1075607--2/28/2008--TC_PIPELINES

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RISKS INHERENT IN OUR BUSINESS 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. If we do not identify opportunities for accretive growth through organic 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. The long-term financial conditions of our pipeline systems are dependent on the continued availability of Western Canadian natural gas for import into the U.S. 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 choose to recontract for shorter periods or at less than maximum rates. The ability to extend and replace contracts on terms comparable to prior contracts or on any terms at all, could be adversely affected by factors, including: Ongoing changes in these factors and customers ability to adjust to changing market conditions may cause Great Lakes and Northern Border to sell a significant portion of available capacity on a short-term basis. The weighted average life of Great Lakes and Northern Border s contracts has generally declined over time. As of January 31, 2008, the weighted average remaining lives of Great Lakes and Northern Border s contracts were 2.4 years and 1.3 years, respectively. Additionally, if the forward natural gas basis 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 transportation rates are subject to review and possible adjustment by federal regulators. If the FERC requires that our pipeline systems tariff be changed, their respective cash flows may be adversely affected. 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. Our pipeline systems pipeline integrity programs 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. Our pipeline systems indebtedness may limit their ability to borrow additional funds, make distributions to us or capitalize on business opportunities. 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. RISKS INHERENT IN AN INVESTMENT IN THE PARTNERSHIP The Partnership s indebtedness may limit its ability to borrow additional funds, make distributions or capitalize on business opportunities. Increases in interest rates could materially adversely affect our business, 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 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 or Tuscarora might be converted into a corporation, which would result in Great Lakes, Northern Border 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 losess on the disposition of common units could be different than expected. Investors other than individuals who are U.S. residents may have adverse tax consequences from owning common units. We have registered as a tax shelter. This may increase the risk of an IRS audit of TC PipeLines or a unitholder. We treat a purchaser of common units as having the same tax benefits as the seller. 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.

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1075607--2/28/2008--TC_PIPELINES_LP