<Page>
FOURTH QUARTER REPORT 2003
TCPL [18
EXHIBIT 2
CONSOLIDATED INCOME
<Table>
<Caption>
Three months ended Year ended
(unaudited) December 31 December 31
(millions of dollars) 2003 2002 2003 2002
- --------------------------------------------------------- --------- --------- ---------
REVENUES 1,319 1,338 5,357 5,214
OPERATING EXPENSES
Cost of sales 159 161 692 627
Other costs and expenses 434 423 1,682 1,546
Depreciation 222 217 914 848
--------- --------- --------- ---------
815 801 3,288 3,021
--------- --------- --------- ---------
OPERATING INCOME 504 537 2,069 2,193
OTHER EXPENSES/(INCOME)
Financial charges 202 215 821 867
Financial charges of joint ventures 14 23 77 90
Equity income (14) (7) (165) (33)
Interest and other income (16) (17) (60) (53)
--------- --------- --------- ---------
186 214 673 871
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND NON-CONTROLLING INTERESTS 318 323 1,396 1,322
INCOME TAXES - CURRENT AND FUTURE 108 128 535 517
NON-CONTROLLING INTERESTS 2 - 2 -
--------- --------- --------- ---------
NET INCOME FROM CONTINUING OPERATIONS 208 195 859 805
NET INCOME FROM DISCONTINUED OPERATIONS - - 50 -
--------- --------- --------- ---------
NET INCOME 208 195 909 805
PREFERRED SECURITIES CHARGES 10 10 36 36
PREFERRED SHARE DIVIDENDS 5 5 22 22
--------- --------- --------- ---------
NET INCOME APPLICABLE TO COMMON SHARES 193 180 851 747
========= ========= ========= =========
NET INCOME APPLICABLE TO COMMON SHARES
Continuing operations 193 180 801 747
Discontinued operations - - 50 -
--------- --------- --------- ---------
193 180 851 747
========= ========= ========= =========
</Table>
See accompanying Notes to the Consolidated Financial Statements.
<Page>
FOURTH QUARTER REPORT 2003
TCPL [19
CONSOLIDATED CASH FLOWS
<Table>
<Caption>
Three months ended Year ended
(unaudited) December 31 December 31
(millions of dollars) 2003 2002 2003 2002
- ------------------------------------------------------------------ --------- --------- ---------
CASH GENERATED FROM OPERATIONS
Net income from continuing operations 208 195 859 805
Depreciation 222 217 914 848
Future income taxes (18) 67 230 247
Equity income in excess of distributions received (3) - (128) (6)
Other (6) (12) (65) (67)
--------- --------- --------- ---------
Funds generated from continuing operations 403 467 1,810 1,827
Decrease in operating working capital 29 101 112 33
--------- --------- --------- ---------
Net cash provided by continuing operations 432 568 1,922 1,860
Net cash provided by/(used in) discontinued operations - 29 (17) 59
--------- --------- --------- ---------
432 597 1,905 1,919
--------- --------- --------- ---------
INVESTING ACTIVITIES
Capital expenditures (127) (202) (391) (599)
Acquisitions, net of cash acquired (23) (209) (570) (228)
Deferred amounts and other 43 (103) (190) (115)
--------- --------- --------- ---------
Net cash used in investing activities (107) (514) (1,151) (942)
--------- --------- --------- ---------
FINANCING ACTIVITIES
Dividends and preferred securities charges (150) (139) (588) (546)
Advances from parent 39 - 46 -
Notes payable (repaid)/issued, net (341) 182 (62) (46)
Long-term debt issued 455 - 930 -
Reduction of long-term debt (358) (256) (744) (486)
Non-recourse debt of joint ventures issued - 20 60 44
Reduction of non-recourse debt of joint ventures (16) (29) (71) (80)
Redemption of junior subordinated debentures - - (218) -
Common shares issued - 7 18 50
--------- --------- --------- ---------
Net cash used in financing activities (371) (215) (629) (1,064)
--------- --------- --------- ---------
(DECREASE)/INCREASE IN CASH AND SHORT-TERM INVESTMENTS (46) (132) 125 (87)
CASH AND SHORT-TERM INVESTMENTS
Beginning of period 383 344 212 299
--------- --------- --------- ---------
CASH AND SHORT-TERM INVESTMENTS
End of period 337 212 337 212
========= ========= ========= =========
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid 28 52 220 257
Interest paid 222 227 846 866
========= ========= ========= =========
</Table>
See accompanying Notes to the Consolidated Financial Statements.
<Page>
FOURTH QUARTER REPORT 2003
TCPL [20
CONSOLIDATED BALANCE SHEET
<Table>
<Caption>
(unaudited)
December 31 (millions of dollars) 2003 2002
- --------------------------------------------------------------------------------- -----------------
ASSETS
CURRENT ASSETS
Cash and short-term investments 337 212
Accounts receivable 603 691
Inventories 165 178
Other 88 107
------------------ -----------------
1,193 1,188
LONG-TERM INVESTMENTS 733 345
PLANT, PROPERTY AND EQUIPMENT 17,451 17,496
OTHER ASSETS 1,164 937
------------------ -----------------
20,541 19,966
================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable 367 297
Accounts payable 1,069 990
Accrued interest 208 227
Current portion of long-term debt 550 517
Current portion of non-recourse debt of joint ventures 19 75
------------------ -----------------
2,213 2,106
DEFERRED AMOUNTS 466 549
LONG-TERM DEBT 9,465 8,815
FUTURE INCOME TAXES 427 226
NON-RECOURSE DEBT OF JOINT VENTURES 761 1,222
JUNIOR SUBORDINATED DEBENTURES 22 238
------------------ -----------------
13,354 13,156
------------------ -----------------
------------------ -----------------
NON-CONTROLLING INTERESTS 82 -
------------------ -----------------
SHAREHOLDERS' EQUITY
Preferred securities 672 674
Preferred shares 389 389
Common shares 4,632 4,614
Contributed surplus 267 265
Retained earnings 1,185 854
Foreign exchange adjustment (40) 14
------------------ -----------------
7,105 6,810
------------------ -----------------
20,541 19,966
================== =================
</Table>
See accompanying Notes to the Consolidated Financial Statements.
<Page>
FOURTH QUARTER REPORT 2003
TCPL [21
CONSOLIDATED RETAINED EARNINGS
<Table>
<Caption>
(unaudited) Year ended December 31
(millions of dollars) 2003 2002
- ---------------------------------------------------------- ---------------
Balance at beginning of year 854 586
Net income 909 805
Preferred securities charges (36) (36)
Preferred share dividends (22) (22)
Common share dividends (520) (479)
--------------- ---------------
1,185 854
=============== ===============
</Table>
See accompanying Notes to the Consolidated Financial Statements.
<Page>
FOURTH QUARTER REPORT 2003
TCPL [22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
Pursuant to a plan of arrangement, effective May 15, 2003, common shares of
TransCanada PipeLines Limited (TCPL or the company) were exchanged on a
one-to-one basis for common shares of TransCanada Corporation (TransCanada). As
a result, TCPL became a wholly-owned subsidiary of TransCanada. The consolidated
financial statements for the year ended December 31, 2003 include the accounts
of TCPL and the consolidated accounts of all its subsidiaries.
On December 3, 2003, TCPL increased its ownership interest in Portland Natural
Gas Transmission System Partnership (Portland) from 43.4 per cent to 61.7 per
cent. Subsequent to the acquisition, Portland was fully consolidated in the
company's financial statements, with 38.3 per cent reflected in non-controlling
interests.
2. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of TCPL have been prepared in accordance
with Canadian generally accepted accounting principles. The accounting policies
applied are consistent with those outlined in TCPL's annual financial statements
for the year ended December 31, 2002. These consolidated financial statements
reflect all normal recurring adjustments that are, in the opinion of management,
necessary to present fairly the financial position and results of operations for
the respective periods. These consolidated financial statements do not include
all disclosures required in the annual financial statements and should be read
in conjunction with the annual financial statements included in TransCanada
PipeLines Limited's 2002 Annual Report. Amounts are stated in Canadian dollars
unless otherwise indicated. Certain comparative figures have been reclassified
to conform with the current period's presentation.
Since a determination of many assets, liabilities, revenues and expenses is
dependent upon future events, the preparation of these consolidated financial
statements requires the use of estimates and assumptions. In the opinion of
Management, these consolidated financial statements have been properly prepared
within reasonable limits of materiality and within the framework of the
company's significant accounting policies.
REGULATION
In December 2002, the National Energy Board (NEB) approved TCPL's application
for the Canadian Mainline to charge interim tolls for transportation service,
effective January 1, 2003. In August 2003, subsequent to the NEB's decision on
the 2003 Tolls and Tariff Application, it approved interim tolls for the period
September 1, 2003 to December 31, 2003. The NEB determined that tolls will
remain interim pending a decision from the Federal Court of Appeal on TCPL's
Fair Return Review and Variance Application. Any adjustments to the interim
tolls will be recorded in accordance with the final NEB decision.
<Page>
FOURTH QUARTER REPORT 2003
TCPL [23
3. SEGMENTED INFORMATION
<Table>
<Caption>
GAS TRANSMISSION POWER CORPORATE TOTAL
-------------------- -------------------- -------------------- --------------------
Three months ended December 31
(unaudited - millions of dollars) 2003 2002 2003 2002 2003 2002 2003 2002
- ---------------------------------------- ---------- --------- ---------- --------- --------- --------- ---------- ---------
Revenues 982 1,007 337 331 - - 1,319 1,338
Cost of sales - - (159) (161) - - (159) (161)
Other costs and expenses (326) (319) (106) (103) (2) (1) (434) (423)
Depreciation (202) (197) (20) (20) - - (222) (217)
---------- --------- ---------- --------- --------- --------- ---------- ---------
Operating income/(loss) 454 491 52 47 (2) (1) 504 537
Financial and preferred equity charges and
non-controlling interests (193) (205) (4) (4) (22) (21) (219) (230)
Financial charges of joint ventures (14) (23) - - - - (14) (23)
Equity income 7 7 7 - - - 14 7
Interest and other income 6 5 4 2 6 10 16 17
Income taxes (100) (113) (15) (15) 7 - (108) (128)
---------- --------- ---------- --------- --------- --------- ---------- ---------
Continuing operations 160 162 44 30 (11) (12) 193 180
========== ========= ========== ========= ========= =========
Discontinued operations - -
---------- ---------
NET INCOME APPLICABLE TO
COMMON SHARES 193 180
========== =========
</Table>
<Table>
<Caption>
GAS TRANSMISSION POWER CORPORATE TOTAL
-------------------- -------------------- -------------------- --------------------
Year ended December 31
(unaudited - millions of dollars) 2003 2002 2003 2002 2003 2002 2003 2002
- ---------------------------------------- ---------- --------- ---------- --------- --------- --------- ---------- ---------
Revenues 3,956 3,921 1,401 1,293 - - 5,357 5,214
Cost of sales - - (692) (627) - - (692) (627)
Other costs and expenses (1,270) (1,166) (405) (371) (7) (9) (1,682) (1,546)
Depreciation (831) (783) (82) (65) (1) - (914) (848)
---------- --------- ---------- --------- --------- --------- ---------- ---------
Operating income/(loss) 1,855 1,972 222 230 (8) (9) 2,069 2,193
Financial and preferred equity charges and
non-controlling interests (781) (821) (11) (13) (89) (91) (881) (925)
Financial charges of joint ventures (76) (90) (1) - - - (77) (90)
Equity income 66 33 99 - - - 165 33
Interest and other income 17 17 14 13 29 23 60 53
Income taxes (459) (458) (103) (84) 27 25 (535) (517)
---------- --------- ---------- --------- --------- --------- ---------- ---------
Continuing operations 622 653 220 146 (41) (52) 801 747
========== ========= ========== ========= ========= =========
Discontinued operations 50 -
---------- ---------
NET INCOME APPLICABLE TO
COMMON SHARES 851 747
========== =========
</Table>
<Table>
<Caption>
TOTAL ASSETS
December 31 2003 2002
(millions of dollars) (unaudited)
- ---------------------------------------------------------- ------------------
Gas Transmission 16,972 16,979
Power 2,746 2,391
Corporate 812 457
------------------ ------------------
Continuing Operations 20,530 19,827
Discontinued Operations 11 139
------------------ ------------------
20,541 19,966
================== ==================
</Table>
<Page>
FOURTH QUARTER REPORT 2003
TCPL [24
4. LONG-TERM DEBT
<Table>
<Caption>
December 31 2003 2002
(millions of dollars) (unaudited)
- -------------------------------------------------------------------------------- ----------------
Alberta System 2,341 2,892
Foreign exchange differential recoverable through
the tollmaking process (16) (271)
----------------- ----------------
2,325 2,621
----------------- ----------------
Canadian Mainline 4,913 5,277
Foreign exchange differential recoverable through
the tollmaking process (60) (330)
----------------- ----------------
4,853 4,947
----------------- ----------------
Other 2,837 1,764
----------------- ----------------
10,015 9,332
Less: current portion of long-term debt 550 517
----------------- ----------------
9,465 8,815
================= ================
</Table>
On June 9, 2003, the company issued US$350 million of unsecured 4.00 per cent
notes maturing on June 15, 2013. On November 18, 2003, the company issued $450
million of unsecured 5.65 per cent notes maturing on January 15, 2014.
5. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
The following represents the significant changes to the company's risk
management and financial instruments since December 31, 2002.
FOREIGN INVESTMENTS
At December 31, 2003 and December 31, 2002, the company had foreign currency
denominated assets and liabilities which created an exposure to changes in
exchange rates. The company uses foreign currency derivatives to hedge this net
exposure on an after-tax basis. The company's portfolio of foreign investment
derivatives is comprised of contracts for periods up to four years. The fair
values shown in the table below for foreign exchange risk are offset by
translation gains or losses on the net assets and are recorded in the foreign
exchange adjustment account in Shareholders' Equity.
<Page>
FOURTH QUARTER REPORT 2003
TCPL [25
<Table>
<Caption>
ASSET/(LIABILITY)
December 31 2003 2002
(millions of dollars) (unaudited)
- -------------------------------- ----------------------------- ------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
----------------------------- ------------------------------
FOREIGN EXCHANGE
Cross-currency swaps
U.S. dollars 65 65 (8) (8)
- ----------------------------------------------------------------------------------------------------
</Table>
At December 31, 2003, the notional principal amounts of cross-currency swaps
were US$250 million (2002 - US$350 million).
<Table>
<Caption>
RECONCILIATION OF FOREIGN EXCHANGE ADJUSTMENT
December 31 2003 2002
(millions of dollars) (unaudited)
- --------------------------------------------------------------------- --------------------- --------------
Balance at beginning of year 14 13
Translation (losses)/gains on foreign currency denominated net assets (136) 3
Foreign exchange gains/(losses) on derivatives, and other 82 (2)
--------------------- --------------
(40) 14
- ----------------------------------------------------------------------------------------------------------------
</Table>
FOREIGN EXCHANGE AND INTEREST RATE MANAGEMENT ACTIVITY
The company manages the foreign exchange risk of U.S. dollar debt, U.S. dollar
expenses and the interest rate exposures of the Alberta System, the Canadian
Mainline and the Foothills System through the use of foreign currency and
interest rate derivatives. These derivatives are comprised of contracts for
periods up to nine years. Certain of the realized gains and losses on these
derivatives are shared with shippers on predetermined terms.
<Table>
<Caption>
ASSET/(LIABILITY)
December 31 2003 2002
(millions of dollars) (unaudited)
- -------------------------------- ----------------------------- ------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
----------------------------- ------------------------------
FOREIGN EXCHANGE
Cross-currency swaps (26) (26) 56 56
INTEREST RATE
Interest rate swaps
Canadian dollars 2 15 4 56
U.S. dollars - 8 (1) 4
- ----------------------------------------------------------------------------------------------------
</Table>
At December 31, 2003, the notional principal amounts of cross-currency swaps
were US$282 million (2002 - US$282 million). Notional principal amounts for
interest rate swaps were $964 million (2002 - $874 million) and US$100 million
(2002 - US$175 million).
<Page>
FOURTH QUARTER REPORT 2003
TCPL [26
6. DISCONTINUED OPERATIONS
The Board of Directors approved plans to dispose of the company's International,
Canadian Midstream, and certain other businesses (December Plan) and the Gas
Marketing business in December 1999 and July 2001, respectively. The company's
disposals under both plans were substantially completed at December 31, 2001.
TCPL's investments in Gasoducto del Pacifico, INNERGY Holdings S.A. and P.T.
Paiton Energy Company approved for disposal under the December Plan will be
accounted for as part of continuing operations as of December 31, 2003, due to
the length of time it has taken the company to dispose of these assets. It is
the intention of the company to continue with its plan to dispose of these
investments.
The company mitigated certain of its remaining exposures associated with the
contingent liabilities related to the divested Gas Marketing operations by
acquiring from a subsidiary of Mirant Corporation certain contracts under which
it still had exposure in 2003, and simultaneously hedging the market price
exposures of these contracts. The company remains contingently liable for
certain residual obligations. In 2003, $50 million of the original approximately
$100 million after-tax deferred gain was recognized in income. The after-tax
deferred gain is included in Deferred Amounts.
At December 31, 2003, TCPL reviewed the provision for loss on discontinued
operations and the deferred gain and concluded that the remaining provision was
adequate and the deferral of the remaining approximately $50 million of
after-tax deferred gain related to the Gas Marketing business was appropriate.
Revenues from discontinued operations for the year ended December 31, 2003 were
$2 million (2002 - $36 million). Net income/(loss) from discontinued operations
for the year ended December 31, 2003 was $50 million, net of $29 million income
taxes (2002 - nil). The provision for loss on discontinued operations at
December 31, 2003 was $41 million (2002 - $83 million). The provision for loss
on discontinued operations is included in Accounts Payable.
7. INVESTMENT IN BRUCE POWER L.P.
On February 14, 2003, the company acquired a 31.6 per cent interest in Bruce
Power L.P. (Bruce Power) for $409 million, including closing adjustments. As
part of the acquisition, the company also funded a one-third share ($75 million)
of a $225 million accelerated deferred rent payment made by Bruce Power to
Ontario Power Generation. The resulting note receivable from Bruce Power is
recorded in Other Assets.
<Page>
FOURTH QUARTER REPORT 2003
TCPL [27
The purchase price of TCPL's 31.6 per cent interest in Bruce Power has been
allocated as follows.
<Table>
<Caption>
PURCHASE PRICE ALLOCATION
(unaudited)
(millions of dollars)
- -----------------------------------------------------------------
Net book value of assets acquired 281
Capital lease 301
Power sales agreements (131)
Pension liability and other (42)
----------
409
==========
</Table>
The amount allocated to the investment in Bruce Power includes a purchase price
allocation of $301 million to the capital lease of the Bruce Power plant which
will be amortized on a straight-line basis over the lease term which extends to
2018, resulting in an annual amortization expense of $19 million. The amount
allocated to the power sales agreements will be amortized to income over the
remaining term of the underlying sales contracts. The amortization of the fair
value allocated to these contracts is: 2003 - $38 million; 2004 - $37 million;
2005 - $25 million; 2006 - $29 million; and 2007 - $2 million. The amount
allocated to the pension liability will be amortized to income over the 11 year
expected average remaining service life of Bruce Power employees, resulting in
an annual amortization of $3 million.
8. COMMITMENT
On June 18, 2003, an agreement was reached among the Mackenzie Delta gas
producers, the Aboriginal PipeLine Group (APG) and TCPL which governs TCPL's
role in the Mackenzie Gas Pipeline Project. The Mackenzie Gas Pipeline Project
would result in a natural gas pipeline being constructed from Inuvik, Northwest
Territories to the northern border of Alberta, where it would then connect with
the Alberta System. Under the agreement, TCPL has agreed to finance the APG for
its one-third share of project definition phase costs, which is estimated to be
approximately $90 million over three years. In the year ended December 31, 2003,
TCPL funded $34 million of this loan which is included in Other Assets. The
ability to recover this investment is contingent upon the outcome of the
project.
- -------------------------------------------------------------------------------
TransCanada welcomes questions from shareholders and potential investors.
Please telephone:
Investor Relations, at 1-800-361-6522 (Canada and U.S. Mainland) or direct dial
David Moneta/Debbie Stein at (403) 920-7911. The investor fax line is
(403) 920-2457. Media Relations: Hejdi Feick/Anita Perry at (403) 920-7859.
Visit TransCanada's Internet site at: http://www.transcanada.com
- -------------------------------------------------------------------------------