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		Nine Months
(unaudited)	September 30,		ended September 30,		ended September 30,		September 30,	December 31,
(millions of dollars)	2017		2017	2016(b)	2017	2016(b)	2017	2016(b)

Northern Border (a)	50	%	16	18	50	52	516	444
Great Lakes	46.45	%	2	4	24	23	469	474
Iroquois	49.34	%	9	—	13	—	222	—

			27	22	87	75	1,207	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 Notes 2 and 6).

Northern Border

On September 1, 2017, the Partnership made an equity contribution to Northern Border amounting to $83 million. This amount represents the Partnership’s 50 percent share of $166 million capital contribution request from Northern Border to reduce the outstanding balance of its revolver debt to increase its available borrowing capacity.

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

The summarized financial information for Northern Border is as follows:

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

ASSETS
Cash and cash equivalents	24		14
Other current assets	36		36
Plant, property and equipment, net	1,069		1,089
Other assets	14		14

	1,143		1,153


LIABILITIES AND PARTNERS’ EQUITY
Current liabilities	48		38
Deferred credits and other	30		28
Long-term debt, including current maturities, net	264		430
Partners’ equity
Partners’ capital	802		659
Accumulated other comprehensive loss	(1	)	(2	)

	1,143		1,153

	Three months ended				Nine months ended
(unaudited)	September 30,				September 30,
(millions of dollars)	2017		2016		2017		2016

Transmission revenues	73		74		217		218
Operating expenses	(20	)	(18	)	(56	)	(53	)
Depreciation	(15	)	(15	)	(45	)	(44	)
Financial charges and other	(5	)	(5	)	(14	)	(16	)

Net income	33		36		102		105

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 nine months ended September 30, 2017 and 2016.

The summarized financial information for Great Lakes is as follows:

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

ASSETS
Current assets	56	66
Plant, property and equipment, net	705	714

	761	780


LIABILITIES AND PARTNERS’ EQUITY
Current liabilities	41	40
Net long-term debt, including current maturities	269	278
Partners’ equity	451	462

	761	780

	Three months ended				Nine months ended
(unaudited)	September 30,				September 30,
(millions of dollars)	2017		2016		2017		2016

Transmission revenues	34		36		138		133
Operating expenses	(19	)	(15	)	(49	)	(45	)
Depreciation	(7	)	(7	)	(21	)	(21	)
Financial charges and other	(5	)	(6	)	(16	)	(17	)

Net income	3		8		52		50

Iroquois

On June 1, 2017, the Partnership acquired a 49.34 percent interest in Iroquois. Also on July 27, 2017, Iroquois declared its second quarter 2017 distribution of $28 million, of which the Partnership received its 49.34 percent share or $14 million on August 1, 2017. The distribution includes the Partnership’s 49.34 percent share of the Iroquois unrestricted cash distribution amounting to approximately $2.6 million (Refer to Note 6). This amount is reported as distributions received as return of investment in the Partnership’s consolidated statement of cash flows.

The Partnership recorded no undistributed earnings from Iroquois in the three and nine months ended September 30, 2017.

The summarized financial information for Iroquois is as follows:

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

ASSETS
Cash and cash equivalents	93	86
Other current assets	33	34
Plant, property and equipment, net	592	604
Other assets	8	7

	726	731


LIABILITIES AND PARTNERS’ EQUITY
Current liabilities	20	18
Net long-term debt, including current maturities	332	335
Other non-current liabilities	9	6
Partners’ equity	365	372

	726	731

	Three months ended				Nine months ended
(unaudited)	September 30,				September 30,
(millions of dollars)	2017		2016		2017		2016

Transmission revenues	43		45		142		145
Operating expenses	(13	)	(13	)	(41	)	(43	)
Depreciation	(7	)	(9	)	(22	)	(28	)
Financial charges and other	(4	)	(4	)	(13	)	(12	)

Net income	19		19		66		62