STRENGTH & STABILITY

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Consolidated capital spending, equity investments and acquisition We expect to spend approximately $6 billion in 2016 on new and existing capital projects. Capital spending includes capital expenditures on growth projects, maintenance capital expenditures and contributions to equity investments. The 2016 capital spending relates to Natural Gas Pipelines projects including NGTL System expansion, the Canadian Mainline, Tuxpan-Tula and Topolobampo; Liquids Pipelines projects including Grand Rapids, Northern Courier and Energy East; and Energy projects including Bruce Power and Napanee. Additionally, on February 1, 2016 we acquired Ironwood Power Plant for approximately US$657 million before post closing adjustments. 28 TransCanada Management's discussion and analysis 2015
Natural Gas Pipelines Our natural gas pipeline network transports natural gas to local distribution companies, power generation facilities and other businesses across Canada, the U.S. and Mexico. We serve more than 80 per cent of the Canadian demand and approximately 15 per cent of the U.S. demand on a daily basis by connecting major natural gas supply basins and markets through: • wholly-owned natural gas pipelines – 56,600 km (35,200 miles) • partially-owned natural gas pipelines – 10,700 km (6,700 miles). We also have regulated natural gas storage facilities in Michigan with a total capacity of 250 Bcf, making us one of the largest providers of natural gas storage and related services in North America. Strategy at a glance Optimizing the value of our existing natural gas pipelines systems, while responding to the changing flow patterns of natural gas in North America, is a top priority. We are also pursuing new pipeline opportunities to add incremental value to our business. Our key areas of focus include: • greenfield development projects, such as infrastructure for liquefied natural gas (LNG) exports from the west coast of Canada and the Gulf of Mexico • additional new pipeline developments within Mexico • connections to emerging Canadian and U.S. shale gas and other supplies • connections to new and growing markets all of which play a critical role in meeting the transportation requirements for supply and demand for natural gas in North America. Highlights from 2015 • We were awarded the contract to build, own and operate the 36-inch diameter Tuxpan-Tula pipeline in Mexico which is approximately 250 km (155 miles) long and has a contracted capacity of 866 MMcf/d. The pipeline is expected to begin construction in 2016 and be in-service in fourth quarter 2017. • The NEB approved the NGTL System’s $1.7 billion North Montney Mainline Project on June 11, 2015. Construction remains subject to a positive FID on the proposed Pacific Northwest LNG Project. • The NEB approved the Canadian Mainline's compliance filing on the NEB 2014 Decision as applied for. The approval was the last step in getting the NEB 2014 Decision implemented and allowing the Canadian Mainline to recognize incentive earnings. • The NEB approved the Kings North Connection project on the Canadian Mainline which will increase gas transmission capacity into the greater Toronto area and provide shippers with the flexibility to source growing supplies of Marcellus gas from the U.S. Northeast. • An agreement was reached with eastern LDCs that resolves their issues with Energy East and the Eastern Mainline Project. The agreement honours our previously stated commitment to ensure that Energy East and the Canadian Mainline's Eastern Mainline Project will provide gas consumers in Eastern Canada with sufficient natural gas transmission capacity and reduced natural gas transmission costs. • We continued the drop down of U.S. natural gas pipeline assets into TC PipeLines, LP, with the sale of the remaining 30% of GTN in April 2015 and 49.9% of PNGTS on January 1, 2016. • NGTL signed contracts for an additional 2.7 Bcf/d of new firm natural gas transportation service that will require a further $600 million expansion of the System for its 2018 Facilities program. TransCanada Management's discussion and analysis 2015 29
Page 1 and 2: STRENGTH & STABILITY 2015 Annual Re
Page 3 and 4: WHAT WE STRIVE FOR OUR VISION To be
Page 5 and 6: A SOLID FOUNDATION DEAR FELLOW SHAR
Page 7 and 8: In December 2015, we entered into a
Page 9 and 10: Management's discussion and analysi
Page 11 and 12: Risks and uncertainties • our abi
Page 13 and 14: Comparable measures We calculate th
Page 15 and 16: TransCanada Management's discussion
Page 17 and 18: as at February 5, 2016 Common share
Page 19 and 20: CAPITAL PROGRAM We are developing q
Page 21 and 22: 2015 FINANCIAL HIGHLIGHTS We use ce
Page 23 and 24: • a $34 million adjustment to inc
Page 25 and 26: Comparable earnings Comparable earn
Page 27 and 28: Funds used in investing activities
Page 29: OUTLOOK Earnings We anticipate our
Page 33 and 34: We are the operator of all of the f
Page 35 and 36: RESULTS The following is a reconcil
Page 37 and 38: 8 Pipelines. In November 2014, we s
Page 39 and 40: OUTLOOK Earnings Canadian Pipelines
Page 41 and 42: at risk for the difference in expec
Page 43 and 44: More competition Changes in supply
Page 45 and 46: The Eastern Mainline Project is con
Page 47 and 48: BUSINESS RISKS The following are ri
Page 49 and 50: Liquids Pipelines Our existing liqu
Page 51 and 52: We are the operator of all of the f
Page 53 and 54: Comparable depreciation and amortiz
Page 55 and 56: U.S. shale oil supply growth origin
Page 57 and 58: Energy East Pipeline In April 2015,
Page 59 and 60: Energy Our Energy business includes
Page 61 and 62: We are the operator of all of our E
Page 63 and 64: RESULTS The following is a reconcil
Page 65 and 66: OUTLOOK Earnings We expect 2016 ear
Page 67 and 68: UNDERSTANDING THE ENERGY BUSINESS O
Page 69 and 70: Western and Eastern Power results C
Page 71 and 72: Average spot market power prices in
Page 73 and 74: Bruce Power results Results reflect
Page 75 and 76: U.S. Power results Comparable EBITD
Page 77 and 78: withdrawal season. By matching purc
Page 79 and 80: U.S. Power capacity payments A sign
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OTHER INCOME STATEMENT ITEMS The fo
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Net income attributable to non-cont
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The decrease in equity in 2015 was
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Net cash used in investing activiti
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Junior subordinated notes issued (m
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In December 2014, Series 1 sharehol
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Long-term debt At the end of 2015,
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GUARANTEES Bruce Power We and our p
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Risk and Description Impact Monitor
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Greenhouse gas emissions regulation
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Derivatives designated as a net inv
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CRITICAL ACCOUNTING ESTIMATES When
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We base these valuations on our pro
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Balance sheet presentation of deriv
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Reporting discontinued operations I
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year ended December 31 (millions of
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QUARTERLY RESULTS Selected quarterl
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FOURTH QUARTER 2015 HIGHLIGHTS Cons
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Comparable EBITDA and comparable EB
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Comparable EBITDA for Energy decrea
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Management's report on Internal Con
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Report of Independent Registered Pu
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Consolidated statement of comprehen
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Consolidated balance sheet at Decem
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Notes to consolidated financial sta
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Cash and Cash Equivalents The Compa
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Canadian income taxes are not provi
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The recognition of gains and losses
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4. SEGMENTED INFORMATION year ended
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year ended December 31, 2013 (milli
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5. OTHER CURRENT ASSETS at December
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Liquids Pipelines Keystone Pipeline
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Summarized Financial Information of
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Other U.S. Natural Gas Pipelines GT
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Allowance for Funds Used During Con
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At December 31, 2015, the Company's
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The above deferred tax amounts have
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16. LONG-TERM DEBT 2015 2014 Outsta
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Long-Term Debt Retired The Company
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18. NON-CONTROLLING INTERESTS The C
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Stock Options Number of Options Wei
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20. PREFERRED SHARES at December 31
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The changes in AOCI by component ar
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The most recent actuarial valuation
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Pension plan assets are managed on
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The significant weighted average ac
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Commodity Price Risk The Company is
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Balance Sheet Presentation of Non-D
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The balance sheet classification of
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2 3 Reported within Revenues on the
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The fair value of the Company's der
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$216 million. The Company's total i
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28. SUBSEQUENT EVENTS Portland Natu
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Five year financial highlights (mil
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Investor information STOCK EXCHANGE
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Shareholder assistance If you are a
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Corporate governance Please refer t
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Our annual report is online, visit
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STRENGTH & STABILITY

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