Canadian pipe and power generation giant TransCanada Corp. on Friday announced that net income declined from C$273 million (C$0.56/share) in 1Q2006 to C$265 million (C$0.52/share) during 1Q2007 due in part to weaker performance from its pipeline segment and the absence of certain discontinued operations. Net income from continuing operations for 1Q2007 was also C$265 million (C$0.52), compared to C$245 million (C$0.50) for 1Q2006.

TransCanada's net income for 1Q2006 included net income from discontinued operations of C$28 million (C$0.06) reflecting bankruptcy settlements with Mirant received in first quarter 2006 related to TransCanada's gas marketing business, which was divested in 2001.

The company reported that comparable earnings were C$250 million (C$0.49) for first quarter 2007 compared to $227 million (C$0.46) in first quarter 2006. TransCanada said the increase in comparable earnings is primarily due to income from the acquisition of ANR, start-up of the 550 MW Becancour cogeneration plant and the commencement of operations of Tamazunchale. Revenue for the company increased to C$2.25 billion from C$1.89 during 1Q2006, a 19% increase.

Net cash provided by operations was C$618 million during the quarter, compared with C$515 million for the same period in 2006. Funds generated from operations in first quarter 2007 were C$582 million, compared with C$517 million for the same period in 2006.

TransCanada's wholly owned pipelines contributed net earnings of C$126 million, which is C$5 million less than last year's C$131 million figure. TransCanada's overall pipe business -- which includes interest ownership -- contributed C$155 million, C$2 million less than last year's C$157 million figure.

"The close of the ANR and Great Lakes acquisition in the first quarter was a significant milestone for TransCanada," said CEO Hal Kvisle. "These assets are a great fit with our pipeline business and extend our services further into key U.S. markets. We continue to make progress on a number of growth projects in both our pipelines and energy businesses, including oil pipelines, gas pipelines, power, gas storage and LNG."

Operating income from TransCanada's western and eastern power operations totaled C$140 million during 1Q2007, a significant increase over last year's quarter contribution of C$107 million. The western operations increase was primarily due to increased margins from higher overall realized power prices on both contracted and uncontracted volumes of power sold, while the eastern operations increase was primarily due to incremental income earned in 2007 from the startup of both the Becancour cogeneration plant in September 2006 and the first of six wind farms (Baie-des-Sables) at the Cartier Wind project in November 2006.

Generation volumes in 1Q2007 increased 1,325 GWh to 2,615 GWh from the 1,290 GWh generated in 1Q2006, primarily due to the start-up of the Becancour and Baie-des-Sables facilities, as well as increased dispatch of the OSP facility.

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