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TransCanada Reports Fourth Quarter and Year-End 2015 Financial Results

Common Share Dividend Increased Nine Per Cent to $2.26 Per Share Annually


/EINPresswire.com/ -- CALGARY, ALBERTA -- (Marketwired) -- 02/11/16 -- TransCanada Corporation (TSX: TRP) (NYSE: TRP) (TransCanada) today announced a net loss attributable to common shares for fourth quarter 2015 of $2.5 billion or $3.47 per share compared to net income of $458 million or $0.65 per share for the same period in 2014. For the year ended December 31, 2015, the net loss attributable to common shares was $1.2 billion or $1.75 per share compared to net income of $1.7 billion or $2.46 per share in 2014. Comparable earnings for fourth quarter 2015 were $453 million or $0.64 per share compared to $511 million or $0.72 per share for the same period last year. For the year ended December 31, 2015, comparable earnings were $1.8 billion or $2.48 per share compared to $1.7 billion or $2.42 per share in 2014. TransCanada's Board of Directors also declared a quarterly dividend of $0.565 per common share for the quarter ending March 31, 2016, equivalent to $2.26 per common share on an annualized basis, an increase of nine per cent. This is the sixteenth consecutive year the Board of Directors has raised the dividend.

"Although 2015 was a very challenging year for the energy industry, our $64 billion portfolio of high-quality energy infrastructure assets performed well," said Russ Girling, TransCanada's president and chief executive officer. "Excluding specific items, comparable earnings and funds generated from operations reached record levels while we continued to safely and reliably meet the needs of our customers across North America."

While we were extremely disappointed by the denial of a Presidential Permit for Keystone XL and the resulting $2.9 billion after-tax non-cash impairment charge, we are well positioned to continue to grow earnings and cash flow in the years ahead. Our assets are largely underpinned by cost of service regulated business models or long-term contracts with solid counterparties resulting in highly predictable cash flow streams with minimal commodity or volume throughput risk. In addition, we are proceeding with $13 billion of near-term growth opportunities that are expected to be in-service by 2018. Over the medium to longer-term we are advancing $45 billion of commercially secured, large-scale projects and various other initiatives that will create significant additional shareholder value.

"Based on the confidence we have in our future outlook, we recently repurchased 7.1 million common shares and are pleased to announce a nine per cent increase in the common share dividend," added Girling. "Building upon the resiliency of our base business, our visible, near-term growth and our financial strength, our common share dividend is expected to rise at an average annual rate of eight to ten per cent through 2020. Success in advancing additional initiatives could further extend and augment future dividend growth."


Fourth Quarter and Year-End Highlights
(All financial figures are unaudited and in Canadian dollars unless noted
otherwise)

--  Fourth quarter 2015 financial results:
    --  Net loss attributable to common shares of $2.5 billion or $3.47 per
        share
    --  Comparable earnings of $453 million or $0.64 per share
    --  Comparable earnings before interest, taxes, depreciation and
        amortization (EBITDA) of $1.5 billion
    --  Funds generated from operations of $1.2 billion
    --  Comparable distributable cash flow of $778 million or $1.10 per
        share
--  For the year ended December 31, 2015:
    --  Net loss attributable to common shares of $1.2 billion or $1.75 per
        share
    --  Comparable earnings of $1.8 billion or $2.48 per share
    --  Comparable EBITDA of $5.9 billion
    --  Funds generated from operations of $4.5 billion
    --  Comparable distributable cash flow of $3.5 billion or $5.00 per
        share
--  Announced an increase in the quarterly common share dividend of nine per
    cent to $0.565 per common share for the quarter ending March 31, 2016
--  Filed a normal course issuer bid to allow for the repurchase of up to
    21.3 million common shares by November 22, 2016 and repurchased 7.1
    million common shares for $307 million under this program as of February
    10, 2016
--  Acquired an additional interest in Bruce Power for $236 million,
    bringing our interest to 48.5 per cent
--  Announced the Bruce Power Life Extension Agreement that will extend the
    operating life of the facility to 2064. TransCanada's estimated share of
    the capital investment over the life of the agreement is $6.5 billion
    (2014 dollars)
--  Awarded a contract to build the US$500 million Tuxpan-Tula Pipeline in
    Mexico
--  Announced the NGTL System reached a two-year revenue agreement with
    customers for 2016-2017 and signed contracts that will require a further
    expansion of approximately $600 million for 2018
--  Sold a 49.9 per cent interest in Portland Natural Gas Transmission
    System (PNGTS) to TC PipeLines, LP for US$223 million
--  Amended the application to the National Energy Board (NEB) for the
    Energy East Pipeline to reflect an adjusted route, schedule and capital
    cost
--  Commenced legal actions following the U.S. Administration's denial of a
    Presidential Permit for the Keystone XL pipeline

Net income attributable to common shares decreased by $2.9 billion to a net loss of $2.5 billion or $3.47 per share for the three months ended December 31, 2015 compared to the same period last year. Fourth quarter 2015 included a net loss of $2.9 billion related to specific items including a $2.9 billion after-tax impairment charge related to Keystone XL, an $86 million after-tax loss provision related to the sale of TC Offshore, a $43 million after-tax charge related to an impairment of turbine equipment held for future use in Energy, a debt retirement charge of $27 million after-tax related to the merger of Bruce A and Bruce B, a $60 million after-tax charge for our business restructuring and transformation initiative and a positive $199 million adjustment related to the impact on our net income from non-controlling interests of TC PipeLines, LP's impairment of their equity investment in Great Lakes. Fourth quarter 2014 included an $8 million after-tax gain from the sale of Gas Pacifico/INNERGY. Both periods included unrealized gains and losses from changes in risk management activities. All of these specific items are excluded from comparable earnings.

Net loss attributable to common shares for the year ended December 31, 2015 was $1.2 billion or $1.75 per share compared to net income of $1.7 billion or $2.46 per share in 2014. Results in 2015 included a net loss of $3.0 billion related to specific items including those noted above for the fourth quarter as well as an Alberta corporate income tax rate increase of $34 million. Results in 2014 included a net after-tax gain of $99 million from the sale of Cancarb and its related power generation facility, an after-tax $32 million expense for terminating a natural gas storage contract and an $8 million after-tax gain from the sale of Gas Pacifico/ INNERGY. These amounts, along with unrealized gains and losses on risk management activities, were excluded from comparable earnings.

Comparable earnings for fourth quarter 2015 were $453 million or $0.64 per share compared to $511 million or $0.72 per share for the same period in 2014. Lower contributions from Canadian Power and the Canadian Mainline were partially offset by higher earnings from the Keystone System.

Comparable earnings for the year ended December 31, 2015 were $1.8 billion or $2.48 per share compared to $1.7 billion or $2.42 per share in 2014. Higher earnings from the Keystone System, U.S. Power, ANR, Eastern Power and Mexico were partially offset by lower contributions from Western Power and Bruce Power.

Notable recent developments in Natural Gas Pipelines, Liquids Pipelines, Energy and Corporate include:

Natural Gas Pipelines:


--  NGTL System: In 2015, we placed approximately $350 million of facilities
    into service. Looking forward, the NGTL System continues to develop a
    further approximately $7.3 billion of new supply and demand facilities.
    We have approximately $2.3 billion of facilities that have received
    regulatory approval of which approximately $450 million are currently
    under construction. We have filed for approval for a further
    approximately $2.0 billion of facilities and are waiting for the
    regulatory review process. Applications for approval to construct and
    operate an additional $3.0 billion of facilities have yet to be filed.

    Included in our capital program is the recently announced 2018 expansion
    of a further $600 million of facilities required on the NGTL System. The
    2018 expansion includes multiple projects totaling approximately 88
    kilometres (km) (55 miles) of 20- to 48-inch diameter pipeline, one new
    compressor, approximately 35 new and expanded meter stations and other
    associated facilities. Applications to construct and operate the various
    components of the 2018 expansion program will be filed with the NEB
    between second quarter and fourth quarter 2016. Subject to regulatory
    approvals, construction is expected to start in 2017, with all
    facilities expected to be in service in 2018.


--  NGTL System Revenue Requirement Agreement: In December, we reached a
    two-year revenue requirement agreement with customers and other
    interested parties on the annual costs, including return on equity and
    depreciation, required to operate the NGTL System for 2016 and 2017. The
    agreement fixes the equity return at 10.1 per cent on 40 per cent deemed
    common equity, establishes depreciation at a forecast composite rate of
    3.16 per cent and fixes operating, maintenance and administration (OM&A)
    costs at $222.5 million annually. An incentive mechanism for variances
    will enable NGTL to capture savings from improved performance while
    providing for the flow-through of all other costs, including pipeline
    integrity expenses and emissions costs. On December 1, 2015, NGTL filed
    an application with the NEB for approval of the agreement.


--  Eastern Mainline Project and Energy East: In October 2014, an
    application was filed for the Eastern Mainline Project, consisting of
    new gas facilities in southeastern Ontario required as a result of the
    proposed transfer of Canadian Mainline assets to crude oil service for
    the Energy East project. Application amendments were filed in December
    2015 that reflect the agreement we announced in August 2015 with Eastern
    LDCs resolving their issues with Energy East and the Eastern Mainline
    Project. The agreement provides gas consumers in eastern Canada with
    sufficient natural gas transmission capacity to meet their needs and
    provides for reduced natural gas transmission costs. The Eastern
    Mainline Project capital cost is estimated to be $2.0 billion and is
    conditioned on the approval and construction of the Energy East
    pipeline.


--  Canadian Mainline Expansions: In addition to the Eastern Mainline
    Project, new facilities totaling approximately $700 million over the
    2016 to 2017 period in the Eastern Triangle portion of the Canadian
    Mainline are required to meet contractual commitments from shippers.


--  Tuxpan-Tula Pipeline: In November 2015, we were awarded the contract to
    build, own and operate the US$500 million, 36-inch, 250 km (155 mile)
    Tuxpan-Tula pipeline under a 25-year contract with the Comision Federal
    de Electricidad (CFE). The pipeline will originate in Tuxpan in the
    state of Veracruz and extend through the states of Puebla and Hidalgo,
    supplying natural gas to each of those jurisdictions as well as the
    central region of Mexico. The pipeline will serve new power generating
    facilities as well as existing power plants that plan to switch from
    fuel oil to natural gas as their base fuel. Physical construction is
    expected to begin in 2016 with a planned in-service date in fourth
    quarter 2017.


--  Topolobampo and Mazatlan Pipelines: The US$1 billion Topolobampo project
    and the US$400 million Mazatlan project are in their final construction
    stages. Both projects are supported by 25-year contracts with the CFE
    and are expected to be in-service in late 2016.


--  ANR Section 4 Rate Case: ANR Pipeline filed a Section 4 Rate Case with
    the Federal Energy Regulatory Commission (FERC) on January 29, 2016 that
    requests an increase to ANR's maximum transportation rates. Changes to
    ANR's traditional supply sources and markets, necessary operational
    changes, needed infrastructure updates, and evolving regulatory
    requirements are driving required investment in facility maintenance,
    reliability and system integrity as well as an increase in operating
    costs that have resulted in the current tariff rates not providing a
    reasonable return on our investment. We will also pursue a collaborative
    process to find a mutually beneficial outcome with our customers through
    settlement negotiations. ANR's last rate case filing was more than 20
    years ago.


--  TC Offshore: On December 18, 2015, we entered into an agreement to sell
    TC Offshore to a third party and expect the sale to close in early 2016.
    As a result, at December 31, 2015, the related assets and liabilities
    were classified as held for sale and recorded at their fair values less
    costs to sell, resulting in a loss on assets held for sale of $125
    million ($86 million after-tax).

--  Sale of PNGTS to TC PipeLines, LP: On January 1, 2016, we closed the
    sale of a 49.9 per cent interest of our total 61.7 per cent interest in
    PNGTS to TC PipeLines, LP for US$223 million including the assumption of
    US$35 million of proportional PNGTS debt.


--  Prince Rupert Gas Transmission: In June 2015, Pacific Northwest LNG (PNW
    LNG) announced a positive Final Investment Decision (FID) for its
    proposed liquefaction and export facility, subject to two conditions.
    The first condition, approval by the Legislative Assembly of British
    Columbia of a Project Development Agreement between PNW LNG and the
    Province of B.C., was satisfied in July 2015. The second condition is a
    positive regulatory decision on PNW LNG's environmental assessment by
    the Government of Canada, which has not yet been received.

    Prince Rupert Gas Transmission (PRGT) has all of the primary regulatory
    permits required from the B.C. Oil and Gas Commission (BC OGC) and the
    B.C. Environmental Assessment Office for the project. We are continuing
    our engagement with Aboriginal groups and have now signed project
    agreements with ten First Nations along the pipeline route.

    We remain on target to begin construction following confirmation of a
    FID by PNW LNG. The in-service date for PRGT is estimated to be 2020 but
    will be aligned with PNW LNG's liquefaction facility timeline. Should
    the project not proceed, our project costs (including carrying charges)
    are fully recoverable.


--  Coastal GasLink: We continue to engage with stakeholders along the
    pipeline route and are progressing detailed engineering and construction
    planning work. We have received eight of ten pipeline and facilities
    permits from the BC OGC and anticipate receiving the remaining two
    permits in first quarter 2016. With these permits, Coastal GasLink will
    hold all of the required primary regulatory permits for the project. We
    are also continuing our engagement with Aboriginal groups along our
    pipeline route and have now signed long-term project agreements with
    eleven First Nations.

    Pending the receipt of regulatory approvals and a positive FID from the
    LNG Canada joint venture participants in 2016, we will begin
    construction. The pipeline in-service date will be scheduled to coincide
    with the operational requirements of the LNG Canada facility to be built
    in Kitimat, B.C. Should the project not proceed, our project costs
    (including carrying charges) are fully recoverable.


--  Merrick Mainline: The proposed Merrick Mainline pipeline project that
    will transport natural gas sourced through the NGTL System to the inlet
    of the proposed Pacific Trail Pipeline terminating at the Kitimat LNG
    Terminal near Kitimat, B.C. has been delayed. In late 2015, the Kitimat
    LNG partners advised us that they are re-phasing the pace of Kitimat LNG
    facility development. Since the Merrick Mainline is dependent upon the
    construction of the downstream infrastructure, the in-service date of
    the Merrick Mainline will be no earlier than 2021.


Liquids Pipelines:


--  Keystone Pipeline System: In fourth quarter 2015, we secured additional
    long term contracts bringing our total contract position to 545,000
    Bbl/d.


--  Houston Lateral and Terminal: On January 13, 2016, we entered into an
    agreement with Magellan Midstream Partners L.P. (Magellan) to connect
    our Houston Terminal to Magellan's Houston and Texas City, Texas
    delivery system. We will own 50 per cent of this US$50 million pipeline
    project which will enhance connections for our Keystone Pipeline System
    to the Houston market. The pipeline is expected to be operational during
    the first half of 2017, subject to the receipt of all necessary rights-
    of- way, permits and regulatory approvals.


--  CITGO Sour Lake Pipeline: We have entered into an agreement with CITGO
    Petroleum (CITGO) to construct a US$65 million pipeline connection from
    the Keystone Pipeline System to provide access to CITGO's Sour Lake,
    Texas terminal, which supplies their 425,000 Bbl/d Lake Charles,
    Louisiana refinery. The connection is targeted to be operational in
    fourth quarter 2016.


--  Keystone XL: The decision on the Keystone XL permit application was
    delayed throughout 2015 by the U.S. Department of State and was
    ultimately denied in November 2015.

    At December 31, 2015, as a result of the denial of the Presidential
    permit, we evaluated our investment in Keystone XL and related projects,
    including Keystone Hardisty Terminal, for impairment. As a result of our
    analysis, we determined that the carrying amount of these assets was no
    longer recoverable, and recognized a total non-cash impairment charge of
    $3.7 billion ($2.9 billion after-tax). The impairment charge was based
    on the excess of the carrying value over the fair value of $621 million,
    which includes a $93 million fair value for Keystone Hardisty Terminal.
    The Keystone Hardisty Terminal remains on hold with an estimated in-
    service date to be driven by market need.

    On January 6, 2016, we filed a Notice of Intent to initiate a claim
    under Chapter 11 of the North American Free Trade Agreement (NAFTA) in
    response to the U.S. Administration's decision to deny a Presidential
    Permit for the Keystone XL Pipeline on the basis that the denial was
    arbitrary and unjustified. Through the NAFTA claim, we are seeking to
    recover more than US$15 billion in costs and damages that we have
    suffered as a result of the U.S. Administration's breach of its NAFTA
    obligations.

    On the same day, we filed a lawsuit in the U.S. Federal Court in
    Houston, Texas, asserting that the U.S. President's decision to deny
    construction of Keystone XL exceeded his power under the U.S.
    Constitution. The federal court lawsuit does not seek damages, but
    rather a declaration that the permit denial is without legal merit and
    that no further Presidential action is required before construction of
    the pipeline can proceed.

    We remain supportive of Keystone XL and continue to review our options,
    including filing a new application for a cross border permit.


--  Energy East Pipeline: In December 2015, we filed an amendment to the
    existing Energy East Pipeline application with the NEB. The amendment
    adjusts the proposed route, scope and capital cost of the project
    reflecting refinement and scope change including the removal of a marine
    port in Quebec. The project will continue to serve the three eastern
    Canadian refineries along the route in Montreal and Quebec City, Quebec
    and Saint John, New Brunswick. Changes to the project schedule and
    scope, as reflected in the amendment, have contributed to a new project
    capital cost of $15.7 billion, excluding the transfer of Canadian
    Mainline natural gas assets.

    Subject to regulatory approvals, the pipeline is anticipated to commence
    deliveries by the end of 2020. However, on January 27, 2016, the
    Canadian federal government announced interim measures for its review of
    the Energy East pipeline project. The government announced it will
    undertake additional consultations with aboriginal groups, help
    facilitate expanded public input into the NEB and assess Energy East's
    impact on upstream greenhouse gas emissions. The government will seek a
    six month extension to the NEB's legislative review and a three month
    extension to the legislative time limit for the government's decision
    which will extend the total review time to 27 months. We are reviewing
    these changes and will assess the impact to the project.


--  Northern Courier Pipeline: Construction continues on the pipeline system
    to transport bitumen and diluent between the Fort Hills mine site and
    Suncor Energy's terminal located north of Fort McMurray, Alberta. The
    project is fully underpinned by long term contracts with the Fort Hills
    partnership. We expect the pipeline system to be ready for service in
    2017.


--  Grand Rapids Pipeline: Grand Rapids Pipeline is a dual 36-inch/20-inch
    crude oil and diluent pipeline system connecting producing areas
    northwest of Fort McMurray, Alberta to terminals in the Edmonton/
    Heartland, Alberta region. We have a joint partnership with Brion Energy
    to develop the Grand Rapids Pipeline with each owning 50 per cent of the
    pipeline project.

    Construction is progressing on phase one, which includes a 20-inch
    pipeline from northern Alberta to Edmonton, Alberta and a 36-inch
    pipeline between Edmonton and Fort Saskatchewan, Alberta. We anticipate
    phase one to begin crude oil transportation service in 2017. The
    construction of phase two, the larger 36-inch pipeline, is currently
    delayed and the in-service date will be subject to sufficient market
    demand.

Energy:


--  Bruce Power: In December 2015, Bruce Power entered into an agreement
    with the Independent Electricity System Operator (IESO) to extend the
    operating life of the facility to the end of 2064. This new agreement
    represents an extension and material amendment to the earlier agreement
    that led to the refurbishment of Units 1 and 2 at the site.

    The amended agreement took effect on January 1, 2016 and allows Bruce
    Power to immediately invest in life extension activities for Units 3
    through 8. Our share of investment in the Asset Management (AM) program
    to be completed over the life of the agreement is approximately $2.5
    billion (2014 dollars). Our share of investment in the Major Component
    Replacement (MCR) work, that is expected to occur between 2020 and 2033,
    is approximately $4 billion (2014 dollars). Under certain conditions,
    Bruce Power and the IESO can elect to not proceed with the remaining MCR
    investments should the cost exceed certain thresholds or prove to not
    provide sufficient economic benefits. The agreement has been structured
    to account for changing cost inputs over time, including ongoing
    operating costs and additional capital investments. Beginning in 2016,
    Bruce Power receives a uniform price of $65.73 per MWh for all units.
    This price will be adjusted over the term of the agreement to
    incorporate incremental capital investment and cost changes.

    In connection with this opportunity, we exercised our option to acquire
    an additional 14.89 per cent ownership interest in Bruce B for $236
    million from the Ontario Municipal Employees Retirement System (OMERS).
    Subsequent to this acquisition, Bruce A and Bruce B were merged to form
    a single partnership structure. In 2015 we recognized a charge of $36
    million ($27 million after- tax), representing our proportionate share,
    on the retirement of Bruce Power debt in conjunction with this merger.
    TransCanada and OMERS each hold a 48.5 per cent interest in this newly
    merged partnership structure.


--  Ironwood: On February 1, 2016, we acquired the 778 MW Ironwood natural
    gas fired, combined cycle power plant located in Lebanon, Pennsylvania
    from Talen Energy Corporation for US$657 million before post closing
    adjustments. The Ironwood power plant delivers energy into the PJM power
    market and will provide us with a solid platform from which to continue
    to grow our wholesale, commercial and industrial customer base in this
    market area.


--  Napanee Project: Construction activities continue on the 900 MW Napanee
    natural gas-fired power plant in eastern Ontario. We expect to invest
    approximately $1.0 billion in the facility during construction and
    commercial operations are expected to begin in late 2017 or early 2018.
    Production from the facility is fully contracted with the IESO.


--  Turbine Equipment Impairment Charge: In the fourth quarter of 2015 we
    recorded an impairment loss of $59 million for turbine equipment
    previously purchased for a new power development project that did not
    proceed.

Corporate:


--  Common Share Dividend: Our Board of Directors declared a quarterly
    dividend of $0.565 per share for the quarter ending March 31, 2016 on
    TransCanada's outstanding common shares. The quarterly amount is
    equivalent to $2.26 per common share on an annualized basis and
    represents a nine per cent increase over the previous amount. This is
    the sixteenth consecutive year the Board of Directors has raised the
    dividend.


--  Common Share Repurchase: On November 19, 2015, the Company announced
    that the Toronto Stock Exchange (TSX) had approved a normal course
    issuer bid which allows for the repurchase of up to 21.3 million common
    shares between November 23, 2015 and November 22, 2016 at prevailing
    market prices plus brokerage fees, or such other prices as may be
    permitted by the TSX. As at February 10, 2016, the Company had
    repurchased 7.1 million common shares for $307 million under this
    program.


--  Corporate Restructuring and Business Transformation: In mid-2015, we
    commenced a business restructuring and transformation initiative. While
    there is no change to our corporate strategy, we undertook this
    initiative to maximize the effectiveness and efficiency of our existing
    operations and reduce overall costs. In the fourth quarter, we recorded
    a charge of $60 million after-tax comprised of $28 million related to
    the 2015 program and a provision of $32 million for planned severance
    costs related to 2016 and expected losses under lease commitments. For
    the year ended December 31, 2015, the charge totaled $74 million after-
    tax.


--  Financing Activity: In October 2015, we issued $400 million of medium-
    term notes maturing on November 15, 2041 bearing interest at 4.55 per
    cent and in November 2015, we issued US$1.0 billion of two-year fixed
    rate notes maturing on November 9, 2017 bearing interest at 1.625 per
    cent. In January 2016, we issued a further US$1.25 billion in the U.S.
    debt capital markets comprised of US$850 million of 10-year notes
    bearing interest at 4.875 per cent and US$400 million of 3-year notes
    bearing interest at 3.125 per cent.

Teleconference and Webcast:

We will hold a teleconference and webcast on Thursday, February 11, 2016 to discuss our fourth quarter 2015 financial results. Russ Girling, TransCanada President and Chief Executive Officer, and Don Marchand, Executive Vice-President, Corporate Development and Chief Financial Officer, along with other members of the TransCanada executive leadership team, will discuss the financial results and Company developments at 1 p.m. (MT) / 3 p.m. (ET).

Analysts, members of the media and other interested parties are invited to participate by calling 866.223.7781 or 416.340.2216 (Toronto area). Please dial in 10 minutes prior to the start of the call. No pass code is required. A live webcast of the teleconference will be available at www.transcanada.com.

A replay of the teleconference will be available two hours after the conclusion of the call until midnight (ET) on February 18, 2016. Please call 800.408.3053 or 905.694.9451 (Toronto area) and enter pass code 9573850.

The audited annual Consolidated Financial Statements and Management's Discussion and Analysis (MD&A) are available under TransCanada's profile on SEDAR at www.sedar.com, with the U.S. Securities and Exchange Commission on EDGAR at www.sec.gov/info/edgar.shtml and on the TransCanada website at www.transcanada.com.

With more than 65 years' experience, TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure including natural gas and liquids pipelines, power generation and gas storage facilities. TransCanada operates a network of natural gas pipelines that extends more than 67,000 kilometres (42,000 miles), tapping into virtually all major gas supply basins in North America. TransCanada is one of the continent's largest providers of gas storage and related services with 368 billion cubic feet of storage capacity. A growing independent power producer, TransCanada owns or has interests in over 13,100 megawatts of power generation in Canada and the United States. TransCanada is developing one of North America's largest liquids delivery systems. TransCanada's common shares trade on the Toronto and New York stock exchanges under the symbol TRP. Visit TransCanada.com and our blog to learn more, or connect with us on social media and 3BL Media.



Fourth quarter 2015 financial highlights
============================================================================
                                    three months ended       year ended
                                       December 31          December 31
                                   ==================== ====================
(unaudited - millions of $, except
 per share amounts)                     2015      2014       2015      2014
============================================================================
Income
Revenues                               2,851     2,616     11,300    10,185
Net (loss)/income attributable to
 common shares                        (2,458)      458     (1,240)    1,743
  per common share - basic and
   diluted                            ($3.47)    $0.65     ($1.75)    $2.46
Comparable EBITDA(1)                   1,527     1,521      5,908     5,521
Comparable earnings(1)                   453       511      1,755     1,715
  per common share(1)                  $0.64     $0.72      $2.48     $2.42

Operating cash flow
Funds generated from operations(1)     1,159     1,178      4,513     4,268
(Increase)/decrease in operating
 working capital                         (20)       12       (398)     (189)
----------------------------------------------------------------------------
Net cash provided by operations        1,139     1,190      4,115     4,079
============================================================================

Comparable distributable cash
 flow(1)                                 778       786      3,546     3,406
  per common share(1)                  $1.10     $1.11      $5.00     $4.81

Investing activities
Capital spending - capital
 expenditures                          1,170     1,108      3,918     3,489
Capital spending - projects in
 development                              46       344        511       848
Contributions to equity investments      190        61        493       256
Acquisitions, net of cash acquired       236        60        236       241
Proceeds from sale of assets, net
 of transaction costs                      -         9          -       196

Dividends declared
Per common share                       $0.52     $0.48      $2.08     $1.92
Basic common shares outstanding
 (millions)
Average for the period                   708       709        709       708
End of period                            703       709        703       709
============================================================================
(1) Comparable EBITDA, comparable earnings, comparable earnings per common
    share, funds generated from operations, comparable distributable cash
    flow and comparable distributable cash flow per common share are all
    non-GAAP measures. See the non-GAAP measures section for more
    information on the non-GAAP measures we use and the Reconciliation of
    non-GAAP measures section for reconciliations to their GAAP equivalents.

FORWARD-LOOKING INFORMATION

We disclose forward-looking information to help current and potential investors understand management's assessment of our future plans and financial outlook, and our future prospects overall.

Statements that are forward-looking are based on certain assumptions and on what we know and expect today and generally include words like anticipate, expect, believe, may, will, should, estimate or other similar words.

Forward-looking statements in this news release may include information about the following, among other things:


--  anticipated business prospects
--  our financial and operational performance, including the performance of
    our subsidiaries
--  expectations or projections about strategies and goals for growth and
    expansion
--  expected cash flows and future financing options available to us
--  expected costs for planned projects, including projects under
    construction and in development
--  expected schedules for planned projects (including anticipated
    construction and completion dates)
--  expected regulatory processes and outcomes
--  expected common share purchases under our normal course issuer bid
--  expected impact of regulatory outcomes
--  expected outcomes with respect to legal proceedings, including
    arbitration and insurance claims
--  expected capital expenditures and contractual obligations
--  expected operating and financial results
--  the expected impact of future accounting changes, commitments and
    contingent liabilities
--  expected industry, market and economic conditions.

Forward-looking statements do not guarantee future performance. Actual events and results could be significantly different because of assumptions, risks or uncertainties related to our business or events that happen after the date of this news release.

Our forward-looking information is based on the following key assumptions, and subject to the following risks and uncertainties:

Assumptions


--  inflation rates, commodity prices and capacity prices
--  timing of financings and hedging
--  regulatory decisions and outcomes
--  foreign exchange rates
--  interest rates
--  tax rates
--  planned and unplanned outages and the use of our pipeline and energy
    assets
--  integrity and reliability of our assets
--  access to capital markets
--  anticipated construction costs, schedules and completion dates
--  acquisitions and divestitures.

Risks and uncertainties


--  our ability to successfully implement our strategic initiatives
--  whether our strategic initiatives will yield the expected benefits
--  the operating performance of our pipeline and energy assets
--  amount of capacity sold and rates achieved in our pipeline businesses
--  the availability and price of energy commodities
--  the amount of capacity payments and revenues we receive from our energy
    business
--  regulatory decisions and outcomes
--  outcomes of legal proceedings, including arbitration and insurance
    claims
--  performance and credit risk of our counterparties
--  changes in market commodity prices
--  changes in the political environment
--  changes in environmental and other laws and regulations
--  competitive factors in the pipeline and energy sectors
--  construction and completion of capital projects
--  costs for labour, equipment and materials
--  access to capital markets
--  interest, tax and foreign exchange rates
--  weather
--  cyber security
--  technological developments
--  economic conditions in North America as well as globally.

You can read more about these factors and others in reports we have filed with Canadian securities regulators and the SEC, including the MD&A in our 2014 Annual Report.

As actual results could vary significantly from forward-looking information, you should not put undue reliance on forward-looking information and should not use future-oriented information or financial outlooks for anything other than their intended purpose. We do not update our forward-looking statements due to new information or future events, unless we are required to by law.

FOR MORE INFORMATION

You can find more information about TransCanada in our annual information form and other disclosure documents, which are available on SEDAR (www.sedar.com).

NON-GAAP MEASURES

We use the following non-GAAP measures:


--  EBITDA
--  EBIT
--  funds generated from operations
--  distributable cash flow
--  distributable cash flow per common share
--  comparable earnings
--  comparable earnings per common share
--  comparable EBITDA
--  comparable EBIT
--  comparable distributable cash flow
--  comparable distributable cash flow per common share
--  comparable income from equity investments
--  comparable interest expense
--  comparable interest income and other
--  comparable income tax expense
--  comparable net income attributable to non-controlling interests.

These measures do not have any standardized meaning as prescribed by U.S. GAAP and therefore may not be comparable to similar measures presented by other entities. Please see the Reconciliation of non-GAAP measures section in this news release for a reconciliation of the GAAP measures to the non-GAAP measures.

EBITDA and EBIT

We use EBITDA as an approximate measure of our pre-tax operating cash flow. It measures our earnings before deducting financial charges, income tax, depreciation and amortization, net income attributable to non-controlling interests and preferred share dividends, and includes income from equity investments. EBIT measures our earnings from ongoing operations and is a useful measure of our performance and an effective tool for evaluating trends in each segment as it is equivalent to our segmented earnings. It is calculated in the same way as EBITDA, less depreciation and amortization.

Funds generated from operations

Funds generated from operations includes net cash provided by operations before changes in operating working capital. We believe it is a useful measure of our consolidated operating cash flow because it does not include fluctuations from working capital balances, which do not necessarily reflect underlying operations in the same period and is used to provide a consistent measure of the cash generating performance of our assets. See the Financial condition section for a reconciliation to net cash provided by operations.

Distributable cash flow

Distributable cash flow is defined as funds generated from operations plus distributions in excess of equity earnings less preferred share dividends, distributions to non-controlling interests and maintenance capital expenditures. Maintenance capital expenditures represent costs which are necessary to preserve the operating ability of our assets and investments. We believe it is a useful supplemental measure of performance that defines cash available to common shareholders before capital allocation. See the Reconciliation of non-GAAP measures section for a reconciliation to net cash provided by operations.

Comparable measures

We calculate the comparable measures by adjusting certain GAAP and non-GAAP measures for specific items we believe are significant but not reflective of our underlying operations in the period. These comparable measures are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable.



----------------------------------------------------------------------------
Comparable measure                     Original measure
----------------------------------------------------------------------------
                                       net income attributable to common
comparable earnings                    shares
comparable earnings per common share   net income per common share
comparable EBITDA                      EBITDA
comparable EBIT                        segmented earnings
comparable distributable cash flow     distributable cash flow
comparable distributable cash flow     distributable cash flow per common
per common share                       share
comparable income from equity
investments                            income from equity investments
comparable interest expense            interest expense
comparable interest income and other   interest income and other
comparable income tax expense          income tax expense
comparable net income attributable to  net income attributable to non-
non-controlling interests              controlling interests
----------------------------------------------------------------------------

Our decision not to adjust for a specific item is subjective and made after careful consideration. Specific items may include:


--  certain fair value adjustments relating to risk management activities
--  income tax refunds and adjustments and changes to enacted rates
--  gains or losses on sales of assets
--  legal, contractual and bankruptcy settlements
--  impact of regulatory or arbitration decisions relating to prior year
    earnings
--  restructuring costs
--  impairment of assets and investments.

In calculating comparable earnings and other comparable measures we exclude the unrealized gains and losses from changes in the fair value of derivatives used to reduce our exposure to certain financial and commodity price risks. These derivatives generally provide effective economic hedges, but do not meet the criteria for hedge accounting. As a result, the changes in fair value are recorded in net income. As these unrealized changes in fair value do not accurately reflect the gains and losses that will be realized at settlement, we do not consider them reflective of our underlying operations.



Consolidated results - fourth quarter 2015
============================================================================
                                    three months ended           year ended
                                           December 31          December 31
                                   ==================== ====================
(unaudited - millions of $, except
 per share amounts)                     2015      2014       2015      2014
============================================================================
Natural Gas Pipelines                    572       621      2,220     2,187
Liquids Pipelines                     (3,413)      230     (2,630)      843
Energy                                    82       219        812     1,051
Corporate                               (161)      (43)      (301)     (150)
----------------------------------------------------------------------------
Total segmented (losses)/earnings     (2,920)    1,027        101     3,931
Interest expense                        (380)     (323)    (1,370)   (1,198)
Interest income and other                 80        28        163        91
----------------------------------------------------------------------------
(Loss)/income before income taxes     (3,220)      732     (1,106)    2,824
Income tax recovery/(expense)            646      (206)       (34)     (831)
----------------------------------------------------------------------------
Net (loss)/income                     (2,574)      526     (1,140)    1,993
Net loss/(income) attributable to
 non-controlling interests               139       (43)        (6)     (153)
----------------------------------------------------------------------------
Net (loss)/income attributable to
 controlling interests                (2,435)      483     (1,146)    1,840
Preferred share dividends                (23)      (25)       (94)      (97)
----------------------------------------------------------------------------
Net (loss)/income attributable to
 common shares                        (2,458)      458     (1,240)    1,743
============================================================================
Net (loss)/income per common share
 - basic and diluted                  ($3.47)    $0.65     ($1.75)    $2.46
============================================================================

Net income attributable to common shares decreased by $2,916 million to a net loss of $2,458 million for the three months ended December 31, 2015 compared to the same period in 2014. The 2015 results included:


--  a $2,891 million after-tax impairment charge on the carrying value of
    our investment in Keystone XL and related projects
--  an $86 million after-tax loss provision related to the sale of TC
    Offshore expected to close in early 2016
--  a net charge of $60 million after tax for our business restructuring and
    transformation initiative comprised of $28 million mainly related to
    2015 severance costs and a provision of $32 million for 2016 planned
    severance costs and expected future losses under lease commitments.
    These charges form part of a restructuring initiative, which commenced
    in 2015 to maximize the effectiveness and efficiency of our existing
    operations and reduce overall costs
--  a $43 million after-tax charge relating to an impairment in value on
    turbine equipment held for future use in our Energy business
--  a charge of $27 million after-tax related to Bruce Power's retirement of
    debt in conjunction with the merger of the Bruce A and Bruce B
    partnerships
--  a $199 million positive income adjustment related to the impact on our
    net income from non-controlling interests of TC PipeLines, LP's
    impairment of their equity investment in Great Lakes.

The 2014 results included:


--  an $8 million after-tax gain on sale of our 30 per cent interest in Gas
    Pacifico/INNERGY.

Net income in both periods included unrealized gains and losses from changes in risk management activities which we exclude, along with the above-noted items, to arrive at comparable earnings.

Comparable earnings decreased by $58 million for the three months ended December 31, 2015 compared to the same period in 2014 as discussed below in the reconciliation of net income to comparable earnings.



RECONCILIATION OF NET INCOME TO COMPARABLE EARNINGS
============================================================================
                                    three months ended           year ended
                                       December 31              December 31
                                   ==================== ====================
(unaudited - millions of $, except
 per share amounts)                     2015      2014       2015      2014
============================================================================
Net income attributable to common
 shares                               (2,458)      458     (1,240)    1,743
Specific items (net of tax):
  Keystone XL impairment charge        2,891         -      2,891         -
  TC Offshore loss on sale                86         -         86         -
  Restructuring costs                     60         -         74         -
  Turbine equipment impairment
   charge                                 43         -         43         -
  Alberta corporate income tax rate
   increase                                -         -         34         -
  Bruce Power merger - debt
   retirement charge                      27         -         27         -
  Non-controlling interests - (TC
   PipeLines, LP - Great Lakes
   impairment)                          (199)        -       (199)        -
  Cancarb gain on sale                     -         -          -       (99)
  Niska contract termination               -         -          -        32
  Gas Pacifico/INNERGY gain on sale        -        (8)         -        (8)
  Risk management activities(1)            3        61         39        47
----------------------------------------------------------------------------
Comparable earnings                      453       511      1,755     1,715
----------------------------------------------------------------------------

Net (loss)/income per common share    ($3.47)    $0.65     ($1.75)    $2.46
Specific items (net of tax):
  Keystone XL impairment charge         4.08         -       4.08         -
  TC Offshore loss on sale              0.12         -       0.12         -
  Restructuring costs                   0.08         -       0.10         -
  Turbine equipment impairment
   charge                               0.06         -       0.06         -
  Alberta corporate income tax rate
   increase                                -         -       0.05         -
  Bruce Power merger - debt
   retirement charge                    0.04         -       0.04         -
  Non-controlling interests - (TC
   PipeLines, LP - Great Lakes
   impairment)                         (0.28)        -      (0.28)        -
  Cancarb gain on sale                     -         -          -     (0.14)
  Niska contract termination               -         -          -      0.04
  Gas Pacifico/INNERGY gain on sale        -     (0.01)         -     (0.01)
  Risk management activities(1)         0.01      0.08       0.06      0.07
----------------------------------------------------------------------------
Comparable earnings per common
 share                                 $0.64     $0.72      $2.48     $2.42
============================================================================

  ================================================================
                                   three months
                                      ended          year ended
1 Risk management activities       December 31      December 31
                                 ================ ================
  (unaudited - millions of $)       2015    2014     2015    2014
  ================================================================

  Canadian Power                      (1)    (11)      (8)    (11)
  U.S. Power                          (8)    (85)     (30)    (55)
  Natural Gas Storage                 (1)      9        1      13
  Foreign exchange                     4     (12)     (21)    (21)
  Income tax attributable to risk
   management activities               3      38       19      27
  ----------------------------------------------------------------
  Total losses from risk
   management activities              (3)    (61)     (39)    (47)
  ================================================================

Comparable earnings decreased by $58 million for the three months ended December 31, 2015 compared to the same period in 2014. This was primarily the net effect of:


--  lower Canadian Mainline incentive earnings
--  lower earnings from Canadian Power due to lower realized power prices
    and PPA volumes from Western Power, lower earnings from Bruce Power due
    to higher planned outage days and higher operating expenses at Bruce A,
    partially offset by fewer planned outage days and lower lease expense at
    Bruce B and lower earnings on sale of unused natural gas transportation
    from Eastern Power
--  higher earnings from Liquids Pipelines due to higher contracted volumes
--  higher interest expense due to long-term debt issuances and the ceasing
    of capitalized interest on Keystone XL and related projects following
    the November 6, 2015 denial of a U.S. Presidential permit.

The stronger U.S. dollar in 2015 compared to 2014 positively impacted the translated results in our U.S. businesses, however, this impact was partially offset by a corresponding increase in interest expense on U.S. dollar-denominated debt as well as realized losses on foreign exchange hedges used to manage our exposure.

CAPITAL PROGRAM

We are developing quality projects under our long-term capital program. These long-life infrastructure assets are supported by long-term commercial arrangements with creditworthy counterparties or regulated business models and are expected to generate significant growth in earnings and cash flow.

Our capital program consists of $13 billion of near-term projects and $45 billion of commercially secured medium and longer-term projects. Amounts presented exclude the impact of foreign exchange, capitalized interest and AFUDC.

All project costs are subject to adjustments due to market conditions, route refinement, permitting conditions, scheduling and timing of regulatory permits.



============================================================================
                                                         Estimated
at December 31, 2015                                       Project  Carrying
(unaudited - billions of $)                                   Cost     Value
============================================================================
Summary
Near-term projects                                            13.4       3.9
Medium to Longer-term projects                                45.2       2.1
----------------------------------------------------------------------------
Total Capital Program                                         58.6       6.0
----------------------------------------------------------------------------

Foreign exchange impact on Capital Program(1)                  4.5       0.8
============================================================================
(1) Reflects foreign exchange rate of $1.38 at December 31, 2015.

Near-term
 projects
============================================================================
at December 31,
 2015                                           Expected Estimated
(unaudited -                                  in-service   project  Carrying
 billions of $)                 Segment             date      cost     value
============================================================================
Ironwood                       Energy               2016    US 0.7         -
 Acquisition
Houston Lateral                Liquids              2016    US 0.6    US 0.5
 and Terminal                  Pipelines
                               Natural Gas          2016    US 1.0    US 0.9
Topolobampo                    Pipelines
                               Natural Gas          2016    US 0.4    US 0.3
Mazatlan                       Pipelines
Grand Rapids                   Liquids              2017       0.9       0.5
 Phase 1(1)                    Pipelines
                               Liquids              2017       1.0       0.6
Northern Courier               Pipelines
                               Natural Gas          2017    US 0.5         -
Tuxpan-Tula                    Pipelines
Canadian Mainline- Other       Natural Gas     2016-2017       0.7       0.1
                               Pipelines
NGTL System      - North       Natural Gas          2017       1.7       0.3
                 Montney       Pipelines
                 - 2016/17     Natural Gas     2016-2018       2.7       0.3
                 Facilities    Pipelines
                 - 2018        Natural Gas          2018       0.6         -
                 Facilities    Pipelines
                 - Other       Natural Gas     2016-2017       0.4       0.1
                               Pipelines
                               Energy            2017 or       1.0       0.3
Napanee                                             2018
Bruce Power -                  Energy          2016-2020       1.2         -
 life
 extension(1)
----------------------------------------------------------------------------
Total Near-term                                               13.4       3.9
 projects
============================================================================
(1) Our proportionate share.

Medium to Longer-term projects

The medium to longer-term projects have greater uncertainty with respect to timing and estimated project costs. The expected in-service dates of these projects are 2019 and beyond, and costs provided in the schedule below reflect the most recent costs for each project as filed with the various regulatory authorities or otherwise disclosed. These projects have all been commercially secured but are subject to approvals that include sponsor FID and/or complex regulatory processes.



============================================================================
                                                       Estimated
at December 31, 2015                                     project    Carrying
(unaudited - billions of $)          Segment                cost       value
============================================================================
Heartland and TC Terminals           Liquids                 0.9         0.1
                                     Pipelines
Upland                               Liquids              US 0.6           -
                                     Pipelines
Grand Rapids Phase 2(1)              Liquids                 0.7           -
                                     Pipelines
Bruce Power - life extension(1)      Energy                  5.3           -
Keystone projects
  Keystone XL(2)                     Liquids              US 8.0      US 0.4
                                     Pipelines
  Keystone Hardisty Terminal(2)      Liquids                 0.3         0.1
                                     Pipelines
Energy East projects
  Energy East(3)                     Liquids                15.7         0.7
                                     Pipelines
  Eastern Mainline Project           Natural Gas             2.0         0.1
                                     Pipelines
BC west coast LNG-related projects
  Coastal GasLink                    Natural Gas             4.8         0.3
                                     Pipelines
  Prince Rupert Gas Transmission     Natural Gas             5.0         0.4
                                     Pipelines
  NGTL System - Merrick              Natural Gas             1.9           -
                                     Pipelines
----------------------------------------------------------------------------
Total Medium to Longer-term projects                        45.2         2.1
============================================================================
(1) Our proportionate share.
(2) Carrying value reflects amount remaining after impairment charge.
(3) Excludes transfer of Canadian Mainline natural gas assets.

Natural Gas Pipelines

The following is a reconciliation of comparable EBITDA and comparable EBIT (our non-GAAP measures) to segmented earnings (the equivalent GAAP measure). See the non-GAAP measures section for more information on the non-GAAP measures we use as well as the reconciliation of non-GAAP measures section for reconciliations to their GAAP equivalents.



============================================================================
                                    three months ended           year ended
                                           December 31          December 31
                                   ==================== ====================
(unaudited - millions of $)             2015      2014       2015      2014
============================================================================
Comparable EBITDA                        984       884      3,477     3,241
Depreciation and amortization           (287)     (272)    (1,132)   (1,063)
----------------------------------------------------------------------------
Comparable EBIT                          697       612      2,345     2,178
----------------------------------------------------------------------------
Specific items:
  TC Offshore loss on sale              (125)        -       (125)        -
  Gas Pacifico/INNERGY gain on sale        -         9          -         9
----------------------------------------------------------------------------
Segmented earnings                       572       621      2,220     2,187
============================================================================

Natural Gas Pipelines segmented earnings decreased by $49 million for the three months ended December 31, 2015 compared to the same period in 2014 and included a $125 million pre-tax loss provision recorded as a result of a December 2015 agreement to sell TC Offshore, which is expected to close in early 2016. Segmented earnings in 2014 included a $9 million pre-tax gain related to the sale of Gas Pacifico/INNERGY in November 2014. These amounts have been excluded from our calculation of comparable EBIT. Comparable EBIT and comparable EBITDA are discussed below.



============================================================================
                                    three months ended       year ended
                                       December 31          December 31
                                   ==================== ====================
(unaudited - millions of $)             2015      2014       2015      2014
============================================================================
Canadian Pipelines
Canadian Mainline                        354       396      1,230     1,334
NGTL System                              259       219        934       856
Foothills                                 26        26        107       106
Other Canadian pipelines(1)                6         5         27        22
----------------------------------------------------------------------------
Canadian Pipelines - comparable
 EBITDA                                  645       646      2,298     2,318
Depreciation and amortization           (213)     (208)      (845)     (821)
----------------------------------------------------------------------------
Canadian Pipelines - comparable
 EBIT                                    432       438      1,453     1,497
----------------------------------------------------------------------------

U.S. and International Pipelines
 (US$)
ANR                                       55        47        232       189
TC PipeLines, LP(1,2)                     30        23        106        88
Great Lakes(3)                            28        13         63        49
Other U.S. pipelines (Bison(4),
 Iroquois(1), GTN(5), Portland(6))        18        32         84       132
Mexico (Guadalajara, Tamazunchale)        43        43        181       160
International and other(1,7)               2        (5)         4       (10)
Non-controlling interests(8)              84        65        292       241
----------------------------------------------------------------------------
U.S. and International Pipelines -
 comparable EBITDA                       260       218        962       849
Depreciation and amortization            (55)      (57)      (224)     (219)
----------------------------------------------------------------------------
U.S. and International Pipelines -
 comparable EBIT                         205       161        738       630
Foreign exchange impact                   68        24        206        68
----------------------------------------------------------------------------
U.S. and International Pipelines -
 comparable EBIT (Cdn$)                  273       185        944       698
----------------------------------------------------------------------------
Business Development comparable
 EBITDA and EBIT                          (8)      (11)       (52)      (17)
----------------------------------------------------------------------------
Natural Gas Pipelines - comparable
 EBIT                                    697       612      2,345     2,178
============================================================================
(1) Results from TQM, Northern Border, Iroquois, TransGas and Gas
    Pacifico/INNERGY reflect our share of equity income from these
    investments. In November 2014, we sold our interest in Gas
    Pacifico/INNERGY.
(2) Beginning in August 2014, TC PipeLines, LP began its at-the-market
    equity issuance program which, when utilized, decreases our ownership
    interest in TC PipeLines, LP. On October 1, 2014, we sold our remaining
    30 per cent direct interest in Bison to TC PipeLines, LP. On April 1,
    2015, we sold our remaining 30 per cent direct interest in GTN to TC
    PipeLines, LP. The following shows our ownership interest in TC
    PipeLines, LP and our effective ownership interest of GTN, Bison and
    Great Lakes through our ownership interest in TC PipeLines, LP for the
    periods presented.
============================================================================
                                       Ownership percentage as of
                            ================================================
                            December 31,    April 1,  October 1,  January 1,
                                    2015        2015        2014        2014
============================================================================
TC PipeLines, LP                    28.0        28.3        28.3        28.9
Effective ownership through
 TC PipeLines, LP:
  Bison                             28.0        28.3        28.3        20.2
  GTN                               28.0        28.3        19.8        20.2
  Great Lakes                       13.0        13.1        13.1        13.4
============================================================================
(3) Represents our 53.6 per cent direct ownership interest. The remaining
    46.4 per cent is held by TC PipeLines, LP.
(4) Effective October 1, 2014, we have no direct ownership in Bison. Prior
    to that our direct ownership interest was 30 per cent effective July 1,
    2013.
(5) Effective April 1, 2015, we have no direct ownership in GTN. Prior to
    that our direct ownership interest was 30 per cent effective July 1,
    2013.
(6) Represents our 61.7 per cent ownership interest.
(7) Includes our share of the equity income from TransGas and Gas
    Pacifico/INNERGY as well as general and administration costs relating to
    our U.S. and International Pipelines. In November 2014, we sold our
    interest in Gas Pacifico/INNERGY.
(8) Comparable EBITDA for the portions of TC PipeLines, LP and Portland we
    do not own.

CANADIAN PIPELINES

Net income and comparable EBITDA for our rate-regulated Canadian pipelines are generally affected by the approved ROE, investment base, level of deemed common equity, incentive earnings or losses and, if material, carrying charges on revenue and cost variances that are recovered in revenue on a flow-through basis. Changes in depreciation, financial charges and taxes also impact comparable EBITDA and comparable EBIT but do not have a significant impact in net income as they are almost entirely recovered in revenue on a flow-through basis.



NET INCOME - WHOLLY OWNED CANADIAN PIPELINES

============================================================================
                                    three months ended       year ended
                                       December 31          December 31
                                   ==================== ====================
(unaudited - millions of $)              2015      2014       2015      2014
============================================================================
Canadian Mainline                          52       115        213       300
NGTL System                                69        59        269       241
Foothills                                   4         4         15        17
============================================================================

Net income for the Canadian Mainline decreased by $63 million for the three months ended December 31, 2015 compared to the same period in 2014 primarily due to a lower average investment base in 2015 and a lower ROE of 10.1 per cent in 2015 compared to 11.5 per cent in 2014. Incentive earnings of $59 million for 2014 were recorded in the fourth quarter 2014 contributing to the higher net income in that period.

Net income for the NGTL System increased by $10 million for the three months ended December 31, 2015 compared to the same period in 2014 mainly due to a higher average investment base and OM&A incentive losses realized in 2014.

U.S. AND INTERNATIONAL PIPELINES

Earnings for our U.S. natural gas pipelines operations are generally affected by contracted volume levels, volumes delivered and the rates charged as well as by the cost of providing services, including OM&A and property taxes. ANR is also affected by the contracting and pricing of its storage capacity and incidental commodity sales.

Comparable EBITDA for U.S. and International Pipelines increased by US$42 million for the three months ended December 31, 2015 compared to the same period in 2014. This increase was the net effect of higher ANR Southeast Mainline transportation revenue, partially offset by increased spending on ANR pipeline integrity work.

A stronger U.S. dollar had a positive impact on the Canadian dollar equivalent comparable earnings from our U.S. and International operations.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization increased by $15 million for the three months ended December 31, 2015 compared to the same period in 2014 mainly because of a higher investment base on the NGTL System, depreciation for the completed Tamazunchale Extension, and the effect of a stronger U.S. dollar.



OPERATING STATISTICS - WHOLLY OWNED PIPELINES
============================================================================
                              Canadian
year ended December 31       Mainline(1)     NGTL System(2)      ANR(3)
                          ================ ================ ================
(unaudited)                   2015    2014     2015    2014     2015    2014
============================================================================
Average investment base
 (millions of $)             4,784   5,690    6,698   6,236      n/a     n/a
Delivery volumes (Bcf)
  Total                      1,595   1,645    3,884   3,891    1,600   1,588
  Average per day              4.4     4.5     10.6    10.7      4.4     4.4
============================================================================
(1) Canadian Mainline's throughput volumes represent physical deliveries to
    domestic and export markets. Physical receipts originating at the
    Alberta border and in Saskatchewan for the year ended December 31, 2015
    were 1,122 Bcf (2014 - 1,228 Bcf). Average per day was 3.1 Bcf (2014 -
    3.4 Bcf).
(2) Field receipt volumes for the NGTL System for the year ended December
    31, 2015 were 4,029 Bcf (2014 - 3,888 Bcf). Average per day was 11.0 Bcf
    (2014 - 10.7 Bcf).
(3) Under its current rates, which are approved by the FERC, changes in
    average investment base do not affect results.

Liquids Pipelines

The following is a reconciliation of comparable EBITDA and comparable EBIT (our non-GAAP measures) to segmented earnings (the equivalent GAAP measure). See the non-GAAP measures section for more information on the non-GAAP measures we use as well as the reconciliation of non-GAAP measures section for reconciliations to their GAAP equivalents.



============================================================================
                                    three months ended       year ended
                                        December 31          December 31
                                   ==================== ====================
(unaudited - millions of $)              2015      2014       2015      2014
============================================================================
Comparable EBITDA                         342       288      1,322     1,059
Depreciation and amortization            (69)      (58)      (266)     (216)
----------------------------------------------------------------------------
Comparable EBIT                           273       230      1,056       843
Specific item:
  Keystone XL impairment charge       (3,686)         -    (3,686)         -
----------------------------------------------------------------------------
Segmented (losses)/earnings           (3,413)       230    (2,630)       843
============================================================================

Liquids Pipelines segmented earnings decreased by $3,643 million to a segmented loss of $3,413 million for the three months ended December 31, 2015 compared to the same period in 2014. The segmented loss in 2015 included a $3,686 million pre-tax impairment charge related to Keystone XL and related projects in connection with the denial of the U.S. Presidential permit. This amount has been excluded from our calculation of comparable EBIT. The remainder of the Liquids Pipelines segmented earnings are equivalent to comparable EBIT which, along with comparable EBITDA, are discussed below.



============================================================================
                                    three months ended       year ended
                                       December 31          December 31
                                   ==================== ====================
(unaudited - millions of $)             2015      2014       2015      2014
============================================================================
Keystone Pipeline System                 348       294      1,345     1,073
Liquids Pipelines Business
 Development                              (6)       (6)       (23)      (14)
----------------------------------------------------------------------------
Liquids Pipelines - comparable
 EBITDA                                  342       288      1,322     1,059
Depreciation and amortization            (69)      (58)      (266)     (216)
----------------------------------------------------------------------------
Liquids Pipelines - comparable EBIT      273       230      1,056       843
============================================================================

----------------------------------------------------------------------------
Comparable EBIT denominated as
 follows:
Canadian dollars                          61        58        236       215
U.S. dollars                             160       153        640       570
Foreign exchange impact                   52        19        180        58
----------------------------------------------------------------------------
                                         273       230      1,056       843
============================================================================

Comparable EBITDA for the Keystone Pipeline System is generated primarily by providing pipeline capacity to shippers for fixed monthly payments that are not linked to actual throughput volumes. Uncontracted capacity is offered to the market on a spot basis and provides opportunities to generate incremental earnings.

Comparable EBITDA for the Keystone Pipeline System increased by $54 million for the three months ended December 31, 2015 compared to the same period in 2014 and was primarily due to:


--  higher contracted volumes
--  a stronger U.S. dollar and its positive effect on the foreign exchange
    impact.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization increased by $11 million for the three months ended December 31, 2015 compared to the same period in 2014 primarily due to the effect of a stronger U.S. dollar.

Energy

The following is a reconciliation of comparable EBITDA and comparable EBIT (our non-GAAP measures) to segmented earnings (the equivalent GAAP measure). See the non-GAAP measures section for more information on the non-GAAP measures we use as well as the reconciliation of non-GAAP measures section for reconciliations to their GAAP equivalents.



============================================================================
                                    three months ended       year ended
                                       December 31          December 31
                                   ==================== ====================
(unaudited - millions of $)             2015      2014       2015      2014
============================================================================
Comparable EBITDA                        275       385      1,280     1,348
Depreciation and amortization            (88)      (79)      (336)     (309)
----------------------------------------------------------------------------
Comparable EBIT                          187       306        944     1,039
----------------------------------------------------------------------------
Specific items (pre-tax):
  Turbine equipment impairment
   charge                                (59)        -        (59)        -
  Bruce Power merger - debt
   retirement charge                     (36)        -        (36)        -
  Cancarb gain on sale                     -         -          -       108
  Niska contract termination               -         -          -       (43)
  Risk management activities             (10)      (87)       (37)      (53)
----------------------------------------------------------------------------
Segmented earnings                        82       219        812     1,051
============================================================================

Energy segmented earnings decreased by $137 million for the three months ended December 31, 2015 compared to the same period in 2014 and included the following specific items:


--  a $59 million pre-tax charge relating to an impairment in value on
    turbine equipment previously purchased for a new power development
    project that did not proceed. Various other projects have recently been
    evaluated for possible use of this equipment and those evaluations
    support the impairment of the carrying value. The evaluation included a
    comparison to similar assets available for sale on the market
--  a pre-tax charge of $36 million related to Bruce Power's retirement of
    debt in conjunction with the merger of the Bruce A and Bruce B
    partnerships
--  unrealized losses from changes in the fair value of certain derivatives
    used to reduce our exposure to certain commodity price risks as follows:


============================================================================
                                    three months ended       year ended
Risk management activities             December 31          December 31
                                   ==================== ====================
(unaudited - millions of $, pre-
 tax)                                   2015      2014       2015      2014
============================================================================
Canadian Power                            (1)      (11)        (8)      (11)
U.S. Power                                (8)      (85)       (30)      (55)
Natural Gas Storage                       (1)        9          1        13
----------------------------------------------------------------------------
Total losses from risk management
 activities                              (10)      (87)       (37)      (53)
============================================================================

The period-over-period variances in these unrealized gains and losses reflect the impact of changes in forward natural gas and power prices and the volume of our positions for these particular derivatives over a certain period of time; however, they do not accurately reflect the gains and losses that will be realized on settlement, or the offsetting impact of other derivative and non-derivative transactions that make up our business as a whole. As a result, we do not consider them representative of our underlying operations.

The specific items noted above have been excluded in our calculation of comparable EBIT. The remainder of the Energy segmented earnings are equivalent to comparable EBIT, which, along with EBITDA, are discussed below.



============================================================================
                                    three months ended       year ended
                                       December 31          December 31
                                   ==================== ====================
(unaudited - millions of $)             2015      2014       2015      2014
============================================================================
Canadian Power
Western Power                             (1)       59         72       252
Eastern Power                             85       111        394       350
Bruce Power                               83       115        285       314
----------------------------------------------------------------------------
Canadian Power - comparable
 EBITDA(1)                               167       285        751       916
Depreciation and amortization            (49)      (46)      (190)     (179)
----------------------------------------------------------------------------
Canadian Power - comparable EBIT(1)      118       239        561       737
----------------------------------------------------------------------------

U.S. Power (US$)
U.S. Power - comparable EBITDA            80        85        418       376
Depreciation and amortization            (27)      (27)      (105)     (107)
----------------------------------------------------------------------------
U.S. Power - comparable EBIT              53        58        313       269
Foreign exchange impact                   19         8         87        27
----------------------------------------------------------------------------
U.S. Power - comparable EBIT (Cdn$)       72        66        400       296
----------------------------------------------------------------------------

Natural Gas Storage and other -
 comparable EBITDA                         7        12         15        44
Depreciation and amortization             (3)       (3)       (12)      (12)
----------------------------------------------------------------------------
Natural Gas Storage and other -
 comparable EBIT                           4         9          3        32
----------------------------------------------------------------------------

Business Development comparable
 EBITDA and EBIT                          (7)       (8)       (20)      (26)
----------------------------------------------------------------------------
Energy - comparable EBIT(1)              187       306        944     1,039
============================================================================
(1) Includes our share of equity income from our investments in ASTC Power
    Partnership and Portlands Energy, and our share of comparable income
    from equity investments from Bruce Power.

Comparable EBITDA for Energy decreased by $110 million for the three months ended December 31, 2015 compared to the same period in 2014 due to the net effect of:


--  lower earnings from Western Power as a result of lower realized power
    prices and PPA volumes
--  lower earnings from Bruce Power due to lower volumes resulting from
    higher planned outage days and higher operating expenses at Bruce A,
    partially offset by higher volumes resulting from fewer planned outage
    days and lower lease expense at Bruce B
--  lower earnings from Eastern Power primarily due to lower earnings on the
    sale of unused natural gas transportation
--  a stronger U.S. dollar and its positive effect on the foreign exchange
    impact.


CANADIAN POWER

Western and Eastern Power
============================================================================
                                    three months ended       year ended
                                       December 31          December 31
                                   ==================== ====================
(unaudited - millions of $)             2015      2014       2015      2014
============================================================================
Revenue(1)
Western Power                            122       189        534       736
Eastern Power                             97       106        455       428
Other(2)                                  13        28         62        85
----------------------------------------------------------------------------
                                         232       323      1,051     1,249
(Loss)/income from equity
 investments(3)                           (5)        3          8        45
Commodity purchases resold               (87)     (108)      (353)     (404)
Plant operating costs and other          (57)      (59)      (248)     (299)
Exclude risk management
 activities(1 )                            1        11          8        11
----------------------------------------------------------------------------
Comparable EBITDA                         84       170        466       602
Depreciation and amortization            (49)      (46)      (190)     (179)
----------------------------------------------------------------------------
Comparable EBIT                           35       124        276       423
============================================================================

Breakdown of comparable EBITDA
Western Power                             (1)       59         72       252
Eastern Power                             85       111        394       350
----------------------------------------------------------------------------
Comparable EBITDA                         84       170        466       602
============================================================================
(1) The realized and unrealized gains and losses from financial derivatives
    used to manage Canadian Power's assets are presented on a net basis in
    Western and Eastern Power revenues. The unrealized gains and losses from
    financial derivatives included in revenue are excluded to arrive at
    Comparable EBITDA.
(2) Includes revenues from the sale of unused natural gas transportation,
    sale of excess natural gas purchased for generation and Cancarb sales of
    thermal carbon black up to April 15, 2014 when it was sold.
(3) Includes our share of equity (loss)/income from our investments in ASTC
    Power Partnership, which holds the Sundance B PPA, and Portlands Energy.
    Equity (loss)/income does not include any earnings related to our risk
    management activities.

Sales volumes and plant availability
Includes our share of volumes from our equity investments.

============================================================================
                                    three months ended       year ended
                                       December 31          December 31
                                   ==================== ====================
(unaudited)                             2015      2014       2015      2014
============================================================================
Sales volumes (GWh)
Supply
  Generation
    Western Power                        643       660      2,519     2,517
    Eastern Power                        766       644      3,911     3,080
  Purchased
    Sundance A & B and Sheerness
     PPAs(1)                           2,809     3,283     10,617    11,472
    Other purchases                       59         7        154        16
----------------------------------------------------------------------------
                                       4,277     4,594     17,201    17,085
============================================================================
Sales
  Contracted
    Western Power                      2,080     3,004      7,707    10,484
    Eastern Power                        766       644      3,911     3,080
  Spot
    Western Power                      1,431       946      5,583     3,521
----------------------------------------------------------------------------
                                       4,277     4,594     17,201    17,085
============================================================================
Plant availability(2)
Western Power(3)                          97%       97%        97%       96%
Eastern Power(4)                          96%       93%        97%       91%
============================================================================
(1) Includes our 50 per cent ownership interest of Sundance B volumes
    through the ASTC Power Partnership.
(2) The percentage of time the plant was available to generate power,
    regardless of whether it was running.
(3) Does not include facilities that provide power to us under PPAs.
(4) Does not include Becancour because power generation has been suspended
    since 2008.

Western Power

Comparable EBITDA for Western Power decreased by $60 million for the three months ended December 31, 2015 compared to the same period in 2014. The decrease was due to lower realized power prices and lower PPA volumes.

Average spot market power prices in Alberta decreased by 32 per cent from $31/MWh to $21/MWh for the three months ended December 31, 2015 compared to the same period in 2014. The addition of new natural gas-fired power plants in 2015 have contributed to a well supplied market and few higher priced hours were observed. Realized power prices on power sales can be higher or lower than spot market power prices in any given period as a result of contracting activities.

The $8 million decrease in equity earnings for the three months ended December 31, 2015 compared to the same period in 2014 is primarily due to the impact of lower Alberta spot market prices on earnings from the ASTC Power Partnership which holds our 50 per cent ownership interest in the Sundance B PPA. Equity earnings do not include the impact of related contracting activities.

Fifty-nine per cent of Western Power sales volumes were sold under contract in fourth quarter 2015 compared to 76 per cent in fourth quarter 2014.

Eastern Power

Comparable EBITDA for Eastern Power decreased by $26 million for the three months ended December 31, 2015 compared to the same period in 2014 due to lower earnings on the sale of unused natural gas transportation and lower contractual earnings at Becancour.

BRUCE POWER

Results reflect our proportionate share. Beginning in 2016, results from Bruce Power will be reported on a combined basis to reflect the merged entity. Comparable income from equity investments is a non-GAAP measure. See the non-GAAP measures section for more information on the non-GAAP measures we use.



============================================================================
                                    three months ended       year ended
                                       December 31          December 31
                                   ==================== ====================
(unaudited - millions of $, unless
 noted otherwise)                       2015      2014       2015      2014
============================================================================
Comparable income from equity
 investments(1)
Bruce A                                   42       100        205       209
Bruce B                                   41        15         80       105
----------------------------------------------------------------------------
                                          83       115        285       314
============================================================================
Comprised of:
  Revenues                               356       361      1,301     1,256
  Operating expenses                    (193)     (162)      (691)     (623)
  Depreciation and other                 (80)      (84)      (325)     (319)
----------------------------------------------------------------------------
Comparable income from equity
 investments(1)                           83       115        285       314
  Bruce Power merger - debt
   retirement charge                     (36)        -        (36)        -
----------------------------------------------------------------------------
Income from equity investments(1)         47       115        249       314
============================================================================
Bruce Power - Other information
Plant availability(2)
  Bruce A                                 87%       96%        87%       82%
  Bruce B                                 97%       84%        87%       90%
  Combined Bruce Power                    92%       91%        87%       86%
Planned outage days
  Bruce A                                 38         -        164       118
  Bruce B                                  2        53        163       127
Unplanned outage days
  Bruce A                                  9        13         28       123
  Bruce B                                  6         4         17         4
Sales volumes (GWh)(1)
  Bruce A                              2,809     3,299     11,148    10,526
  Bruce B                              2,579     1,915      8,210     8,197
----------------------------------------------------------------------------
                                       5,388     5,214     19,358    18,723
============================================================================
Realized sales price per MWh(3)
  Bruce A                                $67       $72        $71       $72
  Bruce B                                $57       $58        $55       $56
  Combined Bruce Power                   $61       $65        $63       $63
============================================================================
(1) Represents our 48.9 per cent ownership interest in Bruce A and 31.6 per
    cent ownership interest in Bruce B up to December 3, 2015 when we
    increased our ownership percentage in Bruce B, and Bruce A and B were
    merged. Sales volumes include deemed generation.
(2) The percentage of time in a year the plant was available to generate
    power, regardless of whether it was running.
(3) Calculation based on actual and deemed generation. Bruce B realized
    sales price per MWh includes revenues under the floor price mechanism
    and revenues from contract settlements.

Comparable income from equity investments from Bruce A decreased by $58 million for the three months ended December 31, 2015 compared to the same period in 2014 mainly due to lower volumes resulting from higher planned outage days and higher operating expenses.

Comparable income from equity investments from Bruce B increased by $26 million for the three months ended December 31, 2015 compared to the same period in 2014 mainly due to higher volumes resulting from lower planned outage days and lower lease expense based on the terms of the lease agreement with Ontario Power Generation.

On December 3, 2015, Bruce Power entered into an agreement with the IESO to extend the operating life of the Bruce Power facility to 2064. This new agreement represents an extension and material amendment to the earlier agreement that led to the refurbishment of Units 1 and 2 at the site.

The amended agreement, which took economic effect on January 1, 2016, allows Bruce Power to immediately invest in life extension activities for Units 3 through 8 to support the long-term refurbishment program. This early investment in the Asset Management program will result in near-term life extension, allowing later investment in the Major Component Replacement work that is expected to begin in 2020.

As part of the life extension and refurbishment agreement, Bruce Power began receiving a uniform price of $65.73 per MWh for all units in January 2016. Over time, the price will be subject to adjustments for the return of and on capital invested under the Asset Management and Major Component Replacement capital programs, along with various other pricing adjustments that allow for a better matching of revenues and costs over the long term.

Our estimated share of investment related to the Asset Management program to be completed over the life of the agreement is approximately $2.5 billion (2014 dollars). Our estimated share of investment in the Major Component Replacement work for Units 3 through 8 over the 2020 to 2033 timeframe is approximately a further $4 billion (2014 dollars).

Under certain conditions, Bruce Power and the IESO can elect to not proceed with the remaining Major Component Replacement investments should the cost exceed certain thresholds or prove to not provide sufficient economic benefits. The agreement has been structured to account for changing cost inputs over time, including ongoing operating costs and larger capital investments.

On December 3, 2015, we exercised our option to acquire an additional 14.89 per cent ownership interest in Bruce B for $236 million from the Ontario Municipal Employees Retirement System. On December 4, 2015, Bruce B and Bruce A were merged to form a single partnership structure through Bruce Power LP with us now owning a 48.5 per cent ownership interest. Prior to the acquisition of additional Bruce B ownership and the merger, we owned 48.9 per cent of Bruce A and 31.6 per cent of Bruce B.

Prior to the amended agreement with the IESO, all of the output from Bruce A Units 1 to 4 was sold at a fixed price/ MWh which was adjusted annually on April 1 for inflation and other provisions under the contract. Bruce A also recovered fuel costs from the IESO.



============================================================================
Bruce A fixed price                                   per MWh
============================================================================
April 1, 2015 - December 31, 2015                     $73.42
April 1, 2014 - March 31, 2015                        $71.70
April 1, 2013 - March 31, 2014                        $70.99

Prior to the amended agreement with the IESO, all output from Bruce B Units 5 to 8 was subject to a floor price adjusted annually for inflation on April 1.



============================================================================
Bruce B floor price                                   per MWh
============================================================================
April 1, 2015 - December 31, 2015                     $54.13
April 1, 2014 - March 31, 2015                        $52.86
April 1, 2013 - March 31, 2014                        $52.34

Amounts received under the Bruce B Units 5 - 8 floor price mechanism within a calendar year were subject to repayment if the average spot price in a month exceeded the floor price. The average spot power price in each month of 2015 was less than the floor price and therefore no amounts received under the floor price mechanism in 2015 are subject to repayment.

Bruce B also enters into fixed-price contracts under which it receives or pays the difference between the contract price and the spot price.

The contract also provides for payment if the IESO reduces Bruce Power's generation to balance the supply of and demand for electricity and/or manage other operating conditions of the Ontario power grid. The amount of the reduction is considered "deemed generation", for which Bruce Power is paid the contract price.



U.S. POWER

============================================================================
                                    three months ended           year ended
                                           December 31          December 31
                                   ==================== ====================
(unaudited - millions of US$)           2015      2014       2015      2014
============================================================================
Revenue
Power(1)                                 423       301      1,975     1,794
Capacity                                  63        84        317       362
----------------------------------------------------------------------------
                                         486       385      2,292     2,156
Commodity purchases resold              (315)     (270)    (1,474)   (1,297)
Plant operating costs and other(2)       (96)     (103)      (422)     (529)
Exclude risk management
 activities(1)                             5        73         22        46
----------------------------------------------------------------------------
Comparable EBITDA                         80        85        418       376
Depreciation and amortization            (27)      (27)      (105)     (107)
----------------------------------------------------------------------------
Comparable EBIT                           53        58        313       269
============================================================================
(1) The realized and unrealized gains and losses from financial derivatives
    used to manage U.S. Power's assets are presented on a net basis in Power
    revenues. The unrealized gains and losses from financial derivatives
    included in revenue are excluded to arrive at Comparable EBITDA.
(2) Includes the cost of fuel consumed in generation.

Sales volumes and plant availability

============================================================================
                                    three months ended           year ended
                                           December 31          December 31
                                   ==================== ====================
(unaudited)                             2015      2014       2015      2014
============================================================================
Physical sales volumes (GWh)
Supply
  Generation                           2,093     1,580      7,849     7,742
  Purchased                            5,137     3,866     20,937    13,798
----------------------------------------------------------------------------
                                       7,230     5,446     28,786    21,540

Plant availability(1,2)                   79%       60%        78%       82%
============================================================================
(1) The percentage of time the plant was available to generate power,
    regardless of whether it was running.
(2) Plant availability was higher in the three months ended December 31,
    2015 than the same period in 2014 due to an unplanned outage at the
    Ravenswood facility from September 2014 - May 2015.

U.S. Power - other information

============================================================================
                                    three months ended       year ended
                                       December 31          December 31
                                   ==================== ====================
(unaudited)                              2015      2014       2015      2014
============================================================================
Average Spot Power Prices (US$ per
 MWh)
New England(1)                             30        41         42        65
New York(2)                                24        36         39        61
Average New York2 Spot Capacity
 Prices
(US$ per KW-M)                           9.22     11.92      11.44     13.96
============================================================================
(1) New England ISO all hours Mass Hub price.
(2) Zone J market in New York City where the Ravenswood plant operates.

Comparable EBITDA for U.S. Power decreased US$5 million for the three months ended December 31, 2015 compared to the same period in 2014 primarily due to the net effect of:


--  lower capacity revenue at Ravenswood due to lower realized capacity
    prices in New York and the impact of lower availability at the facility
--  lower realized power prices at our New England facilities
--  higher generation at our Ravenswood facility
--  higher sales to wholesale, commercial and industrial customers in both
    the PJM and New England markets.

Average New York Zone J spot capacity prices were approximately 23 per cent lower for the three months ended December 31, 2015 compared to the same period in 2014. The decrease in spot prices and the impact of hedging activities resulted in lower realized capacity prices in New York in 2015. This was primarily due to increased available operational supply in New York City's Zone J market.

Capacity revenues were also negatively impacted by an outage from September 2014 to May 2015 at Ravenswood. The calculation used by the NYISO to determine the capacity volume for which a generator is compensated utilizes a rolling average forced outage rate. As a result of this methodology, outages impact capacity volumes and associated revenues on a lagged basis. Accordingly, capacity revenues for the three months ended December 31, 2015 were negatively impacted compared to the same period in 2014. The outage continues to be included in the rolling average forced outage rate.

Wholesale electricity prices in New York and New England were lower for the three months ended December 31, 2015 compared to the same period in 2014. In New England, spot power prices for the three months ended December 31, 2015 were 27 per cent lower compared to the same period in 2014. In New York City, spot power prices were 33 per cent lower for the three months ended December 31, 2015 compared to the same period in 2014. Both markets have experienced lower natural gas commodity prices throughout 2015 compared to 2014.

Physical sales volumes and purchased volumes sold to wholesale, commercial and industrial customers were higher for the three months ended December 31, 2015 than the same period in 2014 as we have expanded our customer base in both the PJM and New England markets.

As at December 31, 2015, approximately 6,600 GWh or 70 per cent of U.S. Power's planned generation is contracted for 2016, and 3,000 GWh or 33 per cent for 2017. Planned generation fluctuates depending on hydrology, wind conditions, commodity prices and the resulting dispatch of the assets. Power sales fluctuate based on customer usage.

NATURAL GAS STORAGE AND OTHER

Comparable EBITDA for Natural Gas Storage and Other decreased by $5 million for the three months ended December 31, 2015 compared to the same period in 2014 mainly due to decreased proprietary revenue as a result of lower realized natural gas storage price spreads.

Corporate

The following is a reconciliation of comparable EBITDA and comparable EBIT (our non-GAAP measures) to segmented losses (the equivalent GAAP measure). See the non-GAAP measures section for more information on the non-GAAP measures we use as well as the reconciliation of non-GAAP measures section for reconciliations to their GAAP equivalent.


============================================================================
                                     three months ended      year ended
                                        December 31         December 31
                                    ========================================
(unaudited - millions of $)              2015      2014      2015      2014
============================================================================
Comparable EBITDA                         (74)      (36)     (171)     (127)
Depreciation and amortization              (8)       (7)      (31)      (23)
----------------------------------------------------------------------------
Comparable EBIT                           (82)      (43)     (202)     (150)
Specific items:
  Restructuring costs                     (79)        -       (99)        -
----------------------------------------------------------------------------
Segmented losses                         (161)      (43)     (301)     (150)
============================================================================

Corporate segmented losses for the three months ended December 31, 2015 increased by $118 million compared to the same period in 2014 and included a charge of $79 million before tax for restructuring charges comprised of $36 million related to 2015 severance costs and a provision of $43 million for 2016 planned severance costs and expected future losses under lease commitments. This amount has been excluded from our calculation of comparable EBIT and EBITDA.

Other income statement items

The following are reconciliations and related analyses of our non-GAAP measures to the equivalent GAAP measures for other income statement items. See the non-GAAP measures section for more information on the non- GAAP measures we use.



============================================================================
                                    three months ended       year ended
                                       December 31          December 31
                                   ==================== ====================
(unaudited - millions of $)             2015      2014       2015      2014
============================================================================
Comparable interest on long-term
 debt
(including interest on junior
 subordinated notes)
Canadian-dollar denominated             (113)     (108)      (437)     (443)
U.S. dollar-denominated                 (234)     (216)      (911)     (854)
Foreign exchange                         (78)      (30)      (255)      (90)
----------------------------------------------------------------------------
                                        (425)     (354)    (1,603)   (1,387)
Other interest and amortization
 expense                                 (12)      (29)       (47)      (70)
Capitalized interest                      57        60        280       259
----------------------------------------------------------------------------
Comparable interest expense             (380)     (323)    (1,370)   (1,198)
Specific items(1)                          -         -          -         -
----------------------------------------------------------------------------
Interest expense                        (380)     (323)    (1,370)   (1,198)
============================================================================
(1) There were no specific items in any of these periods.

Comparable interest expense increased by $57 million for the three months ended December 31, 2015 compared to the same period in 2014 due to the net effect of:


--  higher interest expense reflecting debt issues of:
    --  US$1.0 billion in November 2015
    --  $400 million in October 2015
    --  $750 million in July 2015
    --  US$750 million in May 2015
    --  US$750 million in March 2015
    --  US$350 million in March 2015 by TC PipeLines, LP
    --  US$750 million in January 2015
--  partially offset by U.S. dollar-denominated debt maturities
--  a stronger U.S. dollar and its effect on the foreign exchange impact on
    interest expense related to U.S. dollar- denominated debt
--  lower carrying charges to shippers in 2015 on positive net revenue
    variance for Canadian Mainline
--  higher capitalized interest primarily due to LNG projects and the
    Napanee power generating facility, partially offset by the ceasing of
    capitalized interest on Keystone XL and related projects following the
    November 6, 2015 denial of a U.S. Presidential permit.


===========================================================================
                                    three months ended      year ended
                                       December 31         December 31
                                   =================== ====================
(unaudited - millions of $)              2015     2014      2015      2014
===========================================================================
Comparable interest income and
 other                                     76       40       184       112
Specific items (pre-tax):
  Risk management activities                4      (12)      (21)      (21)
---------------------------------------------------------------------------
Interest income and other                  80       28       163        91
===========================================================================

Comparable interest income and other increased by $36 million for the three months ended December 31, 2015 compared to the same period in 2014 due to the net effect of:


--  increased AFUDC related to our rate-regulated projects, primarily the
    Energy East Pipeline and our Mexico pipelines
--  higher realized losses in 2015 compared to 2014 on derivatives used to
    manage our net exposure to foreign exchange rate fluctuations on the
    U.S. dollar-denominated income
--  the impact of a fluctuating U.S. dollar on the translation of foreign
    currency denominated working capital.


============================================================================
                                   three months ended       year ended
                                      December 31          December 31
                                   ==================== ====================
(unaudited - millions of $)             2015      2014       2015      2014
============================================================================
Comparable income tax expense           (235)     (243)      (903)     (859)
Specific items:
  Keystone XL impairment charge          795         -        795         -
  TC Offshore loss on sale                39         -         39         -
  Restructuring costs                     19         -         25         -
  Turbine equipment impairment
   charge                                 16         -         16         -
  Alberta corporate income tax rate
   increase                                -         -        (34)        -
  Bruce Power merger - debt
   retirement charge                       9         -          9         -
  Cancarb gain on sale                     -         -          -        (9)
  Niska contract termination               -         -          -        11
  Gas Pacifico/ INNERGY gain on
   sale                                    -        (1)         -        (1)
  Risk management activities               3        38         19        27
----------------------------------------------------------------------------
Income tax recovery/(expense)            646      (206)       (34)     (831)
============================================================================

Comparable income tax expense decreased by $8 million for the three months ended December 31, 2015 compared to the same period in 2014 and was mainly the result of lower pre-tax earnings and changes in the proportion of income earned between Canadian and foreign jurisdictions.



============================================================================
                                   three months ended       year ended
                                      December 31          December 31
                                   ==================== ====================
(unaudited - millions of $)             2015      2014       2015      2014
============================================================================
Comparable net income attributable
 to non-controlling interests            (60)      (43)      (205)     (153)
Specific item:
  TC PipeLines, LP - Great Lakes
   impairment                            199         -        199         -
----------------------------------------------------------------------------
Net loss/(income) attributable to
 non-controlling interests               139       (43)        (6)     (153)
============================================================================

Net income attributable to non-controlling interests decreased by $182 million for the three months ended December 31, 2015 compared to the same period in 2014 due to an impairment charge recorded by TC PipeLines, LP related to their equity investment goodwill in Great Lakes. At December 31, 2015, TC PipeLines, LP recorded an impairment of US$199 million. On consolidation, we recorded the non-controlling interest's 72 per cent of this TC PipeLines, LP impairment charge which was US$143 million or $199 million (in Canadian dollars). The TC PipeLines, LP impairment charge is not recognized at the TransCanada consolidation level as a result of our lower carrying value of Great Lakes. This $199 million positive impact to net income attributable to non-controlling interests is excluded from comparable net income attributable to non-controlling interests.

Comparable net income attributable to non-controlling interests increased by $17 million for the three months ended December 31, 2015 compared to the same period in 2014 primarily due to higher earnings resulting from the sale of our remaining 30 per cent direct interests in GTN in April 2015 to TC PipeLines, LP along with the impact of a stronger U.S. dollar on the Canadian dollar equivalent earnings from TC PipeLines, LP.

Preferred share dividends were $23 million for the three months and $94 million for the year ended December 31, 2015 (2014 - $25 million and $97 million, respectively).


Reconciliation of non-GAAP measures

============================================================================
                                    three months ended       year ended
                                       December 31          December 31
                                   ==================== ====================
(unaudited - millions of $, except
 per share amounts)                     2015      2014       2015      2014
============================================================================
EBITDA                                (2,468)    1,443      1,866     5,542
Specific items:
  Keystone XL impairment charge        3,686         -      3,686         -
  TC Offshore loss on sale               125         -        125         -
  Restructuring costs                     79         -         99         -
  Turbine equipment impairment
   charge                                 59         -         59         -
  Bruce Power merger - debt
   retirement charge                      36         -         36         -
  Cancarb gain on sale                     -         -          -      (108)
  Niska contract termination               -         -          -        43
  Gas Pacifico/ INNERGY gain on
   sale                                    -        (9)         -        (9)
  Risk management activities(1)           10        87         37        53
----------------------------------------------------------------------------
Comparable EBITDA                      1,527     1,521      5,908     5,521
Depreciation and amortization            452       416      1,765     1,611
----------------------------------------------------------------------------
Comparable EBIT                        1,075     1,105      4,143     3,910
----------------------------------------------------------------------------
Other income statement items
Comparable interest expense             (380)     (323)    (1,370)   (1,198)
Comparable interest income and
 other                                    76        40        184       112
Comparable income tax expense           (235)     (243)      (903)     (859)
Comparable net income attributable
 to non-controlling interests            (60)      (43)      (205)     (153)
Preferred share dividends                (23)      (25)       (94)      (97)
----------------------------------------------------------------------------
Comparable earnings                      453       511      1,755     1,715
Specific items (net of tax):
  Keystone XL impairment charge       (2,891)        -     (2,891)        -
  TC Offshore loss on sale               (86)        -        (86)        -
  Restructuring costs                    (60)        -        (74)        -
  Turbine equipment impairment
   charge                                (43)        -        (43)        -
  Alberta corporate income tax rate
   increase                                -         -        (34)        -
  Bruce Power merger - debt
   retirement charge                     (27)        -        (27)        -
  Non-controlling interests (TC
   PipeLines, LP - Great Lakes
   impairment)                           199         -        199         -
  Cancarb gain on sale                     -         -          -        99
  Niska contract termination               -         -          -       (32)
  Gas Pacifico/ INNERGY gain on
   sale                                    -         8          -         8
  Risk management activities(1)           (3)      (61)       (39)      (47)
----------------------------------------------------------------------------
Net (loss)/income attributable to
 common shares                        (2,458)      458     (1,240)    1,743
----------------------------------------------------------------------------

Comparable interest income and
 other                                    76        40        184       112
Specific items:
  Risk management activities(1)            4       (12)       (21)      (21)
----------------------------------------------------------------------------
Interest income and other                 80        28        163        91
============================================================================

============================================================================
                                three months ended          year ended
                                   December 31             December 31
                              ====================== =======================
(unaudited - millions of $,
 except per share amounts)         2015        2014        2015        2014
============================================================================
Comparable income tax expense      (235)       (243)       (903)       (859)
Specific items:
  Keystone XL impairment
   charge                           795           -         795           -
  TC Offshore loss on sale           39           -          39           -
  Restructuring costs                19           -          25           -
  Turbine equipment
   impairment charge                 16           -          16           -
  Bruce Power merger - debt
   retirement charge                  9           -           9           -
  Alberta corporate income
   tax rate increase                  -           -         (34)          -
  Cancarb gain on sale                -           -           -          (9)
  Niska contract termination          -           -           -          11
  Gas Pacifico/ INNERGY gain
   on sale                            -          (1)          -          (1)
  Risk management
   activities(1)                      3          38          19          27
----------------------------------------------------------------------------
Income tax recovery/(expense)       646        (206)        (34)       (831)
----------------------------------------------------------------------------
Comparable earnings per
 common share                $     0.64  $     0.72  $     2.48  $     2.42
Specific items (net of tax):
  Keystone XL impairment
   charge                         (4.08)          -       (4.08)          -
  TC Offshore loss on sale        (0.12)          -       (0.12)          -
  Restructuring costs             (0.08)          -       (0.10)          -
  Turbine equipment
   impairment charge              (0.06)          -       (0.06)          -
  Alberta corporate income
   tax rate increase                  -           -       (0.05)          -
  Bruce Power merger - debt
   retirement charge              (0.04)          -       (0.04)          -
  Non-controlling interests
   (TC PipeLines, LP - Great
   Lakes impairment)               0.28           -        0.28           -
  Cancarb gain on sale                -           -           -        0.14
  Niska contract termination          -           -           -       (0.04)
  Gas Pacifico/ INNERGY gain
   on sale                            -        0.01           -        0.01
  Risk management
   activities(1 )                 (0.01)      (0.08)      (0.06)      (0.07)
----------------------------------------------------------------------------
Net (loss)/income per common
 share                       $    (3.47) $     0.65  $    (1.75) $     2.46
============================================================================
==================================================================
                                   three months
                                      ended          year ended
(1) Risk management activities     December 31      December 31
                                 ================ ================
    (unaudited - millions of $)     2015    2014     2015    2014
==================================================================
    Canadian Power                    (1)    (11)      (8)    (11)
    U.S. Power                        (8)    (85)     (30)    (55)
    Natural Gas Storage               (1)      9        1      13
    Foreign exchange                   4     (12)     (21)    (21)
    Income tax attributable to
     risk management activities        3      38       19      27
------------------------------------------------------------------
    Total losses from risk
     management activities            (3)    (61)     (39)    (47)
==================================================================

Comparable EBITDA and EBIT by business segment
============================================================================
three months ended December   Natural
 31, 2015                         Gas    Liquids
(unaudited - millions of $) Pipelines  Pipelines  Energy  Corporate   Total
============================================================================
EBITDA                            859     (3,344)    170       (153) (2,468)
Specific items:
Keystone XL impairment
 charge                             -      3,686       -          -   3,686
TC Offshore loss on sale          125          -       -          -     125
Restructuring costs                 -          -       -         79      79
Turbine impairment charge           -          -      59          -      59
Bruce Power merger - debt
 retirement charge                  -          -      36          -      36
Risk management activities          -          -      10          -      10
----------------------------------------------------------------------------
Comparable EBITDA                 984        342     275        (74)  1,527
Depreciation and
 amortization                    (287)       (69)    (88)        (8)   (452)
----------------------------------------------------------------------------
Comparable EBIT                   697        273     187        (82)  1,075
============================================================================


============================================================================
three months ended December   Natural
 31, 2014                         Gas    Liquids
(unaudited - millions of $) Pipelines  Pipelines  Energy  Corporate   Total
============================================================================
EBITDA                            893        288     298        (36)  1,443
Specific items:
Gas Pacifico/INNERGY gain
 on sale                           (9)         -       -          -      (9)
Risk management activities          -          -      87          -      87
----------------------------------------------------------------------------
Comparable EBITDA                 884        288     385        (36)  1,521
Depreciation and
 amortization                    (272)       (58)    (79)        (7)   (416)
----------------------------------------------------------------------------
Comparable EBIT                   612        230     306        (43)  1,105
============================================================================


============================================================================
year ended December 31,       Natural
 2015                             Gas    Liquids
(unaudited - millions of $) Pipelines  Pipelines  Energy  Corporate   Total
============================================================================
EBITDA                          3,352     (2,364)  1,148       (270)  1,866
Specific items:
Keystone XL impairment
 charge                             -      3,686       -          -   3,686
TC Offshore loss on sale          125          -       -          -     125
Restructuring costs                 -          -       -         99      99
Turbine equipment
 impairment charge                  -          -      59          -      59
Bruce Power merger - debt
 retirement charge                  -          -      36          -      36
Risk management activities          -          -      37          -      37
----------------------------------------------------------------------------
Comparable EBITDA               3,477      1,322   1,280       (171)  5,908
Depreciation and
 amortization                  (1,132)      (266)   (336)       (31) (1,765)
----------------------------------------------------------------------------
Comparable EBIT                 2,345      1,056     944       (202)  4,143
============================================================================


============================================================================
year ended December 31,       Natural
 2014                             Gas    Liquids
(unaudited - millions of $) Pipelines  Pipelines  Energy  Corporate   Total
============================================================================
EBITDA                          3,250      1,059   1,360       (127)  5,542
Specific items:
Cancarb gain on sale                -          -    (108)         -    (108)
Niska contract termination          -          -      43          -      43
Gas Pacifico/INNERGY gain
 on sale                           (9)         -       -          -      (9)
Risk management activities          -          -      53          -      53
----------------------------------------------------------------------------
Comparable EBITDA               3,241      1,059   1,348       (127)  5,521
Depreciation and
 amortization                  (1,063)      (216)   (309)       (23) (1,611)
----------------------------------------------------------------------------
Comparable EBIT                 2,178        843   1,039       (150)  3,910
============================================================================

Comparable Distributable Cash Flow

============================================================================
                                    three months ended      year ended
                                      December 31          December 31
                                   ==================== ====================
(unaudited - millions of $, except
 per share amounts)                     2015      2014       2015      2014
============================================================================
Net cash provided by operations        1,139     1,190      4,115     4,079
Increase/(decrease) in operating
 working capital                          20       (12)       398       189
----------------------------------------------------------------------------
Funds generated from operations        1,159     1,178      4,513     4,268
Distributions in excess of equity
 earnings                                  5        10        226       159
Preferred share dividends paid           (23)      (25)       (92)      (94)
Distributions paid to non-
 controlling interests                   (56)      (44)      (224)     (178)
Maintenance capital expenditures
 including equity investments           (353)     (333)      (937)     (781)
----------------------------------------------------------------------------
Distributable cash flow                  732       786      3,486     3,374
----------------------------------------------------------------------------
Specific items impacting
 distributable cash flow (net of
 tax):
  Restructuring costs                     46         -         60         -
  Niska contract termination               -         -          -        32
----------------------------------------------------------------------------
Comparable distributable cash flow       778       786      3,546     3,406
----------------------------------------------------------------------------
Comparable distributable cash flow
 per common share                      $1.10     $1.11      $5.00     $4.81
============================================================================


                 Condensed consolidated statement of income

============================================================================
                                     three months ended      year ended
                                        December 31         December 31
                                    =================== ====================
(unaudited - millions of Canadian $,
 except per share
amounts)                                 2015      2014      2015      2014
============================================================================
Revenues
Natural Gas Pipelines                   1,487     1,399     5,383     4,913
Liquids Pipelines                         469       435     1,879     1,547
Energy                                    895       782     4,038     3,725
----------------------------------------------------------------------------
                                        2,851     2,616    11,300    10,185
Income from Equity Investments             90       160       440       522
Operating and Other Expenses
Plant operating costs and other           906       810     3,250     2,973
Commodity purchases resold                506       414     2,237     1,836
Property taxes                            127       118       517       473
Depreciation and amortization             452       416     1,765     1,611
Asset impairment charges                3,745         -     3,745         -
----------------------------------------------------------------------------
                                        5,736     1,758    11,514     6,893
----------------------------------------------------------------------------
(Loss)/Gain on Assets Held for
 Sale/Sold                               (125)        9      (125)      117
Financial Charges
Interest expense                          380       323     1,370     1,198
Interest income and other                 (80)      (28)     (163)      (91)
----------------------------------------------------------------------------
                                          300       295     1,207     1,107
----------------------------------------------------------------------------
(Loss)/Income before Income Taxes      (3,220)      732    (1,106)    2,824
----------------------------------------------------------------------------
Income Tax (Recovery)/Expense
Current                                    12        41       136       145
Deferred                                 (658)      165      (102)      686
----------------------------------------------------------------------------
                                         (646)      206        34       831
----------------------------------------------------------------------------
Net (Loss)/Income                      (2,574)      526    (1,140)    1,993
Net (loss)/income attributable to
 non-controlling interests               (139)       43         6       153
----------------------------------------------------------------------------
Net (Loss)/Income Attributable to
 Controlling Interests                 (2,435)      483    (1,146)    1,840
Preferred share dividends                  23        25        94        97
----------------------------------------------------------------------------
Net (Loss)/Income Attributable to
 Common Shares                         (2,458)      458    (1,240)    1,743
============================================================================

Net (Loss)/Income per Common Share
Basic and diluted                      ($3.47)    $0.65    ($1.75)    $2.46
----------------------------------------------------------------------------
Dividends Declared per Common Share     $0.52     $0.48     $2.08     $1.92
----------------------------------------------------------------------------

Weighted Average Number of Common
 Shares
(millions)
Basic                                     708       709       709       708
Diluted                                   708       710       709       710
============================================================================

             Condensed consolidated statement of cash flows

============================================================================
                                     three months ended          year ended
                                            December 31         December 31
                                    =================== ====================
(unaudited - millions of Canadian $)     2015      2014      2015      2014
============================================================================
Cash Generated from Operations
Net (loss)/income                      (2,574)      526    (1,140)    1,993
Depreciation and amortization             452       416     1,765     1,611
Asset impairment charges                3,745         -     3,745         -
Deferred income taxes                    (658)      165      (102)      686
Income from equity investments            (90)     (160)     (440)     (522)
Distributed earnings received from
 equity investments                       179       164       576       579
Employee post-retirement benefits
 expense, net of funding                    3         9        44        37
Loss/(gain) on assets held for
 sale/sold                                125        (9)      125      (117)
Equity allowance for funds used
 during construction                      (50)      (36)     (165)      (95)
Unrealized losses on financial
 instruments                                6        99        58        74
Other                                      21         4        47        22
(Increase)/decrease in operating
 working capital                          (20)       12      (398)     (189)
----------------------------------------------------------------------------
Net cash provided by operations         1,139     1,190     4,115     4,079
----------------------------------------------------------------------------
Investing Activities
Capital expenditures                   (1,170)   (1,108)   (3,918)   (3,489)
Capital projects in development           (46)     (344)     (511)     (848)
Contributions to equity investments      (190)      (61)     (493)     (256)
Acquisitions, net of cash acquired       (236)      (60)     (236)     (241)
Proceeds from sale of assets, net of
 transaction costs                          -         9         -       196
Distributions in excess of equity
 earnings                                   5        10       226       159
Deferred amounts and other                 82      (106)      322       335
----------------------------------------------------------------------------
Net cash used in investing
 activities                            (1,555)   (1,660)   (4,610)   (4,144)
----------------------------------------------------------------------------
Financing Activities
Notes payable (repaid)/issued, net       (554)      689    (1,382)      544
Long-term debt issued, net of issue
 costs                                  1,722        23     5,045     1,403
Long-term debt repaid                     (39)      (49)   (2,105)   (1,069)
Junior subordinated notes issued,
 net of issue costs                         -         -       917         -
Dividends on common shares               (368)     (340)   (1,446)   (1,345)
Dividends on preferred shares             (23)      (25)      (92)      (94)
Distributions paid to non-
 controlling interests                    (56)      (44)     (224)     (178)
Common shares issued                       15         4        27        47
Common shares repurchased                (294)        -      (294)        -
Preferred shares issued, net of
 issue costs                                -         -       243       440
Partnership units of subsidiary
 issued, net of issue costs                24         -        55        79
Preferred shares of subsidiary
 redeemed                                   -         -         -      (200)
----------------------------------------------------------------------------
Net cash provided by/(used in)
 financing activities                     427       258       744      (373)
----------------------------------------------------------------------------
Effect of Foreign Exchange Rate
 Changes on Cash
and Cash Equivalents                       84         3       112         -
----------------------------------------------------------------------------
Increase/(Decrease) in Cash and Cash
 Equivalents                               95      (209)      361      (438)
----------------------------------------------------------------------------
Cash and Cash Equivalents
Beginning of period                       755       698       489       927
----------------------------------------------------------------------------
Cash and Cash Equivalents
End of period                             850       489       850       489
============================================================================

                    Condensed consolidated balance sheet

============================================================================
                                                         December  December
(unaudited - millions                                         31,       31,
 of Canadian $)                                              2015      2014
============================================================================
ASSETS
Current Assets
Cash and cash
 equivalents                                                  850       489
Accounts receivable                                         1,388     1,313
Inventories                                                   323       292
Other                                                       1,353     1,019
----------------------------------------------------------------------------
                                                            3,914     3,113
Plant, Property and   net of accumulated depreciation of
 Equipment             $22,299 and $19,864, respectively   44,817    41,774
Equity Investments                                          6,214     5,598
Regulatory Assets                                           1,184     1,297
Goodwill                                                    4,812     4,034
Intangible and Other
 Assets                                                     3,191     2,646
Restricted Investments                                        351        63
----------------------------------------------------------------------------
                                                           64,483    58,525
============================================================================
LIABILITIES
Current Liabilities
Notes payable                                               1,218     2,467
Accounts payable and
 other                                                      3,021     2,892
Accrued interest                                              520       424
Current portion of
 long-term debt                                             2,547     1,797
----------------------------------------------------------------------------
                                                            7,306     7,580
Regulatory Liabilities                                      1,159       263
Other Long-Term
 Liabilities                                                1,260     1,052
Deferred Income Tax
 Liabilities                                                5,144     4,857
Long-Term Debt                                             29,037    22,960
Junior Subordinated
 Notes                                                      2,422     1,160
----------------------------------------------------------------------------
                                                           46,328    37,872
EQUITY
Common shares, no par
 value                                                     12,102    12,202
  Issued and          December 31, 2015 - 703 million
   outstanding:        shares
                      December 31, 2014 - 709 million
                       shares
Preferred shares                                            2,499     2,255
Additional paid-in
 capital                                                        7       370
Retained earnings                                           2,769     5,478
Accumulated other comprehensive loss                         (939)   (1,235)
----------------------------------------------------------------------------
Controlling Interests                                      16,438    19,070
Non-controlling
 interests                                                  1,717     1,583
----------------------------------------------------------------------------
                                                           18,155    20,653
----------------------------------------------------------------------------
                                                           64,483    58,525
============================================================================


Segmented information

============================================================================
                                       Natural Gas            Liquids
three months ended December 31          Pipelines            Pipelines
                                  ==========================================
(unaudited - millions of Canadian
 $)                                     2015      2014       2015      2014
============================================================================
Revenues                               1,487     1,399        469       435
Income from equity investments            45        39          -         -
Plant operating costs and other         (463)     (471)      (109)     (133)
Commodity purchases resold                 -         -          -         -
Property taxes                           (85)      (83)       (18)      (14)
Depreciation and amortization           (287)     (272)       (69)      (58)
Asset impairment charges                   -         -     (3,686)        -
(Loss)/gain on assets held for
 sale/sold                              (125)        9          -         -
----------------------------------------------------------------------------
Segmented earnings/(losses)              572       621     (3,413)      230
============================================================================
Interest expense
Interest income and other
----------------------------------------------------------------------------
(Loss)/Income before income taxes
Income tax recovery/(expense)
----------------------------------------------------------------------------
Net (loss)/income
Net loss/(income) attributable to
 non-controlling interests
----------------------------------------------------------------------------
Net (loss)/income attributable to
 controlling interests
Preferred share dividends
----------------------------------------------------------------------------
Net (loss)/income attributable to
 common shares
============================================================================



============================================================================

                                       Natural Gas            Liquids
year ended December 31                  Pipelines            Pipelines
                                  ==========================================
(unaudited - millions of Canadian
 $)                                     2015      2014       2015      2014
============================================================================
Revenues                               5,383     4,913      1,879     1,547
Income from equity investments           179       163          -         -
Plant operating costs and other       (1,736)   (1,501)      (478)     (426)
Commodity purchases resold                 -         -          -         -
Property taxes                          (349)     (334)       (79)      (62)
Depreciation and amortization         (1,132)   (1,063)      (266)     (216)
Asset impairment charges                   -         -     (3,686)        -
(Loss)/gain on assets held for
 sale/sold                              (125)        9          -         -
----------------------------------------------------------------------------
Segmented earnings/(loss)              2,220     2,187     (2,630)      843
============================================================================
Interest expense
Interest income and other
----------------------------------------------------------------------------
(Loss)/Income before income taxes
Income tax expense
----------------------------------------------------------------------------
Net (loss)/income
Net income attributable to non-
 controlling interests
----------------------------------------------------------------------------
Net (loss)/income attributable to
 controlling interests
Preferred share dividends
----------------------------------------------------------------------------
Net (loss)/income attributable to
 common shares
============================================================================



Segmented information

============================================================================

three months ended December 31        Energy      Corporate       Total
                                  ==========================================
(unaudited - millions of Canadian
 $)                                 2015   2014   2015   2014   2015   2014
============================================================================
Revenues                             895    782      -      -  2,851  2,616
Income from equity investments        45    121      -      -     90    160
Plant operating costs and other     (181)  (170)  (153)   (36)  (906)  (810)
Commodity purchases resold          (506)  (414)     -      -   (506)  (414)
Property taxes                       (24)   (21)     -      -   (127)  (118)
Depreciation and amortization        (88)   (79)    (8)    (7)  (452)  (416)
Asset impairment charges             (59)     -      -      - (3,745)     -
(Loss)/gain on assets held for
 sale/sold                             -      -      -      -   (125)     9
----------------------------------------------------------------------------
Segmented earnings/(losses)           82    219   (161)   (43)(2,920) 1,027
==============================================================
Interest expense                                                (380)  (323)
Interest income and other                                         80     28
----------------------------------------------------------------------------
(Loss)/Income before income taxes                             (3,220)   732
Income tax recovery/(expense)                                    646   (206)
----------------------------------------------------------------------------
Net (loss)/income                                             (2,574)   526
Net loss/(income) attributable to
 non-controlling interests                                       139    (43)
----------------------------------------------------------------------------
Net (loss)/income attributable to
 controlling interests                                        (2,435)   483
Preferred share dividends                                        (23)   (25)
----------------------------------------------------------------------------
Net (loss)/income attributable to
 common shares                                                (2,458)   458
============================================================================



============================================================================


year ended December 31                Energy      Corporate       Total
                                  ==========================================
(unaudited - millions of Canadian
 $)                                 2015   2014   2015   2014   2015   2014
============================================================================
Revenues                           4,038  3,725      -      - 11,300 10,185
Income from equity investments       261    359      -      -    440    522
Plant operating costs and other     (766)  (919)  (270)  (127)(3,250)(2,973)
Commodity purchases resold        (2,237)(1,836)     -      - (2,237)(1,836)
Property taxes                       (89)   (77)     -      -   (517)  (473)
Depreciation and amortization       (336)  (309)   (31)   (23)(1,765)(1,611)
Asset impairment charges             (59)     -      -      - (3,745)     -
(Loss)/gain on assets held for
 sale/sold                             -    108      -      -   (125)   117
----------------------------------------------------------------------------
Segmented earnings/(loss)            812  1,051   (301)  (150)   101  3,931
==============================================================
Interest expense                                              (1,370)(1,198)
Interest income and other                                        163     91
----------------------------------------------------------------------------
(Loss)/Income before income taxes                             (1,106) 2,824
Income tax expense                                               (34)  (831)
----------------------------------------------------------------------------
Net (loss)/income                                             (1,140) 1,993
Net income attributable to non-
 controlling interests                                            (6)  (153)
----------------------------------------------------------------------------
Net (loss)/income attributable to
 controlling interests                                        (1,146) 1,840
Preferred share dividends                                        (94)   (97)
----------------------------------------------------------------------------
Net (loss)/income attributable to
 common shares                                                (1,240) 1,743
============================================================================

TOTAL ASSETS

============================================================================
                                                 December 31,   December 31,
(unaudited - millions of Canadian $)                     2015           2014
============================================================================
Natural Gas Pipelines                                  31,072         27,103
Liquids Pipelines                                      16,046         16,116
Energy                                                 15,558         14,197
Corporate                                               1,807          1,109
----------------------------------------------------------------------------
                                                       64,483         58,525
============================================================================

Contacts:
TransCanada Media Enquiries:
Mark Cooper/Terry Cunha
403.920.7859 or 800.608.7859

TransCanada Investor & Analyst Enquiries:
David Moneta/Stuart Kampel
403.920.7911 or 800.361.6522


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