TransCanada Management Workshop on Stress Corrosion Cracking

1. Workshop on Stress Corrosion CrackingOperator Panel Houston, TX December 2, 2003

2. Agenda • Introduction to TransCanada • Historical Performance & Challenges • Our Regulatory Environment • TransCanada SCC Management • Research & Sharing Experiences • Summary of Key Messages TransCanada

3. Corporate statistics • TransCanada Corporation (TRP) listed TSX and NYSE • Employees: 2,400 • Total assets: $ 19.9 billion • Operating income: $2.2 billion • Net income: $747 million • Net income per share: $1.56 • * In $ Cdn at December 31, 2002 • *at December 31, 2000 TransCanada

4. Power Generation Assets MacKay River Bear Creek Redwater Kapuskasing Williams Lake Sundance A&B Grandview Tunis Calstock Carseland Bécancour Cancarb Nipigon Curtis Palmer Bruce Power Ocean State North Bay Castleton ManChief Xxx xxx TransCanada 20 plants; 4,700 MW (including LP and plants in development) TransCanada Power, L.P. 7 plants; 328 MW TransCanada

5. Natural gas transmission assets 24,000 miles of wholly owned pipeline; 12 Bcf/day TransCanada

6. 1954 - 1984 1985 - 2003 Historical Performance & Challenges TransCanada

7. Our Regulatory Environment • National Energy Board (NEB) • Onshore Pipeline Regulations - 1999 • Guidance Notes • Alberta Energy & Utilities Board (EUB) • Pipeline Act 122/87 • Regulation recognizes diversity in industry • Mix of Prescriptive and Goal-Oriented Regulation • “to ensure the pipelines are suitable for continued safe, reliable and environmentally responsible service.” • Onus on companies to demonstrate adequacy and effectiveness of integrity management systems TransCanada

8. TransCanada SCC Management • First SCC ruptures occurred in 1985-86 • Near-Neutral pH SCC first recognized on the TC system • tape and asphalt-coated pipe approx. 40% of system length • Active SCC management began in 1986 • Soil model prioritized sections for hydrostatic testing • Public Inquiry in 1995-96 • CEPA SCC Management Program endorsed by membership and NEB • SCC Management Plans were filed • Today we have a risk-based Integrity Management Process TransCanada

9. TransCanada SCC Management TransCanada

10. TransCanada SCC Management TransCanada SCC Management • Data Management • thousands of inspection excavations since 1986 • dozens of hydrotests • service failure data • construction data • operating data • terrain data • population data • System-Wide • Digital On-Line TransCanada

11. Probability of Failure • Probable Consequences • RISK = • X • Safety • Reliability • Environmental • Financial TransCanada SCC Management • Risk Assessment and Decision Making • Failure Probability Models • Combined Statistical and Mechanistic • Models for development phases: Initiation, Growth, Failure • Incorporate Soil Data as well as Other Types • Validated against Condition Monitoring Data • Quantitative • Consequence Model TransCanada

12. TransCanada SCC Management • Routine Maintenance - Acceptable Risk • includes monitoring industry developments • SCC Risk Control - Unacceptable Risk • hydrotesting is the primary action • test 200 - 350 miles of pipeline annually • working toward in-line inspection and repair • SCC Condition Monitoring - Insufficient Information • excavations and data collection • failure or failure-like sites • model-development sites • system coverage TransCanada

13. Research & Sharing Experiences • Experience Sharing • CEPA, PRCI, INGAA • share experience • raise awareness in the industry on issues • communication • sharing and developing best practices • R&D is a key component for long-term effective and cost-effective management success • ILI Tools • Strength of Materials • Cracking Mechanisms • Data Mining TransCanada

14. Summary of Key Messages • SCC is one of several integrity challenges • TransCanada has had success in managing SCC within a flexible goal-oriented regulatory environment • TransCanada uses system information to implement a risk-based approach to SCC management • Companies can work together sharing experiences and taking responsibility for technology & methodology developments • R&D provides effective solutions TransCanada