TransCanada’ 100 per cent owned natural gas transmission sys- tem in Alberta gathers natural gas for use within the province and delivers gas to provincial boundary points for connection with the Canadian Mainline, BC System  and other pipelines.  The 22,500 kilometre system is the largest  carrier of natural gas in North America.  Net earnings of $204 million in 2001 are $15 million lower than in 2000 and 1999. Net earnings in 2001 reflect operating, financing and other cost savings, but are negatively impacted by a sig- nificantly lower implicit rate of return on equity in the Alberta System Rate Settlement (ASRS) compared to the CEIS. The CEIS expired at the end of 2000 and provided a fixed dollar equity return on a significant portion of the investment base. Under the ASRS, the majority of the Alberta System’s revenue requirement for 2001 and 2002 is fixed at negotiated amounts of $1.390 billion and $1.347 billion, respectively. The MCBA includes a provision for the sharing of savings on most OM&A costs in 2001. As a result, in 2001, the Alberta System shared pre-tax operating cost savings of approximately $20 million equally with its customers. The Alberta System is one of the largest volume carriers of natural gas in North America and delivered 4,059 billion cubic feet (Bcf) of natural gas in 2001, as compared to deliveries of 4,490 Bcf in 2000 and 4,535 Bcf in 1999. The volumes transported by the Alberta System represent approximately 16 per cent of total North American natural gas production and about 65 per cent of the natural gas produced in the WCSB. The Alberta System is regulated by the Alberta Energy and Utilities Board (EUB) under the Gas Utilities Act (Alberta) (GUA). Under the GUA, the rates, tolls and other charges and terms and conditions of service are sub- ject to the approval of the EUB. 2000 1999 2001 1,290 1,299 1,345 Alberta System Revenues (millions of dollars) 2000 1999 2001 5,341 5,272 5,183 Alberta System Average Investment Base (millions of dollars) 1999 2000 2001 301 168 127 Alberta System Capital Expenditures (millions of dollars) 2001 ANNUAL REPORT  19 ALBERTA SYSTEM WHOLLY-OWNED PIPELINES – FINANCIAL REVIEW Alberta System the Canadian Mainline continues to compete effectively for market demand and natural gas supplies. The cost of capital issue is subject to an NEB hearing proceeding. MANAGEMENT ’ S DISCUSSION AND ANALYSIS