TransCanada Reports 8 Per Cent Increase in Comparable Earnings Per Share in 2008

Market Wire, February, 2009

TransCanada Corporation (TSX: TRP) (NYSE: TRP) (TransCanada or the Company) today announced comparable earnings for the year ended December 31, 2008 of $1.3 billion or $2.25 per share, an increase of approximately eight per cent on a per share basis compared to 2007. TransCanada's Board of Directors also declared a quarterly dividend of $0.38 per common share, an increase of six per cent.

"TransCanada's financial performance in 2008 demonstrates our ability to generate significant earnings and cash flow even in these uncertain economic times," said Hal Kvisle, TransCanada president and chief executive officer. "This has enabled our Board of Directors to increase the dividend on common shares for the ninth consecutive year. The new quarterly dividend of $0.38 per common share equates to $1.52 per common share on an annualized basis, an increase of six per cent.

"TransCanada made significant progress on a number of major projects in 2008, including the Keystone oil pipeline system, the North Central Corridor expansion, the Bruce Power refurbishment, and three large-scale, gas-fired power plants. These major projects are all under construction today. In 2009, we expect to invest approximately $6 billion in these and other capital projects. The strong cash flow generated by our operating assets, along with recently completed debt and common equity issues, mean we are well-positioned to fund our sizable capital program. Looking forward, we expect to generate strong, long-term financial returns for our shareholders as a result of our growing portfolio of high-quality energy infrastructure assets, our proven project development and execution capabilities, and our strong financial position."

Fourth Quarter and Year-End 2008 Highlights

(All financial figures are unaudited and in Canadian dollars unless noted otherwise)

- Comparable earnings for the year ended December 31, 2008 of $1.3 billion ($2.25 per share)

- Net income for the year ended December 31, 2008 of $1.4 billion ($2.53 per share)

- Funds generated from operations for the year ended December 31, 2008 of $3.0 billion

- Comparable earnings for fourth quarter 2008 of $271 million ($0.46 per share)

- Net income for fourth quarter 2008 of $277 million ($0.47 per share)

- Funds generated from operations for fourth quarter 2008 of $712 million

- Invested $6.4 billion in 2008 in a number of growth opportunities including the Keystone Pipeline system, Ravenswood generating station, Bruce Power, Portlands Energy Centre and Halton Hills generating station.

TransCanada reported net income for fourth quarter 2008 of $277 million ($0.47 per share) compared to $377 million ($0.70 per share) for fourth quarter 2007. Net income in fourth quarter 2007 included $56 million of favourable income tax adjustments and a $14 million gain on the sale of land. Fourth quarter 2008 and 2007 included $6 million and $10 million, respectively, of fair value gains in the natural gas storage business.

Comparable earnings were $271 million ($0.46 per share) for fourth quarter 2008 compared to $297 million ($0.55 per share) in fourth quarter 2007. The $26 million ($0.09 per share) decrease was primarily due to higher Corporate costs, which included unrealized losses of $39 million after-tax ($0.07 per share) from the change in the fair value of derivatives used to manage TransCanada's exposure to rising interest rates that do not qualify as hedges for accounting purposes together with the impact of financing incremental debt to fund the Company's growth. Partially offsetting these higher corporate costs were higher earnings in the Energy and Pipelines businesses.

Net income was $1.4 billion ($2.53 per share) for the year ended December 31, 2008 compared to net income of $1.2 billion ($2.31 per share) for 2007. Net income in 2008 included $152 million of gains from bankruptcy settlements with Calpine, $10 million of GTN lawsuit settlement proceeds, a $27 million write-down of the Broadwater liquefied natural gas (LNG) project costs and $26 million of favourable income tax adjustments. Net income in 2007 included favourable income tax adjustments of $102 million, $14 million gain on the sale of land and $7 million of net unrealized gains from natural gas storage fair value changes.

Comparable earnings for the year ended December 31, 2008 were $1.3 billion ($2.25 per share), compared to $1.1 billion ($2.08 per share) for 2007. The $179 million ($0.17 per share) increase was primarily due to higher earnings from the Energy and Pipelines businesses partially offset by higher Corporate expenses.

Notable recent developments in Pipelines, Energy and Corporate include:

Pipelines

- The Keystone Pipeline system has completed approximately 40 per cent of the engineering, procurement and construction activities for the initial phase of the project to Wood River, Patoka and Cushing. In November, an application was filed with the U.S. Department of State for a Presidential Permit for the Keystone expansion to the U.S. Gulf Coast.