1. TransCanada Business Model
Good Afternoon.
My name is Stuart Kampel. I am General Manager of Mexico Business Development for TransCanada.
It is my pleasure to be here today to speak at this conference.
I have been asked today to provide you with some perspective on how TransCanada approaches its business development and project initiatives.
International Pipeline Conference
November 12, 2009

2. Agenda About TransCanada TransCanada’s North America Business Model
Guadalajara Pipeline Project
For today’s presentation, I will provide a brief overview of TransCanada for those who are not familiar with us;
I will provide a summary of the North America natural gas business model and how TransCanada is positioned within in
and
Finally I will close with an overview of one of the natural gas pipeline projects that we are currently working on here in Mexico, the Guadalajara pipeline project.

3. Natural Gas Pipelines
59,000 km (36,500 mi) of wholly owned natural gas pipeline
Interests in an additional 7,800 km (4,800 mi) of natural gas pipeline
250 Bcf of regulated natural gas storage capacity
Unparalleled connections from traditional and emerging basins to growing markets
Average daily volume of approximately 15 Bcf
TransCanada is the largest pipeline owner / operator in North America, with over $40 billion in assets. We employ approximately 4,000 professionals across our system.
We own over 59,000 kilometers of large diameter natural gas pipeline connecting the largest natural gas supply basins to the largest gas markets.
On an average day, TransCanada transports approximately 15 billion cubic feet of natural gas, which is equivalent to about 20% of North America’s natural gas use.
In addition to our pipeline assets, TransCanada is the 2nd largest natural gas storage operator in North America, with supply area storage located in Alberta, and market area storage located in Michigan. 3

4. Power Generation 19 plants, 10,900 megawatts
Diversified portfolio consists primarily of:
Long-term power purchase arrangements with stable, predictable earnings
Low-cost, base-load generation
Key power infrastructure assets in attractive markets
The second major line of business for TransCanada is in Power Generation.
TransCanada owns or controls approximately 11,000 megawatts of power generation in various locations in North America. This is equivalent to approximately 20% of the generation capacity of Mexico.
Our assets are located primarily in western Canada, the Northeast United States and in the province of Ontario.
Our portfolio is highly diversified, including:
Nuclear Generation
Natural Gas
Coal
Hydro
And more recently wind generation 4

5. TransCanada’s History in Mexico
1998, built the first privately owned pipeline in Mexico, the Energia Mayakan pipeline
1999, built the El Bajio pipeline in Bajio region
2006, built the Tamazunchale pipeline in eastern Mexico
CD Juarez
Nogales
Mexico City
Mérida
Toluca
Tuxpan
Naco
Lázaro Cárdenas
Guadalajara
Altamira
Mayakan Pipeline
El Bajío Pipeline
Manzanillo
Guaymas
Chihuahua
Valladolid
Reynosa
Monterrey
Tijuana
Acapulco
Topolobampo
Mazatlán
Mexicali
Cancun
Pemex Pipeline
Private Open Access Pipeline
Tamazunchale Pipeline
Proposed LNG Terminal
Legend
TransCanada’s history in Mexico goes back to the mid 1990s, when Mexico was restructuring its natural gas regulations and policies.
In 1998, TransCanada built the first non-Pemex pipeline in Mexico, the Energia Mayakan project to the Yucatan.
Later we built the El Bajio pipeline and in 2006 built the first phase of the Tamazunchale pipeline under a contract with CFE.
Our history here in Mexico continues with the upcoming Guadalajara pipeline project, which I will speak more about later.

6. TransCanada’s North American Business Model
I was asked to provide you with some comments on how TransCanada approaches its business and how we position ourselves within in.
To provide some context, I will provide an overview of the North America gas business model. 6

7. The Natural Gas Transportation System
This graphic depicts the Natural gas transportation system from wellhead through to the end use market.
For TransCanada, we have chosen to participate and focus on two specific areas of this system.
TransCanada focuses only on long haul natural gas transportation and underground storage. This segment of the business fits our business style of a capital intensive investment with a very small labor requirement.
TransCanada takes gas downstream of the gas processing plants and transports that gas long distances to the market areas. At that point, we hand off control of the gas to industrials, natural gas distribution companies and power generation facilities.
Source: AGA

8. Natural Gas Value Chain – Considerations of Participants
Producers
Marketers
Pipelines
Local Utility
Consumers
Independent, Major
Shell, BP, Exxon, ConocoPhilips
Gas well gas
Oil well gas No
Product reserves,
Generate cash
Affiliated, Independent
JP Morgan, Encana
Supply aggregation, Logistics management No
Margin on gas, Margin on services
Interstate, Intrastate
TransCanada
Transportation, Storage
Yes
Fee for service, Return on capital
Investor owned, Municipal
Pacific Gas & Electric, Oneok
Supply aggregation,
Transportation
Yes
Fee for service, Return on capital
Residential, Industrial, Commercial
Homes, stores, plants
Market for gas, Market for services No
Secure supply, Minimum cost
Type
Example
Contribution
In terms of the natural gas value chain, depicted here, TransCanada positions itself in the middle of the chain. The considerations and needs of participants in the chain vary widely across this value chain.
Producers, whether big or small, focus their efforts on finding and developing new natural gas reserves both to maintain but also increase their production. The producers take commodity price risk and their objective is to achieve the highest price possible.
Marketers try to help manage pricing risk for producers and the end use market by creating a trading market, similar to a stock exchange. They can speculate on price, but usually take a margin on transactions.
Pipelines provide the conduit to move the gas from the well to the market on a fee for service basis. Since it is such a capital intensive business, with recovery of capital over a 20 to 30 year period, it comes under regulatory scrutiny, with a focus on a reasonable return on capital employed.
The local utility takes that gas and makes it available to households. It is also a fee for service business and is regulated. Consumers, of course, demand reliable service and low prices.
Price Regulated
Objectives

9. Natural Gas Value Chain – Activities of Participants
Producers
Marketers
Pipelines
Local Utility
Consumers
Generate cash flow
Ensure access to market
Obtain best price
Match supplies to market
Avoid imbalance penalties
Cost vs benefit of selling further down the channel
Seasonal arbitrage
Commodity price risk (hedging)
Achieve margin (spread)
Avoid imbalance penalties
Manage price risks
Seasonal arbitrage
Geographic arbitrage
Profit opportunities in managing risks for others
Generate transport/storage revenue
Extract value for service provided (swing)
Impose discipline on shippers (receipt vs delivery imbalances)
Account for ownership of gas in pipeline custody
Optimize system operations
Commodity sales
Service obligation
Supply security/cost
Transport revenue
Pipeline/storage capacity access
Pipeline imbalances
Imbalances on local distribution company
Commodity price risk
Type of service (sale or transport, firm or interruptible)
Supply security
Commodity price
Access to alternatives
Hedging
Imbalances
This chart depicts the main activities of the value chain participants.
Because the objectives of the producers and the end users are so different (one side wants high prices and the other side wants low prices), it is usually up to the regulated entities to enforce discipline on the system.
At the same time, the marketers are always attempting to manipulate the market in order to squeeze additional revenue for themselves.
The pipeline needs to ensure that gas quality standards are met, and that operational tolerances remain relatively constant. The rules that govern the operations of the pipeline system are therefore very strict and are usually consistent across the pipeline industry.
The role of the regulator is very important to keep the system operating in an efficient and consistent manner.
Source: AGA

10. Broad Trends – Gas Demand
Bcf/d
History
Forecast
Residential & Commercial
Other
Industrial
Electric Generation
Since the construction of pipelines is such a capital intensive business, with recovery of capital over a long period of time, it is very important to ensure that the market will exist over a long period of time.
It is important that we understand the market fundamentals and any changes that are coming forward in the industry.
One thing we look at is future trends of gas supply and demand.
Shown here is our forecast of North America gas demand. We expect to see a continued and growing need for natural gas over the next 25 years.
We see demand growth primarily in the power generation sector.
This is particularly true for Mexico as the economy here should grow at a relatively faster pace than in the United States and Canada.
Demand led by Electric Generation sector

11. Broad Trends – Gas Supply
Gulf of Mexico + U.S. Other
WCSB
U.S. Rockies
Eastern Canada
Bcf/d
North
LNG
Mexico
Demand
History
Forecast
U.S. Shale
BC Unconv.
To meet this demand, we see continued growth in domestic natural gas production, supplemented with competitively priced LNG. We expect that Mexico natural gas production will also be a key contributor to supply growth.
The biggest change from previous years, that we are watching very closely, is the emergence of shale gas production onto the supply scene, shown in yellow.
As recently as two years ago we had forecasts that relied much more on imports of LNG than we have today.
The change in expectation from LNG back to Shale gas can have a dramatic impact on the value of our pipeline systems.
Domestic North America gas supply to remain strong

12. Building for Tomorrow: Developing a Portfolio of Future Growth Opportunities
Our Approach:
Maintain complete analysis of market conditions
Capitalize on the need for new and more efficient energy infrastructure in North America
Focus on regions and businesses where we can build genuine competitive advantage
Carefully select opportunities with long-term upside
Maintain long list of project opportunities
Pursue projects when conditions are right
Negotiate contract structure acceptable to our risk tolerance
So, in terms of our business planning, we need to constantly analyse new supply and demand trends.
Once we identify a trend we attempt to capitalize on it by focusing on the regions where we have a competitive advantage.
We select opportunities that have long term fundamentals that will ensure recovery of our capital.
We try to have a long list of project opportunities and select the ones that best reflect our risk and return expectations.
In commercializing the opportunities, we attempt to negotiate terms that appropriately reflect the risk of the project.

13. Building for Tomorrow: Risk / Return Trade off
This slide depicts the risk / return trade off. For any change in the weighting on one side of the scale, there is a corresponding change in the weighting on the other side of the scale.
For example, if the market is not willing to offer long term contracts, the required rate of return must increase to compensate for the risk of capital recovery in the future.
Other types of risks that affect return include the construction cost risks, the strength of the counterparty and even political risk when dealing with certain jurisdictions.
Required Return
Capital Structure
External Financing
Financial Market situation
Corporate Strength
Project Risks
Construction cost
Contract Term
Counterparty Exposure
Regulatory/Political

14. Track Record of Investing in Attractive Low-Risk Assets
$19 Billion* (1999 – 2008)
Canadian Regulated Pipelines $2.6
(14%)
U.S. Regulated Pipelines $8.7
Power – Long-term PPAs / Capacity Payments $4.7
(45%)
For TransCanada, we have shown a consistent track record of investing in projects that offer long term contract and regulatory security.
Over the last ten years, we have invested approximately 19 Billion dollars in US and Canadian regulated pipelines, power plants with long term purchase agreements and if we cannot achieve that, then we look to be the lowest cost service supplier into that region.
(25%)
Power – Low-cost Base-load $2.1
Other $0.9
(11%)
(5%)
* Includes acquisitions and completed greenfield projects

15. Capital Cost Estimate*
Current Projects
Project
Pipelines
Keystone
Canadian Regulated
U.S. Regulated
Bison
Guadalajara
Energy
Bruce Power Units 1 & 2 (50%)
Halton Hills
Kibby Wind
Cartier Wind Phases 4 – 6 (62%)
Coolidge
Capital Cost Estimate*
($Billions)
13.2
2.5
0.7
0.6
0.3
17.3
1.7
0.4
3.8
21.1
In-Service
Date
2010 – 2012
2009 – 2011
2010 – 2011
2011
2010
2009 – 2010
Revenue Stream
Contracted and Spot
Cost of service
Contracted
Fully contracted
This is a list of TransCanada’s current project portfolio.
We plan to invest over $20 billion in projects over the next 3 years.
As you see in the last column, these projects are all secured by long term contracts with very large and stable counter parties.
* TransCanada share in CAD dollars. Assumes a US$ to CAD$ exchange rate of 1.1. Approximately $3.5 billion was spent by the end of 2008 on multi-year projects.

16. Keystone Oil Pipeline Approx. US$12 billion Keystone 3,456 km
Gulf Coast Expansion 3,200 km
Capacity 1,090,000 Bbl/d
910,000 Bbl/d committed for an average term of 18 years (83% of total capacity)
Strong counterparties operating in upstream and downstream segments of the oil business
A good example of how we put our business model into action is the Keystone Oil pipeline that we are currently constructing.
This project will transport crude oil from the rapidly growing oil sands area of Alberta to the refining markets in the US Midwest and Gulf Coast. The oil sands investments are typically long life mining and extraction businesses that match well with pipeline requirements. The system is underpinned with long term contracts with major oil producers and refiners.
We are currently constructing the first phase of the Keystone pipeline that will move 435,000 barrels per day of oil from Alberta to the midwest United States. We expect this phase of the project to be placed into service late this year.
The second phase of the project will see a line extending to the Cushing Oklahoma market. That phase will be placed into service in 2010 and will increase the capacity of the system to 590,000 barrels per day.
Phases 1 and 2 extend 3,456 km from Alberta to the US Midwest. (30 and 36”)
The final phase of the project is expected to be in-service in That is represented by the dotted line on the map. That 2,700 km pipeline will bring Alberta oil to the Houston area. (36”)
Once complete, the system will have the capacity to move over 1 million barrels of crude oil from Alberta’s oil sands to the United States market.

17. Alberta System North Central Corridor 300 km of 42-inch pipe
26 MW of compression
Approximately $925 million
In-service 2010
Groundbirch Pipeline Project
Commitments for 1.1 Bcf/d by 2014
77 km 36-inch pipe
Approximately $250 million
Expected in-service Q4 2010
Horn River Pipeline Project
Commitments for 378 MMcf/d in 2013
155 km combination of NPS 30 and existing pipe
Approximately $340 million
Expected in-service 2012
Here is another project example in Canada on the natural gas side.
We are currently building pipelines to reach the new Shale gas supplies in Northeast British columbia, meeting that emerging gas trend.
The North Central Corridor pipeline will connect the east and west sides of our Alberta system and increase the utilization of our pipeline system.
Pipelines
Proposed Pipelines
Gas Storage Facilities

18. Bison Pipeline 297-mile natural gas pipeline 407 MMcf/d contracted
Initial capacity 400 MMcf/d to 500 MMcf/d
Future expansion up to 1.0 Bcf/d and extension potential
Approximately $US610 million
Connects growing Rockies supply to Northern Border Pipeline with access to Chicago and area markets
Expected in-service date late 2010
Our Bison pipeline in the United States has long term contracts with Rocky Mountain gas producers. This pipeline will connect to another one of our pipelines, increasing its utilization and ensuring long term value for us.

19. Mexico Assets Guadalajara Pipeline 310 km, 30-inch diameter
Expected in-service Q2 2011
Initial capacity 500 MMcf/d
Future expansion up to 900 MMcf/d
Approximately US$320 million
25-year ship or pay contract with CFE
Tamazunchale Pipeline
130 km, 36-inch diameter
Initial capacity 170 MMcf/day
Future expansion up to 430 MMcf/day
In-service late 2006
26-year ship or pay contract with CFE
Here in Mexico, TransCanada follows a very similar business approach.
TransCanada seeks long term investments in growing regions. We seek long term contracts with stable contractual structures.
The projects that we engage in fit our core competencies of financial management, construction management and long term operations.
Currently we own the Tamazunchale gas pipeline in eastern Mexico. This pipeline is underpinned by a 26 year contract with the Comision Federal de Electricidad.
We are about to begin construction on our second pipeline here in Mexico, which is the Manzanillo to Guadalajara gas pipeline. Again, this pipeline is underpinned by a long term contract with the CFE.

20. TransCanada’s Guadalajara Pipeline
I thought I’d provide some additional information o 20

21. Guadalajara Pipeline Awarded in May, 2009
Approximately 300 km in length
30” diameter pipeline
Will deliver up to:
500 MMcf/d of natural gas to CFE’s Manzanillo power plant;
320 MMcf/d of natural gas to the Pemex system near Guadalajara
In-service: March 2011
The Guadalajara pipeline will be a 30” diameter pipe, extending from the Manzanillo LNG terminal 300 kilometers to Guadalajara.
The pipeline will connect to Pemex’s national pipeline system near Guadalajara, allowing the LNG gas to have access to the centre region of the country.
Initially, the pipeline will have a capacity to Guadalajara of 320 million cubic feet per day.

22. Project Summary
The pipeline project is part of a larger energy infrastructure program undertaken by CFE
LNG Supply acquisition (2007) (supplies from Peru)
LNG Regasification (2008) (owned by Korea Gas and Mitsui)
Refurbishment of Manzanillo Power plant to natural gas (CFE)
Gas for new power plants in Guadalajara and for power generation in central Mexico (through the Pemex pipeline)
Pipeline linking LNG terminal to power plant and Pemex pipeline system
The overall program will
Serve Mexico’s growing electric demand
Diversify Mexico’s natural gas supply
Improve efficiency of CFE’s power generation
Ensure natural gas supply in Central and Western Mexico
The pipeline is but one component of a larger undertaking managed by the CFE.
The overall program includes:
An LNG supply contract with supplies contracted from Peru
A regasification terminal
Repowering of the Manzanillo power plant
New power generation near Guadalajara and further inland
The pipeline to Guadalajara
The overall program is intended to serve Mexico’s growing power demand.
By purchasing LNG in the Pacific basin, CFE will diversify its gas supply options. Having optionality for purchasing LNG from both the Pacific and Atlantic supply basins will no doubt pay off in the future.

23. CFE Multi-Phase Program LNG Terminal
To guarantee the future supply of natural gas to thermoelectric power plants through means of purchasing liquefied natural gas (LNG). This LNG will be stored and regasified in a newly constructed Storage and Regasification Terminal in the state of Colima.
As mentioned, CFE will be being LNG from Peru. We believe that CFE obtained an excellent pricing structure for the LNG, with a direct linkage and discount to the Henry Hub price.
Securing the gas contract was no easy task for CFE. During 2006 / 2007, the world economy was booming and LNG was in very high demand.
The regasification terminal contract was awarded in Again, we believe that CFE obtained an excellent contract during a world wide infrastructure boom, where prices of materials and labor were steadily rising and difficult to predict.

24. CFE Multi-Phase Program Manzanillo Power Plant Upgrade
Upgrade and improve the thermoelectric power plant in Manzanillo
One key driver for the project is the refurbishment of CFE’s power plant in Manzanillo. CFE plans to convert this large power plant from fuel oil to cleaner burning natural gas.
With the conversion, the efficiency of the power plant will be vastly improved. In addition the air quality in the region of Manzanillo will see a significant improvement.

25. CFE Multi-Phase Program Guadalajara Pipeline
Transport natural gas from the Storage and Regasification Terminal through the construction of the Guadalajara Pipeline
This gas pipeline links natural gas between the states of Colima and Jalisco, and also increases the security of natural gas supply to Central and Western Mexico
The link between the regas terminal and the Pemex national pipeline system will be the Guadalajara pipeline.
With this pipeline, gas supply security to the western part of the country will be vastly improved.

26. Project Timeline – Key Dates
LNG Gas Supply Contract September 28, 2007
LNG Regasification Contract Awarded March 7, 2008
Guadalajara Pipeline
CFE ITB Issued October 14, 2008
Bid Submission April 14, 2009
Contract Award May 4, 2009
Contract Execution May 20, 2009
Construction Commencement Q1, 2010
Target Completed Q1, 2011
Commercial In-service March 30, 2011
In terms of the pipeline,
The bids were submitted on April 14 of this year.
TransCanada was awarded the contract on May the 4th and the contract was signed on May 20.
We plan to begin construction soon with completion in early 2011.
Relative to projects that we have worked on in the United States and Canada, the process will completed in a relatively short amount of time.
22 months from date of contract to commercial operations

27. Guadalajara Pipeline Construction Challenges
Congested Rights of Way
Fibre optics
Overhead power lines
Highways
Urban structures
Here are some unique attributes of the pipeline.
Congested rights of way with multiple users in the corridors

28. Guadalajara Pipeline Construction Challenges
Difficult construction areas with limited alternatives to re-route.
Difficult construction areas with limited alternatives to reroute

29. Guadalajara Pipeline Construction Challenges
Difficult crossings of canyons, rivers and gorges
Difficult crossings of canyons and gorges

30. Guadalajara Pipeline Construction Challenges
Anticipating future development along the pipeline, such as highway expansion plans and land use changes
Anticipating future highway expansion plans

31. Guadalajara Pipeline Construction Challenges
Working in and around environmentally protected areas
Working in and around environmental protected areas

32. Guadalajara Pipeline Construction Challenges
Working in a high seismic and volcanic area.
In fact this area of the country is one of the most siesmically active regions in the country. This will represent some unique challenges that we don’t typically face in other areas of North America.
Active nearby volcanic and seismic activity

33. TransCanada’s Formula for Success
Long History of Construction
Experienced Project Teams
Extensive database of past projects including costs, risk variables
Well developed project management tools and expertise
Strong supplier and contractor base
Disciplined Approach to Business
Market Intelligence
Risk Analysis
Comprehensive Due Diligence
Financial Structuring
We have:
A long history in pipeline construction, with Experienced project teams, an extensive database of past projects including costs and risk variables
And
Well developed project management tools and expertise
We engage in a Comprehensive Due Diligence process, have recent construction experience in Mexico and through our various projects, have a strong supplier and contractor base from which to work