MANAGEMENT ’ S DISCUSSION AND ANALYSIS POWER HIGHLIGHTS Earnings Increase:  $75 million or 91 per cent increase in net earnings before asset sales in 2001 compared to 2000; $43 million or 79 per cent average increase in annual net earnings over the past three years. Plant Growth:  Added electrical supply totalling more than 650 megawatts (MW) in 2001; added 11 new plants totalling more than 1,500 MW over the past three years. Operations Growth:  67 per cent increase in volumes sold in 2001 compared to 2000; 37 per cent average increase in annual volumes sold over the past three years. Operational Excellence:  96 per cent average plant availability in 2001; 96 per cent average plant availability over past three years. TransCanada’s Power business contributed $157 million of net earnings in 2001, representing an increase of $75 mil- lion or 91 per cent compared to net earnings before asset sales of $82 million in 2000. This increase is primarily attributable to increased earnings in each of Power’s business lines: NIPIGON, KAPUSKASING, TUNIS AND  NORTH BAY These efficient, enhanced combined- cycle facilities are fuelled by combina- tion of natural gas and waste heat exhaust from adjacent com- pressor stationson the Canadian Mainline. POWER RESULTS-AT-A-GLANCE Year ended December 31 (millions of dollars) 2001 2000 1999 Northeastern U.S. operations 159 68 53 Western operations 132 71 20 Power LP investment 39 33 26 General, administrative and support costs (49) (21) (23) Operating and other income 281 151 76 Financial charges (24) (15) (13) Income taxes (100) (54) (23) 157 82 40 After-tax gain on sale of Hermiston Power Partnership – 23 – Net earnings 157 105 40 Power LP Investment:  Higher average ownership in TransCanada Power, L.P. (Power LP) in 2001 compared to 2000 and strong plant performance. Western Operations:  Successfully commenced transactions under the Sundance A power purchase arrangement (PPA); and capitalized on high prices and market volatility, especially in the first half of 2001. Northeastern U.S. Operations:  Increased marketing activities; capitalized on price volatility and market oppor- tunities in 2001; increased ownership to 100 per cent in Ocean State Power (OSP) plant in October 2000; and acquisition of the Curtis Palmer facility in July 2001. 2001 ANNUAL REPORT  27 1999 2000 2001 7,062 8,579 14,323 Power Sales Volumes (GWh)