form11ktcc49213.htm

TRANSCANADA 401(K) AND SAVINGS IBEW 1245 PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

December 31 (dollars)	2008	2007
Assets
Investments
Investments at fair value (Note 3)	1,389,769	1,682,270
Participant loans	57,839	55,343
	1,447,608	1,737,613
Employer contribution receivable	1,458	643
Net Assets Available for Benefits	1,449,066	1,738,256

The accompanying notes to the financial statements are an integral part of these statements.

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TRANSCANADA 401(K) AND SAVINGS IBEW 1245 PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

Year ended December 31 (dollars)	2008
Additions
Contributions:
Employee contributions		399,813
Employer contributions		83,234
		483,047

Interest and dividend income		63,409
Total Additions		546,456

Deductions
Net decrease in fair value of investments (Note 3)		758,438
Transfers (Note 6)		50,718
Payment of plan benefits		25,963
Administrative expenses		527
Total Deductions		835,646

Decrease in Net Assets Available for Benefits		(289,190	)

Net Assets Available for Benefits
Beginning of Year		1,738,256
End of Year		1,449,066

The accompanying notes to the financial statements are an integral part of these statements.

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TRANSCANADA 401(K) AND SAVINGS IBEW 1245 PLAN

NOTES TO FINANCIAL STATEMENTS

NOTE 1: DESCRIPTION OF PLAN

The following description of the TransCanada 401(k) and Savings IBEW 1245 Plan (the Plan) provides only general information. Participants and all others should refer to the Plan document for a more complete description of the Plan’s provisions.

The Plan is a defined contribution plan for retirement benefits. The Plan excludes any employee of TransCanada USA Services Inc. (TCUSA or the Company) or its subsidiaries who are not covered under a collective bargaining agreement with the International Brotherhood of Electrical Workers (IBEW)1245 and non-resident persons who have been non-resident for 183 days or more unless the employee remains on the Company’s payroll, subject to certain restrictions. Employees may enroll when they have attained the age of 21 and completed 11 months of service by the end of a 12 month period with the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

The Board of Directors of TCUSA has appointed Fidelity Management Trust Company (Fidelity or the Trustee) as custodian and trustee of the Plan’s assets.

Vesting

Participants are immediately vested in their contributions (including rollovers), employer contributions and any earnings thereon.

Payment of Benefits

Participants are eligible to request a distribution of their vested amounts upon retirement, death, total and permanent disability, severance of employment with the Company, or, in very limited circumstances, in the event of financial hardship. Distributions are made in the form of a lump-sum payment or a rollover to another qualified account.

A participant’s normal retirement age is 65, however, a participant may elect to withdraw all or a portion of their contributions after the age of 59½, subject to certain conditions. A participant may receive pension benefits commencing on or after age 55 provided they have terminated their employment with the Company.

Forfeitures

As participants are immediately 100 per cent vested in their account balance, there are no forfeitures.

Employee and Employer Contributions

Each year, participants may voluntarily agree to contribute up to the lesser of 60 per cent of their compensation, as defined by the Plan document, and $15,500, subject to certain limitations under the Internal Revenue Code (the Code). The Company will match 50 per cent of each participant’s contributions up to six per cent of the participant’s compensation. To be eligible for employer-matching contributions, participants must have completed 11 months of service by the end of a 12 month period with the Company.

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Participant Accounts

Each participant’s account is credited with the participant’s contribution and an allocation of the Company’s contribution and Plan earnings. Earnings are allocated by the fund based on the ratio of a participant’s account invested in a particular fund to all participants’ investments in that fund. Plan expenses are generally paid by the Plan Sponsor. Affected participant accounts are charged expenses related to participant loans.

Participants are responsible for investment decisions relating to the investment of assets in their account. The Trustee carries out all investing transactions on behalf of the participant.

Participant Loans

Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50 per cent of their vested account balance, reduced by the highest outstanding loan balance in their account during the prior twelve month period. Loan terms range from one to five years for general loans or up to 10 years for the purchase of a primary residence. The loans are secured by the balance in the participant’s account and bear interest, at a reasonable interest rate, as determined by the Plan Administrator, based on prevailing market interest rates at the time. Interest rates remain fixed throughout the duration of the loan. The interest rate on loans outstanding as at December 31, 2008 ranged from 6.00 per cent to 9.25 per cent (2007 – 8.50 per cent to 9.25 per cent). Principal and interest are paid ratably through payroll deductions.

Investment in TransCanada Corporation

Effective June 2, 2008, stock of TransCanada Corporation (TransCanada), the Company’s parent, was available to participants in the Plan. A participant’s portfolio may consist of up to ten per cent of TransCanada stock.

Administrative Expenses

The Company is the Plan Administrator and is responsible for filing all required reports on behalf of the Plan. The Company provides or pays for certain accounting, legal, and management services on behalf of the Plan. The Company incurred $12,550 of expenses on behalf of the Plan in the year ending December 31, 2008. The Company has not charged the Plan for these expenses or services.

Plan Termination

Although it has not expressed any intent to do so, with approval from its Board of Directors, the Company has the right under the Plan to discontinue contributions at any time and to terminate the Plan subject to the provisions of ERISA.

NOTE 2: SUMMARY OF ACCOUNTING POLICIES

Changes in Accounting Policies

The Plan adopted the provisions of Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (FAS 157) for its assets measured at fair value on a recurring basis, effective January 1, 2008.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the ‘exit price’) in an orderly transaction between market participants at the measurement date.

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The Plan’s financial assets that are recorded at fair value on a recurring basis are categorized as Level I based upon a fair value hierarchy in accordance with FAS 157. Fair values of assets included in Level I are determined by reference to quoted prices in active markets for identical assets and liabilities. There is no current period disclosure required under FAS 157 for items measured at fair value on a non-recurring basis.

Assets measured at fair value on a recurring basis are categorized in accordance with FAS 157 as follows:

December 31, 2008 (dollars)	Quoted prices in active markets (Level I)		Significant other observable inputs (Level II)		Significant unobservable inputs (Level III)		Total

Mutual funds		1,384,963		-		-		1,384,963
Common stock and other		4,806		-		-		4,806
Participant loans		-		-		57,839		57,839
Total Investments		1,389,769		-		57,839		1,447,608

The following table presents a summary of changes in the fair value of the Plan's Level III assets:

December 31 (dollars)	2008
Participant Loans
Beginning balance at January 1, 2008		55,343
Purchases, sales, issuances and settlements (net)		2,496
Ending balance at December 31, 2008		57,839

Basis of Presentation

The financial statements of the Plan are prepared on a going concern basis and do not purport to reflect the financial status of the Plan if it were terminated on the valuation date. These financial statements present the aggregate financial position of the Plan and provide no information about the portion of assets attributable to any individual member or group of members. Amounts are stated in U.S. dollars unless otherwise indicated.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

Basis of Accounting

These financial statements are prepared using the accrual basis of accounting.

Investment Valuation and Income Recognition

The Plan’s investments are stated at fair value. The fair value of shares is determined by quoted prices in active markets using the closing sale price on the last day of the Plan year.

Interest income is recorded on the accrual basis; dividends are recorded on the ex-dividend date.

Net increase or decrease in fair value of investments consists of: (1) the net change in unrealized appreciation or depreciation on investments held during the year and (2) the realized gains or losses recognized on the sale of investments during the year.

Purchases and sales of securities are recorded on trade-date basis. Gains and losses on sales of these securities are reported on an average-cost basis.

Participant loans are valued at the outstanding balances, which approximate fair value.

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Contributions and Payment of Benefits

Contributions are recorded in the period in which they become obligations of the Company. Benefits are recorded upon distribution.

Concentration of Risk

The Plan’s exposure to credit loss in the event of nonperformance of investments managed by the Trustee is limited to the carrying value of such instruments. The Plan’s concentrations of credit risk, interest rate risk and market risk are dictated by the Plan’s provisions as well as those of ERISA and the participants’ investment preference.

NOTE 3: INVESTMENTS

The Plan utilizes various investments, including common stock funds and mutual funds. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in value of these investments, it is reasonably possible that changes in the values of investment securities may occur in the near term and that such changes could materially affect participant account balances and the amounts reported in the financial statements.

The following is a summary of investments which represented five per cent or more of the Plan’s net assets available for benefits:

December 31 (dollars)	2008	2007
Baron Asset Fund	216,545	280,014
Fidelity Diversified International Fund	214,874	335,918
Fidelity Equity Income Fund	138,609	214,908
Fidelity Dividend Growth Fund	122,183	158,492
Spartan ® U.S. Equity Index Fund	120,912	128,153
Fidelity Inflation Protected Bond Fund	85,727	* *
Fidelity Freedom 2010 Fund ®	77,804	97,508
Fidelity Freedom 2020 Fund ®	* *	104,286

* Investment represented less than five per cent of the Plan’s net assets.

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Net Decrease in Fair Value of Investments

Net decrease in fair value of investments by major category (including investments purchased, sold and held during the year) as determined by quoted market prices was as follows:

December 31 (dollars)	2008
Mutual funds		758,048
Common stock and other		390
Net Decrease in Fair Value of Investments		758,438

NOTE 4: INCOME TAXES

The Plan is a prototype plan designed by the Trustee. The Internal Revenue Service has determined and informed the Company, by a letter dated October 9, 2003, that the Plan and related trust are designed in accordance with applicable sections of the Code. Although the Plan has been amended since receiving the determination letter, the plan administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code. The Plan is exempt from federal income taxes. Accordingly, no provision for federal income taxes has been made in the accompanying financial statements.

NOTE 5: PARTY-IN-INTEREST AND RELATED PARTY TRANSACTIONS

Certain Plan investments are shares of mutual funds managed by Fidelity, the Trustee as defined by the Plan, therefore these transactions qualify as party-in-interest. The expenses incurred on behalf of the Plan by the Plan sponsor are disclosed in Note 1.

At December 31, 2008, Plan investments also included $3,764 (2007 – nil) of TransCanada common stock and $1,042 (2007 – nil) in a TransCanada stock purchase account.

NOTE 6: TRANSFERS

Transfers of $50,718 relate to employees who are no longer covered under a collective bargaining agreement with the IBEW1245 and therefore transferred their accounts to the TransCanada 401(K) and Savings Plan.

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TRANSCANADA 401(K) AND SAVINGS IBEW 1245 PLAN

EIN #: 98-040263

PLAN #: 003

FORM 5500 SCHEDULE H, PART IV, LINE 4i – SCHEDULE OF ASSETS (HELD AT END OF YEAR)

AS OF DECEMBER 31, 2008

(a)	(b) Identity of Issuer, Borrower, Lessor or Similar Party	(c) Description of Investment	(e) Current Value (US dollars)

	Baron Asset Fund	Mutual Fund	216,545
*	Fidelity Diversified International Fund	Mutual Fund	214,874
*	Fidelity Equity-Income Fund	Mutual Fund	138,609
*	Fidelity Dividend Growth Fund	Mutual Fund	122,183
	Spartan ® U.S. Equity Index Fund	Mutual Fund	120,912
*	Fidelity Inflation Protected Bond Fund	Mutual Fund	85,727
*	Fidelity Freedom 2010 Fund®	Mutual Fund	77,804
*	Fidelity Retirement Money Market Portfolio	Mutual Fund	65,180
*	Fidelity Freedom 2020 Fund®	Mutual Fund	63,405
*	Fidelity U.S. Bond Index Fund	Mutual Fund	53,846
*	Fidelity Export & Multinational Fund	Mutual Fund	39,373
	RS Partners A	Mutual Fund	33,351
*	Fidelity Fund	Mutual Fund	31,370
*	Fidelity Aggressive Growth Fund	Mutual Fund	26,579
	Artisan Mid Cap Value Fund	Mutual Fund	19,265
*	Fidelity Freedom 2040 Fund®	Mutual Fund	18,085
	Hartford Growth Y	Mutual Fund	15,142
*	Fidelity Freedom 2025 Fund	Mutual Fund	13,499
*	Fidelity Freedom 2000 Fund®	Mutual Fund	8,682
*	Fidelity Freedom Income Fund®	Mutual Fund	6,375
*	Fidelity Freedom 2050 Fund	Mutual Fund	5,241
*	Fidelity Freedom 2030 Fund®	Mutual Fund	4,172
*	Fidelity Freedom 2015 Fund	Mutual Fund	2,273
*	Fidelity Freedom 2035 Fund	Mutual Fund	1,769
*	Fidelity Freedom 2045 Fund	Mutual Fund	702
	Total Mutual Funds		1,384,963

*	TransCanada Corporation	Common Stock	3,764
*	TransCanada Corporation	Stock Purchase Account	1,042

	Participant loans	Interest rates ranging from 6.00% to 9.25% maturing through 2013	57,839
	Total Investments		1,447,608

* Represents a party-in-interest (Note 5).

See accompanying report of independent registered public accounting firm.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			1
FINANCIAL STATEMENTS			2
	Statements of Net Assets Available for Benefits as of December 31, 2008 and 2007
	Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2008
	Notes to Financial Statements
SUPPLEMENTAL SCHEDULE			9
	Schedule H, Part IV, Line 4i
		Schedule of Assets (Held at End of Year) as of December 31, 2008
SIGNATURE
EXHIBIT
	The following exhibit is filed herewith:
		Exhibit 23.1 Consent of Independent Registered Public Accounting Firm
	NOTE:
		All other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

	Union 1245 Plan #49213–TransCanada 401(k) and Savings IBEW 1245 Plan
	By:	/s/ Wendy L. Hanrahan
		Wendy L. Hanrahan Vice-President TransCanada USA Services Inc., the Plan Administrator


23.1	Consent of Independent Registered Public Accounting Firm to incorporation by reference in Form S-8.