EQUITY INVESTMENTS

3 Months Ended

Mar. 31, 2016

NOTE 4EQUITY INVESTMENTS

Northern Border, Great Lakes and Portland Natural Gas Transmission System (PNGTS) are regulated by FERC and are operated by TransCanada. The Partnership uses the equity method of accounting for its interests in its equity investees. The Partnership’s equity investments are held through our ILPs that are considered to be variable interest entities (VIEs) (refer to Note 3 and Note 17).

		Equity Earnings		Equity Investments
	Ownership

	Interest at	Three months
(unaudited)	March 31,	ended March 31,		March 31,	December 31,
(millions of dollars)	2016	2016	2015	2016	2015

Northern Border(a)	50%	18	20	476	480
Great Lakes	46.45%	15	11	485	485
PNGTS (b)	49.9%	9	-	122	-

		42	31	1,083	965

(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 interest acquisition in April 2006.

(b)

On January 1, 2016, the Partnership acquired a 49.9 percent interest in PNGTS (Refer to Note 6). For the three months ending March 31, 2016, the Partnership recorded no undistributed earnings from PNGTS.

Northern Border

The Partnership did not have undistributed earnings from Northern Border for the three months ended March 31, 2016 and 2015.

The summarized financial information for Northern Border is as follows:

(unaudited)
(millions of dollars)	March 31, 2016	December 31, 2015

ASSETS
Cash and cash equivalents	35	27
Other current assets	34	33
Plant, property and equipment, net	1,117	1,124
Other assets (a)	15	16

	1,201	1,200


LIABILITIES AND PARTNERS’ EQUITY
Current liabilities	46	39
Deferred credits and other	26	26
Long-term debt, including current maturities, net (a)	409	409
Partners’ equity
Partners’ capital	722	728
Accumulated other comprehensive loss	(2)	(2)

	1,201	1,200

(a)

As a result of the application of ASU No. 2015-03 and similar to the presentation of debt discounts, debt issuance costs of $2 million at December 31, 2015 previously reported as other assets in the balance sheet were reclassified as an offset against their respective debt liabilities.

	Three months ended
(unaudited)	March 31,
(millions of dollars)	2016	2015


Transmission revenues	74	75
Operating expenses	(16)	(16)
Depreciation	(15)	(15)
Financial charges and other	(6)	(5)

Net income	37	39

Great Lakes

The Partnership made an equity contribution to Great Lakes of $4 million in the first quarter of 2016. This amount represents the Partnership’s 46.45 percent share of a $9 million cash call from Great Lakes to make a scheduled debt repayment.

The Partnership did not have undistributed earnings from Great Lakes for the three months ended March 31, 2016 and 2015.

The summarized financial information for Great Lakes is as follows:

(unaudited)
(millions of dollars)	March 31, 2016	December 31, 2015(a)


ASSETS
Current assets	73	86
Plant, property and equipment, net	725	727

	798	813


LIABILITIES AND PARTNERS’ EQUITY
Current liabilities	25	31
Long-term debt, including current maturities, net (a)	288	297
Partners’ equity	485	485

	798	813

(a)

The application of ASU No. 2015-03 did not have a material effect of Great Lakes’ financial statements.

	Three months ended
(unaudited)	March 31,
(millions of dollars)	2016	2015


Transmission revenues	61	48
Operating expenses	(15)	(11)
Depreciation	(7)	(7)
Financial charges and other	(6)	(6)

Net income	33	24