STRENGTH & STABILITY

BUSINESSES POSITIONED FOR SUCCESS
Natural gas pipelines
Our natural gas pipelines business unit continues to
be well positioned to capture North America’s growing
supplies of natural gas and connect them to existing and
emerging markets.
In western Canada, the NGTL natural gas system now has
$5.4 billion of near-term facilities under development to
meet new contracted needs for transmission service.
In eastern Canada, we have a $700 million expansion
underway to connect growing Marcellus supply to
Canadian markets. In addition, we came to an agreement
with our eastern Canadian customers to add $2 billion of
infrastructure to the system as part of the conversion of
portions of the Canadian Mainline for the Energy East crude
oil system.
In the U.S., we have essentially contracted all of our
capacity on the ANR Pipeline, requiring further investment
in the system. Early this year, we filed for new rates with the
Federal Energy Regulatory Commission (FERC) to reflect this
new investment and the changing dynamics on the system.
As always, our preference is to settle the rates with our
customers through negotiation and we will focus on that
task through 2016.
Further south, in Mexico, we were awarded a contract to
build and operate the US$500 million Tuxpan-Tula Pipeline
project. This, combined with our existing network and
projects under construction, will bring our total investment
in Mexico to over US$3 billion, all underpinned by 25 year
throughput agreements with the Comisión Federal de
Electricidad (CFE), Mexico’s state-owned electrical utility.
In terms of larger-scale projects, we continued to advance the
Coastal GasLink and Prince Rupert Gas Transmission projects.
Together they represent an opportunity to invest over
$10 billion, and have the potential to position TransCanada
as a leader in providing gas transportation service to North
America’s emerging liquefied natural gas (LNG) export
industry. We have received the majority of permits and
signed a significant number of agreements with First Nations
communities, positioning us to begin construction once we
receive final investment decisions from our customers.
Looking forward, we expect supply and demand for natural
gas to continue to grow, and we are well positioned to
continue to capture a significant portion of that growth.
Liquids pipelines
In our newest business, liquids pipelines, the Keystone Pipeline
System has become a premier crude-oil transportation system
by providing competitive tolls, shorter transit times and
exceptional product quality. Since we began operations
in 2010, we have safely delivered more than 1.1 billion
barrels of Canadian and U.S. oil to U.S. refineries in the U.S.
Midwest and Gulf Coast. Over the last year, we increased
the average throughput on Keystone by over 30,000
barrels per day, allowing us to secure additional twentyyear
contracts, bringing our total contract position on
Keystone to 545,000 barrels per day. Keystone is expected
to generate approximately US$1 billion in earnings before
interest, taxes, depreciation and amortization (EBITDA)
annually going forward.
The success of the base Keystone Pipeline System has
positioned us well for over $3 billion in smaller-scale
projects at both ends of the system in Alberta and Texas.
These include both the Grand Rapids and Northern Courier
Pipelines in Alberta that connect us more closely to the
supply sources, and the Houston Lateral and CITGO Pipeline
that bring us closer to the refinery.
Our $15.7 billion Energy East Pipeline project will provide
our Western Canadian customers access to Eastern
Canadian refineries and provide tidewater access to the U.S.
Northeast, Gulf Coast and growing international markets.
Market access remains critical for Canadian producers, as
does the certainty of supply for the refiners. In late 2015,
we amended our project application to include over 700
route and scope changes as a direct result of listening to
stakeholders and efforts to avoid sensitive environmental
areas. As we work through the regulatory process in
2016/2017, we will continue to engage and consult with
the many communities along the route.
While approval for cross-jurisdictional crude oil pipelines
has proved difficult, it is clear that the safest and most
environmentally responsible way to transport large volumes
of oil long distances is in a pipeline. It is our expectation that
new GHG regulations in Alberta will allow the regulatory
discussion to move back to objectivity, facts and science. We
remain very confident that an objective review of the project
will result in a positive decision.
Energy
Our energy portfolio continues to grow. In 2015, we
increased our power generation capacity from 10,900 to
13,100 MW and announced significant additional growth
initiatives. Despite weak gas and power prices, primarily in
Western Canada, our diverse portfolio of primary contracted
power generation delivered $1.3 billion of comparable
EBITDA, which was similar to 2014.
In the near term, we have $2.9 billion of power generation
assets that will come into service. These include the recently
closed US$657 million acquisition of the Ironwood
Generating Station in Pennsylvania, strengthening our
position in the Eastern U.S. market. And in Ontario, we
continued construction of the fully contracted $1 billion
Napanee Generating Station, which will come into service in
late 2017.
04 TransCanada AR 2015