Annual Report & Accounts

Name	Symbol	Market	Type
Citi Fun 24	LSE:BC93	London	Medium Term Loan

RNS Number:0960S
TransCanada Pipelines Ld
01 March 2007

PART 1

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U.S. Securities and Exchange Commission
Washington, D.C. 20549

Form 40-F

( ) REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT of 1934

(X) annual report pursuant to section 13(a) OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006

Commission File Number 1-8887

TRANSCANADA PIPELINES LIMITED
(Exact Name of Registrant as specified in its charter)

Canada
(Jurisdiction of incorporation or organization)

4922, 4923, 4924, 5172
(Primary Standard Industrial Classification Code Number (if applicable))

Not Applicable
(I.R.S. Employer Identification Number (if applicable))

TransCanada Tower, 450 - 1 Street S.W.
Calgary, Alberta, Canada, T2P 5H1
(403) 920-2000
(Address and telephone number of Registrant's principal executive offices)

CT Corporation, Suite 2610, 520 Pike Street
Seattle, Washington, 98101; (206) 622-4511; 1-800-456-4511
(Name, address (including zip code) and telephone number (including area code)
of agent for service in the United States)

Securities registered pursuant to section 12(b) of the Act:
Title of each class Name of each exchange on which registered
8.25% Preferred Securities due 2047 New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None

For annual reports, indicate by check mark the information filed with this Form:
( X )Annual Information Form ( X ) Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.

At December 31, 2006, 4,000,000 Cumulative Redeemable First Preferred Shares
Series U
and 4,000,000 Cumulative Redeemable First Preferred Shares Series Y
were issued and outstanding
All of the Registrant's common shares are owned by TransCanada Corporation.

Indicate by check mark whether the Registrant by filing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
(the "Exchange Act"). If "Yes" is marked, indicate the file number assigned to
the Registrant in connection with such Rule.
Yes No X

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or such shorter period that the Registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days.
Yes X No

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CONSOLIDATED AUDITED ANNUAL FINANCIAL STATEMENTS AND
MANAGEMENT'S DISCUSSION & ANALYSIS
A.
Audited Annual Financial Statements

For consolidated audited financial statements, including the report of
independent chartered accountants with respect thereto, see pages 70 through 110
of the TransCanada PipeLines Limited ("TCPL") 2006 Management's Discussion and
Analysis and Audited Consolidated Financial Statements included herein. See the
related supplementary note entitled "Reconciliation to United States GAAP" for a
reconciliation of the differences between Canadian and United States generally
accepted accounting principles, including the auditors' report attached as
document 13.4.
B.
Management's Discussion & Analysis

For management's discussion and analysis, see pages 2 through 69 of
TCPL's 2006 Management's Discussion and Analysis and Audited Consolidated
Financial Statements included herein.

For the purposes of this Report, only pages 2 through 69 and 70 through
110 of the TCPL 2006 Management's Discussion and Analysis and Audited
Consolidated Financial Statements shall be deemed incorporated herein by
reference and filed, and the balance of such 2006 Management's Discussion and
Analysis and Audited Consolidated Financial Statements, except as otherwise
specifically incorporated by reference in the TCPL Annual Information Form,
shall be deemed not filed with the Securities and Exchange Commission as part of
this Report under the Exchange Act.
C.
Management's Annual Report on Internal Control Over Financial Reporting

For information on management's internal control over financial
reporting, see "Report of Management" included in TCPL's consolidated audited
financial statements on page 70, the section entitled "Management's Annual
Report on Internal Control over Financial Reporting" under the heading "Controls
and Procedures" in Management's Discussion and Analysis on page 62 of TCPL's
Management's Discussion and Analysis and Audited Consolidated Financial
Statements, and Management's Report on Internal Control Over Financial Reporting
filed as document 13.5.

Management's assessment of the effectiveness of TCPL's internal control
over financial reporting as of December 31, 2006 has been audited by TCPL's
independent auditors, KPMG LLP, a registered public accounting firm, as stated
in their audit report on management's assessment. KPMG LLP has issued a report
on the effectiveness of internal control over financial reporting as of December
31, 2006 filed as document 13.6.

UNDERTAKING

The Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the staff of the U.S. Securities
and Exchange Commission (the "Commission"), and to furnish promptly, when
requested to do so by the Commission staff, information relating to: the
securities registered pursuant to Form 40-F; the securities in relation to which
the obligation to file an Annual Report on Form 40-F arises; or transactions in
said securities.

DISCLOSURE CONTROLS AND PROCEDURES

For information on disclosure controls and procedures, see "Controls and
Procedures" in Management's Discussion and Analysis on page 62 of TCPL's 2006
Management's Discussion and Analysis and Audited Consolidated Financial
Statements.

AUDIT COMMITTEE FINANCIAL EXPERT

The Registrant's board of directors has determined that it has at least
one audit committee financial expert serving on its audit committee. Mr. Harry
G. Schaefer has been designated an audit committee financial expert and is
independent, as that term is defined by the New York Stock Exchange's listing
standards applicable to the Registrant. The Commission has indicated that the
designation of Mr. Schaefer as an audit committee financial expert does not make
Mr. Schaefer an "expert" for any purpose, impose any duties, obligations or
liability on Mr. Schaefer that are greater than those imposed on members of the
audit committee and board of directors who do not carry this designation or
affect the duties, obligations or liability of any other member of the audit
committee.

CODE OF ETHICS

The Registrant has adopted codes of business ethics for its employees,
its President and Chief Executive Officer, Chief Financial Officer and
Controller and its directors. The Registrant's codes are available on its
website at www.transcanada.com. There has been no waiver of the codes granted
during the 2006 fiscal year.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate fees for professional services rendered by KPMG LLP for
the TransCanada group of companies for the 2006 and 2005 fiscal years are shown
in the table below:
Fees in millions of Canadian dollars 2006 2005
Audit Fees $ 4.94 $ 3.15

Audit-Related Fees 0.07 0.11

Tax Fees 0.22 0.12

All Other Fees 0.07 0.14

Total $ 5.30 $ 3.52

The nature of each category of fees is described below.

Audit Fees

Audit fees were incurred for professional services rendered by the
auditors for the audit of the TransCanada group of companies' annual financial
statements or services provided in connection with statutory and regulatory
filings or engagements, the review of interim consolidated financial statements
and information contained in various prospectuses and other offering documents.

Audit-Related Fees

Audit-related fees were incurred for the audit of the financial
statements of the Registrant's certain pension plans.

Tax Fees

Tax fees were primarily incurred for tax compliance and tax advice.
These services consisted of: tax compliance including the review of Canadian and
US income tax returns and tax items and tax services related to domestic and
international taxation including income tax, capital tax and Goods and Services
Tax.

All Other Fees

Fees disclosed in the table above under the item "all other fees" were
incurred for services other than the audit fees, audit-related fees and tax fees
described above. These services consisted of advice with regards to compliance
with the Sarbanes-Oxley Act of 2002.

Pre-Approval Policies and Procedures

TCPL's Audit Committee has adopted a pre-approval policy with respect to
permitted non-audit services. Under the policy, the Audit Committee has granted
pre-approval for specified non-audit services. For engagements of $25,000 CDN or
less which are not within the annual pre-approved limit approval by the Audit
Committee is not required, and for engagements between $25,000 CDN and $100,000
CDN, approval of the Audit Committee Chair is required, and the Audit Committee
is to be informed of the engagement at the next scheduled Audit Committee
meeting. For all engagements of $100,000 CDN or more, pre-approval of the Audit
Committee is required. In all cases, regardless of dollar amount involved, where
there is a potential for conflict of interest involving the external auditor on
an engagement, the Audit Committee Chair must pre-approve the assignment.

To date, TCPL has not approved any non-audit services on the basis of
the de-minimis exemptions. All non-audit services have been pre-approved by the
Audit Committee in accordance with the pre-approval policy described above.

OFF-BALANCE SHEET ARRANGEMENTS

The Registrant has no off-balance sheet arrangements, as defined in this
Form, other than the guarantees described in Note 22 of the Notes to the Audited
Consolidated Financial Statements attached to this Form 40-F and incorporated
herein by reference.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

For information on Tabular Disclosure of Contractual Obligations, see
"Management's Discussion and Analysis - Contractual Obligations", which is
incorporated herein by reference on page 52 of TCPL's 2006 Management's
Discussion and Analysis and Audited Consolidated Financial Statements.

IDENTIFICATION OF THE AUDIT COMMITTEE

The Registrant has a separately-designated standing Audit Committee. The
members of the Audit Committee are:
Chair: H.G. Schaefer
Members: D.H. Burney
K.E. Benson
P. Gauthier
P.L. Joskow
J.A. MacNaughton

FORWARD-LOOKING INFORMATION

This document, documents incorporated herein by reference, and other
reports and filings made with the securities regulatory authorities contain
certain information that is forward-looking and is subject to important risks
and uncertainties. The words "anticipate", "expect", "may", "should",
"estimate", "project", "outlook", "forecast" or other similar words are used to
identify such forward looking information. All forward-looking statements are
based on TCPL's beliefs and assumptions based on information available at the
time such statements were made. The results or events predicted in this
information may differ from actual results or events. Factors which could cause
actual results or events to differ materially from current expectations include,
among other things, the ability of TCPL to successfully implement its strategic
initiatives and whether such strategic initiatives will yield the expected
benefits, the availability and price of energy commodities, regulatory
decisions, changes in environmental and other laws and regulations, competitive
factors in the pipeline and energy industry sectors, construction and completion
of capital projects, access to capital markets, interest and currency exchange
rates, technological developments and the current economic conditions in North
America. By its nature, such forward-looking information is subject to various
risks and uncertainties, including those material risks discussed herein, in
TCPL's Annual Information Form filed as document 13.1 hereto and in TCPL's
Management's Discussion and Analysis filed as document 13.2 hereto, which could
cause TCPL's actual results and experience to differ materially from the
anticipated results or other expectations expressed. The material assumptions in
making these forward-looking statements are disclosed in TCPL's Management's
Discussion and Analysis, filed as document 13.2 hereto, under the headings "TCPL
Overview", "TCPL's Strategy", "Outlook", "Pipelines - Opportunities and
Developments", "Pipelines - Outlook", "Energy - Opportunities and Developments"
and "Energy - Outlook". Readers are cautioned not to place undue reliance on
this forward-looking information, which is given as of the date it is expressed
in this document or otherwise, and TCPL undertakes no obligation to update
publicly or revise any forward-looking information, whether as a result of new
information, future events or otherwise, except as required by law.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant
certifies that it meets all of the requirements for filing on Form 40-F and has
duly caused this Annual Report to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Calgary, Province of Alberta, Canada.
TRANSCANADA PIPELINES LIMITED

Per: /s/ GREGORY A. LOHNES GREGORY A. LOHNES
Executive Vice-President and Chief Financial Officer

Date: February 28, 2007

DOCUMENTS FILED AS PART OF THIS REPORT
13.1
Annual Information Form for the year ended December 31, 2006.

13.2
Management's Discussion and Analysis (included on pages 2 through 69 of
TCPL's 2006 Management's Discussion and Analysis and Audited Consolidated
Financial Statements).

13.3
2006 Consolidated Audited Financial Statements (included on pages 70 through
110 of TCPL's 2006 Management's Discussion and Analysis and Audited
Consolidated Financial Statements).

13.4
Related supplementary note entitled "Reconciliation to United States GAAP"
and the auditors' report thereon.

13.5
Management's Report on Internal Control Over Financial Reporting.

13.6
Report of Independent Registered Public Accounting Firm on Management's
Report on Internal Control Over Financial Reporting.

99.1
Comments by Auditors for United States Readers on Canada - United States
Reporting Difference.

EXHIBITS
23.1
Consent of KPMG LLP, Chartered Accountants.

31.1.
Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

31.2
Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

32.1
Certification of Chief Executive Officer regarding Periodic Report
containing Financial Statements.

32.2
Certification of Chief Financial Officer regarding Periodic Report
containing Financial Statements.

,G688292.JPG

TRANSCANADA PIPELINES LIMITED

ANNUAL INFORMATION FORM

February 22, 2007

TABLE OF CONTENTS
Page
TABLE OF CONTENTS i
PRESENTATION OF INFORMATION ii
FORWARD-LOOKING INFORMATION ii
TRANSCANADA PIPELINES LIMITED 1
Corporate Structure 1
Significant Subsidiaries 2
GENERAL DEVELOPMENT OF THE BUSINESS 2
Developments in the Pipelines Business 2
Developments in the Energy Business 4
Recent Developments 7
BUSINESS OF TCPL 7
Pipelines Business 8
Regulation 10
Energy Business 11
Other Interests 12
HEALTH, SAFETY AND ENVIRONMENT 12
LEGAL PROCEEDINGS AND REGULATORY ACTIONS 13
TRANSFER AGENT AND REGISTRAR 13
INTEREST OF EXPERTS 13
RISK FACTORS 14
DIVIDENDS 14
DESCRIPTION OF CAPITAL STRUCTURE 14
DEBT 15
CREDIT RATINGS 16
MARKET FOR SECURITIES 17
DIRECTORS AND OFFICERS 19
Directors 19
Officers 21
CORPORATE GOVERNANCE 22
Compliance with Canadian Governance Guidelines 22
Audit Committee 22
Other Board Committees 24
Conflicts of Interest 25
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS 25
SECURITIES OWNED BY DIRECTORS 25
COMPENSATION OF DIRECTORS 26
EXECUTIVE COMPENSATION AND OTHER INFORMATION 29
Report on Executive Compensation 29
Performance Graph 41
Remuneration of Executive Officers of TCPL 41
Executive Compensation 41
Equity Compensation Plan Information 47
Pension and Retirement Benefits for Executives 49
Supplemental Disclosure - Total Compensation Awards 54
ADDITIONAL INFORMATION 56
GLOSSARY 57
SCHEDULE "A" Metric Conversion Table A-1
SCHEDULE "B" Disclosure of Corporate Governance Practices B-1
SCHEDULE "C" Charter of The Board of Directors C-1
SCHEDULE "D" Description of Board Committees and Their Charters D-1
SCHEDULE "E" Charter of the Audit Committee E-1

TRANSCANADA PIPELINES LIMITED i

PRESENTATION OF INFORMATION

Unless otherwise noted, the information contained in this Annual Information
Form ("AIF") for TransCanada PipeLines Limited ("TCPL") is given at or for the
year ended December 31, 2006 ("Year End"). Amounts are expressed in Canadian
dollars unless otherwise indicated. Financial information is presented in
accordance with Canadian generally accepted accounting principles.

Unless the context indicates otherwise, a reference in this AIF to "TCPL" or
the "Company" includes TCPL's parent, TransCanada Corporation ("TransCanada")
and the subsidiaries of TCPL through which its various business operations are
conducted and a reference to "TransCanada" includes TransCanada Corporation and
the subsidiaries of TransCanada Corporation, including TCPL. Where TCPL is
referred to with respect to actions that occurred prior to its 2003 plan of
arrangement with TransCanada, which is described below under the heading
"TransCanada PipeLines Limited - Corporate Structure", these actions were taken
by TCPL or its subsidiaries. The term "subsidiary", when referred to in this
AIF, with reference to TCPL means direct and indirect wholly-owned subsidiaries
of, and entities controlled by, TransCanada or TCPL, as applicable.

TCPL's Management's Discussion and Analysis dated February 22, 2007 ("MD&A")
and TCPL's Audited Consolidated Financial Statements dated February 22, 2007 are
incorporated by reference into this AIF and can be found on SEDAR at
www.sedar.com under TCPL's profile.

Information relating to metric conversion can be found at Schedule "A" to this
AIF.

FORWARD-LOOKING INFORMATION

This AIF, the documents incorporated by reference into this AIF, and other
reports and filings made with the securities regulatory authorities contain
certain information that is forward-looking and is subject to important risks
and uncertainties. The words "anticipate", "expect", "may", "should",
"estimate", "project", "outlook", "forecast" or other similar words are used to
identify such forward looking information. All forward-looking statements are
based on TCPL's beliefs and assumptions based on information available at the
time such statements were made. The results or events predicted in this
information may differ from actual results or events. Factors which could cause
actual results or events to differ materially from current expectations include,
among other things, the ability of TCPL to successfully implement its strategic
initiatives and whether such strategic initiatives will yield the expected
benefits, the availability and price of energy commodities, regulatory
decisions, changes in environmental and other laws and regulations, competitive
factors in the pipeline and energy industry sectors, construction and completion
of capital projects, access to capital markets, interest and currency exchange
rates, technological developments and the current economic conditions in North
America. By its nature, such forward-looking information is subject to various
risks and uncertainties, including those material risks discussed in this AIF
under "Risk Factors" and in the MD&A under "Pipelines - Business Risks" and
"Energy - Business Risks", which could cause TCPL's actual results and
experience to differ materially from the anticipated results or other
expectations expressed. The material assumptions in making these forward-looking
statements are disclosed in the MD&A under the headings "TCPL Overview", "TCPL's
Strategy", "Outlook", "Pipelines - Opportunities and Developments", "Pipelines -
Outlook", "Energy - Opportunities and Developments" and "Energy - Outlook".
Readers are cautioned not to place undue reliance on this forward-looking
information, which is given as of the date it is expressed in this AIF or
otherwise, and TCPL undertakes no obligation to update publicly or revise any
forward-looking information, whether as a result of new information, future
events or otherwise, except as required by law.

ii TRANSCANADA PIPELINES LIMITED

TRANSCANADA PIPELINES LIMITED

Corporate Structure

TCPL's head office and registered office are located at 450 - 1st Street S.W.,
Calgary, Alberta, T2P 5H1.

TCPL is a Canadian public company. Significant dates and events are set forth
below.
Date Event
March 21, 1951 Incorporated by Special Act of Parliament as Trans-Canada Pipe Lines Limited.
April 19, 1972 Continued under the Canada Corporations Act by Letters Patent, which included the
alteration of its capital and change of name to TransCanada PipeLines Limited.
June 1, 1979 Continued under the Canada Business Corporations Act.
July 2, 1998 Certificate of Arrangement issued in connection with the Plan of Arrangement with NOVA
Corporation ("NOVA") under which the companies merged and then split off the commodity
chemicals business carried on by NOVA into a separate public company.
January 1, 1999 Certificate of Amalgamation issued reflecting TCPL's vertical short form amalgamation
with a wholly-owned subsidiary, Alberta Natural Gas Company Ltd.
January 1, 2000 Certificate of Amalgamation issued reflecting TCPL's vertical short form amalgamation
with a wholly-owned subsidiary, NOVA Gas International Ltd.
May 4, 2001 Restated TransCanada PipeLines Limited Articles of Incorporation filed.
June 20, 2002 Restated TransCanada PipeLines Limited By-Laws filed.
May 15, 2003 Certificate of Arrangement issued in connection with the plan of arrangement with
TransCanada. TransCanada was incorporated pursuant to the provisions of the Canada
Business Corporations Act on February 25, 2003. The arrangement was approved by TCPL
common shareholders on April 25, 2003 and following court approval, Articles of
Arrangement were filed making the arrangement effective May 15, 2003. The common
shareholders of TCPL exchanged each of their TCPL common shares for one common share of
TransCanada. The debt securities and preferred shares of TCPL remained obligations and
securities of TCPL. TCPL continues to hold the assets it held prior to the arrangement
and continues to carry on business as the principal operating subsidiary of the
TransCanada group of entities.

At Year End, TCPL had approximately 2,350 employees, substantially all of whom
were employed in Canada and the United States.

TRANSCANADA PIPELINES LIMITED 1

Significant Subsidiaries

TCPL's significant subsidiaries(1) at Year End and the jurisdiction under which
each subsidiary was incorporated are noted below. TCPL owns, directly or
indirectly, 100 per cent of the voting shares of each of these subsidiaries.

,G262674.JPG
(1)
Excludes certain of TCPL's subsidiaries where:

*
the total assets of the subsidiary do not exceed ten per cent of the
consolidated assets of TCPL at Year End;

*
the sales and operating revenues of the subsidiary do not exceed ten per
cent of the consolidated sales and operating revenues of TCPL for the year
ended December 31, 2006;

*
the aggregate assets of all the excluded subsidiaries do not exceed 20 per
cent of the consolidated assets of TCPL at Year End; and

*
the aggregate sales and operating revenues of all the excluded subsidiaries
do not exceed 20 per cent of the consolidated sales and operating revenues
of TCPL for the year ended December 31, 2006.

GENERAL DEVELOPMENT OF THE BUSINESS

The general development of TCPL's business during the last three financial
years, and the significant acquisitions, dispositions, events or conditions
which have had an influence on that development, are described below.

Effective June 1, 2006, TCPL revised the composition and names of its
reportable business segments to Pipelines and Energy. Pipelines is principally
comprised of the company's pipelines in Canada, the United States and Mexico.
Energy includes the company's power operations, natural gas storage business and
liquefied natural gas ("LNG") projects in Canada and the United States.

Developments in the Pipelines Business

TransCanada's strategy in pipelines is focused on both growing its North
American natural gas transmission network and maximizing the long-term value of
its existing pipeline assets. Summarized below are significant developments that
have occurred in TCPL's pipelines business over the last three years.

2006

Pipeline Developments
*
January 2006. TCPL secured firm, long-term contracts for the Keystone
oil pipeline project totalling 340,000 barrels per day with durations
averaging 18 years;

2 TRANSCANADA PIPELINES LIMITED

*
April 2006. TC PipeLines, LP, an affiliate of TCPL, acquired an
additional 20 per cent general partnership interest in Northern Border
Pipeline Company ("NBPL") for approximately US$307 million which brings
the total general partnership interest in NBPL to 50 per cent. TC
PipeLines, LP also indirectly assumed approximately US$122 million of
the debt of NBPL. TCPL expects to become the operator of NBPL in April
2007. TCPL is the parent company of TC PipeLines GP, Inc., the general
partner of TC PipeLines, LP;

*
April 2006. TCPL sold its 17.5 per cent general partner interest in
Northern Border Partners, L.P. for approximately US$29.5 million;

*
December 2006. The 130 km Tamazunchale pipeline in east central Mexico
went into commercial service;

*
December 2006. TC PipeLines, LP acquired 49 per cent of Sierra Pacific
Resources' 50 per cent interest in Tuscarora Gas Transmission Company
("Tuscarora"), with an option to acquire the remaining one per cent
interest for US$100 million, plus US$37 million of assumed debt, subject
to certain post closing adjustments. TC PipeLines, LP now holds a 99 per
cent interest in Tuscarora and TCPL indirectly holds a one per cent
ownership interest. A subsidiary of TCPL became the operator of
Tuscarora;

*
December 2006. TransCanada entered into a purchase and sale agreement
with El Paso Corporation pursuant to which TransCanada agreed to acquire
American Natural Resources Company and ANR Storage Company
(collectively, "ANR"). TransCanada also agreed to purchase an additional
3.55 per cent interest in Great Lakes Gas Transmission Limited
Partnership ("Great Lakes") from El Paso Corporation. The total purchase
price is approximately US$3.4 billion and includes approximately US$488
million of assumed debt. The acquisition includes an approximately
17,000-kilometre pipeline system and 230 billion cubic feet ("Bcf") of
storage capacity in the United States. The acquisition closed on
February 22, 2007, as discussed under "General Development of the
Business - Recent Developments" in this AIF;

*
December 2006. TC PipeLines, LP agreed to acquire a 46.45 per cent
interest in Great Lakes from El Paso Corporation for a purchase price of
US$962 million which includes the assumption of approximately US$212
million of assumed debt, subject to certain post closing adjustments.
The acquisition closed on February 22, 2007, as discussed under "General
Development of the Business - Recent Developments" in this AIF;

*
TCPL continued to invest in the Canadian Mainline and the Alberta
System;

*
TCPL continued funding of the Mackenzie Valley Aboriginal Pipeline
Limited Partnership for its participation in the Mackenzie Gas Pipeline
Project; and

*
TCPL continued discussions relating to the proposed Alaska Highway
Pipeline Project.

Regulatory Matters
*
February 2006. TCPL filed an application with the U.S. Federal Energy
Regulatory Commission ("FERC") for a certificate for a two-phase
expansion of its existing natural gas pipeline in southern California,
the North Baja system ("North Baja System") and the construction of a
new lateral pipeline in California's Imperial Valley;

*
April 2006. The National Energy Board ("NEB") approved a negotiated
settlement of the 2006 Canadian Mainline tolls which included a deemed
common equity ratio of 36 per cent and incentives for managing cost
through fixing certain components of the revenue requirement;

*
June 2006. TCPL filed an application with the NEB seeking approval to
transfer a portion of TCPL's Canadian Mainline natural gas transmission
facilities to the Keystone oil pipeline project for the purposes of
transporting crude oil from Alberta to refining centres in the U.S.
Midwest, which was approved by the NEB in February, 2007. Additionally,
in December 2006, TCPL filed an application with the NEB for approval to
construct and operate the Canadian portion of the Keystone oil pipeline,
which is anticipated to be in service in late 2009; and

*
June 2006. TransCanada filed a rate case with the FERC requesting a
number of tariff changes including an increase in rates for certain
services on the Gas Transmission Northwest system ("Gas Transmission
Northwest

TRANSCANADA PIPELINES LIMITED 3

System"). Further information relating to the Gas Transmission Northwest
System can be found in this AIF under "Business of TCPL - Regulation".

Further information about these developments can be found in this AIF under
"General Development of the Business - Recent Developments" and in the MD&A
under the heading "TCPL's Strategy - Pipelines" and "Pipelines - Opportunities
and Developments".

2005

Pipeline Developments
*
February 2005, TCPL announced the Keystone oil pipeline project, a
US$2.1 billion oil pipeline project to transport approximately 435,000
barrels per day of heavy crude oil from Alberta to Illinois;

*
March 2005. TCPL sold 3,574,200 common units of TC PipeLines, LP for
$153 million;

*
TCPL continued discussions relating to the proposed Alaska Highway
Pipeline Project;

*
June 2005. TCPL acquired an additional interest in the Iroquois Gas
Transmission System L.P. ("Iroquois System") for US$13.6 million. The
acquisition increased TCPL's ownership interest from 40.96 per cent to
44.48 per cent;

*
June 2005. TCPL commenced construction of the Tamazunchale Pipeline in
east-central Mexico which went into service in December 2006; and

*
TCPL continued funding of the Mackenzie Valley Aboriginal Pipeline
Limited Partnership for its participation in the Mackenzie Gas Pipeline
Project.

Regulatory Matters

*
March 2005. TCPL reached a settlement with shippers and other interested
parties regarding the annual revenue requirements of its Alberta System
for the years 2005, 2006 and 2007. The settlement was approved by
regulators; and

*
May 2005. TCPL received the NEB's decision on the Canadian Mainline 2004
Tolls and Tariff Application (Phase II), approving an increase in the
deemed common equity component of TCPL's Canadian Mainline System's
capital structure from 33 per cent to 36 per cent effective January 1,
2004.

2004

Pipeline Developments
*
November 2004. TCPL acquired the Gas Transmission Northwest System and
the North Baja System from National Energy & Gas Transmission, Inc. for
US$1.7 billion, including approximately US$0.5 billion of assumed debt.

Developments in the Energy Business

In the past three years, TCPL has grown its energy business and, in particular,
has increased its power generation capacity from facilities it owns, operates
and/or controls, including those under construction or in development, from
approximately 5,700 megawatts ("MW") in 2004 to approximately 7,700 MW at Year
End. Summarized below are significant developments that have occurred in TCPL's
energy business over the last three years.

2006

Energy Developments
*
TCPL continued construction of the Cartier wind energy project ("Cartier
Wind Energy Project"), of which 62 per cent is owned by TCPL. The first
of six proposed wind farm projects was commercial in late 2006 and
construction commenced on the second which is expected to be in service
in late 2007. The other phases of the Cartier Wind Energy Project will
continue, subject to future appropriations and approvals, through 2012
at five

4 TRANSCANADA PIPELINES LIMITED

different locations in the Gaspe region of Quebec and capacity is
expected to total 740 MW when all phases are complete. Once completed,
the entire output of the Cartier Wind Energy Project will be supplied to
Hydro-Quebec Distribution under 20-year power purchase contracts;
*
September 2006. Portlands Energy Centre L.P., 50 per cent owned by TCPL,
signed a 20-year Accelerated Clean Energy Supply ("ACES") contract with
the Ontario Power Authority for Portlands Energy Centre ("PEC"), a 550
MW high-efficiency, combined-cycle natural gas generation plant is being
constructed in downtown Toronto. The capital cost of PEC is estimated to
be approximately $730 million. PEC is expected to be operational in
simple-cycle mode and delivering 340 MW of electricity beginning June
2008, and is expected to be completed in the second quarter of 2009,
delivering up to 550 MW of power under the ACES contract;

*
September 2006. Construction of the 550 MW Becancour cogeneration plant
near Trois Rivieres, Quebec, was completed and placed in commercial
service providing power to Hydro-Quebec Distribution;

*
November 2006. TCPL was awarded a 20-year Clean Energy Supply contract
by the Ontario Power Authority to build, own and operate a 683 MW
natural gas-fired power plant near the Town of Halton Hills, Ontario.
TCPL expects to invest approximately $670 million in the Halton Hills
Generating Station, which is anticipated to be in service in the second
quarter of 2010;

*
December 2006. The Edson gas storage facility was placed in service; and

*
TCPL continued work on the restart and refurbishment project at Bruce A
nuclear power generation facility in Ontario. The first unit is expected
to be online in late 2009, subject to approval by the Canadian Nuclear
Safety Commission.

Regulatory Matters
*
January 2006. TCPL, on behalf of the Broadwater Energy project, filed an
application with the FERC for approval of the LNG regasification project to
be located in Long Island Sound, New York. The United States Coast Guard
issued a report which determined that the waterways associated with the
project are suitable if additional measures are implemented to manage the
safety and security risks associated with the project. Broadwater's
application to the New York Department of State for a determination that the
project is consistent with New York's coastal zone policies was deemed
complete by the state in November of 2006. Also in November, the FERC issued
a statement which concludes that with strict adherence to federal and state
permit requirements and regulations, and Broadwater's proposed mitigation
measures and the FERC's recommendations, the Broadwater project will not
result in significant impacts to the environment; and

*
December 2006. A public hearing on the Cacouna Energy LNG facility in
Cacouna, Quebec (the "Cacouna Energy Project") was held in May and June of
2006 and in December 2006 the Minister of the Environment for Quebec and the
federal Minister of the Environment, jointly released the report of the
Joint Commission on the Cacouna Energy Project. The report has several
recommendations and opinions but overall, in management's view, appears to
be favourable to the project. TCPL continues to work towards gaining
regulatory approval and provided the necessary approvals are obtained, the
facility is anticipated to be in service sometime in 2010.

Further information about each of these energy developments can be found in the
MD&A under the heading "TCPL's Strategy - Energy" and "Energy - Opportunities
and Developments".

2005

Energy Developments
*
February 2005. TCPL advanced the 740 MW Cartier Wind Energy Project with
the signing of long term electricity supply contracts;

*
April 2005. TCPL acquired the hydroelectric power generation assets from
USGen New England, Inc. for approximately US$503 million;

TRANSCANADA PIPELINES LIMITED 5

*
September 2005. TCPL sold all of its interests in TransCanada Power,
L.P. ("Power LP") to EPCOR Utilities Inc. for net proceeds of $523
million;

*
October 2005. Bruce Power A L.P. ("Bruce A") entered into agreements
with the Ontario Power Authority to restart units 1 and 2, extend the
operating life of unit 3 and replace the generators on unit 4 at Bruce
A. The capital program for the restart and refurbishment work is
expected to total approximately $4.25 billion with TransCanada's share
expected to be approximately $2.125 billion;

*
December 2005. TCPL sold its approximate 11 per cent interest in P.T.
Paiton Energy Company to subsidiaries of The Tokyo Electric Power
Company, resulting in gross proceeds of US$103 million;

*
December 2005. TCPL acquired the remaining rights and obligations of the
756-megawatt Sheerness Power Purchase Arrangement ("PPA") from the
Alberta Balancing Pool for $585 million;

*
TCPL commenced construction of a natural gas storage facility located
near Edson, Alberta; and

*
Ocean State Power successfully restructured its long-term natural gas
fuel supply contracts with its supplier.

Regulatory Matters
*
TCPL continued working toward gaining regulatory approval for its two
LNG projects: Cacouna in Quebec and the Broadwater Energy project,
offshore of New York State in Long Island Sound.

2004

Energy Developments
*
April 2004. TCPL received approval from the Quebec government to develop
the 550 MW natural gas-fired Becancour cogeneration plant located at an
industrial park near Trois-Rivieres, Quebec ("Becancour Plant") and
which will supply its entire power output to Hydro-Quebec Distribution
under 20 year power purchase contracts. Construction of the 550 MW
Becancour Plant began in the third quarter of 2004;

*
April 2004. TCPL sold its ManChief and Curtis Palmer power plants to
Power LP for approximately US$403 million, excluding closing
adjustments;

*
September 2004. TCPL and Petro-Canada signed a memorandum of
understanding for the development of the Cacouna Energy Project. The
proposed facility will be capable of receiving, storing and regasifying
imported LNG with an average annual send out capacity of approximately
500 million cubic feet per day of natural gas. The proposed facility
requires regulatory and other approvals from federal, provincial and
municipal governments and regulators;

*
October 2004. The Cartier Wind Energy Project, of which 62 per cent is
owned by TCPL, was awarded six wind energy projects by Hydro-Quebec
Distribution, representing a total of 740 MW in the Gaspe region of
Quebec. The six proposed projects are distributed throughout the
Gaspesie-Iles-de-la-Madeleine region and the Regional County
Municipality of Matane;

*
November 2004. TCPL and Shell US Gas & Power LLC ("Shell") announced
plans to jointly develop an offshore LNG regasification terminal,
Broadwater Energy, in the New York State waters of Long Island Sound.
The proposed floating storage and regasification unit will be capable of
receiving, storing and regasifying imported LNG with an average send out
capacity of approximately one Bcf per day of natural gas. TCPL owns 50
per cent of Broadwater Energy LLC, which will own and operate the
facility, while Shell will contract for the facility's entire
regasification capacity and supply the LNG. The proposed Broadwater
Energy LNG facility required regulatory approval from federal and state
governments before construction could begin;

*
Construction of the 165 MW MacKay River power plant located in Alberta
was completed in 2003 and the plant was put into commercial service in
2004; and

*
Construction of the 90 MW Grandview natural gas-fired cogeneration power
plant on the site of the Irving Oil refinery in Saint John, New
Brunswick ("Grandview Plant") was completed by the end of 2004 and was
commissioned in January 2005. Under a 20-year tolling arrangement, a
subsidiary of Irving Oil Limited will

6 TRANSCANADA PIPELINES LIMITED

provide fuel to the Grandview Plant and has contracted for 100 per cent
of the Grandview Plant's heat and electricity output.

Recent Developments

On February 22, 2007, TransCanada closed its acquisitions of ANR and an
additional 3.55 per cent interest in Great Lakes from El Paso Corporation for
approximately US$3.4 billion, and includes approximately US$488 million of
assumed long-term debt. The acquisition of ANR was partially financed through a
public offering of subscription receipts by TransCanada, resulting in proceeds
of approximately $1.5 billion. For further information see "General Development
of the Business - Developments in the Pipelines Business" in this AIF.

In February 2007, TC PipeLines, LP completed a private placement offering of
17,356,086 units at a price of US$34.57 per unit. TransCanada acquired 50 per
cent of the units for US$300 million, increasing its total ownership to 32.1 per
cent. TransCanada also invested an additional approximately $12 million to
maintain its general partnership ownership interest in TC PipeLines, LP. The
total private placement resulted in gross proceeds of approximately US$612
million which were used to partially finance TC PipeLines, LP's acquisition of
its 46.45 per cent interest in Great Lakes.

TCPL received NEB approval on February 9, 2007, to transfer a section of the
Canadian Mainline natural gas transmission facilities to the Keystone oil
pipeline project to transport crude oil from Alberta to refining centres in the
U.S. Midwest. TCPL continues to proceed with applications for U.S. regulatory
approvals at federal and state levels. Construction of the Keystone pipeline is
expected to begin in early 2008, with commercial operations scheduled to
commence in the fourth quarter of 2009. In addition, TCPL announced in January
2007 the start of a binding Open Season for an expansion and extension of the
propsed Keystone oil pipeline. The purpose of the Open Season is to obtain
binding commitments to support the expansion of the proposed Keystone pipeline
from approximately 435,000 barrels per day to 590,000 barrels per day and the
construction of the 468 km extension of the United States portion of the
pipeline. The US$700 million expansion and extension project is targetted to be
in-service in the fourth quarter of 2010.

In February 2007, TCPL received approval from the NEB to integrate the B.C.
system into the Foothills system in southern B.C. An agreement between the
Company and shippers on the B.C. system includes a sharing mechanism for
anticipated cost savings through increased administrative efficiencies arising
from the integration of the two systems.

In January 2007, TCPL received a procedural order from the FERC establishing a
timeline for Gas Transmission Northwest System's rate case proceeding. The
comprehensive filing requests a number of tariff changes, including increased
rates for transportation services. The hearing into this rate case is scheduled
to commence on October 31, 2007. For further information see this AIF under
"Business of TCPL - Regulation".

BUSINESS OF TCPL

TCPL is a leading North American energy infrastructure company focused on
pipelines and energy. At Year End, Pipelines accounted for approximately 53 per
cent of revenues and 71 per cent of TCPL's total assets and the Energy business
accounted for approximately 47 per cent of revenues and 25 per cent of TCPL's
total assets. The following is a description of each of TCPL's two main areas of
operation.

TRANSCANADA PIPELINES LIMITED 7

The following table shows TCPL's revenues from operations by segment,
classified geographically, for the years ended December 31, 2006 and 2005.
Revenues From Operations(millions of dollars) 2006 2005(4)
Pipelines
Canada - Domestic Deliveries 2,390 2,281
Canada - Export Deliveries(1) 971 1,159
United States 629 553
3,990 3,993
Energy(2)
Canada - Domestic Deliveries 2,566 1,218
Canada - Export Deliveries(1) 1 1
United States 963 912
3,530 2,131
Total Revenues(3) 7,520 6,124
(1)
Export deliveries include pipeline revenues attributable to deliveries to
U.S. pipelines and power deliveries to U.S. markets.

(2)
Revenues include sales of natural gas.

(3)
Revenues are attributed to countries based on country of origin of product
or service.

(4)
Effective June 1, 2006, TCPL revised the composition and names of its
reportable business segments to Pipelines and Energy. The financial
reporting of these segments was aligned to reflect the internal
organizational structure of the Company. Pipelines principally comprises the
Company's pipelines in Canada, the U.S. and Mexico. Energy includes the
Company's power operations, natural gas storage business and liquefied
natural gas projects in Canada and the U.S. The segmented information has
been retroactively reclassified to reflect the changes in reportable
segments. These changes had no impact on consolidated net income.

Pipelines Business

TCPL has substantial Canadian and U.S. natural gas pipeline and related
holdings, including:

Canada

*
a natural gas transmission system running from the Alberta border east
to delivery points in eastern Canada and at various U.S. border points
("Canadian Mainline");

*
a natural gas transmission system throughout the province of Alberta
("Alberta System");

*
a natural gas transmission system in southeastern B.C., southern Alberta
and southwestern Saskatchewan (the "B.C. and Foothills Systems");

*
a 121 km natural gas transmission pipeline and related facilities which
supply natural gas to the oil sands region of northern Alberta and a 27
km natural gas pipeline which supplies natural gas to a petrochemical
complex at Joffre, Alberta; and

*
a 50 per cent interest in Trans Quebec & Maritimes Pipeline Inc. ("TQM")
which operates a natural gas transmission system in southeastern Quebec
(the "TQM System").

United States

*
effective February 22, 2007, TransCanada owns the ANR system (the "ANR
System") a natural gas transmission system which extends approximately
17,000 km from producing fields in Louisiana, Oklahoma, Texas and the
Gulf of Mexico to markets in Wisconsin, Michigan, Illinois, Ohio and
Indiana;

8 TRANSCANADA PIPELINES LIMITED

*
the Gas Transmission Northwest System, a natural gas transmission system
running from northwestern Idaho, through Washington and Oregon to the
California border;

*
the North Baja System, a natural gas transmission system which extends
from southwestern Arizona to a point near Ogilby, California on the
California/Mexico border;

*
effective February 22, 2007, a 68.5 per cent effective ownership
interest in the Great Lakes Gas Transmission system ("Great Lakes
System") which is located in the north central U.S., roughly parallel to
the Canada-U.S. Border. Of this interest, 53.55 per cent is held
directly by TransCanada and the remainder is held through TransCanada's
interest in TC PipeLines, LP;

*
a 44.5 per cent interest in the Iroquois System which runs southwards
down through the eastern part of the State of New York terminating at
points in Long Island and New York City;

*
a 61.7 per cent interest in the Portland Natural Gas Transmission system
("Portland System") which runs through Maine and New Hampshire into
Massachusetts;

*
effective February 22, 2007, a 16.1 per cent effective ownership
interest, held through TC PipeLines, LP, in the NBPL system ("NBPL
System") which is located in the upper midwestern portion of the U.S.;
and

*
effective February 22, 2007, a 32.8 per cent effective ownership
interest in the Tuscarora system ("Tuscarora System") which runs from
Oregon eastwards to the upper portion of Nevada. One per cent of this
interest is held directly through a subsidiary of TCPL and the remainder
is held through TCPL's interest in TC PipeLines, LP.

As at February 22, 2007 TCPL holds a 32.1 per cent interest in TC PipeLines,
LP, a publicly held limited partnership of which a subsidiary of TCPL acts as
the general partner. The remaining interest of TC PipeLines, LP is widely held
by the public. At Year End, TC PipeLines, LP also held a 50 per cent interest in
NBPL and a 99 per cent interest in Tuscarora. Additionally, as at February 22,
2007, TC PipeLines, LP owns the remaining 46.45 per cent in Great Lakes.

International

TCPL also has the following natural gas pipeline and related holdings in Mexico
and South America:

*
a 46.5 per cent interest in the TransGas system which runs from
Mariquita in central Colombia to Cali in southwest Colombia;

*
a 30 per cent interest in the Gas Pacifico pipeline which extends from
Loma de la Lata, Argentina to Concepcion, Chile;

*
a 30 per cent interest in INNERGY Holdings S.A. which is an industrial
natural gas marketing and distribution company based in Concepcion,
Chile; and

*
a 100 per cent interest in the Tamazunchale pipeline, which extends from
the Pemex Gas facilities near Naranjos, Veracruz, Mexico to an
electricity generation station near Tamazunchale, San Luis Potosi,
Mexico.

Further information about TCPL's pipeline holdings, developments and
opportunities and significant regulatory developments which relate to pipelines
can be found in the MD&A under the headings "Pipelines - Opportunities and
Developments", and "Pipelines - Financial Analysis".

In addition, information about the Mackenzie Gas Pipeline Project and the
Alaska Highway Pipeline Project can be found in the MD&A under the headings
"Pipelines - Opportunities and Developments - Mackenzie Gas Pipeline Project"
and "Pipelines - Opportunities and Developments - Alaska Highway Pipeline
Project", respectively.

TRANSCANADA PIPELINES LIMITED 9

Regulation

Canada

CANADIAN MAINLINE

Under the terms of the National Energy Board Act (Canada), the Canadian Mainline
and B.C. and Foothills Systems are regulated by the NEB. The NEB sets tolls
which provide TCPL the opportunity to recover projected costs of transporting
natural gas, including the return on the Canadian Mainline's and B.C. and
Foothills System's average investment base. In addition, new facilities are
approved by the NEB before construction begins and the NEB regulates the
operation of the Canadian Mainline and B.C. and Foothills Systems. Net earnings
of the Canadian Mainline and B.C. and Foothills Systems may be affected by
changes in investment base, the allowed return on equity, the level of deemed
common equity and any incentive earnings.

ALBERTA SYSTEM

The Alberta System is regulated by the Alberta Energy and Utilities Board
("EUB") primarily under the provisions of the Gas Utilities Act ("GUA") and the
Pipeline Act. Under the GUA, the Alberta System rates, tolls and other charges,
and terms and conditions of services are subject to approval by the EUB. Under
the provisions of the Pipeline Act, the EUB oversees various matters including
the economic, orderly and efficient development of pipeline facilities, the
operation and abandonment of the facilities and certain related pollution and
environmental conservation issues. In addition to requirements under the
Pipeline Act, the construction and operation of natural gas pipelines in Alberta
are subject to certain provisions of other provincial legislation such as the
Environmental Protection and Enhancement Act.

United States

TCPL's wholly-owned and partially owned U.S. pipelines, including ANR System,
Gas Transmission Northwest System, Great Lakes System, Iroquois System, Portland
System, NBPL System, North Baja System and Tuscarora System, are 'natural gas
companies' operating under the provisions of the Natural Gas Act of 1938 and the
Natural Gas Policy Act of 1978, and are subject to the jurisdiction of the FERC.
The Natural Gas Act of 1938 grants the FERC authority over the construction and
operation of pipelines and related facilities. The FERC also has authority to
regulate rates for natural gas transportation and interstate commerce.

GAS TRANSMISSION NORTHWEST SYSTEM AND NORTH BAJA SYSTEM

Rates and tariffs of the Gas Transmission Northwest System and the North Baja
System have been approved by the FERC. These two systems operate under fixed
rate models, whereby rates for various service types have been approved by the
FERC and under which each of the two systems is permitted to discount or
negotiate rates on a non-discriminatory basis. Currently effective rates for
mainline capacity on the Gas Transmission Northwest System went into effect on
January 1, 2007, following Gas Transmission Northwest System's filing of a
general rate case in June 2006 under Section 4 of the Natural Gas Act of 1938.
Gas Transmission Northwest System's current rates were accepted for filing by
the FERC, subject to refund. Refunds, with interest, may be due following
approval of final rates by the FERC. Gas Transmission Northwest System's
previously effective rates, which remained in effect through December 31, 2006,
were established through a 1994 rate proceeding which culminated in a settlement
that was approved by the FERC in 1996. Rates for capacity on the North Baja
System were established in the FERC's initial order certificating construction
and operations of its system.

PORTLAND SYSTEM

In 2003, the Portland System received final approval from the FERC of its
general rate case under the Natural Gas Act of 1938. The Portland System is
required to file a general rate case under the Natural Gas Act of 1938 with a
proposed effective date of April 1, 2008.

10 TRANSCANADA PIPELINES LIMITED

Energy Business

The Energy segment of TCPL's business includes the acquisition, development,
construction, ownership and operation of electrical power generation plants, the
purchase and marketing of electricity, the provision of electricity account
services to energy and industrial customers, and the development, construction,
ownership and operation of natural gas storage and LNG facilities in Canada and
the United States.

The electrical power generation plants and power supply that TCPL owns,
operates and/or controls, including those under development or in construction,
in the aggregate, represent approximately 7,700 MW of power generation capacity.
Power plants and power supply in Canada account for approximately 85 per cent of
this total, and power plants in the United States account for the balance, being
approximately 15 per cent.

TCPL owns and operates:

*
natural gas-fired cogeneration plants in Alberta at Carseland (80 MW),
Redwater (40 MW), Bear Creek (80 MW) and MacKay River (165 MW);

*
the natural gas-fired cogeneration plant (90 MW) near Saint John, New
Brunswick (Grandview);

*
a waste-heat fuelled power plant at the Cancarb facility in Medicine
Hat, Alberta (27 MW) (Cancarb);

*
a natural gas-fired, combined-cycle plant in Burrillville, Rhode Island
(560 MW) (Ocean State Power);

*
hydroelectric generation assets in New Hampshire, Vermont and
Massachusetts (567 MW) (TC Hydro);

*
a natural gas-fired cogeneration plant near Trois-Rivieres, Quebec (550
MW) (Becancour); and

*
a natural gas storage facility near Edson, Alberta (Edson).

TCPL has long-term power purchase arrangements in place for:

*
100 per cent of the production of the Sundance A (560 MW) and a 50 per
cent interest, through a partnership, of the production of the Sundance
B (353 MW of 706 MW) power facilities near Wabamun, Alberta; and

*
756 MW of the production from the Sheerness facility near Hanna,
Alberta.

TCPL has:

*
a 60 per cent interest in CrossAlta Gas Storage Services Ltd., an
underground natural gas storage facility located near Crossfield,
Alberta;

*
a long-term natural gas storage lease with a third party located in
Alberta; and

*
a 62 per cent interest in the Baie-des-Sables Cartier Wind Energy
Project in the Gaspe region of Quebec (68 MW of a total 109.5 MW).

TCPL owns, but does not operate:

*
a 48.7 per cent partnership interest in the Bruce A nuclear power
generation facility in Ontario (730.5 MW of a total of 1,500 MW that is
currently in operation. Another 1,500 MW, of which 730.5 MW are
attributable to TCPL, will be generated from two other units currently
under refurbishment with restart expected to begin in late 2009 or early
2010);

*
a 31.6 per cent partnership interest in the Bruce B nuclear power
generation facilities in Ontario (1,011 MW of a total of 3,200 MW that
is in operation); and

*
a 16.7 per cent interest in Huron Wind L.P. whose assets are located at
the Bruce site (2 MW of a total of 9 MW that is in operation).

TCPL owns the following facilities which are under construction or development:

*
a 62 per cent interest in the Cartier Wind Energy Project which is
expected to construct five additional wind energy projects in the Gaspe
region of Quebec over the period 2007 to 2012 (391 MW of a total of 630
MW) subject to future appropriations and approvals;

TRANSCANADA PIPELINES LIMITED 11

*
a 50 per cent interest in the Portlands Energy Centre, a 550 MW natural
gas-fired power plant located in the Portlands area of Toronto, which is
expected to be in commercial service in the second quarter of 2009;

*
the 683 MW Halton Hills natural gas-fired power plant located near the
Town of Halton Hills, Ontario, which is anticipated to be in service in
the second quarter of 2010;

*
a joint venture with Shell on the Broadwater LNG project located
offshore of New York State in Long Island Sound, a facility when
completed that would be capable of receiving, storing and regasifying
imported LNG with an average send out capacity of approximately one
billion cubic feet per day of natural gas; and

*
a joint venture with Petro-Canada on the Cancouna LNG project located in
Quebec at Gros Cacouna harbour on the St. Lawrence River, a facility
when completed that would be capable of receiving, storing and
regasifying imported LNG with an average send out capacity of
approximately 500 million cubic feet per day of natural gas.

Further information about TCPL's energy holdings and significant developments
and opportunities relating to energy can be found in the MD&A under the headings
"Energy - Financial Analysis" and "Energy - Opportunities and Developments".

Other Interests

Cancarb Limited

TCPL owns Cancarb Limited, a world scale thermal carbon black manufacturing
facility located in Medicine Hat, Alberta.

TransCanada Turbines

TCPL owns a 50 per cent interest in TransCanada Turbines Ltd., a repair and
overhaul business for aero-derivative industrial gas turbines. This business
operates primarily out of facilities in Calgary, Alberta, with offices in
Bakersfield, California; East Windsor, Connecticut; and Liverpool, England.

TransCanada Calibrations

TCPL owns an 80 per cent interest in TransCanada Calibrations Ltd., a gas meter
calibration business certified by Measurement Canada, located at Ile des Chenes,
Manitoba.

HEALTH, SAFETY AND ENVIRONMENT

TCPL is committed to providing a safe and healthy environment for its employees,
contractors, the public and to the protection of the environment. Health, safety
and environment ("HS&E") is a priority in all of TCPL's operations. The HS&E
Committee of TCPL's Board of Directors ("Board") monitors conformance with the
TCPL HS&E corporate policy through regular reporting provided by TCPL's
department of Community, Safety & Environment. TCPL's senior executives are also
committed to ensuring TCPL is in conformance with its policies and regulated
requirements and is an industry leader. Senior executives are regularly advised
of all important operational issues and initiatives relating to HS&E by way of
formal reporting processes. TCPL's HS&E management system and performance are
assessed by an independent outside firm every three years or more often if the
HS&E Committee requests it. The most recent assessment was conducted in November
2006 by Det Norsk Veritas. These assessments involve senior executive and
employee interviews, review of policies, procedures, objectives, performance
measurement and reporting.

TCPL's HS&E management system is modeled to the elements of the International
Organization for Standardization's (ISO) standard for environmental management
systems, ISO 14001. The HS&E management system facilitates the focus of
resources on the areas of significant risk to the organization's HS&E business
activities. The system highlights opportunities for improvement, enables TCPL to
work towards defined HS&E expectations and objectives, and provides a
competitive business advantage. Independent third party assessments, internal
management system assessments and work place and facility planned inspections
are used to evaluate the implementation effectiveness of the HS&E programs,
processes and procedures, and confirms TCPL's compliance with regulatory
requirements.

12 TRANSCANADA PIPELINES LIMITED

TCPL employs full-time staff dedicated to HS&E matters, and incorporates HS&E
policies and principles into the planning, development, construction and
operation of all its projects. Environmental protection requirements have not
had a material impact on the capital expenditures of TCPL to date. However,
there can be no assurance that such requirements will not have a material impact
on TCPL's financial or operating results in future years. Such requirements can
be dependent on a variety of factors including the regulatory environment in
which TCPL operates.

Environment

Climate change remains a serious issue for TCPL. The change of government in
Canada in early 2006 resulted in a shift of focus from meeting environmental
regulation targets to a broader emphasis on clean air as well as greenhouse gas
emissions. The government of Canada released the Clean Air Act on October 19,
2006. At this time, however, the policy framework for the new regulations has
not been released by the federal government and detailed sectoral targets and
timeframes as well as compliance options have not been set. At a provincial
level, the Quebec government has passed legislation for a hydrocarbon royalty on
industrial greenhouse gas emitters. The details as to how the royalty will be
applied have not yet been determined but it is expected these details will be
set in the coming year. In Alberta, the government has indicated it will
continue with its own plan for implementing regulations to manage greenhouse gas
emissions. It is yet to be determined how this effort will tie into a federal
program.

In the United States, state level initiatives are under way to limit greenhouse
gas emissions, particularly in the north-eastern United States and California.
Details have not been finalized and the impact to TCPL's United States based
assets is uncertain.

Despite this uncertainty, TCPL continues with its programs to manage greenhouse
gas emissions from its assets, and to evaluate new processes and technologies
that result in improved efficiencies and lower greenhouse gas emissions rates.
In addition, TCPL remains involved in policy discussions in those jurisdictions
where policy development is under way and where the Company has operations.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

The Canadian Alliance of Pipeline Landowners' Association (CAPLA) and two
individual landowners commenced an action in 2003 under Ontario's Class
Proceedings Act, 1992, against TCPL and Enbridge Inc. for damages of $500
million alleged to arise from the creation of a control zone within 30 metres of
the pipeline pursuant to Section 112 of the National Energy Board Act. On
November 20, 2006, the Ontario Superior Court granted the motion of TCPL and
Enbridge Inc. for a dismissal of the case. CAPLA has now appealed the decision.
TCPL continues to believe the claim is without merit and will vigorously defend
the action. TCPL has made no provision for any potential liability. Any
liability, if any, would be dealt with through the regulatory process.

TCPL and its subsidiaries are subject to various other legal proceedings and
actions arising in the normal course of business. While the final outcome of
such legal proceedings and actions cannot be predicted with certainty, it is the
opinion of TCPL's management that the resolution of such proceedings and actions
will not have a material impact on TCPL's consolidated financial position or
results of operations.

TRANSFER AGENT AND REGISTRAR

TCPL's transfer agent and registrar is Computershare Trust Company of Canada
with transfer facilities in the Canadian cities of Vancouver, Calgary, Winnipeg,
Toronto, Montreal and Halifax.

INTEREST OF EXPERTS

Our auditors, KPMG LLP, have confirmed that they are independent within the
meaning of the Rules of Professional Conduct of the Institute of Chartered
Accountants of Alberta.

TRANSCANADA PIPELINES LIMITED 13

RISK FACTORS

A discussion of the Company's risk factors can be found in the MD&A for the year
ended December 31, 2006, which is incorporated by reference, under the headings
"Pipelines - Opportunities and Developments", "Pipelines - Business Risks",
"Energy - Opportunities and Developments", "Energy - Business Risks" and "Risks
and Risk Management".

DIVIDENDS

All of TCPL's common shares are held by TransCanada and as a result, any
dividends declared by TCPL on its common shares are paid to TransCanada. TCPL's
Board of Directors has not adopted a formal dividend policy. The Board reviews
the financial performance of TCPL quarterly and makes a determination of the
appropriate level of dividends to be declared on its common shares in the
following quarter. Provisions of various trust indentures and credit
arrangements to which TCPL is a party, restrict TCPL's ability to declare and
pay dividends to TransCanada and preferred shareholders under certain
circumstances and, if such restrictions apply, they may, in turn, have an impact
on TransCanada's ability to declare and pay dividends on its common and
preferred shares. In the opinion of TCPL management, such provisions do not
currently restrict or alter TCPL's ability to declare or pay dividends.

The dividends declared per common share during the past three completed
financial years are set forth in the following table.
2006 2005 2004
Dividends declared on common shares(1) $1.28 $1.23 $1.17
Dividends declared on preferred shares, Series U $2.80 $2.80 $2.80
Dividends declared on preferred shares, Series Y $2.80 $2.80 $2.80
(1)
Effective May 15, 2003, TCPL dividends have been declared in an amount equal
to the aggregate dividend paid by TransCanada. The amounts presented reflect
the aggregate amount divided by the total outstanding common shares of TCPL.

DESCRIPTION OF CAPITAL STRUCTURE

Share Capital

TCPL's authorized share capital consists of an unlimited number of common
shares, of which 483,344,109 were issued and outstanding at Year End, and an
unlimited number of first preferred shares and second preferred shares, issuable
in series. There were 4,000,000 Series U and 4,000,000 Series Y first preferred
shares issued and outstanding at Year End. The following is a description of the
material characteristics of each of these classes of shares.

Common Shares

As the holder of all of TCPL's common shares, TransCanada holds all the voting
rights in those common shares.

First Preferred Shares, Series U

Subject to certain limitations, the Board may, from time to time, issue first
preferred shares in one or more series and determine for any such series, its
designation, number of shares and respective rights, privileges, restrictions
and conditions. The first preferred shares as a class, have, among others,
provisions to the following effect.

The holders of the first preferred shares, Series U are entitled to receive as
and when declared by the Board, fixed cumulative preferential cash dividends at
an annual rate of $2.80 per share, payable quarterly.

The first preferred shares of each series shall rank on a parity with the first
preferred shares of every other series, and shall be entitled to preference over
the common shares and any other shares ranking junior to the first preferred
shares with respect to the payment of dividends, the repayment of capital and
the distribution of assets to TCPL in the event of a liquidation, dissolution or
winding up of TCPL.

14 TRANSCANADA PIPELINES LIMITED

TCPL is entitled to purchase for cancellation, some or all of the first
preferred shares, Series U outstanding at the lowest price which such shares are
obtainable, in the opinion of the Board, but not exceeding $50.00 per share plus
costs of purchase. Furthermore, TCPL may redeem, on or after October 15, 2013,
some or all of the first preferred shares, Series U upon payment for each share
at $50.00 per share.

Except as provided by the Canada Business Corporations Act or as referred to
below, the holders of the first preferred shares will not have any voting rights
nor will they be entitled to receive notice of or to attend shareholders'
meetings unless and until TCPL fails to pay, in the aggregate, six quarterly
dividends on the first preferred shares, Series U.

The provisions attaching to the first preferred shares as a class may be
modified, amended or varied only with the approval of the holders of the first
preferred shares as a class. Any such approval to be given by the holders of the
first preferred shares may be given by the affirmative vote of the holders of
not less than 662/3 per cent of the first preferred shares represented and voted
at a meeting or adjourned meeting of such holders.

First Preferred Shares, Series Y

The rights, privileges, restrictions and conditions attaching to the first
preferred shares, Series Y are substantially identical to those attaching to the
first preferred shares, Series U except that the first preferred shares, Series
Y are redeemable by TCPL after March 5, 2014.

DEBT

The following table sets out the issuances by TCPL of senior unsecured notes
with terms to maturity in excess of one year, during the 12 months ended
December 31, 2006.
Date Issued Issue Price per Aggregate
$1,000 Principal Issue Price
Amount of Notes
January 13, 2006 $999.55 $299,865,000
March 20, 2006 US$997.21 US$498,605,000
October 3, 2006 $999.76 $399,904,000

There are no provisions associated with this debt that entitle debt holders to
voting rights. From time to time, TCPL issues commercial paper for terms not
exceeding nine months.

TRANSCANADA PIPELINES LIMITED 15

CREDIT RATINGS

The following table sets out the credit ratings assigned to those outstanding
classes of securities of TCPL:
Overall DBRS Moody's S&P
Senior Secured Debt
First Mortgage Bonds A A2 A
Senior Unsecured Debt
Debentures A A2 A-
Medium-term Notes A A2 A-
Subordinated Debt A (low ) A3 BBB+
Junior Subordinated Debt Pfd-2 A3 BBB
Preferred Shares Pfd-2 (low ) Baa1 BBB
Commercial Paper R-1 (low ) P-1 -
Trend/Rating Outlook Stable(1) Stable Negative
(1)
At February 22, 2007, the DBRS rating was confirmed as stable. At December
31, 2006, the rating was under review. Discussed further in the DBRS section
below.

Credit ratings are intended to provide investors with an independent measure of
credit quality of an issue of securities. Credit ratings are not recommendations
to purchase, hold or sell securities and do not address the market price or
suitability of a specific security for a particular investor. There is no
assurance that any rating will remain in effect for any given period of time or
that any rating will not be revised or withdrawn entirely by a rating agency in
the future if, in its judgment, circumstances so warrant. A description of the
rating agencies' credit ratings listed in the table above is set out below.

Dominion Bond Rating Service (DBRS)

DBRS has different rating scales for short and long-term debt and preferred
shares. "High" or "low" grades are used to indicate the relative standing within
a rating category. The absence of either a "high" or "low" designation indicates
the rating is in the "middle" of the category. The R-1 (low) rating assigned to
TCPL's short-term debt is the third highest of ten rating categories and
indicates satisfactory credit quality. The overall strength and outlook for key
liquidity, debt and profitability ratios is not normally as favourable as with
higher rating categories, but these considerations are still respectable. Any
qualifying negative factors that exist are considered manageable, and the entity
is normally of sufficient size to have some influence in its industry. The A
ratings assigned to TCPL's senior secured and senior unsecured debt and the A
(low) rating assigned to its subordinated debt are the third highest of ten
categories for long-term debt. Long-term debt rated A is of satisfactory credit
quality. Protection of interest and principal is still substantial, but the
degree of strength is less than that of AA rated entities. While a respectable
rating, entities in the A category are considered to be more susceptible to
adverse economic conditions and have greater cyclical tendencies than higher
rated entities. The Pfd-2 and Pfd-2 (low) ratings assigned to TCPL's junior
subordinated debt and preferred shares are the second highest of six rating
categories for preferred shares. Preferred shares rated Pfd-2 are of
satisfactory credit quality. Protection of dividends and principal is still
substantial; however, earnings, the balance sheet and coverage ratios are not as
strong as Pfd-1 rated companies.

Subsequent to TransCanada's December 22, 2006 announcement of its plans to
acquire ANR, DBRS put TCPL's rating under review with developing implications.
On February 22, 2007, DBRS confirmed the rating of TCPL with a stable trend and
subsequently removed TCPL's rating from under review.

16 TRANSCANADA PIPELINES LIMITED

Moody's Investor Services (Moody's)

Moody's has different rating scales for short and long-term obligations.
Numerical modifiers 1, 2 and 3 are applied to each rating classification, with 1
being the highest and 3 being the lowest. The P-1 rating assigned to TCPL's
short-term debt is the highest of four rating categories and indicates a
superior ability to repay short-term debt obligations. The A2 ratings assigned
to TCPL's senior secured and senior unsecured debt and the A3 ratings assigned
to its subordinated debt and junior subordinated debt are the third highest of
nine rating categories for long-term obligations. Obligations rated A are
considered upper-medium grade and are subject to low credit risk. The Baa1
rating assigned to TCPL's preferred shares is the fourth highest of nine rating
categories for long-term obligations. Obligations rated Baa are subject to
moderate credit risk, are considered medium-grade, and as such, may possess
certain speculative characteristics.

Standard & Poor's (S&P)

S&P has different rating scales for short and long-term obligations. Ratings may
be modified by the addition of a plus (+) or minus (-) sign to show the relative
standing within a particular rating category. The A and A- ratings assigned to
TCPL's senior secured and senior unsecured debt, respectively, are the third
highest of ten rating categories for long-term obligations. An A rating
indicates the obligor's capacity to meet its financial commitment is strong;
however, the obligation is somewhat susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rated categories. The BBB+ rating assigned to TCPL's subordinated debt and the
BBB ratings assigned to its junior subordinated debt and preferred shares are
the fourth highest of ten rating categories for long-term obligations. An
obligation rated BBB exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation.

MARKET FOR SECURITIES

TransCanada holds all the common shares of TCPL and these are not listed on a
public market. TransCanada's common shares are listed on the Toronto Stock
Exchange ("TSX") and the New York Stock Exchange ("NYSE"). The following table
sets forth the reported monthly high and low closing prices and monthly trading
volumes of the common shares of TransCanada on the TSX for the period indicated:

Common Shares (TRP)
Month High Low Volume
($) ($) Traded
December 2006 40.77 38.95 20,122,013
November 2006 39.14 36.50 21,499,249
October 2006 36.34 33.95 19,350,398
September 2006 35.97 34.65 22,209,089
August 2006 36.35 34.86 22,367,872
July 2006 34.75 31.70 17,073,298
June 2006 34.50 31.55 23,121,387
May 2006 33.50 30.94 30,019,492
April 2006 34.73 33.02 20,961,283
March 2006 35.38 33.67 25,708,683
February 2006 35.25 34.57 21,932,670
January 2006 37.01 34.75 24,218,158

TRANSCANADA PIPELINES LIMITED 17

In addition, the following securities of TCPL are listed:

TCPL's Cumulative Redeemable First Preferred Shares,
Series U (TCA.PR.X) and Series Y (TCA.PR.Y), which are listed on the TSX
Series U Series Y
Month High Low Volume High Low Volume
($) ($) Traded ($) ($) Traded
December 2006 55.75 53.55 247,895 55.70 53.85 24,486
November 2006 55.75 54.66 45,230 55.65 54.60 37,280
October 2006 55.25 53.80 72,586 55.30 53.75 93,736
September 2006 53.70 52.80 28,346 54.50 52.70 37,876
August 2006 53.00 52.25 27,981 53.40 52.25 76,794
July 2006 52.90 51.65 28,901 52.49 51.72 150,491
June 2006 53.00 51.32 31,406 53.25 51.55 41,185
May 2006 52.50 51.10 36,962 52.15 51.27 46,570
April 2006 53.50 51.45 38,063 53.50 51.28 34,017
March 2006 54.10 53.30 43,092 54.45 53.55 40,666
February 2006 55.19 53.87 46,321 55.00 54.00 37,332
January 2006 54.25 53.41 32,091 54.85 53.75 24,292

TCPL's 8.25% preferred securities due 2047, which are listed on the NYSE (TCAPr)
Month High Low Volume
($) ($) Traded
December 2006 26.35 25.68 106,700
November 2006 26.15 25.66 120,400
October 2006 26.20 25.76 99,500
September 2006 26.16 25.55 104,800
August 2006 26.06 25.59 77,000
July 2006 25.73 25.46 133,800
June 2006 26.25 25.31 153,500
May 2006 25.49 25.31 136,000
April 2006 25.40 25.21 136,700
March 2006 26.03 25.19 225,300
February 2006 25.90 25.70 97,500
January 2006 25.89 25.60 127,000

18 TRANSCANADA PIPELINES LIMITED

In addition, TCPL's 16.50% First Mortgage Pipe Line Bonds due 2007, are listed
on the London Stock Exchange; however, this issue is thinly traded and accounts
for approximately $50 million or less than one per cent of TCPL's consolidated
capital structure.

DIRECTORS AND OFFICERS

As of February 22, 2007, the directors and officers of TransCanada as a group
beneficially owned, directly or indirectly, have exercisable options to own, or
exercised control or direction over, 1,676,238 common shares of TransCanada
which constitutes less than one per cent of TransCanada's common shares and less
than one per cent of the voting securities of any of its subsidiaries or
affiliates. TransCanada collects this information from its directors and
officers but otherwise has no direct knowledge of individual holdings of its
securities.

Directors

Set forth below are the names of the thirteen directors who served on TCPL's
Board at Year End, together with their jurisdictions of residence, all positions
and offices held by them with TransCanada and its significant affiliates, their
principal occupations or employment during the past five years and the year from
which each director has continually served as a director of TransCanada.
Positions and offices held with TransCanada are also held by such person at
TCPL.
Name and Principal Occupation During the Five Preceding Years
Place of Residence Director Since
Kevin E. Benson(1) President and Chief Executive Officer, Laidlaw International, 2005
Wheaton, Illinois Inc. (transportation services) since June 2003, and Laidlaw,
United States Inc. from September 2002 to June 2003. President and Chief
Executive Officer, The Insurance Corporation of British Columbia
from December 2001 until September 2002. Director, Laidlaw
International, Inc.
Derek H. Burney, O.C. Senior strategic advisor at Ogilvy Renault LLP (law firm). 2005
Ottawa, Ontario President and Chief Executive Officer, CAE Inc. (technology)
Canada from October 1999 to August 2004. Lead director at Quebecor
World Inc. (communications and media) from April 2003 to
November 2005. Chairman, CanWest Global Communications Corp. and
Lead Director, Shell Canada Limited.
Wendy K. Dobson Professor, Rotman School of Management and Director, Institute 1992
Uxbridge, Ontario for International Business, University of Toronto (education).
Canada Vice Chair, Canadian Public Accountability Board. Director,
Toronto-Dominion Bank.
E. Linn Draper Corporate Director. Chairman, President and Chief Executive 2005
Lampasas, Texas Officer of Columbus, Ohio-based American Electric Power Co.,
United States Inc. from April 1993 to April 2004. Director, Alliance Data
Systems Corporation, Lead Director, Alpha Natural Resources,
Inc., Chair of NorthWestern Corporation and Director,
Temple-Inland Inc.
The Hon. Paule Gauthier, Senior Partner, Desjardins Ducharme LLP (law firm). Director, 2002
P.C., O.C., O.Q., Q.C. Cossette Communication Group Inc., Institut Quebecois des Hautes
Quebec, Quebec Etudes Internationales, Laval University, Metro Inc., RBC Dexia
Canada Investor Services Trust, Rothmans Inc. and Royal Bank of Canada.

TRANSCANADA PIPELINES LIMITED 19

Kerry L. Hawkins Corporate Director. President, Cargill Limited (agricultural) 1996
Winnipeg, Manitoba from September 1982 to December 2005. Director, NOVA Chemicals
Canada Corporation and Shell Canada Limited.
S. Barry Jackson Corporate Director. Chair of the Board, TransCanada since April 2002
Calgary, Alberta 2005. Chair of Resolute Energy Inc. (oil and gas) from January
Canada 2002 to April 2005 and Chair of Deer Creek Energy Limited (oil
and gas) from April 2001 to September 2005. Director, Cordero
Energy Inc. and Nexen Inc.
Paul L. Joskow Professor, Department of Economics, Massachusetts Institute of 2004
Brookline, Massachusetts Technology (MIT) (education). Director of the MIT Center for
United States Energy and Environmental Policy Research. Director, National
Grid PLC and Putnam Mutual Funds.
Harold N. Kvisle President and Chief Executive Officer, TransCanada since May 2001
Calgary, Alberta 2003 and TCPL since May 2001. Director, Bank of Montreal and
Canada PrimeWest Energy Inc. Chair of the Mount Royal College Board of
Governors.
John A. MacNaughton, C.M. Corporate Director. Chairman of the Canadian Trading and 2006
Toronto, Ontario Quotation System Inc. Founding President and Chief Executive
Canada Officer of the Canadian Pension Plan Investment Board from 1999
to 2005. Director, Nortel Networks Corporation.
David P. O'Brien(2) Corporate Director. Chair, EnCana Corporation (oil and gas) 2001
Calgary, Alberta since April 2002 and Chair, Royal Bank of Canada since February
Canada 2004. Chair and Chief Executive Officer of PanCanadian Energy
Corporation (oil and gas) from October 2001 to April 2002.
Director, Focus Energy Trust, Molson Coors Brewing Company, and
C.D. Howe Institute. Chancellor, Concordia University.
Harry G. Schaefer, F.C.A. President, Schaefer & Associates (business advisory services). 1987
Calgary, Alberta Vice-Chair of the Board, TransCanada since May 2003 and TCPL
Canada since June 1998. Director, Agrium Inc. and Trustee of Fording
Canadian Coal Trust.
D. Michael G. Stewart Principal of the privately held Ballinacurra Group of Investment 2006
Calgary, Alberta Companies since March 2002. A number of senior executive
Canada positions with Westcoast Energy Inc. (energy infrastructure,
services and utilities) including Executive Vice-President,
Business Development from September 1993 to March 2002. Director
Canadian Energy Services Inc. and Pengrowth Corporation.
(1)
Mr. Benson was President and Chief Executive Officer of Canadian Airlines
International Ltd. from July 1996 to February 2000. Canadian Airlines
International Ltd. filed for protection under the Companies' Creditors
Arrangement Act (Canada) and applicable bankruptcy protection statutes in
the United States on March 24, 2000.

(2)
Mr. O'Brien was a director of Air Canada on April 1, 2003 when Air Canada
filed for protection under the Companies' Creditors Arrangement Act
(Canada). Mr. O'Brien resigned as a director from Air Canada in November
2003.

TransCanada will hold its annual meeting of common shareholders on Friday,
April 27, 2007, and subject to the election of the thirteen nominees proposed
for election to TransCanada's board, these directors will be elected by the sole

20 TRANSCANADA PIPELINES LIMITED

shareholder of TCPL as directors of TCPL on that date. Each director holds
office until TCPL's next annual meeting or until his or her successor is earlier
elected or appointed.

Mr. Stewart was elected to the Board on April 28, 2006 and Mr. MacNaughton was
appointed to the Board on June 14, 2006. In addition, Mr. Schaefer will retire
effective April 27, 2007 and Mr. W.T. Stephens has been selected as a new
nominee for election. Mr. Stephens previously served on the Board from 2000 to
2005.

Officers

All of the executive officers and corporate officers of TransCanada reside in
Calgary, Alberta, Canada. Current positions and offices held with TransCanada
are also held by such person at TCPL. As of the date hereof, the officers of
TransCanada, their present positions within TransCanada and their principal
occupations during the five preceding years are as follows:

Executive Officers
Name Present Position Held Principal Occupation During the Five Preceding
Years
Harold N. Kvisle President and Chief Executive President and Chief Executive Officer.
Officer
Russell K. Girling President, Pipelines Executive Vice-President, Corporate Development
and Chief Financial Officer, March 2003 to June
2006. Prior to March 2003, Executive
Vice-President and Chief Financial Officer.
Gregory A. Lohnes Executive Vice-President and Chief Prior to June 2006, President and Chief Executive
Financial Officer Officer of Great Lakes Gas Transmission Company.
Dennis J. McConaghy Executive Vice-President, Prior to June 2006, Executive Vice-President, Gas
Pipeline Strategy and Development Development.
Sean McMaster(1) Executive Vice-President, Corporate Executive Vice-President, General Counsel and
and General Counsel and Chief Chief Compliance Officer from October 2006 to
Compliance Officer January 2007. Prior to October 2006, General
Counsel and Chief Compliance Officer. Prior
thereto, General Counsel since June 2006.
Vice-President, Transactions, Power Division,
TCPL from April 2003 to June 2006. President,
TransCanada Power Services Ltd., general partner
of TransCanada Power LP, from June 2003 to August
2005. Prior to June 2003, Vice-President, Power
Services Ltd.
Alexander J. Pourbaix President, Energy Executive Vice-President, Power March 2003 to
June 2006. Prior to March 2003, Executive
Vice-President, Power Development.
Sarah E. Raiss Executive Vice-President, Corporate Executive Vice-President, Corporate Services.
Services
Donald M. Wishart Executive Vice-President, Operations Prior to March 2003, Senior Vice-President, Field
and Engineering Operations.
(1)
Mr. McMaster was appointed Executive Vice-President, General Counsel and
Chief Compliance Officer on October 30, 2006.

TRANSCANADA PIPELINES LIMITED 21

Corporate Officers
Name Present Position Held Principal Occupation During the Five Preceding
Years
Ronald L. Cook Vice-President, Taxation Prior to April 2002, Director, Taxation.
Donald J. DeGrandis Corporate Secretary Prior to June 2006, Associate General Counsel,
Corporate.
Garry E. Lamb Vice-President, Risk Management Vice-President, Risk Management.
Donald R. Marchand Vice-President, Finance and Vice-President, Finance and Treasurer.
Treasurer
G. Glenn Menuz Vice President and Controller Prior to June 2006, Assistant Controller.

CORPORATE GOVERNANCE

The Board and the members of TCPL's management are committed to the highest
standards of corporate governance. TCPL's corporate governance practices comply
with the governance rules of the Canadian Securities Administrators ("CSA"),
those of the NYSE applicable to foreign issuers and of the U.S. Securities and
Exchange Commission ("SEC"), and those mandated by the United States
Sarbanes-Oxley Act of 2002 ("SOX"). As a non-U.S. company, TCPL is not required
to comply with most of the NYSE corporate governance listing standards; however,
except as summarized on its website at www.transcanada.com, the governance
practices followed are in compliance with the NYSE standards for U.S. companies
in all significant respects. TCPL is in compliance with the CSA's Multilateral
Instrument 52-110 pertaining to audit committees. TCPL is also in compliance
with the CSA's National Policy 58-201, Corporate Governance Guidelines, and
National Instrument 58-101, Disclosure of Corporate Governance Practices
(collectively, the "Canadian Governance Guidelines"). In 2005, the Canadian
Governance Guidelines came into effect and for purposes of the TSX replaced the
TSX Corporate Governance Guidelines. Further information about TCPL's corporate
governance can be found on TransCanada's website under the heading "Corporate
Governance".

Compliance with Canadian Governance Guidelines

The "Disclosure of Corporate Governance Practices" addressing disclosure in
accordance with the Canadian Governance Guidelines is attached to this AIF at
Schedule "B". It has been approved by the Governance Committee and the Board.

Audit Committee

TCPL has an Audit Committee which is responsible for assisting the Board in
overseeing the integrity of TCPL's financial statements and compliance with
legal and regulatory requirements and in ensuring the independence and
performance of TCPL's internal and external auditors. The members of the Audit
Committee at Year End were Harry G. Schaefer (Chair), Kevin E. Benson, Derek H.
Burney, Paule Gauthier, Paul L. Joskow and John A. MacNaughton. Mr. Jackson is a
non-voting member of the Audit Committee.

The Board believes that the composition of the Audit Committee reflects a high
level of financial literacy and expertise. Each member of the Audit Committee
has been determined by the Board to be "independent" and "financially literate"
within the meaning of the definitions under Canadian and U.S. securities laws
and the NYSE rules. In addition, the Board has determined that Mr. Schaefer is
an "Audit Committee Financial Expert" as that term is defined under U.S.
securities laws. The Board has made these determinations based on the education
and breadth and depth of experience of each member of the Audit Committee. The
following is a description of the education and experience,

22 TRANSCANADA PIPELINES LIMITED

apart from their respective roles as directors of TCPL, of each member of the
Audit Committee that is relevant to the performance of his or her
responsibilities as a member of the Audit Committee:

Mr. Schaefer earned a Bachelor of Commerce from the University of Alberta, is a
Chartered Accountant and is a Fellow of the Canadian Institute of Chartered
Accountants. He serves on and has served on the boards of several public
companies and other organizations, including as Chairman of the Alberta Chapter
of the Institute of Corporate Directors, and on the audit committees of certain
of those boards. Mr. Schaefer has also held several executive positions with
public companies. He is currently Chair of the Audit Committee and of the audit
committees of two other public companies.

Mr. Benson earned a Bachelor of Accounting from the University of Witwatersrand
(South Africa) and was a member of the South African Society of Chartered
Accountants. Mr. Benson is the President and Chief Executive Officer of Laidlaw
International, Inc. In prior years, he has held several executive positions
including one as President and Chief Executive Officer of Canadian Airlines
International Ltd. and has served on other public company boards.

Mr. Burney earned a Bachelor of Arts (Honours) and Master of Arts from Queen's
University. He is currently a senior strategic advisor at Ogilvy Renault LLP.
Mr. Burney previously served as President and Chief Executive Officer of CAE
Inc. and as Chairman and Chief Executive Officer of Bell Canada International
Inc. Mr. Burney is the lead director at Shell Canada Limited and the Chairman of
CanWest Global Communications Corp. He has served on one other organization's
audit committee.

Mme. Gauthier earned a Bachelor of Arts from the College Jesus-Marie de
Sillery, a Bachelor of Laws from Laval University and a Master of Laws in
Business Law (Intellectual Property) from Laval-University. She has served on
the boards of several public companies and other organizations and on the audit
committees of certain of those boards.

Mr. Joskow earned a Bachelor of Arts with Distinction in Economics from Cornell
University, a Masters of Philosophy in Economics from Yale University, and Ph.D.
in Economics from Yale University. He is currently a Professor, Department of
Economics, Massachusetts Institute of Technology. He has served on the boards of
several public companies and other organizations and on the audit committees of
certain of those boards.

Mr. MacNaughton earned a Bachelor of Arts in Economics from the University of
Western Ontario. Mr. MacNaughton is currently the Chairman of Canadian Trading
and Quotation System Inc. In prior years, he has held several executive
positions including founding President and Chief Executive Officer of the
Canadian Pension Plan Investment Board and President of Nesbitt Burns Inc. He is
currently the Chair of an audit committee of one other public company.

The Charter of the Audit Committee can be found in Schedule "E" of this AIF and
on TransCanada's website under the Corporate Governance - Board Committees page,
at the link specified above under the heading "Corporate Governance".

Pre-Approval Policies and Procedures

TCPL's Audit Committee has adopted a pre-approval policy with respect to
permitted non-audit services. Under the policy, the Audit Committee has granted
pre-approval for specified non-audit services. For engagements of $25,000 or
less which are not within the annual pre-approved limit, approval by the Audit
Committee is not required, and for engagements between $25,000 and $100,000,
approval of the Audit Committee Chair is required, and the Audit Committee is to
be informed of the engagement at the next scheduled Audit Committee meeting. For
all engagements of $100,000 or more, pre-approval of the Audit Committee is
required. In all cases, regardless of the dollar amount involved, where there is
a potential for conflict of interest involving the external auditor to arise on
an engagement, the Audit Committee Chair must pre-approve the assignment.

To date, TCPL has not approved any non-audit services on the basis of the
de-minimis exemptions. All non-audit services have been pre-approved by the
Audit Committee in accordance with the pre-approval policy described above.

TRANSCANADA PIPELINES LIMITED 23

External Auditor Service Fees

The aggregate fees for external auditor services rendered by the External
Auditor for the TransCanada group of companies for the 2006 and 2005 fiscal
years, are shown in the table below:
Fee Category 2006 2005 Description of Fee Category
(millions of dollars)
Audit Fees 4.94 3.15 Aggregate fees for audit services rendered by TCPL's External
Auditor for the audit of TransCanada's annual financial
statements or services provided in connection with statutory and
regulatory filings or engagements, the review of interim
consolidated financial statements and information contained in
various prospectuses and other offering documents.
Audit Related Fees 0.07 0.11 Aggregate fees for assurance and related services rendered by
TCPL's External Auditor that are reasonably related to
performance of the audit or review of TransCanada's financial
statements and are not reported as Audit Fees. The nature of
services comprising these fees related to the audit of the
financial statements of TCPL's certain pension plans.
Tax Fees 0.22 0.12 Aggregate fees rendered by TCPL's External Auditor for primarily
tax compliance and tax advice. The nature of these services
consisted of: tax compliance including the review of Canadian and
U.S. income tax returns; and tax items and tax services related
to domestic and international taxation including income tax,
capital tax and Goods and Services Tax.
All Other Fees 0.07 0.14 Aggregate fees for products and services other than those
reported in this table above rendered by TCPL's External Auditor.
The nature of these services consisted of advice with respect to
TCPL's compliance with SOX.
Total 5.30 3.52

Other Board Committees

In addition to the Audit Committee, TCPL has three other Board committees: the
Governance Committee, the Health, Safety and Environment Committee and the Human
Resources Committee. Mr. Jackson, the Chair of the Board, sits on each of
Board's committees as a non-voting member. The voting members of each of these
committees, as of Year End, are identified below:
Governance Committee Health, Safety & Environment Committee Human Resources Committee

Chair: W.K. Dobson Chair: E.L. Draper Chair: K.L. Hawkins
Members: D.H. Burney Members: P. Gauthier Members: W.K. Dobson
P.L. Joskow K.L. Hawkins E.L. Draper
D.P. O'Brien D.M.G. Stewart D.P. O'Brien
H.G. Schaefer J.A. MacNaughton

The charters of the Governance Committee, the Health, Safety & Environment
Committee and the Human Resources Committee can be found on TransCanada's
website under the Corporate Governance - Board Committees page at the link
specified below.

Further information about TCPL's Board committees and corporate governance can
be found in Schedule "D" attached to this AIF or on TransCanada's website
located at: http://www.transcanada.com/company/board_committees.html.

24 TRANSCANADA PIPELINES LIMITED

Conflicts of Interest

Directors and officers of TCPL and its subsidiaries are required to disclose the
existence of existing or potential conflicts in accordance with TCPL policies
governing directors and officers and in accordance with the Canada Business
Corporations Act. Although some of the directors sit on boards or may be
otherwise associated with companies that ship natural gas on TCPL's pipeline
systems, TCPL as a common carrier in Canada cannot, under its tariff, deny
transportation service to a credit-worthy shipper. Further, due to the
specialized nature of the industry, TCPL believes that it is important for its
Board to be composed of qualified and knowledgeable directors, so some of them
must come from oil and gas producers and shippers; the Governance Committee
closely monitors relationships among directors to ensure that business
associations do not affect the Board's performance. In a circumstance where a
director declares an interest in any material contract or material transaction
being considered at a meeting, the director generally absents himself or herself
from the meeting during the consideration of the matter, and does not vote on
the matter.

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

As at the date hereof and since the beginning of the most recently completed
financial year, no executive officer, director, or former executive officer or
director of TCPL or its subsidiaries, no proposed nominee as a director of TCPL,
or any associate of any such director, executive officer or proposed nominee has
been indebted to TCPL or any of its subsidiaries. There is no indebtedness of
any such person to another entity that is the subject of a guarantee, support
agreement, letter of credit or other similar arrangement or understanding
provided by TCPL or any of its subsidiaries.

SECURITIES OWNED BY DIRECTORS

The following table sets out the number of each class of securities of
TransCanada or any of its affiliates beneficially owned, directly or indirectly,
or over which control or direction is exercised and the number of deferred share
units credited to each director, as of February 22, 2007.
Director Securities Deferred Share
Owned, Units(2)
Controlled or
Directed(1)
K. Benson 3,000 7,857
D. Burney 1,000 7,310
W. Dobson 3,000 29,584
E.L. Draper 0 7,647
P. Gauthier 1,000 21,314
K. Hawkins 3,898 (3) 32,875
S.B. Jackson 39,000 13,931
P.L. Joskow 5,000 10,423
H. Kvisle 607,516 (4) 0
J. MacNaughton 30,000 3,464
D. O'Brien 18,771 21,314
H. Schaefer 23,214 (5) 20,208
D.M.G. Stewart 7,500 (6) 3,026

TRANSCANADA PIPELINES LIMITED 25

(1)
The information as to shares beneficially owned or over which control or
direction is exercised, not being within the knowledge of TransCanada, has
been furnished by each of the nominees. Except as indicated in these notes,
the nominees have sole voting and dispositive power with respect to the
securities listed above. As to each class of shares of TransCanada, its
subsidiaries and affiliates, the percentage of outstanding shares
beneficially owned by any one director or nominee or by all directors and
officers of TransCanada as a group does not exceed 1% of the class
outstanding.

(2)
The value of a deferred share unit is tied to the value of TransCanada's
common shares. A deferred share unit is a bookkeeping entry, equivalent to
the value of a TransCanada common share, and does not entitle the holder to
voting or other shareholder rights, other than the accrual of additional
deferred share units for the value of dividends. A director cannot redeem
deferred share units until the director ceases to be a member of the Board.
Canadian directors can then redeem their units for cash or shares while U.S.
directors can only redeem their units for cash. Mr. Kvisle is an employee
of TransCanada and participates is the ESU program; he does not participate
in the DSU program.

(3)
The shares listed include 2,500 shares held by Mr. Hawkins' wife.

(4)
Securities owned, controlled or directed include common shares that Mr.
Kvisle has a right to acquire through the exercise of stock options that are
vested under the Stock Option Plan, which is described elsewhere in this
AIF. Directors as such do not participate in the Stock Option Plan. Mr.
Kvisle, as an employee of TransCanada, has the right to acquire 474,500
common shares under vested stock options, which amount is included in this
column.

(5)
The shares listed do not include 700 common shares held by Mr. Schaefer's
wife and 5,500 common shares held by a company controlled by Mr. Schaefer's
wife. Mr. Schaefer disclaims beneficial ownership of, or control or
direction over, such shares.

(6)
The shares listed include 500 shares held by Mr. Stewart's wife.

COMPENSATION OF DIRECTORS

Unless as otherwise defined in the following sections, all capitalized terms
used from herein shall have the same meaning ascribed to them in TransCanada's
Management Proxy Circular (the "Proxy Circular"), dated February 22, 2007.

TransCanada's directors also serve as directors of TCPL. An aggregate fee is
paid for serving on the Boards of TransCanada and TCPL. Since TransCanada does
not hold any assets directly, other than the common shares of TCPL and
receivables from certain of TransCanada's subsidiaries, all directors' costs are
assumed by TCPL according to a management services agreement between the two
companies. The meetings of the boards and committees of TransCanada and TCPL run
concurrently.

Minimum Share Ownership Guidelines

The Board believes that directors can more effectively represent the interests
of shareholders if they have a significant investment in the common shares of
TransCanada, or their economic equivalent. As a result, TransCanada requires
each director (other than Mr. Kvisle who is subject to executive share ownership
guidelines) to acquire and hold a minimum number of common shares, or their
economic equivalent, equal in value to five times the director's annual cash
retainer fee. Directors have a maximum of five years to reach this level of
ownership. The level of ownership can be achieved by direct purchase of common
shares, by participation in the TransCanada Dividend Reinvestment Plan or by
means of directing cash retainer fees (or any other fees subsequent to January
1, 2007) into, or otherwise acquiring deferred share units ("DSUs") under, the
Share Unit Plan for Non-Employee Directors (1998) (the "DSU Plan"), described
under the heading "Share Unit Plan for Non-Employee Directors" below.

All of the current directors have achieved the minimum share ownership.

26 TRANSCANADA PIPELINES LIMITED

Board and Committee Remuneration

TCPL's director compensation practices are designed to reflect the size and
complexity of TCPL and to reinforce the emphasis TCPL places on shareholder
value by linking a portion of directors' compensation to the value of
TransCanada's common shares. The market competitiveness of director compensation
is assessed against the Comparator Group (as defined under the heading
"Executive Compensation and Other Information - Report on Executive
Compensation") and a general industry sample of Canadian companies of similar
size and scope to TCPL.

For the financial year ended December 31, 2006, each director who was not an
employee of TCPL, other than the Chair, was paid in quarterly installments in
arrears as follows:
Retainer fee $30,000 per annum
Committee retainer fee $3,000 per annum
Committee Chair retainer fee $4,000 per annum
Board and Committee attendance fee $1,500 per meeting
Committee Chair attendance fee $1,500 per meeting

The Chair, who was paid none of the directors' fees outlined above, was paid a
retainer fee of $300,000 per annum in respect of his duties as Chair, $3,000 per
chaired Board meeting, and was reimbursed for certain office and other expenses.
Half of Mr. Jackson's retainer fee for acting as Chair was paid in DSUs. The
Vice-Chair was paid a retainer fee of $12,000 per annum in respect of his duties
as Vice-Chair, in addition to his other director's fees as outlined above. Each
committee chair is entitled to claim a per diem for time spent on committee
activities outside of the committee meetings. Additionally, directors other than
the Chair and the CEO receive, in respect of their service as directors, an
annual grant of units under the DSU Plan, see "Share Unit Plan for Non-Employee
Directors" below for details on this plan. Fees are paid quarterly and are
pro-rated from the date of the director's appointment to the Board and the
relevant committees.

TCPL pays a travel fee of $1,500 per meeting for which round trip travel time
exceeds three hours, and reimburses the directors for out-of-pocket expenses
incurred in attending such meetings.

Directors who are U.S. residents are paid the same amounts as outlined above in
U.S. dollars.

Fees Paid to Directors in 2006

The following table sets out the total fees paid in cash and the value of the
DSUs awarded or credited for each non-employee director in 2006 as at the date
of the grant, unless otherwise stated. Mr. Kvisle, as an employee of TCPL,
receives no cash fees or DSUs as a director.

Directors generally direct their retainer fee to be paid in DSUs until the
minimum share ownership guideline is reached, and are always entitled to direct
their retainer fee (and, subsequent to January 1, 2007, any other fees) to be
paid in DSUs. In 2006, K.E. Benson, D.H. Burney, E.L. Draper, P. Gauthier, K.L.
Hawkins, J.A. MacNaughton and D.P. O'Brien received their retainer fees in DSUs
and half of Mr. Jackson's retainer fee for acting as Chair was paid in DSUs. For

TRANSCANADA PIPELINES LIMITED 27

further information on the DSU Plan, see the description under the heading
"Share Unit Plan for Non-Employee Directors" below.

Name Board Committee Committee Board Committee Travel Strategic Total Total Total
Retainer Retainer Chair Attendance Attendance Fee Issues Fees Value of Cash and
Fee Fee Retainer Fee Fee and Paid in DSUs Value of
Fee Strategic Cash Credited DSUs
Planning (2) Credited
Sessions
D.D.
Baldwin $15,000 $3,000 $2,000 $4,500 $6,000 $0 $1,500 $32,000 $0 $32,000
(3)(4)
K.E.
Benson(5) 30,000 3,000 N/A 15,000 9,000 13,500 4,500 45,000 136,290 181,290
D.H.
Burney 30,000 5,250 N/A 12,000 6,000 10,500 4,500 38,250 136,290 174,540
W.K.
Dobson(3) 30,000 6,000 4,000 16,500 12,000 9,000 6,000 83,500 106,290 189,790
E.L.
Draper(3) 30,000 6,000 3,000 16,500 15,000 12,000 6,000 58,500 136,290 194,790
(5)(6)
P.
Gauthier(3)30,000 6,000 N/A 16,500 16,500 10,500 6,000 55,500 136,290 191,790
(6)
K.L.
Hawkins 30,000 6,000 4,000 15,000 16,500 10,500 6,000 58,000 136,290 194,290
(3)
S.B.
Jackson 300,000 N/A N/A 33,000 1,500 4,500 4,500 193,500 150,000 343,500
(6)(7)
P.L.
Joskow(5) 30,000 6,000 N/A 16,500 12,000 10,500 6,000 81,000 106,290 187,290
J.A. 22,500 4,500 N/A 10,500 6,000 4,500 1,500 33,264 122,526 155,790
MacNaughton
D.P.
O'Brien 30,000 6,000 N/A 13,500 4,500 1,500 1,500 27,000 136,290 163,290
H.G.
Schaefer 42,000 6,000 4,000 16,500 21,000 3,000 6,000 98,500 106,290 204,790
(3)(8)
D.M.G.
Stewart 22,500 2,250 N/A 12,000 3,000 6,000 3,000 48,750 106,290 155,040
(6)

(1)
Fees are aggregate amounts respecting duties performed on both TransCanada
and TCPL Boards.

(2)
Total DSUs credited includes the amount of the retainer fee elected to be
received in DSUs and the grant of 3,000 DSUs made in September 2006 which
had an initial cash value of approximately $35.43 per DSU.

(3)
The committee chair retainer fee amount includes per diem fees paid in
addition to the committee retainer fee in respect of duties performed and
meetings held in preparation for committee meetings. Mme. Gauthier chaired
one meeting of the Health, Safety and Environment Committee in Mr. Baldwin's
absence.

(4)
Mr. Baldwin retired from the Board on April 28, 2006.

(5)
U.S. directors are paid or credited these amounts, including DSU
equivalents, based on U.S. dollars.

(6)
The committee attendance fee includes the amount of $1,500 for a Health,
Safety and Environment Committee off-site facility visit.

(7)
Mr. Jackson's Board attendance fee includes the fee of $3,000 in respect of
each Board meeting chaired. Half of Mr. Jackson's retainer fee for acting as
Chair was paid in DSUs.

(8)
Mr. Schaefer's retainer fee amount includes the fee of $12,000 in respect of
duties performed as Vice-Chair.

Share Unit Plan for Non-Employee Directors

The Share Unit Plan for Non-Employee Directors (1998) was established in 1998
and was last amended and restated effective January 1, 2007. Prior to the
January 1, 2007 amendment, the DSU Plan allowed eligible Board members, on a
quarterly basis, to direct their annual directors' retainer fee or, at the
discretion of the Governance Committee, other Board-related fees, to acquire
units representing the right to acquire common shares or their cash equivalent.
Subsequent to January 1, 2007, Board members are permitted to elect to receive
any portion of their fees in DSUs. The DSU Plan also allows the Governance
Committee to grant units as additional directors' compensation. In September
2006, a grant of 3,000 DSUs was made to each director other than the Chair and
the CEO.

28 TRANSCANADA PIPELINES LIMITED

Initially the value of a DSU is equal to the market value of a common share at
the time the directors are credited with the units. Thus each grant of 3,000
DSUs in September 2006 had an initial cash value of approximately $106,290. The
value of a DSU, when redeemed, is equivalent to the market value of a common
share at the time the redemption takes place. In addition, at the time dividends
are declared and paid on the common shares, each DSU accrues an amount equal to
such dividends, which amount is then reinvested in additional DSUs at a price
equal to the then market value of a common share. DSUs cannot be redeemed until
the director ceases to be a member of the Board. Canadian directors may redeem
for cash or common shares at their option. U.S. directors may only redeem for
cash.

This information is provided by RNS
The company news service from the London Stock Exchange
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