NOTE 4 INVESTMENTS IN UNCONSOLIDATED AFFILIATES

Great Lakes and Northern Border are regulated by FERC and are operated by TransCanada. We use the equity method of accounting for our interests in our equity investees.

		Equity Earnings from Unconsolidated Affiliates(b)			Investment in Unconsolidated Affiliates
		Year ended December 31			December 31
	Ownership Interest at December 31, 2015	Year ended December 31			December 31
(millions of dollars)	Ownership Interest at December 31, 2015	2015	2014	2013	2015		2014

Northern Border(a)	50%	66	69	64	480		505
Great Lakes	46.45%	31	19	3	485	(c)	672

		97	88	67	965		1,177


(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 additional 20 percent acquisition in April 2006.
(b)	Equity Earnings represents our share in investee's earnings and does not include any impairment charge on the equity method investment recorded as a reduction of carrying value of these investments.
(c)	During the fourth quarter of 2015, we recognized an impairment charge on our investment in Great Lakes amounting to $199 million. See discussion below.

Northern Border

The Partnership owns a 50 percent general partner interest in Northern Border. The other 50 percent partnership interest in Northern Border is held by ONEOK Partners, L.P., a publicly traded limited partnership.

TC PipeLines Intermediate Limited Partnership, as one of the general partners, may be exposed to the commitments and contingencies of Northern Border. The Partnership holds a 98.9899 percent limited partnership interest in TC PipeLines Intermediate Limited Partnership.

Northern Border has a FERC-approved settlement agreement which established maximum long-term transportation rates and charges on the Northern Border system effective January 1, 2013. Northern Border is required to file for new rates no later than January 1, 2018.

The Partnership recorded no undistributed earnings from Northern Border for the years ended December 31, 2015, 2014 and 2013.

At December 31, 2015 and 2014, the Partnership had a $117 million difference between the carrying value of Northern Border and the underlying equity in the net assets primarily resulting from the recognition and inclusion of goodwill in the Partnership's investment in Northern Border relating to the Partnership's April 2006 acquisition of an additional 20 percent general partnership interest in Northern Border. As of December 31, 2015, no impairment has been identified in our investment in Northern Border.

The summarized financial information for Northern Border is as follows:

December 31 (millions of dollars)		2015		2014

Assets
Cash and cash equivalents		27		41
Other current assets		33		34
Plant, property and equipment, net		1,124		1,163
Other assets		18		34

		1,202		1,272

Liabilities and Partners' Equity
Current liabilities		39		64
Deferred credits and other		26		22
Long-term debt, including current maturities		411		411
Partners' equity
	Partners' capital	728		777
	Accumulated other comprehensive loss	(2	)	(2	)

		1,202		1,272

Year ended December 31 (millions of dollars)	2015		2014		2013

Transmission revenues	286		293		286
Operating expenses	(70	)	(72	)	(75	)
Depreciation	(60	)	(59	)	(58	)
Financial charges and other	(22	)	(22	)	(23	)

Net income	134		140		130

Great Lakes

The Partnership owns a 46.45 percent general partner interest in Great Lakes. TransCanada owns the other 53.55 percent partnership interest. TC GL Intermediate Limited Partnership, as one of the general partners, may be exposed to the commitments and contingencies of Great Lakes. The Partnership holds a 98.9899 percent limited partnership interest in TC GL Intermediate Limited Partnership.

On November 14, 2013, FERC approved a settlement between Great Lakes and its customers to modify its transportation rates effective November 1, 2013. The settlement increases maximum recourse transportation rates by approximately 21 percent. The settlement also requires that Great Lakes file for new rates to be in effect no later than January 1, 2018.

The Partnership recorded no undistributed earnings from Great Lakes for the years ended December 31, 2015, 2014, and 2013.

The Partnership made equity contributions to Great Lakes of $4 million and $5 million in the first and fourth quarter of 2015, respectively. These amounts represent the Partnership's 46.45 percent share of a $9 million and $10 million cash call from Great Lakes to make scheduled debt repayments.

Despite the recent improvement in income from our investment in Great Lakes since 2013, including favorable current year results, its long-term value has been adversely impacted by the changing natural gas flows in its market region as well as our conclusion in the fourth quarter that other strategic alternatives to increase its utilization or revenue were no longer feasible. As a result, we determined that the carrying value of our investment in Great Lakes was in excess of its fair value and that the decline is not temporary. Accordingly, we concluded that the carrying value of our investment in Great Lakes was impaired.

Our analysis determined that the fair value of our investment in Great Lakes is $465 million, resulting in an impairment charge of $199 million in the fourth quarter of 2015, reflected as Impairment of equity-method investment on our Statement of Income for the year ended December 31, 2015. The impairment charge reduced the difference between the carrying value of our investment in Great Lakes and the underlying equity in the net assets, which was reduced to $260 million at December 31, 2015 (2014 – $458 million) and represents the equity method goodwill remaining in our investment in Great Lakes relating to the Partnership's February 2007 acquisition of a 46.45 percent general partner interest in Great Lakes.

Our assumptions related to the estimated fair value of our remaining equity investment in Great Lakes could be negatively impacted by near and long-term conditions including:


•	future regulatory rate action or settlement,
•	valuation of Great lakes in future transactions,
•	changes in customer demand at Great Lakes for pipeline capacity and services,
•	changes in North American natural gas production in the major producing basins,
•	changes in natural gas prices and natural gas storage market conditions, and
•	changes in other long-term strategic objectives.

There is a risk that adverse changes in these key assumptions could result in additional future impairment of the carrying value of our investment in Great Lakes.

The summarized financial information for Great Lakes is as follows:

December 31 (millions of dollars)	2015	2014

Assets
Current assets	86	66
Plant, property and equipment, net	727	748

	813	814

Liabilities and Partners' Equity
Current liabilities	31	38
Long-term debt, including current maturities	297	316
Partners' equity	485	460

	813	814

Year ended December 31 (millions of dollars)	2015		2014		2013

Transmission revenues	177		146		124
Operating expenses	(59	)	(53	)	(60)
Depreciation	(28	)	(28	)	(31)
Financial charges and other	(23	)	(25	)	(27)

Net income	67		40		6