•  Print this page
  • Glossary 

Contractual Obligations

Contractual Obligations

Purchase Obligations

At December 31, 2008, the Company's approximate future purchase obligations were as follows:

Year ended December 31 (millions of dollars)
Payments Due by Period
  Total Less than one year 1 – 3 years 3 – 5 years More than 5 years
Transportation by others(2) 931 260 396 199 76
Capital expenditures(3)(4) 2,317 2,092 155 70
Other 6 3 2 1
Commodity purchases(5) 6,711 945 1,394 1,284 3,088
Capital expenditures(3)(6) 1,049 509 456 61 23
Other(7) 1,133 88 151 124 770
Information technology and other 99 29 41 22 7
Total purchase obligations 12,246 3,926 2,595 1,761 3,964
(1) The amounts in this table exclude funding contributions to pension plans and funding to the APG.
(2) Rates are based on known 2009 levels. Beyond 2009, demand rates are subject to change. The contract obligations in the table are based on known or contracted demand volumes only and exclude commodity charges incurred when volumes flow.
(3) Amounts are estimates and are subject to variability based on timing of construction and project enhancements. The Company expects to fund capital projects with cash from operations and, if necessary, new debt and equity.
(4) Primarily consists of capital expenditures related to TransCanada's share of the construction costs of Keystone, North Central Corridor and other pipeline projects.
(5) Commodity purchases include fixed and variable components. The variable components are estimates and are subject to variability in plant production, market prices and regulatory tariffs.
(6) Primarily consists of capital expenditures related to TransCanada's share of the construction costs of Coolidge, Bruce Power, the remaining Cartier Wind projects, Halton Hills and Portlands Energy.
(7) Includes estimates of certain amounts that are subject to change depending on plant fired hours, the consumer price index, actual plant maintenance costs, plant salaries, and changes in regulated rates for transportation.

TransCanada and its affiliates have long-term natural gas transportation and natural gas purchase arrangements as well as other purchase obligations, all of which are transacted at market prices and in the normal course of business.

In 2009, TransCanada expects to make funding contributions to the Company's pension and other post-retirement benefit plans in the amount of approximately $140 million and $27 million, respectively. This represents an increase from total funding contributions of $90 million in 2008 and is attributable primarily to significantly reduced investment performance and plan experience being different than expectations. TransCanada's proportionate share of funding contributions expected to be made by joint ventures to their respective pension and other post-retirement benefit plans in 2009 is approximately $37 million and $4 million, respectively, compared to actual total contributions of $42 million in 2008.

The next actuarial valuation for the Company's pension and other post-retirement benefit plans is expected to be carried out as at January 1, 2010. Primarily as a result of the significantly lower performance of the pension plan assets in 2008, it is expected that funding requirements for these plans could continue at the anticipated 2009 level for the next several years to amortize solvency deficiencies in addition to normal costs. The Company's net benefit cost is expected to remain at 2008 levels. However, the net benefit cost and the amount of funding contributions received will be dependent on various factors, including future investment returns achieved on plan assets, the level of interest rates, changes to plan design and actuarial assumptions, actual plan experience versus projections and amendments to pension plan regulations and legislation. Increases in the level of required plan funding are not expected to have a material impact on the Company's liquidity.

Bruce Power

Bruce A has signed commitments to third-party suppliers related to refurbishing and restarting Units 1 and 2 and refurbishing Units 3 and 4 to extend their operating life. TransCanada's share of these signed commitments, which extend over the three-year period ending December 31, 2011, are as follows:

Year ended December 31 (millions of dollars)
2009 204
2010 49
2011 2

Aboriginal Pipeline Group

Under its agreement with the APG, TransCanada agreed to finance the APG's one-third share of the MGP project's predevelopment costs. These costs are currently forecast to be between $150 million and $200 million, on a cumulative basis, depending on the pace of project development. As at December 31, 2008, the Company had advanced $140 million of this total. This agreement is discussed further in the "Pipelines — Opportunities and Developments" section of this MD&A.


In April 2008, the Ontario Court of Appeal dismissed an appeal filed by the Canadian Alliance of Pipeline Landowners' Associations (CAPLA). CAPLA filed the appeal as a result of a decision by the Ontario Superior Court in November 2006 to dismiss CAPLA's class action lawsuit against TransCanada and Enbridge Inc. for damages alleged to have arisen from the creation of a control zone within 30 metres of a pipeline pursuant to Section 112 of the National Energy Board Act. The Ontario Court of Appeal's decision is final and binding as CAPLA did not seek any further appeal within the time frame allowed.

TransCanada is subject to laws and regulations governing environmental quality and pollution control. At December 31, 2008, the Company had recorded liabilities of approximately $86 million representing the Company's estimate of the amount it expects to expend to remediate certain sites. However, additional liabilities may be incurred as more assessments occur and remediation efforts continue.

TransCanada and its subsidiaries are subject to various legal proceedings and actions arising in the normal course of business. While the final outcome of such legal proceedings and actions cannot be predicted with certainty, it is the opinion of management that the resolution of such proceedings and actions will not have a material impact on the Company's consolidated financial position or results of operations.


TransCanada, Cameco Corporation and BPC have severally guaranteed one-third of certain contingent financial obligations of Bruce B related to power sales agreements, operator licenses, a lease agreement and contractor services. The guarantees have terms ranging from one year ending in 2010 to perpetuity. In addition, TransCanada and BPC have severally guaranteed one-half of certain contingent financial obligations related to an agreement with the OPA to refurbish and restart Bruce A power generation units. The guarantees were provided as part of the reorganization of Bruce Power in 2005 and have terms ending in 2019. TransCanada's share of the potential exposure under these Bruce A and Bruce B guarantees was estimated at December 31, 2008 to range from $711 million to a maximum of $750 million. The fair value of these guarantees is estimated to be $17 million.

The Company and its partners in certain jointly owned entities have severally as well as jointly and severally guaranteed the financial performance of these entities related primarily to construction projects, redelivery of natural gas, PPA payments and the payment of liabilities. TransCanada's share of the potential exposure under these guarantees was estimated at December 31, 2008 to range from $688 million to a maximum of $1.4 billion. For certain of these entities, any payments made by TransCanada under these guarantees in excess of its ownership interest are to be reimbursed by its partners. Deferred Amounts includes $9 million for the fair value of these joint and several guarantees.

TransCanada has guaranteed a subsidiary's equity undertaking to support the payment, under certain conditions, of principal and interest on US$43 million of the public debt obligations of TransGas. The Company has a 46.5 per cent interest in TransGas. Under the terms of a shareholder agreement, TransCanada and another major multinational company may be required to severally fund more than their proportionate share of debt obligations of TransGas in the event that the minority shareholders fail to contribute. Any payments made by TransCanada under this agreement would convert into share capital of TransGas. The Company's potential exposure is contingent on the impact any change of law would have on the ability of TransGas to service the debt. There has been no change in applicable law since the issuance of debt in 1995 and, thus, no exposure for TransCanada. The debt matures in 2010. The Company has made no provision related to this guarantee.