Mike Hachey Director, Power Marketing TransCanada Power Marketing Ltd Mike Hachey Director, Power Marketing TransCanada Power Marketing Ltd. Interrelationship Between Gas and Electricity Markets in New England – A Generator’s Perspective Restructuring Roundtable May 21, 2004

Power Generation Assets ManChief Kapuskasing Castleton North Bay Bécancour Sundance A & B Nipigon Calstock Carseland Curtis Palmer Bruce Power Tunis Ocean State Grandview Williams Lake Bear Creek Redwater MacKay River Cancarb Since 1996, our interests in power facilities have grown from two plants with less than 300 megawatts to 20 plants with nearly 4,700 megawatts of capacity. This amount of power can meet the needs of approximately 4.7 million average households. We are the largest partner in TransCanada Power, L.P., a publicly held limited partnership traded on the Toronto Stock Exchange, that owns power plants in both countries. Our plants use a diverse range of fuels including natural gas, hydro, waste heat and wood waste. Our leading-edge expertise in the fuel-efficient and environmentally responsible process of cogeneration has made us a partner of choice for large industrial customers to develop on-site power generation. TransCanada also markets, develops and operates electrical generation across Canada and the northern United States. TransCanada Power, L.P. 7 plants; 328 MW TransCanada 20 plants; 4,700 MW (including LP and plants in development) TransCanada December 6, 2018

Natural Gas Transmission Assets Alberta System Trans Québec & Maritimes Canadian Mainline Foothills BC System Portland TransCanada’s natural gas pipeline network is one of the largest and most sophisticated in the world. We transport the majority of western Canada’s natural gas production, offering our customers quick, flexible and reliable access to key markets in eastern Canada, the Pacific Northwest, Midwest and Northeast United States. We connect almost 1,000 receipt points and ship for well over 300 customers. We also have interests in a number of pipelines in the United States both directly and as general partner of TC PipeLines, LP. We are well-positioned to play a role in moving new gas supplies – including Alaska and Mackenzie Delta natural gas, and offshore liquified natural gas -- to key growth markets. We’re focused on optimizing our pipeline network by connecting new supply, providing better access to markets and introducing competitive and innovative approaches to meeting customers’ needs. Great Lakes Northern Border Iroquois Tuscarora 24,000 miles of wholly owned pipeline; 12 Bcf/day TransCanada December 6, 2018

Issues List Fuel Switching and Regional Energy Policy Available Information Pipeline Nomination Schedule vs. NEPOOL Market Schedule (Straw proposal #1) Intraday Market (Straw proposal #2) Fuel Switching and Regional Energy Policy TransCanada December 6, 2018

Available Information Numerous Gas Fired Generators Not Scheduled in DAM ISO Morning Reports of 1/14-1/16 Showed Surplus, No OP4 OP4 on 1/14 Posted 5PM, 2 HR Duration, 108 MW Relief Gas Market Signals Strong: Tenn Z6 Mid $19/50/20 /MMBTU Now we know: DAM understated due to bid load, virtual generation Severe electric scheduling uncertainty at ISO TransCanada December 6, 2018

Pipe Nominations vs. NEPOOL Mkt Schedule Today, gas pipeline nominations due 1230, electric DAM schedule issued 1600, physical dispatch schedule issued 2200 Straw Proposal #1 Extreme days only Provide firm electric schedule before pipeline nominations are due TransCanada December 6, 2018

Intraday Market On extremely cold days, intraday gas difficult to impossible to find Straw Proposal #2 On extreme days, ISO to assume gas-fired units not scheduled by 1200 unavailable unless told otherwise Levitan, Jan ‘02: “ISO-NE should not rely upon gas-fired merchant power plants to provide operating reserves [during OFOs]” TransCanada December 6, 2018

Fuel Switching and Regional Energy Policy Substantial amount of gas-fired capacity in NEPOOL cannot switch to light oil unless no gas available Expensive to maintain oil burn capability for “once in a blue moon” Limited oil burn during extreme cold relieves price pressure on gas and electric markets, improves reliability ’90s vintage plants burning low S #2 cleaner than ’60s and ’70s vintage plants burning #6 oil TransCanada December 6, 2018

Thank you! TransCanada December 6, 2018