TransCanada Reports 2005 Net Income of $1.2 Billion

Board of Directors Increases Quarterly Dividend

CALGARY, Alberta –January 31, 2006 – (TSX: TRP) (NYSE: TRP)

Fourth Quarter and Year-End 2005 Financial Highlights
(All financial figures are unaudited and in Canadian dollars unless noted otherwise)
  • Quarterly dividend of $0.32 per common share declared by the Board of Directors, an increase of five per cent
  • Net income, excluding gains, for fourth quarter 2005 of $235 million or $0.48 per share, an increase of 27 per cent
  • Net income, excluding gains, for the year ended December 31, 2005 of $852 million or $1.75 per share, an increase of eight per cent
  • Funds generated from operations for fourth quarter 2005 of $530 million, an increase of 12 per cent; for the year ended December 31, 2005, $1,951 million, an increase of 15 per cent

The Board of Directors of TransCanada Corporation (TransCanada or the company) today declared a quarterly dividend of $0.32 per common share for the quarter ending March 31, 2006, a five per cent increase over the $0.305 paid in each of the previous four quarters. The dividend is payable on April 28, 2006 to shareholders of record at the close of business on March 31, 2006. This is the sixth consecutive annual increase in the common share dividend.

TransCanada today announced net income and net income from continuing operations (net earnings) for fourth quarter 2005 of $350 million or $0.72 per share. Excluding an after-tax gain of $115 million or $0.24 per share from the sale of the company’s interest in PT Paiton Energy Company (Paiton Energy), net earnings were $235 million or $0.48 per share, an increase of $50 million or $0.10 per share compared to $185 million or $0.38 per share for fourth quarter 2004.

For the year ended December 31, 2005, TransCanada’s net income was $1,209 million or $2.49 per share compared to $1,032 million or $2.13 per share for 2004. Net earnings for 2005 included gains related to the sales of TransCanada Power, L.P. (Power LP), Paiton Energy and units of TC PipeLines, LP (PipeLines, LP), while net earnings for 2004 included gains on sales of the ManChief and Curtis Palmer assets to Power LP and the company’s equity interest in Millenium. Excluding total gains of $357 million recorded in 2005 and total gains of $194 million recorded in 2004, net earnings for 2005 of $852 million or $1.75 per share increased $66 million or $0.13 per share compared to 2004.

Funds generated from operations for fourth quarter 2005 were $530 million, an increase of $55 million compared to fourth quarter 2004. Funds generated from operations for the year ended December 31, 2005 were $1,951 million, an increase of $248 million compared to 2004.

“TransCanada's strong 2005 results are the direct result of significant capital investments over the past six years," said Hal Kvisle, TransCanada's chief executive officer. "We have invested approximately $8.5 billion over that period to grow our North American gas transmission and power businesses. In doing so, we have sustained our gas transmission earnings and built a substantial and profitable power generation business.

"Events over the past year have reinforced the critical need for new gas and power infrastructure in many parts of North America. TransCanada continues to play a vital role in the continental energy market through our extensive natural gas transmission network and our growing fleet of power generation facilities," said Mr. Kvisle.

“In 2005, TransCanada invested approximately $2.1 billion in our core businesses. Notable acquisitions included the Sheerness Power Purchase Arrangement and the Northeast US hydro assets. Key development projects include Bruce Power, the Bécancour cogeneration plant, the Cartier Wind power project and the Keystone oil pipeline. Longer-term initiatives relate to the transmission of northern natural gas and the development of liquefied natural gas facilities. Acquisitions, active projects and longer-term initiatives will all contribute to further strengthening our position as a leading North American energy infrastructure company.

“Our success is the direct result of our expertise in our core businesses, our experience in the responsible and reliable operation of large-scale energy infrastructure, and our financial strength.

For our shareholders, that has meant another year of solid growth in earnings and cash flow, and a total annual return on their investment of approximately 28 per cent. For the sixth year in a row, confidence in our growth prospects has enabled TransCanada’s Board of Directors to increase the dividend paid to shareholders to $1.28 on an annual basis,,” said Mr. Kvisle.

During the fourth quarter of 2005 and the first month of 2006, TransCanada:

  • Announced in October that Bruce Power (being the collective investments in Bruce Power A L.P. (Bruce A) and Bruce Power L.P. (Bruce B)) and the Ontario Power Authority (OPA), a Crown Corporation of the Province of Ontario, entered into a long-term agreement on the restart and refurbishment of the Bruce A units. The capital program for the restart and refurbishment work is expected to total approximately $4.25 billion. As owner of a 47.9 per cent interest in the newly formed Bruce A (along with BPC Generation Infrastructure Trust (BPC) – 47.9 per cent, and the Power Workers’ Union Trust No. 1 and The Society of Energy Professionals Trust – together, 4.2 per cent) TransCanada’s approximate share of the capital program is $2.125 billion and will be financed through capital contributions to 2011. With the restart of Units 1 and 2, Bruce Power’s output capacity is expected to rise by approximately 1,500 megawatts (MW) to more than 6,200 MW.
  • In November, signed a Memorandum of Understanding with ConocoPhillips Company and ConocoPhillips Pipe Line Company (CPPL) (a wholly owned subsidiary of ConocoPhillips Company) which commits ConocoPhillips Company to ship crude oil on the proposed Keystone oil pipeline (Keystone), and gives CPPL the right to acquire up to a fifty per cent participating interest in the pipeline. On January 31, 2006, TransCanada announced it has secured firm, long-term contracts totalling 340,000 barrels per day through the binding Open Season held during the fourth quarter. The Keystone pipeline, expected to cost approximately US$2.1 billion, will be capable of transporting approximately 435,000 barrels per day of crude oil from Hardisty, Alberta to Patoka, Illinois through a 2,950 kilometre pipeline system.
  • Acquired the remaining rights and obligations of the 756 megawatt Sheerness Power Purchase Arrangement (PPA) from the Alberta Balancing Pool for $585 million. The remaining term of the PPA is approximately 15 years. The acquisition closed on December 30, 2005.
  • Closed the sale of its 11 per cent interest in Paiton Energy to subsidiaries of The Tokyo Electric Power Company for gross proceeds of US$103 million ($122 million). Paiton Energy owns two 615 MW coal-fired power plants in East Java, Indonesia.
  • Received support from the Canadian Association of Petroleum Producers (CAPP) and other stakeholders for an increase in the deemed common equity ratio from 30 per cent to 36 per cent on TransCanada’s Foothills and BC Systems, effective January 1, 2006. On December 21, 2005, The National Energy Board (NEB) approved the Foothills System 2006 tolls, reflecting a deemed common equity of 36 per cent, as final tolls. BC System tolls have been authorized on an interim basis, with no issues raised with respect to the capital structure.
  • Continued to advance the Bécancour and Cartier Wind power projects. Construction of the 550 MW Bécancour cogeneration plant near Trois Rivières, Québec remains on schedule to begin operations in September 2006. The 740 MW Cartier Wind project, 62 per cent owned by TransCanada, continued to award construction contracts in November and December and construction is scheduled to begin in March 2006. Located in the Gaspésie region of Québec, the first of the six projects that make up Cartier Wind is anticipated to be operational beginning in December 2006 with the remaining projects continuing through 2012.
  • Issued, in January 2006, through its wholly owned subsidiary TransCanada PipeLines Limited (TCPL), $300 million of five-year medium-term notes bearing interest of 4.3 per cent under its Canadian base shelf program. Proceeds from the offering were used to reduce commercial paper outstanding.
  • On behalf of the Broadwater Energy project, filed a formal application on January 30, 2006 with the U.S. Federal Energy Regulatory Commission (FERC) for federal approval to construct and operate the Broadwater project. The proposed facility, which would be located in the New York State waters of Long Island Sound, would be capable of receiving, storing, and re-gasifying imported liquefied natural gas with an average annual send-out capacity of approximately one billion cubic feet (bcf) a day of natural gas. The estimated cost of construction is US$700 million to US$1 billion. Broadwater is being developed jointly by TransCanada and Shell US Gas and Power.
  • The Mackenzie Gas Pipeline Project has continued to progress. The public hearings phase of the regulatory process commenced in late January 2006 and is expected to continue throughout the year.

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2005 Fourth Quarter Results (172 KB pdf)

2005 Q4 version francaise (298 KB pdf)

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