EPCOR Acquires TransCanada's Interest in TransCanada Power, L.P.

EPCOR Utilities Inc. and TransCanada Corporation have entered into an agreement whereby EPCOR will acquire TransCanada's interest in TransCanada Power, L.P. for $529 million.

EPCOR's acquisition includes:

: :  Approximately 14.5 million units of the Partnership,
     representing approximately 30.6 per cent of the
     outstanding units;

: :  100 per cent ownership of the General Partner of the Partnership; and

: :  Management and operations agreements governing the ongoing
     operation of the Partnership's power generation assets.

The transaction has been approved by the Boards of each of TransCanada, EPCOR and the Partnership, and is expected to close in the third quarter of 2005, subject to regulatory approvals. When the transaction closes, TransCanada expects to realize an after tax gain of approximately $200 million. TransCanada will continue to operate and maintain the Partnership's power plants until closing. TransCanada has agreed to provide operations and support services to EPCOR and the Partnership during a transition period following closing to facilitate an orderly transfer of management functions for the Partnership. EPCOR will change the Partnership's name and ticker symbol, to take effect at the close of the transaction.

"EPCOR is pleased to announce the acquisition of a significant ownership interest in one of Canada's premier power partnerships," said EPCOR President and CEO Don Lowry, who EPCOR will nominate to become Chairman of the Partnership. "Our investment in the Partnership represents the cornerstone of EPCOR's long-term power growth strategy, and this commitment will be demonstrated over time through project development, acquisitions and the transfer of quality power assets to the Partnership on a basis that will be accretive to unitholder value. We look forward to assuming sponsorship of the Partnership. We have committed to maintain our investment in the Partnership as a long-term core asset for EPCOR."

"EPCOR brings to the Partnership over 100 years of experience operating power assets," Lowry continued. "We currently operate over 2,400 megawatts of generation capacity in Alberta, British Columbia, Washington State and Ontario. EPCOR has consistently had Canadian generating assets ranked among the top ten nationally in the Canadian Electricity Association's annual rankings of operating reliability and availability. Our extensive expertise in the power sector across a broad range of fuel sources will serve the Partnership well in efficiently operating the Partnership's existing assets and in identifying, evaluating and successfully pursuing future opportunities for growth."

"The Partnership's assets operate under long-term contracts, and have a proven record of strong, stable operating performance," said EPCOR Executive Vice President Brian Vaasjo, who EPCOR will nominate to become President of the Partnership. "As the manager and operator, our goal will be to maintain this performance at the existing plants, and to develop or acquire additional high quality assets for the Partnership on an accretive basis."

Vaasjo continued: "The change in sponsorship should have no impact on the high reliability of the assets and no material impact on the costs of the Partnership. In our new role as sponsor to the Partnership, we are confident that we will be able to maintain the stability that unitholders have become accustomed to. EPCOR and the Partnership will enjoy excellent alignment, partly as a result of the Partnership having a 'right of first look' on potential power generation acquisitions available to EPCOR. Furthermore, EPCOR currently owns an inventory of power generation assets that possess characteristics that would make them attractive acquisitions for the Partnership."

"TransCanada Power, L.P. has performed exceptionally well for both TransCanada and the Partnership's public unitholders," said Hal Kvisle, TransCanada's President and CEO. "Under our sponsorship, TransCanada Power, L.P. has grown significantly while generating strong returns for Partnership unitholders, including TransCanada. However, the completion of this transaction will enable TransCanada to focus on our much larger, directly-owned power businesses in Canada and the United States. We are pleased to have reached agreement to divest our interests in TransCanada Power, L.P. to EPCOR, a strong and capable sponsor with a proven record in the power business."

RBC Capital Markets and BMO Nesbitt Burns acted as exclusive financial advisors to EPCOR and TransCanada, respectively, in association with the transaction.

Find out more about:
TransCanada Corporation
TransCanada Power, L.P.
EPCOR Utilities Inc.

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Posted 18/05/05

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