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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. 

## WHOLLY-OWNED PIPELINES – FINANCIAL REVIEW 

## Alberta System 

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. 

## ALBERTA SYSTEM 

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. 

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. 

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