and wholesale customers, which added incremental business to its portfolio without taking significant price risk. 

The $15 million or 28 per cent increase in operating income from 1999 to 2000 was primarily due to the acquisition of the remaining 29.9 per cent equity interest in OSP in October 2000. The OSP facility remains under FERC regulation and earns a regulated rate of return. 

In July 2001, Power expanded its Northeastern U.S. Operations through the acquisition of the Curtis Palmer Hydroelectric Company, L.P. The purchase of the Curtis Palmer facili- ty near Corinth, New York represents TransCanada’s first hydroelectric facility and a further diversification of Power’s fuel sources. The plant has a generating capacity of 60 MW, all of which is sold under a fixed-priced, long-term agreement to Niagara Mohawk Power Corporation with a remaining term of more than 25 years. In December 2001, TransCanada completed an upgrade of the water control facilities at Curtis Palmer. 

## WESTERN OPERATIONS 

Western Operations has two main components – Western Marketing and Plant Operations. Western Marketing includes the power marketing and trading operations originating out of the Calgary office, including the purchase of electricity under the 560 MW Sundance A PPA, commencing January 1, 2001, and the subsequent resale of this output to industrial and mar- keting customers. From its Calgary office, TransCanada markets electricity across Canada and throughout the northern tier of the U.S. from Washington to Wisconsin. Plant Operations includes contributions from TransCanada’s Alberta power plants as well as fees earned to manage Power LP and operate its seven plants. 

Western Operations had a significant increase of $61 million or 86 per cent in operat- ing income in 2001 compared to 2000, primarily due to the acquisition of the 560 MW Sundance A PPA in 2000 and increased commercial activity that capitalized on opportuni- ties created by price volatility in Western Canada and the Pacific Northwest regions. 

The increase of $51 million or 255 per cent in operating income from 1999 to 2000 was due to higher marketing earnings from increased sales in Alberta and capitalizing on oppor- tunities created by extreme price volatility in the Western Region. 

## Western Marketing 

The deregulation of the Alberta power market provided TransCanada with the opportunity to acquire new long-term and short-term supply sources through the Sundance A PPA and the Market Achievement Plan auction, which occurred in August and December 2000, respectively. Under the Sundance A PPA, TransCanada acquired 560 MW of coal-fired base- load supply in Alberta for a 17-year period. TransCanada commenced transactions under this PPA beginning January 1, 2001. Through a partnership with AltaGas Services Inc., in December 2001, TransCanada effectively acquired 50 per cent of the remaining rights and obligations of the 706 MW Sundance B PPA. TransCanada will use its experience and expertise from Sundance A to optimize the earnings from Sundance B. The Sundance B PPA acquisi- tion will provide TransCanada with an additional 353 MW of supply for the next 19 years and is expected to immediately begin contributing incremental earnings commencing January 2002. TransCanada has sold all of its Sundance A and B power supply in 2002 and 59 per cent of its expected, average combined Sundance A and B power supply for the next 

## WILLIAMS LAKE 

Power LP owns a 66 MW wood waste- fired power plant at Williams Lake, British Columbia. 

## OCEAN STATE 

The 100 per cent owned OSP plant in Rhode Island is a 560 MW natural gas- fired, combined-cycle facility. 

## BEAR CREEK & MACKAY RIVER 

Currently under construction are the 165 MW MacKay River facility near Fort McMurray Alberta and the 80 MW Bear Creek facility near Grande Prairie, Alberta. The expected completion dates are 2003 for MacKay River and late 2002 for Bear Creek. 

## CARSELAND 

TransCanada com- pleted construction of an 80 MW natural gas- fired cogeneration plant near Carseland, Alberta in September 2001 with commercial operation commencing in January 2002. 

## REDWATER 

TransCanada com- pleted construction of a 40 MW natural gas-fired cogeneration plant near Redwater, Alberta in November 2001 with commercial operation commenc- ing in January 2002. 

five years. TransCanada continues to secure additional long-term sales contracts for the remaining Sundance A and B power supply as well as any uncontracted supply from its Alberta power plants. 

In 2001, in addition to the sales of Sundance A output, TransCanada utilized its marketing experience to suc- cessfully take advantage of market opportunities created by high market prices, power price volatility and inefficiencies 

