INVESTMENTS IN UNCONSOLIDATED AFFILIATES

12 Months Ended

Dec. 31, 2014

INVESTMENTS IN UNCONSOLIDATED AFFILIATES

INVESTMENTS IN UNCONSOLIDATED AFFILIATES

NOTE 4 INVESTMENTS IN UNCONSOLIDATED AFFILIATES

Great Lakes and Northern Border are regulated by FERC and are operated by TransCanada. We use the equity method of accounting for our interests in our equity investees.

		Equity Earnings from Unconsolidated Affiliates			Investment in Unconsolidated Affiliates
		Year ended December 31			December 31
	Ownership Interest at December 31, 2014
(millions of dollars)		2014	2013	2012	2014	2013
Northern Border(a)	50%	69	64	72	505	523
Great Lakes	46.45%	19	3	27	672	672
		88	67	99	1,177	1,195

(a) Equity earnings from Northern Border is net of the 12-year amortization of a $10 million transaction fee paid to the operator of Northern Border at the time of the Partnership's additional 20 percent acquisition in April 2006.

Northern Border

The Partnership owns a 50 percent general partner interest in Northern Border. The other 50 percent partnership interest in Northern Border is held by ONEOK Partners, L.P., a publicly traded limited partnership.

TC PipeLines Intermediate Limited Partnership, as one of the general partners, may be exposed to the commitments and contingencies of Northern Border. The Partnership holds a 98.9899 percent limited partnership interest in TC PipeLines Intermediate Limited Partnership.

Northern Border has a FERC-approved settlement agreement which established maximum long-term transportation rates and charges on the Northern Border system effective January 1, 2013. The Northern Border Settlement also includes a three-year moratorium on filing rate cases and requires Northern Border to file for new rates no later than January 1, 2018.

The Partnership recorded no undistributed earnings from Northern Border for the years ended December 31, 2014, 2013 and 2012.

At December 31, 2014, the Partnership had a $117 million (2013 – $118 million) difference between the carrying value of Northern Border and the underlying equity in the net assets primarily resulting from the recognition and inclusion of goodwill in the Partnership's investment in Northern Border relating to the Partnership's April 2006 acquisition of an additional 20 percent general partnership interest in Northern Border.

The summarized financial information for Northern Border is as follows:

December 31 (millions of dollars)		2014		2013
Assets
Cash and cash equivalents		41		27
Other current assets		34		34
Plant, property and equipment, net		1,163		1,197
Other assets		34		33
		1,272		1,291
Liabilities and Partners' Equity
Current liabilities		64		51
Deferred credits and other		22		19
Long-term debt		411		411
Partners' equity
	Partners' capital	777		812
	Accumulated other comprehensive loss	(2	)	(2	)
		1,272		1,291

Year ended December 31 (millions of dollars)	2014		2013		2012
Transmission revenues	293		286		311
Operating expenses	(72	)	(75	)	(79	)
Depreciation	(59	)	(58	)	(63	)
Financial charges and other	(22	)	(23	)	(24	)
Net income	140		130		145

Great Lakes

The Partnership owns a 46.45 percent general partner interest in Great Lakes. TransCanada owns the other 53.55 percent partnership interest. TC GL Intermediate Limited Partnership, as one of the general partners, may be exposed to the commitments and contingencies of Great Lakes. The Partnership holds a 98.9899 percent limited partnership interest in TC GL Intermediate Limited Partnership.

On November 14, 2013, FERC approved a settlement between Great Lakes and its customers to modify its transportation rates effective November 1, 2013. The settlement increases maximum recourse transportation rates by approximately 21 percent. The settlement includes a moratorium on filing rate cases or challenging the settlement rates until March 31, 2015 and requires that Great Lakes file to have new rates in effect no later than January 1, 2018.

The Partnership recorded no undistributed earnings from Great Lakes for the years ended December 31, 2014, 2013, and 2012.

At December 31, 2014, the Partnership had a $458 million (2013 – $458 million) difference between the carrying value of Great Lakes and the underlying equity in the net assets primarily resulting from the recognition and inclusion of goodwill in the Partnership's investment in Great Lakes relating to the Partnership's February 2007 acquisition of a 46.45 percent general partner interest in Great Lakes.

The Partnership made equity contributions to Great Lakes of $4 million and $5 million in the first and fourth quarter of 2014, respectively. These amounts represent the Partnership's 46.45 percent share of a $9 million and $10 million cash call from Great Lakes to make scheduled debt repayments.

The summarized financial information for Great Lakes is as follows:

December 31 (millions of dollars)	2014	2013
Assets
Current assets	66	52
Plant, property and equipment, net	748	771
	814	823
Liabilities and Partners' Equity
Current liabilities	38	28
Long-term debt, including current maturities	316	335
Partners' equity	460	460
	814	823

Year ended December 31 (millions of dollars)	2014		2013		2012
Transmission revenues	146		124		182
Operating expenses	(53	)	(60	)	(66	)
Depreciation	(28	)	(31	)	(31	)
Financial charges and other	(25	)	(27	)	(28	)
Net income	40		6		57