Cover_sd.qxd 4/11/03 3:45 PM Page 1 2002 ANNUAL REPORT 2002 ANNUAL REPORT ANNUAL REPORT TC PIPELINES, LP focus discipline RESULTS TC PipeLines, LP is a United States limited partnership that offers investors stable cash flow and growth prospects through TC PIPELINES, LP 450 – First Street SW Calgary, Alberta, Canada T2P 5H1 participation in the natural gas transmission industry. TC PipeLines owns a 30 percent interest in Northern Border Pipeline Company and a 49 percent interest in toll-free (877) 290-2772 facsimile (403) 920-2350 www.tcpipelineslp.com Tuscarora Gas Transmission Company. Both Northern Border Pipeline and Tuscarora own interstate pipeline systems that transport western Canadian natural gas to growing natural gas consuming markets in the midwestern United States and northern Nevada areas, respectively. The Partnership is managed by its general partner, TC PipeLines GP, Inc., a wholly owned subsidiary of TransCanada PipeLines Limited, a leading North American energy company. Common units of TC PipeLines are listed on the Nasdaq Stock Market and trade under the symbol “TCLP”. Highlights 1 Letter to Unitholders 2 Form 10-K 3 Financial Statements F-1 Cover_sd.qxd 4/11/03 3:45 PM Page 1 2002 ANNUAL REPORT 2002 ANNUAL REPORT ANNUAL REPORT TC PIPELINES, LP focus discipline RESULTS TC PipeLines, LP is a United States limited partnership that offers investors stable cash flow and growth prospects through TC PIPELINES, LP 450 – First Street SW Calgary, Alberta, Canada T2P 5H1 participation in the natural gas transmission industry. TC PipeLines owns a 30 percent interest in Northern Border Pipeline Company and a 49 percent interest in toll-free (877) 290-2772 facsimile (403) 920-2350 www.tcpipelineslp.com Tuscarora Gas Transmission Company. Both Northern Border Pipeline and Tuscarora own interstate pipeline systems that transport western Canadian natural gas to growing natural gas consuming markets in the midwestern United States and northern Nevada areas, respectively. The Partnership is managed by its general partner, TC PipeLines GP, Inc., a wholly owned subsidiary of TransCanada PipeLines Limited, a leading North American energy company. Common units of TC PipeLines are listed on the Nasdaq Stock Market and trade under the symbol “TCLP”. Highlights 1 Letter to Unitholders 2 Form 10-K 3 Financial Statements F-1 Cover_sd.qxd 4/11/03 3:45 PM Page 2 BOARD OF DIRECTORS EXECUTIVE OFFICERS OF THE GENERAL PARTNER OF THE GENERAL PARTNER OF TC PIPELINES, LP OF TC PIPELINES, LP OUR ASSETS (December 31, 2002) (December 31, 2002) Albrecht W.A. Bellstedt Ronald J. Turner 1 OUR GOAL IS TO DELIVER STABLE, SUSTAINABLE CASH FLOWS Executive Vice-President, Law and General Counsel President and Chief Executive Officer 2 TransCanada PipeLines Limited Calgary, Alberta Russell K. Girling TO OUR UNITHOLDERS AND TO FIND OPPORTUNITIES TO INCREASE CASH Chief Financial Officer Russell K. Girling Executive Vice-President and Chief Financial Officer Paul F. MacGregor DISTRIBUTIONS WHILE MAINTAINING OUR LOW-RISK PROFILE. TransCanada PipeLines Limited Vice-President, Business Development Calgary, Alberta Donald R. Marchand (2)(4) Vice-President and Treasurer 1 Northern Border Robert A. Helman Pipeline Company Partner Ronald L. Cook 2 Tuscarora Gas Mayer, Brown, Rowe & Maw Transmission Company Vice-President, Taxation Chicago, Illinois Theresa Jang Jack F. Jenkins-Stark (2)(3) Controller Senior Vice-President and Chief Financial Officer NORTHERN BORDER PIPELINE TUSCARORA Silicon Energy Corp. Rhondda E.S. Grant TC PIPELINES OWNERSHIP 30% 49% Alameda, California Secretary ACQUIRED BY TC PIPELINES May 28, 1999 September 1, 2000 David L. Marshall (1)(4) COMMENCED OPERATIONS 1982 1995 Retired Vice-Chairman and Chief Financial Officer ORIGINATES NEAR Port of Morgan, MT Malin, OR The Pittston Company TERMINATES NEAR North Hayden, IN Wadsworth, NV OUR STRATEGY Incline Village, Nevada LENGTH (MILES) 1,249 240 (1) Chair, Audit Committee 1 RECEIPT CAPACITY (MMcfd ) 2,373 182 (2) Dennis J. McConaghy Member, Audit Committee Focus on natural gas transmission assets that (3) Chair, Conflicts Committee EQUITY INCOME – TC PIPELINES’ SHARE 42.1 42.8 Executive Vice-President, Gas Development (4) 38.1 •are underpinned with long-term TransCanada PipeLines Limited Member, Conflicts Committee Calgary, Alberta 30.0 10.0 transportation contracts Ronald J. Turner • have organic growth potential Executive Vice-President, Operations and Engineering 4.7 15.0 5.0 TransCanada PipeLines Limited 3.6 •connect to growing natural gas Calgary, Alberta 0.9 00 01 02 00 01 02 consuming markets 0 0 •connect to growing natural gas supply CASH DISTRIBUTIONS – TC PIPELINES’ SHARE 49.2 INVESTOR RELATIONS INTERNET SITE 42.9 Theresa Jang www.tcpipelineslp.com 40.5 Leverage from TransCanada’s expertise Controller Telephone: (877) 290-2772 K-1 INFORMATION 30.0 in natural gas transmission industry 10.0 Facsimile: (403) 920-2350 Telephone: (877) 699-1091 Email: [email protected] STOCK EXCHANGE LISTING 4.6 Maintain strong financial position 15.0 5.0 OFFICES Nasdaq Stock Market: TCLP 2.4 110 Turnpike Road, Suite 203 1.5 Westborough, Massachusetts 01581 00 01 02 00 01 02 AUDITORS 0 0 Telephone: (508) 871-7046 1 KPMG LLP Millions of cubic feet per day. Facsimile: (508) 871-7047 Calgary, Alberta 450 – First Street SW Calgary, Alberta T2P 5H1 TRANSFER AGENT Telephone: (877) 290-2772 Mellon Investor Services LLC Facsimile: (403) 920-2350 Ridgefield Park, New Jersey Telephone: (800) 756-3353 Please recycle April 2003 Printed in Canada Designed and produced by Cover_sd.qxd 4/11/03 3:45 PM Page 2 BOARD OF DIRECTORS EXECUTIVE OFFICERS OF THE GENERAL PARTNER OF THE GENERAL PARTNER OF TC PIPELINES, LP OF TC PIPELINES, LP OUR ASSETS (December 31, 2002) (December 31, 2002) Albrecht W.A. Bellstedt Ronald J. Turner 1 OUR GOAL IS TO DELIVER STABLE, SUSTAINABLE CASH FLOWS Executive Vice-President, Law and General Counsel President and Chief Executive Officer 2 TransCanada PipeLines Limited Calgary, Alberta Russell K. Girling TO OUR UNITHOLDERS AND TO FIND OPPORTUNITIES TO INCREASE CASH Chief Financial Officer Russell K. Girling Executive Vice-President and Chief Financial Officer Paul F. MacGregor DISTRIBUTIONS WHILE MAINTAINING OUR LOW-RISK PROFILE. TransCanada PipeLines Limited Vice-President, Business Development Calgary, Alberta Donald R. Marchand (2)(4) Vice-President and Treasurer 1 Northern Border Robert A. Helman Pipeline Company Partner Ronald L. Cook 2 Tuscarora Gas Mayer, Brown, Rowe & Maw Transmission Company Vice-President, Taxation Chicago, Illinois Theresa Jang Jack F. Jenkins-Stark (2)(3) Controller Senior Vice-President and Chief Financial Officer NORTHERN BORDER PIPELINE TUSCARORA Silicon Energy Corp. Rhondda E.S. Grant TC PIPELINES OWNERSHIP 30% 49% Alameda, California Secretary ACQUIRED BY TC PIPELINES May 28, 1999 September 1, 2000 David L. Marshall (1)(4) COMMENCED OPERATIONS 1982 1995 Retired Vice-Chairman and Chief Financial Officer ORIGINATES NEAR Port of Morgan, MT Malin, OR The Pittston Company TERMINATES NEAR North Hayden, IN Wadsworth, NV OUR STRATEGY Incline Village, Nevada LENGTH (MILES) 1,249 240 (1) Chair, Audit Committee 1 RECEIPT CAPACITY (MMcfd ) 2,373 182 (2) Dennis J. McConaghy Member, Audit Committee Focus on natural gas transmission assets that (3) Chair, Conflicts Committee EQUITY INCOME – TC PIPELINES’ SHARE 42.1 42.8 Executive Vice-President, Gas Development (4) 38.1 •are underpinned with long-term TransCanada PipeLines Limited Member, Conflicts Committee Calgary, Alberta 30.0 10.0 transportation contracts Ronald J. Turner • have organic growth potential Executive Vice-President, Operations and Engineering 4.7 15.0 5.0 TransCanada PipeLines Limited 3.6 •connect to growing natural gas Calgary, Alberta 0.9 00 01 02 00 01 02 consuming markets 0 0 •connect to growing natural gas supply CASH DISTRIBUTIONS – TC PIPELINES’ SHARE 49.2 INVESTOR RELATIONS INTERNET SITE 42.9 Theresa Jang www.tcpipelineslp.com 40.5 Leverage from TransCanada’s expertise Controller Telephone: (877) 290-2772 K-1 INFORMATION 30.0 in natural gas transmission industry 10.0 Facsimile: (403) 920-2350 Telephone: (877) 699-1091 Email: [email protected] STOCK EXCHANGE LISTING 4.6 Maintain strong financial position 15.0 5.0 OFFICES Nasdaq Stock Market: TCLP 2.4 110 Turnpike Road, Suite 203 1.5 Westborough, Massachusetts 01581 00 01 02 00 01 02 AUDITORS 0 0 Telephone: (508) 871-7046 1 KPMG LLP Millions of cubic feet per day. Facsimile: (508) 871-7047 Calgary, Alberta 450 – First Street SW Calgary, Alberta T2P 5H1 TRANSFER AGENT Telephone: (877) 290-2772 Mellon Investor Services LLC Facsimile: (403) 920-2350 Ridgefield Park, New Jersey Telephone: (800) 756-3353 Please recycle April 2003 Printed in Canada Designed and produced by T.9.11 Pipeline LP.v5 4/9/03 4:47 PM Page 1 HIGHLIGHTS AS A RESULT OF INCREASED CASH FLOWS FROM NORTHERN BORDER PIPELINE AND TUSCARORA, TC PIPELINES RAISED ITS QUARTERLY CASH DISTRIBUTION FROM $0.50 PER UNIT TO $0.525 PER UNIT EFFECTIVE FOR THE SECOND QUARTER OF 2002, MARKING THE PARTNERSHIP’S THIRD 2.50 2.40 DISTRIBUTION INCREASE IN THREE YEARS. 2.08 2.00 Also in 2002, Tuscarora completed the construction of its expansion facilities, consisting of two compressor stations and an 11-mile extension and commissioned those facilities 1.00 for service on December 1. The expansion has increased Tuscarora’s capacity by approximately 42 percent. With the expansion capacity fully contracted for terms ranging 00 01 02 0 from ten to fifteen years, TC PipeLines