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EPCOR to Buy TransCanada's Stake in TransCanada Power

Edmonton-based EPCOR Utilities Inc. and Calgary-based TransCanada Corp. have entered into an agreement under which EPCOR will acquire TransCanada's interest in TransCanada Power L.P. for C$529 million.

TransCanada Power is a limited partnership that owns a portfolio of 11 generation assets in Canada and the United States, with a total capacity of 744 MW. The generation plants include natural gas, small-scale hydro and biomass facilities.

EPCOR's acquisition includes 14.5 million units of TransCanada Power, representing approximately 30.6% of the outstanding units and 100% ownership of the general partner of TransCanada Power. The acquisition also includes management and operations agreements governing the ongoing operation of TransCanada's power generation assets.

Apart from the interest in the limited partnership being sold to EPCOR, TransCanada owns, controls or is constructing 5,000 MW of generation capacity in the United States and Canada.

The transaction has been approved by the boards of TransCanada, EPCOR and TransCanada Power 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 C$200 million.

TransCanada will continue to operate and maintain TransCanada Power's power plants until closing. TransCanada has agreed to provide operations and support services to EPCOR and TransCanada Power during a transition period following closing to facilitate an orderly transfer of management functions for TransCanada Power. EPCOR will change TransCanada Power's name and ticker symbol, to take effect at the close of the transaction.

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

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