EX-13.3 2 a12312016tcplaifenglish.htm ANNUAL INFORMATION FORM Exhibit
EXHIBIT 13.3

TransCanada PipeLines Limited
2016 Annual information form
March 15, 2017




















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BLANK PAGE FOR MARGINS - REMOVE!

 
 
TCPL Annual information form 2016
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Contents
Acquisition of Columbia Pipeline Group, Inc.
 
 
 
 
 



Presentation of information
Unless the context indicates otherwise, a reference in this Annual information form (AIF) to TransCanada PipeLines Limited (TCPL) or the Company, we, us and our includes TCPL's parent, TransCanada Corporation (TransCanada) and the subsidiaries of TCPL through which its various business operations are conducted, and a reference to TransCanada includes TransCanada Corporation and the subsidiaries of TransCanada Corporation, including TCPL. Where TCPL is referred to with respect to actions that occurred prior to its 2003 plan of arrangement (the Arrangement) with TransCanada, which is described below under the heading TransCanada PipeLines LimitedCorporate structure, these actions were taken by TCPL or its subsidiaries. The term subsidiary, when referred to in this AIF, with reference to TCPL means direct and indirect wholly owned subsidiaries of, and legal entities controlled by, TransCanada or TCPL, as applicable.
Unless otherwise noted, the information contained in this AIF is given at or for the year ended December 31, 2016 (Year End). Amounts are expressed in Canadian dollars unless otherwise indicated. Information in relation to metric conversion can be found at Schedule A to this AIF. The Glossary found at the end of this AIF contains certain terms defined throughout this AIF and abbreviations and acronyms that may not otherwise be defined in this document.
Certain portions of TCPL's Management's discussion and analysis dated February 15, 2017 (MD&A) are incorporated by reference into this AIF as stated below. The MD&A can be found on SEDAR (www.sedar.com) under TCPL's profile.
Financial information is presented in accordance with United States generally accepted accounting principles (GAAP). We use certain financial measures that do not have a standardized meaning under GAAP and therefore they may not be comparable to similar measures presented by other entities. Refer to the About this document – Non-GAAP measures section of the MD&A for more information about the non-GAAP measures we use and a reconciliation to their GAAP equivalents, which section of the MD&A is incorporated by reference herein.
Forward-looking information
This AIF, including the MD&A disclosure incorporated by reference herein, contains certain information that is forward-looking and is subject to important risks and uncertainties. We disclose forward-looking information to help current and potential investors understand management’s assessment of our future plans and financial outlook, and our future prospects overall.
Statements that are forward-looking are based on certain assumptions and on what we know and expect today and generally include words like anticipate, expect, believe, may, will, should, estimate or other similar words.
Forward-looking statements in this document include information about the following, among other things:
planned changes in our business including the divestiture of certain assets
our financial and operational performance, including the performance of our subsidiaries
expectations or projections about strategies and goals for growth and expansion
expected cash flows and future financing options available to us
expected dividend growth    
expected costs for planned projects, including projects under construction, permitting and in development
expected schedules for planned projects (including anticipated construction and completion dates)
expected regulatory processes and outcomes
expected impact of regulatory outcomes
expected outcomes with respect to legal proceedings, including arbitration and insurance claims
expected capital expenditures and contractual obligations
expected operating and financial results
the expected impact of future accounting changes, commitments and contingent liabilities
expected industry, market and economic conditions.
Forward-looking statements do not guarantee future performance. Actual events and results could be significantly different because of assumptions, risks or uncertainties related to our business or events that happen after the date of this document.
Our forward-looking information is based on the following key assumptions, and subject to the following risks and uncertainties:

 
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TCPL Annual information form 2016
 


Assumptions
planned monetization of our U.S. Northeast power business
inflation rates, commodity prices and capacity prices
nature and scope of hedging
regulatory decisions and outcomes
the Canadian dollar to U.S. dollar exchange rate remains at or near current levels
interest rates
tax rates
planned and unplanned outages and the use of our pipeline and energy assets
integrity and reliability of our assets
access to capital markets
anticipated construction costs, schedules and completion dates.

Risks and uncertainties
our ability to realize the anticipated benefits from the acquisition of Columbia Pipeline Group, Inc. (Columbia)
timing and execution of our planned asset sales
our ability to successfully implement our strategic initiatives
whether our strategic initiatives will yield the expected benefits
the operating performance of our pipeline and energy assets
amount of capacity sold and rates achieved in our pipeline businesses
the availability and price of energy commodities
the amount of capacity payments and revenues we receive from our energy business
regulatory decisions and outcomes
outcomes of legal proceedings, including arbitration and insurance claims
performance and credit risk of our counterparties
changes in market commodity prices
changes in the political environment
changes in environmental and other laws and regulations
competitive factors in the pipeline and energy sectors
construction and completion of capital projects
costs for labour, equipment and materials
access to capital markets
interest, tax and foreign exchange rates
weather
cyber security
technological developments
economic conditions in North America as well as globally.
You can read more about these factors and others in reports we have filed with Canadian securities regulators and the U.S. Securities and Exchange Commission (SEC).
As actual results could vary significantly from the forward-looking information, you should not put undue reliance on forward-looking information and should not use future-oriented information or financial outlooks for anything other than their intended purpose. We do not update our forward-looking statements due to new information or future events, unless we are required to by law.

 
 
TCPL Annual information form 2016
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TransCanada PipeLines Limited
CORPORATE STRUCTURE
TCPL's head office and registered office are located at 450 - 1st Street S.W., Calgary, Alberta, T2P 5H1. TCPL is a reporting issuer in the jurisdictions of Canada. Significant dates and events are set forth below.
Date
Event
 
 
March 21, 1951
Incorporated by Special Act of Parliament as Trans-Canada Pipe Lines Limited.
April 19, 1972
Continued under the Canada Corporations Act by Letters Patent, which included the alteration of its capital and change of name to TransCanada PipeLines Limited.
June 1, 1979
Continued under the Canada Business Corporations Act (CBCA).
July 2, 1998
Certificate of Arrangement issued in connection with the Plan of Arrangement with NOVA Corporation under which the companies merged and then split off the commodity chemicals business carried on by NOVA Corporation into a separate public company.
January 1, 1999
Certificate of Amalgamation issued reflecting TCPL's vertical short form amalgamation with a wholly owned subsidiary, Alberta Natural Gas Company Ltd.
January 1, 2000
Certificate of Amalgamation issued reflecting TCPL's vertical short form amalgamation with a wholly owned subsidiary, NOVA Gas International Ltd.
May 4, 2001
Restated TCPL Articles of Incorporation filed.
June 20, 2002
Restated TCPL Limited By-Laws filed.
May 15, 2003
Certificate of Arrangement issued in connection with the plan of arrangement with TransCanada. TransCanada was incorporated pursuant to the provisions of the CBCA on February 25, 2003. The arrangement was approved by TCPL common shareholders on April 25, 2003 and following court approval, Articles of Arrangement were filed making the arrangement effective May 15, 2003. The common shareholders of TCPL exchanged each of their common shares of TCPL for one common share of TransCanada. The debt securities and preferred shares of TCPL remained obligations and securities of TCPL. TCPL continues to carry on business as the principal operating subsidiary of the TransCanada group of entities.

 
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TCPL Annual information form 2016
 


INTERCORPORATE RELATIONSHIPS
The following diagram presents the name and jurisdiction of incorporation, continuance or formation of TCPL’s principal subsidiaries as at Year End. Each of the subsidiaries shown has total assets that exceeded 10 per cent of the total consolidated assets of TCPL as at year end or revenues that exceeded 10 per cent of the total consolidated revenues of TCPL for the year then ended. TCPL beneficially owns, controls or directs, directly or indirectly, 100 per cent of the voting shares or units in each of these subsidiaries.
TransCanada Corporation – Canada
TransCanada PipeLines Limited – Canada
TransCanada PipeLine USA Ltd. – Nevada
TransCanada Oil Pipelines Inc. – Delaware
Columbia Pipeline Group, Inc. – Delaware
Columbia Energy Group – Delaware
Columbia Pipeline Partners LP – Delaware
CPG OpCo LP – Delaware
NOVA Gas Transmission Ltd. – Alberta



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The above diagram does not include all of the subsidiaries of TCPL. The assets and revenues of excluded subsidiaries in the aggregate did not exceed 20 per cent of the total consolidated assets of TCPL as at Year End or total consolidated revenues of TCPL for the year then ended.

 
 
TCPL Annual information form 2016
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General development of the business
We operate in three core businesses: Natural Gas Pipelines, Liquids Pipelines and Energy. As a result of our acquisition of Columbia on July 1, 2016 and the pending sales of the U.S. Northeast power business, we have determined that a change in our operating segments is appropriate. Accordingly, we consider ourselves to be operating in the following segments: Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines and Energy. This provides information that is aligned with how management decisions about our business are made and how performance of our business is assessed. We also have a non-operational Corporate segment consisting of corporate and administrative functions that provide governance and other support to our operational business segments.
Natural Gas Pipelines and Liquids Pipelines are principally comprised of our respective natural gas and liquids pipelines in Canada, the U.S. and Mexico as well as our regulated natural gas storage operations in the U.S. Energy includes our power operations and the non-regulated natural gas storage business in Canada.

Summarized below are significant developments that have occurred in our Natural Gas Pipelines, Liquids Pipelines and Energy businesses, respectively, and certain acquisitions, dispositions, events or conditions which have had an influence on that development, during the last three financial years and year to date in 2017. Further information about changes in our business that we expect to occur during the current financial year can be found in the Canadian Natural Gas Pipelines , U.S. Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines and Energy sections of the MD&A, which sections of the MD&A are incorporated by reference herein.
NATURAL GAS PIPELINES
Developments in the Canadian Natural Gas Pipelines segment
Date
Description of development
 
 
Canadian Regulated Pipelines
 
 
NGTL System
 
 
March 2014
We received an NEB Safety Order (the Order) in response to the recent pipeline releases on the NGTL System. The Order required us to reduce the maximum operating pressure on three per cent of NGTL’s pipeline segments. We filed a request for a review and variance of the Order that would minimize gas disruptions while still maintaining a high level of safety, which the NEB granted in April 2014 subject to certain conditions. We accelerated components of our integrity management program to address the NEB Order.
March 2014
The NEB approved approximately $400 million in NGTL facility expansions.
Fourth Quarter 2014
We continued to experience significant growth on the NGTL System as a result of growing natural gas supply in northwestern Alberta and northeastern British Columbia (B.C.) from unconventional gas plays and substantive growth in intra-basin delivery markets. This demand growth was driven primarily by oil sands development, gas-fired electric power generation and expectations regarding B.C. west coast LNG projects.
First Quarter 2015
The NGTL System had approximately $6.7 billion of new supply and demand facilities under development and we continued to advance several of these capital expansion projects by filing the regulatory applications with the NEB. We also received additional requests for firm receipt service.
Fourth Quarter 2015 / First Quarter 2016
In 2015, we placed approximately $350 million of facilities in service. In 2016, the NGTL System continued to develop further new supply and demand facilities. We had approximately $2.3 billion of facilities that received regulatory approval and had approximately $450 million currently under construction. We filed for approval for a further approximately $2.0 billion of facilities which are currently under regulatory review. Applications for approval to construct and operate an additional $3.0 billion of facilities have yet to be filed. Included in our capital program is the recently announced 2018 expansion of a further $600 million of facilities required on the NGTL System. The 2018 expansion includes multiple projects totaling approximately 88 km (55 miles) of 20-to 48-inch diameter pipeline, one new compressor, approximately 35 new and expanded meter stations and other associated facilities. Subject to regulatory approvals, construction is expected to start in 2017, with all facilities expected to be in service in 2018.
October 2016
On October 6, 2016, the NEB recommended government approval of the $0.4 billion Towerbirch Project. This project consists of a 55 km (34 miles) 36-inch pipeline loop and a 32 km (20 miles) 30-inch pipeline extension of the NGTL System in northwest Alberta and northeast B.C. The NEB approved the continued use of the existing rolled-in toll methodology for this project. On October 31, 2016, the Government of Canada approved our $1.3 billion NGTL 2017 Facilities Application, which is a major component of the 2016/2017 program. This NGTL expansion program consists of five pipeline loops ranging in size from 24-inch up to 48-inch pipe of approximately 230 km (143 miles) in length, plus two compressor station unit additions of approximately 46.5 MW (62,360 HP).

 
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TCPL Annual information form 2016
 


Date
Description of development
December 2016
We announced the $0.6 billion Saddle West expansion of the NGTL System to increase natural gas transportation capacity on the northwest portion of our system. The project will consist of 29 km (18 miles) of 36-inch pipeline looping of existing mainlines, the addition of five compressor units at existing station sites and new metering facilities. The project is underpinned by incremental firm service contracts and is expected to be in-service in 2019. NGTL currently has a $3.7 billion near-term capital program for completion to 2020, including the Saddle West expansion and excluding the $1.7 billion North Montney and $1.9 billion Merrick pipeline projects. In 2016, we have placed in service approximately $0.5 billion of facilities. We currently have regulatory approval for $2.0 billion of facilities and plan to place in service $1.6 billion of new facilities in 2017.
 
 
NGTL Revenue Requirement Settlements
 
 
October 2014
We reached a revenue requirement settlement with our shippers for 2015 on the NGTL System.
February 2015
We received NEB approval for our revenue requirement settlement with our shippers for 2015 on the NGTL System. The terms of the one year settlement include continuation of the 2014 ROE of 10.1 per cent on 40 per cent deemed equity, continuation of the 2014 depreciation rates and a mechanism for sharing variances above and below a fixed operating, maintenance and administration (OM&A) expense amount that is based on an escalation of 2014 actual costs.
December 2015
We reached a two-year revenue requirement agreement with customers and other interested parties on the annual costs, including return on equity and depreciation required to operate the NGTL System for 2016 and 2017. The agreement fixes the equity return at 10.1 per cent on 40 per cent deemed common equity, establishes depreciation at a forecast composite rate of 3.16 per cent and fixes OM&A costs at $222.5 million annually. An incentive mechanism for variances will enable NGTL to capture savings from improved performance and provide for the flow-through of all other costs, including pipeline integrity expenses and emissions costs. on December 1, 2015, NGTL filed with the NEB for approval of the agreement.
 
 
North Montney
 
 
June 2015
The NEB approved the $1.7 billion North Montney Mainline (NMML) project subject to certain terms and conditions. Under one of these conditions, construction on the NMML project can only begin after a positive final investment decision (FID) has been made on the proposed Pacific North West LNG project (PNW LNG). The NMML will provide substantial new capacity on the NGTL System to meet the transportation requirements associated with rapidly increasing development of natural gas resources in the Montney supply basin in northeastern B.C. The project will connect Montney and other Western Canada Sedimentary Basin (WCSB) supply to both existing and new natural gas markets, including LNG markets. The project will also include an interconnection with our proposed Prince Rupert Gas Transmission Project (PRGT) to provide natural gas supply to the proposed PNW LNG liquefaction and export facility near Prince Rupert, B.C.
September 2016
The Canadian Government approved the sunset clause extension request we filed in March 2016, for the NMML Certificate of Public Convenience and Necessity for one year to June 10, 2017. The extension continues to be subject to the condition that construction shall not begin until a positive FID has been made on PNW LNG. NGTL continues to work with our customers and stakeholders to be ready to initiate construction of the $1.7 billion North Montney facilities, however, the in-service date will be finalized once a FID has been made.
March 2017
We announced that we filed a variance application with the NEB to proceed with construction of the NMML project in northeast B.C. As discussed above, TransCanada had previously been granted the required primary federal and provincial approvals to construct NMML, subject to conditions that included the requirement for a positive final investment decision on the proposed PNW LNG project. The requested variance would allow TransCanada to move forward with construction of the majority of the NMML Project, at an estimated capital cost of approximately $1.4 billion, prior to a final investment decision on the PNW LNG project. In support of the variance for the NMML project, TransCanada secured new 20-year commercial contracts with 11 shippers for approximately 1.5 Bcf/d of firm service.
 
 
Canadian Mainline – Kings North and Station 130 Facilities
 
 
Fourth Quarter 2016
We placed in service the approximate $310 million Kings North Connector and the approximate $75 million compressor unit addition at Station 130 on the Canadian Mainline system. These two projects are consistent with our current 2015-2020 Mainline Settlement with our shippers and provide optionality to access alternative supply sources while contracting for increased short haul transportation service within the Eastern Triangle area of the Canadian Mainline system.
 
 
Canadian Mainline – Eastern Mainline Project
 
 
May 2014
We filed a project description with the NEB for the Eastern Mainline Project.
October 2014
We filed an application with the NEB for the Energy East pipeline project and to transfer a portion of the Canadian Mainline from natural gas service to crude oil service. We also filed an application for the Eastern Mainline Project, consisting of new gas facilities in southeastern Ontario required as a result of the proposed transfer of Mainline assets to crude oil service for the Energy East pipeline project. This $2 billion project consists of new gas facilities in southeastern Ontario that will be required as a result of the proposed Energy East pipeline project that includes a planned transfer of a portion of Canadian Mainline from natural gas service to crude oil service.
August 2015
TransCanada announced it had reached an agreement with eastern local distribution companies (LDCs)
that resolved their issues with Energy East pipeline project and the Eastern Mainline Project.

 
 
TCPL Annual information form 2016
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Date
Description of development
December 2015
Application amendments were filed that reflect the agreement we announced in August 2015 with eastern LDCs resolving their issues with Energy East pipeline project and the Eastern Mainline Project. The agreement provided gas consumers in eastern Canada with sufficient natural gas transmission capacity and provides for reduced natural gas transmission costs.
January 2016
The Canadian federal government announced interim measures for its review of the Energy East pipeline project. The government announced it will undertake additional consultations with aboriginal groups, help facilitate expanded public input into the NEB, and assess upstream GHG emissions associated with the project. The government will seek a six month extension to the NEB’s legislative review and a three month extension to the legislative time limit for the government’s decision. We are reviewing these changes and will assess the impacts to the Eastern Mainline Project. The Eastern Mainline Project is conditioned on the approval and construction of the Energy East pipeline. Refer to the General development of the business – Liquids pipelines section for an update on Energy East.
 
 
Canadian Mainline – Other Expansions
 
 
January 2014
Shippers on the Canadian Mainline elected to renew approximately 2.5 Bcf/d of their contracts through November 2016.
November 2014
In addition to the Eastern Mainline Project, we executed new short haul arrangements in the Eastern Triangle portion of the Canadian Mainline that require new facilities, or modifications to existing facilities. These projects are subject to regulatory approval and, once constructed, will provide capacity needed to meet customer requirements in eastern Canada.
First Quarter 2016
In addition to the Eastern Mainline Project, new facilities investments totaling approximately $700 million over the 2016 to 2017 period in the Eastern Triangle portion of the Canadian Mainline were required to meet contractual commitments from shippers. Also refer to the Canadian Mainline - Kings North and Station 130 Facilities section
above.
Third Quarter 2016
We launched an open season for the Canadian Mainline, seeking binding commitments on our new long-term, fixed-price proposal to transport WCSB supply from the Empress receipt point in Alberta to the Dawn hub in Southern Ontario. The open season for the proposed service resulted in bids that fell well short of the volumes required to make the proposal viable. On November 15, 2016 we announced we would not proceed with the service offering at that time.
First Quarter 2017
In addition to the Eastern Mainline Project, new facilities investments in the Eastern Triangle portion of the Canadian Mainline are planned for 2017. Including the Vaughan Loop, with a planned in-service date of November 2017, we have approximately $300 million of additional investment to meet contractual commitments from shippers.
March 2017
We announced the successful conclusion of a long-term, fixed-price Open Season to transport natural gas on the Canadian Mainline from the Empress receipt point in Alberta to the Dawn hub in Southern Ontario. The recent Open Season resulted in binding, long-term contracts from WCSB gas producers to transport 1.5 PJ/d of natural gas at a simplified toll of $0.77/GJ.
 
 
Canadian Mainline Settlement
 
 
March 2014
The Canadian Mainline and the three largest Canadian local distribution companies (LDCs) entered into a settlement (LDC Settlement) which was filed with the NEB for approval in December 2013. In March 2014, the NEB responded to the LDC Settlement application and did not approve the application as a settlement, but allowed us the option to continue with the application as a contested tolls application, amend the application or terminate the processing of the application. The LDC Settlement calculated tolls for 2015 on a base ROE of 10.1 per cent on 40 per cent deemed common equity. It also included an incentive mechanism that required a $20 million (after tax) annual contribution by us from 2015 to 2020, which could have resulted in a range of ROE outcomes from 8.7 per cent to 11.5 per cent. The LDC Settlement would have enabled the addition of facilities in the Eastern Triangle to serve immediate market demand for supply diversity and market access. The LDC Settlement was intended to provide a market driven, stable, long-term accommodation of future demand in this region in combination with the anticipated lower demand for transportation on the Prairies Line and the Northern Ontario Line while providing a reasonable opportunity to recover our costs. The LDC Settlement also retained pricing flexibility for discretionary services and implemented certain tariff changes and new services as required by the terms of the settlement. We amended the application with additional information.
November 2014
Following a hearing, the NEB approved the Canadian Mainline's 2015 - 2030 Tolls and Tariff Application (the NEB 2014 Decision) which superseded the NEB 2013 Decision. The application reflected components of the LDC Settlement. In 2014, the Canadian Mainline operated under the NEB's decision for the years 2013-2017, which included an approved ROE of 11.5 per cent on deemed common equity of 40 per cent and an incentive mechanism based on total net revenues.
First Quarter 2015
In 2015, the Canadian Mainline began operating under the NEB 2014 Decision.
August 2015
TransCanada announced it had reached an agreement with the eastern LDCs that resolves the LDCs’ issues with Energy East and the Eastern Mainline Project.
 
 

 
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TCPL Annual information form 2016
 


Date
Description of development
 
 
LNG PIPELINE PROJECTS
 
Prince Rupert Gas Transmission
 
 
November 2014
We received an Environmental Assessment Certificate (EAC) from the B.C. Environmental Assessment Office (EAO). We submitted our pipeline permit applications to the B.C. Oil and Gas Commission (OGC) for construction of the pipeline. We made significant changes to the project route since first announced, increasing it by 150 km (93 miles) to 900 km (559 miles), taking into account Aboriginal and stakeholder input. We continued to work closely with Aboriginal groups and stakeholders along the proposed route to create and deliver appropriate benefits to all impacted groups. We concluded a benefits agreement with the Nisga’a First Nation to allow 85 km (52 miles) of the proposed natural gas pipeline to run through Nisga'a Lands.
June 2015
PNW LNG announced a positive FID for its proposed liquefaction and export facility, subject to two conditions. The first condition, approval by the Legislative Assembly of B.C. of a Project Development Agreement between PNW LNG and the Province of B.C., was satisfied in July 2015. The second condition is a positive regulatory decision on PNW LNG’s environmental assessment by the Government of Canada.
Third Quarter 2015
We received all remaining permits from the B.C. OGC which completed the eleven permits required to build and operate PRGT. Environmental permits for the project were received in November 2014 from the B.C. EAO. With these permits, PRGT has all of the primary regulatory permits required for the project. We remain on target to begin construction following confirmation of a FID by PNW LNG. The in-service date for PRGT will be aligned with PNW LNG’s liquefaction facility timeline.
September 2016
PNW LNG received an environmental certificate from the Government of Canada for a proposed LNG plant at Prince Rupert, B.C. PNW LNG has indicated they will conduct a total project review over the coming months prior to announcing next steps for the project. The project has key approvals in place and will advance construction following direction from PNW LNG.
December 2016
PNW LNG received an LNG export license from the NEB which extended the export term from 25 years to 40 years.
We continued our engagement with Indigenous groups and have now signed project agreements with 14 First Nation groups along the pipeline route. Project agreements outline financial and other benefits and commitments that will be provided to each First Nation for as long as the project is in service. PRGT is a 900 km (559 miles) natural gas pipeline that will deliver gas from the North Montney producing region at an expected interconnect on the NGTL System near Fort St. John, B.C. to PNW LNG's proposed LNG facility near Prince Rupert, B.C. Should the project not proceed, our project costs (including carrying charges) are fully recoverable. The in-service date for PRGT will be aligned with PNW LNG's liquefaction facility timeline.
 
 
Coastal GasLink
 
 
January 2014
We filed the EAC application with the B.C. EAO. We focused on community, landowner, government and Aboriginal engagement as the project advanced through the regulatory process. The pipeline was expected to be placed in service near the end of the decade, subject to a FID to be made by LNG Canada after obtaining final regulatory approvals. Coastal GasLink is a 670 km (416 miles) pipeline that will deliver natural gas from Montney gas producing region at an expected interconnect on NGTL near the Dawson Creek, B.C. area, to LNG Canada’s proposed LNG facility near Kitimat, BC. Should the project not proceed, our project costs (including carrying charges) are fully recoverable.
October 2014
The EAO issued an EAC for Coastal GasLink. In 2014, we also submitted applications to the B.C. OGC for the permits required under the Oil and Gas Activities Act to build and operate Coastal GasLink.
First Quarter 2016
We continued to engage with Indigenous groups and have now announced project agreements with 11 First Nation groups along the pipeline route which outline financial and other benefits and commitments that will be provided to each First Nation group for as long as the project is in service. We also continued to engage with stakeholders along the pipeline route and progressed detailed engineering and construction planning work to refine the capital cost estimate. In response to feedback received, we applied for a minor route amendment to the B.C. EAO in order to provide an option in the area of concern.
July 2016
The LNG Canada joint venture participants announced a delay to their FID for the proposed liquefied natural gas facility in Kitimat, B.C. A future FID date has not been disclosed. We worked with LNG Canada to maintain the appropriate pace of the Coastal GasLink development schedule and work activities. We continued our engagement with Indigenous groups along our pipeline route and have now concluded long-term project agreements with 17 First Nation communities. We look to continue discussions with the remaining First Nations who have not signed project agreements.
 
 
Merrick Mainline
 
 
June 2014
We announced the signing of agreements for approximately 1.9 Bcf/d of firm natural gas transportation services to underpin the development of a major extension of our NGTL System. The Merrick Mainline pipeline will deliver natural gas from NGTL's existing Groundbirch Mainline and the proposed PRGT project. Since the Merrick Mainline is dependent upon the construction of the downstream infrastructure, the in-service date of the Merrick Mainline remains uncertain.
 
 

 
 
TCPL Annual information form 2016
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Developments in the U.S. Natural Gas Pipelines segment
Date
Description of development
 
 
COLUMBIA ACQUISITION
 
 
July 2016
On July 1, 2016, we acquired 100 per cent ownership of Columbia for a purchase price of US$10.3 billion in cash. The acquisition was financed through the issuance of TCPL common shares to TransCanada and an intercompany loan due to TransCanada in connection with proceeds received from the sale of TransCanada subscription receipts. The sale of TransCanada subscription receipts was completed on April 1, 2016 through a public offering and gross proceeds of approximately $4.4 billion were transferred to TCPL prior to the closing of the acquisition. In addition, we drew on acquisition bridge facilities in the aggregate amount of US$6.9 billion. In respect of the acquisition, we filed a business acquisition report on Form 51-102F4 on July 22, 2016, which can be found on the Company’s SEDAR profile at www.SEDAR.com. For more information about the acquisition of Columbia, refer to the About our business – Acquisition of Columbia Pipeline Group, Inc. section of the MD&A.
 
 
COLUMBIA CAPITAL PROJECTS
 
Third Quarter 2016
The July 1, 2016 acquisition of Columbia included a capital expansion program that was underway for new facilities planned to be in service in 2016 through 2018 as well as modernization programs for existing assets to be completed through 2020. The large capital expansion program, less projects completed in 2016, consists of US$6.8 billion related to our regulated pipeline business and US$0.3 billion related to our midstream business. The estimated project costs exclude AFUDC. The following summarizes the eight key capital projects for this new set of assets that are now part of our overall U.S. Natural Gas Pipelines footprint. For clarification, when used below, Columbia Gas is our natural gas transportation system for the Appalachian basin, which contains the Marcellus and Utica shale plays. This system also interconnects with other pipelines that provide access to key markets in the U.S. Northeast and south to the Gulf of Mexico and its growing demand for natural gas to serve LNG exports. Access to markets from producers in the region is driving the large capital program for new pipeline facilities on this system. Columbia Gulf is our pipeline system originally designed as a long haul delivery system transporting supply from the Gulf of Mexico to major supply markets in the U.S. Northeast. The pipeline is now transitioning and expanding to accommodate new supply in the Appalachian basin and its interconnect with Columbia Gas and other pipelines to deliver gas to various Gulf Coast markets.
 
 
Leach XPress
 
June 2015
The FERC 7(C) application for this Columbia Gas project was filed. The project is designed to transport approximately 1.5 Bcf/d of Marcellus and Utica gas supply to delivery points along the pipeline and to the Leach interconnect with Columbia Gulf. The project consists of 219 km (136 miles) of 36-inch greenfield pipe, 39 km (24 miles) of 36-inch loop, three km (two miles) of 30- inch greenfield pipe, 82.8 MW (111,000 hp) of greenfield compression and 24.6 MW (33,000 hp) of brownfield compression.
September 2016
The Final Environmental Impact Statement (FEIS) for the project was received.
January 2017
The FERC Order approving the construction of the facility was issued. Once remaining regulatory approvals are obtained, we plan to begin right-of-way preparation and construction activities in February 2017. We expect the project, with an estimated capital investment of US$1.4 billion, to be in service in fourth quarter 2017.
 
 
Rayne XPress
 
July 2015
The FERC 7(C) application for this Columbia Gulf project was filed. The project is designed to transport approximately 1.1 Bcf/d of southwest Marcellus and Utica production associated with the Leach XPress expansion and an interconnect with the Texas Eastern System to various delivery points on Columbia Gulf and the Gulf Coast. The project consists of bi-directional compressor station modifications along Columbia Gulf, 38.8 MW (52,000 hp) of greenfield compression, 20.1 MW (27,000 hp) of replacement compression and six km (four miles) of 30-inch pipe replacement.
September 2016
The FEIS for the project was received.
January 2017
The FERC Order approving the construction of the facility was issued. We expect the project, with an estimated capital investment of US$0.4 billion, to be in service on November 1, 2017.
 
 
Mountaineer XPress
 
 April 2016
The FERC 7(C) application for this Columbia Gas project was filed. The project is designed to transport approximately 2.7 Bcf/d of Marcellus and Utica gas supply to delivery points along the pipeline and to the Leach interconnect with Columbia Gulf. The project consists of 264 km (164 miles) of 36-inch greenfield pipeline, 10 km (six miles) of 24-inch lateral pipeline, 0.6 km (0.4 miles) of 30-inch replacement pipeline, 114.1 MW (153,000 hp) of greenfield compression and 55.9 MW (75,000 hp) of brownfield compression. We expect this project, with an estimated capital investment of US$2.0 billion, to be in service in fourth quarter 2018.
 
 

 
10   
TCPL Annual information form 2016
 


Date
Description of development
 
 
Gulf XPress
 
April 2016
The FERC 7(C) application for this Columbia Gulf project was filed. The project is designed to transport approximately 0.9 Bcf/d associated with the Mountaineer XPress expansion to various delivery points on Columbia Gulf and the Gulf Coast. The project consists of adding seven greenfield midpoint compressor stations along the Columbia Gulf route totaling 182.7 MW (254,000 hp). We expect this project, with an estimated capital investment of US$0.6 billion, to be placed in service in fourth quarter 2018.
 
 
Cameron Access Project
 
September 2015
The FERC certificate for this Columbia Gulf project was received. The project is designed to transport approximately 0.8 Bcf/d of gas supply to the Cameron LNG export terminal in Louisiana. The project consists of 44 km (27 miles) of 36-inch greenfield pipeline, 11 km (seven miles) of 30-inch looping and 9.7 MW (13,000 hp) of greenfield compression. We expect this project, with an estimated capital investment of US$0.3 billion, to be in service in first quarter 2018.
 
 
WB XPress
 
December 2015
The FERC 7(C) application for both segments of this Columbia Gas project was filed. The project is designed to transport approximately 1.3 Bcf/d of Marcellus gas supply westbound (0.8 Bcf/d) to the Gulf Coast via an interconnect with the Tennessee Gas Pipeline, and eastbound (0.5 Bcf/d) to Mid-Atlantic markets. The project consists of 47 km (29 miles) of various diameter pipeline, 338 km (210 miles) of restoring and uprating maximum operating pressure of existing pipeline, 29.8 MW (40,000 hp) of greenfield compression and 99.9 MW (134,000 hp) of brownfield compression. We expect this project, with an estimated capital investment of US$0.8 billion, to have a Western build in service in the beginning of second quarter 2018 and an Eastern build in service in fourth quarter 2018.
 
 
Modernization I & II
 
First Quarter 2017
Columbia Gas and its customers have entered into a settlement arrangement, approved by FERC, which provides recovery and return on investment to modernize its system, improve system integrity and enhance service reliability and flexibility. The modernization program includes, among other things, replacement of aging pipeline and compressor facilities, enhancements to system inspection capabilities and improvements in control systems. Modernization I has been approved for up to US$0.6 billion of work with approximately US$0.2 billion remaining to be spent in 2017. Modernization II has been approved for up to US$1.1 billion of work to be completed through 2020. As per terms of the arrangements, facilities in service by October 31 collect revenues effective February 1 of the following year.
 
 
Midstream – Gibraltar Pipeline Project
 
December 2016
The first phase of the multi-phase project was completed. We expect to complete the US$0.3 billion investment to construct an approximate 1,000 TJ/d dry gas header pipeline in southwest Pennsylvania by the end of 2017.
 
 
OTHER U.S. NATURAL GAS PIPELINES
 
 
Columbia Pipeline Partners LP (CPPL)
 
 
November 2016
We entered into an agreement and plan of merger through which Columbia agreed to acquire, for cash, all of the outstanding publicly held common units of CPPL at a price of US$17.00 per common unit for an aggregate transaction value of approximately US$915 million. The transaction closed on February 17, 2017.
 
 
ANR Pipeline
 
 
March 2014
We secured nearly 2.0 Bcf/d of additional firm natural gas transportation commitments for existing and expanded capacity on ANR Pipeline's Southeast Mainline (SEML). The capacity sales and expansion projects include reversing the Lebanon Lateral in western Ohio, additional compression at Sulphur Springs, Indiana, expanding the Rockies Express pipeline interconnect near Shelbyville, Indiana and 600 MMcf/d of capacity as part of a reversal project on ANR's SEML. Capital costs associated with the ANR System expansions required to bring the additional capacity to market were estimated to be US$150 million. The capacity was subscribed at maximum rates for an average term of 23 years with approximately 1.25 Bcf/d of new contracts beginning service in late 2014. These secured contracts on the SEML will move Utica and Marcellus shale gas to points north and south on the system. ANR also assessed further demand from our customers to transport natural gas from the Utica/Marcellus formation, which was expected to result in incremental opportunities to enhance and expand the system.
January 2016
ANR Pipeline filed a Section 4 Rate Case that requests an increase to ANR's maximum transportation rates. Shifts in ANR’s traditional supply sources and markets, necessary operational changes, needed infrastructure updates, and evolving regulatory requirements are driving required investment in facility maintenance, reliability and system integrity as well as an increase in operating costs that resulted in the current tariff rates not providing a reasonable return on our investment. We also pursued a collaborative process to find a mutually beneficial outcome with our customers through settlement negotiations. ANR's last rate case filing was more than 20 years ago.

 
 
TCPL Annual information form 2016
11


Date
Description of development
Second and Third Quarters 2016
ANR reached a settlement with its shippers effective August 1, 2016 and received FERC approval on December 16, 2016. Per the settlement, transmission reservation rates will increase by 34.8 per cent and storage rates will remain the same for contracts one to three years in length, while increasing slightly for contracts of less than one year and decreasing slightly for contracts more than three years in duration. There is a moratorium on any further rate changes until August 1, 2019. ANR may file for new rates after that date if it has spent more than US$0.8 billion in capital additions, but must file for new rates no later than an effective date of August 1, 2022. In addition to ANR’s rate case settlement, FERC approvals were obtained for settlements with shippers for our Iroquois, Tuscarora and Columbia Gulf pipelines.
 
 
Great Lakes
 
 
February 2016
We reduced forecasted cash flows for the next ten years as compared to those utilized in previous impairment tests. There is a risk that continued reductions in future cash flow forecasts and adverse changes in other key assumptions could result in a future impairment of a portion of the goodwill balance relating to Great Lakes. Our share of the goodwill related to Great Lakes, net of non-controlling interests, was US$386 million at December 31, 2016 (2015 – US$386 million).
 
 
Sale of Gas Transmission Northwest LLC (GTN) Pipeline, Iroquois Gas Transmission System, L.P. (Iroquois) and Portland Natural Gas Transmission System (PNGTS) to TC PipeLines, LP (TCLP)
 
April 2015
We closed the sale of our remaining 30 per cent interest in GTN to TCLP for an aggregate purchase price of US$457 million. Proceeds were comprised of US$246 million in cash, the assumption of US$98 million in proportional GTN debt and US$95 million of new Class B units of TCLP.
January 2016
We closed the sale of 49.9 per cent of our total 61.7 per cent interest in PNGTS to TCLP for US$223 million including the assumption of US$35 million of proportional PNGTS debt.
First/Second Quarter 2016
On March 31, 2016, we acquired an additional 4.87 per cent interest in Iroquois for an aggregate purchase price of US$54 million, and on May 1, 2016, a further 0.65 per cent was acquired for US$7 million. As a result, our interest in Iroquois increased to 50 per cent.
February 2017
We offered to sell a 49.3 per cent interest in Iroquois, together with our remaining 11.8 per cent interest in PNGTS, subject to satisfactory negotiation of terms, compliance with any applicable regulatory requirements, and Partnership Board approval, to TCLP. TransCanada’s Board of Directors approved the sales of Iroquois and PNGTS.
 
 
TC Offshore LLC (TC Offshore)
 
 
December 2015
We entered into an agreement to sell TC Offshore to a third party and expected the sale to close in early 2016. As a result, at December 31, 2015, the related assets and liabilities were classified as held for sale and were recorded at their fair values less costs to sell. This resulted in a pre-tax loss provisions of $125 million recorded in 2015.
March 2016
We completed the sale of TC Offshore to a third party.
 
 
LNG PIPELINE PROJECTS
 
 
Alaska LNG Project
 
 
April 2014
The State of Alaska passed new legislation to provide a framework for us, the three major North Slope producers (the ANS Producers), and the Alaska Gasline Development Corp. (AGDC) to advance the development of an LNG export project.
June 2014
We executed an agreement with the State of Alaska to abandon the previous Alaska to Alberta project governance and framework and executed a new precedent agreement where we will act as the transporter of the State’s portion of natural gas under a long-term shipping contract in the Alaska LNG Project. We also entered into a Joint Venture Agreement with the three major ANS Producers and AGDC to commence the pre-front end engineering and design (pre-FEED) phase of Alaska LNG Project. The pre-FEED work was anticipated to take two years to complete with our share of the cost to be approximately US$100 million. The precedent agreement also provided us with full recovery of development costs in the event the project did not proceed.
November 2015
We sold our interest in the Alaska LNG project to the State of Alaska. The proceeds of US$65 million from this sale provide a full recovery of costs incurred to advance the project since January 1, 2014 including a carrying charge. With this sale, our involvement in developing a pipeline system for commercializing Alaska North Slope natural gas ceases.

 
12   
TCPL Annual information form 2016
 


Developments in the Mexico Natural Gas Pipelines segment
Date
Description of development
 
 
Mexico Natural Gas Pipelines
 
Topolobampo
 
First Quarter 2017
The Topolobampo project is a 530 km (329 miles), 30-inch pipeline with a cost of US$1.0 billion that will receive natural gas from upstream pipelines near El Encino in the state of Chihuahua. The pipeline will deliver natural gas from these interconnecting pipelines to delivery points along the pipeline route including our Mazatlán pipeline at El Oro in the state of Sinaloa. Construction of the pipeline is supported by a 25-year natural gas Transportation Service Agreement (TSA) for 670 MMcf/d with the CFE. Completion of construction is delayed into 2017 due to delays with Indigenous consultations by others. Under the terms of the TSA, this delay is recognized as a force majeure event with provisions allowing for the collection of revenue as per the original TSA service commencement date of July 2016.
 
Mazatlán
 
 
November 2015
The Mazatlán project is a 413 km (257 miles), 24-inch diameter pipeline running from El Oro to Mazatlán within the state of Sinaloa with an estimated cost of US$0.4 billion. This pipeline is supported by a 25-year natural gas TSA for 200 MMcf/d with the CFE.
Third Quarter 2016
Physical construction is complete and is awaiting natural gas supply from upstream interconnecting pipelines. We have met our obligations and thus are collecting revenue as per provisions in the contract and per the original TSA service commencement date of December 2016.
 
Tula
 
 
November 2015
We were awarded the contract to build, own and operate the US$0.6 billion, 36 inch, 300 km (186 miles) pipeline supported by a 25-year natural gas TSA for 886 MMcf/d with the CFE. The pipeline will transport natural gas from Tuxpan, Veracruz to markets near Tula, Querétaro extending through the states of Puebla and Hidalgo.
Third Quarter 2016
Construction commenced in the region that does not require Indigenous community consultations by others. Completion of construction is revised to 2018 due to delays with Indigenous consultation.
 
Villa de Reyes Pipeline
 
 
April 2016
We announced that we were awarded the contract to build, own and operate the Villa de Reyes pipeline in Mexico. Construction of the pipeline is supported by a 25-year natural gas transportation service contract for 886 MMcf/d with the CFE. We expect to invest approximately US$0.6 billion to construct 36- and 24-inch diameter pipelines totaling 420 km (261 miles) with an anticipated in-service date of early 2018. The bi-directional pipeline will transport natural gas between Tula, in the state of Hidalgo, and Villa de Reyes, in the state of San Luis Potosí. The project will interconnect with our Tamazunchale and Tula pipelines as well as with other transporters in the region.
 
Sur de Texas
 
 
June 2016
We announced that our joint venture with IEnova had been chosen to build, own and operate the US$2.1 billion Sur de Texas pipeline in Mexico. We will have a 60 per cent interest in this project. Construction of the pipeline is supported by a 25-year natural gas transportation service contract for 2.6 bcf/d with the CFE. We expect to invest approximately US$1.3 billion in the joint venture to construct the 42-inch diameter, approximately 800 km (497 miles) pipeline with an anticipated in-service date of late 2018. The pipeline will start offshore in the Gulf of Mexico, at the border point near Brownsville, Texas, and end in Tuxpan, Mexico in the state of Veracruz. The project will deliver natural gas to our Tamazunchale and Tula pipelines and to other transporters in the region.
 
Tamazunchale Pipeline Extension Project
 
 
November 2014
Construction of the US$600 million extension was completed. Delays from the original service commencement date in March 2014 were attributed primarily to archeological findings along the pipeline route. Under the terms of the transportation service agreement, these delays were recognized as a force majeure with provisions allowing for collection of revenue from the original service commencement date.
 
 
Further information about developments in the Natural Gas Pipelines business, including changes that we expect will occur in the current financial year, can be found in the MD&A in the About our business – Our strategy and Natural Gas Pipelines business sections; Canadian Natural Gas Pipelines – Financial results, Outlook, Understanding the Canadian Natural Gas Pipelines segment and Significant events sections; U.S. Natural Gas Pipelines – Financial results, Outlook, Understanding the U.S. Natural Gas Pipelines segment and Significant events sections; and Mexico Natural Gas Pipelines – Financial results, Outlook, Understanding the Mexico Natural Gas Pipelines segment, and Significant events sections, which sections of the MD&A are incorporated by reference herein.

 
 
TCPL Annual information form 2016
13


LIQUIDS PIPELINES
Date
Description of development
 
 
Keystone Pipeline System
 
 
Second Quarter 2015
We entered into an agreement with CITGO Petroleum (CITGO) to construct a US$65 million pipeline connection between the Keystone Pipeline and CITGO’s Sour Lake, Texas terminal, which supplies their 425,000 Bbl/d Lake Charles, Louisiana refinery. The connection is targeted to be operational in fourth quarter 2016.
Fourth Quarter 2015
We secured additional long term contracts bringing our total contract position up to 545,000 Bbl/d.
January 2016
We entered into an agreement with Magellan Midstream Partners L.P. (Magellan) to connect our Houston Terminal to Magellan's Houston and Texas City, Texas delivery system. We will own 50 per cent of this US$50 million pipeline project which will enhance connections for our Keystone Pipeline to the Houston market. The pipeline is expected to be operational during the first half of 2017, subject to the receipt of all necessary rights-of-way, permits and regulatory approvals.
Second Quarter 2016
On April 2, 2016, we shut down the Keystone Pipeline after a leak was detected along the pipeline right-of-way in Hutchinson County, South Dakota. We reported the total volume of the release of 400 barrels to the National Response Center and the Pipeline and Hazardous Materials Safety and Administration (PHMSA). Temporary repairs were completed and the Keystone Pipeline was restarted by mid-April 2016. Shortly thereafter in early May 2016, permanent pipeline repairs were completed and restoration work was completed by early July 2016. Corrective measures required by PHMSA were completed in September 2016. This shutdown did not significantly impact our 2016 earnings.
August 2016
The Houston Lateral pipeline and terminal, an extension from the Keystone Pipeline to Houston, Texas, went into service. The terminal has an initial storage capacity for 700,000 barrels of crude oil.
December 2016
The HoustonLink pipeline which connects the Houston Terminal to Magellan's Houston and Texas City, Texas delivery system was completed.
December 2016
The CITGO Sour Lake pipeline connection between the Keystone Pipeline and CITGO's Sour Lake, Texas terminal was placed into service.
 
 
Keystone XL
 
 
January 2015
The Nebraska State Supreme Court vacated the lower court’s ruling that the law was unconstitutional. As a result, the Governor’s January 2013 approval of the alternate route through Nebraska for Keystone XL remains valid. Landowners have filed lawsuits in two Nebraska counties seeking to enjoin Keystone XL from condemning easements on state constitutional grounds.
November 2015
The decision on the Keystone XL Presidential permit application was delayed throughout 2015 by the Department of State (DOS) and was ultimately denied in November 2015. At December 31, 2015, as a result of the denial of the Presidential permit, we evaluated our investment in Keystone XL and related projects, including Keystone Hardisty Terminal, for impairment. As a result of our analysis, we determined that the carrying amount of these assets was no longer recoverable, and recognized a total non-cash impairment charge of $3.7 billion ($2.9 billion aftertax). The impairment charge was based on the excess of the carrying value of $4.3 billion over the fair value of $621 million, which includes $93 million fair value for Keystone Hardisty Terminal. The calculation of this impairment is discussed further in the Other information – Critical accounting estimates section of the MD&A. The Keystone Hardisty Terminal remains on hold with an estimated in-service date to be driven by market need. Also in November 2015, we withdrew our application to the Nebraska Public Service Commission for approval of the route for Keystone XL in the state. The application was initially filed in October 2015. The withdrawal was made without prejudice to potentially refile if we elect to pursue the project.
January 2016
On January 5, 2016, the South Dakota PUC accepted Keystone XL’s certification that it continues to comply with the conditions in its existing 2010 permit authority in the state. On January 6, 2016, we filed a Notice of Intent to initiate a claim under Chapter 11 of North American Free Trade Agreement (NAFTA) in response to the U.S. Administration’s decision to deny a Presidential permit for the Keystone XL Pipeline on the basis that the denial was arbitrary and unjustified. Through the NAFTA claim, we are seeking to recover more than US$15 billion in costs and damages that we estimated to have suffered as a result of the U.S. Administration’s breach of its NAFTA obligations. In June 2016, we filed a Request for Arbitration in a dispute against the U.S. Government pursuant to the Convention on Settlement of Investment Disputes between States and Nationals of Other States, the Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings and Chapter 11 of NAFTA. This arbitration is in a preliminary stage and the likelihood of success and resulting impact on the Company's financial position or results of operations is unknown at this time. On January 5, 2016, we also filed a lawsuit in the U.S. Federal Court in Houston, Texas, asserting that the U.S. President’s decision to deny construction of Keystone XL exceeded his power under the U.S. Constitution. The federal court lawsuit does not seek damages, but rather a declaration that the permit denial is without legal merit and that no further Presidential action is required before construction of the pipeline can proceed.
January 2017
On January 24, 2017, the U.S. President signed a Presidential Memorandum inviting TransCanada to refile an application for the U.S. Presidential Permit. On January 26, 2017, we filed a Presidential Permit application with the U.S. Department of State for the project. The pipeline will begin in Hardisty, Alberta, and extend south to Steele City, Nebraska. Given the passage of time since the November 6, 2015 denial of the Presidential Permit, we are updating our shipping contracts and some shippers may increase or decrease their volume commitments. We expect the project to retain sufficient commercial support for us to make a FID.
 
 

 
14   
TCPL Annual information form 2016
 


Date
Description of development
 
 
Energy East
 
 
April 2015
We announced that the proposed marine terminal and associated tank terminal in Cacouna, Québec will not be built as a result of the recommended reclassification of the beluga whale, indigenous to the site, as an endangered species.
November 2015
Following consultation with stakeholders and shippers, we announced the intention to amend the Energy East pipeline application to remove a port in Québec and proceed with a single marine terminal in Saint John, New Brunswick.
December 2015
We filed an amendment to the existing project application with the NEB that adjusted the proposed route, scope and capital cost of the project reflecting refinement and scope change including the removal of the port in Québec. The project will continue to serve the three eastern Canadian refineries along the route in Montréal and Québec City, Québec and Saint John, New Brunswick. Changes to the project schedule and scope, as reflected in the amendment, contributed to a revised project capital cost estimate of $15.7 billion, excluding the transfer of Canadian Mainline natural gas assets.
March 2016
On March 1, 2016, the Province of Québec filed a court action seeking an injunction to compel the Energy East Pipeline to comply with the province’s environmental regulations. On March 30, 2016, the Québec Superior Court joined the injunction action led by the Province of Québec with the prior action led by Québec Environmental Law Centre / Centre québécois du droit de l’environnement (CQDE), which sought a declaration to compel the Energy East pipeline to submit to the mandatory provincial environmental review process. As a result of communication with the Ministère du Développement durable, Environnement et la Lutte contre les changements climatiques, on April 22, 2016, we filed a project review engaging an environmental assessment under the Environmental Quality Act (Québec) according to an agreed upon schedule for key steps in that process. This process was in addition to environmental assessment required under the NEB Act and the Canadian Environmental Assessment Act, 2012. The Attorney General for Québec agreed to suspend its litigation against TransCanada and Energy East and to withdraw it once the provincial environmental assessment process has been completed. The CQDE similarly agreed to suspend the action. These suspensions were in effect until early November 2016, but may have to be extended given the delay in the NEB process noted below. The first phase of Energy East public hearings for the voluntary Québec le Bureau d’audiences publiques sur l’environnement (BAPE) process was completed. The voluntary BAPE hearing process is intended to inform the Province of Québec in its participation in the federal process and provides project information to the public. A second phase, consisting of a series of public input sessions, has been suspended as it has been replaced with the environmental assessment as described above.
May 2016
We filed a consolidated application with the NEB for the Energy East pipeline. In June 2016, Energy East achieved a major milestone with the NEB’s announcement determining the Energy East pipeline application is sufficiently complete to initiate the formal regulatory review process. However, in August 2016, panel sessions were cancelled as three NEB panelists recused themselves from continuing to sit on the panel to review the project due to allegations of reasonable apprehension of bias. The Chair of the NEB and the Vice Chair, who is also a panel member, have recused themselves of any further duties related to the project. As a result, all hearings for the project were adjourned until further notice.
January 2017
On January 9, 2017, the NEB appointed three new permanent panel members to undertake the review of the Energy East and Eastern Mainline projects. On January 27, 2017, the new NEB panel members voided all decisions made by the previous hearing panel members and all decisions will be removed from the official hearing record. We are not required to refile the application and parties will not be required to reapply for intervener status. However, all other proceedings and associated deadlines are no longer applicable. It is expected the next step will be a determination of the application’s completeness and the issuance of a hearing order which triggers the 21-month time limit for the NEB to adjudicate the application. 
 
 
White Spruce
 
 
December 2016
We finalized a long term transportation agreement to develop and construct the 20-inch diameter White Spruce pipeline, which will transport crude oil from a major oil sands plant in northeast Alberta, into the Grand Rapids pipeline system. The total capital cost for the project is approximately $200 million and it is expected to be in service in 2018 subject to regulatory approvals.
 
 
Northern Courier
 
 
Fourth Quarter 2016
Construction continued on the Northern Courier pipeline to transport bitumen and diluent between the Fort Hills mine site and Suncor Energy's terminal located north of Fort McMurray, Alberta. The project is fully underpinned by long term contracts with the Fort Hills partnership. We expect to begin commercial operation in fourth quarter 2017.
 
 
Grand Rapids
 
 
August 2015
We announced a joint venture between Grand Rapids and Keyera Corp. for provision of diluent transportation service on the 20-inch pipeline between Edmonton and Fort Saskatchewan, Alberta .The joint venture will be incorporated into Grand Rapids and it will provide enhanced diluent supply alternatives to our shippers.

 
 
TCPL Annual information form 2016
15


Date
Description of development
Fourth Quarter 2016
Construction continued on the Grand Rapids pipeline. We entered into a partnership with Brion Energy to develop Grand Rapids with each party owning 50 per cent of the pipeline project. Our partner has also entered into a long-term transportation service contract in support of the project. We will operate Grand Rapids once it is complete and we expect crude oil transportation to begin in the second half of 2017. Construction is also progressing on the 20-inch diameter diluent joint venture pipeline between Edmonton and Fort Saskatchewan, Alberta. The joint venture between Grand Rapids and Keyera Corp. will be incorporated into Grand Rapids and will provide enhanced diluent supply alternatives to our shippers. We anticipate the pipeline to be in service in late 2017.
 
Upland Pipeline
 
 
April 2015
We filed an application to obtain a U.S. Presidential permit for the Upland Pipeline. The pipeline will provide crude oil transportation from and between multiple points in North Dakota and interconnect with the Energy East pipeline system at Moosomin, Saskatchewan. Subject to regulatory approvals, we anticipate the Upland Pipeline to be in service in 2020. The commercial contracts we have executed for Upland Pipeline are conditioned on the Energy East pipeline project proceeding.
January 2016
We are reviewing the Canadian federal government's interim measures for pipeline reviews and to assess their impact to Upland Pipeline.
 
 
Liquids Marketing
 
 
2015
We established a liquids marketing business to expand into other areas of the liquids business value chain. The liquids marketing business will generate revenue by capitalizing on asset utilization opportunities by entering into short-term or long-term pipeline or storage terminal capacity contracts. Volatility in commodity prices and changing market conditions could impact the value of those capacity contracts. Availability of alternative pipeline systems that can deliver into the same areas can also impact contract value. The liquids marketing business complies with our risk management polices which are described in the Other information - Risks and risk management section of the MD&A.
Further information about developments in the Liquids Pipelines business, including changes that we can expect will occur in the current financial year, can be found in the MD&A in the About our business – Our strategy, Liquids Pipelines – Financial results, Liquids Pipelines – Outlook, Liquids Pipelines – Understanding the Liquids Pipelines business and Liquids Pipelines – Significant events sections, which sections of the MD&A are incorporated by reference herein.

 
16   
TCPL Annual information form 2016
 


ENERGY
Date
Description of development
 
 
Canadian Power
 
 
Alberta PPAs
 
 
June 2015
The Alberta government announced a renewal and change to the SGER in Alberta. Since 2007, under the SGER, established industrial facilities with GHG emissions above a certain threshold are required to reduce their emissions by 12 per cent below an average intensity baseline and a carbon levy of $15 per tonne is placed on emissions above this target. The changed regulations include an increase in the emissions reductions target to 15 per cent in 2016 and 20 per cent in 2017, along with an increase in the carbon levy to $20 per tonne in 2016 and $30 per tonne in 2017. Starting in 2018, coal-fired generators will pay $30 per tonne of CO2 on emissions above what Alberta's cleanest natural gas-fired plant would emit to produce an equivalent amount of electricity.
2016
On March 7, 2016, we issued notice to the Balancing Pool to terminate our Alberta PPAs. On July 22, 2016, we, along with the ASTC Power Partnership, issued a notice referring the matter to be resolved by binding arbitration pursuant to the dispute resolution provisions of the PPAs. On July 25, 2016, the Government of Alberta brought an application in the Court of Queen’s Bench to prevent the Balancing Pool from allowing termination of a PPA held by another party which contains identically worded termination provisions to our PPAs. The outcome of this court application could have affected resolution of the arbitration of the Sheerness, Sundance A and Sundance B PPAs. In December 2016, management engaged in settlement negotiations with the Government of Alberta and finalized terms of the settlement of all legal disputes related to the PPA terminations. The Government and the Balancing Pool agreed to our termination of the PPAs resulting in the transfer of all our obligations under the PPAs to the Balancing Pool. Upon final settlement of the PPA terminations, we transferred to the Balancing Pool a package of environmental credits held to offset the PPA emissions costs and recorded a non-cash charge of $92 million before tax ($68 million after tax) related to the carrying value of our environmental credits. In first quarter 2016, as a result of our decision to terminate the PPAs, we recorded a non-cash impairment charge of $240 million before tax ($176 million after tax) comprised of $211 million before tax ($155 million after tax) related to the carrying value of our Sundance A and Sheerness PPAs and $29 million before tax ($21 million after tax) on our equity
investment in the ASTC Power Partnership which previously held the Sundance B PPA.
 
 
Ontario Cap and Trade
 
 
May 2016
Legislation enabling Ontario’s cap and trade program was signed into law with the new regulation taking effect July 1, 2016. This regulation sets a limit on annual province-wide greenhouse gas emissions beginning in January 2017 and introduces a market to administer the purchase and trading of emissions allowances. The regulation places the compliance obligation for emissions from our natural gas fired power facilities on local gas distributors, with the distributors then flowing the associated costs to the facilities themselves. The IESO has proposed contract amendments for contract holders to address costs and other issues associated with this change in law. We continue to work with the IESO to finalize these amendments. We do not expect a significant overall impact to our Energy business as a result of this new regulation.
 
 
Napanee
 
 
January 2015
We began construction activities on a 900 MW natural gas-fired power plant at Ontario Power Generation’s Lennox site in eastern Ontario in the town of Greater Napanee. Production from the facility is fully contracted with the IESO.
First Quarter 2016
Construction continues and we expect to invest approximately $1.1 billion in the Napanee facility during construction and commercial operations are expected to begin in 2018.
 
 
Bécancour
 
 
May 2014
We received final approval from the Régie de l’énergie for the December 2013 amendment to the original suspension agreement with Hydro-Québec Distribution (HQ). Under the amendment, HQ continued to have the option (subject to certain conditions) to further extend the suspension of all electricity generation from the Bécancour power plant past 2017. The amendment also includes revised provisions intended to reduce HQ’s payments to us for Bécancour's natural gas transportation costs during the suspension period, although we retain our ability to recover our full capacity costs under the Electricity Supply Contract with HQ while the facility is suspended. In addition, HQ exercised its option in the amended suspension agreement to extend suspension of all electricity generation to the end of 2017, and requested further suspension of generation to the end of 2018. In June 2015, HQ had requested further suspension of generation to the end of 2019. In June 2016, HQ requested further suspension of generation to the end of 2020.
August 2015
We executed an agreement with HQ allowing HQ to dispatch up to 570 MW of peak winter capacity from our Bécancour facility for a term of 20 years commencing in December 2016.
November 2016
HQ released a new ten year supply plan indicating additional peak winter capacity from Bécancour is not required at this time. Prior to this development, the regulator in Québec, Régie de l'énergie, reversed its initial decision to approve this agreement. Management does not expect further developments at Bécancour until November 2019 when the next 10 year supply plan is filed.

 
 
TCPL Annual information form 2016
17


Date
Description of development
 
 
Bruce Power
 
 
March 2014
Cameco Corporation sold its 31.6 per cent limited partnership interest in Bruce B to BPC Generation Infrastructure Trust.
Fourth Quarter 2014
New Canadian federal legislation was passed in 2015 respecting the determination of liability and compensation for a nuclear incident in Canada resulting in personal injuries and damages. In 2016 the act was proclaimed to come into force by cabinet and the provisions are effective as of January 1, 2017. This legislation will replace existing legislation which currently provides that the licensed operator of a nuclear facility has absolute and exclusive liability and limits the liability to a maximum of $75 million. The new law is fundamentally consistent with the existing regime although the maximum liability will increase to $650 million and increase in increments over three years to a maximum of $1 billion. The operator will also be required to maintain financial assurances such as insurance in the amount of the maximum liability. Our indirect subsidiary owns 50 per cent of the common shares of Bruce Power Inc., the licensed operator of Bruce Power, and as such Bruce Power Inc. is subject to this liability in the event of an incident as well as the legislation’s other requirements.
December 2015
Bruce Power entered into an agreement with the IESO to extend the operating life of the facility to the end of 2064. This new agreement represents an extension and material amendment to the earlier agreement that led to the refurbishment of Units 1 and 2 at the site. The amended agreement is effective January 1, 2016 and allows Bruce Power to immediately invest in life extension activities for Units 3 through 8. Our estimated share of investment in the Asset Management program to be completed over the life of the agreement is approximately $2.5 billion (2014 dollars). Our estimated share of investment in the Major Component Replacement work that is expected to begin in 2020 is approximately $4 billion (2014 dollars). Under certain conditions, Bruce Power and the IESO can elect to not proceed with the remaining Major Component Replacement investments should the cost exceed certain thresholds or prove to not provide sufficient economic benefits. The agreement has been structured to account for changing cost inputs over time, including ongoing operating costs and additional capital investments. Beginning in January 2016, Bruce Power receives a uniform price of $65.73 per MWh for all units, which includes certain flow-through items such as fuel and lease expense recovery. Over time, the uniform price will be subject to adjustments for the return of and on capital invested at Bruce Power under the Asset Management and Major Component Replacement capital programs, along with various other pricing adjustments that allow for a better matching of revenues and costs over the long term. In connection with this opportunity, we exercised our option to acquire an additional 14.89 per cent ownership interest in Bruce B for $236 million from the Ontario Municipal Employees Retirement System. Subsequent to this acquisition, Bruce A and Bruce B were merged to form a single partnership structure. In 2015, we recognized a $36 million charge, representing our proportionate share, on the retirement of Bruce Power debt in conjunction with this merger. We now hold a 48.5 per cent interest in this newly merged partnership structure.
Second Quarter 2016
Bruce Power issued bonds and borrowed under its bank credit facility as part of a financing program to fund its capital program and make distributions to its partners. Distributions received by us from Bruce Power in second quarter 2016 included $725 million from this financing program.
February 2017
Bruce Power issued additional bonds under its financing program and distributed $362 million to TransCanada.
 
 
Cancarb Limited and Cancarb Waste Heat Facility
 
 
January 2014
We announced we had reached an agreement for the sale of Cancarb Limited, our thermal carbon black facility, and its related power generation facility.
April 2014
The sale of Cancarb Limited and its related power generation facility closed for gross proceeds of $190 million. We recognized a gain of $99 million, net of tax, in second quarter 2014.
 
 
Ontario Solar
 
 
September 2014
We completed the acquisition of three solar facilities for $181 million as per our December 2011 agreement, pursuant to which we agreed to buy Ontario solar generation facilities with combined capacity of 86 MW from Canadian Solar Solutions Inc. for approximately $500 million.
December 2014
We acquired an additional solar facility for $60 million. Our total investment in the eight solar facilities we have purchased is $457 million. All power produced by the solar facilities is sold under 20-year feed-in tariff contracts with the IESO.
 

 
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TCPL Annual information form 2016
 


Date
Description of development
 
U.S. Power
 
Monetization of U.S. Northeast power business
 
 
November 2016
We announced the sale of Ravenswood, Ironwood, Ocean State Power and Kibby Wind to Helix Generation, LLC, an affiliate of LS Power Equity Advisors for US$2.2 billion and the sale of TC Hydro to Great River Hydro, LLC, an affiliate of ArcLight Capital Partners, LLC for US$1.065 billion. These two sale transactions are expected to close in the first half of 2017 subject to certain regulatory and other approvals and will include closing adjustments. These sales are expected to result in an approximate net loss of $1.2 billion before tax ($1.1 billion after tax) which is comprised of a $1,085 million goodwill impairment charge ($656 million after tax), a net loss of $829 million ($863 million after tax) on the sale of the thermal and wind package and an approximate gain of $710 million ($440 million after tax) on sale of the hydro assets to be recorded upon the close of that transaction. A process to monetize our marketing business, TCPM, is underway.
 
 
Ravenswood
 
 
May 2015
The Ravenswood Generating Station returned to service after the September 2014 unplanned outage which resulted from a problem with the generator associated with the high pressure turbine. Insurance recoveries, net of deductibles, for this event have been received and are being recognized in capacity revenues to offset amounts lost during the periods impacted by the lower forced outage rate. As a result of these insurance recoveries, the Unit 30 unplanned outage has not had a significant impact on our earnings, although the recording of earnings has not coincided exactly with lost revenues due to timing of the insurance proceeds. In addition, insurance recoveries related to an unplanned outage at the Ravenswood facility that occurred in 2008 were received in June 2016 and a portion of the proceeds were recognized in power revenue. Refer to the Monetization of U.S. Northeast power business section above.
 
 
Ironwood
 
 
February 2016
We acquired the 778 MW Ironwood natural gas fired, combined cycle power plant located in Lebanon, Pennsylvania for US$653 million in cash after post-acquisition adjustments. The Ironwood power plant delivers energy into the PJM Interconnection area power market. Refer to the Monetization of U.S. Northeast power business section above.
Further information about developments in the Energy business, including changes that we expect will occur in the current financial year, can be found in the MD&A in the About our business – Our strategy, Energy – Financial results, Energy – Outlook, Energy – Understanding the Energy business and Energy – Significant events sections, which sections of the MD&A are incorporated by reference herein.
Business of TCPL
We are a leading North American energy infrastructure company focused on Natural Gas Pipelines, Liquids Pipelines and Energy. Refer to the About our business – Three core businesses – Total revenues section of the MD&A for our revenues from operations by segment, for the years ended December 31, 2016 and 2015, which section of the MD&A is incorporated by reference herein.
The following is a description of each of TransCanada's three core businesses.
NATURAL GAS PIPELINES     
Our natural gas pipeline network transports natural gas from supply basins to local distribution companies, power generation facilities, interconnecting pipelines and other businesses across Canada, the U.S. and Mexico. Our Natural Gas Pipelines business is split into three operating segments representing its geographic diversity: Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines and Mexico Natural Gas Pipelines.
A description of the natural gas pipelines and regulated natural gas storage assets we operate in addition to further information about our pipeline holdings, developments and opportunities, significant regulatory developments and competitive position which relate to our Natural Gas Pipelines business can be found in the Natural Gas Pipelines business, Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines and Mexico Natural Gas Pipelines sections of the MD&A, which sections of the MD&A are incorporated by reference herein.

 
 
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LIQUIDS PIPELINES
Our existing liquids pipeline infrastructure connects Alberta crude oil supplies to U.S. refining markets in Illinois, Oklahoma and Texas, as well as connecting U.S. crude oil supplies from the Cushing, Oklahoma hub to refining markets in the U.S. Gulf Coast. Our proposed future pipeline infrastructure would also connect Canadian and U.S. crude oil supplies to refining markets in eastern Canada and overseas export markets, and expand capacity for Canadian and U.S. crude oil access to U.S. markets.
A description of pipelines and properties we operate, in addition to further information about our pipeline holdings, developments and opportunities, significant regulatory developments and competitive position which relate to our Liquids Pipelines business can be found in the MD&A in the Liquids Pipelines section, which section of the MD&A is incorporated by reference herein.
REGULATION OF NATURAL GAS PIPELINES AND LIQUIDS PIPELINES
Canada
Natural Gas Pipelines
The Canadian Mainline, NGTL System and Foothills System (collectively, the Systems) are regulated by the NEB under the National Energy Board Act (Canada). The NEB regulates the construction and operation of facilities, and the terms and conditions of services, including rates, for these Canadian regulated natural gas transmission systems.
The NEB generally sets tolls that provide TransCanada the opportunity to recover costs of transporting natural gas, including the return of capital (depreciation) and return on the average investment base for each of the Systems. Generally, Canadian natural gas pipelines request the NEB to approve the pipeline’s cost of service and tolls once a year, and recover or refund the variance between actual and expected revenues and costs in future years. The Canadian Mainline, however, operates under a fixed toll arrangement for its longer term firm transportation service and has the flexibility to price its shorter term and discretionary services in order to maximize its revenue. Further information relating to the decision from the NEB regarding the Canadian Restructuring Proposal as well as the LDC Settlement can be found in the General developments of the business - Natural Gas Pipelines - Developments in the Canadian Natural Gas Pipelines segment - Canadian Mainline Settlement above. In addition, the NEB approved the NGTL revenue requirement settlement application that was filed in December 2015, subject to certain reporting requirements that were subsequently met and approved by the NEB.
New facilities on or associated with the Systems are approved by the NEB before construction begins and the NEB regulates the operations of each of the Systems. Net earnings of the Systems may be affected by changes in investment base, the allowed ROE, and any incentive earnings.
West Coast LNG Natural Gas Pipeline Projects
The Coastal GasLink and PRGT natural gas pipeline projects are being proposed and developed primarily under the regulatory regime administered by the OGC and the EAO. The OGC is responsible for overseeing oil and gas operations in B.C., including exploration, development, pipeline transportation and reclamation. The EAO is an agency that manages the review of proposed major projects in B.C., as required by the B.C. Environmental Assessment Act.
Liquids Pipelines
The NEB regulates the terms and conditions of service, including rates, construction and operation of the Canadian portion of the Keystone Pipeline System. The rates for transportation service on the Keystone Pipeline System are calculated in accordance with a methodology agreed to in transportation service agreements between Keystone and its shippers, and approved by the NEB.
Liquids Pipelines Projects
The Northern Courier Pipeline and Grand Rapids Pipeline projects are currently under construction and the White Spruce pipeline is under development, all of which are primarily under the regulatory regime administered by the AER. The AER administers approvals required to construct and operate the pipelines and associated facilities in accordance with Directive 56, approvals to obtain land access under the Public Land Act, and environmental approvals under the Environmental and Protection Enhancement Act.
Energy East Pipeline is being developed under the regulatory regime administered by the NEB.

 
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TCPL Annual information form 2016
 


United States
Natural Gas Pipelines
TransCanada is subject to regulation by various federal, state and local governmental agencies, including those specifically described below.
The Company's wholly owned and partially owned U.S. pipelines are considered natural gas companies operating under the provisions of the Natural Gas Act of 1938 and the Natural Gas Policy Act of 1978, and are subject to the jurisdiction of the FERC. The Natural Gas Act of 1938 grants the FERC authority over the construction, acquisition and operation of pipelines and related facilities utilized in the transportation and sale of natural gas in interstate commerce, including the extension, enlargement or abandonment of service using such facilities. The FERC also has authority to regulate rates and charges for transportation and storage of natural gas in interstate commerce.
TransCanada holds certificates of public convenience and necessity issued by FERC, authorizing them to operate the pipelines, facilities and properties now in operation and to transport and store natural gas in interstate commerce. Our regulated natural gas storage business also has facilities that are regulated by FERC. The Company is also subject to the Natural Gas Pipeline Safety Act of 1968 and the Pipeline Safety Improvement Act of 2002, which regulate the safety of natural gas pipelines.
Liquids Pipelines
The FERC regulates the terms and conditions of service, including transportation rates, of interstate liquids pipelines, including the U.S. portion of the Keystone Pipeline System and Marketlink. The siting and construction of pipeline facilities are regulated by the specific state regulator in which the pipeline facilities are located. Pipeline safety is regulated by the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration. Liquids pipelines that cross the international border between Canada and the United States, such as the proposed Upland pipeline, will require a Presidential Permit from the U.S. DOS.
Mexico
Natural Gas Pipelines
TransCanada’s pipelines in Mexico are regulated by the Comisión Reguladora de Energía or Energy Regulatory Commission who approve construction of new pipeline facilities and ongoing operations of the infrastructure. Our Mexican pipelines have approved tariffs, services and related rates, however, the contracts underpinning the construction and operation of the facilities are long-term negotiated fixed rate contracts. These rates are only subject to change under specific circumstances such as certain types of force majeure events or changes in law.
ENERGY
Our Energy business is made up of three groups:
Canadian Power
Natural Gas Storage (Canadian, non-regulated)
U.S. Power (monetization expected to close in the first half of 2017).
Further information about Energy assets we operate, power supply that we own or have the rights to, power generation capacity we own or are developing and Energy assets currently under construction, along with our Energy holdings and significant developments, and opportunities in relation to our Energy business, can be found in the MD&A in the Energy section, which section of the MD&A is incorporated by reference herein.


 
 
TCPL Annual information form 2016
21


General
EMPLOYEES
At Year End, TCPL had 7,165 employees, substantially all of whom were employed in Canada and the U.S., as set forth in the following table.
Calgary (includes U.S. employees working in Canada)
2,570

Western Canada (excluding Calgary)
581

Eastern Canada
300

Houston (includes Canadian employees working in the U.S.)
712

U.S. Midwest
747

U.S. Northeast
653

U.S. Southeast/Gulf Coast (excluding Houston)
1,313

U.S. West Coast
79

Mexico and South America
210

Total
7,165

CORPORATE RESTRUCTURING AND BUSINESS TRANSFORMATION
In mid-2015, we commenced a business restructuring and transformation initiative. While there is no change to our corporate
strategy, we had undertaken this initiative to reduce overall costs and maximize the effectiveness and efficiency of our existing
operations. For more information about our corporate restructuring and business transformation, refer to the Corporate – Corporate restructuring and business transformation section of the MD&A, which section of the MD&A is incorporated by reference herein.
ACQUISITION OF COLUMBIA PIPELINE GROUP, INC.
On July 1, 2016, we acquired 100 per cent ownership of Columbia for a purchase price of US$10.3 billion in cash. The acquisition was financed through the issuance of TCPL common shares to TransCanada and an intercompany loan due to TransCanada in connection with proceeds received from the sale of TransCanada subscription receipts. The sale of TransCanada subscription receipts was completed on April 1, 2016 through a public offering and gross proceeds of approximately $4.4 billion were transferred to TCPL prior to the closing of the acquisition. In addition, we drew on acquisition bridge facilities in the aggregate amount of US$6.9 billion. For more information about the acquisition of Columbia, refer to the About our business – Acquisition of Columbia Pipeline Group, Inc. section of the MD&A, which section of the MD&A is incorporated by reference herein.
HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION AND SOCIAL POLICIES
The Health, Safety and Environment (HSE) committee of TCPL’s Board of Directors (the Board) oversees operational risk, people and process safety, security of personnel and environmental risks, and monitors compliance with our HSE corporate policy through regular reporting from management. We have a management system that establishes a framework for managing HSE issues that is used to capture, organize, document, monitor and improve our related policies, programs and procedures.
Our management system for HSE is modeled after international standards, conforms to external industry consensus standards and voluntary programs, and complies with applicable legislative and regulatory requirements and various other internal management systems. It follows a continuous improvement cycle organized into four key areas:
Planning: risk and regulatory assessment, objectives and targets, and structure and responsibility
Implementing: development and implementation of programs, plans, procedures and practices aimed at operational risk management
Reporting: document and records management, communication and reporting, and
Action: ongoing audit and review of HSE performance.

 
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TCPL Annual information form 2016
 


The committee reviews HSE performance and operational risk management. It receives detailed reports on:
overall HSE corporate governance
operational performance and preventive maintenance metrics
asset integrity programs
emergency preparedness, incident response and evaluation
people and process safety performance metrics, and
developments in and compliance with applicable legislation and regulations.
The committee also receives updates on any specific areas of operational and construction risk management review being conducted by management and the results and corrective action plans flowing from internal and third party audits. Information about the financial and operational effects of environmental protection requirements on the capital expenditures, profit or loss and competitive position of TCPL can be found in the MD&A in the Other information – Risks and risk management – Health, safety and environment section, which section of the MD&A is incorporated by reference herein. Generally, each year the committee or the committee Chair tours one of our existing assets or projects under development as part of its responsibility to monitor and review our HSE practices. Additionally, the Board and the committee have a joint site visit annually. In 2016, the committee held a special session devoted to operational safety.
Environmental policies
TCPL’s facilities are subject to federal, state, provincial, and local environmental statutes and regulations governing environmental protection, including, but not limited to, air emissions and GHG emissions, water quality, wastewater discharges and waste management. Such laws and regulations generally require facilities to obtain or comply with a wide variety of environmental registrations, licences, permits and other approvals and requirements. Failure to comply with these laws and regulations may result in the assessment of administrative, civil or criminal penalties, the imposition of remedial requirements and/or the issuance of orders respecting future operations. We have implemented audit and inspection programs designed to ensure our facilities remain in compliance with environmental requirements.
Safety and asset integrity
As one of TCPL's corporate values, safety is an integral part of the way our employees work. Each year we develop goals predicated on achieving year over year sustainable improvement in our safety performance, and meeting or exceeding industry benchmarks.
The safety and integrity of our existing and newly developed infrastructure is a top priority. All new assets are designed, constructed and commissioned with full consideration given to safety and integrity, and are brought in service only after all necessary requirements have been satisfied.
TCPL annually conducts emergency response exercises to practice effective coordination between the Company, local emergency responders, regulatory agencies and government officials in the event of an emergency. TCPL uses the Incident Command System which supports a unified approach to emergency response with these community members. TCPL also provides annual training to all field staff in the form of table top exercises, online and vendor lead training.
Social policies
TCPL has a number of policies, guiding principles and practices in place to help manage Indigenous and stakeholder relations. We have adopted a Code of Business Ethics (Code) which applies to all employees, officers and directors as well as contract workers of TCPL and its wholly-owned subsidiaries and operated entities in countries where we conduct business. All employees (including executive officers) and directors must certify their compliance with the Code.
Our approach to Indigenous and stakeholder engagement is based on building relationships, mutual respect and trust while recognizing the unique values, needs and interests of each community. Our Stakeholder Engagement Commitment Statement provides the structure to guide our teams’ behavior and actions, so they understand their responsibility and extend respect, courtesy and the opportunity to respond to every stakeholder.
TCPL’s Aboriginal Relations and Native American Relations Policies are guided by principles of trust, respect and responsibility. We work together with Indigenous communities to find mutually acceptable solutions and benefits. These Policies recognize the diversity and uniqueness of each Indigenous community, the importance of the land, and the imperative of building relationships based on mutual respect and trust.

 
 
TCPL Annual information form 2016
23


TCPL also has an Avoiding Bribery and Corruption Program which includes an Avoiding Bribery and Corruption Policy, annual online training provided to all personnel, face to face training provided to personnel in higher risk areas of our business, a supplier and contractor due diligence review process, and auditing of certain types of transactions.
We strive for continuous improvement in how we navigate the interconnections and complexity of environmental, social and economic issues related to our business. These issues are of great importance to our stakeholders and Indigenous communities, and have an impact on our ability to build and operate energy infrastructure.
Risk factors
A discussion of our risk factors can be found in the MD&A in the Natural Gas Pipelines business – Natural Gas Pipelines – Business risks, Liquids Pipelines – Business risks, Energy – Business risks and Other information – Risks and risk management sections, which sections of the MD&A are incorporated by reference into this AIF.
Dividends
All of TCPL's common shares are held by TransCanada and as a result, any dividends declared by TCPL on its common shares are paid to TransCanada.  Our Board has not adopted a formal dividend policy. The Board reviews the financial performance of TCPL quarterly and makes a determination of the appropriate level of dividends to be declared in the following quarter. Currently, TransCanada's payment of dividends is primarily funded from dividends it receives as the sole common shareholder of TCPL. Provisions of various trust indentures and credit arrangements to which TCPL is a party restrict TCPL's ability to declare and pay dividends to TransCanada under certain circumstances and, if such restrictions apply, they may, in turn, have an impact on TransCanada's ability to declare and pay dividends. Pursuant to the terms of the unsecured, subordinate trust notes (Trust Notes) issued by TransCanada Trust (the Trust) (a financing trust subsidiary wholly owned by TCPL) and related agreements, in certain circumstances including where holders of the Trust Notes receive deferral preferred shares of TCPL in lieu of cash interest payments and where exchange preferred shares are issued to holders of the trust notes as a result of certain bankruptcy related events, TCPL would be prohibited from declaring or paying dividends on or redeeming their outstanding preferred shares (or, if none are outstanding, their respective common shares) until all such exchange or deferral preferred shares are redeemed by TCPL. Further information about such Trust Notes can be found in the Financial condition – Junior subordinated notes issued section of the MD&A. In the opinion of TCPL management, such provisions do not currently restrict or alter TCPL's ability to declare or pay dividends.
The dividends declared per share on our common and preferred shares during the past three completed financial years are set out in the MD&A under the heading About our business – Quarterly dividend on our common shares and Corporate Preferred share dividends, which section of the MD&A is incorporated by reference herein.
Description of capital structure
SHARE CAPITAL
TCPL’s authorized share capital consists of an unlimited number of common shares, of which 859,261,781 were issued and outstanding at Year End, and an unlimited number of first preferred shares and second preferred shares, issuable in series. The following is a description of the material characteristics of each of these classes of shares.
Common shares
As the holder of all of TCPL's common shares, TransCanada holds all the voting and dividend rights on those common shares.

 
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TCPL Annual information form 2016
 


Preferred shares
Subject to certain limitations, the Board may, from time to time, issue first preferred shares in one or more series and determine for any such series, its designation, number of shares and respective rights, privileges, restrictions and conditions. The first preferred shares as a class have, among others, the provisions described below.
The first preferred shares of each series rank on a parity with the first preferred shares of every other series, and are entitled to preference over the common shares and any other shares ranking junior to the first preferred shares with respect to the payment of dividends, the repayment of capital and the distribution of assets of TCPL in the event of a liquidation, dissolution or winding up of TCPL.
Except as provided by the CBCA or as referred to below, the holders of the first preferred shares will not have any voting rights nor will they be entitled to receive notice of or to attend shareholders’ meetings unless and until TCPL fails to pay, in the aggregate, six quarterly dividends on the preferred shares.
The provisions attaching to the first preferred shares as a class may be modified, amended or varied only with the approval of the holders of the first preferred shares as a class. Any such approval to be given by the holders of the first preferred shares may be given by the affirmative vote of the holders of not less than sixty-six and two-thirds per cent of the first preferred shares represented and voted at a meeting or adjourned meeting of such holders.
Exchange preferred shares
In connection with the issuance by the Trust of consecutive series of Trust Notes, TCPL created corresponding consecutive series of first preferred shares, designated as Exchange Preferred Shares. The Board may issue Exchange Preferred Shares, consisting of such number of shares sufficient to satisfy the rights of former holders of Trust Notes to receive Exchange Preferred Shares following a bankruptcy or insolvency event of TCPL or TransCanada Corporation. The holders of Exchange Preferred Shares will be entitled to receive quarterly fixed rate cumulative preferential cash dividends, as and when declared by the Board, at an annualized rate equal to the rate of interest payable by the Trust on the Trust Notes at the time of issuance of the Exchange Preferred Shares. The Exchange Preferred Shares are not redeemable by TransCanada in whole or in part on or prior to the date that is 10 years after the issuance corresponding series of Trust Notes (Redemption Date). The Exchange Preferred Shares are redeemable by TCPL in whole or in part at any time after each series' applicable Redemption Date, by the payment of an amount in cash for each share to be redeemed equal to $1,000.00 plus all accrued and unpaid dividends thereon.
In the event of liquidation, dissolution or winding up of TransCanada, the holders of Exchange Preferred Shares shall be entitled to receive $1,000.00 per share plus all accrued and unpaid dividends thereon in preference over the common shares or any other shares ranking junior to the Exchange Preferred Shares. Except as provided by the CBCA, the respective holders of the Exchange Preferred Shares are not entitled to receive notice of, attend at, or vote at any meeting of shareholders unless and until TCPL shall have failed to pay six quarterly dividends on such series of preferred shares, whether or not consecutive, in which case the holders of the Exchange Preferred Shares shall have the right to receive notice of and to attend each meeting of shareholders at which directors are to be elected and which take place more than 60 days after the date on which the failure first occurs, and to one vote with respect to resolutions to elect directors for each exchange preferred share, until all arrears of dividends have been paid.
So long as the Exchange Preferred Shares are outstanding, TCPL shall not declare dividends on or redeem any common shares or shares ranking junior to the Exchange Preferred Shares, unless all dividends payable on the Exchange Preferred Shares or any other shares raking prior to or on parity with the Exchange Preferred Shares have been paid.
Debt
The Financial condition – Long-term debt issued section of the MD&A includes a list of issuances by TCPL of U.S. dollar denominated senior unsecured notes and Canadian dollar denominated medium term unsecured note debentures with terms to maturity in excess of one year, during the 12 months ended December 31, 2016, which section of the MD&A is incorporated by reference herein. There are no provisions associated with this debt that entitle debt holders to voting rights. From time to time, TCPL issues commercial paper for terms not exceeding nine months.

 
 
TCPL Annual information form 2016
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Credit ratings
The following table sets out the current credit ratings assigned to those outstanding classes of securities of TransCanada Corporation, TCPL, the Trust and various group entities which have been rated by DBRS Limited (DBRS), Moody's Investors Service, Inc. (Moody’s) and Standard & Poors (S&P):
 
 
DBRS
Moody's
S&P
 
TCPL - Senior unsecured debt
     Debentures
     Medium-term notes
A (low)
A (low)
A3
A3
A-
A-
 
 
TCPL - Junior subordinated notes
BBB
Baa1
BBB
 
TransCanada Trust - Subordinated trust notes
Not rated
Baa2
BBB
 
TransCanada Corporation - Preferred shares
Pfd-2 (low)
Baa2
P-2
 
Commercial paper (TCPL and TCPL guaranteed)
R-1 (low)
P-2
A-2
 
Trend/rating outlook
Under review
with developing
implications
Stable
Negative
Credit ratings are intended to provide investors with an independent measure of credit quality of an issue of securities. Credit ratings are not recommendations to purchase, hold or sell securities and do not address the market price or suitability of a specific security for a particular investor. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future if, in its judgment, circumstances so warrant.
Each of TransCanada Corporation, TCPL, the Trust and various group entities paid fees to each of DBRS, Moody’s and S&P for the credit ratings rendered in respect of their outstanding classes of securities noted above. In addition to annual monitoring fees for TransCanada Corporation and TCPL and their rated securities, additional payments were made to DBRS, Moody’s and S&P in respect of other services provided in connection with the acquisition of Columbia.
The information concerning our credit ratings relates to our financing costs, liquidity and operations. The availability of our funding options may be affected by certain factors, including the global capital market environment and outlook as well as our financial performance. Our access to capital markets at competitive rates is dependent on our credit rating and rating outlook, as determined by credit rating agencies such as DBRS, Moody's and S&P, and if our ratings were downgraded our financing costs and future debt issuances could be unfavorably impacted. A description of the rating agencies' credit ratings listed in the table above is set out below.
DBRS
DBRS has different rating scales for short- and long-term debt and preferred shares. High or low grades are used to indicate the relative standing within all rating categories other than AAA and D and other than in respect of DBRS’ ratings of commercial paper and short-term debt, which utilize high, middle and low subcategories for its R-1 and R-2 rating categories. In respect of long-term debt and preferred share ratings, the absence of either a high or low designation indicates the rating is in the middle of the category. The R-1 (low) rating assigned to TCPL's and TCPL guaranteed short-term debt is in the third highest of 10 rating categories and indicates good credit quality. The capacity for payment of short-term financial obligations as they fall due is substantial. The overall strength is not as favourable as higher rating categories. Short-term debt rated R-1 (low) may be vulnerable to future events, but qualifying negative factors are considered manageable. The A (low) rating assigned to TCPL's senior unsecured debt is in the third highest of 10 categories for long-term debt. Long-term debt rated A is good credit quality. The capacity for the payment of financial obligations is substantial, but of lesser credit quality than that of AA rated securities. Long-term debt rated A may be vulnerable to future events but qualifying negative factors are considered manageable. The BBB rating assigned to junior subordinated notes is in the fourth highest of the 10 categories for long-term debt. Long- term debt rated BBB is of adequate credit quality. The capacity for the payment of financial obligations is considered acceptable, but long-term debt rated BBB may be vulnerable to future events. The Pfd-2 (low) rating assigned to TransCanada's preferred shares is in the second highest of six rating categories for preferred shares. Preferred shares rated Pfd-2 are of satisfactory credit quality. Protection of dividends and principal is still substantial; however, earnings, the balance sheet and coverage ratios are not as strong as Pfd-1 rated companies. In general, Pfd-2 ratings correspond with companies whose long-term debt is rated in the A category.
MOODY’S
Moody's has different rating scales for short- and long-term obligations. Numerical modifiers 1, 2 and 3 are appended to each rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and a modifier 3 indicates a ranking in the lower end of that generic rating category. The A3 rating assigned to TCPL's senior unsecured debt is in the third highest of nine rating categories for long-term obligations. Obligations rated A are judged to be upper medium-grade and are subject to low credit risk. The P-2 rating assigned to TCPL's and TCPL guaranteed U.S. commercial paper programs is the second highest of four rating categories for short-term debt issuers. Issuers rated P-2 have a strong ability to repay short-term debt obligations. The Baa1 and Baa2 ratings assigned to TCPL's junior subordinated

 
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notes and to both TransCanada's preferred shares and the TransCanada Trust subordinated trust notes, respectively, are in the fourth highest of nine rating categories for long-term obligations, with the junior subordinated notes ranking higher within the Baa rating category with a modifier of 1 as opposed to the modifier of 2 on the subordinated trust notes and preferred shares. Obligations rated Baa are judged to be medium-grade and are subject to moderate credit risk and, as such, may possess certain speculative characteristics.
S&P
S&P has different rating scales for short- and long-term obligations. Ratings from AA through CCC may be modified by the addition of a plus (+) or minus (-) sign to show the relative standing within a particular rating category. The A- rating assigned to TCPL's senior unsecured debt is in the third highest of 10 rating categories for long-term obligations. An A rating indicates the obligor's capacity to meet its financial commitment is strong; however, the obligation is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rated categories. TCPL's and TCPL guaranteed U.S. commercial paper programs are each rated A-2 which is the second highest of eight rating categories for short-term debt issuers. Short-term debt issuers rated A-2 have satisfactory capacity to meet their financial commitments, however they are somewhat more susceptible to adverse effects of changes in circumstances and economic conditions than obligors in the highest rating category. The BBB rating assigned to TCPL’s junior subordinated notes and to the TransCanada Trust subordinated trust notes is in the fourth highest of 10 rating categories for long-term debt obligations and the P-2 rating assigned to TransCanada’s preferred shares is the second highest of eight rating categories for Canadian preferred shares. The BBB and P-2 ratings assigned to TCPL's junior subordinated notes, the TransCanada Trust subordinated trust notes and TransCanada's preferred shares exhibit adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
Market for securities
TransCanada holds all of the common shares of TCPL and these are not listed on a public market. TCPL's Formosa Bonds are listed on the Taipei Exchange. Since the date of issuance no Formosa Bonds have been traded on the Taipei Exchange.
During 2016 (to date), 79,655,911 common shares of TCPL were issued to TransCanada as set out in the following table:
Date
Number of
TCPL common
shares

Price per
TCPL common
share

Aggregate
issuance price

June 28, 2016
43,134,601


$57.28


$2,470,750,000

November 16, 2016
17,058,823


$59.50


$1,015,000,000

November 21, 2016
16,561,775


$60.38


$1,000,000,000

December 1, 2016
2,900,712


$60.33


$175,000,000

January 31, 2017
3,032,268


$61.67


$187,000,000

TCPL has not sold or issued any securities that are not listed or quoted on a market place during the year ended December 31, 2016, other than the common shares listed in the table above and the (i) US$400 million principal amount of 3.125% senior note due 2026 on January 27, 2016, (ii) US$850 million principal amount of 4.875% senior note due 2026 on January 27, 2016, (iii) $300 million principal amount of 3.69% medium term note debentures due 2023 on June 6, 2016, (iv) $700 million principal amount of 4.35% medium term note debentures due 2046 on June 6, 2016, and (v) US$1.2 billion principal amount of 6.125% junior subordinated notes due 2076 on August 11, 2016.
Directors and officers
As of March 15, 2017, the directors and officers of TCPL as a group beneficially owned, or exercised control or direction over, directly or indirectly, an aggregate of 642,719 common shares of TransCanada. This constitutes less than one per cent of TransCanada's common shares. The Company collects this information from our directors and officers but otherwise we have no direct knowledge of individual holdings of TransCanada's securities.
DIRECTORS
The following table sets forth the names of the directors who serve on the Board, as of March 15, 2017 (unless otherwise indicated), together with their jurisdictions of residence, all positions and offices held by them with TCPL, their principal occupations or employment during the past five years and the year from which each director has continually served as a director of TransCanada and, prior to the Arrangement, with TCPL. Positions and offices held with TCPL are also held by such person at TransCanada. Each director holds office until the next annual meeting or until his or her successor is earlier elected or appointed.

 
 
TCPL Annual information form 2016
27


Name and
place of residence
 
Principal occupation during the five preceding years 
 
Director since
Kevin E. Benson
Calgary, Alberta
Canada
 
Corporate director. Director, Winter Sport Institute (non-profit) since February 2015. Director, Calgary Airport Authority from January 2010 to December 2013.
 
2005
Derek H. Burney, O.C.
Ottawa, Ontario
Canada
 
Senior strategic advisor, Norton Rose Fulbright (law firm). Chairman, GardaWorld International Advisory Board (risk management and security services) since April 2008. Advisory Board member, Paradigm Capital Inc. (investment dealer) since May 2011.
 
2005
Stéphan Crétier1

 
Corporate director. Chairman, President and Chief Executive Officer of Garda World Security Corporation (Garda World) (private security services) and director of a number of Garda World’s direct and indirect subsidiaries, since 1999. Director, ORTHOsoft Inc. (formerly ORTHOsoft Holdings Inc.) (medical software technology) from August 2004 to November 2004. Director, BioEnvelop Technologies Corp. (manufacturing) from 2001 to 2003. Director, President and Chief Executive Officer, Rafale Capital Corp. (manufacturing) from 1999 to 2001.
 
2017
Russell K. Girling2
Calgary, Alberta
Canada
 
President and Chief Executive Officer, TransCanada since July 2010. Chief Operating Officer from July 2009 to June 2010, and President, Pipelines from June 2006 to June 2010. Director, American Petroleum Institute since January 2015. Director, Agrium Inc. (agricultural) since May 2006.
 
2010
S. Barry Jackson
Calgary, Alberta
Canada
 
Corporate director. Chair of the Board, TransCanada since April 2005. Director, WestJet Airlines Ltd. (airline) since February 2009. Director, Laricina Energy Ltd. (oil and gas, exploration and production) since December 2005. Director, Nexen Inc. (Nexen) (oil and gas, exploration and production) from 2001 to June 2013, and Chair of the board, Nexen from 2012 to June 2013.
 
2002
John E. Lowe
Houston, Texas
U.S.A.
 
Non-executive Chairman of the Board of Directors, Apache Corporation (Apache) (oil and gas) since May 2015. Director, Apache from July 2013 to May 2015. Senior Executive Adviser at Tudor Pickering, Holt & Co. LLC (energy investment and merchant banking) since September 2012. Director, Phillips 66 Company (energy infrastructure) since May 2012. Director, Agrium Inc. (agriculture) from May 2010 to August 2015. Director, DCP Midstream LLC and DCP Midstream GP, LLC (energy infrastructure) from October 2008 to April 2012. Assistant to the Chief Executive Officer, ConocoPhillips (oil and gas, exploration and production) from October 2008 to April 2012. Director, Chevron Phillips Chemical Co. LLC (global petrochemicals) from October 2008 to January 2011.
 
2015
Paula Rosput Reynolds
Seattle, Washington
U.S.A.
 
President and Chief Executive Officer, PreferWest, LLC (business advisory group) since October 2009. Director, CBRE Group, Inc. (commercial real estate) since March 2016. Director, BP p.l.c. (oil and gas) since May 2015. Director, Siluria Technologies Inc. (natural gas) since February 2015. Director, BAE Systems plc. (aerospace, defence, information security) since April 2011. Director, Delta Air Lines, Inc. (airline) from August 2004 to June 2015. Director, Anadarko Petroleum Corporation (oil and gas, exploration and production) from August 2007 to May 2014.
 
2011
John Richels
Nichols Hills, Oklahoma
U.S.A.
 
Corporate director. Chairman, Devon Energy Corporation (oil and gas, exploration and production, energy infrastructure) since June 2016, and Director since June 2007 (Vice Chair from December 2014 to June 2016). Director, Independent Petroleum Association of America (oil and gas) since November 2007. Chairman of EnLink Midstream, LLC and EnLink Midstream Partner, LP (energy infrastructure) from March 2014 to June 2016. Director, BOK Financial Corporation (financial services) from January 2013 to April 2016. Chairman, American Exploration and Production Council from May 2012 to June 2015. Former Vice-Chairman of the board of governors, Canadian Association of Petroleum Producers.
 
2013
Mary Pat Salomone
Naples, Florida
U.S.A.
 
Corporate director. Director, Herc Rentals (equipment rental) since July 2016. Director, Intertape Polymer Group (manufacturing) since November 2015. Senior Vice-President and Chief Operating Officer, The Babcock & Wilcox Company (energy infrastructure) from January 2010 to June 2013. Director, United States Enrichment Corporation (basic materials, nuclear) from December 2011 to October 2012.
 
2013
Indira Samarasekera
Vancouver, British Columbia
Canada
 
Senior Advisor, Bennett Jones LLP (law firm) since September 2015. Director, Magna International (automotive manufacturing) since May 2014 and the Bank of Nova Scotia(Scotiabank) (chartered bank) since May 2008. Member, The TriLateral Commission since August 2016. Federal member, Independent Advisory Board for Senate Appointments since January 2016.
 
2016
D. Michael G. Stewart
Calgary, Alberta
Canada
 
Corporate director. Director, Pengrowth Energy Corporation (oil and gas, exploration and production) since December 2010. Director, Canadian Energy Services & Technology Corp. (chemical, oilfield services) since January 2010. Director, Northpoint Resources Ltd. (oil and gas, exploration and production) from July 2013 to February 2015. Director, C&C Energia Ltd. (oil and gas) from May 2010 to December 2012. 
 
2006
Siim A. Vanaselja
Westmount, Québec
Canada
 
Corporate director. Director, Great-West Lifeco Inc. (financial services) since May 2014. Director , Maple Leaf Sports and Entertainment Ltd. (sports, property management) since August 2012. Executive Vice-President and Chief Financial Officer, BCE Inc. and Bell Canada (telecommunications and media) from January 2001 to June 2015.
 
2014

 
28   
TCPL Annual information form 2016
 


Name and
place of residence
 
Principal occupation during the five preceding years 
 
Director since
Richard E. Waugh
Calgary, Alberta
Canada
 
Corporate director. Advisor, Acasta Enterprises Inc. (asset management/investment) since June 23, 2015. Deputy Chairman, Scotiabank from November 2013 to January 2014. President and Chief Executive Officer, Scotiabank from March 2003 to November 2013, and Deputy Chairman until January 2014. Director, Catalyst Inc. (non-profit) from February 2007 to November 2013, and Chair, Catalyst Canada Inc. Advisory Board from February 2007 to October 2013.
 
2012
1 Effective February 17, 2017.
2 As President and CEO of TransCanada, Mr. Girling is not a member of any Board Committees, but is invited to attend committee meetings as required.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions
Except as indicated below, no other director or executive officer of the Corporation is or was a director, chief executive officer or chief financial officer of another company in the past 10 years that:
was the subject of a cease trade or similar order, or an order denying that company any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days
was involved in an event that resulted in the company being subject to one of the above orders after the director or executive officer no longer held that role with the company, which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer
while acting in that capacity, or within a year of acting in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that company.
Canwest Global Communications Corp. voluntarily entered into the Companies’ Creditors Arrangement Act (CCAA) and obtained an order from the Ontario Superior Court of Justice to start proceedings on October 6, 2009. Although no cease trade orders were issued, Canwest shares were de-listed by the TSX after the filing and started trading on the TSX Venture Exchange. Canwest emerged from CCAA protection and Postmedia Network acquired its newspaper business on July 13, 2010 while Shaw Communications Inc. acquired its broadcast media business on October 27, 2010. Mr. Burney was a director of Canwest from April 2005 to October 2010.
Laricina Energy (Laricina) voluntarily entered into the CCAA and obtained an order from the Court of Queen's Bench of Alberta, Judicial Centre of Calgary for creditor protection and stay of proceedings effective March 26, 2015.  A final court order was granted on January 28, 2016, allowing Laricina to exit from protection under the CCAA and concluding the stay of proceedings against Laricina and its subsidiaries. Mr. Jackson has been a director of Laricina since December 2005.
On May 6, 2009, Crucible Materials Corp. (Crucible) and one of its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware (the Bankruptcy Court). On August 26, 2010, the Bankruptcy Court entered an order confirming Crucible’s Second Amended Chapter 11 Plan of Liquidation. Ms. Salomone was a director of Crucible from May 2008 to May 1, 2009.
No director or executive officer of the Corporation has within the past 10 years:
become bankrupt
made a proposal under any legislation relating to bankruptcy or insolvency
become subject to or launched any proceedings, arrangement or compromise with any creditors, or
had a receiver, receiver manager or trustee appointed to hold any of their assets.
No director or executive officer of the Corporation has been subject to:
any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or
any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to    a reasonable investor in making an investment decision.

 
 
TCPL Annual information form 2016
29


BOARD COMMITTEES
TCPL has four committees of the Board, which are the same committees and are comprised of the same membership as TransCanada: the Audit committee, the Governance committee, the Health, Safety & Environment committee and the Human Resources committee. The voting members of each of these committees, as of March 15, 2017, are identified below. Information about the Audit committee can be found in this AIF under the heading Audit committee.
Director
Audit
committee
Governance committee
Health, Safety & Environment
committee
Human Resources
committee
Kevin E. Benson
ü

ü

 
 
Derek H. Burney
ü

Chair
 
 
Stéphan Crétier1
ü

 
ü

 
S. Barry Jackson (Chair)
 
ü

 
ü

John E. Lowe
ü

 
ü

 
Paula Rosput Reynolds
 
 
ü

Chair
John Richels
 
 
ü

ü

Mary Pat Salomone
 
 
ü

ü

Indira Samarasekera
ü

ü

 
 
D. Michael G. Stewart
ü

 
Chair
 
Siim A. Vanaselja
Chair
ü

 
 
Richard E. Waugh
 
ü

 
ü

1Effective February 17, 2017.
OFFICERS
All of the executive officers and corporate officers of TCPL reside in Calgary, Alberta, Canada. Unless otherwise indicated, references to positions and offices held with TCPL are also held by such person at TransCanada. As of the date hereof, the officers of TCPL, their present positions within TCPL and their principal occupations during the five preceding years are as follows:
Executive officers
Name
Present position held 
Principal occupation during the five preceding years
Russell K. Girling
President and Chief Executive Officer
President and Chief Executive Officer.
Kristine L. Delkus
Executive Vice-President, Stakeholder Relations and General Counsel
Prior to October 2015, Executive Vice-President, General Counsel and Chief Compliance Officer. Prior to March 2014, Senior Vice-President, Pipelines Law and Regulatory Affairs. Prior to June 2012, Deputy General Counsel, Pipelines and Regulatory Affairs (TCPL).
Wendy L. Hanrahan
Executive Vice-President, Corporate Services
Executive Vice-President, Corporate Services.

Karl R. Johannson
Executive Vice-President and President, Natural Gas Pipelines
Prior to November 2012, Senior Vice-President, Canadian and Eastern U.S. Pipelines.
Donald R. Marchand
Executive Vice-President and Chief Financial Officer
Prior to February 1, 2017, Executive Vice-President, Corporate Development and Chief Financial Officer. Prior to October 2015, Executive Vice-President and Chief Financial Officer.
Paul E. Miller
Executive Vice-President and President, Liquids Pipelines
Prior to March 2014, Senior Vice-President, Oil Pipelines.
Francois L. Poirier
Executive Vice President, Strategy and Corporate Development
Prior to February 1, 2017, Senior Vice-President, Strategy and Corporate Development (Corporate Services Division) since October 2015. President, Energy East Pipeline (Development Division) from April 1, 2014 to September 30, 2015. President, Wells Fargo Securities Canada, Ltd., from January 1, 2012 to March 31, 2014.
Alexander J. Pourbaix
Chief Operating Officer
Prior to October 2015, Executive Vice-President and President, Development. Prior to March 2014, President, Energy and Oil Pipelines.
William C. Taylor
Executive Vice-President and President, Energy
Prior to March 2014, Senior Vice-President, U.S. and Canadian Power. Prior to May 2013, Senior Vice-President, Eastern Power.

 
30   
TCPL Annual information form 2016
 


Corporate officers
Name
Present position held 
Principal occupation during the five preceding years
Sean M. Brett
Vice-President, Risk Management
Prior to August 2015, Vice-President and Treasurer.
Ronald L. Cook
Vice-President, Taxation
Vice-President, Taxation (TCC) and Vice-President, Taxation (TCPL).
Joel E. Hunter
Vice-President, Finance and Treasurer
Prior to August 2015, Vice-President, Finance.
Christine R. Johnston
Vice-President, Law and Corporate Secretary
Prior to June 2014, Vice-President and Corporate Secretary. Prior to March 2012, Vice-President, Finance Law.
G. Glenn Menuz
Vice-President and Controller
Vice-President and Controller.
CONFLICTS OF INTEREST
Directors and officers of TransCanada and its subsidiaries are required to disclose any existing or potential conflicts in accordance with TransCanada policies governing directors and officers and in accordance with the CBCA. Further information regarding our policies related to conflicts of interest can be found at Schedule B to this AIF under the headings Board characteristics Independence - Serving on other boards and Governance philosophy Conflicts of interest.
Corporate governance
Information about TCPL’s corporate governance, including the Company’s Board committees and their charters, can be found at Schedule B to this AIF, which is excerpted from TransCanada’s Management information circular dated February 28, 2017 (TransCanada’s Circular).
Audit committee
The Audit committee is responsible for assisting the Board in overseeing the integrity of our financial statements and our compliance with legal and regulatory requirements. It is also responsible for overseeing and monitoring the internal accounting and reporting process and the process, performance and independence of our internal and external auditors. The charter of the Audit committee can be found in Schedule C of this AIF.
RELEVANT EDUCATION AND EXPERIENCE OF MEMBERS    
The members of the Audit committee as of February 15, 2017 are Siim A. Vanaselja (Chair), Kevin E. Benson, Derek H. Burney, John E. Lowe, Indira Samarasekera, and D. Michael G. Stewart. Mary Pat Salomone was a voting member of the committee from April 26, 2013 until April 29, 2016. Ms. Samarasekera joined the Committee effective April 29, 2016 and Stéphan Crétier will join the committee effective February 17, 2017.
The Board believes that the composition of the Audit committee reflects a high level of financial literacy and expertise. Each member of the Audit committee has been determined by the Board to be independent and financially literate within the meaning of the definitions under Canadian and U.S. securities laws and the NYSE rules. In addition, the Board has determined that Mr. Vanaselja, Mr. Benson and Mr. Lowe are Audit Committee Financial Experts as that term is defined under U.S. securities laws. The Board has made these determinations based on the education and breadth and depth of experience of each member of the Audit committee. The following is a description of the education and experience, apart from their respective roles as directors of TransCanada, of each member of the Audit committee that is relevant to the performance of his responsibilities as a member of the Audit committee.

 
 
TCPL Annual information form 2016
31


Siim A. Vanaselja
Mr. Vanaselja is a member of the Chartered Professional Accountants of Ontario and holds an Honours Bachelor of Business degree from the Schulich School of Business. He was the Executive Vice-President and Chief Financial Officer of BCE Inc. and Bell Canada from January 2001 until June 2015, having previously served as Executive Vice-President and Chief Financial Officer of Bell Canada International from 1996 to 2001. Prior to that, he was a partner at the accounting firm KPMG Canada in Toronto. Mr. Vanaselja serves as director for Great-West Lifeco Inc. and Maple Leaf Sports and Entertainment Ltd. He has served as a member of the Conference Board of Canada’s National Council of Financial Executives, the Corporate Executive Board’s Working Council for Chief Financial Officers and Moody’s Council of Chief Financial Officers.
Kevin E. Benson
Mr. Benson is a Chartered Accountant (South Africa) and was a member of the South African Society of Chartered Accountants. He serves as a director of the Winter Sport Institute, and was the President and Chief Executive Officer of Laidlaw International, Inc. from June 2003 until October 2007. In prior years, he has held several executive positions including as President and Chief Executive Officer of The Insurance Corporation of British Columbia and has served on other public company boards and on the audit committees of all of those boards.
Derek H. Burney
Mr. Burney earned a Bachelor of Arts (Honours) and Master of Arts from Queen’s University. He is currently a senior strategic advisor at Norton Rose Fulbright. He previously served as President and Chief Executive Officer of CAE Inc. and as Chair and Chief Executive Officer of Bell Canada International Inc. Mr. Burney was the lead director at Shell Canada Limited from April 2001 until May 2007 and was the Chair of Canwest Global Communications Corp. from August 2006 until October 2010. He has served on one other organization’s audit committee and has participated in Financial Reporting Standards Training offered by KPMG.
Stéphan Crétier
Mr. Crétier earned an Masters of Business Administration from the University of California (Pacific). He is the Chairman, President and CEO of a multinational corporation, Garda World with over 20 years of experience in providing company-wide operational and financial oversight. Mr. Cretier also serves as director of a number of Garda World’s direct and indirect subsidiaries. He previously served as a director of three public companies, ORTHOsoft Inc. (formerly ORTHOsoft Holdings Inc.), BioEnvelop Technologies Corp. and Rafale Capital Corp.
John E. Lowe
Mr. Lowe holds a Bachelor of Science degree in Finance and Accounting from Pittsburg State University and is a Certified Public Accountant (inactive). He has been the non-executive Chairman of Apache's board of directors since May 2015. He also currently serves on the board of directors for Phillips 66 Company and has been the Senior Executive Adviser at Tudor, Pickering, Holt & Co. LLC since September 2012. Mr. Lowe has previously served on the audit committees for Agrium Inc. and DCP Midstream LLC. He has also held various executive and management positions with ConocoPhillps for more than 25 years.
Indira Samarasekera
Dr. Samarasekera earned an MSc from the University of California and was granted a PhD in metallurgical engineering from the University of British Columbia. She also holds honorary degrees from the Universities of Alberta, British Columbia, Toronto, Waterloo, Montreal and Western in Canada and Queen’s University in Belfast, Ireland. Dr. Samaraskera is currently a senior advisor for Bennett Jones LLP and serves on the board of directors of the Bank of Nova Scotia, Magna International, Asia-Pacific Foundation, the Rideau Hall Foundation and the Perimeter Institute of Theoretical Physics. She is also a member of the TriLateral Commission, a federal member of the Independent Advisory Board for Senate Appointments and sits on the selection panel for Canada’s outstanding chief executive officer of the year.
D. Michael G. Stewart
Mr. Stewart earned a Bachelor of Science in Geological Sciences with First Class Honours from Queen’s University. He currently serves on the board of directors of Pengrowth Energy Corporation (governance committee Chair) and Canadian Energy Services and Technology Corp. (corporate governance and nominating committee Chair). He has also previously served on the board of directors of several other public companies and organizations and was on the audit committee of certain of those boards. Mr. Stewart held a number of senior executive positions with Westcoast Energy Inc. including Executive Vice-President, Business Development. He has been active in the Canadian energy industry for over 40 years.

 
32   
TCPL Annual information form 2016
 


PRE-APPROVAL POLICIES AND PROCEDURES
TCPL's Audit committee has adopted a pre-approval policy with respect to permitted non-audit services. Under the policy, the Audit committee has granted pre-approval for specified non-audit services. For engagements of up to $250,000, approval of the Audit committee Chair is required, and the Audit committee is to be informed of the engagement at the next scheduled Audit committee meeting. For all engagements of $250,000 or more, pre-approval of the Audit committee is required. In all cases, regardless of the dollar amount involved, where there is a potential for conflict of interest involving the external auditor to arise on an engagement, the Audit committee must pre-approve the assignment.
To date, all non-audit services have been pre-approved by the Audit committee in accordance with the pre-approval policy described above.
EXTERNAL AUDITOR SERVICE FEES
The table below shows the services KPMG provided during the last two fiscal years and the fees we paid them:
($ millions)
2016

2015

 
 
 
Audit fees
$8.2

$7.8

• audit of the annual consolidated financial statements
 
 
• services related to statutory and regulatory filings or engagements
 
 
• review of interim consolidated financial statements and information contained in various prospectuses and other securities offering documents
 
 
Audit-related fees
$0.1

$0.2

• services related to the audit of the financial statements of certain TransCanada post-retirement and post-employment plans, and pipeline abandonment trusts
 
 
Tax fees
$0.6

$0.5

• Canadian and international tax planning and tax compliance matters, including the review of income tax returns and other tax filings
 
 
All other fees


Total fees
$8.9

$8.5

Note: The tax fees principally related to fees incurred on account of compliance matters.
Loans to directors and executives
As of the date of this AIF, none of our directors or executives had any loans from TCPL or any of our subsidiaries. This is also true for:
former executives or directors of TCPL or any of our subsidiaries
this year’s nominated directors, and
any associate of a director, executive officer or nominated director.
None of the above owe money to another entity that is the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by TCPL or any of our subsidiaries.

 
 
TCPL Annual information form 2016
33


Securities owned by directors
The table below shows the total value of each director’s common shares of TransCanada as of March 15, 2017 in addition to the total value of deferred share units (DSUs) of TransCanada or shares of our affiliates outstanding at the end of 2016, including the DSUs credited as dividend equivalents until January 31, 2017.
None of the nominated directors (or all of our directors and executives as a group) own more than one per cent of TransCanada shares, or any class of shares of its subsidiaries and affiliates.
Director
TransCanada
common shares
 
TransCanada deferred share
units
K. Benson
13,000

 
68,403

D. Burney
12,910

 
62,782

Stéphan Crétier

 

R. Girling1, 2
246,390

 

S.B. Jackson
39,000

 
146,772

John E. Lowe
15,000

 
7,952

P. Rosput Reynolds
6,000

 
21,613

J. Richels3
10,000

 
19,998

M.P. Salomone
3,000

 
11,407

Indira Samarasekera

 
2,652

D.M.G. Stewart4
16,651

 
30,928

S.A. Vanaselja
12,000

 
12,719

R.E. Waugh5
29,730

 
23,533

Refer to the Compensation of directors section below for further information regarding the compensation of TransCanada's directors.
1 
Mr. Girling is an employee of TCPL and participates in the Company's executive share unit program. He does not participate in the DSU program. Securities owned, controlled or directed include common shares that Mr. Girling has a right to acquire through exercise of stock options that are vested under the stock option plan, which is described in Schedule D to this AIF under the heading Compensation - Executive compensation. Directors as such do not participate in the stock option plan. Mr. Girling, as an employee of TCPL, has the right to acquire 1,756,310 TransCanada common shares under vested stock options.
2 
Mr. Girling’s holdings include 4,000 shares held by his wife.
3 
Mr. Richels’ holdings represent 10,000 shares held in a family partnership controlled by Mr. Richels and his wife.
4 
Mr. Stewart's holdings include 2,129 shares held by his wife.
5 
Mr. Waugh's holdings include 4,220 shares held by his wife.
Compensation of directors
Information relating to the compensation of directors, including information regarding compensation paid by TCPL to directors in 2016, the Company's minimum share ownership guidelines and TransCanada’s share unit plan for non-employee directors, is provided in Schedule D to this AIF under the heading Compensation Director compensation, which is excerpted from TransCanada’s Circular.
Executive compensation
Information relating to TCPL's compensation governance is provided in Schedule D to this AIF under the heading Compensation Compensation governance, which is excerpted from TransCanada’s Circular. Information relating to TCPL's executive compensation is provided in Schedule D to this AIF under the heading Compensation Executive compensation, which is excerpted from TransCanada’s Circular.
Board and committee meetings of TransCanada and TCPL run concurrently. TCPL is the principal operating subsidiary of TransCanada. Executive officers of TCPL also serve as executive officers of TransCanada. An aggregate remuneration is paid for serving as an executive of TCPL and for service as an executive officer of TransCanada. Since TransCanada does not hold any material assets directly other than the common shares of TCPL and receivables from certain of TransCanada’s subsidiaries, all executive employee costs are assumed by TCPL according to a management services agreement between the two companies.

 
34   
TCPL Annual information form 2016
 


Legal proceedings and regulatory actions
Legal proceedings, arbitrations and actions are part of doing business. While we cannot predict the final outcomes of proceedings and actions with certainty, management does not expect any current proceeding or action to have a material impact on our consolidated financial position or results of operations. Other than the Keystone XL legal proceedings described in this AIF under the heading General development of the business – Liquids Pipelines – Keystone XL, we are not aware of any potential legal proceeding or action that would have a material impact on our consolidated financial position or results of operations.
Transfer agent and registrar
TCPL's transfer agent and registrar is Computershare Trust Company of Canada with its Canadian transfer facilities in the cities of Vancouver, Calgary, Toronto, Halifax and Montréal.
Material contracts
Except as described below, TransCanada did not enter into any material contracts outside the ordinary course of business during the year ended December 31, 2016, nor has it entered into any material contracts outside the ordinary course of business prior to the year ended December 31, 2016 which are still in effect as at the date of this AIF.
In connection with the acquisition of Columbia, the Company filed the following material contract on its SEDAR profile at www.sedar.com: Agreement and Plan of Merger among TCPL, TransCanada Pipeline USA LTD., Taurus Merger Sub Inc., Columbia, and, solely for purposes of Section 3.02, Section 5.02, Section 5.09 and Article VIII, TransCanada Corporation dated as of March 17, 2016. Further information about the Columbia acquisition can be found under the General – Acquisition of Columbia Pipeline Group, Inc. and General development of the business – Natural Gas Pipelines – Developments in the U.S. Natural Gas Pipelines segment headings in this AIF.
Interest of experts
KPMG LLP are the auditors of TransCanada and have confirmed with respect to TransCanada, that they are independent within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada and any applicable legislation or regulations and also that they are independent accountants with respect to all relevant U.S. professional and regulatory standards.
The consolidated and combined financial statements of Columbia as of December 31, 2015 and 2014, and for each of the three years ended December 31, 2015, included in Schedule B to the business acquisition report dated July 22, 2016 were audited by Deloitte & Touche LLP (which report expresses an unqualified opinion and includes an explanatory paragraph relating to Columbia's initial public offering of limited partner interests of CPPL which was completed on February 11, 2015 and Columbia's spin-off from NiSource Inc. on July 1, 2015).
Additional information
1.
Additional information in relation to TCPL may be found under TCPL's profile on SEDAR (www.sedar.com).
2.
Additional financial information is provided in TCPL's audited consolidated financial statements and MD&A for its most recently completed financial year.

 
 
TCPL Annual information form 2016
35


Glossary
Units of measure
Bbl/d
 
Barrel(s) per day
Bcf
 
Billion cubic feet
Bcf/d
 
Billion cubic feet per day
GWh
 
Gigawatt hours
km
 
Kilometres
KW-M
 
Kilowatt month
MMcf/d
 
Million cubic feet per day
MW
 
Megawatt(s)
MWh
 
Megawatt hours
TJ/d
 
Terajoule per day
 
 
 
General terms and terms related to our operations
bitumen
 
A thick, heavy oil that must be diluted to flow (also see: diluent). One of the components of the oil sands, along with sand, water and clay
diluent
 
A thinning agent made up of organic compounds. Used to dilute bitumen so it can be transported through pipelines
FID
 
Final investment decision
force majeure
 
Unforeseeable circumstances that prevent a party to a contract from fulfilling it
GHG
 
Greenhouse gas
HSE
 
Health, safety and environment
investment base
 
Includes rate base as well as assets under construction
LNG
 
Liquefied natural gas
NEB 2014 Decision
 
In response to the RH-01-2014 Decision on the Canadian Mainline's 2015-2030 Tolls Application
OM&A
 
Operating, maintenance and administration
PJM Interconnection area (PJM)
 
A regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia
PPA
 
Power purchase arrangement
rate base
 
Our annual average investment used
TSA
 
Transportation Service Agreements
WCSB
 
Western Canada Sedimentary Basin
 

Accounting terms
AFUDC
 
Allowance for funds used during construction
GAAP
 
U.S. generally accepted accounting principles
ROE
 
Rate of return on common equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government and regulatory bodies terms
CFE
 
Comisión Federal de Electricidad (Mexico)
FERC
 
Federal Energy Regulatory Commission (U.S.)
IESO
 
Independent Electricity System Operator
NAFTA
 
North American Free Trade Agreement
NEB
 
National Energy Board (Canada)
SEC
 
U.S. Securities and Exchange Commission
SGER
 
Specified Gas Emitters Regulations


 
36   
TCPL Annual information form 2016
 


Schedule A
Metric conversion table
The conversion factors set out below are approximate factors. To convert from Metric to Imperial multiply by the factor indicated. To convert from Imperial to Metric divide by the factor indicated.
Metric
Imperial
Factor
Kilometres (km)
Miles
0.62
Millimetres
Inches
0.04
Gigajoules
Million British thermal units
0.95
Cubic metres*
Cubic feet
35.3
Kilopascals
Pounds per square inch
0.15
Degrees Celsius
Degrees Fahrenheit
to convert to Fahrenheit multiply by 1.8, then add 32 degrees; to convert to Celsius subtract 32 degrees, then divide by 1.8
*
The conversion is based on natural gas at a base pressure of 101.325 kilopascals and at a base temperature of 15 degrees Celsius.


 
 
TCPL Annual information form 2016
37


Schedule B
Governance
We believe that strong governance improves corporate performance and benefits all stakeholders.
This section discusses our approach to governance and describes our Board and how it works.
 
 
 
 
 
 
 
 
 
WHERE TO FIND IT
 
 
 
 
 
 
 
 
 
 
>
About our governance practices
 
 
 
 
Board characteristics
 
 
 
 
 
Governance philosophy
29
 
About our governance practices
Our Board and management are committed to the highest standards of ethical conduct and corporate governance.
TransCanada is a public company listed on the TSX and the NYSE, and we recognize and respect rules and regulations in both Canada and the U.S.
Our corporate governance practices comply with the Canadian governance guidelines, which include the governance rules of the TSX and Canadian Securities Administrators (CSA):
 
 
 
Role and responsibilities of
the Board
31
 
 
 
 
Orientation and education
37
 
 
 
 
Board effectiveness and director assessment
39
 
 
 
 
Engagement
43
 
 
 
 
Communicating with the Board
43
 
 
 
 
Shareholder proposals
44
 
 
 
 
Board committees
45
 
 
 
 
 
 
 
National Instrument 52-110, Audit Committees,
National Policy 58-201, Corporate Governance Guidelines, and
National Instrument 58-101, Disclosure of Corporate Governance Practice (NI 58-101).
We also comply with the governance listing standards of the NYSE and the governance rules of the U.S. Securities and Exchange Commission (SEC) that apply, in each case, to foreign private issuers.
Our governance practices comply with the NYSE standards for U.S. companies in all significant respects, except as summarized on our website (www.transcanada.com). As a non-U.S. company, we are not required to comply with most of the governance listing standards of the NYSE. As a foreign private issuer, however, we must disclose how our governance practices differ from those followed by U.S. companies that are subject to the NYSE standards.
We benchmark our policies and procedures against major North American companies to assess our standards and we adopt best practices as appropriate. Some of our best practices are derived from the NYSE rules and comply with applicable rules adopted by the SEC to meet the requirements of the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).
BOARD CHARACTERISTICS
Our Board and its members exemplify strong principles of corporate governance:
an independent, non-executive Chair
an effective board size
all directors except our CEO are independent
knowledgeable and experienced directors who ensure that we promote ethical behaviour throughout TransCanada
qualified directors who can make a meaningful contribution to the Board and the development of our strategy and business and oversight of our risk management processes
significant share ownership requirements to align the directors’ interests with those of our shareholders, and
annual assessments of Board, Chair, committee and director effectiveness.
Size and composition
TransCanada’s articles state that the Board must have between eight and 15 directors. The Board has determined that 12 directors will be elected this year at the annual meeting. The Board believes this size is appropriate based on the scope of our business, the skills and experience of the nominated directors and the four standing committees, and to achieve effective decision making. It believes that all of the nominated directors are well qualified to serve on the Board.
We believe our Board must consist of qualified and knowledgeable directors, and include directors with direct experience in the oil and gas, pipelines and power sectors.

 
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TransCanada Management information circular 2017 

 


Board diversity
We have been committed to a diverse Board since 1999, when our Corporate governance guidelines were revised to include a variety of diversity criteria, which bring a range of perspectives to the Board that are not limited to gender diversity.
While the Governance committee has not set a specific target for the number of women directors on our Board, the committee believes that a diverse board with a variety of perspectives enhances our decision-making and helps keep the Board informed and effective. We do not believe targets are an appropriate method of increasing diversity on the Board. Instead, we believe that a process-based method of reviewing directors on a variety of diversity factors (including gender) is more appropriate, particularly given the business environment in which TransCanada operates.
In order to achieve a diverse Board, the committee focuses on the process surrounding director nomination. Each year, the committee reviews the general and specific criteria applicable to candidates to be considered for nomination to the Board. These guidelines outline the criteria that the committee considers when evaluating potential director nominees. We have not adopted a written policy with respect to the identification and nomination of women directors because we believe that encompassing our diversity criteria in our written Corporate governance guidelines is more appropriate than a separate written policy.
Our Corporate governance guidelines provide that when choosing director nominees, the committee takes into account the diversity of backgrounds, skills and experience, and personal characteristics such as age, gender, and geographic residence among the directors along with the key common qualities required for effective Board participation. The committee regularly considers the current number of women on the Board when selecting director candidates by considering gender, in addition to other characteristics, as one of the factors.
The committee aims to maintain the composition of the Board in a way that provides the best mix of skills and experience to guide our strategy and oversee ongoing business operations. TransCanada does not have term limits for directors, but does have a retirement policy to encourage board renewal, as discussed in Director tenure, on page 42.
The committee ensures that the list of potential director candidates discussed includes a reasonable number of qualified women candidates, but ultimate decisions are made based on the qualifications of the candidates and the expertise needs of the Board.
We believe that this process is effective as 23 per cent of the Board is currently composed of women directors. After the annual meeting, if the nominated directors are all elected, 25 per cent of the Board will be comprised of women directors.
a12312016t_chart-33483.jpg
Pie chart of Board composition by gender (men: (10), women: (3))

Independence
An independent board is a fundamental principle of governance. We believe that the majority of our directors must be independent in accordance with applicable Canadian legal requirements and guidelines, and consistent with the independence criteria of the regulations of the SEC and rules of the NYSE.
The Governance committee and the Board review the independence of each Board member and nominated director against these criteria once a year. The Governance Committee also reviews family relationships and associations with companies that have relationships with TransCanada when it reviews director independence.
The Board has determined that all of the nominated directors are independent, except for Mr. Girling because of his role as President and CEO. Other than Mr. Girling, none of the directors have a direct or indirect material

 
 
TransCanada Management information circular 2017 

27


relationship with TransCanada that could reasonably be expected to interfere with the exercise of his or her independent judgment.
Independent Chair
The Chair is appointed by the Board, and serves in a non-executive capacity. We have had separate Chair and CEO positions since our incorporation in 2003 and at our predecessor company since 1994. Mr. Jackson has served as the independent non-executive Chair since April 30, 2005.
In late 2016, we announced that Mr. Siim A. Vanaselja will be the next independent non-executive Chair of the Board, subject to his re-election at the 2017 annual meeting of shareholders. Mr. Vanaselja will succeed Mr. Jackson, who will retire as Chair of the Board at the close of the 2017 annual meeting of common shareholders. Mr. Jackson will continue to serve as a Board member, subject to his re-election at the 2017 annual meeting of shareholders.
Independent advice
The Board and each of its four standing committees can retain independent advisors to assist in carrying out their duties and responsibilities.
Serving on other boards
To ensure we do not have overboarding or interlocking relationships that would conflict with a director’s independence or interfere with fulfilling their Board duties and responsibilities, we have the following policy:
outside directors may not serve on more than four public company boards in total,
the CEO may not serve on more than two public company boards in total, and
Audit committee members may not serve on more than three audit committees in total.
Currently, none of our directors serves on more than four public company boards, the CEO serves on two public company boards (including TransCanada's), and none of our Audit committee members serves on more than two audit committees in total.
We discuss the time commitment and duties and responsibilities with every candidate so they have a full understanding of the role and our expectations of directors. The Governance committee monitors director relationships to ensure their business associations do not hinder their role as a TransCanada director or Board performance overall.
The Board believes that it is important for it to be composed of qualified and knowledgeable directors. As a result, due to the specialized nature of the energy infrastructure business, some of the nominated directors are associated with or sit on the boards of companies that ship natural gas or liquids through our pipeline systems. Transmission services on most of TransCanada’s pipeline systems in Canada and the U.S. are subject to regulation and, accordingly, we generally cannot deny transportation services to a creditworthy shipper. As discussed in Conflicts of interest, the Governance committee monitors relationships among directors to ensure that business associations do not affect the Board’s performance.
See the director profiles starting on page 13 for the other public company boards each nominated director serves on.
Independent of management
Our Corporate governance guidelines stipulate that the Board must meet at the end of each Board meeting, in-camera, without management present. In 2016, the independent directors met separately before and at the end of every regularly scheduled Board meeting.
Our Board has adopted the policy of holding in-camera sessions at each meeting of its committees without management. Members of management meet with the independent directors upon request.


 
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TransCanada Management information circular 2017 

 


GOVERNANCE PHILOSOPHY
We believe that effective corporate governance improves corporate performance and benefits all shareholders and that honesty and integrity are vital to ensuring good corporate governance.
The Board has formally adopted the Corporate governance guidelines recommended by the Governance committee. These guidelines address the structure and composition of the Board and its committees, and clarify the responsibilities of the Board and management.
Ethical business conduct
Our Code of business ethics (the Code) incorporates principles of good conduct and ethical and responsible behaviour to guide our decisions and actions and the way we conduct business.
The Code applies to all employees, officers and directors as well as contract workers of TransCanada and its wholly-owned subsidiaries and operated entities in countries where we conduct business. All employees (including executive officers) and directors must certify their compliance with the Code.
Any unusual behaviour or suspected violations of the Code must be reported immediately. Employees can report a concern to their supervisor, Corporate compliance, Internal audit, their Compliance coordinator, or to our Ethics help-line. The help-line allows anyone – employees, contractors, consultants, other stakeholders and the general public – to report a concern, confidentially and anonymously, about any perceived accounting irregularities, legal or ethical violations or other suspected breaches of the Code. The telephone number is published on our website and employee intranet, in other employee communications and in our Annual report. Our policy strictly prohibits reprisals or retaliation against anyone who files an ethics concern or complaint in good faith.
Internal audit handles most investigations, including any concerns about directors and senior management. Human resources professionals handle any concerns relating to human resource matters such as harassment.
The Audit committee monitors compliance with the Code and reports any significant violations to the Board. The committee follows formal procedures for receiving and reviewing complaints, determining a course of action and retaining the information on file. It also oversees the operation of the Ethics help-line as part of its responsibilities.
Any waiver of the Code for our executives and directors must be approved by the Board, or the appropriate committee. There were no material departures from the Code in 2016.
Effective July 1, 2016, TransCanada acquired Columbia Pipeline Group, Inc. (Columbia). Columbia's code of business ethics and compliance program was assessed and determined to be essentially equivalent to TransCanada's Code. Columbia employees will transition to compliance with TransCanada's Code during 2017.
The Code is posted on our website (www.transcanada.com).

 
 
TransCanada Management information circular 2017 

29


Conflicts of interest
The Code covers potential conflicts of interest.
Serving on other boards
The Board considers whether directors serving on the boards of, or acting as officers or in another similar capacity for, other entities including public and private companies, Crown corporations and other state-owned entities, and non-profit organizations pose any potential conflict. The Board reviews these relationships annually to determine that they do not interfere with any of our director’s ability to act in our best interests. If a director declares a material interest in any material contract or material transaction being considered at a meeting, the director is not present during the discussion and does not vote on the matter.
Our Code requires employees to receive consent before accepting a directorship with an entity that is not an affiliate. The CEO and executive vice-presidents (our executive leadership team) must receive the consent of the Governance committee. All other employees must receive the consent of the Corporate Secretary or her delegate.
Affiliates
The Board oversees relationships between TransCanada and any affiliates to avoid any potential conflicts of interest. This includes our relationship with TC PipeLines, LP, a master limited partnership listed on the NYSE.
Auditor independence
Pursuant to the Audit committee charter, the Audit committee reviews, approves and monitors adherence to our hiring policies for partners, employees and former partners and employees of our current and former external auditors to ensure auditor independence is maintained. The committee also has a pre-approval policy with respect to permitted non-audit services
Our Annual information form (AIF) includes more information about the Audit committee, including the committee charter. The 2016 AIF is available on our website (www.transcanada.com) and on SEDAR (www.sedar.com).
Majority voting
Our majority voting policy applies to electing a new Board when the number of nominated directors is the same as the number of director positions available. If, prior to a meeting, a nominated director receives more “withheld” proxy votes than five per cent of the total votes cast by proxy, we will hold a vote by ballot for all directors. If a director does not receive a majority of “for” votes cast by ballot, the director must resign from the Board. The Board will accept the resignation if there are no exceptional circumstances. We expect the Board to announce its decision to either accept or reject the director’s resignation in a press release within 90 days after the annual meeting, and include its reasons for rejecting the resignation, if applicable.
This policy does not apply if there is a proxy contest over the election of directors.
Share ownership
We have share ownership requirements for our directors and executives to align their interests with those of our shareholders. Ownership levels are significant, and directors and executives must meet the requirements within five years of assuming their position.
As of February 28, 2017, all of our directors who have served for at least five years meet the share ownership requirements, as do most of our directors who have served for fewer than five years. Mr. Crétier, Ms. Salomone and Dr. Samarasekera, each have five years from the date of their appointment to meet the requirements:
Director
Date appointed
Share ownership date
Mr. Crétier
February 17, 2017
February 17, 2022
Ms. Salomone
February 12, 2013
February 12, 2018
Dr. Samarasekera
April 29, 2016
April 29, 2021
Ms. Salomone met the share ownership requirements at December 31, 2016. Director compensation was transitioned to a flat fee retainer, in lieu of meeting fees on January 1, 2017, and as a result the share ownership requirement increased from $720,000 to $940,000.
See Aligning the interests of directors and shareholders on page 58 and Aligning the interests of executives and shareholders on page 77 for more information.

 
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TransCanada Management information circular 2017 

 


ROLE AND RESPONSIBILITIES OF THE BOARD
The Board’s primary responsibilities are to foster TransCanada’s long-term success, oversee our business and affairs and management, and to act honestly, in good faith and in the best interests of TransCanada.
The Board’s main objective is to promote our best interests, to maximize long-term shareholder value and to enhance shareholder returns.
The Board has key duties and responsibilities, delegates some duties to its four standing committees, and discharges others to management for managing the day-to-day affairs of the business.
The Chair is responsible for ensuring that the Board is organized properly, functions effectively and meets its obligations and responsibilities. The Chair’s role includes coordinating the affairs of the Board, working with management (primarily the CEO), and ensuring effective relations with Board members, shareholders, other stakeholders and the public.
Charters and position descriptions
The Board and each committee have adopted a charter that outlines its principal responsibilities.
The charters are reviewed every year to ensure that they reflect current developments in corporate governance and corporate best practices, and the Board approves any necessary changes.
The Board charter describes the:
composition and organization of the Board
duties and responsibilities for managing our affairs, and
oversight responsibilities for:
management and human resources
strategy and planning
financial and corporate issues
business and risk management, including compensation risk
policies and procedures
compliance reporting and corporate communications, and
general legal obligations, including its ability to use independent advisors as necessary.
The Board has also developed position descriptions for the Chair of the Board, each committee Chair and the CEO. The position descriptions for the Chair of the Board and the CEO are part of their terms of reference. The position descriptions for the Chair of each committee are contained in the committee charters.
See Appendix A for a copy of the Board charter. The Board charter, committee charters and position descriptions for the Chair of the Board and the CEO are posted on our website (www.transcanada.com).

 
 
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31


Strategic planning
We have a multi-year strategic plan that balances risk and reward.
The Board provides oversight and direction in the strategic planning process to ensure management develops corporate strategies that support our vision to be the leading energy infrastructure company in North America. We set annual corporate objectives to support our core strategies for achieving growth and creating value for shareholders. These are established with and approved by the Board every year. The Governance committee oversees the processes used for the preparation and articulation of our strategic plan.
The Board monitors management’s progress toward achieving strategic goals, and discusses a broad range of matters related to our strategy, business interests and the dynamic environment in which we operate at each regularly scheduled meeting. Management also reports regularly on our operational and financial performance.
The Board generally holds a formal annual strategic planning session over two days and several sessions on strategic issues throughout the year. At strategic planning sessions, management and the Board review and discuss management’s strategic plan, with the strategic plan put forward to the Board for approval. The strategic issues sessions provide the Board with the opportunity to consider specific strategic issues in detail. The frequency of these strategic sessions provides the Board with the time they need to discuss and address strategic issues.
In addition to the ongoing strategic planning process, the Board and Governance committee address emerging strategic issues throughout the year as they arise.
strategicproflowchart2017.jpg
See Meeting attendance on page 25 for more information about the meetings held in 2016 and Orientation and education on pages 37 and 38 for more information about the strategic issues and planning sessions attended by Board members in 2016.
 
Strategic process cycle:
Board provides input/feedback and approves strategic plan;
Management implements strategic plan;
Board has strategic issues sessions to focus on specific strategic issues;
Board assesses implementation and provides input on overall strategic plan;
Management prepares strategic plan using Board input and through meetings with senior executives;
Management presents strategic plan to the Board;
Board assesses implementation and provides input on overall strategic plan.
 
 


 
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TransCanada Management information circular 2017 

 


Risk oversight
Process
The Board and its committees are responsible for risk oversight including overseeing management systems and processes for identification, evaluation, prioritization, mitigation and monitoring of risk. Our directors have a broad range of experience and skills in risk management and, as a result, the Board is highly engaged and qualified to participate in a meaningful discussion of key business risks with management at Board and committee meetings.
A key business risk is generally defined as an exposure that has the potential to materially impact TransCanada’s ability to meet or support its business, operational or strategic objectives.
TransCanada maintains a comprehensive corporate risk register which identifies principal risks associated with our business and seeks input across the organization to ensure it reflects any new key business risks as our business grows and our environment evolves. In addition, ‘top-of-mind’ concerns are solicited from our senior executives and presented to the Board. This process recognizes the dynamic and evolving business environment in which we operate and allows management to keep the Board informed of existing and emerging risks and how those risks are managed or mitigated in accordance with TransCanada’s risk parameters and risk tolerance.
All risks identified under the corporate risk register are categorized using a risk responsibility matrix which establishes clear accountabilities to the Board, committees and executives responsible for specific oversight of each risk.
Our risks are categorized according to these main areas:
corporate strategy
business strategy and execution
business opportunity
commercial operations
physical operations, and
general corporate risk (including compensation risk).
The Governance committee oversees our risk management process. The committee reviews 'top-of-mind' business risks with management at each committee meeting and the risk responsibility matrix with management annually to ensure there is proper Board and committee oversight according to the terms of their charters, and that we have management programs in place to mitigate those risks. It also recommends, along with the respective committee (or executive) assigned responsibility for specific risks, any enhancements to our risk management program and policies to the Board.
In addition, all projects and opportunities recommended by management to the Board for approval include specific descriptions on the associated risks. The risk discussion associated with each project forms a part of the Board’s determination of whether to approve projects or pursue opportunities.
Our process ensures that the Board is fully informed of the interrelationship between the business environment and risks, and is intended to facilitate and stimulate discussion of our key business risks.
Our AIF and Annual report include more information about the risks applicable to TransCanada. The 2016 AIF and the 2016 Annual report are available on our website (www.transcanada.com) and on SEDAR (www.sedar.com).

 
 
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33


Committee responsibilities
The various Board committees are also involved in risk oversight in their respective areas to ensure a robust risk management process with appropriate expertise, attention and diligence given to each key business risk. The chart below includes the risk focus area of each committee, and information on each risk focus area. The committees receive updates regularly from management on their risk focus areas, and update the Board on their risk oversight activities regularly. In addition to its specific focus area, each committee maintains an overall awareness of risk management for TransCanada, and includes other issues in its reports to the Board as appropriate.
Committee
Risk focus
Description
Audit
Financial risk
Oversees management’s role in monitoring compliance with financial risk management policies and procedures and reviewing the adequacy of our financial risk management.
Ensures that:
our financial risk management strategies, policies and limits are designed to ensure our risks and related exposures are in line with our business objectives and risk tolerance, and
risks are managed within limits that are ultimately established by the Board, implemented by senior management and monitored by our risk management and internal audit groups.
Oversees cyber security and its related risks to TransCanada.
Governance
Risk management process and management allocation of risks
Reviews TransCanada’s ‘top-of-mind’ business risks with management at each committee meeting.
Oversees the risk responsibility matrix with management annually to ensure there is proper Board and committee oversight according to the terms of their charters.
Ensures that we have management programs in place to mitigate those risks.
Recommends, along with the respective committee (or executive) assigned responsibility for specific risks, any enhancements to our risk management program and policies to the Board.
Health, Safety and Environment
Operational risk, people and process safety, security and environmental risk
Monitors compliance with our health, safety and environment (HSE) corporate policies through regular reporting from management, within the framework of our integrated HSE management system that is used to capture, organize and document our related policies, programs and procedures. See the next page for more details.
Human Resources
Human resources and compensation risk
Oversees the compensation policies and practices to effectively identify and mitigate compensation risks and discourage members of the executive leadership team or others from taking inappropriate or excessive risks and to ensure our compensation policies are not reasonably likely to have a material adverse effect on TransCanada.
See Compensation governance starting on page 50 for more information about how we manage our compensation risk.

 
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HSE risk management system
Our management system for HSE is modeled after international standards, conforms to external industry consensus standards and voluntary programs, and complies with applicable legislative and regulatory requirements and various other internal management systems. It follows a continuous improvement cycle organized into four key areas:
Planning: risk and regulatory assessment, objectives and targets, and structure and responsibility
Implementing: development and implementation of programs, plans, procedures and practices aimed at operational risk management
Reporting: document and records management, communication and reporting, and
Action: ongoing audit and review of HSE performance.
The committee reviews HSE performance and operational risk management. It receives detailed reports on:
overall HSE corporate governance
operational performance and preventive maintenance metrics
asset integrity programs
emergency preparedness, incident response and evaluation
people and process safety performance metrics, and
developments in and compliance with applicable legislation and regulations.
The committee also receives updates on any specific areas of operational and construction risk management review being conducted by management and the results and corrective action plans flowing from internal and third party audits.
Generally, each year the committee or the committee Chair tours one of our existing assets or projects under development as part of its responsibility to monitor and review our HSE practices. Additionally, the Board and the committee have a joint site visit annually.
Succession planning
The Board is responsible for succession planning at the executive level including the development of the CEO succession plan. Succession planning for the CEO position is an ongoing process that includes analysis of each potential candidate’s performance, skills and experience, assessment of the personal attributes and characteristics that the Board believes are necessary for the role, and assessment of developmental opportunities to increase senior executive bench strength.
The CEO prepares an overview of the executive vice-president roles, noting the required skills and expertise for each position and the current executive's areas of strength. He also prepares development plans for each executive and presents them to the Board. The CEO meets formally with each executive at least twice a year, and more frequently as necessary, to discuss progress on his or her development plan.
The CEO identifies potential future candidates for the executive vice-president positions and presents them to the Board for discussion. Each candidate is assessed based on their skills and experience and the competencies that are required for promotion to the senior executive level. Development opportunities are also identified so each candidate can receive additional or varied management experience, training, development and educational opportunities. The Board reviews each position and the performance assessment and competencies of potential successors at least once a year and makes decisions as appropriate.

 
 
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Management diversity
Our executive leadership team includes our President and CEO, and all of our executive vice-presidents. Senior management includes our executive leadership team, as well as our senior vice-presidents and vice-presidents.
In 2013, management set and the Board reviewed three and five-year goals to increase the number of women in senior management.
Setting these goals supports our long-term commitment to ensuring TransCanada has a capable and diverse senior management team. We believe that having a defined goal for the representation of women in senior management is an effective way to increase the number of women on our executive leadership team over the long term. More women at the senior management level provides a larger group of women that can be considered for promotion to executive positions.
In order to achieve these goals we have focused on identifying, assessing and developing high potential candidates from our existing talent pool as well as strategic hires. High potential candidates are each assigned a sponsor on the executive leadership team who works with them to increase their exposure within the organization and at the Board.
The executive leadership team reviews and discusses this talent pool regularly and approves all senior management appointments. The Board approves all appointments to the executive leadership team.
Progress towards these goals is reviewed and assessed by the Human Resources committee and executive leadership team at least annually to ensure that we have a qualified pool of women, and that the women in senior management are being adequately supported and developed. The Board receives progress reports on our goals annually. In addition, the Human Resources committee annually reviews the company’s initiatives to provide development opportunities for high potential and diverse candidates below the executive level.
We have achieved notable progress towards achieving our goals at the senior management level. In 2013, we set a three-year goal of 18 per cent of women in senior management. We exceeded that goal, with women holding 19 per cent of senior management positions at the end of 2016. Our target is to increase this percentage to 25 per cent by 2018.
a12312016t_chart-34245.jpg
Bar graph of women in senior management. Actual: 2013 - 9%, 2014 - 15%, 2015 - 16%, 2016 - 19%, Target 2018 - 25%
The Board encourages the inclusion of women candidates for consideration for all executive leadership positions, but ultimate decisions are made based on the qualifications of the candidates.
We do not have specific goals for the executive leadership team. In 2016, two of our eight or 25 per cent of our executive leadership team members were women. As of February 28, 2017, two of our nine, or 22 per cent of our executive leadership team were women.

 
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Access to management
The Board has complete access to management, but gives reasonable advance notice to avoid disrupting the business and operations. The Board Chair and committee Chairs also connect with relevant members of the executive leadership team as needed.
The Board encourages the executive leadership team to include key managers in Board and committee meetings so they can share their expertise on specific matters. This gives the Board an opportunity to meet individuals who have the potential to assume more senior positions in the future, and for these individuals to gain exposure to the Board.
ORIENTATION AND EDUCATION
New directors participate in an orientation program featuring sessions on corporate strategy, our main business issues, and historical and financial information about TransCanada. They also have an opportunity to visit and tour our facilities and project sites and meet with the executive leadership team and other directors.
We tailor the sessions for each director based on individual needs and their specific areas of interest. New directors also meet one-on-one with members of the executive leadership team for an overview of the different areas of our business and operations and a discussion of key areas of interest. Briefing sessions are also held for new committee members.
Directors receive a reference manual with:
details about their duties and obligations as a member of the Board
information about our business and operations
copies of the Board and committee charters
copies of past public filings, and
documents from recent Board meetings.
The Governance committee reviews the orientation program and manual every year so they continue to meet our needs and those of new directors.
The committee also develops the continuing education program every year based on current and emerging issues, our corporate objectives and input from other directors. Our 2016 education program included three in-depth focus sessions covering the business fundamentals of each of our lines of business (natural gas pipelines, liquids pipelines and energy).
Continuing education helps strengthen a director’s knowledge and understanding of the business, industry, governance and other issues. Senior management and external experts make presentations to the Board and committees from time to time on various topics related to the business, including changes to legal, regulatory and industry requirements. Continuing education is also conducted on an informal basis and our directors are provided with articles and publications of interest.
We suggest seminars and education programs for our directors that may be relevant, and pay the registration fee and travel expenses as appropriate. We also offer to pay annual fees for memberships with organizations that are appropriate and provide relevant publications and educational opportunities to our directors.

 
 
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2016 Director education program
Date
Topic
Presented/hosted by
Attended by
May 5
Focus Session –
North American Power
IHS
All directors
May 13
Focus Session –
Oil Markets
IHS
 All directors
June 2
National Conference, Calgary
Institute of Corporate Directors
 D. Michael G. Stewart
June 3
Focus Session -
Global and North America Natural Gas
IHS
All directors
June 13 - 14
Strategic planning session –
economic outlook, clean energy landscape and renewables, natural gas pipelines, oil market fundamentals and asset allocation
Members of the executive leadership
team and Senior Vice-President, Strategy and Corporate Development
All directors
August 9 - 10
Site visit - Columbia office and tour of construction sites, West Virginia
Chief Operating Officer
D. Michael G. Stewart
September 7
Strategic issues session – Mexico fundamentals and political risk
Credit Suisse and Estrategia Pública Consultores
All directors
September 8
Construction site tour – Tula, Hidalgo, Mexico
Mexico project team
All directors
November 2
Strategic issues session –
oil & gas pipelines strategic review, and analysis on market activity
Executive Vice-President, Liquids Pipelines and Senior Vice-President, Strategy and Corporate Development
All directors
December 6
Strategic issues session –
stakeholder environment
Senior Vice-President, Government Relations, Communication and Community Relations and Vice-President, Environment, Land and Indigenous Relations
All directors


 
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BOARD EFFECTIVENESS AND DIRECTOR ASSESSMENT
The Governance committee oversees an assessment of the performance of the Board, the Chair, committees and individual directors annually and reports the results to the Board.
Interviews include questions about effectiveness, communication and personal and individual peer performance and solicit input from directors about areas for potential improvement. The interviews are open-ended to encourage discussion and seek specific input on topics such as risk, strategy and governance.
The Governance committee believes the interview process is the most effective way for directors to give feedback that can be reviewed by the entire Board. The committee also monitors developments in board governance and evolving best practices in corporate governance.
image-3.jpg
In 2016, the assessment process showed that the Chair, each director, and all committees are functioning effectively and fulfilling the mandates set out in the Board and committee charters.
In late 2016, we announced that Mr. Jackson would be retiring as Chair of the Board at the close of the 2017 annual meeting of shareholders, and that Mr. Vanaselja would be his successor. As a result, the assessment of the Chair of the Board for 2016 concentrated on 'lessons learned' during Mr. Jackson's tenure that would be valuable to Mr. Vanaselja as the incoming Chair of the Board.
Financial literacy
The Board has determined that all members of the Audit committee are financially literate, which means each member can read and understand a set of financial statements that are generally comparable to ours in terms of breadth and complexity of accounting issues. You can find more information about their education and financial experience in the director profiles starting on page 13, in the Audit committee report on page 46 and in the AIF which is available on our website (www.transcanada.com) and on SEDAR (www.sedar.com).
Flowchart: director assessment process. Chair of Board and Governance Committee conduct interviews and self-assessment, discussion, Board report.


 
 
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Board renewal
The Governance committee regularly assesses the skill set of each director, and reviews it against the director retirement schedule, their ages and the composition of each committee. The review also takes into account the desirability of maintaining a reasonable diversity of backgrounds, and character and behavioural qualities such as integrity.
The Governance committee, with input from the Chair of the Board and the CEO, is responsible for identifying suitable director candidates, and canvasses the entire Board for potential nominees. The committee also uses a third party recruitment specialist to identify potential director candidates. The committee is responsible for assessing the individuals and proposing the strongest candidates for nomination. An evolving roster of suitable director candidates is maintained by the committee.
The committee looks for a mix of skills and experience required for overseeing our business and affairs. The Board considers personal characteristics such as gender, ethnic background and geographic residence when looking at diversity. However, candidates are nominated as directors based on their background and ability to contribute to the Board and committee meetings.
The committee ensures that the Board seeks expertise in the following key areas:
• Accounting & finance
• Energy/utilities
• Engineering
• Governance
• Government/regulatory
• Health, safety and environment
• International markets
• Law
• Management/leadership
• Oil & gas/utilities
• Operations, and
• Risk management.
Candidates who are being nominated for the first time must have experience in industries similar to ours, or experience in general business management or with corporations that are similar in size and scope. Candidates must also be willing to serve on the Board, able to devote the necessary time to fulfill their duties and responsibilities and be under 70 years old.
The committee recommends potential candidates based on their qualifications and independence and how these qualities balance with the skill set of the current Board, the structure and composition of the committees and the director retirement schedule. This assessment helps the Board determine the best mix of skills and experience to guide our business operations and our long-term strategy.

 
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Board matrix
The matrix below shows the likely retirement year of the current non-executive directors based on current age, and the skills, committees, education and expertise of all our nominated directors. The Governance committee considers these factors and others when discussing Board renewal.
a29011boardmatrixtabledl.jpg
 
Director Matrix: Director, (Benson, Burney, Cretier, Girling, Jackson, Lowe, Reynolds, Richels Salomone, Samarasekera, Stewart, Vanaselja, Waugh), education, committees, (Audit, Governance, Human Resources, Health and Safety and Environment), Key expertise areas (accounting/finance, energy/utilities, engineering, government/regulatory, health, safety and environment, international markets, law management/leadership, oil & gas, operations, risk management.
 


 
 
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Director tenure
Once a director turns 70, he or she will not stand for re-election at the next annual meeting. The Board may waive the retirement age for a director if:
they have not served seven consecutive years by age 70, or
their continued service is in the best interests of the company, because of their specific skills and experience.
The Governance committee reviews factors like age, changes in principal occupation, consistently poor attendance, poor performance and other relevant circumstances that may trigger the resignation or retirement of a director.
TransCanada does not use term limits for our directors. We do not believe term limits are an effective mechanism to promote board renewal. In addition to the annual director assessment, which ensures that each of our Board members, committees and the Board is functioning effectively, the committee reviews director succession planning at least annually. This review provides the opportunity for the committee to focus on creating a board with an appropriate mix of experience and skills to guide the long-term strategy and ongoing business operations of the company. Our flexible retirement policy promotes effective Board turnover without limiting the mix of skills and experience on the Board.
The Board has waived the retirement age policy for Mr. Benson and Mr. Burney and asked each of them to stand for re-election at the 2017 annual meeting. The Board and Governance committee determined that the retirement age policy should be waived for Mr. Benson and Mr. Burney as they continue to provide significant contributions to the Board. Mr. Benson's extensive business experience and management skills continue to provide valuable input to TransCanada's business and affairs. Mr. Burney's experience and deep understanding of the evolving business and political environment continue to be important, particularly with respect to the Keystone XL Pipeline project. The Board believes that the skills, experience, and continuity provided by Mr. Benson and Mr. Burney's extended tenure will be valuable to the Board over the coming year.
While Mr. Jackson is stepping down as Board Chair, he is standing for re-election. We believe that his continued membership on the Board provides continuity, and allows TransCanada to benefit from his extensive experience in the oil and gas industry.
The graphs below show the composition of our Board by years of service as of the date of this circular and after the annual meeting, assuming all of the nominated directors are elected.

a12312016t_chart-33574.jpga12312016t_chart-34854.jpg

(Director Tenure: Current composition (0-5 years - 62%, 6-10 years - 15%, 11-15 years - 23%), post - meeting composition (0-5 years - 58%, 6-10 years - 17%, 11-15 years - 25%)).



 
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ENGAGEMENT
We believe it is important to engage with our stakeholders.
Members of our Board engage with governance organizations and shareholder advocacy groups to discuss emerging best practices and provide commentary on how we maintain our high standard of corporate governance.
TransCanada regularly engages with our shareholders and other stakeholders. Our executive leadership team hosts teleconferences to discuss our quarterly financial and operating results. The teleconferences are webcast and available to analysts, media, shareholders and the public. Our executive and senior management also typically speak at investor conferences and meet one-on-one with investors as part of our shareholder engagement. In 2016, we engaged with institutions representing more than 50 per cent of current outstanding shares.
A list of upcoming and past events and presentations, including presentation slides and webcasts, where available, can be found online at www.transcanada.com.
Investor relations welcomes opportunities to engage with our shareholders and other stakeholders. You may contact our investor relations department directly by phone, email, or regular mail at:
Investor Relations
TransCanada Corporation
450 1st Street S.W.
Calgary, Alberta
Canada T2P 5H1
investor_relations@transcanada.com
1.800.361.6522
COMMUNICATING WITH THE BOARD
Shareholder engagement allows us to hear directly from shareholders and other important stakeholders about any issues or concerns.
Shareholders, employees and others can contact the Board directly by writing to:
Chair of the Board of Directors
c/o Corporate Secretary
TransCanada Corporation
450 1st Street S.W.
Calgary, Alberta T2P 5H1
The Board, including committee Chairs, will also be available at the annual meeting to receive questions from shareholders.


 
 
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SHAREHOLDER PROPOSALS
According to Canadian law, shareholder proposals can only be considered for the annual meeting of common shareholders if they are submitted by a specific date.
Our Corporate Secretary must receive any shareholder proposals before 5:00 p.m. MDT on November 30, 2017 to be considered for the Management information circular for our 2018 annual meeting of common shareholders.
ADVANCE NOTICE BYLAW
Shareholders who wish to nominate a director for the 2017 annual meeting of common shareholders, other than by a shareholder proposal, must:
notify the Corporate Secretary in writing, and
provide the information required in our By-law Number 1, which can be found on our website (www.transcanada.com) or on SEDAR (www.sedar.com).
Any notices of director nominees must be received by the Corporate Secretary before 5:00 p.m. MDT on April 5, 2017 for an individual to be included in our list of director nominees for our 2017 annual meeting of common shareholders.
The chart below explains when advance notice of director nominations is required for annual meetings and special meetings:
Type of meeting
Announcement timing
Advance notice deadline
Annual meeting
Public announcement more than 50 days before meeting
Not less than 30 days before meeting
Public announcement 50 days or less before meeting
Not less than 10 days following the first public announcement of the meeting
Special meeting to elect directors
Public announcement more than 50 days before meeting
Not less than 15 days before meeting
Public announcement 50 days or less before meeting
Not less than 15 days following the first public announcement of the meeting



 
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BOARD COMMITTEES
The Board has four standing committees:
Audit committee
Governance committee
Health, Safety and Environment committee, and
Human Resources committee.
Each of the committees is comprised entirely of independent directors.
The Governance committee is responsible for reviewing the composition of each committee and recommending any changes once new directors are appointed or elected to the Board. Each committee must consist entirely of independent directors, except for the Health, Safety and Environment committee, which must have a majority of independent directors. Currently, all members of the Health, Safety and Environment committee are independent. Each committee has the authority to retain advisors to help it carry out its responsibilities. The Board does not have an executive committee.
Each committee reviews its charter at least once a year, and recommends any changes to the Governance committee and the Board. You can find the committee charters on our website (www.transcanada.com).
The Audit and the Human Resources committees hold simultaneous meetings, as do the Governance and Health, Safety and Environment committees, so each committee has sufficient time to focus on its responsibilities. As a result, Mr. Jackson, the independent non-executive Chair of the Board, is a voting member of the Governance committee and the Human Resources committee, and is not a member of the Audit committee or the Health, Safety and Environment committee.
The committees will be reconstituted after the annual meeting.
Each meeting has time set aside for members to discuss the committee operations and responsibilities without management present.


 
 
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Audit committee
 
 
Members
Siim Vanaselja (Chair)
Kevin E. Benson
Derek H. Burney
Stéphan Crétier (as of February 17, 2017)
John Lowe
Mary Pat Salomone (until April 29, 2016)
Indira Samarasekera (as of April 29, 2016)
D. Michael G. Stewart
Meetings in 2016
5 regularly scheduled meetings (February, April, July, November, December)
Independent
7 independent directors, 100 per cent independent and financially literate.
 
Mr. Vanaselja, Mr. Benson and Mr. Lowe are “audit committee financial experts” as defined by the SEC in the U.S., and each have the accounting or related financial management experience required under the NYSE rules.
Mandate
The Audit committee is responsible for assisting the Board in overseeing the integrity of our financial statements and our compliance with legal and regulatory requirements.
 
It is also responsible for overseeing and monitoring the accounting and reporting process and the process, performance and independence of our internal and external auditors.
 
 
The Audit committee meets in-camera with the Chief Financial Officer (CFO) at the beginning of each meeting, and also meets separately with the external auditors and Vice-President, Corporate Compliance and Internal Audit. The committee also meets in-camera at the end of each meeting.
2016 highlights
Reviewed our 2016 interim and annual disclosure documents including the unaudited interim and audited annual consolidated financial statements and related management’s discussion and analysis, AIF and circular and recommended them for approval.
Oversaw our financial reporting risks including issues relating to materiality and risk assessment.
Received the external auditor’s formal written statement of independence (which sets out all of its relationships with TransCanada) and its comments to management about our internal controls and procedures.
Reviewed the appointment of the external auditor and estimated fees and recommended them to the Board for approval.
Reviewed the audit plans of the internal and external auditors and pre-approved the non-audit services performed by KPMG relating primarily to tax and benefit plans.
Recommended the funding of the Registered Pension Plan and Supplemental Pension Plan.
Reviewed the major accounting policies and estimates.
Received reports from management on our cybersecurity plans and initiatives.
Oversaw the corporate compliance program requirements, structure and results, including foreign corrupt practices and anti-bribery statutes and policies.

 
Monitored Canadian and U.S. financial reporting and legal and regulatory developments affecting our financial reporting process, controls and disclosure.
Reviewed and recommended changes to the suite of risk management policies, and reviewed developments and reports relating to counterparty, insurance and market risks.
Reviewed and recommended prospectuses relating to the issuance of securities.
Recommended amendments to the Public disclosure policy and Code of business ethics.
Approved annual election to enter into uncleared swaps as permitted under U.S. legislation and monitored compliance.
Received regular reports from management on risk management, finance and liquidity, treasury, pensions, compliance, material litigation and information services security controls.
Received regular reports from Internal Audit.
Reviewed adequacy of staff complements in accounting and tax.
Reviewed and Recommended amendments to the Audit committee charter.
Reviewed material litigation.




Our AIF includes more information about the Audit committee, including the committee charter, oversight responsibilities, each member’s education and experience, and policies and procedures for pre-approving permitted non-audit services. The 2016 AIF is available on our website (www.transcanada.com) and on SEDAR (www.sedar.com).

 
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Governance committee
 
 
Members
Derek H. Burney (Chair)
Kevin E. Benson
S. Barry Jackson
Indira Samarasekera (as of April 29, 2016)
Siim A. Vanaselja
Richard E. Waugh
Meetings in 2016
3 regularly scheduled meetings (February, April, November)
Independent
6 independent directors, 100 per cent independent
Mandate
The Governance committee is responsible for assisting the Board with maintaining strong governance policies and practices at TransCanada, reviewing the independence and financial literacy of directors, managing director compensation and the Board assessment process, and overseeing our strategic planning process and risk management activities.
 
It monitors the relationship between management and the Board, directors’ share ownership levels, governance developments and emerging best practices. It is also responsible for identifying qualified candidates for the Board to consider as potential directors.
 
It also recommends the meeting schedule for Board and committee meetings, site visits, and oversees matters related to the timing of our annual meeting.
 
 
The Governance committee meets in-camera at the beginning and end of each meeting.
2016 highlights
Reviewed the independence of each director according to our written criteria to give the Board guidance in its annual assessment of independence and the structure and composition of each committee, and the other directorships held by Board members (including public and private companies, Crown corporations and non-profit organizations).
Oversaw our strategic planning process, including strategic issues to be considered and planning of our strategic issues and planning sessions.
Oversaw our risk management activities, including receiving updates on 'top of mind' business risks and making recommendations to the Board as appropriate.
Reviewed the identified principal risks with management to ensure we have proper Board and committee oversight and management programs in place to mitigate risks.
Monitored director share ownership requirements.
Recommended that director compensation be moved to a flat fee structure and that the director retainer be increased. The committee also recommended increases to the Audit committee and Human Resources committee Chair retainers.
 
Reviewed our Corporate governance guidelines and committee charters and recommended appropriate changes to the Board for approval. The changes included limiting the total number of boards that a director may serve on to four, and the total number of boards that the CEO may serve on to two.
Reviewed say on pay updates and voting trends.
Oversaw the annual assessment of the Board, committees and Chair.
Monitored updates to securities regulations (regulation and legal updates affecting our policies, procedures and disclosure practices) and matters relating to the financial markets. The committee continues to monitor legal developments and emerging best practices in Canada, the U.S. and internationally.
Oversaw the Board’s retirement policy, Board renewal, and the selection of new director candidates
Oversaw the selection of the new Board Chair. The process was led by the Governance committee Chair.
Reviewed our lobbying policies, activities and expenditures.
Reviewed external governance assessments and made recommendations for revisions to governance practices to the Board as appropriate.





 
 
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Health, Safety and Environment committee
 
 
Members
D. Michael G. Stewart (Chair)
Stéphan Crétier (as of February 17, 2017)
John Lowe
Paula Rosput Reynolds
John Richels (retiring May 5, 2017)
Mary Pat Salomone
Paule Gauthier (retired April 29, 2016)
Meetings in 2016
4 regularly scheduled meetings (February, April, June and November)
Independent
6 independent directors, 100 per cent independent
Mandate
The Health, Safety and Environment committee is responsible of oversight for health, safety, security and environmental matters (HSE matters).
 
The committee reviews and monitors:
 
the performance and activities of TransCanada on HSE matters including compliance with applicable and proposed legislation, regulations and orders; conformance with industry standards and best practices; people, health, safety and security; process safety; asset reliability; operational risk management and asset integrity plans and programs; and emergency response plans and programs
the systems, programs and policies relating to HSE matters and whether they are being appropriately developed and effectively implemented
actions and initiatives undertaken by TransCanada to prevent, mitigate and manage risks related to HSE matters which may have the potential to adversely impact our operations, activities, plans, strategies or reputation; or prevent loss or injury to our employees and assets or operations from malicious acts, natural disasters or other crisis situations
any critical incidents respecting our assets or operations involving: the fatality of or a life threatening injury to a person; any pipeline ruptures resulting in significant property damage or loss of product; any whistleblower events relating to HSE matters; or any incidents involving personnel and public safety, property damage, environmental damage or physical security that have the potential to severely and adversely impact our reputation and or business continuity
significant regulatory audits, findings, orders, reports and/or recommendations issued by or to TransCanada related to HSE matters or issues, together with management's response thereto.
 
 
The Health, Safety and Environment committee met separately with the Chief Operating Officer at the end of each meeting. The committee also meets in-camera at the end of each meeting.
2016 highlights
Received and reviewed regular reports on HSE related activities, performance and compliance.
Received regular reports on operational risk management, people and process safety and regulatory compliance matters related to asset integrity.
Reviewed the status of critical incidents, root cause analysis and incident follow-up.
Monitored management’s response and the status of corrective action plans to significant audits from the National Energy Board, Pipeline and Hazardous Materials Safety Administration and other regulatory agencies.
Oversaw our risk management activities related to health, safety, security and environment, and reported to the Board as appropriate.
Monitored the effectiveness of health, safety and environment policies, management systems, programs, procedures and practices through the receipt of reports on four levels of governance activities related to internal and external audit findings.
 
Monitored updates to Canadian and U.S. air emissions and greenhouse gas legislation, climate change initiatives and related compliance matters.
Committee Chair visited the Columbia office, and toured construction sites in West Virginia.
Received an update on Columbia HSE performance and integration.
Received an overview of the Crisis Management Plan.
Received an annual update on insurance coverage.
Received and reviewed regular reports on the operational and HSE performance at Bruce Power.

 
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Human Resources committee
 
 
Members
Paula Rosput Reynolds (Chair)
S. Barry Jackson
John Richels (retiring May 5, 2017)
Mary Pat Salomone (as of April 29, 2016)
Richard E. Waugh
Paule Gauthier (retired April 29, 2016)
Meetings in 2016
5 regularly scheduled meetings (January, February, September, November and December)
Independent
5 independent directors, 100 per cent independent
Mandate
The Human Resources committee is responsible for assisting the Board with developing strong human resources policies and plans, overseeing the compensation programs, and assessing the performance of the CEO and other members of the executive leadership team against pre-established objectives and recommending their compensation to the Board.
 
It approves all executive incentive awards, and any major changes to the compensation programs and benefits plans for employees. It is also responsible for the benefits under our Canadian pension plans and reviewing our share ownership requirements for executives.
 
 
The Human Resources committee meets in-camera at the beginning and end of each meeting.
2016 highlights
Assessed the performance of the executive leadership team and recommended the 2016 executive compensation awards to the Board for approval.
Reappointed Meridian Compensation Partners (Meridian) as the independent compensation advisor to the committee after determining that Meridian is independent based on the factors enumerated by the NYSE.
Increased the number of common shares reserved for issuance under the stock option plan to allow for grants to be made over the next three years, as approved by shareholders.
Modified the performance measure relative weightings for the named executives under the short-term incentive plan to reflect organizational changes.