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EQUITY INVESTMENTS
9 Months Ended
Sep. 30, 2018
EQUITY INVESTMENTS  
EQUITY INVESTMENTS

 

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

 

 

 

 

 

Interest at

 

Three months

 

Nine months

 

Equity Investments

 

(unaudited)

 

September 30,

 

ended September 30,

 

ended September 30,

 

September 30,

 

December 31,

 

(millions of dollars)

 

2018

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northern Border (a)

 

50

%

16

 

16

 

49

 

50

 

501

 

512

 

Great Lakes

 

46.45

%

9

 

2

 

45

 

24

 

480

 

479

 

Iroquois(b)

 

49.34

%

9

 

9

 

35

 

13

 

215

 

222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34

 

27

 

129

 

87

 

1,196

 

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)

Equity earnings from Iroquois is net of the 29-year amortization of a $10 million purchase price discrepancy assumed by the Partnership from TransCanada at the time of the 2017 Acquisition.

 

Distributions from Equity Investments

 

Distributions received from equity investments for the nine months ended September 30, 2018 were $150 million, (2017 —$109 million) of which $7.8 million (2017 - $2.6 million) was considered a return of capital and was 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 and nine months ended September 30, 2018 and 2017.

 

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

 

(unaudited)

 

 

 

 

 

(millions of dollars)

 

September 30, 2018

 

December 31, 2017

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

 

17

 

14

 

Other current assets

 

34

 

36

 

Property, plant and equipment, net

 

1,048

 

1,063

 

Other assets

 

14

 

14

 

 

 

 

 

 

 

 

 

1,113

 

1,127

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS’ EQUITY

 

 

 

 

 

Current liabilities

 

43

 

38

 

Deferred credits and other

 

34

 

31

 

Long-term debt, net (a)

 

264

 

264

 

Partners’ capital

 

773

 

795

 

Accumulated other comprehensive loss

 

(1

)

(1

)

 

 

 

 

 

 

 

 

1,113

 

1,127

 

 

 

 

 

 

 

 

 

(a)

No current maturities as of September 30, 2018 and December 31, 2017.

 

 

 

Three months ended

 

Nine months ended

 

(unaudited)

 

September 30,

 

September 30,

 

(millions of dollars)

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

Transmission revenues

 

72

 

73

 

212

 

217

 

Operating expenses

 

(19

)

(20

)

(57

)

(56

)

Depreciation

 

(15

)

(15

)

(45

)

(45

)

Financial charges and other

 

(5

)

(5

)

(12

)

(14

)

 

 

 

 

 

 

 

 

 

 

Net income

 

33

 

33

 

98

 

102

 

 

 

 

 

 

 

 

 

 

 

 

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 and nine months ended September 30, 2018 and 2017.

 

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

 

(unaudited)

 

 

 

 

 

(millions of dollars)

 

September 30, 2018

 

December 31, 2017

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets

 

53

 

107

 

Property, plant and equipment, net

 

693

 

701

 

 

 

 

 

 

 

 

 

746

 

808

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS’ EQUITY

 

 

 

 

 

Current liabilities

 

18

 

75

 

Net long-term debt, including current maturities (a)

 

250

 

259

 

Other long-term liabilities

 

3

 

1

 

Partners’ equity

 

475

 

473

 

 

 

 

 

 

 

 

 

746

 

808

 

 

 

 

 

 

 

 

 

(a)

Includes current maturities of $21 million as of September 30, 2018 (December 31, 2017 - $19 million).

 

 

 

Three months ended

 

Nine months ended

 

(unaudited)

 

September 30,

 

September 30,

 

(millions of dollars)

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

Transmission revenues

 

49

 

34

 

183

 

138

 

Operating expenses

 

(17

)

(19

)

(50

)

(49

)

Depreciation

 

(8

)

(7

)

(24

)

(21

)

Financial charges and other

 

(5

)

(5

)

(13

)

(16

)

 

 

 

 

 

 

 

 

 

 

Net income

 

19

 

3

 

96

 

52

 

 

 

 

 

 

 

 

 

 

 

 

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 nine months ended September 30, 2018, the Partnership received distributions from Iroquois amounting to $42 million, which includes the Partnership’s 49.34 percent share of the Iroquois unrestricted cash distribution amounting to approximately $7.8 million, respectively. 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 third quarter 2018 distribution of $29 million on October 22, 2018, of which the Partnership received its 49.34 percent share of $14 million on November 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 and nine months ended September 30, 2018 and 2017.

 

The summarized financial information provided to us by Iroquois for the period from the June 1, 2017 acquisition date through September 30, 2018 is as follows:

 

(unaudited)

 

 

 

 

 

(millions of dollars)

 

September 30, 2018

 

December 31, 2017

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

 

91

 

86

 

Other current assets

 

34

 

36

 

Property, plant and equipment, net

 

582

 

591

 

Other assets

 

9

 

8

 

 

 

 

 

 

 

 

 

716

 

721

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS’ EQUITY

 

 

 

 

 

Current liabilities

 

23

 

17

 

Net long-term debt, including current maturities (a)

 

327

 

329

 

Other non-current liabilities

 

13

 

9

 

Partners’ equity

 

353

 

366

 

 

 

 

 

 

 

 

 

716

 

721

 

 

 

 

 

 

 

 

 

(a)

Includes current maturities of $145 million as of September 30, 2018 (December 31, 2017 - $4 million).

 

 

 

 

 

Nine months

 

Four months

 

 

 

Three months ended

 

ended

 

ended

 

(unaudited)

 

September 30,

 

September 30,

 

September 30,

 

(millions of dollars)

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

Transmission revenues

 

42

 

43

 

147

 

57

 

Operating expenses

 

(13

)

(13

)

(41

)

(18

)

Depreciation

 

(7

)

(7

)

(22

)

(9

)

Financial charges and other

 

(4

)

(4

)

(11

)

(5

)

 

 

 

 

 

 

 

 

 

 

Net income

 

18

 

19

 

73

 

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