Outlook

TransCanada assumes that its operations in 2009 will be materially consistent with those in 2008 and includes the positive impact of a full year of earnings from Ravenswood, incremental earnings from Portlands Energy, which is expected to be commissioned in first quarter 2009, and a decrease in planned outages at Bruce Power. These positive impacts are expected to be partially offset by a return to more normal hydrology levels at TC Hydro from the record levels experienced in 2008. In addition, the current economic climate is negatively affecting demand, liquidity and prices in commodity markets in which TransCanada operates.

Although TransCanada has sold forward significant output from its power plants and Alberta PPAs, as well as capacity from its natural gas storage facilities, operating income in 2009 can be affected by changes in the spot market price of power, market heat rates, hydrology, forward capacity payments, natural gas storage spreads and unplanned outages. Operating income from Energy's U.S. operations is affected by changes in the U.S./Canadian dollar exchange rates.

Other factors such as plant availability, regulatory changes, weather, currency movements, and overall stability of the energy industry can also affect 2009 operating income. Refer to the "Energy — Business Risks" section of this MD&A for a complete discussion of these factors.

Following the expiry of the Ravenswood tolling arrangement with Hess Corporation on December 31, 2008, TransCanada will manage the ongoing marketing of the Ravenswood plant output in the same manner as it does with other generation assets in the U.S. Northeast. Dependent on market liquidity and other factors, a significant portion of the electricity generated by the Ravenswood facility in 2009 and beyond may be sold at spot prices. As noted in the "Energy — Business Risk" section of this MD&A, spot prices for electricity are subject to change depending on underlying energy commodity prices, available supply, demand and other factors.

Capital Expenditures

Energy's total capital expenditures in 2008 were $4.3 billion, including the acquisition of Ravenswood for $3.1 billion. Energy's overall capital spending in 2009 is expected to be approximately $1.4 billion, including cash calls for the Bruce A refurbishment and restart project and continued construction at Coolidge, Cartier Wind, Kibby Wind and Halton Hills.