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		25