Operating, maintenance and administration (OM&A) costs on the Alberta System are fixed under the settlement, as well as the return on equity which will be established by applying the Alberta Energy and Utilities Board's (EUB) formula for determining annual rate of return on common equity on deemed common equity of 35 per cent. The majority of other cost elements, such as depreciation, income, and municipal taxes will be treated on a flow through basis.

In addition, TransCanada will withdraw our motion before the Alberta Court of Appeal for leave to appeal the 2004 EUB decision that disallowed applied-for incentive compensation costs related to the Alberta System, upon approval of this settlement.

"TransCanada has reached two major settlements with our stakeholders during February and March - a tolls settlement on the Canadian Mainline for 2005 and this multi-year revenue requirement settlement on our Alberta System," said Hal Kvisle, TransCanada's chief executive officer. "TransCanada is pleased to have again achieved an alignment of interests with our shippers and we remain committed to providing value to our customers and to exploring and developing pipeline services that benefit all stakeholders."

TransCanada will continue to charge interim tolls for 2005 for transportation service on the Alberta System, as approved by the EUB in December 2004. These interim tolls will remain in effect until final tolls are established through the Phase 2 proceeding of the Alberta System's 2005 General Rate Application. This proceeding will address the allocation of costs among transportation services and rate design. TransCanada will file this application with the EUB on or before April 15, 2005.

For further information on this settlement, please refer to the recent News Release or the settlement application on the EUB website.