TC PipeLines, LP Announces 2004 Third Quarter Results

Financial Highlights (unaudited)
(millions of U.S. dollars, except per unit amounts)

(1) Net income per unit is computed by dividing net income, after deduction of the general partner’s allocation, by the number of common and subordinated units outstanding. The general partner’s allocation is computed based upon the general partner’s 2 per cent interest plus an amount equal to incentive distributions.
(2) Current accounting practice requires the classification of cumulative cash distributions in excess of cumulative equity earnings to be reported as a return of capital.
(3) The Partnership's 2004 third quarter cash distribution will be paid on November 12, 2004 to unitholders of record as of October 29, 2004.

Net Income

The Partnership reported third quarter 2004 net income of $12.6 million or $0.68 per unit, an increase of $0.6 million compared to $12.0 million or $0.65 per unit in third quarter 2003.

Equity income from Northern Border Pipeline was $11.3 million in third quarter 2004 compared to $11.2 million in the same quarter of 2003. The increase is attributable to higher revenues and lower interest costs partially offset by a $0.6 million (TC PipeLines’ share equals $0.2 million) write-off of previously capitalized costs. The increase in revenues reflects Northern Border Pipeline’s ability to generate and retain more revenues from the sale of short-term capacity and additional transportation services. The reduction in interest costs is primarily due to a lower average long-term debt balance. Equity income from Tuscarora amounted to $1.8 million in third quarter 2004 compared to $1.3 million for third quarter 2003. The increase was primarily due to revenues from long-term firm transportation contracts, which commenced in November 2003, related to Tuscarora’s 2002 expansion.

The Partnership’s third quarter 2004 general and administrative expenses of $0.3 million are $0.2 million lower compared to $0.5 million in the same quarter of 2003. This is primarily due to the timing of expenses incurred during the year. Financial charges of $0.2 million in third quarter 2004 as compared to less than $0.1 million in the same period last year are due to the higher average debt balances.

Cash Flow

The Partnership reported third quarter 2004 cash generated from operations of $12.5 million compared to $12.8 million for third quarter 2003. When including the portion of the cash distribution from Northern Border Pipeline and Tuscarora reported as a return of capital, cash generated increased to $16.9 million in 2004.

In third quarter 2004, the Partnership received a cash distribution from Northern Border Pipeline of $15.5 million, $4.2 million of which has been classified as return of capital, compared to $11.6 million in third quarter 2003, an increase of $3.9 million. This increase in the third quarter 2004 distribution is mainly due to a change in Northern Border Pipeline’s cash distribution policy effective January 1, 2004. Under this new policy, cash distributions are based upon 100 per cent of distributable cash flow and calculated as earnings before interest, taxes, depreciation and amortization, less interest and maintenance capital expenditures, as reported in Northern Border Pipeline’s financial statements.

Cash distributions from Tuscarora for the third quarter 2004 were $2.0 million, $0.2 million of which has been classified as return of capital. This is an increase of $0.4 million relative to third quarter 2003. This increase was due to higher revenues from long-term firm transportation contracts, which commenced in November 2003, related to Tuscarora’s 2002 expansion.

In the first half of 2004, the Partnership borrowed an aggregate of $20 million under the revolving credit facility, which was used primarily to finance its equity contribution to Northern Border Pipeline. In the third quarter of 2004, the Partnership repaid $6 million of this amount. The balance outstanding as at September 30, 2004 is $19.5 million.

During third quarter 2004, the Partnership paid an aggregate $10.7 million of cash distributions to unitholders and its general partner, compared to $10.1 million in third quarter 2003. This cash distribution, on a per unit basis, represents $0.575 per unit in third quarter 2004, compared to $0.55 per unit in third quarter 2003, as well as the general partner interest, including incentive distributions.

Conference Call

The Partnership will hold a conference call Wednesday, October 27, 2004 at 12 p.m. (Eastern). Ron Turner, president and chief executive officer of the general partner, will discuss the third quarter 2004 financial results and general developments and issues concerning the Partnership. Those interested in listening to the call may dial (800) 387-6216. A replay of the conference call will also be available two hours after the call and until midnight (Eastern), November 3, 2004 by dialing (800) 408-3053, then entering pass code 3105860.

A live web cast of the conference call will also be available through the Partnership's website at www.tcpipelineslp.com. An audio replay of the call will be maintained on the website.

TC PipeLines, LP is a publicly traded limited partnership. It owns a 30 per cent interest in Northern Border Pipeline Company, a Texas general partnership, and a 49 per cent interest in Tuscarora Gas Transmission Company, a Nevada general partnership. Northern Border Pipeline, which is owned 70 per cent by Northern Border Partners, L.P., a publicly traded master limited partnership controlled by affiliates of Enron Corp., owns a 1,249-mile United States interstate pipeline system that transports natural gas from the Montana-Saskatchewan border to markets in the midwestern United States. Tuscarora owns a 240-mile United States interstate pipeline system that transports natural gas from Oregon, where it interconnects with facilities of Gas Transmission Northwest Corporation, to northern Nevada. TC PipeLines, LP is managed by its general partner, TC PipeLines GP, Inc., an indirect wholly owned subsidiary of TransCanada Corporation. Subsidiaries of TransCanada also hold common and subordinated units of the Partnership. Common units of TC PipeLines, LP are quoted on the Nasdaq Stock Market and trade under the symbol “TCLP.”

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Cautionary Statement Regarding Forward Looking Information
This news release includes forward-looking statements regarding future events and the future financial performance of TC PipeLines, LP. Words such as “believes,” “expects,” “intends,” “forecasts,” “projects,” and similar expressions identify forward-looking statements. All forward-looking statements are based on the Partnership’s current beliefs as well as assumptions made by and information currently available to the Partnership. These statements reflect the Partnership’s current views with respect to future events. Important factors that could cause actual results to materially differ from the Partnership's current expectations include regulatory decisions, particularly those of the Federal Energy Regulatory Commission, the Securities and Exchange Commission, majority control of the Northern Border Pipeline management committee by affiliates of Enron Corp., which has filed for bankruptcy protection, the failure of a shipper on either one of the Partnership’s pipelines to perform its contractual obligations, cost of acquisitions, future demand for natural gas, overcapacity in the industry, and other risks inherent in the transportation of natural gas as discussed in the Partnership’s filings with the Securities and Exchange Commission, including the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2003.