NOTE 5 EQUITY INVESTMENTS

The Partnership has equity interests in Northern Border, Great Lakes and 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
(unaudited)	March 31,		ended March 31,		March 31,	December 31,
(millions of dollars)	2018		2018	2017	2018	2017

Northern Border(a)	50	%	17	19	507	512
Great Lakes	46.45	%	24	17	499	479
Iroquois(b)	49.34	%	18	—	211	222

			59	36	1,217	1,213

(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)The Partnership acquired a 49.34% interest in Iroquois on June 1, 2017.

Distributions from Equity Investments

Distributions received from equity investments for the quarter ended March 31, 2018 were $45 million (2017 — $28 million;) of which $2 million (2017 - none) was considered a return of capital and is included in Investing activities in the Partnership’s consolidated statement of cash flows. The return of capital was related to our investment in Iroquois (see further discussion below).

Northern Border

The Partnership did not have undistributed earnings from Northern Border for the three months ended March 31, 2018 and 2017.

The summarized financial information provided to us by Northern Border is as follows:

(unaudited)
(millions of dollars)	March 31, 2018		December 31, 2017

ASSETS
Cash and cash equivalents	22		14
Other current assets	35		36
Plant, property and equipment, net	1,059		1,063
Other assets	14		14

	1,130		1,127


LIABILITIES AND PARTNERS’ EQUITY
Current liabilities	50		38
Deferred credits and other	32		31
Long-term debt, net (a)	264		264
Partners’ equity
Partners’ capital	785		795
Accumulated other comprehensive loss	(1	)	(1	)

	1,130		1,127

	Three months ended
(unaudited)	March 31,
(millions of dollars)	2018		2017

Transmission revenues	72		74
Operating expenses	(19	)	(17	)
Depreciation	(15	)	(15	)
Financial charges and other	(4	)	(4	)

Net income	34		38

(a)

No current maturities as of March 31, 2018 and December 31, 2017.

Great Lakes

The Partnership made an equity contribution to Great Lakes of $4 million in the first quarter of 2018. 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, 2018 and 2017.

The summarized financial information provided to us by Great Lakes is as follows:

(unaudited)
(millions of dollars)	March 31, 2018	December 31, 2017

ASSETS
Current assets	129	107
Plant, property and equipment, net	699	701

	828	808


LIABILITIES AND PARTNERS’ EQUITY
Current liabilities	63	75
Net long-term debt, including current maturities (a)	250	259
Other long term liabilities	—	1
Partners’ equity	515	473

	828	808

	Three months ended
(unaudited)	March 31,
(millions of dollars)	2018		2017

Transmission revenues	81		63
Operating expenses	(17	)	(14	)
Depreciation	(8	)	(7	)
Financial charges and other	(4	)	(5	)

Net income	52		37

(a)

Includes current maturities of $21 million as of March 31, 2018 (December 31, 2017 - $19 million).

Iroquois

On June 1, 2017, the Partnership, through its interest in TC PipeLines Intermediate Limited Partnership acquired a 49.34 percent interest in Iroquois. During the three months ended March 31, 2018, the Partnership received distributions from Iroquois amounting to $14 million which includes the Partnership’s 49.34 percent share of the Iroquois unrestricted cash distribution amounting to approximately $2 million. The unrestricted cash does not represent a distribution of Iroquois’ cash from operations during the period and therefore it was reported as distributions received as return of investment in the Partnership’s consolidated statement of cash flows.

Iroquois declared its first quarter 2018 distribution of $29 million on March 7, 2018, of which the Partnership received its 49.34 percent share or $14 million on May 1, 2018. The distribution includes our 49.34 percent share of the Iroquois unrestricted cash distribution amounting to approximately $2.6 million. The Partnership did not have undistributed earnings from Iroquois for the three months ended March 31, 2018.

The summarized financial information provided to us by Iroquois for the period from the June 1, 2017 acquisition date through March 31, 2018 is as follows:

(unaudited)
(millions of dollars)	March 31, 2018	December 31, 2017

ASSETS
Cash and cash equivalents	105	86
Other current assets	32	36
Plant, property and equipment, net	589	591
Other assets	9	8

	735	721


LIABILITIES AND PARTNERS’ EQUITY
Current liabilities	50	17
Net long-term debt, including current maturities (a)	329	329
Other non-current liabilities	12	9
Partners’ equity	344	366

	735	721

(unaudited)	Three months ended
(millions of dollars)	March 31, 2018

Transmission revenues	60
Operating expenses	(14	)
Depreciation	(7	)
Financial charges and other	(4	)

Net income	35

(a)

Includes current maturities of $4 million as of March 31, 2018 (December 31, 2017 - $4 million).