3		)	4,884.2
Total Equity	4,971.8			5,336.0			7,577.2			—		5,929.7			(18,842.9		)	4,971.8
Total Liabilities and Equity	$	7,929.1		$	8,085.2		$	7,923.5		$	—	$	8,336.9		$	(21,992.9	)	$	10,281.8
Total Liabilities and Equity	$	7,789.8		$	8,021.3		$	7,900.3		$	—	$	7,914.9		$	(21,475.3	)	$	10,151.0

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

CONDENSED CONSOLIDATING BALANCE SHEETS (continued)



As of December 31, 2015 (in millions)	CPG		CEG		Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
ASSETS
Current Assets
Cash and cash equivalents	$	800.0	$	46.7	$	1.9	$	—	$	82.3		$	—		$	930.9
Accounts receivable, net	—		5.6		—		—		146.8			—			152.4
Accounts receivable-affiliated	14.6		85.6		3.4		—		156.4			(260.0		)	—
Materials and supplies, at average cost	—		—		—		—		32.8			—			32.8
Exchange gas receivable	—		—		—		—		19.0			—			19.0
Deferred property taxes	—		—		—		—		52.0			—			52.0
Prepayments and other	0.3		10.1		—		—		43.8			(5.7		)	48.5
Total Current Assets	814.9		148.0		5.3		—		533.1			(265.7		)	1,235.6
Investments
Unconsolidated affiliates	—		—		—		—		438.1			—			438.1
Consolidated affiliates	5,174.6		7,569.8		5,608.9		—		—			(18,353.3		)	—
Other investments	12.0		0.3		—		—		1.5			—			13.8
Total Investments	5,186.6		7,570.1		5,608.9		—		439.6			(18,353.3		)	451.9
Property, Plant and Equipment
Property, plant and equipment	—		—		—		—		9,052.3			—			9,052.3
Accumulated depreciation and amortization	—		—		—		—		(2,988.6		)	—			(2,988.6		)
Net Property, Plant and Equipment	—		—		—		—		6,063.7			—			6,063.7
Other Noncurrent Assets
Regulatory assets	—		35.1		—		—		142.6			—			177.7
Goodwill	—		—		1,975.5		—		—			—			1,975.5
Notes receivable-affiliated	1,848.2		—		—		—		—			(1,848.2		)	—
Postretirement and postemployment benefits assets	—		0.5		—		—		115.6			(0.4		)	115.7
Deferred income taxes	18.9		—		—		—		—			(18.9		)	—
Deferred charges and other	4.9		—		—		—		10.6			—			15.5
Total Other Noncurrent Assets	1,872.0		35.6		1,975.5		—		268.8			(1,867.5		)	2,284.4
Total Assets	$	7,873.5	$	7,753.7	$	7,589.7	$	—	$	7,305.2		$	(20,486.5	)	$	10,035.6

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

CONDENSED CONSOLIDATING BALANCE SHEETS (continued)



As of December 31, 2015 (in millions)	CPG			CEG			Columbia OpCo			OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings	$	—		$	—		$	—		$	—	$	15.0		$	—		$	15.0
Short-term borrowings-affiliated	99.0			—			—			—		134.3			(233.3		)	—
Accounts payable	0.1			—			—			—		56.7			—			56.8
Accounts payable-affiliated	10.8			4.8			—			—		11.1			(26.7		)	—
Customer deposits	—			—			—			—		17.9			—			17.9
Taxes accrued	—			—			—			—		111.7			(5.7		)	106.0
Interest accrued	9.4			—			—			—		0.1			—			9.5
Exchange gas payable	—			—			—			—		18.6			—			18.6
Deferred revenue	—			—			—			—		15.0			—			15.0
Accrued capital expenditures	—			—			—			—		100.1			—			100.1
Accrued compensation and related costs	—			—			—			—		51.9			—			51.9
Other accruals	—			0.3			—			—		69.7			—			70.0
Total Current Liabilities	119.3			5.1			—			—		602.1			(265.7		)	460.8
Noncurrent Liabilities
Long-term debt	2,725.6			—			—			—		—			—			2,725.6
Long-term debt-affiliated	—			1,217.3			—			—		630.9			(1,848.2		)	—
Deferred income taxes	—			1,350.4			—			—		16.6			(18.9		)	1,348.1
Accrued liability for postretirement and postemployment benefits	0.3			8.3			—			—		41.2			(0.4		)	49.4
Regulatory liabilities	—			10.5			—			—		311.1			—			321.6
Asset retirement obligations	—			—			—			—		25.7			—			25.7
Other noncurrent liabilities	15.3			0.2			—			—		75.9			—			91.4
Total Noncurrent Liabilities	2,741.2			2,586.7			—			—		1,101.4			(1,867.5		)	4,561.8
Total Liabilities	2,860.5			2,591.8			—			—		1,703.5			(2,133.2		)	5,022.6
Equity
Common stock	4.0			—			—			—		—			—			4.0
Additional paid-in capital	4,032.7			—			—			—		—			—			4,032.7
Retained earnings	46.9			—			—			—		—			—			46.9
Net parent investment	—			4,232.3			7,615.4			—		5,631.3			(17,479.0		)	—
Accumulated other comprehensive loss	(27.0		)	(26.8		)	(25.7		)	—		(29.6		)	82.1			(27.0		)
Total CPG Equity	4,056.6			4,205.5			7,589.7			—		5,601.7			(17,396.9		)	4,056.6
Noncontrolling Interest	956.4			956.4			—			—		—			(956.4		)	956.4
Total Equity	5,013.0			5,161.9			7,589.7			—		5,601.7			(18,353.3		)	5,013.0
Total Liabilities and Equity	$	7,873.5		$	7,753.7		$	7,589.7		$	—	$	7,305.2		$	(20,486.5	)	$	10,035.6

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Three Months Ended June 30, 2016 (in millions)	CPG			CEG			Columbia OpCo			OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPGConsolidated
Three Months Ended September 30, 2016(in millions)	CPG			CEG			Columbia OpCo			OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
Operating Revenues
Transportation revenues	$	—		$	—		$	—		$	—	$	~~259~~270.43		$	—		$	~~259~~270.43
Storage revenues	—			—			—			—		48.9			—			48.9
Other revenues	—			—			—			—		57.69			—			57.69
Total Operating Revenues	—			—			—			—		~~313~~327.91			—			~~313~~327.91
Operating Expenses
Operation and maintenance	3767.82			—			—			—		~~142~~255.17			—			~~179~~322.9
Operation and maintenance-affiliated	01.41			—			—			—		—			(01.41		)	—
Depreciation and amortization	—			0.2			—			—		4143.04			—			4143.26
Gain on sale of assets and impairment, net	—			—			—			—		(3.4		)	—			(3.4		)
Gain on sale of assets	—			—			—			—		(9.3		)	—			(9.3		)
Property and other taxes	—			—			—			—		21.0			—			21.0
Impairment of long-lived assets	—			—			—			—		19.1			—			19.1
Total Operating Expenses	38.2			0.2			—			—		200.7			(0.4		)	238.7
Property and other taxes	—			—			0.1			—		19.7			—			19.8
Equity Earnings in Unconsolidated Affiliates	—			—			—			—		16.3			—			16.3
Total Operating Expenses	68.3			0.2			0.1			—		328.6			(1.1		)	396.1
Equity Earnings in Consolidated Affiliates	79.1			129.8			133.3			—		—			(342.2		)	—
Equity Earnings in Unconsolidated Affiliates	—			—			—			—		16.0			—			16.0
Operating Income	40.9			129.6			133.3			—		129.5			(341.8		)	91.5
Equity Earnings in Consolidated Affiliates	9.8			21.0			22.6			—		—			(53.4		)	—
Operating Loss	(58.5		)	20.8			22.5			—		14.5			(52.3		)	(53.0		)
Other Income (Deductions)
Interest expense	(2933.70		)	—			—			—		(20.12		)	1.28			(3031.64		)
Interest expense-affiliated	—(0.5		)	(11.23		)	(01.31		)	—		(6.7.6		)	1820.20			—(0.5		)
Other, net	1920.3			01.34			—			—		913.68			(1921.48		)	913.87
Total Other Deductions, net	(1013.42		)	(109.9		)	(01.31		)	—		06.80			—			(2018.82		)
Income before Income Taxes	30.5			118.7			133.0			—		130.3			(341.8		)	70.7
Loss before Income Taxes	(71.7		)	10.9			21.4			—		20.5			(52.3		)	(71.2		)
Income Taxes	(1822.1		)	38(1.32		)	—			—		(0.83		)	12.10			22(21.16		)
Net Income	48.6			80.4			133.0			—		129.5			(342.9		)	48.6
Net Loss	(49.6		)	12.1			21.4			—		20.8			(54.3		)	(49.6		)
Less: Net income attributable to noncontrolling interest	92.79			92.79			—			—		—			(92.79		)	92.79
Net Income Attributable to CPG	$	38.9		$	70.7		$	133.0		$	—	$	129.5		$	(333.2	)	$	38.9
Net Loss Attributable to CPG	$	(52.5	)	$	9.2		$	21.4		$	—	$	20.8		$	(51.4	)	$	(52.5	)

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (continued)

Three Months Ended June 30, 2015 (in millions)	CPG			CEG			Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPGConsolidated
Three Months Ended September 30, 2015(in millions)	CPG			CEG			Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
Operating Revenues
Transportation revenues	$	—		$	—		$	—	$	—	$	~~237~~266.82		$	—		$	~~237~~266.82
Transportation revenues-affiliated	—			—			—		—		18.5			—			18.5
Storage revenues	—			—			—		—		49.5			—			49.5
Storage revenues	—			—			—		—		36.2			—			36.2
Other revenues	—			—			—		—		5.2			—			5.2
Storage revenues-affiliated	—			—			—		—		12.9			—			12.9
Total Operating Revenues	—			—			—		—		320.9			—			320.9
Other revenues	—			—			—		—		10.7			—			10.7
Total Operating Revenues	—			—			—		—		316.1			—			316.1
Operating Expenses
Operation and maintenance	06.3			(0.74		)	—		—		~~151~~180.56			—			~~151~~186.15
Operation and maintenance-affiliated	—1.5			~~0.2~~—			—		—		~~24.7~~—			—(1.5		)	~~24.9~~—
Depreciation and amortization	—			—			—		—		3335.90			—			3335.90
Gain on sale of assets and impairment, net	—			1.8			—		—		(8.3		)	—			(6.5		)
Gain on sale of assets	—			—			—		—		(39.0		)	—			(39.0		)
Property and other taxes	—			—			—		—		19.1			—			19.1
Impairment of long-lived assets	—			—			—		—		0.6			—			0.6
Total Operating Expenses	0.3			1.3			—		—		220.9			—			222.5
Property and other taxes	—			—			—		—		17.3			—			17.3
Equity Earnings in Unconsolidated Affiliates	—			—			—		—		13.7			—			13.7
Total Operating Expenses	7.8			(0.4		)	—		—		194.5			(1.5		)	200.4
Equity Earnings in Consolidated Affiliates	64.6			107.1			107.7		—		—			(279.4		)	—
Equity Earnings in Unconsolidated Affiliates	—			—			—		—		15.4			—			15.4
Operating Income	64.3			105.8			107.7		—		108.9			(279.4		)	107.3
Equity Earnings in Consolidated Affiliates	87.7			144.9			143.6		—		—			(376.2		)	—
Operating Income	79.9			145.3			143.6		—		141.8			(374.7		)	135.9
Other Income (Deductions)
Interest expense	(1229.9		)	—			—		—		—(1.1		)	—1.6			(1229.94		)
Interest expense-affiliated	(01.36		)	(11.24		)	—		—		(6.36		)	619.86			~~(11.0~~—		)
Other, net	719.10			(0.21		)	01.8		—		47.40			(621.82		)	56.37
Total Other Deductions, net	(612.15		)	(11.43		)	01.8		—		(10.97		)	—			(1822.67		)
Income from Continuing Operations before Income Taxes	5867.24			94134.40			~~108~~145.54		—		~~107~~141.01			(~~279~~374.47		)	88113.72
Income Taxes	(17.95		)	3045.28			—		—		~~1.9~~—			~~(1.6~~—		)	2838.63
Income from Continuing Operations	6074.19			6488.2			~~108~~145.54		—		~~105~~141.1			(~~277~~374.87		)	6074.19
Loss from Discontinued Operations-net of taxes	(0.31		)	(0.31		)	—		—		—			0.31			(0.31		)
Net Income	5974.8			6388.91			~~108~~145.54		—		~~105~~141.1			(~~277~~374.56		)	5974.8
Less: Net income attributable to noncontrolling interest	911.08			911.08			—		—		—			(911.08		)	911.08
Net Income Attributable to CPG	$	5063.80		$	5476.93		$	~~108~~145.54	$	—	$	~~105~~141.1		$	(~~268~~362.58	)	$	5063.80

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (continued)

Six Months Ended June 30, 2016 (in millions)	CPG			CEG			Columbia OpCo			OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPGConsolidated
Nine Months Ended September 30, 2016(in millions)	CPG			CEG			Columbia OpCo			OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
Operating Revenues
Transportation revenues	$	—		$	—		$	—		$	—	$	~~567~~838.92		$	—		$	~~567~~838.92
Storage revenues	—			—			—			—		98147.87			—			98147.87
Other revenues	—			—			—			—		1119.76			—			1119.76
Total Operating Revenues	—			—			—			—		~~678~~1,005.45			—			~~678~~1,005.45
Operating Expenses
Operation and maintenance	68135.24			(0.2		)	—			—		~~281~~536.29			(0.2		)	~~349~~671.09
Operation and maintenance-affiliated	01.56			—			—			—		—			(01.56		)	—
Depreciation and amortization	—			0.46			—			—		81124.26			—			81125.62
Gain on sale of assets and impairment, net	—			—			—			—		(6.0		)	—			(6.0		)
Gain on sale of assets	—			—			—			—		(15.3		)	—			(15.3		)
Property and other taxes	0.1			—			—			—		42.7			—			42.8
Impairment of long-lived assets	—			—			—			—		19.1			—			19.1
Total Operating Expenses	68.8			0.2			—			—		399.1			(0.7		)	467.4
Property and other taxes	0.1			—			0.1			—		62.4			—			62.6
Equity Earnings in Unconsolidated Affiliates	—			—			—			—		32.2			—			32.2
Total Operating Expenses	137.1			0.4			0.1			—		727.7			(1.8		)	863.5
Equity Earnings in Consolidated Affiliates	192.6			309.6			314.8			—		—			(817.0		)	—
Equity Earnings in Unconsolidated Affiliates	—			—			—			—		48.2			—			48.2
Operating Income	123.8			309.4			314.8			—		311.5			(816.3		)	243.2
Equity Earnings in Consolidated Affiliates	202.4			330.6			337.4			—		—			(870.4		)	—
Operating Income	65.3			330.2			337.3			—		326.0			(868.6		)	190.2
Other Income (Deductions)
Interest expense	(5992.2		)	—			—			—		(2.79		)	13.97			(6091.04		)
Interest expense-affiliated	—(0.5		)	(2233.47		)	(01.45		)	—		(1321.95		)	3656.7			—(0.5		)
Other, net	3959.03			02.82			—			—		1529.64			(3860.64		)	1630.85
Total Other Deductions, net	(2033.24		)	(2131.65		)	(01.45		)	—		(15.0		)	—			(4361.24		)
Income from Continuing Operations before Income Taxes	~~103~~31.69			~~287~~298.87			~~314~~335.48			—		~~310~~331.50			(~~816~~868.36		)	~~200~~128.08
Income Taxes	(3153.67		)	9593.19			—			—		1.30			—2.0			6443.82
Income from Continuing Operations	~~135~~85.26			~~192~~204.78			~~314~~335.48			—		~~309~~330.20			(~~816~~870.36		)	~~135~~85.26
Income from Discontinued Operations-net of taxes	0.2			0.2			—			—		—			(0.2		)	0.2
Net Income	~~135~~85.48			~~192~~205.90			~~314~~335.48			—		~~309~~330.20			(~~816~~870.58		)	~~135~~85.48
Less: Net income attributable to noncontrolling interest	2427.32			2427.32			—			—		—			(2427.32		)	2427.32
Net Income Attributable to CPG	$	~~111~~58.16		$	~~168~~177.68		$	~~314~~335.48		$	—	$	~~309~~330.20		$	(~~792~~843.26	)	$	~~111~~58.16

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (continued)

Six Months Ended June 30, 2015 (in millions)	CPG			CEG			Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPGConsolidated
Nine Months Ended September 30, 2015(in millions)	CPG			CEG			Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
Operating Revenues
Transportation revenues	$	—		$	—		$	—	$	—	$	~~486~~752.24		$	—		$	~~486~~752.24
Transportation revenues-affiliated	—			—			—		—		47.5			—			47.5
Storage revenues	—			—			—		—		72122.83			—			72122.83
Storage revenues-affiliated	—			—			—		—		26.2			—			26.2
Other revenues	—			—			—		—		2328.46			—			2328.46
Total Operating Revenues	—			—			—		—		~~656~~977.10			—			~~656~~977.10
Operating Expenses
Operation and maintenance	06.36			(01.82		)	—		—		~~270~~450.06			—			~~269~~456.50
Operation and maintenance-affiliated	—1.5			0.3			—		—		52.6			—(1.5		)	52.9
Depreciation and amortization	—			—			—		—		66101.4			—			66101.4
Gain on sale of assets and impairment, net	—			1.8			—		—		(13.6		)	—			(11.8		)
Gain on sale of assets	—			—			—		—		(52.6		)	—			(52.6		)
Property and other taxes	—			—			—		—		38.2			—			38.2
Impairment of long-lived assets	—			1.8			—		—		0.6			—			2.4
Total Operating Expenses	0.3			1.3			—		—		413.6			—			415.2
Property and other taxes	—			—			—		—		55.5			—			55.5
Equity Earnings in Unconsolidated Affiliates	—			—			—		—		29.1			—			29.1
Total Operating Expenses	8.1			0.9			—		—		608.1			(1.5		)	615.6
Equity Earnings in Consolidated Affiliates	161.7			238.3			238.9		—		—			(638.9		)	—
Equity Earnings in Unconsolidated Affiliates	—			—			—		—		44.5			—			44.5
Operating Income	161.4			237.0			238.9		—		271.6			(638.9		)	270.0
Equity Earnings in Consolidated Affiliates	249.4			383.2			382.5		—		—			(1,015.1		)	—
Operating Income	241.3			382.3			382.5		—		413.4			(1,013.6		)	405.9
Other Income (Deductions)
Interest expense	(1242.98		)	—			—		—		—(1.1		)	—1.6			(1242.93		)
Interest expense-affiliated	(01.39		)	(1829.15		)	—		—		(1724.73		)	626.84			(29.3		)
Other, net	726.1			0.23			13.53		—		714.9			(628.80		)	916.96
Total Other Deductions, net	(618.16		)	(1729.92		)	13.53		—		(910.85		)	—			(3255.30		)
Income from Continuing Operations before Income Taxes	~~155~~222.37			~~219~~353.1			~~240~~385.48		—		~~261~~402.89			(~~638~~1,013.96		)	~~237~~350.79
Income Taxes	(1.9.4		)	57103.86			—		—		26.2			(1.6		)	80118.58
Income from Continuing Operations	~~157~~232.21			~~161~~249.35			~~240~~385.48		—		~~235~~376.67			(~~637~~1,012.30		)	~~157~~232.21
Loss from Discontinued Operations-net of taxes	(0.34		)	(0.34		)	—		—		—			0.34			(0.34		)
Net Income	~~156~~231.97			~~161~~249.01			~~240~~385.48		—		~~235~~376.67			(~~637~~1,011.06		)	~~156~~231.97
Less: Net income attributable to noncontrolling interest	1627.19			1627.19			—		—		—			(1627.19		)	1627.19
Net Income Attributable to CPG	$	~~140~~203.8		$	~~144~~221.92		$	~~240~~385.48	$	—	$	~~235~~376.67		$	(~~620~~983.97	)	$	~~140~~203.8

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended June 30, 2016 (in millions, net of taxes)	CPG			CEG			Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries		Consolidating adjustments and eliminations			CPG Consolidated
Three Months Ended September 30, 2016(in millions, net of taxes)	CPG			CEG			Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries		Consolidating adjustments and eliminations			CPG Consolidated
Net Income	$	48.6		$	80.4		$	133.0	$	—	$	129.5	$	(342.9	)	$	48.6
Net Loss	$	(49.6	)	$	12.1		$	21.4	$	—	$	20.8	$	(54.3	)	$	(49.6	)
Other comprehensive income
Net unrealized gain on cash flow hedges	0.3			(0.23		)	—		—		0.56		(0.3		)	0.3
Unrecognized pension and OPEB benefit	0.1			0.1			—		—		—		(0.1		)	0.1
Unrecognized pension and OPEB cost	(0.4		)	(0.5		)	—		—		0.1		0.4			(0.4		)
Total other comprehensive income	(0.41		)	(0.18		)	—		—		0.57		(0.41		)	(0.41		)
Total Comprehensive Income	49.0			80.3			133.0		—		130.0		(343.3		)	49.0
Total Comprehensive Loss	(49.7		)	11.3			21.4		—		21.5		(54.2		)	(49.7		)
Less: Comprehensive Income-noncontrolling interest	92.79			92.79			—		—		—		(92.79		)	92.79
Comprehensive Income-controlling interests	$	39.3		$	70.6		$	133.0	$	—	$	130.0	$	(333.6	)	$	39.3
Comprehensive Loss-controlling interests	$	(52.6	)	$	8.4		$	21.4	$	—	$	21.5	$	(51.3	)	$	(52.6	)

Three Months Ended June 30, 2015 (in millions, net of taxes)	CPG			CEG			Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
Three Months Ended September 30, 2015(in millions, net of taxes)	CPG			CEG			Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
Net Income	$	5974.8		$	6388.91		$	~~108~~145.54	$	—	$	~~105~~141.1		$	(~~277~~374.56	)	$	5974.8
Other comprehensive income
Net unrealized gain on cash flow hedges	0.3			(0.2		)	—		—		0.5			(0.3		)	0.3
Net unrealized loss on cash flow hedges	(0.7		)	(1.2		)	—		—		0.5			0.7			(0.7		)
Unrecognized pension and OPEB benefit	0.3			0.3			—		—		—			(0.3		)	0.3
Unrecognized pension and OPEB cost	(0.1		)	0.1			—		—		(0.2		)	0.1			(0.1		)
Total other comprehensive income	(0.68		)	0(1.1		)	—		—		0.53			(0.68		)	(0.68		)
Total Comprehensive Income	6074.40			6487.0			~~108~~145.54		—		~~105~~141.64			(~~278~~373.18		)	6074.40
Less: Comprehensive Income-noncontrolling interest	911.08			911.08			—		—		—			(911.08		)	911.08
Comprehensive Income-controlling interests	$	5162.42		$	5575.02		$	~~108~~145.54	$	—	$	~~105~~141.64		$	(~~269~~362.10	)	$	5162.42

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (continued)

Six Months Ended June 30, 2016 (in millions, net of taxes)	CPG			CEG			Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries		Consolidating adjustments and eliminations			CPG Consolidated
Nine Months Ended September 30, 2016(in millions, net of taxes)	CPG			CEG			Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries		Consolidating adjustments and eliminations			CPG Consolidated
Net Income	$	~~135~~85.48		$	~~192~~205.90		$	~~314~~335.48	$	—	$	~~309~~330.20	$	(~~816~~870.58	)	$	~~135~~85.48
Other comprehensive income
Net unrealized gain on cash flow hedges	01.70			(0.36		)	—		—		1.06		(01.70		)	01.70
Unrecognized pension and OPEB benefit	0.2			0.2			—		—		—		(0.2		)	0.2
Unrecognized pension and OPEB cost	(0.2		)	(0.3		)	—		—		0.1		0.2			(0.2		)
Total other comprehensive income	0.98			(0.19		)	—		—		1.07		(0.98		)	0.98
Total Comprehensive Income	~~136~~86.36			~~192~~204.81			~~314~~335.48		—		~~310~~331.27		(~~817~~871.46		)	~~136~~86.36
Less: Comprehensive Income-noncontrolling interest	2427.43			2427.43			—		—		—		(2427.43		)	2427.43
Comprehensive Income-controlling interests	$	~~111~~59.93		$	~~168~~176.48		$	~~314~~335.48	$	—	$	~~310~~331.27	$	(~~793~~844.03	)	$	~~111~~59.93

Six Months Ended June 30, 2015 (in millions, net of taxes)	CPG			CEG			Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
Nine Months Ended September 30, 2015(in millions, net of taxes)	CPG			CEG			Columbia OpCo		OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
Net Income	$	~~156~~231.97		$	~~161~~249.01		$	~~240~~385.48	$	—	$	~~235~~376.67		$	(~~637~~1,011.06	)	$	~~156~~231.97
Other comprehensive income
Net unrealized gain on cash flow hedges	0.5			(0.3		)	—		—		0.8			(0.5		)	0.5
Net unrealized loss on cash flow hedges	(0.2		)	(1.5		)	—		—		1.3			0.2			(0.2		)
Unrecognized pension and OPEB benefit	7.32			7.34			—		—		—(0.2		)	(7.32		)	7.32
Total other comprehensive income	7.80			75.09			—		—		01.81			(7.80		)	7.80
Total Comprehensive Income	~~164~~238.7			~~168~~255.0			~~240~~385.48		—		~~236~~377.48			(~~644~~1,018.86		)	~~164~~238.7
Less: Comprehensive Income-noncontrolling interest	1627.19			1627.19			—		—		—			(1627.19		)	1627.19
Comprehensive Income-controlling interests	$	~~148~~210.68		$	~~151~~227.91		$	~~240~~385.48	$	—	$	~~236~~377.48		$	(~~628~~990.7	)	$	~~148~~210.68

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2016 (in millions)	CPG			CEG			Columbia OpCo			OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPGConsolidated
Nine Months Ended September 30, 2016(in millions)	CPG			CEG			Columbia OpCo			OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
Net Cash Flows from Operating Activities	$	(72174.37	)	$	~~271~~376.79		$	(0.28	)	$	—	$	~~414~~521.87		$	(~~345~~470.21	)	$	~~268~~253.80
Investing Activities
Capital expenditures	—			—			—			—		(~~673~~1,095.8		)	—			(~~673~~1,095.8		)
Change in short-term lendings-affiliated	(~~339~~519.74		)	(~~182~~400.25		)	3.3			—		36(28.67		)	~~482~~945.03			—
Proceeds from disposition of assets	—			—			—			—		09.19			—			09.19
Contributions to equity investees	—			—			—			—		(16.92		)	—			(16.92		)
Distributions from equity investees	—			—			—			—		01.86			—			01.86
Other investing activities	—10.3			—			—			—		(36.75		)	—			(3.78		)
Net Cash Flows used for Investing Activities	(~~339~~509.71		)	(~~182~~400.25		)	3.3			—		(~~641~~1,125.97		)	~~482~~945.03			(~~678~~1,086.57		)
Financing Activities
Change in short-term borrowings	—			—			—			—		(15.0		)	—			(15.0		)
Change in short-term borrowings-affiliated	~~(98~~151.80		)	—			~~322~~439.92			—		~~257~~605.81			(~~481~~945.93		)	—250.0
Debt related costs	(0.7		)	—			—			—		—			—			(0.7		)
Payments of capital lease obligations and other debt related costs	(0.6		)	—			—			—		(1.9		)	—			(2.5		)
Quarterly distributions to unitholders	—			—			—			—		(37.0		)	37.0			—
Common stock issuances associated with the Merger	0.1			—			—			—		—			—			0.1
Distribution to noncontrolling interest in Columbia OpCo	—			—			(327.9		)	—		—			327.9			—
Quarterly distributions to unitholders	—			—			—			—		(56.9		)	56.9			—
Distribution to noncontrolling interest	—			—			—			—		—			(19.8		)	(19.8		)
Distribution to noncontrolling interest in Columbia OpCo	—			—			(443.6		)	—		—			443.6			—
Distribution to noncontrolling interest	—			—			—			—		—			(30.4		)	(30.4		)
Acquisition of treasury stock	(6.2		)	—			—			—		—			—			(6.2		)
Dividends paid - common stock	(105.01		)	—			—			—		—			—			(105.01		)
Net Cash Flows used for Financing Activities	(210.7		)	—			(5.0		)	—		205.8			(136.8		)	(146.7		)
Dividends paid to TransCanada	(55.5		)	—			—			—		—			—			(55.5		)
Change in cash and cash equivalents	(622.7		)	89.5			(1.9		)	—		(21.3		)	—			(556.4		)
Net Cash Flows used for Financing Activities	(16.3		)	—			(4.4		)	—		531.3			(475.2		)	35.4
Change in cash and cash equivalents	(700.1		)	(23.6		)	(1.9		)	—		(72.7		)	—			(798.3		)
Cash and cash equivalents at beginning of period	800.0			46.7			1.9			—		82.3			—			930.9
Cash and Cash Equivalents at End of Period	$	~~177~~99.39		$	~~136~~23.21		$	—		$	—	$	619.06		$	—		$	~~374~~132.56

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (continued)

Six Months Ended June 30, 2015 (in millions)	CPG			CEG			Columbia OpCo			OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPGConsolidated
Nine Months Ended September 30, 2015(in millions)	CPG			CEG			Columbia OpCo			OpCo GP		Non-guarantor Subsidiaries			Consolidating adjustments and eliminations			CPG Consolidated
Net Cash Flows from Operating Activities	$	06.82		$	(2824.45	)	$	24.61		$	—	$	~~296~~440.15		$	(412.31	)	$	~~266~~414.82
Investing Activities
Capital expenditures	—			(3.8		)	—			—		(~~470~~833.20		)	3.8			(~~470~~833.20		)
Insurance recoveries	—			—			—			—		2.1			—			2.1
Change in short-term lendings-affiliated	—			—(33.2		)	(~~560~~126.48		)	—		60(119.20		)	—424.5			~~(500~~145.25		)
Proceeds from disposition of assets	—			2.1			—			—		1955.0			(3.8		)	1753.3
Contributions to equity investees	—			(1,217.3		)	—(446.2		)	—		—(1.4		)	1,~~217~~663.35			—(1.4		)
Distributions from equity investees	—			—			—			—		215.21			—			215.21
Other investing activities	(35.62		)	—			—			—		(1319.40		)	—			(1724.02		)
Net Cash Flows used for Investing Activities	(35.62		)	(1,~~219~~252.02		)	(~~560~~573.40		)	—		(~~400~~900.12		)	12,~~217~~088.30			(~~965~~642.86		)
Financing Activities
Change in short-term borrowings	—225.0			—			—			—		20.0			—			20245.0
Change in short-term borrowings-affiliated	~~576~~388.8			30(5.1		)	—			—		(~~140~~211.67		)	—(424.5		)	~~466~~(252.35		)
Issuance of long-term debt	2,745.9			—			—			—		—			—			2,745.9
Debt related costs	(2223.56		)	—			—			—		—			—			(2223.56		)
Issuance of long-term debt-affiliated	—			1,217.3			—			—		—			—			1,217.3
Payments of long-term debt-affiliated, including current portion	(1,848.2		)	—			—			—		(957.8		)	—			(2,806.0		)
Proceeds from the issuance of common units, net of offering costs	—			—			1,170.0			—		(1.6		)	—			1,168.4
Contribution of capital from parent	—			—			—			—		1,217.3			(1,217.3		)	—
Contribution of capital from CEG	—			—			—			—		1,663.5			(1,663.5		)	—
Distribution of IPO proceeds to parent	—			—			(500.0		)	—		—			—			(500.0		)
Distribution of IPO proceeds to NiSource	—			—			(500.0		)	—		—			—			(500.0		)
Distribution to parent	(1,450.0		)	—			—			—		—			—			(1,450.0		)
Distribution to NiSource	(1,450.0		)	—			—			—		—			—			(1,450.0		)
Quarterly distributions to unitholders	—			—			—			—		(926.20		)	926.20			—
Distribution to noncontrolling interest	—			—			—			—		—			(4.9		)	(4.9		)
Distribution to noncontrolling interest in Columbia OpCo	—			—			(69.9		)	—		—			69.9			—
Transfer from parent	0.8			—			—			—		—			—			0.8
Distribution received from Columbia OpCo	—			69.9			—			—		—			(69.9		)	—
Net Cash Flows from Financing Activities	2.8			1,247.4			670.0			—		128.1			(1,213.0		)	835.3
Distribution to noncontrolling interest	—			—			—			—		—			(13.9		)	(13.9		)
Change in cash and cash equivalents	—			—			112.2			—		24.1			—			136.3
Dividends paid - common stock	(39.7		)	—			—			—		—			—			(39.7		)
Transfer from NiSource	0.8			(0.6		)	(13.0		)	—		13.6			—			0.8
Net Cash Flows from Financing Activities	(1.0		)	1,281.5			587.1			—		500.0			(2,075.9		)	291.7
Change in cash and cash equivalents	—			4.8			18.2			—		40.3			—			63.3
Cash and cash equivalents at beginning of period	—			—			—			—		0.5			—			0.5
Cash and Cash Equivalents at End of Period	$	—		$	—4.8		$	~~112~~18.2		$	—	$	2440.68		$	—		$	~~136~~63.8

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

22. Subsequent Event

Proposed Acquisition. On November 1, 2016, CPPL announced that it had entered into an agreement and plan of merger with CPG, Pony Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of CPG (“Pony Merger Sub”) and MLP GP.

The conflicts committee of the board of directors of MLP GP (the “GP Conflicts Committee”) and the board of directors of the MLP GP (the "GP Board") approved the merger agreement and transactions contemplated by the merger agreement and determined that the merger agreement and the merger transactions are fair and reasonable to and in the best interests of CPPL and to the holders of CPPL common units unaffiliated with CPG, CEG and MLP GP (collectively, the “CPPL unaffiliated unitholders”). The GP Conflicts Committee recommended the GP Board approve the merger agreement and the merger transactions. The GP Board resolved that the merger agreement and the merger transactions be submitted to the unitholders of CPPL at a special meeting of the unitholders for approval. The GP Board recommended that the unitholders of CPPL vote in favor of the proposal to approve the merger agreement and the merger transactions at the special meeting of the unitholders.

CPG indirectly owns, through its ownership of CEG, 100.0% of the membership interests in MLP GP. CEG owns all of the subordinated units (“CPPL subordinated units”) representing a 46.5% limited partner interest in CPPL. Pursuant to the merger agreement, Pony Merger Sub will merge with and into CPPL at the effective time of the merger, with CPPL surviving, such that following the merger, MLP GP will remain a wholly owned subsidiary of CPG and the sole general partner of CPPL, and CPG and CEG will be the only limited partners of CPPL. Each CPPL common unit issued and outstanding as of immediately prior to the effective time of the merger will be converted into the right to receive (i) $17.00 per CPPL common unit in cash without any interest thereon plus (ii) an additional amount of cash per CPPL common unit without any interest thereon equal to the product of (x) the number of days from and including the first day of the quarter in which the closing occurs through and including the closing date multiplied by (y) $0.00217 per CPPL common Unit (a daily distribution rate equal to the quotient of $0.1975 divided by ninety-one (91)), plus (iii) an amount equal to $0.1975 per CPPL common unit in cash without any interest thereon if the record date for the CPPL’s quarterly cash distribution with respect to the quarter immediately preceding the quarter in which the closing occurs shall not have occurred prior to the effective time of the merger (the "Merger Consideration"). Incentive distribution rights of CPPL, which are owned by CEG, will be unchanged and remain outstanding as incentive distribution rights of the surviving entity, and no consideration will be delivered in respect thereof. CPPL subordinated units, which are owned by CEG, will also be unchanged and remain outstanding as CPPL subordinated units of the surviving entity, and no consideration will be delivered in respect thereof. CPG will be issued CPPL common units at the effective time of the merger equal to the number of public common units being converted into the right to receive the Merger Consideration. The parties anticipate that the merger will close in the first quarter of 2017 and that CPPL will pay the regular quarterly cash distributions to unitholders at the quarterly per unit distribution rate of $0.1975, with the declaration date and record date for each quarterly distribution to occur no later than 30 days and 42 days, respectively, after the end of each fiscal quarter.

Completion of the merger is conditioned upon, among other things: (1) approval of the merger agreement and the transactions contemplated by the merger agreement, including the merger, by the affirmative vote or consent of holders, as of the record date of the special meeting of CPPL’s unitholders (including CEG), of (a) a majority of the outstanding CPPL common units, voting as a class, (b) a majority of the CPPL common units held by the CPPL unaffiliated unitholders, and (c) a majority of the outstanding CPPL subordinated units, voting as a class; (2) all required filings, consents, approvals, permits and authorizations in connection with the merger having been made or obtained; and (3) the absence of legal injunctions or impediments prohibiting the merger transactions.

Pursuant to the merger agreement, CEG delivered a consent to voting the CPPL subordinated units owned beneficially or of record by it or any of its subsidiaries in favor of the merger proposal, including the 46,811,398 CPPL subordinated units currently held by CEG, which units represent 100.0% of the outstanding CPPL subordinated units.

The merger agreement contains provisions granting both CPPL and CPG the right to terminate the merger Agreement for certain reasons, including, among others, if: (1) the merger is not completed on or before August 1, 2017; (2) any governmental authority has issued a final and nonappealable statute, rule, order, decree or regulation enjoining or prohibiting consummation of the merger; (3) under certain conditions, there has been a material breach of any of the representations, warranties, covenants or agreements set forth in the merger agreement by a party to the merger agreement which is not cured within 30 days following receipt by the breaching party of written notice from the non-breaching party (a “terminable breach”); (4) CPPL does not obtain the requisite unitholder approval of the merger agreement and the merger transactions at a special meeting of unitholders; or (5) either the GP Board, in accordance with the merger agreement, withdraws, modifies or qualifies, or proposes to publicly withdraw, modify or

Table of Contents

ITEM 1. FINANCIAL STATEMENTS (continued)

Columbia Pipeline Group, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

qualify, in a manner adverse to CPG its recommendation to the unitholders of CPPL (the “CPPL Board Recommendation”) or fails to include the CPPL Board Recommendation in the proxy statement to be filed by CPPL in connection with the merger (that taking of any such action being referred to as a “CPPL Change in Recommendation”).

All costs and expenses incurred in connection with the merger agreement and the merger transactions will be paid by the party incurring such costs and expenses, except that (1) CPG and CPPL shall each bear and pay one half of the expenses incurred in connection with the proxy statement and Schedule 13E-3 filings, (2) if (a) CPG terminates the merger agreement due to a CPPL Change in Recommendation, (b) either party terminates the merger agreement due to the failure to obtain the requisite unitholder approval of the merger agreement and the merger transactions at a special meeting of unitholders of CPPL and prior to such special meeting, a CPPL Change in Recommendation has occurred, or if CPG terminates the merger agreement due to a terminable breach by CPPL, CPPL will pay the expenses incurred by CPG up to a maximum of $10.0 million, and (3) if CPPL terminates the merger agreement due to a terminable breach by CPG, CPG will pay the expenses incurred by CPPL.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Columbia Pipeline Group, Inc.

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q (this "Form 10-Q") to “we,” “us,” “our,” the “Company” and “CPG” refer to Columbia Pipeline Group, Inc., a Delaware corporation, and its consolidated subsidiaries including CEG and CPPL.

This discussion and analysis should be read in conjunction with information contained in our accompanying unaudited consolidated interim financial statements and the notes thereto and our consolidated financial statements and notes thereto included in our 2015 Form 10-K.

Note regarding forward-looking statements

This Form 10-Q contains “forward-looking statements,” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements give our current expectations, contain projections of results of operations or of financial condition, or forecasts of future events. Words such as “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” “project,” “budget,” “potential,” or “continue,” and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this Form 10-Q. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include:


•	changes in general economic conditions;


•	competitive conditions in our industry;


•	actions taken by third-party operators, processors and transporters;


•	the demand for natural gas storage and transportation services;


•	our ability to successfully implement our business plan;


•	our ability to complete internal growth projects on time and on budget;


•	the price and availability of debt and equity financing;


•	restrictions in our existing and any future credit facilities;


•	capital market performance and other factors that may decrease the value of benefit plan assets;


•	the availability and price of natural gas to the consumer compared to the price of alternative and competing fuels;


•	competition from the same and alternative energy sources;


•	energy efficiency and technology trends;


•	operating hazards and other risks incidental to transporting, storing and gathering natural gas;


•	natural disasters, weather-related delays, casualty losses and other matters beyond our control;


•	interest rates;


•	labor relations;


•	large customer defaults;


•	changes in the availability and cost of capital;

4143

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Columbia Pipeline Group, Inc.


•	changes in tax status;


•	the effects of existing and future laws and governmental regulations;


•	the effects of future litigation, including litigation relating to the Merger;


•	the occurrence of any event, change or other circumstance in connection with the recent Merger;


•	risks related to disruption of management’s attention from our ongoing business operations due to the Merger;


•	risks associated with the loss and ongoing replacement of key personnel due to the recent Merger;


•	risks relating to unanticipated costs of integration in connection with the Merger, including operating costs, customer loss or business disruption being greater than expected;


•	risks relating to the difficulties in integrating the businesses and management of CPG and TransCanada; and


•	certain factors discussed elsewhere in this Form 10-Q.

Other factors described herein, as well as factors that are unknown or unpredictable, could also have a material adverse effect on future results. Please see Item 1A “Risk Factors” in our 2015 Form 10-K and this Form 10-Q. Except as required by applicable securities laws, we do not intend to update these forward-looking statements and information.

Separation

On June 2, 2015, NiSource announced that its board of directors approved the separation of CPG from NiSource (the “Separation”) through the distribution of CPG common stock to holders of NiSource common stock as of June 19, 2015 (the “Record Date”). On July 1, 2015, NiSource distributed, pursuant to an effective registration statement on Form 10, 317.6 million shares, one share of CPG common stock for every one share of NiSource common stock held by NiSource stockholders on the Record Date. As of July 1, 2015, CPG was an independent, publicly traded company, and NiSource did not retain any ownership interest in CPG. CPG's common stock began trading "regular-way" under the ticker symbol "CPGX" on the NYSE on July 2, 2015.

Merger

On March 17, 2016, CPG entered into a Merger Agreement, among CPG, Parent, US Parent, Merger Sub, and, solely for purposes of Section 3.02, Section 5.02, Section 5.09 and Article VIII of the Merger Agreement, TransCanada. Upon the terms and subject to the conditions set forth in the Merger Agreement, effective July 1, 2016, Merger Sub was merged with and into CPG (the “Merger”) with CPG surviving the Merger as an indirect wholly owned subsidiary of TransCanada.

On July 1, 2016, TransCanada closed the acquisition of CPG valued at $13.0 billion, comprised of a purchase price of approximately $10.3 billion and CPG debt of approximately $2.7 billion. CPG became an indirect, wholly owned subsidiary of TransCanada as a result of the Merger. Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of CPG common stock, par value $0.01 per share, was canceled and converted into the right to receive $25.50 per share in cash, without interest. Upon completion of the transaction, TransCanada owns the general partner of CPPL, all of CPPL’s incentive distribution rights and all of CPPL’s subordinated units, which represent a 46.5% limited partnership interest in CPPL. As a result, CPPL is now effectively managed by TransCanada.

~~Executive~~Proposed ~~Overview~~Acquisition

WeOn ~~are~~November a1, ~~growth-oriented~~2016, ~~Delaware~~CPPL ~~corporation~~announced ~~formed~~that byit ~~NiSource~~had toentered ~~own,~~into ~~operate~~an agreement and ~~develop~~plan aof ~~portfolio~~merger ofwith ~~pipelines~~CPG, ~~storage~~Pony Merger Sub LLC, a Delaware limited liability company and ~~related~~wholly ~~midstream~~owned ~~assets~~subsidiary of CPG (“Pony Merger Sub”) and MLP GP.

WeThe ~~own~~conflicts ~~approximately~~committee ~~15,000~~of ~~miles~~the board of ~~strategically~~directors ~~located~~of ~~interstate~~MLP ~~gas~~GP ~~pipelines~~(the ~~extending~~“GP ~~from~~Conflicts ~~New~~Committee”) ~~York~~and to the ~~Gulf~~board of ~~Mexico~~directors ~~and one~~ of the ~~nation’s~~MLP ~~largest~~GP ~~underground~~(the ~~natural~~"GP ~~gas~~Board") ~~storage~~approved ~~systems,~~the ~~with~~merger ~~approximately~~agreement ~~300~~and ~~MMDth~~transactions ofcontemplated ~~working~~by ~~gas~~the ~~capacity,~~merger asagreement ~~well~~and asdetermined ~~related~~that ~~gathering~~the merger agreement and ~~processing~~the ~~assets.~~merger ~~For~~transactions ~~the~~are ~~six~~fair ~~months~~and ~~ended~~reasonable ~~June 30,~~to ~~2016,~~and ~~95%~~in the best interests of ~~our~~CPPL ~~revenue,~~and ~~excluding~~to the holders

4244

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Columbia Pipeline Group, Inc.

~~revenues~~of ~~generated~~CPPL ~~from~~common ~~cost~~units ~~recovery~~unaffiliated ~~under~~with ~~certain~~CPG, ~~regulatory~~CEG ~~tracker~~and ~~mechanisms~~MLP GP (collectively, ~~which~~the we“CPPL ~~refer~~unaffiliated tounitholders”). asThe ~~“tracker-related~~GP ~~revenues,”~~Conflicts ~~was~~Committee ~~generated~~recommended ~~under~~the ~~firm~~GP ~~revenue~~Board ~~contracts~~approve the merger agreement and the merger transactions. AsThe ofGP ~~June 30,~~Board ~~2016,~~resolved ~~these~~that ~~contracts~~the ~~had~~merger aagreement ~~weighted~~and ~~average~~the ~~remaining~~merger ~~contract~~transactions ~~life~~be submitted to the unitholders of 4CPPL at a special meeting of the unitholders for approval.~~8 years.~~ WeThe ~~own~~GP ~~these~~Board ~~assets~~recommended ~~through~~that ~~Columbia~~the ~~OpCo,~~unitholders aof ~~partnership~~CPPL ~~between~~vote ~~our~~in ~~wholly~~favor ~~owned~~of ~~subsidiary~~the ~~CEG~~proposal to approve the merger agreement and ~~CPPL~~the merger transactions at the special meeting of the unitholders.

WeCPG ~~expect~~indirectly owns, through its ownership of CEG, 100% of the ~~revenues~~membership ~~generated~~interests in MLP GP. CEG owns all of the subordinated units (“CPPL subordinated units”) representing a 46.5% limited partner interest in CPPL. Pursuant to the merger agreement, Pony Merger Sub will merge with and into CPPL at the effective time of the merger, with CPPL surviving, such that following the merger, MLP GP will remain a wholly owned subsidiary of CPG and the sole general partner of CPPL, and CPG and CEG will be the only limited partners of CPPL. Each CPPL common unit issued and outstanding as of immediately prior to at the effective time of the merger will be converted into the right to receive (i) $17.00 per CPPL common unit in cash without any interest thereon plus (ii) an additional amount of cash per CPPL common unit without any interest thereon equal to the product of (x) the number of days from ~~our~~and ~~businesses~~including the first day of the quarter in which the closing occurs through and including the closing date multiplied by (y) $0.00217 per CPPL common Unit (a daily distribution rate equal to the quotient of $0.1975 divided by ninety-one (91)), plus (iii) an amount equal to $0.1975 per CPPL common unit in cash without any interest thereon if the record date for the CPPL’s quarterly cash distribution with respect to the quarter immediately preceding the quarter in which the closing occurs shall not have occurred prior to the effective time of the merger (the "Merger Consideration"). Incentive distribution rights of CPPL, which are owned by CEG, will ~~increase~~be unchanged and remain outstanding as weincentive ~~execute~~distribution onrights ~~our~~of ~~significant~~the ~~portfolio~~surviving entity, and no consideration will be delivered in respect thereof. CPPL subordinated units, which are owned by CEG, will also be unchanged and remain outstanding as CPPL subordinated units of ~~organic~~the ~~growth~~surviving ~~opportunities~~entity, and no consideration will be delivered in respect thereof. WeCPG ~~believe~~will be issued CPPL common units at the effective time of the merger equal to the number of public common units being converted into the right to receive the Merger Consideration. The parties anticipate that ~~future~~the ~~internal~~merger ~~growth~~will ~~projects~~close in the first quarter of 2017 and that CPPL will bepay ~~funded~~the ~~primarily~~regular ~~through~~quarterly ~~borrowings~~cash ~~under~~distributions ~~our~~to ~~credit~~unitholders ~~facilities~~at orthe ~~through~~quarterly ~~issuances~~per unit distribution rate of ~~debt~~$0.1975, with the declaration date and ~~equity~~record ~~securities~~date for each quarterly distribution to occur no later than 30 days and 42 days, respectively, after the end of each fiscal quarter.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Columbia Pipeline Group, Inc.

meeting, a CPPL Change in Recommendation has occurred, or if CPG terminates the merger agreement due to a terminable breach by CPPL, CPPL will pay the expenses incurred by CPG up to a maximum of $10 million, and (3) if CPPL terminates the merger agreement due to a terminable breach by CPG, CPG will pay the expenses incurred by CPPL.

Executive Overview

We are a growth-oriented Delaware corporation formed to own, operate and develop a portfolio of pipelines, storage and related midstream assets.

We own approximately 15,000 miles of strategically located interstate gas pipelines extending from New York to the Gulf of Mexico and one of the nation’s largest underground natural gas storage systems, with approximately 300 MMDth of working gas capacity, as well as related gathering and processing assets. For the nine months ended September 30, 2016, 95% of our revenue, excluding revenues generated from cost recovery under certain regulatory tracker mechanisms, which we refer to as “tracker-related revenues,” was generated under firm revenue contracts. As of September 30, 2016, these contracts had a weighted average remaining contract life of 4.7 years. We own these assets through Columbia OpCo, a partnership between our wholly owned subsidiary CEG and CPPL.

We expect the revenues generated from our businesses will increase as we execute on our significant portfolio of organic growth opportunities. We believe that future internal growth projects will be funded primarily through borrowings under our credit facility, long-term intercompany debt or through issuances of CPPL equity securities.

Commercial Growth and Expansion

We believe that we are well-positioned to attract volumes to our systems through cost-effective capacity expansions. For example, we have recently completed or we are currently undertaking the following expansions (all amounts listed are inclusive of AFUDC, as applicable):

• ~~Big~~Washington ~~Pine~~County ~~Expansion~~Gathering. WeA ~~are~~producer ~~investing~~has ~~approximately~~contracted ~~$75~~with ~~million~~us to ~~extend~~build ~~the~~an ~~Big~~approximately ~~Pine~~20 ~~pipeline~~mile ~~and~~gas ~~add~~gathering ~~compression~~system ~~facilities that will add incremental capacity. The project will support Marcellus shale production~~ in ~~western~~southwestern Pennsylvania. The initial project ~~piping~~went ~~was placed~~ into service induring the third quarter of 2015 and ~~the~~we ~~compression~~expect ~~was~~to ~~placed~~invest ~~into~~approximately ~~service~~$120 inmillion ~~the~~through ~~second quarter of 2016~~2021.

• ~~Washington~~Gibraltar ~~County~~Pipeline ~~Gathering~~Project. AWe ~~producer~~expect ~~has~~to ~~contracted~~invest ~~with~~approximately us$260 million to ~~build~~construct an approximately 201 ~~mile~~MMDth/d dry gas ~~gathering~~header ~~system~~pipeline in ~~southwestern~~southwest Pennsylvania. ~~The~~We ~~initial~~expect ~~project~~this ~~went~~to ~~into~~be the first of multiple phases with an initial in-service ~~during~~date in the ~~third~~fourth quarter of ~~2015~~2016, and wea ~~expect~~final toin-service ~~invest~~date ~~approximately~~in ~~$120~~the ~~million~~fourth ~~through~~quarter ~~2018~~of 2017.

• ~~Kentucky~~Utica ~~Power~~Access ~~Plant~~ Project. We invested approximately $3050 million to construct 24.7 miles of 1624-inch pipeline ~~and other facilities~~ to aprovide ~~power~~205,000 ~~plant~~Dth/d ~~near~~of ~~Columbia~~new ~~Gas~~firm ~~Transmission’s~~transportation ~~Line~~to P.provide ~~This~~Appalachian ~~project~~production ~~will~~access ~~provide~~to upliquid totrading ~~72,000~~points ~~Dth/d~~on ofColumbia ~~new~~Gas ~~firm~~Transmission's ~~service~~system. ~~and~~This project was placed into service in the ~~second~~fourth quarter of 2016.

• Gibraltar Pipeline Project. We expect to invest approximately $260 million to construct an approximately 1 MMDth/d dry gas header pipeline in southwest Pennsylvania. We expect this to be the first of multiple phases with an initial in-service date in the fourth quarter of 2016.

• Utica Access Project. We expect to invest approximately $50 million to construct 4.7 miles of 24-inch pipeline to provide 205,000 Dth/d of new firm transportation to provide Utica production access to liquid trading points on Columbia Gas Transmission's system. This project is expected to be placed into service in the fourth quarter of 2016.


•	Leach XPress. This project will provide approximately 1.5 MMDth/d of capacity from the Marcellus and Utica production regions to the Leach compressor station located on the Columbia Gulf system, TCO Pool, and other markets on the Columbia Gas Transmission system. We expect the project, which involves an estimated investment of $1.4 billion, to be placed into service in the fourth quarter of 2017.


•	Millennium Lateral. We intend to invest approximately $20 million through our ownership stake in Millennium Pipeline to construct approximately 8 miles of 16-inch pipeline to a new power plant situated near Wawayanda, New York. This project will provide up to 127,000 Dth/d of new firm capacity and will be placed into service in the second quarter of 2017.

•

Rayne XPress. This project will transport approximately 1 MMDth/d of southwest Marcellus and Utica production on the Columbia Gulf system from the Leach, Kentucky interconnect with Columbia Gas Transmission towards the Rayne compressor station in southern Louisiana to reach various Gulf Coast markets. We expect the project, which involves an estimated investment of $420 million, to be placed into service in the fourth quarter of 2017.

• ~~Millennium~~Cameron ~~Lateral~~Access Project. WeThis ~~intend~~project, towhich ~~invest~~involves an investment of approximately $20300 million, ~~through~~will ~~our~~provide ~~ownership~~800,000 ~~stake~~Dth/d inof ~~Millennium~~transportation ~~Pipeline~~capacity toon ~~construct~~the ~~approximately~~Columbia 8Gulf ~~miles~~system ~~of 16-inch pipeline~~ to athe ~~new~~Cameron ~~power~~LNG ~~plant~~export ~~situated~~terminal ~~near~~in ~~Wawayanda,~~Louisiana. ~~New~~We ~~York.~~expect ~~This~~the project ~~will provide up~~ to ~~127,000 Dth/d of new firm capacity and will~~ be placed into service in the ~~fourth~~first quarter of ~~2017~~2018.

• Cameron Access Project. This project, which involves an investment of approximately $320 million, will provide 800,000 Dth/d of transportation capacity on the Columbia Gulf system to the Cameron LNG export terminal in Louisiana. We expect the project to be placed into service in the first quarter of 2018.46

• WB XPress. This project, which involves an investment of approximately $860 million, will expand Columbia Gas Transmission's WB system in order to transport approximately 1.3 MMDth/d of Marcellus production to pipeline interconnects and East Coast markets, including access to the Cove Point LNG terminal. We expect this project to be placed into service in the fourth quarter of 2018.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Columbia Pipeline Group, Inc.


•	WB XPress. This project, which involves an investment of approximately $0.9 billion, will expand Columbia Gas Transmission's WB system in order to transport approximately 1.3 MMDth/d of Marcellus production to pipeline interconnects and East Coast markets, including access to the Cove Point LNG terminal. We expect this project to be placed into service in the fourth quarter of 2018.


•	Mountaineer XPress. This approximately $2.0 billion project will provide new takeaway capacity for Marcellus and Utica production. The project will provide up to 2.7 MMDth/d of firm transportation capacity on the Columbia Gas Transmission system. We expect this project to be placed into service in the fourth quarter of 2018.


•	Gulf XPress. Gulf XPress will provide 860,000 Dth/d of firm transportation capacity for Marcellus and Utica production on the Columbia Gulf system. This project involves an investment of approximately $0.7 billion and is expected to be placed into service in the fourth quarter of 2018.

• ~~Millennium~~Central ~~Eastern~~Virginia ~~System Upgrade~~Connector. WeThis ~~intend~~project towill ~~invest~~provide ~~approximately~~45,000 ~~$130~~Dth/d ~~million~~of ~~through~~firm ~~our~~transportation ~~ownership~~capacity ~~stake~~on inthe ~~Millennium~~Columbia ~~Pipeline~~Gas toTransmission ~~expand~~system ~~eastward flow capacity by 237,500 Dth/d~~ to ~~Ramapo~~a ~~and~~new ~~other~~point ~~nearby~~of ~~points~~delivery onin ~~the system~~Virginia. WeThis ~~expect~~approximately ~~this~~$13 million project is expected to be placed into service in the fourth quarter of 2018.

• ~~Central~~Millennium ~~Virginia~~Eastern ~~Connector~~System Upgrade. ~~This~~We ~~project~~intend ~~will~~to ~~provide~~invest upapproximately to$135 ~~45,000~~million ~~Dth/d~~through ofour ~~firm~~ownership ~~transportation~~stake ~~capacity~~in onMillennium ~~the~~Pipeline ~~Columbia~~to ~~Gas~~expand ~~Transmission~~eastward ~~system~~flow tocapacity aby ~~new~~223,000 ~~point~~Dth/d ofto ~~delivery~~Ramapo inand ~~Virginia.~~other ~~This~~nearby ~~approximately~~points ~~$12~~on ~~million~~the ~~project~~system. isWe ~~expected~~expect this project to be placed into service in the fourth quarter of 2018.

In 2013, the FERC approved the modernization settlement entered into by Columbia Gas Transmission and its customers that provides recovery and return on an investment of up to $1.5 billion over a five-year period to modernize its system to improve system integrity and enhance service reliability and flexibility. The modernization program includes, among other things, replacement of aging pipeline and compressor facilities, enhancements to system inspection capabilities and improvements in control systems. Columbia Gas Transmission placed approximately $320 million in modernization investments into service during 2015. In January 2016, the FERC approved Columbia Gas Transmission's third annual filing for recovery of the revenue requirement under this program. In December 2015, Columbia Gas Transmission filed an extension of this settlement and received the FERC’s approval of the customer agreement in March 2016. This extension will allow Columbia Gas Transmission to invest an additional $1.1 billion over an additional three-year period through 2020. This agreement also expands the scope of facility investments covered by the program.

Items Affecting Comparability of our Financial Results

The historical financial results discussed below may not be comparable to our future financial results for the following reasons:


•	Following the Separation, we incur incremental general and administrative expenses as a result of being a public company.

• Following the Separation, ~~amounts~~transactions between CPG and NiSource and its subsidiaries reflected in our historical consolidated financial statements as affiliated are reflected as unaffiliated.

• We entered into a $1,500.0 million revolving credit facility, which became effective at the time of the Separation. As of June 30, 2016, we had no borrowings and issued $18.1 million in letters of credit under our revolving credit facility. On July 1, 2016, in connection with the Merger, all existing letters of credit were migrated to a TransCanada credit facility and the CPG revolving credit facility was terminated. In addition, prior to the Separation, we sold $2,750.0 million of senior unsecured notes. The net proceeds of $2,722.3 million from that offering were used to repay $1,087.3 million of intercompany debt and pay a $1,450.0 million special dividend to NiSource. As a result, interest expense incurred on intercompany debt will be eliminated and replaced with interest expense on our credit facilities and our notes.

• ~~For~~We entered into a $1,500.0 million revolving credit facility, which became effective at the ~~three~~time ~~and~~of ~~six~~the ~~months~~Separation. ~~ended~~As ~~June~~of 30On July 1, 2016, ~~CPG~~in ~~incurred~~connection with the Merger, ~~transaction~~all ~~costs~~existing letters of ~~$12.3~~credit ~~million~~were migrated to a TransCanada credit facility and ~~$23.2~~the ~~million,~~CPG ~~respectively,~~revolving ~~including~~credit ~~legal~~facility was terminated. As a result, ~~advisory~~CPG ~~and~~accelerated ~~other~~the ~~related~~amortization ~~fees~~of $4.3 ~~These~~million of deferred costs associated with the revolving credit facility, which are included in ~~"Operation~~interest ~~and~~expense ~~maintenance"~~for on the ~~Condensed~~three ~~Statements~~and ofnine ~~Consolidated~~months ~~Operations~~ended ~~(unaudited)~~September 30, 2016.

44• Subsequent to the completion of the Merger, we entered into a $2,000.0 million revolving credit facility with US Parent. As of September 30, 2016, we had $250.0 million in outstanding borrowings under the revolving credit facility. As a result, CPG will incur affiliated interest expense on outstanding borrowings under the credit facility.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Columbia Pipeline Group, Inc.

~~Results~~• CPG incurred additional costs as a result of the Merger. CPG incurred Merger transaction costs of $43.1 million and $66.3 million for the three and nine months ended September 30, 2016, respectively, including legal, advisory and other related fees. Additionally CPG incurred employee related expenses of $101.5 million and an impairment charge of $19.1 million. These costs are included in "Operation and maintenance" and "Impairment of long-lived assets" on the Condensed Statements of Consolidated Operations (unaudited).

~~Three and Six Months Ended June 30, 2016~~ 48

The following schedule presents our historical consolidated key operating and financial metrics.

	Three Months EndedJune 30,						Six Months EndedJune 30,
(in millions)	2016			2015			2016			2015
Operating Revenues
Transportation revenues	$	259.4		$	237.8		$	567.9		$	486.2
Transportation revenues-affiliated	—			18.5			—			47.5
Storage revenues	48.9			36.2			98.8			72.8
Storage revenues-affiliated	—			12.9			—			26.2
Other revenues	5.6			10.7			11.7			23.4
Total Operating Revenues	313.9			316.1			678.4			656.1
Operating Expenses
Operation and maintenance	179.9			151.1			349.0			269.5
Operation and maintenance-affiliated	—			24.9			—			52.9
Depreciation and amortization	41.2			33.9			81.6			66.4
Gain on sale of assets and impairment, net	(3.4		)	(6.5		)	(6.0		)	(11.8		)
Property and other taxes	21.0			19.1			42.8			38.2
Total Operating Expenses	238.7			222.5			467.4			415.2
Equity Earnings in Unconsolidated Affiliates	16.3			13.7			32.2			29.1
Operating Income	91.5			107.3			243.2			270.0
Other Income (Deductions)
Interest expense	(30.6		)	(12.9		)	(60.0		)	(12.9		)
Interest expense-affiliated	—			(11.0		)	—			(29.3		)
Other, net	9.8			5.3			16.8			9.9
Total Other Deductions, net	(20.8		)	(18.6		)	(43.2		)	(32.3		)
Income from Continuing Operations before Income Taxes	70.7			88.7			200.0			237.7
Income Taxes	22.1			28.6			64.8			80.5
Income from Continuing Operations	48.6			60.1			135.2			157.2
Income (Loss) from Discontinued Operations-net of taxes	—			(0.3		)	0.2			(0.3		)
Net Income	48.6			59.8			135.4			$	156.9
Less: Net income attributable to noncontrolling interest	9.7			9.0			24.3			16.1
Net income attributable to CPG	$	38.9		$	50.8		$	111.1		$	140.8
Throughput (MMDth)
Columbia Gas Transmission	375.9			315.1			920.3			812.4
Columbia Gulf	116.1			137.3			269.1			283.0
Crossroads	3.5			3.5			8.1			8.6
Total	495.5			455.9			1,197.5			1,104.0

Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015

Operating Revenues. Operating revenues were $313.9 million for the second quarter of 2016, a decrease of $2.2 million from the same period in 2015. The decrease in operating revenues was primarily due to a decrease of $31.7 million attributable to the recovery of operating costs under certain regulatory tracker mechanisms, which are offset in expense, and lower mineral rights royalty revenue of $4.9 million. These decreases were offset by increased demand revenue of $33.4 million largely from the East Side Expansion and Rayne XPress growth projects, and the CCRM. Additionally, there were increased shorter term transportation services of $3.3 million.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Columbia Pipeline Group, Inc.

~~Operating~~Results ~~Expenses. Operating expenses were $238.7 million for the second quarter~~ of 2016, an increase of $16.2 million from the same period in 2015. The increase in operating expenses was primarily due to higher costs related to the Separation of $24.4 million, increased costs related to the Merger of $12.3 million and higher depreciation and amortization of $7.3 million, primarily due to higher levels of in-service assets. Additionally, there were higher employee and administrative costs of $3.2 million and decreased gains on the sale of assets of $3.1 million, primarily due to conveyances of mineral interests. These variances were partially offset by $31.7 million of decreased operating costs under certain regulatory tracker mechanisms, recoveries of which are offset in operating revenues.Operations

~~Equity~~Three ~~Earnings~~and inNine ~~Unconsolidated~~Months ~~Affiliates.~~Ended ~~Equity~~September 30, ~~earnings in unconsolidated affiliates were $16.3 million for the second quarter of~~ 2016, ~~an increase of $2.6 million from the same period in 2015. Equity earnings increased primarily due to earnings generated by Millennium Pipeline resulting from higher demand revenue.~~

~~Other Income (Deductions). Other income (deductions) for the second quarter of 2016 reduced income by $20.8 million compared to a reduction in income of $18.6 million in the same period in 2015.~~ The ~~variance~~following ~~was~~schedule ~~primarily~~presents ~~due~~our tohistorical anconsolidated ~~increase~~key inoperating ~~interest expense of $3.5 million~~ and ~~higher~~financial ~~amortization of debt related costs of $2~~metrics.5 million, both resulting from the issuance of long-term debt in May 2015. These increased deductions were partially offset by an increase in other income of $4.8 million for the equity portion of AFUDC.

Income Taxes. The effective income tax rates were 31.3% and 32.2% for the second quarter of 2016 and 2015, respectively. The change in the overall effective tax rates between 2016 and 2015 was primarily due to the effects of tax credits, state income taxes, utility rate-making and other permanent book-to-tax differences.



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2016			2015			2016			2015
Operating Revenues
Transportation revenues	$	270.3		$	266.2		$	838.2		$	752.4
Transportation revenues-affiliated	—			—			—			47.5
Storage revenues	48.9			49.5			147.7			122.3
Storage revenues-affiliated	—			—			—			26.2
Other revenues	7.9			5.2			19.6			28.6
Total Operating Revenues	327.1			320.9			1,005.5			977.0
Operating Expenses
Operation and maintenance	322.9			186.5			671.9			456.0
Operation and maintenance-affiliated	—			—			—			52.9
Depreciation and amortization	43.6			35.0			125.2			101.4
Gain on sale of assets	(9.3		)	(39.0		)	(15.3		)	(52.6		)
Impairment of long-lived assets	19.1			0.6			19.1			2.4
Property and other taxes	19.8			17.3			62.6			55.5
Total Operating Expenses	396.1			200.4			863.5			615.6
Equity Earnings in Unconsolidated Affiliates	16.0			15.4			48.2			44.5
Operating (Loss) Income	(53.0		)	135.9			190.2			405.9
Other Income (Deductions)
Interest expense	(31.4		)	(29.4		)	(91.4		)	(42.3		)
Interest expense-affiliated	(0.5		)	—			(0.5		)	(29.3		)
Other, net	13.7			6.7			30.5			16.6
Total Other Deductions, net	(18.2		)	(22.7		)	(61.4		)	(55.0		)
(Loss) Income from Continuing Operations before Income Taxes	(71.2		)	113.2			128.8			350.9
Income Taxes	(21.6		)	38.3			43.2			118.8
(Loss) Income from Continuing Operations	(49.6		)	74.9			85.6			232.1
(Loss) Income from Discontinued Operations-net of taxes	—			(0.1		)	0.2			(0.4		)
Net (Loss) Income	(49.6		)	74.8			85.8			$	231.7
Less: Net income attributable to noncontrolling interest	2.9			11.8			27.2			27.9
Net (loss) income attributable to CPG	$	(52.5	)	$	63.0		$	58.6		$	203.8
Throughput (MMDth)
Columbia Gas Transmission	378.4			284.3			1,298.7			1,096.7
Columbia Gulf	138.9			137.5			408.0			420.5
Crossroads	3.2			3.1			11.3			11.7
Total	520.5			424.9			1,718.0			1,528.9

~~Throughput.~~Three ~~Throughput~~Months ~~totaled~~Ended ~~495.5~~September ~~MMDth~~30, ~~for the second quarter of~~ 2016, ~~compared~~Compared to ~~455.9~~Three ~~MMDth~~Months ~~for~~Ended ~~the~~September ~~same~~30, ~~period in~~ 2015. ~~The increase of 39.6 MMDth was primarily due to increased transportation of Marcellus and Utica natural gas production.~~

~~Six~~Operating ~~Months~~Revenues. ~~Ended~~Operating ~~June~~revenues ~~30,~~were $327.1 million for the third quarter of 2016, ~~Compared~~an increase of $6.2 million from the same period in 2015. The increase in operating revenues was primarily due to ~~Six~~increased ~~Months~~demand ~~Ended~~revenue ~~June~~of 30$29.0 million largely from the East Side Expansion, ~~2015~~Broad Run Connector and Rayne XPress growth projects, and the CCRM. Additionally, there was higher mineral rights royalty revenue of $3.9 million and increased shorter term transportation services of $1.5 million. These increases were partially offset by a decrease of $29.3 million attributable to the recovery of operating costs under certain regulatory tracker mechanisms, which are offset in expense.

Operating Revenues. Operating revenues were $678.4 million for the six months ended June 30, 2016, an increase of $22.3 million from the same period in 2015. The increase in operating revenues was primarily due to increased demand revenue of $71.9 million largely from the East Side Expansion and Rayne XPress growth projects, and the CCRM. Additionally, there were increased shorter term transportation services of $4.6 million. These increases were partially offset by a decrease of $41.8 million attributable to the recovery of operating costs under certain regulatory tracker mechanisms, which are offset in expense, and lower mineral rights royalty revenue of $10.5 million. 49

Operating Expenses. Operating expenses were $467.4 million for the six months ended June 30, 2016, an increase of $52.2 million from the same period in 2015. The increase in operating expenses was primarily due to higher costs related to the Separation of $42.0 million, increased costs related to the Merger of $23.2 million, higher depreciation and amortization of $15.2 million and increased property and other taxes of $4.6 million, both primarily due to higher levels of in-service assets. Additionally, there were higher employee and administrative costs of $8.8 million, decreased gains on the sale of assets of $5.8 million, primarily due to conveyances of mineral interests, and increased outside service costs of $3.9 million. These variances were partially offset by $41.8 million of decreased operating costs under certain regulatory tracker mechanisms, recoveries of which are offset in operating revenues, and lower maintenance expenses of $4.9 million.

Equity Earnings in Unconsolidated Affiliates. Equity earnings in unconsolidated affiliates were $32.2 million for the six months ended June 30, 2016, an increase of $3.1 million from the same period in 2015. Equity earnings increased primarily due to earnings generated by Pennant.

Other Income (Deductions). Other income (deductions) for the six months ended June 30, 2016 reduced income by $43.2 million compared to a reduction in income of $32.3 million in the same period in 2015. The variance was primarily due to an increase in interest expense of $12.2 million and higher amortization of debt related costs of $3.6 million, both resulting from the issuance of long-term debt in May 2015, and increased revolving credit facility fees of $2.1 million. These increased deductions were partially offset by an increase in other income of $7.4 million for the equity portion of AFUDC.

Income Taxes. The effective income tax rates were 32.4% and 33.9% for the six months ended June 30, 2016 and 2015, respectively. The change in the overall effective tax rates between 2016 and 2015 was primarily due to income before income tax attributable to noncontrolling interest following CPPL’s IPO that is not subject to an income tax provision, as well as the effects of tax credits, state income taxes, utility rate-making and other permanent book-to-tax differences.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Columbia Pipeline Group, Inc.

~~Throughput~~Operating Expenses. ~~Throughput~~Operating ~~totaled~~expenses ~~1,197~~were $396.51 ~~MMDth~~million for the ~~six~~third ~~months~~quarter ~~ended~~of ~~June 30,~~ 2016, ~~compared~~an toincrease ~~1,104~~of $195.07 ~~MMDth~~million ~~for~~from the same period in 2015. The increase in operating expenses was primarily due to higher costs related to the Merger of 93$144.6 million, decreased gains on the sale of assets of $29.7 million, primarily due to conveyances of mineral interests, increased impairment charges of $18.5 ~~MMDth~~million due to the cancellation of IT system upgrades and increased costs related to the Separation of $16.4 million. Additionally, there was increased depreciation and amortization of $8.6 million and higher property and other taxes of $2.5 million, both primarily due to ~~increased~~higher ~~transportation~~levels of ~~Marcellus~~in-service assets, and ~~Utica~~higher ~~natural~~employee ~~gas~~and ~~production~~administrative costs of $3.6 million. These variances were partially offset by $29.3 million of decreased operating costs under certain regulatory tracker mechanisms, recoveries of which are offset in operating revenues.

47Equity Earnings in Unconsolidated Affiliates. Equity earnings in unconsolidated affiliates were $16.0 million for the third quarter of 2016, an increase of $0.6 million from the same period in 2015. Equity earnings increased primarily due to earnings generated by Millennium Pipeline.

Other Income (Deductions). Other income (deductions) for the third quarter of 2016 reduced income by $18.2 million compared to a reduction in income of $22.7 million in the same period in 2015. The variance was primarily due to an increase in other income of $7.3 million for the equity portion of AFUDC. This increase in other income was partially offset by $4.3 million of accelerated amortization of deferred costs associated with the CPG revolving credit facility which was terminated in connection with the Merger.

Income Taxes. The effective income tax rates were 30.3% and 33.8% for the third quarter of 2016 and 2015, respectively. The annual effective tax rate was adjusted in the third quarter of 2016 to reflect the impact of the Merger. Refer to Note 1, “Basis of Accounting Presentation” for additional information on the Merger. The change in the overall effective tax rates between 2016 and 2015 was primarily due to the effects of utility rate-making and other permanent book-to-tax differences.

Throughput. Throughput totaled 520.5 MMDth for the third quarter of 2016, compared to 424.9 MMDth for the same period in 2015. The increase of 95.6 MMDth was primarily due to increased transportation of Marcellus and Utica natural gas production.

Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2015

Operating Revenues. Operating revenues were $1,005.5 million for the nine months ended September 30, 2016, an increase of $28.5 million from the same period in 2015. The increase in operating revenues was primarily due to increased demand revenue of $100.9 million largely from the East Side Expansion, Broad Run Connector and Rayne XPress growth projects, and the CCRM. Additionally, there were increased shorter term transportation services of $6.1 million. These increases were partially offset by a decrease of $71.1 million attributable to the recovery of operating costs under certain regulatory tracker mechanisms, which are offset in expense, and lower mineral rights royalty revenue of $6.6 million.

Operating Expenses. Operating expenses were $863.5 million for the nine months ended September 30, 2016, an increase of $247.9 million from the same period in 2015. The increase in operating expenses was primarily due to higher costs related to the Merger of $167.8 million, increased costs related to the Separation of $58.4 million, decreased gains on the

Filing Compare · Columbia Pipeline Group, Inc.