NOTE 4 EQUITY INVESTMENTS

The Partnership has equity interests in Northern Border, Great Lakes and effective June 1, 2017, Iroquois. The pipeline systems owned by these entities are regulated by FERC. The pipeline systems of Northern Border and Great Lakes are operated by subsidiaries of TransCanada. The Iroquois pipeline system is operated by Iroquois Pipeline Operating Company, a wholly owned subsidiary of Iroquois. 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 17).

	Ownership		Equity Earnings				Equity Investments
	Interest at		Three months		Six Months
(unaudited)	June 30,		ended June 30,		ended June 30,		June 30,	December 31,
(millions of dollars)	2017		2017	2016(b)	2017	2016(b)	2017	2016(b)

Northern Border (a)	50	%	15	16	34	34	437	444
Great Lakes	46.45	%	6	4	23	19	475	474
Iroquois	49.34	%	3	—	3	—	226	—

			24	20	60	53	1,138	918

(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 acquisition of an additional 20 percent interest in April 2006.

(b)

Recast to eliminate equity earnings from PNGTS and consolidate PNGTS for all periods presented (Refer to Note 2).

Northern Border

The Partnership did not have undistributed earnings from Northern Border for the three and six months ended June 30, 2017 and 2016.

The summarized financial information for Northern Border is as follows:

(unaudited)
(millions of dollars)	June 30, 2017		December 31, 2016

ASSETS
Cash and cash equivalents	16		14
Other current assets	34		36
Plant, property and equipment, net	1,077		1,089
Other assets	14		14

	1,141		1,153


LIABILITIES AND PARTNERS’ EQUITY
Current liabilities	37		38
Deferred credits and other	30		28
Long-term debt, including current maturities, net	430		430
Partners’ equity
Partners’ capital	645		659
Accumulated other comprehensive loss	(1	)	(2	)

	1,141		1,153

	Three months ended				Six months ended
(unaudited)	June 30,				June 30,
(millions of dollars)	2017		2016		2017		2016

Transmission revenues	69		70		144		144
Operating expenses	(18	)	(18	)	(36	)	(35	)
Depreciation	(15	)	(15	)	(30	)	(29	)
Financial charges and other	(5	)	(6	)	(9	)	(11	)

Net income	31		31		69		69

Great Lakes

The Partnership made an equity contribution to Great Lakes of $4 million in the first quarter of 2017. 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 and six months ended June 30, 2017 and 2016.

The summarized financial information for Great Lakes is as follows:

(unaudited)
(millions of dollars)	June 30, 2017	December 31, 2016

ASSETS
Current assets	61	66
Plant, property and equipment, net	705	714

	766	780


LIABILITIES AND PARTNERS’ EQUITY
Current liabilities	34	40
Long-term debt, including current maturities, net	269	278
Partners’ equity	463	462

	766	780

	Three months ended				Six months ended
(unaudited)	June 30,				June 30,
(millions of dollars)	2017		2016		2017		2016

Transmission revenues	41		36		103		97
Operating expenses	(17	)	(15	)	(30	)	(30	)
Depreciation	(7	)	(7	)	(14	)	(14	)
Financial charges and other	(5	)	(5	)	(10	)	(11	)

Net income	12		9		49		42

Iroquois

On June 1, 2017, the Partnership acquired a 49.34 percent interest in Iroquois (Refer to Note 6). The Partnership recorded no undistributed earnings from Iroquois in June 2017.

The summarized financial information for Iroquois is as follows:

(unaudited)
(millions of dollars)	June 30, 2017	December 31, 2016

ASSETS
Cash and cash equivalents	100	88
Other current assets	26	27
Plant, property and equipment, net	595	611
Other assets	8	7

	729	733


LIABILITIES AND PARTNERS’ EQUITY
Current liabilities	15	16
Long-term debt, including current maturities, net	332	338
Other non-current liabilities	9	5
Partners’ equity	373	374

	729	733

	Three months ended				Six months ended
(unaudited)	June 30,				June 30,
(millions of dollars)	2017		2016		2017		2016

Transmission revenues	45		47		98		100
Operating expenses	(13	)	(15	)	(29	)	(30	)
Depreciation	(7	)	(10	)	(14	)	(19	)
Financial charges and other	(5	)	(4	)	(9	)	(8	)

Net income	20		18		46		43