TransCanada Corporation (TransCanada) has reported a net income of CAD1.4 billion, or CAD2.53 per share, for 2008, compared with the net income of CAD1.2 billion, or CAD2.31 per share, in the previous year. It also reported comparable earnings of CAD1.3 billion, or CAD2.25 per share, for 2008, compared with the comparable earnings of CAD1.1 billion, or CAD2.08 per share, in the previous year.

“TransCanada’s financial performance in 2008 demonstrates our ability to generate significant earnings and cash flow even in these uncertain economic times,” said Hal Kvisle, TransCanada president and chief executive officer. “This has enabled our board of directors to increase the dividend on common shares for the ninth consecutive year. The new quarterly dividend of CAD0.38 per common share equates to CAD1.52 per common share on an annualized basis, an increase of 6%.

“TransCanada made significant progress on a number of major projects in 2008, including the Keystone oil pipeline system, the North Central Corridor expansion, the Bruce Power refurbishment, and three large-scale, gas-fired power plants. These major projects are all under construction today. In 2009, we expect to invest about CAD6 billion in these and other capital projects. The strong cash flow generated by our operating assets, along with recently completed debt and common equity issues, mean we are well-positioned to fund our sizable capital program. Looking forward, we expect to generate strong, long-term financial returns for our shareholders as a result of our growing portfolio of high-quality energy infrastructure assets, our proven project development and execution capabilities, and our strong financial position.”

Fourth Quarter and Year-End 2008 Highlights:

— Funds generated from operations for the year ended December 31, 2008 of CAD3.0 billion

— Comparable earnings for fourth quarter 2008 of CAD271 million (CAD0.46 per share)

— Net income for fourth quarter 2008 of CAD277 million (CAD0.47 per share)

— Funds generated from operations for fourth quarter 2008 of CAD712 million

— Invested CAD6.4 billion in 2008 in a number of growth opportunities including the Keystone pipeline system, Ravenswood generating station, Bruce power, Portlands Energy Centre and Halton Hills generating station.

TransCanada reported net income for fourth quarter 2008 of CAD277 million (CAD0.47 per share) compared to CAD377 million (CAD0.70 per share) for fourth quarter 2007. Net income in fourth quarter 2007 included CAD56 million of favorable income tax adjustments and a CAD14 million gain on the sale of land. Fourth quarter 2008 and 2007 included CAD6 million and CAD10 million, respectively, of fair value gains in the natural gas storage business.

Comparable earnings were CAD271 million (CAD0.46 per share) for fourth quarter 2008 compared to CAD297 million (CAD0.55 per share) in fourth quarter 2007. The CAD26 million (CAD0.09 per share) decrease was primarily due to higher Corporate costs, which included unrealized losses of CAD39 million after-tax (CAD0.07 per share) from the change in the fair value of derivatives used to manage TransCanada’s exposure to rising interest rates that do not qualify as hedges for accounting purposes together with the impact of financing incremental debt to fund the company’s growth. Partially offsetting these higher corporate costs were higher earnings in the Energy and Pipelines businesses.

Net income in 2008 included CAD152 million of gains from bankruptcy settlements with Calpine, CAD10 million of GTN lawsuit settlement proceeds, a CAD27 million write-down of the Broadwater liquefied natural gas (LNG) project costs and CAD26 million of favourable income tax adjustments. Net income in 2007 included favourable income tax adjustments of CAD102 million, CAD14 million gain on the sale of land and CAD7 million of net unrealized gains from natural gas storage fair value changes.

The CAD179 million (CAD0.17 per share) increases were primarily due to higher earnings from the Energy and Pipelines businesses partially offset by higher corporate expenses.

Notable recent developments in pipelines, energy and corporate include:


The Keystone pipeline system has completed about 40% of the engineering, procurement and construction activities for the initial phase of the project to Wood River, Patoka and Cushing. In November, an application was filed with the U.S. Department of State for a Presidential Permit for the Keystone expansion to the US Gulf Coast.

TransCanada agreed to increase its equity ownership in the Keystone partnership to 79.99%, which will reduce ConocoPhillips’ equity ownership to 20.01%. Certain parties who have agreed to make volume commitments to the Keystone expansion have an option to acquire up to a combined 15% equity ownership in the Keystone partnerships. If these options are exercised, TransCanada’s equity ownership could be reduced to 64.99%.

In November, ANR’s Cold Springs 1 storage facility was placed in service. The project added 14 billion cubic feet (Bcf) of natural gas storage and 200 million cubic feet per day (mmcf/d) of withdrawal capacity, and increased ANR’s total storage capacity to 250 Bcf.

The Bison pipeline project is a proposed 480 kilometre (km) pipeline from the powder River basin in Wyoming to the Northern border system in North Dakota. The project has shipping commitments for about 405 mmcf/d and is expected to be in service in fourth quarter 2010. The capital cost of the project is estimated at $500 – $600 million. TransCanada continues to work with shippers to finalize the size and design of this project.

In December 2008, the Alaska Commissioner of Revenue and Natural Resources issued the Alaska Gasline Inducement Act (AGIA) license to TransCanada. TransCanada has committed under AGIA to advance the Alaska Pipeline project through an open season and subsequent Federal Energy Regulatory Commission (FERC) certification.

TransCanada has commenced the engineering, environmental, field and commercial work, and expects to conclude an open season by mid-2010.

TransCanada recently concluded a binding open season for gas transmission service from the Montney Groundbirch area located in northeastern B.C. Shippers have committed to firm gas transportation contracts and volumes associated with these commitments are expected to reach 1.1 Bcf per day (Bcf/d) by 2014. The proposed pipeline will be about 77 kilometers in length and is expected to commence service in fourth quarter 2010, subject to receipt of necessary regulatory approvals. The proposed project is expected to cost about CAD250 million.

TransCanada is finalizing details associated with a binding open season and pipeline extension project to service the Horn River shale gas area in northeastern B.C. with the Alberta System. The Horn River project is expected to commence operation in early 2011.


In fourth quarter 2008, Bruce power completed a review of the end of life estimates for units 3 and 4. Unit 3 is now expected to be in commercial service until 2011, which provides the benefit of nearly two additional years of generation before the unit commences an expected 36-month refurbishment period. After the refurbishment period, the end of life estimate for unit 3 is expected to increase from the originally expected date of 2037 to 2038.

In addition, unit 4 is now expected to be in commercial service until 2016, providing nearly seven years of generation before the unit commences a similar refurbishment period, after which, the end of life estimate for Unit 4 is expected to increase from the originally expected date of 2036 to 2042.

Refurbishment work continues on units 1 and 2 and the units are expected to return to commercial service in 2010.

The 109 megawatt (MW) Carleton wind farm, the third of six phases of the Cartier Wind project, was placed in service in November 2008. The remaining phases are expected to be constructed through 2012, subject to receipt of necessary approvals. Once completed, the combined capacity of the six phases is expected to be 740 MW.