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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Commission file number 1-10934

ENBRIDGE ENERGY PARTNERS, L.P.
(Exact name of registrant as specified in its charter)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý    No o

        The Registrant had 44,296,134 Class A common units outstanding as of November 5, 2004.

TABLE OF CONTENTS

Exhibits

        This Quarterly Report on Form 10-Q contains forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. They use words such as "anticipate," "believe," "continue," "estimate," "expect," "forecast," "intend," "may," "plan," "position," "projection," "strategy," "could," "should," or "will" or the negative of those terms or other variations of them or comparable terminology. In particular, statements, expressed or implied, concerning future actions, conditions or events or future operating results or the ability to generate revenues, income or cash flow are forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future actions, conditions or events and future results of operations may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond the ability of Enbridge Energy Partners, L.P. (the "Partnership") to control or predict. For additional discussion of risks, uncertainties and assumptions, see the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 2003.

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ENBRIDGE ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF INCOME

The accompanying notes are an integral part of these consolidated financial statements.

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ENBRIDGE ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

The accompanying notes are an integral part of these consolidated financial statements.

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ENBRIDGE ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these consolidated financial statements.

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ENBRIDGE ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

The accompanying notes are an integral part of these consolidated financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. BASIS OF PRESENTATION

        The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim consolidated financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. In the opinion of management, they contain all adjustments, consisting only of normal recurring adjustments, which management considers necessary to present fairly the financial position as of September 30, 2004 and December 31, 2003; the results of operations for the three and nine month periods ended September 30, 2004 and 2003; and cash flows for the nine month periods ended September 30, 2004 and 2003. The results of operations for the three and nine months ended September 30, 2004 should not be taken as indicative of the results to be expected for the full year, due to seasonality of portions of the natural gas business and maintenance activities. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto of Enbridge Energy Partners, L.P. (the "Partnership"), presented in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 2003.

2. ACQUISITIONS

Mid-Continent System

        On March 1, 2004, the Partnership acquired crude oil pipeline and storage assets, known as the Mid-Continent system, for $116.9 million, including transaction costs of $2.0 million. The results of operations are included in the Partnership's financial statements as of the acquisition date. The assets acquired serve refineries in the U.S. Mid-Continent from Cushing, Oklahoma and include:

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the 433-mile Ozark pipeline from Cushing to Wood River, Illinois;



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a 1.2 million barrel storage terminal located in El Dorado, Kansas;



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the 47-mile West Tulsa pipeline in Oklahoma; and



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a storage terminal at Cushing, with 8.3 million barrels of storage capacity.

        These systems were acquired to provide cash flows primarily from toll or fee-based revenues from a combination of regulated assets and contracted unregulated assets. The assets and results of operations are included in the Partnership's Liquids segment from the date of acquisition.

        The purchase price and the allocation to assets acquired and liabilities assumed were as follows:

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Palo Duro System

        On March 1, 2004, the Partnership purchased natural gas transmission and gathering pipeline assets for $13.1 million. The assets, referred to as the "Palo Duro" system, are located in Texas between the Partnership's existing Anadarko system and the recently acquired North Texas system, and are expected to increase natural gas delivery flexibility to the Partnership's customers. The assets purchased include approximately 400 miles of natural gas transmission and gathering pipelines, together with 5,200 horsepower of compression. There was no goodwill recorded for the purchase of the Palo Duro system. The Palo Duro system's results of operations are included in the Partnership's Natural Gas segment from the date of acquisition.

Other Acquisitions

        During the third quarter of 2004, the Partnership completed two separate acquisitions of natural gas assets in Texas and Mississippi for a total of $9.9 million. The acquisition in Texas was made to provide complimentary facilities to the Partnership's North Texas system. The acquisition in Mississippi is expected to consolidate redundant natural gas processing facilities. The purchase price for these acquisitions was applied to property, plant, and equipment and there was no goodwill recorded. The results of operations for both acquisitions are included in the Partnership's Natural Gas segment from their respective dates of acquisition.

3. NET INCOME PER COMMON AND i-UNIT

        Net income per common and i-unit is computed by dividing net income, after deduction of Enbridge Energy Company, Inc.'s. (the "General Partner") allocation, by the weighted average number of Class A and Class B common units and i-units outstanding. The General Partner's allocation is equal to an amount based upon its general partner interest, adjusted to reflect an amount equal to incentive distributions and an amount required to reflect depreciation on the General Partner's historical cost basis for assets contributed upon formation of the Partnership. There are no dilutive securities. Net income per common and i-unit was determined as follows:

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4. FINANCIAL INSTRUMENTS

        Net income and cash flows are subject to volatility stemming from changes in market prices such as interest rates, natural gas prices, natural gas liquids prices and fractionation margins. In order to manage the risks, the Partnership uses a variety of derivative financial instruments to create offsetting positions to specific commodity or interest rate exposures. Under SFAS No. 133 all derivative financial instruments are reflected in the balance sheet at their fair value. For those instruments that qualify for hedge accounting, the accounting treatment depends on each instrument's intended use and how it is designated. For those instruments that do not qualify for hedge accounting, the change in market value is recorded as cost of natural gas in the Consolidated Statement of Income.

        For cash flow hedges, changes in the derivative fair values, to the extent that the hedges are determined to be highly effective, are recorded as a component of accumulated other comprehensive income until the hedged transactions occur and are recognized in earnings. Any ineffective portion of a cash flow hedge's change in value is recognized immediately in earnings. For fair value hedges, the change in mark to market value of the financial instrument is determined each period and is taken into earnings. In conjunction with this, the change in the value of the hedged item is also calculated and taken into earnings. To the extent that the two valuations offset, the hedge is effective and there should not be a net earnings effect.

        The change in value of the Partnership's financial derivatives in the third quarter of 2004 compared to the same period in 2003 is primarily due to sharp increases in forward natural gas and NGL prices. As a result of the Partnership's hedge portfolio, which is largely comprised of long-term fixed price sale agreements, the significant increase in forward commodity prices quarter over quarter have decreased the value of the hedges.

        The Partnership's hedging activities are included at the fair values in the Consolidated Statements of Financial Position as follows:

Hedge Instrument Ineffectiveness

        The changes in the market value of natural gas hedging instruments that are attributable to hedge ineffectiveness, measured on a quarterly basis, are included in the cost of natural gas expense in the Consolidated Statements of Income in the period in which they occur. The following table sets forth the hedge ineffectiveness for the periods presented.

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        The hedge transaction ineffectiveness for the three and nine months ended September 30, 2004, which relates to the Partnership's natural gas basis swap financial transactions, is reflected in the Marketing segment. The hedge transaction ineffectiveness for the three and nine months ended September 30, 2003, which relates to certain natural gas financial transactions on the Partnership's East Texas system, are reflected in the Natural gas segment.

5. CASH AND CASH EQUIVALENTS

        The Partnership extinguishes liabilities when a creditor has relieved the Partnership of the obligation, which occurs when the Partnership's financial institution honors a check that the creditor has presented for payment. As such, included in accounts payable and other are obligations for which the Partnership has issued check payments that have not yet been presented to the financial institution of approximately $21.8 million at September 30, 2004 and $11.9 million at December 31, 2003.

6. DEBT

        On April 26, 2004, the Partnership amended its unsecured multi-year revolving credit facility and terminated its existing 364-day revolving credit facility, each of which was originally entered into in January 2003. The amended facility consists of a $600.0 million three-year term senior credit facility (the "Senior Credit Facility"), which matures in 2007. Interest is charged on amounts drawn under this facility at a variable rate equal to the Base Rate or a Eurodollar rate as defined in the facility agreement. In the case of Eurodollar rate loans, an additional margin is charged which varies depending on the Partnership's credit rating and the amounts drawn under the facility. A facility fee is payable on the entire amount of the facility whether or not drawn. The facility fee varies depending on the Partnership's credit rating. As of September 30, 2004, the facility fee was 0.175%. The Senior Credit Facility contains restrictive covenants that require the Partnership to maintain a minimum interest coverage ratio of 2.75 times and a maximum leverage ratio of 5.25 times for eighteen months until September 2005, decreasing to 5.00 times thereafter, as described in the Senior Credit Facility. At September 30, 2004, the interest coverage ratio was approximately 4.0 and the leverage ratio was approximately 4.0. The Senior Credit Facility also places limitations on the amount of debt that may be incurred directly by the Partnership's subsidiaries. Accordingly, it is expected that the Partnership will provide debt financing to its subsidiaries as required and as of September 30, 2004 the Partnership's subsidiaries had no amounts outstanding under this facility. As of September 30, 2004, the Partnership has drawn $320.0 million on the Senior Credit Facility at a weighted average interest rate of 2.1%.

        On January 9, 2004, the Partnership issued $200.0 million in aggregate principal amount of its 4.0% Senior Notes due 2009. The Partnership used the proceeds of approximately $198.3 million, net of expenses of approximately $1.6 million, to repay a portion of its outstanding debt under bank credit facilities.

        For the nine months ended September 30, 2004 and 2003, the Partnership converted interest payable related to loans from the General Partner in the amount of $6.7 million and $2.8 million, respectively, into long-term debt to the General Partner.

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7. DISTRIBUTIONS TO PARTNERS

        The following table sets forth the distributions, as approved by the Board of Directors, for each period in the nine months ended September 30, 2004.

(1)

The Partnership issued 615,663 i-units to Enbridge Energy Management, L.L.C., the sole owner of the Partnership's i-units, during 2004 in lieu of cash distributions.

(2)

The Partnership retains an amount equal to 2% of the i-unit distribution from the General Partner in respect of its 2% general partner interest in the i-units.

8. EQUITY UNIT ISSUANCES

       On September 15, 2004, the Partnership issued 3.68 million Class A common units at $47.90 per unit, which generated proceeds, net of underwriters' discounts, commissions and issuance expenses, of approximately $168.6 million. Proceeds from this offering were used to reduce borrowings under the Partnership's three-year Senior Credit Facility by approximately $165.0 million. The remaining proceeds were used to fund the general operations of the Partnership. In addition, the General Partner contributed $3.6 million to the Partnership to maintain its 2% general partner interest in the Partnership.

        On January 2, 2004, the Partnership issued an additional 450,000 Class A common units pursuant to the underwriters' exercise of the over-allotment option as part of the December 2003 Class A common unit issuance, resulting in additional proceeds to the Partnership, net of underwriters' fees and discounts, commissions and issuance expense, of approximately $21.6 million. The proceeds from the over-allotment were used to reduce the Senior Credit Facility. In addition to the proceeds generated from the unit issuance, the General Partner contributed $0.4 million to the Partnership to maintain its 2% general partner interest in the Partnership.

9. COMMITMENTS, CONTINGENCIES AND ENVIRONMENTAL LIABILITIES

        As of September 30, 2004, the Partnership has entered into contractual commitments of approximately $125.0 million. Of this amount, approximately $102.0 million relates to the expansion of the East Texas system, $5.0 million relates to the construction of storage tanks on the Mid-Continent system and the balance relates to a processing plant and additional compression facilities on the Anadarko system. Approximately $108.0 million of the contractual commitments are expected to be settled by December 31, 2004, with the remaining $17.0 million expected to be settled in the year ended December 31, 2005.

        In March 2004, the Partnership reduced its long-term environmental liabilities by $2.0 million related to certain of its Natural Gas segment assets that were originally recorded upon acquisition of these assets. During the time that these assets have been owned by the Partnership, since October 2002,

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management has completed an updated review of the affected sites and determined that suspected contamination is less significant than originally estimated. This assessment was based upon information gathered during the ownership period, existing technology, presently enacted laws and regulations and prior experience in remediating contaminated sites for similar assets.

10. SEGMENT INFORMATION

        Effective June 30, 2004, the Partnership changed its reporting segments. The Natural Gas Transportation segment was combined with the Gathering and Processing segment to form one new segment called "Natural Gas". Liquids Transportation was renamed "Liquids" and there were no changes to the Marketing segment. These changes were a result of newly stated internal performance measures for the Partnership. The new segments are consistent with how management makes resource allocation decisions, evaluates performance and furthers the achievement of the Partnership's long-term objectives. Financial information for prior periods were reclassified to reflect the new segmentation.

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        The following tables present certain financial information relating to the Partnership's business segments (dollars in millions):