TransCanada Reports Continued Strong Growth and Raises Dividend

Year End Highlights:
(All financial figures are in Canadian dollars unless noted otherwise)

TransCanada PipeLines Limited's net income applicable to common shares from continuing operations (net earnings), before unusual items, for the year ended December 31, 2001 was $670 million or $1.41 per share compared to $592 million or $1.25 per share in 2000, an increase of 13 per cent. There were no unusual items in 2001. In 2000, unusual items included $30 million gains from asset sales from continuing operations and $28 million of positive adjustments related to tax law and income tax rate changes.
Net earnings before unusual items for the fourth quarter 2001 were $167 million or $0.35 per share compared to fourth quarter 2000 net earnings before unusual items of $176 million or $0.37 per share. In the fourth quarter 2000, unusual items included $15 million of positive adjustments related to tax law and income tax rate changes.
Net income applicable to common shares for the year ended December 31, 2001 was $603 million or $1.27 per share after reflecting a net loss from discontinued operations of $67 million or $0.14 per share compared to $711 million or $1.50 per share, which included a net gain from discontinued operations of $61 million or $0.13 per share, in 2000.
Net income applicable to common shares in the fourth quarter 2001 was $187 million or $0.40 per share after reflecting a net gain from discontinued operations of $20 million or $0.05 per share compared to $162 million or $0.34 per share for the fourth quarter 2000 which included a net loss from discontinued operations of $29 million or $0.06 per share.
Funds generated from continuing operations for the year ended December 31, 2001 were $1.51 billion compared to $1.28 billion for the same period in 2000, an increase of approximately 18 per cent.
In 2001, TransCanada continued to strengthen its balance sheet through the realization of proceeds of $1.17 billion from the sale of non-core assets under its divestiture plans and realized funds generated from operations of approximately $1.5 billion. The company reduced debt and redeemed preferred securities by approximately $1.1 billion and invested approximately $1.0 billion in its operations.
TransCanada's Board of Directors today raised the quarterly dividend for the company's outstanding common shares 11 per cent from $0.225 per share to $0.25 per share for the quarter ended March 31, 2002. This is the 153rd consecutive quarterly dividend on TransCanada's common shares and is payable on April 30, 2002 to shareholders of record at the close of business on March 28, 2002. The Board also declared regular dividends on TransCanada's preferred shares.
The fourth quarter 2001 acquisition of a 50 per cent interest in the generating capacity of the Sundance B Power Purchase Arrangement (PPA) brought total power plant capacity owned, controlled or under construction by TransCanada to approximately 2,250 megawatts (MW). The Sundance B PPA and the new cogeneration plants at Carseland and Redwater, Alberta will make a positive contribution to income in 2002.
The closure of agreements with Mirant, and BP Gas & Power in the fourth quarter 2001 completed TransCanada's sale of the majority of its gas marketing business.
The signing of a Memorandum of Understanding (MOU) with nine other major American and Canadian pipeline companies in November 2001 reinforces TransCanada's commitment to bring Alaska North Slope natural gas to markets in Canada and the lower 48 states.
Deliveries of natural gas on the Alberta System in 2001 averaged 11.1 billion cubic feet per day (Bcf/d), compared to 12.3 Bcf/d in 2000. Canadian Mainline deliveries of natural gas averaged 6.7 Bcf/d, compared to 7.3 Bcf/d in 2000. The BC System delivered an average of 1.1 Bcf/d of natural gas in 2001, the same as in 2000.

"TransCanada finished 2001 in a strong position," said Hal Kvisle, TransCanada's chief executive officer. "Our earnings have grown and their quality and predictability have improved substantially. Our balance sheet is considerably stronger and we continue to make profitable investments in our core businesses of natural gas transmission and power. Indeed, TransCanada's financial strength and new investments position us for profitable growth in the future."

Commenting on the increase in the quarterly dividend for the company's outstanding common shares, Mr. Kvisle said, "As we have said, if TransCanada demonstrated continued sustainable earnings growth, then the Board of Directors would have the opportunity to consider increases in the dividend. Clearly, we have proven our ability for continued strong growth."

Continued Focus on Key Strategies

"Over the coming year, we will continue to execute our growth strategies," said Mr. Kvisle. "We will leverage the flexibility afforded by our strong balance sheet and discretionary cash flow to invest in our core businesses and acquire assets and businesses consistent with our objective of adding to shareholder value while effectively managing risk."

TransCanada's core strategies are to: establish a new regulatory framework; grow and optimize its extensive pipeline network; sustain the pace of profitable growth in power; focus on operational excellence; and to maintain considerable financial strength.

Fourth Quarter 2001 Accomplishments

Power Growth
TransCanada acquired a 50 per cent interest in the remaining rights and obligations of the 706 MW Sundance B PPA from Enron Canada Power Corp. The $110 million acquisition closed December 28, 2001. TransCanada has marketed the 2002 capacity it acquired through a portfolio of short-term sales contracts. "Our ability to move quickly on prudent acquisitions like the Sundance B PPA was facilitated by our strong balance sheet and investment discipline," said Mr. Kvisle. "We are poised to pursue additional opportunities in a market where power valuations are reaching more realistic levels."

Also in the fourth quarter, TransCanada's newest cogeneration plants in Alberta - Redwater (40 MW) and Carseland (80 MW) - entered the final phase of plant commissioning and commenced full commercial operation in January 2002.

TransCanada now owns, controls, or is constructing a total of approximately 2,250 MW of power. This represents an increase of approximately 650 MW, or 40 per cent, over the end of 2000.

Pipeline Expansion
In December 2001, the U.S. Federal Energy Regulatory Commission granted a Certificate of Public Necessity and Convenience to the Iroquois Pipeline Operating Company to construct the 230 million cubic feet per day Eastchester Expansion Project into New York City. The Eastchester Expansion will be the first new interstate pipeline built into New York City in about 40 years and will serve power generation and other needs. TransCanada increased its interest in the Iroquois Gas Transmission System in the second quarter of 2001 to 40.96 per cent.

Exit from Gas Marketing
In the fourth quarter, TransCanada closed separate agreements with Mirant and BP Gas & Power for the sale of the majority of TransCanada's natural gas marketing and trading operations. The parties agreed not to disclose the financial terms.

"The sale of our gas marketing business marks the final significant step in transforming TransCanada into a highly focused, North American natural gas transmission and power company," said Mr. Kvisle.

Progress on Northern Development
In November 2001, TransCanada, its jointly owned affiliate, Foothills Pipe Lines Ltd., and the other active partner in the Alaska Natural Gas Transportation System signed an MOU with seven major U.S. companies relating to the Alaska portion of an Alaska Highway pipeline project. All of these companies were involved in developing the Alaska Highway project at an earlier point. "Together, we are developing a proposal and initiating discussions with the Alaska North Slope producers to develop a project that satisfies the needs of both Alaska producers and North American consumers," said Mr. Kvisle.

TransCanada continues to work with Canadian Mackenzie Delta producers to bring Mackenzie Delta natural gas to market through the company's existing Alberta infrastructure. "We remain enthusiastic about the prospects for Mackenzie Delta gas, and we look forward to working with producers and the people of the Northwest Territories to make this attractive Canadian project a reality," said Mr. Kvisle.

Regulatory Developments
In November 2001, the National Energy Board (NEB) approved TransCanada's 2001 and 2002 Canadian Mainline Tolls and Tariff Application. "We are pleased with the NEB's decision because it endorses the Mainline Services and Pricing Settlement," said Mr. Kvisle. "This Settlement was achieved through broad industry negotiations and has significant support from our customers. We will continue in 2002 to actively consult with all our stakeholders to develop a new regulated pipeline business model."

TransCanada's current Canadian Mainline interim toll of $1.13 per gigajoule (Eastern Zone) will remain in place until a decision is made in the NEB's hearing on the company's Fair Return Application, scheduled to commence February 19, 2002. This hearing is to determine an appropriate cost of capital for TransCanada for its Canadian Mainline in 2001 and 2002. The company is seeking approval of an after-tax weighted average cost of capital of 7.5 per cent. This compares to 5.84 per cent earned by the Canadian Mainline today.
"TransCanada is committed to ensuring all of its business segments provide competitive returns," said Mr. Kvisle. In conclusion, Mr. Kvisle said, "We are pleased with the progress TransCanada achieved in 2001 and look forward to accomplishing even more in 2002."

Conference Call

TransCanada will hold a teleconference call January 29, 2002 at 1:00 p.m. (Mountain) / 3:00 p.m. (Eastern) to discuss the year-end 2001 financial results, general developments and issues concerning the company. Analysts, members of the media and other interested parties wanting to participate in the call should dial 1-800-478-9326 or 416-695-5801 (Toronto area) at least 10 minutes prior to the start of the call. No pass code is required. A replay of the teleconference will be available two hours after the conclusion of the call until midnight, February 5, 2002 by dialing 1-800-408-3053 or 416-695-5800 (Toronto area) and entering passcode 1011446. The conference will begin with a brief address by members of TransCanada's executive management, followed by a question and answer period for investment analysts. A question and answer period for members of the media will immediately follow. A live audio web cast of the teleconference will also be available on TransCanada's web site (www.transcanada.com). The web cast will be archived and available for replay.

About TransCanada

TransCanada is a leading North American energy company. It is focused on natural gas transmission and power services with employees who are expert in these businesses. The company's network of approximately 38,000 kilometres of pipeline transports the majority of western Canada's natural gas production to the fastest growing markets in Canada and the United States. TransCanada owns, controls or is constructing a total of approximately 2,250 megawatts of power -- an amount of power that can eet the needs of more than two million average households. The company's common shares trade under the symbol TRP on the Toronto and New York stock exchanges.

For For further information, please contact:

Media Inquiries:
Glenn Herchak / Kurt Kadatz
(403) 920-7859

Analyst Inquiries:
David Moneta
(403) 920-7917

Related Information

2001 Fourth Quarter Results (205 KB, PDF)
2001 Q4 version francaise (198 KB, PDF)