TransCanada reaches a five-year settlement with stakeholders on Canadian Mainline

CALGARY, Alberta – February 26, 2007 – TransCanada Corporation (TSX: TRP) (NYSE:TRP) today announced its wholly owned subsidiary, TransCanada PipeLines Limited (TransCanada), has reached a five-year settlement with interested stakeholders regarding 2007 tolls and costs for years 2008 to 2011 on its Canadian Mainline natural gas transmission system. The settlement is supported by an unopposed resolution of TransCanada’s Tolls Task Force.

“With this settlement, TransCanada has continued its collaborative relationship with customers,” said Hal Kvisle, chief executive officer. “TransCanada will achieve increased equity earnings and additional revenues through performance under various incentive programs, while customers will benefit from lower tolls and share the benefit of incentive program outcomes.”

TransCanada and its stakeholders agreed the cost of capital will reflect a rate of return on common equity, as determined by the National Energy Board’s (NEB) return on equity formula, on a deemed common equity ratio of 40 per cent, an increase from 36 per cent. The remaining capital structure will consist of senior debt following the redemption of U.S. dollar denominated Preferred Securities currently in the Canadian Mainline’s rate base. The foreign exchange gain expected to be realized as a result of the redemption of the Preferred Securities will be amortized over five years and will reduce the tolls paid by shippers.

The settlement results in a net revenue requirement of approximately $1.6 billion for 2007. Subject to NEB approval of the settlement, the annualized benchmark Eastern Zone toll for 2007 is expected to be $1.02/GJ.

The settlement establishes the Canadian Mainline’s fixed operating, maintenance and administration (OM&A) costs for each year of the settlement. Any variance between actual OM&A costs and those agreed to in the settlement will accrue to TransCanada from 2007 to 2009. Variances on OM&A costs will be shared 50/50 between TransCanada and customers in 2010 and 2011. All other cost elements of the revenue requirement will be treated on a flow through basis.

The performance-based incentive arrangements, similar to those agreed to in the 2006 settlement, are focused on aligning interests in achieving cost savings and increased value, thereby providing mutual benefits to both TransCanada and its customers.

TransCanada and stakeholders have agreed to a slight decrease in the depreciation rate for the term of the settlement and to seek NEB approval to put into abeyance until 2012 the requirement for an updated depreciation study due in 2008.

TransCanada will seek NEB approval for a change in 2007 interim tolls to align with tolls agreed to in the settlement until final tolls pursuant to this settlement are approved by the NEB.

TransCanada will apply to the NEB for approval of this settlement in the near future. With NEB approval, the terms of this settlement will be effective January 1, 2007 for a period of five years.

With more than 50 years experience, TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure including natural gas pipelines, power generation, gas storage facilities, and projects related to oil pipelines and LNG facilities. TransCanada’s network of wholly owned pipelines extends more than 59,000 kilometres (36,500 miles), tapping into virtually all major gas supply basins in North America.
TransCanada is one of the continent’s largest providers of gas storage and related services with approximately 360 billion cubic feet of storage capacity. A growing independent power producer, TransCanada owns, or has interests in, approximately 7,700 megawatts of power generation in Canada and the United States. TransCanada’s common shares trade on the Toronto and New York stock exchanges under the symbol TRP.

FORWARD LOOKING INFORMATION

This news release may contain certain information that is forward-looking and is subject to important risks and uncertainties. The words "anticipate", "expect", "may", "should", "estimate", "project", "outlook", "forecast" or other similar words are used to identify such forward looking information. All forward-looking statements are based on TransCanada’s beliefs and assumptions based on information available at the time such statements were made. The results or events predicted in this information may differ from actual results or events. Factors which could cause actual results or events to differ materially from current expectations include, among other things, the ability of TransCanada to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits, the availability and price of energy commodities, regulatory decisions, changes in environmental and other laws and regulations, competitive factors in the pipeline and energy industry sectors, construction and completion of capital projects, access to capital markets, interest and currency exchange rates, technological developments and the current economic conditions in North America. By its nature, such forward looking information is subject to various risks and uncertainties which could cause TransCanada's actual results and experience to differ materially from the anticipated results or other expectations expressed. For additional information on these and other factors, see the reports filed by TransCanada with Canadian securities regulators and with the United States Securities Exchange Commission. Readers are cautioned not to place undue reliance on this forward looking information, which is given as of the date it is expressed in this news release or otherwise, and TransCanada undertakes no obligation to update publicly or revise any forward looking information, whether as a result of new information, future events or otherwise, except as required by law.

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For further information, please contact:

Media Inquiries:

TransCanada
Shela Shapiro
(403) 920-7859 or Toll Free (800) 608-7859

Investor & Analyst Inquiries:

David Moneta/Myles Dougan
(403) 920-7911