NewsRelease TC PipeLines, LP Annunces 2015 Third Quarter Financial Results Agrees t purchase a 49.9% interest in Prtland Natural Gas Transmissin frm TransCanada Hustn, Texas Nvember 6, 2015 TC PipeLines, LP (NYSE: TCP) (the Partnership) tday reprted third quarter 2015 distributable cash flw f $68 millin and net incme attributable t cntrlling interests f $49 millin. We are very pleased t annunce that the Partnership has agreed t acquire a 49.9 percent interest in Prtland Natural Gas Transmissin System frm TransCanada. The pipeline system is strategically lcated in the nrtheastern United States and serves New England s grwing energy needs, said Steve Becker, President f the General Partner. This transactin is anther in a series f expected drpdwns frm TransCanada and again demnstrates ur strategy f investing in assets that prvide stability and lng-term value t ur unithlders. Our existing assets perfrmed very well during the quarter, generating increased earnings and cash flws cmpared t the same quarter in 2014, cntinued Becker. "This slid perfrmance, tgether with the accretin frm drpdwns, reaffirms ur expectatin that we will cntinue t increase the annual distributin at least at a 6 percent rate fr the next 2 t 3 years." Third Quarter 2015 Highlights (All financial figures are unaudited) Agreed t purchase a 49.9% interest in the Prtland Natural Gas Transmissin System (PNGTS) frm TransCanada fr $223 millin Generated distributable cash flw f $68 millin Paid cash distributins f $59 millin Declared cash distributins f $0.89 per cmmn unit Generated net incme attributable t cntrlling interests f $49 millin The Partnership s financial highlights fr the third quarter f 2015 cmpared t the third quarter f 2014 were: (unaudited) Three mnths ended September 30, Nine mnths ended September 30, (millins f dllars except per cmmn unit amunts) 2015 2014 2015 2014 Distributable cash flw (a) 68 52 217 188 Cash distributins paid (59) (54) (169) (157) Cash distributins paid per cmmn unit $0.89 $0.84 $2.57 $2.46 Earnings befre interest, taxes, depreciatin and amrtizatin (EBITDA) (a) 86 72 266 253 Net incme attributable t cntrlling interests 49 31 150 125 Net incme per cmmn unit basic and diluted (b) $0.70 $0.48 $2.23 $1.96 Weighted average cmmn units utstanding (millins) basic and diluted (c) 64.0 62.6 63.8 62.4 Cmmn units utstanding at end f perid (millins) (c) 64.0 63.6 64.0 63.6 (a) Distributable cash flw and EBITDA are nn-gaap financial measures. Refer t the descriptin f Distributable cash flw and EBITDA in the sectin f this release entitled Nn-GAAP Financial Measures and the Supplemental Schedule fr further detail. (b) Net incme per cmmn unit is cmputed by dividing net incme attributable t cntrlling interests, after deductin f amunts attributable t the General Partner and Class B units by the weighted average number f cmmn units utstanding. Refer t Financial Summary-Cnslidated Statements f Incme sectin f this release. (c) Under the ATM prgram, the Partnership issued 396,205 units during the nine mnths ended September 30, 2015.
Page 2 Recent Develpments PNGTS Acquisitin - On Nvember 5, 2015, we entered int an agreement with TransCanada t acquire a 49.9 percent interest in the PNGTS fr $223 millin including apprximately $35 millin in prprtinate PNGTS debt. PNGTS is a high-capacity, high-pressure interstate natural gas pipeline which began serving New England's energy needs in March 1999. The pipeline cnnects with the TransQuebec and Maritimes Pipeline at the Canadian brder and shares facilities with the Maritimes and Nrtheast Pipeline frm Westbrk, Maine t a cnnectin with the Tennessee Gas Pipeline System near Bstn, Massachusetts. The purchase agreement als prvides fr additinal payments t TransCanada ranging frm $5 millin up t a ttal f $50 millin if pipeline capacity is expanded t varius threshlds during the 15-year perid fllwing the date f clsing. The transactin is expected t clse at the end f 2015. The Partnership plans t finance the acquisitin with a cmbinatin f debt and equity. The transactin was apprved by the Bard f Directrs f the general partner, fllwing apprval and recmmendatin frm the Bard's cnflicts cmmittee, which is cmprised entirely f independent directrs. The cnflicts cmmittee engaged Deutsche Bank t act as its financial advisr, Mrris, Nichls, Arsht & Tunnell, LLP as its legal cunsel and Wd Mackenzie as its natural gas market utlk advisr. Cash Distributins On Octber 22, 2015, the bard f directrs f ur General Partner declared the Partnership s third quarter 2015 cash distributin in the amunt f $0.89 per cmmn unit, payable n Nvember 13, 2015 t unithlders f recrd as f Nvember 3, 2015. Term Lan Facility On September 30, 2015, the Partnership refinanced its maturing $170 millin shrt-term lan with a three-year term lan maturing n Octber 1, 2018. The utstanding principal bears interest based n the LIBOR plus an applicable margin. Great Lakes - On Octber 15, 2015, Federal Energy Regulatry Cmmissin apprved a settlement regarding transprtatin service rates payable t Great Lakes, frm its TransCanada affiliate, ANR Pipeline Cmpany. As a result f the settlement, Great Lakes will recgnize deferred transprtatin revenue f apprximately $23 millin in the furth quarter f 2015, inclusive f apprximately $9 millin f revenue related t services perfrmed in 2014. GTN Carty Lateral- In Octber 2015, GTN placed the Carty Lateral in-service. The lateral was cnstructed in nrthcentral Oregn t deliver natural gas t an electric generatin facility wned by Prtland General Electric Cmpany. Prtland General Electric Cmpany has a 30-year cntract fr 100% f Carty Lateral s capacity and a 20-year GTN mainline cntract fr 75,000 dekatherms/day beginning in May 2016. Results f Operatins Fr the three mnths ended September 30, 2015, net incme attributable t cntrlling interests increased by $18 millin cmpared t the same perid in 2014. The increase was primarily due t: higher net incme frm GTN mainly due t higher revenues frm the sale f shrt-term services t its custmers; higher equity earnings frm Nrthern Brder due t higher revenues frm the sale f available capacity; and the 2015 GTN acquisitin effective April 1, 2015, whereby the Partnership nw wns 100 percent f GTN. EBITDA increased by $14 millin cmpared t the same perid in 2014. The increase was primarily due t: higher GTN revenues as nted abve; higher equity earnings frm Nrthern Brder, again as nted abve; and lwer expenses in the current perid primarily due t csts incurred relating t the 2014 Bisn acquisitin in 2014. 2
Page 3 Distributable cash flw increased by $16 millin in the third quarter f 2015 cmpared t the same perid in 2014 primarily due t the net effect f: higher EBITDA; n distributins paid t nn-cntrlling interests in the current perid as a result f the 2014 Bisn acquisitin and the 2015 GTN acquisitin;. higher interest expense related t additinal brrwings t fund a prtin f the 2014 Bisn acquisitin and the 2015 GTN acquisitin; higher maintenance capital expenditures primarily due t 2015 majr cmpressin equipment verhauls n GTN s pipeline system; and distributin allcable t Class B units during the current perid. Nn-GAAP Financial Measures Effective September 30, 2015, we have presented the fllwing nn-gaap financial measures: EBITDA Ttal distributable cash flw Distributable cash flw EBITDA is an apprximate measure f ur perating cash flw during the current earnings perid and recnciles directly t the net incme amunt presented. It measures ur earnings befre deducting interest, depreciatin and amrtizatin, net incme attributable t nn-cntrlling interests, distributins allcable t the General Partner and Class B units, and it includes earnings frm ur equity investments. Ttal distributable cash flw and distributable cash flw prvide measures f distributable cash generated during the current earnings perid and recncile directly t the net incme amunt presented. Ttal distributable cash flw includes EBITDA plus: Distributins frm ur equity investments less: Earnings frm ur equity investments, Equity allwance fr funds used during cnstructin (Equity AFUDC), Interest expense, Distributins t nn-cntrlling interests, and Maintenance capital expenditures. Distributable cash flw is cmputed net f distributins declared t the General Partner and distributins allcable t Class B units. Distributins declared t the General Partner are based n its effective tw percent interest plus an amunt equal t incentive distributins. Distributins allcable t the Class B units equal 30 percent f GTN s distributable cash flw fr the six mnths ended September 30, 2015 less $15 millin. Distributable cash flw infrmatin and EBITDA are presented t assist investrs in evaluating ur business perfrmance. We believe these measures prvide additinal meaningful infrmatin in evaluating ur financial perfrmance and cash distributin capability. As well, management uses these measures as a basis fr recmmendatins t ur General Partner s bard f directrs regarding the distributin amunt t be declared each quarter. The nn-gaap financial measures presented as part f this release are prvided as a supplement t GAAP financial results and are nt meant t be cnsidered in islatin r as substitutes fr financial results prepared in accrdance with GAAP. Additinally, these measures as presented may nt be cmparable t similarly titled measures f ther cmpanies. 3
Page 4 Cnference Call Analysts, members f the media, investrs and ther interested parties are invited t participate in a telecnference by calling 866.225.6564 n Friday, Nvember 6, 2015 at 10:00 a.m. central time (CT)/11:00 a.m. eastern time (ET). Steve Becker, President f the General Partner, will discuss the third quarter financial results and prvide an update n the Partnership s business, fllwed by a questin and answer sessin fr the investment cmmunity and media. Please dial in 10 minutes prir t the start f the call. N pass cde is required. A live webcast f the cnference call will als be available thrugh the Partnership s website at www.tcpipelineslp.cm. Slides fr the presentatin will be psted n the Partnership s website under Events and Presentatins prir t the webcast. A replay f the telecnference will als be available tw hurs after the cnclusin f the call and until 11 p.m. (CDT) and midnight (EDT) n Nvember 13, 2015, by calling 800.408.3053, then entering pass cde 5111484. TC PipeLines, LP is a Delaware master limited partnership with interests in six federally regulated U.S. interstate natural gas pipelines which serve markets in the Western and Midwestern United States. The Partnership is managed by its general partner, TC PipeLines GP, Inc., a subsidiary f TransCanada Crpratin (NYSE: TRP). Fr mre infrmatin abut TC PipeLines, LP, visit the Partnership s website at www.tcpipelineslp.cm. Frward-Lking Statements Certain nn-histrical statements in this release relating t future plans, prjectins, events r cnditins are intended t be frward-lking statements within the meaning f Sectin 27A f the Securities Act f 1933 and Sectin 21E f the Securities Exchange Act f 1934. These statements are based n current expectatins and, therefre, subject t a variety f risks and uncertainties that culd cause actual results t differ materially frm the prjectins, anticipated results r ther expectatins expressed in this release, including, withut limitatin, the timing, structure and clsing f future drpdwns f TransCanada s remaining U.S. natural gas pipeline assets and the ability f these assets t generate nging value t ur unithlders, cmpetitive cnditins in the natural gas industry, increases in perating and cmpliance csts, the utcme f rate prceedings, ur ability t identify and cmplete expansin and grwth pprtunities, perating hazards beynd ur cntrl, availability f capital and market demand that the Partnership expects r believes will r may ccur in the future. These and ther factrs that culd cause future results t differ materially frm thse anticipated are discussed in Item 1A in ur Annual Reprt n Frm 10-K fr the year-ended December 31, 2014 filed with the Securities and Exchange Cmmissin (the SEC), as updated and supplemented by subsequent filings with the SEC. All frward-lking statements are made nly as f the date made and except as required by applicable law, we undertake n bligatin t update any frward-lking statements t reflect new infrmatin, subsequent events r ther changes. 30 Media Inquiries: Mark Cper/Davis Sheremata 403.920.7859 800.608.7859 Unithlder and Analyst Inquiries: Rhnda Amundsn 877.290.2772 investr_relatins@tcpipelineslp.cm 4
Page 5 TC PipeLines, LP Financial Summary Cnslidated Statements f Incme Three mnths ended Nine mnths ended (unaudited) September 30, September 30, (millins f dllars except per cmmn unit amunts) 2015 2014 2015 2014 Transmissin revenues 83 80 255 249 Equity earnings frm uncnslidated affiliates 17 15 63 66 Operatin and maintenance expenses (12) (14) (36) (38) Prperty taxes (5) (5) (16) (17) General and Administrative (1) (5) (5) (8) Depreciatin (21) (21) (63) (64) Financial charges and ther (12) (11) (41) (37) Net incme 49 39 157 151 Net incme attributable t nn-cntrlling interests - 8 7 26 Net incme attributable t cntrlling interests 49 31 150 125 Calculatin f net incme attributable t cmmn Net incme attributable t cntrlling interests Less: Net incme attributable t the General Partner, including incentive distributins 49 (b) 31 150 (b) 125 2 1 5 3 Net incme attributable t Class B units 2 (b) - 2 (b) - Net Incme attributable t cmmn units 45 30 143 122 Weighted average cmmn units utstanding (millins) - basic and diluted 64.0 62.6 63.8 62.4 Net incme per cmmn unit - basic and diluted (a) $ 0.70 (b) $ 0.48 $ 2.23 (b) $ 1.96 Cmmn units utstanding, end f perid (millins) 64.0 63.6 64.0 63.6 5
Page 6 (a) Net incme per cmmn unit is cmputed by dividing net incme attributable t cntrlling interests, after deductin f amunts attributable t the General Partner and Class B units by the weighted average number f cmmn units utstanding. The amunt allcable t the General Partner equals an amunt based upn the General Partner s effective tw percent general partner interest, plus an amunt equal t incentive distributins. See nte immediately belw fr further discussin f amunts attributable t the Class B units. (b) The Class B units we issued t TransCanada as part f financing the acquisitin f the remaining 30 percent in GTN n April 1, 2015 entitle TransCanada t an annual distributin based n 30 percent f GTN s annual distributins as fllws: (i) 100 percent f distributins abve $20 millin thrugh March 31, 2020; and (ii) 25 percent f distributins abve $20 millin thereafter. Under the terms f the Partnership Agreement, the Class B distributin will be initially calculated t equal 30 percent f GTN s distributable cash flw fr the nine mnths ending December 31, 2015, less $15 millin. Cnsistent with the applicatin f Accunting Standards Cdificatin 260 - Earnings per share, the Partnership will allcate a prtin f net incme attributable t cntrlling interests t the Class B units upn 30 percent f GTN s ttal distributable cash flw exceeding $15 millin fr the nine mnth perid ending December 31, 2015. During the six mnths ended September 30, 2015, 30 percent f GTN s ttal distributable cash flw was $17 millin. Given the 2015 threshld level fr Class B unit distributins is $15 millin, we have allcated $2 millin f the Partnership s net incme attributable t cntrlling interests t the Class B units in the third quarter. This allcatin reduced net incme per cmmn unit by apprximately three cents during the three and nine mnths ended September 30, 2015. Additinally, as the threshld level fr 2015 has nw been exceeded, we expect t allcate 30 percent f GTN s furth quarter distributable cash flw t the Class B units. 6
Page 7 TC PipeLines, LP Financial Summary Cnslidated Cndensed Balance Sheets (unaudited) September 30, 2015 December 31, 2014 (millins f dllars) ASSETS Current assets 66 68 Investment in uncnslidated affiliates 1,151 1,177 Plant, prperty and equipment, net 1,953 1,968 Other assets 138 136 3,308 3,349 LIABILITIES AND PARTNERS' EQUITY Current liabilities 64 291 Other liabilities 27 26 Lng-term debt, net f current prtin 1,890 1,446 Partners' equity 1,327 1,586 3,308 3,349 7
Page 8 TC PipeLines, LP Supplemental Schedule Nn-GAAP Financial Measures Recnciliatins f Net incme t Distributable Cash Flw Three mnths ended Nine mnths ended (unaudited) September 30, September 30, (millins f dllars except per cmmn unit amunts) 2015 2014 2015 2014 Net Incme 49 39 157 151 Add: Interest expense (a) 16 12 45 37 Depreciatin and amrtizatin (b) 21 21 64 65 EBITDA 86 72 266 253 Add: Less: Less: Distributable cash flw frm equity investments (c) Nrthern Brder 23 19 69 66 Great Lakes 3 4 21 22 26 23 90 88 Equity earnings Nrthern Brder (16) (14) (50) (53) Great Lakes (1) (1) (13) (13) (17) (15) (63) (66) Equity AFUDC (1) - (1) - Interest expense (a) (16) (12) (45) (37) Distributins t nn-cntrlling interests (d) - (13) (11) (42) Maintenance capital expenditures (6) (2) (12) (5) Ttal Distributable Cash Flw (e) 72 53 224 191 General Partner distributins declared (f ) (2) (1) (5) (3) Distributins allcable t Class B units (g) (2) - (2) - Distributable Cash Flw (e) 68 52 217 188 8
Page 9 (a) Interest expense includes net realized lss related t the interest rates swaps f $1 millin and $2 millin fr the three and nine mnths ended September 30, 2015, respectively (2014 - $1 millin and $2 millin). (b) Amunts presented here represent depreciatin f Plant, prperty and equipment and amrtizatin f debt issuance csts. (c) Amunts here are calculated in accrdance with the cash distributin plicies f these entities. Distributins frm each f ur equity investments represent ur respective share f these entities quarterly distributable cash during the current reprting perid. (d) Amunts here are calculated in accrdance with the cash distributin plicies f ur cnslidated subsidiaries. Distributins t nn-cntrlling interests represent the respective share f quarterly distributable cash during the current reprting perid nt wned by us. (e) Ttal Distributable Cash Flw and Distributable Cash Flw represent the amunt f distributable cash generated by the Partnership subsidiaries and equity investments during the current earnings perid and thus recncile directly t the net incme amunt presented. The calculatin differs frm the previus nn-gaap measure Partnership Cash Flws befre General Partner distributins and Partnership Cash Flws as the previusly used measures primarily reflected cash received during the perid thrugh distributins frm ur subsidiaries and equity investments that were generated frm the prir quarter s financial results. The amunts reflected here have been adjusted t reflect the calculatin as described abve and t present the cmparable Ttal Distributable Cash flw and Distributable Cash Flw frm the previus perids. (f) Distributins declared t the General Partner fr the three and nine mnths ended September 30, 2015 included an incentive distributin f apprximately $1 millin and $2 millin, respectively (2014 - nil). (g) During the six mnths ended September 30, 2015, 30 percent f GTN s ttal distributins was $17 millin. Given the 2015 threshld level fr Class B unit distributins is $15 millin, we have allcated $2 millin t the Class B units in the third quarter. Additinally, as the threshld level fr 2015 has nw been exceeded, we expect t allcate 30 percent f GTN s furth quarter distributable cash flw t the Class B units. Refer t nte (b) f the Financial Summary- Cnslidated Statements f Incme sectin f this release fr additinal details. 9