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Focus and Discipline Result in Strong TransCanada First Quarter Performance
CALGARY, Alberta - April 25, 2003 - (TSE: TRP) (NYSE: TRP)
First Quarter 2003 Financial Highlights:
(All financial figures are in Canadian dollars unless noted otherwise)
"Our strong financial performance this quarter continues to be a direct result of our focus and discipline in implementing our key strategies," said Hal Kvisle, TransCanada's chief executive officer. "We will continue to maintain and utilize our strong financial position as a solid platform for growth and value creation in our core businesses."
First Quarter 2003 Developments
In the first quarter, TransCanada completed its acquisition of a 31.6 per cent interest in Bruce Power L.P. for approximately $376 million plus closing adjustments. TransCanada also funded a one-third share ($75 million) of a $225 million accelerated deferred rent payment to Ontario Power Generation. Bruce Power L.P. is a tenant under a lease on the Bruce nuclear power facility in Ontario. The lease expires in 2018 with an option to extend the lease by up to 25 years.
"Our investment in Bruce Power L.P. is an excellent example of our focused and disciplined approach to growth," said Mr. Kvisle. "Bruce is one of the largest and most efficient power generation facilities in North America and located in one of the largest power markets. Our Bruce investment is consistent with our objective of building a balanced portfolio of low-cost power generation assets."
Mr. Kvisle said strong power prices and excellent operating performance contributed significantly to solid first quarter results from Bruce Power L.P. He also noted that in the first quarter since the acquisition in February 2003, Bruce Power L.P. contributed $27 million after tax of equity income to TransCanada while achieving an average selling price of $63 per megawatt hour.
In February, TransCanada, through its subsidiary NOVA Gas Transmission Ltd. (NGTL) reached a one-year settlement regarding the 2003 revenue requirement for TransCanada's Alberta System. The one-year settlement establishes NGTL's fixed revenue requirement for 2003 ($1.277 billion for 2003 versus $1.347 billion in 2002.) TransCanada estimates this change will decrease net earnings on the Alberta System by approximately $40 million after tax, as compared to 2002.
This settlement is currently before the Alberta Energy and Utilities Board for approval together with the Alberta System 2003 Tariff Settlement, which includes proposed modifications to rate design and an application for a new service.
"We believe negotiations leading to this settlement were significantly influenced by the June 2002 National Energy Board (NEB) decision on our Canadian Mainline Fair Return application," said Mr. Kvisle. "While there remain many complex issues in the current regulatory environment, we are committed to working collaboratively with our customers to try and resolve those issues and move forward."
In March, TransCanada applied to the Federal Court of Appeal for leave to appeal the NEB's RH-R-1-2002 Decision issued February 20, 2003. In this Decision, the NEB dismissed TransCanada's September 2002 request for a Review and Variance of the NEB's June 2002 RH-4-2001 Decision on the company's Fair Return application.
"We continue to be concerned with the effect of the NEB Decision on TransCanada's ability to obtain a fair return on our investment in our Canadian Mainline," said Mr. Kvisle.
Also in the first quarter, TransCanada's Board of Directors unanimously recommended common shareholders vote in favour of a proposal to create a new holding company -- TransCanada Corporation -- to become the parent of TransCanada PipeLines Limited. The proposal will be voted on today at TransCanada's Annual and Special Meeting of Shareholders. TransCanada will announce the results of the vote after the Meeting.
"TransCanada is embarking on the rest of the year and the future with a strong balance sheet, clear strategies and a capable and enthusiastic team," said Mr Kvisle. "We look forward to maintaining our focus on our core strategies with an emphasis on well-planned, well-executed growth that creates value for our shareholders while preserving our financial strength."
Annual Meeting of Shareholders and Teleconference
TransCanada will hold its Annual and Special Meeting of Shareholders beginning today at 10:30 a.m. (Mountain) / 12:30 p.m. (Eastern). The meeting will take place at the Roundup Centre (13th Avenue and Third Street S.E.) in Calgary, Alberta. A live audio Web cast of the meeting will be available on TransCanada's Web site at www.transcanada.com beginning at 10:30 a.m. (Mountain) / 12:30 p.m. (Eastern). The meeting Web cast will be archived and available for replay.
TransCanada will hold a teleconference today at 1:00 p.m. (Mountain) / 3:00 p.m. (Eastern) to discuss the first quarter 2003 financial results and general developments and issues concerning the company. Analysts, members of the media and other interested parties wanting to participate in the call should dial 1-800-273-9672 or 416-695-5806 (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, May 2, 2003, by dialing 1-800-408-3053 or 416-695-5800 (Toronto area) and entering passcode 1402789.
The conference will begin with a short 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 unable to attend the Annual and Special Meeting of Shareholders will immediately follow. A live audio Web cast of the teleconference will also be available on TransCanada's Web site. The teleconference Web cast will be archived and available for replay.
TransCanada is a leading North American energy company. We are focused on natural gas transmission and power services with employees who are expert in these businesses. Our 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 has interests in more than 4,000 megawatts of power - an equal amount of power can meet the needs of about four million average households. Our common shares trade under the symbol TRP on the Toronto and New York stock exchanges.
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