1075607--2/26/2010--TC_PIPELINES

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Limited partner interests are inherently different from the capital stock of a corporation, although many of the business risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business. All of the information included in this report and any subsequent reports we may file with the SEC or make available to the public should be carefully considered and evaluated before investing in any securities issued by us. Each of the risks and uncertainties described below could lead to events or circumstances that may have a material adverse effect on our business, financial condition, results of operations and cash flows, including our ability to make distributions to our unitholders. The risks referred to herein disclose risks inherent in the Partnership and our pipeline systems. The long-term financial conditions of our pipeline systems, except North Baja, are dependent on the continued availability of gas exiting the WCSB and the market demand for these volumes. Competition from pipelines that deliver natural gas from other supply sources to our pipeline systems' market areas could cause our pipeline systems to discount their rates or otherwise experience a reduction in their revenues. Our pipeline systems may not be able to maintain existing customers or acquire new customers when the current shipper contracts expire or customers may recontract for shorter periods or at less than maximum rates. Our pipeline systems are subject to regulation by agencies, including the FERC, which could have an adverse impact on our ability to establish transportation rates that would allow recovery of the full cost of operating our pipeline systems, including a reasonable return, and our ability to make distributions. If our pipeline systems do not maintain their respective rate bases, the amount of revenue attributable to the return on the rate base they collect from their shippers will decrease over time. Cash distributions are dependent primarily on our cash flow, financial reserves and working capital borrowings. We are dependent on our pipeline systems to generate sufficient cash to enable us to pay distributions. The recent global economic and financial market crisis has had and may continue to have a negative effect on our business. If we do not identify opportunities for accretive growth through organic growth projects or acquisitions, or our pipeline systems do not successfully complete expansion projects or make and integrate acquisitions that are accretive, our future growth may be limited. If any significant shipper fails to perform its contractual obligations, our pipeline systems' respective cash flows and financial condition could be adversely impacted. Our pipeline systems' pipeline integrity testing programs and any necessary pipeline repairs, or preventative or remedial measures may impose significant costs and liabilities. Our pipeline systems' operations are regulated by federal, state and local agencies responsible for environmental protection and operational safety, and costs of environmental compliance and the costs of environmental liabilities could exceed our estimates. Our pipeline systems' indebtedness may limit their ability to borrow additional funds, make distributions to us or capitalize on business opportunities. Capital and credit market conditions may adversely affect the Partnership's and/or our pipeline systems' access to capital and cost of capital. We do not own a controlling interest in Great Lakes or Northern Border and we may be unable to cause certain actions to take place unless the other partner agrees. As a result, we will be unable to control the amount of cash we will receive from those operations and we could be required to contribute significant cash to fund our share of their operations. If we fail to make these contributions our ownership interest would be diluted. Our pipeline systems' operations are subject to operational hazards and unforeseen interruptions, which could adversely affect their businesses and for which they may not be adequately insured. Our pipeline systems do not own all of the land on which their pipelines and facilities are located, which could disrupt their operations. If we were to lose TransCanada's management expertise, we would not have sufficient stand-alone resources to operate. Our pipeline systems may undertake or be dependent upon expansion and build projects which involve significant risks that could adversely affect our business. The Partnership's indebtedness may limit its ability to borrow additional funds, make distributions or capitalize on business opportunities. The conditions of the U.S. and international credit markets may adversely affect our ability to obtain credit or draw on our current credit facility. Increases in interest rates and general volatility in the financial markets and economy could adversely affect our business, our common unit price, results of operations, cash flows and financial condition. We do not have the same flexibility as other types of organizations to accumulate cash and equity to protect against illiquidity in the future. Unitholders have limited voting rights and do not control our general partner. We may issue additional common units without unitholder approval, which would dilute the existing unitholders' interest. In addition, issuance of additional common units may increase the risk that we will be unable to pay the full minimum quarterly distribution on all common units. Unitholders may not have limited liability in some circumstances. Our general partner has a limited call right that may require unitholders to sell their common units at an undesirable time or price. Without the consent of each unitholder, Great Lakes, Northern Border, North Baja or Tuscarora might be converted into a corporation, which would result in Great Lakes, Northern Border, North Baja or Tuscarora, as the case may be, being subject to corporate income taxes. TransCanada controls our general partner, which has sole responsibility for conducting our business and managing our operations. TC PipeLines GP, our general partner, and its affiliates have limited fiduciary responsibilities and may have conflicts of interest with respect to our partnership, and they may favor their own interests to the detriment of our unitholders. Cost reimbursements due to our general partner may be substantial and could reduce our cash available for distribution. If we were found to be an "investment company" under the Investment Company Act of 1940, our contracts may be voidable and our offers of securities may be subject to rescission. The Internal Revenue Service (IRS) could treat us as a corporation, which would substantially reduce the cash available for distribution to unitholders. If our pipeline systems were to become subject to a material amount of entity-level taxation for state tax purposes, then our pipeline systems' operating cash flow and cash available for distribution to us and for other business needs would be reduced. We have not requested an IRS ruling with respect to our tax treatment. Unitholders may be required to pay taxes on income from us even if they receive no cash distributions. Tax gains or losses on the disposition of common units could be different than expected. Tax-exempt and non-U.S. investors may have adverse tax consequences from owning common units. We treat a purchaser of common units as having the same tax benefits without regard to the actual common units purchased. A successful IRS challenge could adversely affect the value of the common units. We have adopted certain valuation methodologies that may result in a shift of income, gain, loss and deduction between the general partner and the unitholders. The IRS may challenge this treatment, which could adversely affect the value of the common units. The sale or exchange of 50 per cent or more of the total interest in our capital and profits will result in the termination of our partnership for federal income tax purposes. Unitholders will likely be subject to state and local taxes and return filing requirements in states where they do not live as a result of an investment in our common units.

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1075607--2/26/2010--TC_PIPELINES_LP