Quarterly Report to Shareholders

QuarterlyReporttoShareholders

TCEnergyreportsstrongsecondquarterfinancialresultsWellpositionedtosecurefuturegrowthopportunitiesasenergytransitionevolves

CALGARY,Alberta–July29,2021–TCEnergyCorporation(TSX,NYSE:TRP)(TCEnergyortheCompany)todayannounced

netincomeattributabletocommonsharesforsecondquarter2021of$982millionor$1.00persharecomparedtonet

incomeof$1.3billionor$1.36pershareforthesameperiodin2020.Comparableearningsforsecondquarter2021were

$1.0billionor$1.07percommonsharecomparedto$863millionor$0.92percommonsharein2020.TCEnergy'sBoard

ofDirectorsalsodeclaredaquarterlydividendof$0.87percommonshareforthequarterendingSeptember30,2021,

equivalentto$3.48percommonshareonanannualizedbasis.

"Duringthefirsthalfof2021,ourdiversifiedportfolioofcriticalenergyinfrastructureassetscontinuedtosafelyand

reliablymeetNorthAmerica'sgrowingdemandforenergy,"saidFrançoisPoirier,TCEnergy’sPresidentand

ChiefExecutiveOfficer."Comparableearningsof$2.23percommonshareandcomparablefundsgeneratedfrom

operationsof$3.8billioninthefirstsixmonthsoftheyearreflecttheutility-likenatureofourbusinessalongwiththe

consistentlystrongperformanceofourlegacyassetsandcontributionsfromprojectsthatenteredservicein2020."

Ourresultsareunderpinnedbystrongdemandforourservicestogetherwithaconstantfocusonoperationalexcellence.

Flowsandutilizationlevelsacrossournetworkcontinuetobeinlinewithhistoricalnormsdespitetheongoingimpactsof

COVID-19,extremeweathereventsandenergymarketvolatility.Onceagain,thishighlightsthevitalroleour

infrastructureplaysinthefunctioningoftheNorthAmericaneconomyandthewell-beingofmillionsofpeopleacrossthe

continent.Giventhesolidstarttotheyear,wecontinuetoexpectfull-year2021comparableearningstobegenerally

consistentwithlastyear'srecordresults.

"Weareadvancinga$21billionsecuredcapitalprogramandworkingonasubstantiveportfolioofothersimilarly

high-qualityopportunitiesunderdevelopment,"continuedPoirier."Importantly,allofoursecuredcapitalprojectsare

underpinnedbylong-termcontractsand/orregulatedbusinessmodelshighlightingthefundamentalneedforthiscritical

newinfrastructurewhileatthesametimegivingusvisibilitytotheearningsandcashflowtheywillgenerateasthey

enterserviceinthecomingyears.Throughprudentfinancialmanagement,wearepoisedtoeffectivelyself-fundour

growthprogramthroughourinternallygeneratedcashflowanddebtcapacity."

Lookingbeyondourcurrentsuiteofprojects,wearewellpositionedtocapturefuturegrowthprospectsassociatedwith

ourextensiveassetfootprintanddeeporganizationalcapabilitiesaswellasothersthatariseastheworldbothconsumes

moreenergyandtransitionstoacleanerenergyfuture.Todayweannouncedthat,subjecttocustomaryconditions

precedentandregulatoryapprovals,wehavesanctionedtheVRprojectonourColumbiaGassystem.Thisproject

representsanapproximateUS$0.7billioncapitalinvestmentand,amongotherelements,includestheinstallationof

electriccompressionwhichwillreducedirectcarbondioxideequivalentemissionswhileaddressinggrowingmarket

demandbyprovidingadditionaltransportationservicesunderlong-termcontracts.Weareexploringotheropportunities

toelectrifyanduserenewableenergytopowercertainoftheCompany'sproprietaryenergyloads,withthegoalofanet

reductioninemissionsacrossourfootprint.BrucePoweralsocontinuestoprogressitsmulti-billiondollarlifeextension

program,asourceofsignificantemission-lesspowerinOntario,andwerecentlyannouncedaninitiativetojointly

develop,alongwithPembinaPipelineCorporation(Pembina),acarbontransportationandsequestrationsystemfor

Alberta-basedindustriestomanagetheiremissionsandcontributetoalower-carboneconomy.

Inallouroperationsandprojects,weremainfocusedonmanagingandreducingourgreenhousegasemissionsand

buildingconstructive,enduringrelationshipswithourcommunitiesandstakeholders.Webelieveourcreativity,technical

strengthandunparalleledmarketconnectivityprovideustheabilitytoprosperregardlessofthepaceandformofenergy

transition.Successinadvancingourcurrentslateofsecuredprojectsandotherorganicgrowthopportunitiesisexpected

tosupportannualdividendgrowthoffivetosevenpercentinthishistoricallylow-interestrateenvironment.

Highlights(AllfinancialfiguresareunauditedandinCanadiandollarsunlessotherwisenoted)

• Secondquarter2021financialresults

◦ Netincomeattributabletocommonsharesof$982millionor$1.00percommonshare

◦ Comparableearningsof$1.0billionor$1.07percommonshare

◦ ComparableEBITDAof$2.2billion

◦ Netcashprovidedbyoperationsof$1.7billion

◦ Comparablefundsgeneratedfromoperationsof$1.8billion

• Declaredaquarterlydividendof$0.87percommonshareforthequarterendingSeptember30,2021

• Continuedtoadvanceour$21billionsecuredcapitalprogrambyinvesting$1.4billioninvariousgrowthprojectsduring

thesecondquarter

• SanctionedtheVRproject,anapproximateUS$0.7billionenhancementprojectonourColumbiaGassystemto

improvereliabilityandloweremissions

• ColumbiaGasnotifiedFERConJuly28thatithasreachedasettlement-in-principlewithitscustomersaddressingall

remainingissuesrelatedtoitsSection4RateCasefiling

• AnnouncedapartnershipwithPembinatojointlydevelopacarbontransportationandsequestrationsysteminAlberta

• IssuedRequestsforInformation(RFI)seekingtoidentifypotentialwind,solarandenergystorageprojectsand/or

investmentopportunitiestomeettheelectricityneedsofaportionofourU.S.pipelineassets

• Recognized$1.1billionintheConsolidatedstatementofequityprincipallyfromtherepurchaseofpartnerinterestsin

KeystoneXL,retirementofitsnon-recourseproject-levelcreditfacilityandissuanceofClassCInterests,partially

offsettingthe$2.2billionafter-taximpairmentchargerecordedinfirstquarter2021

• Issued$750millionofthree-yearfloating-rateMediumTermNotes,$500millionof10-yearfixed-rateMediumTerm

Notesand$250millionof26-yearfixed-rateMediumTermNotes

• Redeemed$500millionofSeries13preferredsharesinMayutilizingproceedsfromthejuniorsubordinateddebt

offeringcompletedinMarch.

Netincomeattributabletocommonsharesdecreasedby$299millionor$0.36percommonshareto$982millionor

$1.00pershareforthethreemonthsendedJune30,2021comparedtothesameperiodlastyear.Pershareresults

reflecttheimpactofcommonsharesissuedfortheacquisitionofTCPipeLines,LPinfirstquarter2021.Netincome

attributabletocommonsharesincludesanumberofspecificitemsthatwebelievearesignificantbutnotreflectiveofour

underlyingoperationsintheperiod.Moreinformationontheseitems,whichareexcludedfromcomparableearnings,

canbefoundinthetableentitled"Reconciliationofnetincome/(loss)tocomparableearnings".

ComparableEBITDAof$2.2billionincreasedby$47millionforthethreemonthsendedJune30,2021comparedtothe

sameperiodin2020primarilyduetotheneteffectofthefollowing:

• higherEBITDAfromCanadianNaturalGasPipelineslargelyduetotheimpactofincreasedflow-throughincometaxes

anddepreciationalongwithhigherrate-baseearningsontheNGTLSystemandCoastalGasLinkdevelopmentfees

• increasedearningsinU.S.NaturalGasPipelinesfromColumbiaGasfollowingtheapplicationforhighertransportation

rateseffectiveFebruary1,2021,subjecttorefunduponcompletionofthecurrentrateproceeding,aswellasimproved

earningsacrossourU.S.NaturalGasPipelinesassetsfollowingthecoldweathereventsof2021impactingmanyofthe

U.S.marketsinwhichweoperate

• higherPowerandStorageresultsattributabletoincreasedearningsatBrucePowerin2021duetofeweroutagedays

andahighercontractpricepartiallyoffsetbyhigheroperatingexpenses,aswellasincreasedNaturalGasStorageand

OtherearningsfollowingtheNovember2020acquisitionoftheremaining50percentownershipinterestin

TCTurbines

• decreasedearningsfromLiquidsPipelinesduetolowervolumesontheKeystonePipelineSystem,partiallyoffsetby

increasedcontributionsfromliquidsmarketingactivitiesreflectinghighermarginsandvolumes

• foreignexchangeimpactofaweakerU.S.dollarontheCanadiandollarequivalentsegmentedearningsinour

U.S.dollar-denominatedoperations.U.S.dollar-denominatedcomparableEBITDAincreasedbyUS$105million

comparedto2020toUS$1.1billion,however,thiswastranslatedat1.23in2021versus1.39in2020.Whilethe

weakeningoftheU.S.dollarin2021comparedtothesameperiodin2020hadaconsiderablenegativeimpacton2021

comparableEBITDA,thecorrespondingimpactoncomparableearningswasnotsignificantduetooffsettingnatural

andeconomichedges.

Duetotheflow-throughtreatmentofcertainexpensesincludingincometaxes,financialchargesanddepreciationonour

Canadianrate-regulatedpipelines,changesintheseexpensesimpactourcomparableEBITDAdespitehavingno

significanteffectonnetincome.

Comparableearningsof$1.0billionor$1.07percommonshareincreasedby$182millionor$0.15percommonsharefor

thethreemonthsendedJune30,2021comparedtothesameperiodin2020andwasprimarilytheneteffectof:

• changesincomparableEBITDAdescribedabove

• higherInterestincomeandothermainlyattributabletorealizedgainsin2021comparedtorealizedlossesin2020on

derivativesusedtomanageournetexposuretoforeignexchangeratefluctuationsonU.S.dollar-denominatedincome

• decreasedNon-controllinginterestsfollowingtheMarch3,2021acquisitionofalloutstandingcommonunitsof

TCPipeLines,LPnotbeneficiallyownedbyTCEnergy

• higherIncometaxexpenseprimarilyduetohighercomparableearningsandflow-throughincometaxesinour

Canadianrate-regulatedpipelines.

Comparableearningspersharereflectstheimpactofcommonsharesissuedfortheacquisitionoftheremaining

ownershipinterestsinTCPipeLines,LPinfirstquarter2021.

CertainofourbusinessesgenerateallormostoftheirearningsinU.S.dollarsand,sincewereportourfinancialresultsin

Canadiandollars,changesinthevalueoftheU.S.dollaragainsttheCanadiandollardirectlyaffectourcomparableEBITDA

andmayalsoimpactcomparableearnings.AsourU.S.dollar-denominatedoperationscontinuetogrow,thisexposure

increases.AportionoftheU.S.dollar-denominatedcomparableEBITDAexposureisnaturallyoffsetbyU.S.

dollar-denominatedamountsbelowcomparableEBITDAwithinDepreciationandamortization,Interestexpenseand

otherincomestatementlineitems.Thebalanceoftheexposureisactivelymanagedonarollingtwo-yearforwardbasis

usingforeignexchangederivatives,however,thenaturalexposurebeyondthatperiodremains.Asnotedpreviously,the

netimpactoftheU.S.dollarmovementsoncomparableearningsforthethreemonthsendedJune30,2021comparedto

2020,afterconsideringnaturaloffsetsandeconomichedges,wasnotsignificant.

NOTABLERECENTDEVELOPMENTSINCLUDE:

CanadianNaturalGasPipelines• CoastalGasLink:FromDecember2020untilApril13,2021,inresponsetotheCOVID-19pandemic,anorderofthe

BritishColumbiaProvincialHealthOfficerrestrictedthenumberofworkersonindustrialsitesacrossnorthern

BritishColumbia,includingCoastalGasLink,and,asaresult,onlycriticalconstructionactivitiescontinuedduringthis

time.Majorerosionandsedimentcontrolworkwasrequiredintheabsenceofcontinuedpipelineconstructionduring

thewinterperiod.OnApril13,2021,theprovincialhealthorderwasliftedallowingtheprojecttofinalize

remobilizationplansforthesummerconstructionprogram.

Asaresultofscopechanges,permitdelaysandtheimpactsfromCOVID-19,includingtheprovincialhealthorder,we

continuetoexpectprojectcoststoincreasesignificantlyalongwithadelaytoprojectcompletioncomparedtothe

originalprojectcostandschedule.CoastalGasLinkhassoughtandwillcontinuetomitigatecostincreasesandschedule

delays.CoastalGasLinkexpectsincrementalcostswillbeincludedinthefinalpipelinetolls,subjecttocertain

conditions.

CoastalGasLinkisindisputewithLNGCanadawithrespecttotherecognitionofcertaincostsandtheimpactson

schedule.Ifaresolutionisnotreachedinthenearterm,CoastalGasLinkmayberequiredtosuspendcertainkey

constructionactivitiesbutwouldcontinuewithworkrequiredforsafetyreasonsandcompliancewithregulatory

requirements.AnyequityrequiredtobecontributedbyCoastalGasLinkLPpartners,includingus,tofundincremental

costswillbedeterminedbythesubstanceofaresolutionwithLNGCanada.

CoastalGasLinkcontinuestohaveaccesstoasubordinateddemandrevolvingfacilitywithTCEnergywhichprovides

theprojectwithadditionalshort-termfundingandfinancialflexibilityandonwhich$220millionwasdrawnat

June30,2021.Ifnecessary,asaninterimmeasure,thetotalamountofavailablecreditfacilitiesprovidedto

CoastalGasLinkbyTCEnergymaybeexpandedtoallowCoastalGasLinktoaccessincrementalshort-termfundingasa

bridgetoarequiredincreaseinproject-levelfinancingorprojectrecoveries.

• NGTLSystem:InthesixmonthsendedJune30,2021,theNGTLSystemplacedapproximately$0.1billionofcapacity

projectsinservice.

U.S.NaturalGasPipelines• VRProject:Weareactivelydevelopingprojectsthatwillreplaceandupgradecertainfacilitieswhilereducingemissions

alongportionsofourpipelinesystemsinprincipaldeliverymarkets.Theenhancedfacilitieswillimprovereliabilityof

thesystemsandallowforadditionaltransportationservicestoaddressgrowingdemandunderlong-termcontracts

whilereducingdirectcarbondioxideequivalent(CO2e)emissions.Consistentwiththisinitiative,theVRprojectonthe

ColumbiaGassystemhasbeensanctioned,subjecttocustomaryconditionsprecedentandnormal-courseregulatory

approvalsandisincludedinthesecuredprojectstablewithintheCapitalprogramsection.Thisprojectrepresentsan

approximateUS$0.7billioncapitalinvestmentandistargetedtobeplacedinserviceduringthesecondhalfof2025.

• GrandChenierXPress:PhaseIofGrandChenierXPress,anexpansionprojectontheANRpipelinesystemconnecting

supplydirectlytoU.S.GulfCoastLNGexportfacilities,wentintoserviceinApril2021.PhaseIIisexpectedtobeplaced

inserviceinearly2022.

• ColumbiaGasSection4RateCase:ColumbiaGasfiledaSection4RateCasewithFERCinJuly2020requestingan

increasetoitsmaximumtransportationrateseffectiveFebruary1,2021,subjecttorefunduponcompletionoftherate

proceeding.OnJuly28,2021,ColumbiaGasnotifiedFERCthatithasreachedasettlement-in-principlewithits

customersaddressingallremainingissuesinthecase,includingbutnotlimitedtotheresolutionofratesand

continuationofColumbiaGas'smodernizationprogram.Whiledefinitivetermsarestillbeingfinalized,ColumbiaGas

expectsafinalsettlementtobefiledwithFERCinthirdquarter2021,with2021revenueexpectedtobegenerally

consistentwithestimatesrecordedtodate,subjecttorevisionfollowingcompletionandapprovalofsettlementterms.

MexicoNaturalGasPipelines• VilladeReyes:ConstructionisongoingbuthasbeendelayedduetoCOVID-19contingencymeasureswhichhave

impededourabilitytoobtainworkauthorizationsasaresultofadministrativeclosures.Weexpecttoreachpartial

in-servicebytheendof2021,withtheremainderoftheconstructionofVilladeReyescompletedinthefirsthalfof

2022.

LiquidsPipelines• KeystoneXL:OnJune9,2021,followingtherevocationofthePresidentialPermitfortheKeystoneXLpipelineproject

onJanuary20,2021,andafteracomprehensivereviewofoptionsinconsultationwithourpartner,theGovernmentof

Alberta,weterminatedtheKeystoneXLpipelineproject.Terminationactivitiesandrelatedcostswillcontinuethrough

2022withanyadjustmentstotheestimatedfairvalueandfuturecontractualandlegalobligationsexpensedas

determinedandexcludedfromcomparableearnings.

Althoughwerecordeda$2.2billionafter-taxassetimpairmentcharge,netofexpectedcontractualrecoveriesand

othercontractualandlegalobligationsrelatedtotheKeystoneXLpipelineprojectterminationactivities,asignificant

portionofthisamountwassharedwiththeGovernmentofAlberta,therebyreducingthenetfinancialimpactto

TCEnergy.InJune2021,ClassAInterestspreviouslyissuedtotheGovernmentofAlbertatotaling$394millionwere

repurchasedforanominalamount,the$1.0billion(US$849million)balanceonthecreditfacilitywasguaranteedand

fullypaidbytheGovernmentofAlbertaand$91millionofClassCInterestswereissuedtotheGovernmentofAlberta

entitlingthemtofutureliquidationproceedsfromspecifiedKeystoneXLprojectassets.Afterconsideringthese

transactions,includingthetaximpactthereon,thenetfinancialimpacttousasaresultoftheterminationof

KeystoneXLandrelatedprojectsatJune30,2021was$1.1billion.

AfterthePresidentialPermitwasrevoked,constructionactivitiesceasedexceptforcertainactivitiesrequiredtoclean

upandreclaimworksitesinadherencetoourcommitmenttosafety,theenvironment,andourregulatory

requirements.Wewillcontinuetocoordinatewithregulators,stakeholdersandIndigenousgroupstomeetour

environmentalandregulatorycommitmentsandensureasafeexitfromtheKeystoneXLpipelineproject.Themajority

oftheseassociatedcostswerefundedthroughafinaldrawdownontheproject-levelcreditfacilitywhichoccurredin

June2021,subsequenttowhichthecreditfacilitywasfullyrepaidbytheGovernmentofAlbertaandterminated.

OnJuly2,2021,TCEnergyfiledaNoticeofIntenttoinitiatealegacyNorthAmericanFreeTradeAgreement(NAFTA)

claimtorecovereconomicdamagesresultingfromtherevocationofthePresidentialPermitfortheKeystoneXL

pipeline.WewillbeseekingtorecovermorethanUS$15billionindamagesasaresultoftheU.S.Government'sbreach

ofitsNAFTAobligations.Thisclaimisinapreliminarystageandthetimingofoutcomeisunknownatpresent.

PowerandStorage• RenewableEnergyRFI:ThroughanRFIprocessinsecondquarter2021,weannouncedthatwewereseekingtoidentify

potentialcontractsand/orinvestmentopportunitiesinupto620MWofwindenergyprojects,300MWofsolar

projectsand100MWofenergystorageprojectstomeettheelectricityneedsofaportionofourU.S.pipelineassets.

Wearecurrentlyevaluatingtheresponsesreceived.

• BrucePoweroutage:Aspartoftheplannedinspections,testing,analysisandmaintenanceactivitiesatBrucePower

duringthecurrentUnit6MCRoutageandplannedUnit3outage,higherthananticipatedreadingsofhydrogen

concentrationinpressuretubesweredetected.Theothersixunitscurrentlyinoperationatthefacilityhaveallbeen

inspectedduringrecentplannedoutagesanditwasdeterminedthatthereisnoimpactontheirsafeoperation.

BrucePowerhasadvisedtheCanadianNuclearSafetyCommission(CNSC)andisworkingonnextsteps.

ThesedevelopmentsareexpectedtoresultinadelaytothereturntoserviceofUnit3followingitsplannedoutage

whichwasexpectedtobecompletedinearlyfourthquarter2021.Thetimingofthereturntoservicewilldependupon

thefinalresultsoftheanalysisandBrucePower’ssubmissiontoCNSC.Wedonotexpectthisdevelopmenttohavea

materialimpactonourearningsorcashflows.

AlbertaCarbonGrid• Carbontransportationandsequestrationsystem:OnJune17,2021weannouncedapartnershipwithPembinato

jointlydevelopacarbontransportationandsequestrationsystemwhich,whenfullyconstructed,wouldbecapableof

transportingmorethan20milliontonnesofCO2annually.Byleveragingexistingpipelinesandanewlydeveloped

sequestrationhub,theAlbertaCarbonGrid(ACG)isexpectedtoprovideaninfrastructureplatformforAlberta-based

industriestomanagetheiremissionsandcontributetoalower-carboneconomy.Designedtobeanopen-access

system,theACGwouldconnecttheFortMcMurray,AlbertaIndustrialHeartlandandDraytonValleyregionstokey

sequestrationlocationsanddeliverypointsacrosstheprovince.

Corporate• Commonsharedividend:OurBoardofDirectorsdeclaredaquarterlydividendof$0.87percommonshareforthe

quarterendingSeptember30,2021.Thequarterlyamountisequivalentto$3.48percommonshareonanannualized

basis.

• RetirementandappointmentofourExecutiveVice-PresidentandChiefFinancialOfficer(CFO):OnMay17,2021,we

announcedthatDonMarchand,ExecutiveVice-PresidentandCFO,willretirefromTCEnergyonNovember1,2021,

steppingdownasCFOonJuly31,2021.JoelHunter,currentlySeniorVice-President,CapitalMarkets,willsucceed

Mr.MarchandasExecutiveVice-PresidentandCFO.Mr.MarchandwillassistMr.Hunterwiththetransitionfrom

AugustthroughNovember.

• Issuanceoflong-termdebt:OnJune9,2021,TCPLissued$750millionofMediumTermNotesdueinJune2024bearing

interestatafloatingrate,$500millionofMediumTermNotesdueinJune2031bearinginterestatafixedrateof

2.97percent,and$250millionofMediumTermNotesdueinSeptember2047bearinginterestatafixedrateof

4.33percent.

• Redemptionof$500millionseries13preferredshares:WeredeemedallissuedandoutstandingTCEnergySeries13

preferredsharesonMay31,2021,pursuanttotheirterms,utilizingproceedsfromthejuniorsubordinateddebt

offeringcompletedinMarch2021.

TeleconferenceandWebcastWewillholdateleconferenceandwebcastonThursday,July29,2021todiscussoursecondquarter2021financial

results.FrançoisPoirier,PresidentandChiefExecutiveOfficer;DonMarchand,ExecutiveVice-PresidentandCFO;and

othermembersoftheexecutiveleadershipteamwilldiscussTCEnergy'sfinancialresultsandcompanydevelopmentsat

9a.m.(MDT)/11a.m.(EDT).

Membersoftheinvestmentcommunityandotherinterestedpartiesareinvitedtoparticipatebycalling

1.800.319.4610.Nopasscodeisrequired.Pleasedialin15minutespriortothestartofthecall.Alivewebcastofthe

teleconferencewillbeavailableonTCEnergy'swebsiteatTCEnergy.com/eventsorviathefollowing

URL:http://www.gowebcasting.com/11357.

Areplayoftheteleconferencewillbeavailabletwohoursaftertheconclusionofthecalluntilmidnight(EDT)on

August5,2021.Pleasecall1.855.669.9658andenterpasscode7144.

TheunauditedinterimcondensedconsolidatedfinancialstatementsandManagement’sDiscussionandAnalysis

(MD&A)areavailableonourwebsiteatTCEnergy.comandwillbefiledtodayunderTCEnergy'sprofileonSEDARat

www.sedar.comandwiththeU.S.SecuritiesandExchangeCommissiononEDGARatwww.sec.gov.

https://www.tcenergy.com/events/2021-second-quarter-financial-results-conference-call/

http://www.gowebcasting.com/11357

https://www.tcenergy.com/

https://www.sedar.com/

https://www.sec.gov/

AboutTCEnergyWeareavitalpartofeverydaylife–deliveringtheenergymillionsofpeoplerelyontopowertheirlivesinasustainable

way.Thankstoasafe,reliablenetworkofnaturalgasandcrudeoilpipelines,alongwithpowergenerationandstorage

facilities,whereverlifehappens–we’rethere.Guidedbyourcorevaluesofsafety,responsibility,collaborationand

integrity,our7,500peoplemakeapositivedifferenceinthecommunitieswhereweoperateacrossCanada,theU.S.and

Mexico.

TCEnergy'scommonsharestradeontheToronto(TSX)andNewYork(NYSE)stockexchangesunderthesymbolTRP.

Tolearnmore,visitusatTCEnergy.com.

Forward-LookingInformationThisreleasecontainscertaininformationthatisforward-lookingandissubjecttoimportantrisksanduncertainties(such

statementsareusuallyaccompaniedbywordssuchas"anticipate","expect","believe","may","will","should",

"estimate","intend"orothersimilarwords).Forward-lookingstatementsinthisdocumentareintendedtoprovide

TCEnergysecurityholdersandpotentialinvestorswithinformationregardingTCEnergyanditssubsidiaries,including

management'sassessmentofTCEnergy'sanditssubsidiaries'futureplansandfinancialoutlook.Allforward-looking

statementsreflectTCEnergy'sbeliefsandassumptionsbasedoninformationavailableatthetimethestatementswere

madeandassucharenotguaranteesoffutureperformance.Asactualresultscouldvarysignificantlyfromthe

forward-lookinginformation,youshouldnotputunduerelianceonforward-lookinginformationandshouldnotuse

future-orientedinformationorfinancialoutlooksforanythingotherthantheirintendedpurpose.Wedonotupdateour

forward-lookinginformationduetonewinformationorfutureevents,unlesswearerequiredtobylaw.Foradditional

informationontheassumptionsmade,andtherisksanduncertaintieswhichcouldcauseactualresultstodifferfromthe

anticipatedresults,refertothemostrecentQuarterlyReporttoShareholdersandAnnualReportfiledunderTCEnergy's

profileonSEDARatwww.sedar.comandwiththeU.S.SecuritiesandExchangeCommissionatwww.sec.gov.

Non-GAAPMeasuresThisreleasecontainsreferencestonon-GAAPmeasures,includingcomparableearnings,comparableearningsper

commonshare,comparableEBITDAandcomparablefundsgeneratedfromoperations,thatdonothaveanystandardized

meaningasprescribedbyU.S.GAAPandthereforeareunlikelytobecomparabletosimilarmeasurespresentedbyother

companies.Thesenon-GAAPmeasuresarecalculatedonaconsistentbasisfromperiodtoperiodandareadjustedfor

specificitemsineachperiod,asapplicableexceptasotherwisedescribedintheCondensedconsolidatedfinancial

statementsandMD&A.Formoreinformationonnon-GAAPmeasures,refertoTCEnergy'smostrecentQuarterlyReport

toShareholders.

MediaInquiries:

JaimieHarding/HejdiCarlsen

[email protected]

403.920.7859or800.608.7859

Investor&AnalystInquiries:

DavidMoneta/HunterMau

[email protected]

403.920.7911or800.361.6522

https://www.tcenergy.com/

https://www.sedar.com/

https://www.sec.gov/

Quarterlyreporttoshareholders

Secondquarter2021

Financialhighlights

threemonthsendedJune30

sixmonthsendedJune30

(millionsof$,exceptpershareamounts) 2021 2020 2021 2020

Income

Revenues 3,182 3,089 6,563 6,507

Netincome/(loss)attributabletocommonshares 982 1,281 (75) 2,429

percommonshare–basic $1.00 $1.36 ($0.08) $2.59

ComparableEBITDA 2,246 2,199 4,738 4,734

Comparableearnings 1,045 863 2,153 1,972

percommonshare $1.07 $0.92 $2.23 $2.10

Cashflows

Netcashprovidedbyoperations 1,711 1,613 3,377 3,336

Comparablefundsgeneratedfromoperations 1,754 1,549 3,777 3,643

Capitalspending1 1,439 2,150 3,324 4,419

Dividendsdeclared

Percommonshare $0.87 $0.81 $1.74 $1.62

Basiccommonsharesoutstanding(millions)

–weightedaveragefortheperiod 979 940 966 940

–issuedandoutstandingatendofperiod 979 940 979 940

1 Includescapacitycapitalexpenditures,maintenancecapitalexpenditures,capitalprojectsindevelopmentandcontributionstoequityinvestments.

Management’sdiscussionandanalysis

July28,2021

Thismanagement’sdiscussionandanalysis(MD&A)containsinformationtohelpthereadermakeinvestmentdecisionsabout

TCEnergyCorporation(TCEnergy).Itdiscussesourbusiness,operations,financialposition,risksandotherfactorsforthe

threeandsixmonthsendedJune30,2021,andshouldbereadwiththeaccompanyingunauditedCondensedconsolidated

financialstatementsforthethreeandsixmonthsendedJune30,2021,whichhavebeenpreparedinaccordancewith

U.S.GAAP.

ThisMD&AshouldalsobereadinconjunctionwithourDecember31,2020auditedConsolidatedfinancialstatementsand

notesandtheMD&Ainour2020AnnualReport.Capitalizedabbreviatedtermsthatareusedbutnototherwisedefined

hereinaredefinedinour2020AnnualReport.Certaincomparativefigureshavebeenadjustedtoreflectthecurrentperiod's

presentation.

FORWARD-LOOKINGINFORMATIONWediscloseforward-lookinginformationtohelpthereaderunderstandmanagement’sassessmentofourfutureplansand

financialoutlook,andourfutureprospectsoverall.

Statementsthatareforward-lookingarebasedoncertainassumptionsandonwhatweknowandexpecttodayandgenerally

includewordslikeanticipate,expect,believe,may,will,should,estimateorothersimilarwords.

Forward-lookingstatementsinthisMD&Aincludeinformationaboutthefollowing,amongotherthings:

• ourfinancialandoperationalperformance,includingtheperformanceofoursubsidiaries

• expectationsaboutstrategiesandgoalsforgrowthandexpansion

• expectedcashflowsandfuturefinancingoptionsavailable,includingportfoliomanagement

• expecteddividendgrowth

• expectedaccesstoandcostofcapital

• expectedcostsandschedulesforplannedprojects,includingprojectsunderconstructionandindevelopment

• expectedcapitalexpenditures,contractualobligations,commitmentsandcontingentliabilities

• expectedregulatoryprocessesandoutcomes

• expectedoutcomeswithrespecttolegalproceedings,includingarbitrationandinsuranceclaims

• theexpectedimpactoffuturetaxandaccountingchanges

• expectedindustry,marketandeconomicconditions

• theexpectedimpactsofCOVID-19.

Forward-lookingstatementsdonotguaranteefutureperformance.Actualeventsandresultscouldbesignificantlydifferent

becauseofassumptions,risksoruncertaintiesrelatedtoourbusinessoreventsthathappenafterthedateofthisMD&A.

2|TCEnergySecondQuarter2021

Ourforward-lookinginformationisbasedonthefollowingkeyassumptions,andsubjecttothefollowingrisksand

uncertainties:

Assumptions• regulatorydecisionsandoutcomes

• plannedandunplannedoutagesandtheuseofourpipeline,powerandstorageassets

• integrityandreliabilityofourassets

• anticipatedconstructioncosts,schedulesandcompletiondates

• accesstocapitalmarkets,includingportfoliomanagement

• expectedindustry,marketandeconomicconditions

• inflationratesandcommodityprices

• interest,taxandforeignexchangerates

• natureandscopeofhedging

• expectedimpactofCOVID-19.

Risksanduncertainties• ourabilitytosuccessfullyimplementourstrategicprioritiesandwhethertheywillyieldtheexpectedbenefits

• ourabilitytoimplementacapitalallocationstrategyalignedwithmaximizingshareholdervalue

• theoperatingperformanceofourpipeline,powerandstorageassets

• amountofcapacitysoldandratesachievedinourpipelinebusinesses

• theamountofcapacitypaymentsandrevenuesfromourpowergenerationassetsduetoplantavailability

• productionlevelswithinsupplybasins

• constructionandcompletionofcapitalprojects

• costandavailabilityoflabour,equipmentandmaterials

• theavailabilityandmarketpricesofcommodities

• accesstocapitalmarketsoncompetitiveterms

• interest,taxandforeignexchangerates

• performanceandcreditriskofourcounterparties

• regulatorydecisionsandoutcomesoflegalproceedings,includingarbitrationandinsuranceclaims

• ourabilitytoeffectivelyanticipateandassesschangestogovernmentpoliciesandregulations,includingthoserelatedto

theenvironmentandCOVID-19

• ourabilitytorealizethevalueoftangibleassetsandcontractualrecoveriesfromimpairedassets,includingtheKeystoneXL

pipelineproject

• competitioninthebusinessesinwhichweoperate

• unexpectedorunusualweather

• actsofcivildisobedience

• cybersecurityandtechnologicaldevelopments

• economicconditionsinNorthAmericaaswellasglobally

• globalhealthcrises,suchaspandemicsandepidemics,includingCOVID-19andtheunexpectedimpactsrelatedthereto.

YoucanreadmoreaboutthesefactorsandothersinthisMD&AandinotherreportswehavefiledwithCanadiansecurities

regulatorsandtheSEC,includingtheMD&Ainour2020AnnualReport.

Asactualresultscouldvarysignificantlyfromtheforward-lookinginformation,youshouldnotputunduerelianceon

forward-lookinginformationandshouldnotusefuture-orientedinformationorfinancialoutlooksforanythingotherthan

theirintendedpurpose.Wedonotupdateourforward-lookingstatementsduetonewinformationorfutureevents,unless

wearerequiredtobylaw.

TCEnergySecondQuarter2021|3

FORMOREINFORMATIONYoucanfindmoreinformationaboutTCEnergyinourAnnualInformationForm(AIF)andotherdisclosuredocuments,which

areavailableonSEDAR(www.sedar.com).

NON-GAAPMEASURESThisMD&Areferencesthefollowingnon-GAAPmeasures:

• comparableEBITDA

• comparableEBIT

• comparableearnings

• comparableearningspercommonshare

• fundsgeneratedfromoperations

• comparablefundsgeneratedfromoperations.

ThesemeasuresdonothaveanystandardizedmeaningasprescribedbyGAAPandthereforemaynotbecomparableto

similarmeasurespresentedbyotherentities.

ComparablemeasuresWecalculatecomparablemeasuresbyadjustingcertainGAAPmeasuresforspecificitemswebelievearesignificantbutnot

reflectiveofourunderlyingoperationsintheperiod.Exceptasotherwisedescribedherein,thesecomparablemeasuresare

calculatedonaconsistentbasisfromperiodtoperiodandareadjustedforspecificitemsineachperiod,asapplicable.

Ourdecisionnottoadjustforaspecificitemissubjectiveandmadeaftercarefulconsideration.Specificitemsmayinclude:

• gainsorlossesonsalesofassetsorassetsheldforsale

• incometaxrefunds,valuationallowancesandadjustmentsresultingfromchangesinlegislationandenactedtaxrates

• certainfairvalueadjustmentsrelatingtoriskmanagementactivities

• legal,contractualandbankruptcysettlements

• impairmentofgoodwill,plant,propertyandequipment,investmentsandotherassets

• acquisitionandintegrationcosts

• restructuringcosts.

Weexcludetheunrealizedgainsandlossesfromchangesinthefairvalueofderivativesusedtoreduceourexposureto

certainfinancialandcommoditypricerisks.Thesederivativesgenerallyprovideeffectiveeconomichedgesbutdonotmeet

thecriteriaforhedgeaccounting.Asaresult,thechangesinfairvaluearerecordedinnetincome.Astheseamountsdonot

accuratelyreflectthegainsandlossesthatwillberealizedatsettlement,wedonotconsiderthemreflectiveofourunderlying

operations.WealsoexcludetheunrealizedforeignexchangegainsandlossesontheLoanreceivablefromaffiliateaswellas

thecorrespondingproportionateshareofSurdeTexasforeignexchangegainsandlosses,astheseamountsdonotaccurately

reflectthegainsandlossesthatwillberealizedatsettlement.Theseamountsoffsetwithineachreportingperiod,resultingin

noimpactonnetincome.

Thefollowingtableidentifiesournon-GAAPmeasuresagainsttheirmostdirectlycomparableGAAPmeasures.

Comparablemeasure GAAPmeasure

comparableEBITDA segmentedearnings

comparableEBIT segmentedearnings

comparableearnings netincomeattributabletocommonshares

comparableearningspercommonshare netincomepercommonshare

comparablefundsgeneratedfromoperations netcashprovidedbyoperations


ComparableEBITDAandcomparableEBITComparableEBITDA(comparableearningsbeforeinterest,taxes,depreciationandamortization)representssegmented

earningsadjustedforcertainspecificitems,excludingnon-cashchargesfordepreciationandamortization.Weuse

comparableEBITDAasameasureofourearningsfromongoingoperationsasitisausefulindicatorofourperformanceandis

alsopresentedonaconsolidatedbasis.ComparableEBIT(comparableearningsbeforeinterestandtaxes)represents

segmentedearningsadjustedforspecificitemsandisaneffectivetoolforevaluatingtrendsineachsegment.Refertoeach

businesssegmentsectionforareconciliationtosegmentedearnings.

ComparableearningsandcomparableearningspercommonshareComparableearningsrepresentsearningsorlossesattributabletocommonshareholdersonaconsolidatedbasis,adjustedfor

specificitems.Comparableearningsiscomprisedofsegmentedearnings,Interestexpense,Allowanceforfundsusedduring

construction(AFUDC),Interestincomeandother,Incometaxexpense,Non-controllinginterestsandPreferredshare

dividends,adjustedforspecificitems.RefertotheConsolidatedresultssectionforreconciliationstoNetincomeattributable

tocommonsharesandNetincomepercommonshare.

FundsgeneratedfromoperationsandcomparablefundsgeneratedfromoperationsFundsgeneratedfromoperationsreflectsnetcashprovidedbyoperationsbeforechangesinoperatingworkingcapital.We

believeitisausefulmeasureofourconsolidatedoperatingcashflowsbecauseitexcludesfluctuationsfromworkingcapital

balances,whichdonotnecessarilyreflectunderlyingoperationsinthesameperiod,andisusedtoprovideaconsistent

measureofthecashgeneratingperformanceofourassets.Comparablefundsgeneratedfromoperationsisadjustedforthe

cashimpactofspecificitemsnotedabove.RefertotheFinancialconditionsectionforareconciliationtoNetcashprovidedby

operations.


Capitalprogram

Wearedevelopingqualityprojectsunderourcapitalprogram.Theselong-lifeinfrastructureassetsaresupportedby

long-termcommercialarrangementswithcreditworthycounterpartiesand/orregulatedbusinessmodelsandareexpectedto

generatesignificantgrowthinearningsandcashflows.

Ourcapitalprogramconsistsofapproximately$21billionofsecuredprojectswhichincludecommerciallysupported,

committedprojectsthatareeitherunderconstructionorareinorpreparingtocommencethepermittingstage.Anadditional

$7billionofprojectsunderdevelopmentarecommerciallysupported(exceptwherenoted)buthavegreateruncertaintywith

respecttotimingandestimatedprojectcostsandaresubjecttocertainkeyapprovals.

Threeyearsofmaintenancecapitalexpendituresforourbusinessesareincludedinthesecuredprojectstable.Maintenance

capitalexpendituresonourregulatedCanadianandU.S.naturalgaspipelinesareaddedtoratebaseonwhichwehavethe

opportunitytoearnareturnandrecovertheseexpendituresthroughcurrentorfuturetolls,whichissimilartoourcapacity

capitalprojectsonthesepipelines.Tollingarrangementsinourliquidspipelinesbusinessprovidefortherecoveryof

maintenancecapitalexpenditures.

InthesixmonthsendedJune30,2021,weplacedapproximately$0.5billionofCanadianandU.S.NaturalGasPipelines

capacitycapitalprojectsintoservice.Inaddition,approximately$0.8billionofmaintenancecapitalexpenditureswere

incurred.

Allprojectsaresubjecttocostandtimingadjustmentsduetofactorsincludingweather,marketconditions,routerefinement,

permittingconditions,schedulingandtimingofregulatorypermits,aswellastheadditionalrestrictionsanduncertainty

presentedbytheongoingimpactofCOVID-19.AmountsexcludecapitalizedinterestandAFUDC.


Securedprojects

Expectedin-servicedate

Estimatedprojectcost1

CarryingvalueatJune30,2021(billionsof$)

CanadianNaturalGasPipelines

CanadianMainline 2021-2024 0.3 0.1

NGTLSystem2 2021 1.2 0.8

2022 3.2 1.0

2023 1.7 0.1

2024+ 0.5 —

CoastalGasLink3 2023 0.2 0.2

Regulatedmaintenancecapitalexpenditures 2021-2023 2.1 0.2

U.S.NaturalGasPipelines

Othercapacitycapital 2021-2025 US2.8 US1.0

Regulatedmaintenancecapitalexpenditures 2021-2023 US2.1 US0.3

MexicoNaturalGasPipelines

VilladeReyes 2021-2022 US0.9 US0.8

Tula4 — US0.8 US0.6

LiquidsPipelines

Othercapacitycapital 2022 US0.1 —

Recoverablemaintenancecapitalexpenditures 2021-2023 0.1 —

PowerandStorage

BrucePower–lifeextension5 2021-2024 2.6 1.5

Other

Non-recoverablemaintenancecapitalexpenditures6 2021-2023 0.7 0.1

19.3 6.7

Foreignexchangeimpactonsecuredprojects7 1.6 0.6

Totalsecuredprojects(Cdn$) 20.9 7.3

1 Amountsreflect100percentofcostsrelatedtowholly-ownedassetsaswellascashcontributionstoourjointventureinvestments.

2 Estimatedprojectcostsfor2022and2023include$0.5billionfortheFoothillspipelinesystemrelatedtothe2023WestPathExpansionProgram.

3 Theestimatedprojectcostandcarryingvaluerepresentourshareofpartnerequitycontributionstotheproject,withtheexpectedin-servicedateand

estimatedprojectcostreflectingthelastprojectupdate.RefertotheRecentdevelopments–CanadianNaturalGasPipelinessectionforadditional

informationregardingtheongoingreviewofprojectcostandschedule.

4 ConstructionofthecentralsegmentoftheTulaprojecthasbeendelayedduetoalackofprogresstosuccessfullycompleteIndigenousconsultationby

theSecretaryofEnergy.Projectcompletionisexpectedapproximatelytwoyearsaftertheconsultationprocessissuccessfullyconcluded.TheEast

SectionoftheTulapipelineisavailableforinterruptibletransportationservices.

5 ReflectsourexpectedshareofcashcontributionsfortheUnit6MCRprogramcosts,expectedtobeinservicein2023,andamountstobeinvested

undertheAssetManagementprogramthrough2024.

6 Includesnon-recoverablemaintenancecapitalexpendituresfromallsegmentsandisprimarilycomprisedofourproportionateshareofmaintenance

capitalexpendituresforBrucePowerandotherPowerandStorageassets.

7 ReflectsU.S./Canadaforeignexchangerateof1.24atJune30,2021.


ProjectsunderdevelopmentThecostsprovidedinthetablebelowreflectthemostrecentestimatesforeachprojectasfiledwiththevariousregulatory

authoritiesorotherwisedeterminedbymanagement.

Estimatedprojectcost1

CarryingvalueatJune30,2021(billionsof$)


Othercapacitycapital2 US0.3 —

LiquidsPipelines

GrandRapidsPhase23 0.7 —

PowerandStorage

BrucePower–lifeextension4 5.9 0.3

6.9 0.3

Foreignexchangeimpactonprojectsunderdevelopment5 0.1 —

Totalprojectsunderdevelopment(Cdn$) 7.0 0.3

1 Amountsreflectourproportionateshareofjointventurecostswhereapplicableand100percentofcostsrelatedtowholly-ownedassets.

2 IncludesprojectssubjecttoapositivecustomerFID.

3 Regulatoryapprovalshavebeenobtainedandadditionalcommercialsupportisbeingpursued.

4 ReflectsourproportionateshareofMCRprogramcostsforUnits3,4,5,7and8,andtheremainingAssetManagementprogramcostsbeyond2024.

5 ReflectsU.S./Canadaforeignexchangerateof1.24atJune30,2021.


Consolidatedresults–secondquarter2021




CanadianNaturalGasPipelines 361 682 717 973

U.S.NaturalGasPipelines 688 625 1,561 1,463

MexicoNaturalGasPipelines 138 151 290 390

LiquidsPipelines 250 306 (2,258) 717

PowerandStorage 158 (31) 321 33

Corporate (36) (20) (4) 281

Totalsegmentedearnings 1,559 1,713 627 3,857

Interestexpense (583) (561) (1,153) (1,139)

Allowanceforfundsusedduringconstruction 64 81 114 163

Interestincomeandother 127 203 189 (324)

Income/(loss)beforeincometaxes 1,167 1,436 (223) 2,557

Incometax(expense)/recovery (147) (52) 293 112

Netincome 1,020 1,384 70 2,669

Netincomeattributabletonon-controllinginterests (6) (63) (75) (159)

Netincome/(loss)attributabletocontrollinginterests 1,014 1,321 (5) 2,510

Preferredsharedividends (32) (40) (70) (81)


Netincome/(loss)percommonshare–basic $1.00 $1.36 ($0.08) $2.59

Netincome/(loss)attributabletocommonsharesdecreasedby$299millionand$2.5billionor$0.36and$2.67percommon

shareforthethreeandsixmonthsendedJune30,2021comparedtothesameperiodsin2020.Thisdecreasewasprimarily

duetothe$2.2billionafter-taxassetimpairmentoftheKeystoneXLpipelineproject,netofexpectedcontractualrecoveries

andothercontractualandlegalobligations,recordedthroughtheincomestatementandalsoreflectstheimpactofcommon

sharesissuedfortheacquisitionoftheremainingownershipinterestsinTCPipeLines,LPinfirstquarter2021.

ThefollowingspecificitemswererecognizedinNetincome/(loss)attributabletocommonsharesandwereexcludedfrom

comparableearnings:

2021resultsincluded:

• a$2.2billionafter-taxassetimpairmentchargepredominantlyinfirstquarter2021,netofexpectedcontractualrecoveries

andothercontractualandlegalobligations,relatedtotheterminationoftheKeystoneXLpipelineprojectfollowingthe

January20,2021revocationofthePresidentialPermit.RefertotheRecentdevelopmentssectionforadditionalinformation

• preservationandothercostsof$16millionaftertaxinsecondquarter2021primarilyrelatedtothepreservationand

storageofKeystoneXLpipelineprojectassetswhichcouldnotbeaccruedaspartoftheKeystoneXLimpairmentcharge,

andinterestexpenseontheKeystoneXLproject-levelcreditfacilitypriortoitstermination

• a$13millionafter-taxrecoveryofcertaincostsfromtheIESOinsecondquarter2021associatedwiththeOntarionatural

gas-firedpowerplantssoldin2020.

TheKeystoneXLpipelineprojectassetimpairmentchargedoesnotreflectoffsettingamountswithrespecttothe

GovernmentofAlberta'srelatedinvestmentinKeystoneXLnortheirrepaymentoftheproject'sguaranteedcreditfacility

withoutrecoursetoTCEnergy,bothofwhichwereaccountedforwithintheCondensedconsolidatedstatementofequityin

secondquarter2021andservedtoreduceournetfinancialimpactfromtheKeystoneXLpipelineprojecttermination.Refer

totheRecentdevelopments–LiquidsPipelinessectionforadditionalinformation.


2020resultsincluded:

• anafter-taxgainof$408millionrelatedtothesaleofa65percentequityinterestintheCoastalGasLinkPipelineLimited

Partnership(CoastalGasLinkLP)insecondquarter2020

• anincometaxvaluationallowancereleaseof$281millionfollowingourreassessmentofdeferredincometaxassetsthat

aredeemedmorelikelythannottoberealizedinfirstquarter2020

• anincrementalafter-taxlossof$80millioninsecondquarter2020relatedtotheOntarionatural-gasfiredpowerplants

soldinApril2020,whichresultedinayear-to-dateafter-taxlossof$157millionatJune30,2020.

Netincome/(loss)inbothperiodsincludedunrealizedgainsandlossesfromchangesinriskmanagementactivitieswhichwe

exclude,alongwiththeabovenoteditems,toarriveatcomparableearnings.AreconciliationofNetincome/(loss)

attributabletocommonsharestocomparableearningsisshowninthefollowingtable.

RECONCILIATIONOFNETINCOME/(LOSS)TOCOMPARABLEEARNINGS





Specificitems(netoftax):

KeystoneXLassetimpairmentchargeandother 2 — 2,194 —

KeystoneXLpreservationandother 16 — 16 —

GainonpartialsaleofCoastalGasLinkLP — (408) — (408)

Incometaxvaluationallowancerelease — — — (281)

(Gain)/lossonsaleofOntarionaturalgas-firedpowerplants (13) 80 (13) 157

Riskmanagementactivities1 58 (90) 31 75


Netincome/(loss)percommonshare $1.00 $1.36 ($0.08) $2.59

Specificitems(netoftax):

KeystoneXLassetimpairmentchargeandother — — 2.27 —

KeystoneXLpreservationandother 0.02 — 0.02 —

GainonpartialsaleofCoastalGasLinkLP — (0.43) — (0.43)

Incometaxvaluationallowancerelease — — — (0.30)

(Gain)/lossonsaleofOntarionaturalgas-firedpowerplants (0.01) 0.09 (0.01) 0.17

Riskmanagementactivities 0.06 (0.10) 0.03 0.07

Comparableearningspercommonshare $1.07 $0.92 $2.23 $2.10

1 Riskmanagementactivities threemonthsendedJune30


(millionsof$) 2021 2020 2021 2020

U.S.NaturalGasmarketing (4) — 2 —

Liquidsmarketing (14) (41) 10 7

CanadianPower 1 (2) 1 (1)

NaturalGasStorage 2 (7) 3 (4)

Foreignexchange (63) 170 (58) (102)

Incometaxattributabletoriskmanagementactivities 20 (30) 11 25

Totalunrealized(losses)/gainsfromriskmanagementactivities (58) 90 (31) (75)


COMPARABLEEBITDATOCOMPARABLEEARNINGSComparableEBITDArepresentssegmentedearningsadjustedforthespecificitemsdescribedaboveandexcludesnon-cash

chargesfordepreciationandamortization.ForfurtherinformationonourreconciliationtocomparableEBITDArefertothe

businesssegmentfinancialresultssections.




ComparableEBITDA

CanadianNaturalGasPipelines 684 621 1,370 1,218



LiquidsPipelines 366 432 759 877

PowerandStorage 157 135 338 329

Corporate (4) 6 (7) 4

ComparableEBITDA 2,246 2,199 4,738 4,734

Depreciationandamortization (633) (635) (1,278) (1,265)

Interestexpenseincludedincomparableearnings (577) (561) (1,147) (1,139)


Interestincomeandotherincludedincomparableearnings 158 7 250 55

Incometaxexpenseincludedincomparableearnings (175) (125) (379) (336)




Comparableearningspercommonshare $1.07 0.92 $2.23 $2.10

ComparableEBITDA–2021versus2020

ComparableEBITDAincreasedby$47millionforthethreemonthsendedJune30,2021comparedtothesameperiodin2020

primarilyduetotheneteffectofthefollowing:

• higherEBITDAfromCanadianNaturalGasPipelineslargelyduetotheimpactofincreasedflow-throughincometaxesand

depreciationalongwithhigherrate-baseearningsontheNGTLSystemandCoastalGasLinkdevelopmentfees

• increasedearningsinU.S.NaturalGasPipelinesfromColumbiaGasfollowingtheapplicationforhighertransportationrates

effectiveFebruary1,2021,subjecttorefunduponcompletionofthecurrentrateproceeding,aswellasimprovedearnings

acrossourU.S.NaturalGasPipelinesassetsfollowingthecoldweathereventsof2021impactingmanyoftheU.S.markets

inwhichweoperate

• higherPowerandStorageresultsattributabletoincreasedearningsatBrucePowerin2021duetofeweroutagedaysanda

highercontractprice,partiallyoffsetbyhigheroperatingexpenses,aswellasincreasedNaturalGasStorageandOther

earningsfollowingtheNovember2020acquisitionoftheremaining50percentownershipinterestinTCTurbines



• foreignexchangeimpactofaweakerU.S.dollarontheCanadiandollarequivalentsegmentedearningsinourU.S.

dollar-denominatedoperations.Asdetailedbelow,U.S.dollar-denominatedcomparableEBITDAincreasedby

US$105millioncomparedto2020toUS$1.1billion,however,thiswastranslatedat1.23in2021versus1.39in2020.Refer

totheForeignexchangediscussionbelowforadditionalinformation.


ComparableEBITDAincreasedby$4millionforthesixmonthsendedJune30,2021comparedtothesameperiodin2020

primarilyduetotheneteffectofthefollowing:

• higherEBITDAfromCanadianNaturalGasPipelineslargelyduetotheimpactofincreasedflow-throughdepreciationalong

withhigherrate-baseearningsontheNGTLSystem,CoastalGasLinkdevelopmentfeesandincreasedflow-throughincome

taxesontheCanadianMainline,partiallyoffsetbylowerflow-throughfinancialchargesontheCanadianMainline

• increasedearningsinU.S.NaturalGasPipelinesfromColumbiaGasfollowingtheapplicationforhighertransportationrates

effectiveFebruary1,2021,subjecttorefunduponcompletionofthecurrentrateproceeding,andimprovedearningsacross

ourU.S.NaturalGasPipelinesassetsfollowingthecoldweathereventsof2021impactingmanyoftheU.S.marketsin

whichweoperate

• higherPowerandStorageresultsattributabletoincreasedNaturalGasStorageandOtherearningsfollowingtheNovember

2020acquisitionoftheremaining50percentownershipinterestinTCTurbines,partiallyoffsetbydecreasedearningsin

BrucePowerin2021primarilyduetohigheroperatingexpensesandlowervolumes.CanadianPowerearningsare

consistent,reflectinghigherrealizedmarginsin2021andincreasedearningsfromourMacKayRivercogenerationfacility,

offsetbytheeffectofthesaleofourOntarionaturalgas-firedpowerplantsinApril2020



• lowercontributionfromMexicoNaturalGasPipelinesmainlyduetoUS$55millionoffeesrecognizedin2020associated

withthesuccessfulcompletionoftheSurdeTexaspipeline

• foreignexchangeimpactofaweakerU.S.dollarontheCanadiandollarequivalentsegmentedearningsinourU.S.

dollar-denominatedoperations.Asdetailedbelow,U.S.dollar-denominatedcomparableEBITDAincreasedbyUS$81million

comparedto2020toUS$2.3billion,however,thiswastranslatedat1.25in2021versus1.37in2020.

WhiletheweakeningoftheU.S.dollarin2021comparedtothesameperiodsin2020hadaconsiderablenegativeimpacton

2021comparableEBITDA,thecorrespondingimpactoncomparableearningswasnotsignificantduetooffsettingnaturaland

economichedges.RefertotheForeignexchangediscussionbelowforadditionalinformation.

Duetotheflow-throughtreatmentofcertainexpensesincludingincometaxes,financialchargesanddepreciationonour

Canadianrate-regulatedpipelines,changesintheseexpensesimpactourcomparableEBITDAdespitehavingnosignificant

effectonnetincome.

Comparableearnings–2021versus2020

Comparableearningsincreasedby$182millionor$0.15percommonshareforthethreemonthsendedJune30,2021

comparedtothesameperiodin2020andwasprimarilytheneteffectof:






• higherIncometaxexpenseprimarilyduetohighercomparableearningsandflow-throughincometaxesinourCanadian

rate-regulatedpipelines.


Comparableearningsincreasedby$181millionor$0.13percommonshareforthesixmonthsendedJune30,2021compared

tothesameperiodin2020andwasprimarilytheneteffectof:






• lowerAFUDC,predominantlyonaccountofthesuspensionofrecordingAFUDContheVilladeReyesprojecteffective

January1,2021duetoongoingprojectdelays

• higherIncometaxexpenseprimarilyduetoincreasedflow-throughincometaxesinourCanadianrate-regulatedpipelines

andhighercomparableearnings.

Comparableearningspersharereflectstheimpactofcommonsharesissuedfortheacquisitionoftheremainingownership

interestsinTCPipeLines,LPinfirstquarter2021.RefertotheFinancialconditionsectionofthisMD&Aforfurtherinformation

oncommonshareissuances.

Foreignexchange

CertainofourbusinessesgenerateallormostoftheirearningsinU.S.dollarsand,sincewereportourfinancialresultsin

Canadiandollars,changesinthevalueoftheU.S.dollaragainsttheCanadiandollardirectlyaffectourcomparableEBITDAand

mayalsoimpactcomparableearnings.AsourU.S.dollar-denominatedoperationscontinuetogrow,thisexposureincreases.

AportionoftheU.S.dollar-denominatedcomparableEBITDAexposureisnaturallyoffsetbyU.S.dollar-denominatedamounts

belowcomparableEBITDAwithinDepreciationandamortization,Interestexpenseandotherincomestatementlineitems.

Thebalanceoftheexposureisactivelymanagedonarollingtwo-yearforwardbasisusingforeignexchangederivatives,

however,thenaturalexposurebeyondthatperiodremains.Asnotedpreviously,thenetimpactoftheU.S.dollarmovements

oncomparableearningsforthethreeandsixmonthsendedJune30,2021comparedto2020,afterconsideringnatural

offsetsandeconomichedges,wasnotsignificant.

Averageexchangerate—U.S.toCanadiandollars

TheaverageexchangerateforoneU.S.dollarconvertedintoCanadiandollarswasasfollows:

threemonthsendedJune30,2021 1.23

threemonthsendedJune30,2020 1.39

sixmonthsendedJune30,2021 1.25

sixmonthsendedJune30,2020 1.37


ThecomponentsofourfinancialresultsdenominatedinU.S.dollarsaresetoutinthetablebelow,includingourU.S.and

MexicoNaturalGasPipelinesoperationsalongwiththemajorityofourLiquidsPipelinesbusiness.ComparableEBITDAisa

non-GAAPmeasure.

Pre-taxU.S.dollar-denominatedincomeandexpenseitems threemonthsendedJune30


(millionsofUS$) 2021 2020 2021 2020

ComparableEBITDA


MexicoNaturalGasPipelines1 151 151 310 374

U.S.LiquidsPipelines 217 234 445 489

1,085 980 2,305 2,224

Depreciationandamortization (224) (214) (442) (428)

Interestonlong-termdebtandjuniorsubordinatednotes (313) (331) (630) (663)

Capitalizedinterestoncapitalexpenditures 1 39 10 51


Non-controllinginterestsandother (5) (50) (60) (122)

567 466 1,223 1,137

1 Excludesinterestexpenseonourinter-affiliateloanwithSurdeTexaswhichisfullyoffsetinInterestincomeandother.


Outlook

ConsolidatedcomparableearningsOuroverallcomparableearningspercommonshareoutlookfor2021remainsconsistentwiththe2020AnnualReport.We

continuetomonitortheimpactofCOVID-19andotherdevelopmentsonenergymarkets,ourconstructionprojectsand

regulatoryproceedingsforanypotentialeffectonour2021comparableearningspercommonshare.

ConsolidatedcapitalspendingOurexpectedtotalcapitalexpendituresfor2021asoutlinedinthe2020AnnualReportremainmateriallyunchanged.

Althoughwehaveobservedsomeslowdownoncertainofourconstructionactivitiesandcapitalexpenditures,wedonot

believedisruptionsrelatedtoCOVID-19willbematerialtoouroverall2021capitalprogrambutrecognizethatuncertainty

continuestoexist.


CanadianNaturalGasPipelines

ThefollowingisareconciliationofcomparableEBITDAandcomparableEBIT(ournon-GAAPmeasures)tosegmentedearnings

(themostdirectlycomparableGAAPmeasure).



(millionsof$) 2021 2020 2021 2020

NGTLSystem 408 369 805 713

CanadianMainline 229 223 465 448

OtherCanadianpipelines1 47 29 100 57

ComparableEBITDA 684 621 1,370 1,218


ComparableEBIT 361 312 717 603

Specificitem:

GainonpartialsaleofCoastalGasLinkLP — 370 — 370

Segmentedearnings 361 682 717 973

1 IncludesresultsfromFoothills,VenturesLP,GreatLakesCanada,ourinvestmentinTQM,CoastalGasLinkdevelopmentfeerevenueaswellasgeneral

andadministrativeandbusinessdevelopmentcostsrelatedtoourCanadianNaturalGasPipelines.

CanadianNaturalGasPipelinessegmentedearningsdecreasedby$321millionand$256millionforthethreeandsixmonths

endedJune30,2021comparedtothesameperiodsin2020.Secondquarter2020resultsincludedapre-taxgainof

$370millionrelatedtothesaleofa65percentequityinterestinCoastalGasLinkLPwhichhasbeenexcludedfromour

calculationofcomparableEBIT.

NetincomeandcomparableEBITDAforourrate-regulatedCanadiannaturalgaspipelinesareprimarilyaffectedbyour

approvedROE,ourinvestmentbase,thelevelofdeemedcommonequityandincentiveearnings.Changesindepreciation,

financialchargesandincometaxesaffectcomparableEBITDAbutdonothaveasignificantimpactonnetincomeastheyare

almostentirelyrecoveredinrevenuesonaflow-throughbasis.

NETINCOMEANDAVERAGEINVESTMENTBASE



(millionsof$) 2021 2020 2021 2020

NetIncome

NGTLSystem 155 139 307 274

CanadianMainline 53 39 104 78

Averageinvestmentbase

NGTLSystem 15,179 13,675

CanadianMainline 3,692 3,635

NetincomefortheNGTLSystemincreasedby$16millionand$33millionforthethreeandsixmonthsendedJune30,2021

comparedtothesameperiodsin2020mainlyduetoahigheraverageinvestmentbaseresultingfromcontinuedsystem

expansions.TheNGTLSystemisoperatingunderthe2020-2024RevenueRequirementSettlementwhichincludesanROEof

10.1percenton40percentdeemedcommonequity,theopportunitytoincreasedepreciationratesiftollsfallbelow

specifiedlevelsandanincentivemechanismforcertainoperatingcostswherevariancesfromprojectedamountsareshared

withourcustomers.


NetincomefortheCanadianMainlineincreasedby$14millionand$26millionforthethreeandsixmonthsended

June30,2021comparedtothesameperiodsin2020largelyduetohigherincentiveearningsandtheeliminationofa

$20millionafter-taxannualTCEnergycontributionincludedinthepreviousNEB2014Decision.BeginningJanuary1,2021,

theCanadianMainlineisoperatingunderthe2021-2026MainlineSettlementwhichincludesanapprovedROEof

10.1percenton40percentdeemedcommonequityandanincentivetodecreasecostsandincreaserevenuesonthe

pipelineunderabeneficialsharingmechanismwithourcustomers.

COMPARABLEEBITDAComparableEBITDAforCanadianNaturalGasPipelinesincreasedby$63millionand$152millionforthethreeandsixmonths

endedJune30,2021comparedtothesameperiodsin2020duetotheneteffectof:

• increasedrate-baseearningsandhigherflow-throughdepreciationandincometaxesontheNGTLSystem

• CoastalGasLinkdevelopmentfeerevenuewhichcommencedinsecondquarter2020

• higherflow-throughincometaxes,increasedincentiveearningsandeliminationoftheTCEnergycontribution,partially

offsetbylowerflow-throughfinancialchargesanddepreciationontheCanadianMainline.

DEPRECIATIONANDAMORTIZATIONDepreciationandamortizationincreasedby$14millionand$38millionforthethreeandsixmonthsendedJune30,2021

comparedtothesameperiodsin2020mainlyduetoNGTLSystemexpansionfacilitiesthatwereplacedinservice,partially

offsetbylowerdepreciationontheCanadianMainline.



OnMarch3,2021,weacquiredalltheoutstandingcommonunitsofTCPipeLines,LPnotbeneficiallyownedbyTCEnergyor

ouraffiliatesinexchangeforTCEnergycommonshares(TCPipeLines,LPacquisition).RefertotheRecentdevelopments

sectionforadditionalinformation.TCPipeLines,LPresultsforthethreeandsixmonthsendedJune30,2021andcomparative

resultsforthesameperiodsin2020reflectourownershipinterestsineightnaturalgaspipelinespriortotheacquisition.

ThetablebelowisareconciliationofcomparableEBITDAandcomparableEBIT(ournon-GAAPmeasures)tosegmented

earnings(themostdirectlycomparableGAAPmeasure).



(millionsofUS$,unlessotherwisenoted) 2021 2020 2021 2020

ColumbiaGas 355 288 763 660

ANR 150 114 301 261

ColumbiaGulf 52 47 109 97

GreatLakes1,4 36 17 77 47

GTN2,4 40 — 55 —

OtherU.S.pipelines3,4 77 22 137 50

TCPipeLines,LP4,5 — 26 24 60

Non-controllinginterests5 7 81 84 186

ComparableEBITDA 717 595 1,550 1,361


ComparableEBIT 564 451 1,249 1,073

Foreignexchangeimpact 128 174 310 390

ComparableEBIT(Cdn$) 692 625 1,559 1,463

Specificitem:

Riskmanagementactivities (4) — 2 —

Segmentedearnings(Cdn$) 688 625 1,561 1,463

1 Resultsreflectour53.55percentdirectinterestinGreatLakesuntilMarch3,2021andour100percentownershipinterestsubsequenttothe

TCPipeLines,LPacquisition.

2 Reflects100percentofGTN'searningssubsequenttotheTCPipeLines,LPacquisitiononMarch3,2021.

3 Reflectsearningsfromourownershipinourmineralrightsbusiness(CEVCO),Crossroads,andourshareofequityincomefromMillenniumandHardy

Storage,aswellasgeneralandadministrativeandbusinessdevelopmentcostsrelatedtoourU.S.naturalgaspipelines.Fortheperiodsubsequentto

theTCPipeLines,LPacquisitiononMarch3,2021,resultsalsoinclude100percentofBison,NorthBaja,andTuscarora,61.7percentofPortland,plus

ourequityincomefromNorthernBorderandIroquois.

4 OurownershipinterestinTCPipeLines,LPwas25.5percentpriortotheacquisitiononMarch3,2021,atwhichtimeitbecame100percent.Priorto

March3,2021,resultsreflectedTCPipeLines,LP’s46.45percentinterestinGreatLakes,itsownershipofGTN,Bison,NorthBaja,Portlandand

TuscaroraaswellasitsshareofequityincomefromNorthernBorderandIroquois.

5 ReflectsearningsattributabletoportionsofTCPipeLines,LPandPortlandthatwedidnotownpriortotheTCPipeLines,LPacquisitionon

March3,2021,andsubsequentlyreflectsearningsattributabletotheremaining38.3percentinterestinPortlandwedonotown.

U.S.NaturalGasPipelinessegmentedearningsincreasedby$63millionand$98millionforthethreeandsixmonthsended

June30,2021comparedtothesameperiodsin2020andincludedunrealizedlossesandgainsfromchangesinthefairvalue

ofderivativesrelatedtoourU.S.NaturalGasmarketingbusinessin2021whichhavebeenexcludedfromourcalculationof

comparableEBIT.AweakerU.S.dollarin2021hadanegativeimpactontheCanadiandollarequivalentsegmentedearnings

fromourU.S.operationscomparedtothesameperiodin2020.RefertotheConsolidatedresults–Foreignexchangesection

foradditionalinformation.


ComparableEBITDAforU.S.NaturalGasPipelinesincreasedbyUS$122millionandUS$189millionforthethreeandsix

monthsendedJune30,2021comparedtothesameperiodsin2020andwasprimarilyduetotheneteffectof:

• anetincreaseinearningsfromColumbiaGasfollowingtheapplicationforhighertransportationrateseffective

February1,2021,subjecttorefunduponcompletionoftherateproceeding,alongwithincrementalearningsresultingfrom

greatercapitalizedpipelineintegritycostsin2021comparedto2020,partiallyoffsetbyhigherpropertytaxes.Refertothe

Recentdevelopmentssectionforadditionalinformation

• increasedearningsacrossourU.S.NaturalGasPipelinesassetsduetothecoldweathereventsoffirstquarter2021

impactingmanyoftheU.S.marketsinwhichweoperate.

ThepositiveimpactoncomparableearningsfollowingtheMarch3,2021TCPipeLines,LPacquisitionnotedaboveisreflected

throughareductioninNon-controllinginterests.RefertotheCorporate–Netincomeattributabletonon-controllinginterests

sectionforadditionalinformation.

DEPRECIATIONANDAMORTIZATIONDepreciationandamortizationincreasedbyUS$9millionandUS$13millionforthethreeandsixmonthsendedJune30,2021

comparedtothesameperiodsin2020mainlyduetonewprojectsplacedinservice.


MexicoNaturalGasPipelines

ThefollowingisareconciliationofcomparableEBITDAandcomparableEBIT(ournon-GAAPmeasures)tosegmentedearnings

(themostdirectlycomparableGAAPmeasure).



(millionsofUS$,unlessotherwisenoted) 2021 2020 2021 2020

Topolobampo 40 40 81 80

SurdeTexas1 27 28 61 122

Tamazunchale 31 30 62 60

Guadalajara 18 15 37 31

Mazatlán 18 17 35 35

ComparableEBITDA 134 130 276 328




ComparableEBITandsegmentedearnings(Cdn$) 138 151 290 390

1 Representsequityincomefromour60percentinterestandfeesearnedfromtheconstructionandoperationofthepipeline.

MexicoNaturalGasPipelinescomparableEBITandsegmentedearningsdecreasedby$13millionand$100millionforthe

threeandsixmonthsendedJune30,2021comparedtothesameperiodsin2020.LowercomparableEBITDAandaweaker

U.S.dollarforthethreeandsixmonthsendedJune30,2021hadanegativeimpactontheCanadiandollarequivalent

segmentedearningscomparedtothesameperiodsin2020.RefertotheConsolidatedresults–Foreignexchangesectionfor

additionalinformation.

ComparableEBITDAforMexicoNaturalGasPipelinesincreasedbyUS$4millionforthethreemonthsendedJune30,2021

comparedtothesameperiodin2020primarilyasaresultofincreasedearningsonGuadalajarafollowingtheimplementation

ofaflowreversalcompletedin2020,anddecreasedbyUS$52millionforthesixmonthsendedJune30,2021comparedto

thesameperiodin2020mainlyattributabletoUS$55millionoffeesrecognizedinfirstquarter2020associatedwiththe

successfulcompletionoftheSurdeTexaspipeline.

DEPRECIATIONANDAMORTIZATIONDepreciationandamortizationforthethreeandsixmonthsendedJune30,2021wasconsistentwiththesameperiodsin

2020.


LiquidsPipelines

ThefollowingisareconciliationofcomparableEBITDAandcomparableEBIT(ournon-GAAPmeasures)tosegmented

earnings/(losses)(themostdirectlycomparableGAAPmeasure).



(millionsof$) 2021 2020 2021 2020

KeystonePipelineSystem 311 380 629 768

Intra-Albertapipelines1 23 23 45 47

Liquidsmarketingandother 32 29 85 62




Specificitems:

KeystoneXLassetimpairmentchargeandother (9) — (2,854) —

KeystoneXLpreservationandother (15) — (15) —

Riskmanagementactivities (14) (41) 10 7

Segmentedearnings/(losses) 250 306 (2,258) 717

ComparableEBITDAdenominatedasfollows:

Canadiandollars 100 107 204 209

U.S.dollars 217 234 445 489



1 Intra-AlbertapipelinesincludeGrandRapids,WhiteSpruceandNorthernCourier.

LiquidsPipelinessegmentedearningsdecreasedby$56millionand$2,975millionforthethreeandsixmonthsended

June30,2021comparedtothesameperiodsin2020andincludedthefollowingspecificitemswhichhavebeenexcluded

fromourcalculationofcomparableEBITandcomparableearnings:

• a$9millionand$2,854millionpre-taxassetimpairmentcharge,netofexpectedcontractualrecoveriesandother

contractualandlegalobligations,forthethreeandsixmonthsendedJune30,2021,associatedwiththeterminationofthe

KeystoneXLpipelineandrelatedprojectsfollowingtheJanuary20,2021revocationofthePresidentialPermit.Refertothe

Recentdevelopmentssectionforadditionalinformation

• pre-taxpreservationandothercostsof$15millionforthethreeandsixmonthsendedJune30,2021relatedtothe

preservationandstorageoftheKeystoneXLpipelineprojectassetswhichcouldnotbeaccruedaspartoftheKeystoneXL

impairmentcharge

• unrealizedlossesandgainsfromchangesinthefairvalueofderivativesrelatedtoourliquidsmarketingbusiness.

AweakerU.S.dollarin2021hadanegativeimpactontheCanadiandollarequivalentsegmentedearningsfromour

U.S.operationscomparedtothesameperiodsin2020.RefertotheConsolidatedresults–Foreignexchangesectionfor



ComparableEBITDAforLiquidsPipelinesdecreasedby$66millionand$118millionforthethreeandsixmonthsended

June30,2021comparedtothesameperiodsin2020andwasprimarilyduetotheneteffectof:

• lowervolumesontheKeystonePipelineSystem

• increasedcontributionsfromliquidsmarketingactivitiesmainlyattributabletohighermarginsandvolumes.

DEPRECIATIONANDAMORTIZATIONDepreciationandamortizationdecreasedby$7millionand$9millionforthethreeandsixmonthsendedJune30,2021

comparedtothesameperiodsin2020primarilyasaresultofaweakerU.S.dollar.


PowerandStorage

ThefollowingisareconciliationofcomparableEBITDAandcomparableEBIT(ournon-GAAPmeasures)tosegmented

earnings/(losses)(themostdirectlycomparableGAAPmeasure).



(millionsof$) 2021 2020 2021 2020

BrucePower1 90 80 184 199

CanadianPower2 57 55 126 125

NaturalGasStorageandother 10 — 28 5




Specificitems:

Gain/(loss)onsaleofOntarionaturalgas-firedpowerplants 17 (145) 17 (261)

Riskmanagementactivities 3 (9) 4 (5)

Segmentedearnings/(losses) 158 (31) 321 33

1 RepresentsourshareofequityincomefromBrucePower.

2 IncludesNapaneefromin-serviceinMarch2020andourotherOntarionaturalgas-firedpowerplantsuntilsoldinApril2020.

PowerandStoragesegmentedearningsincreasedby$189millionand$288millionforthethreeandsixmonthsended

June30,2021comparedtothesameperiodsin2020andincludedthefollowingspecificitemswhichhavebeenexcluded

fromcomparableEBIT:

• a$17millionpre-taxrecoveryofcertaincostsfromtheIESOinsecondquarter2021associatedwiththeOntarionatural

gas-firedpowerplantssoldin2020.Incrementalpre-taxlossesonthesaleof$145millionand$261millionwererecorded

inthethreeandsixmonthsendedJune30,2020

• unrealizedgainsandlossesfromchangesinthefairvalueofderivativesusedtoreduceourexposuretocertaincommodity

pricerisks.

ComparableEBITDAforPowerandStorageincreasedby$22millionand$9millionforthethreeandsixmonthsended

June30,2021comparedtothesameperiodsin2020primarilyduetotheneteffectof:

• increasedBrucePowercontributionforthethreemonthsendedJune30,2021comparedtothesameperiodin2020driven

byhighervolumesresultingfromfeweroutagedaysandahighercontractprice,partiallyoffsetbyincreasedoperating

expenses.DecreasedresultsforthesixmonthsendedJune30,2021versusthesameperiodin2020weremainly

attributabletoincreasedoperatingexpensesandlowervolumesresultingfromgreateroutagedays,partiallyoffsetbygains

in2021onfundsinvestedforpost-retirementbenefits.AdditionalfinancialandoperatinginformationonBrucePoweris

providedbelow

• increasedNaturalGasStorageandotherearningsasaresultoftheNovember2020acquisitionoftheremaining50percent

ownershipinterestinTCTurbinesandhigherrealizedAlbertanaturalgasstoragespreads

• consistentCanadianPowerearningsreflectinghigherrealizedmarginsin2021aswellasearningsfromourMacKayRiver

cogenerationfacilityfollowingitsreturntoserviceinMay2020,offsetbythesaleofourOntarionaturalgas-firedpower

plantsinApril2020.

DEPRECIATIONANDAMORTIZATIONDepreciationandamortizationincreased$7millionand$8millionforthethreeandsixmonthsendedJune30,2021

comparedtothesameperiodsin2020andincludesincrementalTCTurbinesdepreciationfollowingtheNovember2020

acquisitionoftheremaining50percentownershipinterestaswellasotheradjustmentsinsecondquarter2020.


BRUCEPOWERThefollowingreflectsourproportionateshareofthecomponentsofcomparableEBITDAandcomparableEBIT.



(millionsof$,unlessotherwisenoted) 2021 2020 2021 2020

EquityincomeincludedincomparableEBITDAandEBITcomprisedof:

Revenues1 405 371 809 838

Operatingexpenses (238) (211) (463) (447)

Depreciationandother (77) (80) (162) (192)

ComparableEBITDAandEBIT2 90 80 184 199

BrucePower–otherinformation

Plantavailability3,4 85% 79% 85% 86%

Plannedoutagedays4 91 123 165 169

Unplannedoutagedays 7 6 22 12

Salesvolumes(GWh)2 5,032 4,716 10,096 10,308

RealizedpowerpriceperMWh5 $81 $80 $80 $81

1 NetofamountsrecordedtoreflectoperatingcostefficienciessharedwiththeIESO.

2 Representsour48.3percent(2020–48.4percent)ownershipinterestinBrucePower.SalesvolumesincludedeemedgenerationandUnit6output

untilJanuary2020whenitsMCRprogramcommenced.

3 Thepercentageoftimetheplantwasavailabletogeneratepower,regardlessofwhetheritwasrunning.

4 ExcludesUnit6MCRoutagedays.

5 Calculationbasedonactualanddeemedgeneration.RealizedpowerpriceperMWhincludesrealizedgainsandlossesfromcontractingactivitiesand

costflow-throughitems.Excludesunrealizedgainsandlossesoncontractingactivitiesandnon-electricityrevenues.

TheUnit6MCRoutagecommencedinJanuary2020.PlannedmaintenanceonUnit1wascompletedinfirstquarter2021and

commencedonUnit3inMarch2021.DuringtheUnit6MCRandUnit3outagescurrentlyunderway,certainfindingsarose

thatareexpectedtoresultinadelaytothereturntoserviceofUnit3.RefertotheRecentdevelopmentssectionofthis

MD&Aforfurtherinformation.PlannedmaintenanceisstillexpectedtooccuronUnit7infourthquarter2021andthe

average2021plantavailability,excludingtheUnit6MCR,isnowexpectedtobeinthelow-80percentrange.


Corporate

ThefollowingisareconciliationofcomparableEBITDAandcomparableEBIT(ournon-GAAPmeasures)toCorporate

segmented(losses)/earnings(themostdirectlycomparableGAAPmeasure).



(millionsof$) 2021 2020 2021 2020

ComparableEBITDAandEBIT (4) 6 (7) 4

Specificitem:

Foreignexchange(loss)/gain–inter-affiliateloans1 (32) (26) 3 277

Segmented(losses)/earnings (36) (20) (4) 281

1 ReportedinIncomefromequityinvestmentsintheCondensedconsolidatedstatementofincome.

Corporatesegmentedlossesincreasedby$16millionforthethreemonthsendedJune30,2021whileCorporatesegmented

earningsdecreasedby$285millionforthesixmonthsendedJune30,2021comparedtothesameperiodsin2020and

includedforeignexchangelossesandgainsonourproportionateshareofpeso-denominatedinter-affiliateloanstothe

SurdeTexasjointventurefromitspartners.TheseamountsarerecordedinIncomefromequityinvestmentsintheCorporate

segmentandhavebeenexcludedfromourcalculationofcomparableEBITDAandEBITastheyarefullyoffsetby

correspondingforeignexchangegainsandlossesontheinter-affiliateloanreceivableincludedinInterestincomeandother.

RefertotheFinancialrisksandfinancialinstruments–Relatedpartytransactionssectionforadditionalinformation.

ComparableEBITDAandEBITforCorporatedecreasedby$10millionand$11millionforthethreeandsixmonthsended

June30,2021comparedtothesameperiodsin2020primarilyduetoaU.S.capitaltaxadjustmentrecordedinsecond

quarter2020.

Interestexpense

threemonthsended

June30sixmonthsended

June30

(millionsof$) 2021 2020 2021 2020

Interestonlong-termdebtandjuniorsubordinatednotes

Canadiandollar-denominated (177) (176) (347) (333)

U.S.dollar-denominated (313) (331) (630) (663)

Foreignexchangeimpact (73) (127) (157) (242)

(563) (634) (1,134) (1,238)

Otherinterestandamortizationexpense (15) (14) (31) (52)

Capitalizedinterest 1 87 18 151

Interestexpenseincludedincomparableearnings (577) (561) (1,147) (1,139)

Specificitem:

KeystoneXLpreservationandother (6) — (6) —

Interestexpense (583) (561) (1,153) (1,139)


Interestexpenseincreasedby$22millionand$14millionforthethreeandsixmonthsendedJune30,2021comparedtothe

sameperiodsin2020andincluded$6millioninsecondquarter2021relatedtotheKeystoneXLproject-levelcreditfacilityfor

theperiodfollowingtherevocationofthePresidentialPermitfortheKeystoneXLpipeline.Thishasbeenremovedfromour

calculationofinterestexpenseincludedincomparableearnings.

Interestexpenseincludedincomparableearningsincreasedby$16millionand$8millionforthethreeandsixmonthsended

June30,2021comparedtothesameperiodsin2020primarilyduetotheneteffectof:

• lowercapitalizedinterestduetoitscessationfortheKeystoneXLpipelineprojectfollowingtherevocationofthe

PresidentialPermitinJanuary2021,thechangetoequityaccountingforourCoastalGasLinkinvestmentuponthesaleofa

65percentinterestinCoastalGasLinkLPinsecondquarter2020andthecompletionoftheNapaneepowerplantinfirst

quarter2020

• long-termdebtissuances,netofmaturities.RefertotheFinancialconditionsectionforadditionalinformation

• lowerinterestratesonreducedlevelsofshort-termborrowings

• theforeignexchangeimpactfromaweakerU.S.dollarontranslationofU.S.dollar-denominatedinterest.

Allowanceforfundsusedduringconstruction

threemonthsended


June30

(millionsof$) 2021 2020 2021 2020

Canadiandollar-denominated 36 23 64 60

U.S.dollar-denominated 23 42 40 75



AFUDCdecreasedby$17millionand$49millionforthethreeandsixmonthsendedJune30,2021comparedtothesame

periodsin2020.TheincreasesinCanadiandollar-denominatedAFUDCareprimarilyrelatedtoahigherbalanceof

NGTLSystemexpansionprojectsunderconstruction.ThedecreasesinU.S.dollar-denominatedAFUDCaremainlytheresult

ofthesuspensionofrecordingAFUDContheVilladeReyesprojecteffectiveJanuary1,2021duetoongoingdelaysonthe

project,partiallyoffsetbyincreasedcapitalexpendituresonANRpipelineprojects.

Interestincomeandother

threemonthsended


June30

(millionsof$) 2021 2020 2021 2020

Interestincomeandotherincludedincomparableearnings 158 7 250 55

Specificitems:

Foreignexchangegains/(losses)–inter-affiliateloan 32 26 (3) (277)

Riskmanagementactivities (63) 170 (58) (102)

Interestincomeandother 127 203 189 (324)

Interestincomeandotherdecreasedby$76millionandincreasedby$513millionforthethreeandsixmonthsended

June30,2021comparedtothesameperiodsin2020andincludedthefollowingspecificitemswhichhavebeenremoved

fromourcalculationofInterestincomeandotherincludedincomparableearnings:

• foreignexchangegainsandlossesonthepeso-denominatedinter-affiliateloanreceivablefromtheSurdeTexasjoint

venture

• unrealizedlossesandgainsfromchangesinthefairvalueofderivativesusedtomanageourforeignexchangerisk.


Ourproportionateshareofthecorrespondingforeignexchangelossesandgainsandinterestexpenseonthe

peso-denominatedinter-affiliateloanstotheSurdeTexasjointventurefromitspartnersarereflectedinIncomefromequity

investmentsintheCorporateandMexicoNaturalGasPipelinessegments,respectively.Theforeignexchangegainsandlosses

ontheseinter-affiliateloansareremovedfromcomparableearningswhiletheinterestincomeandinterestexpenseare

includedincomparableearningswithallamountsoffsettingandresultinginnoimpactonnetincome.RefertotheFinancial

risksandfinancialinstruments–RelatedPartyTransactionssectionforadditionalinformation.

Interestincomeandotherincludedincomparableearningsincreasedby$151millionand$195millionforthethreeandsix

monthsendedJune30,2021comparedtothesameperiodsin2020mainlyduetorealizedgainsin2021comparedtorealized

lossesin2020onderivativesusedtomanageournetexposuretoforeignexchangeratefluctuationsonU.S.dollar-

denominatedincome.

Incometax(expense)/recovery

threemonthsended


June30

(millionsof$) 2021 2020 2021 2020

Incometaxexpenseincludedincomparableearnings (175) (125) (379) (336)

Specificitems:

KeystoneXLassetimpairmentchargeandother1 7 — 660 —

KeystoneXLpreservationandother1 5 — 5 —

Incometaxvaluationallowancerelease — — — 281

Gain/(loss)onsaleofOntarionaturalgas-firedpowerplants (4) 65 (4) 104

GainonpartialsaleofCoastalGasLinkLP — 38 — 38

Riskmanagementactivities 20 (30) 11 25

Incometax(expense)/recovery (147) (52) 293 112

1 Includes$7millionofdeferredincometaxrecoveryand$5millionofcurrentincometaxrecoveryforthethreemonthsendedJune30,2021and

$785millionofdeferredincometaxrecoveryand$120millionofcurrentincometaxexpenseforthesixmonthsendedJune30,2021.

Incometaxexpenseincreasedby$95millionforthethreemonthsendedJune30,2021comparedtothesameperiodin2020

primarilyduetothereleaseofincometaxvaluationallowancesrelatedtotheOntarionaturalgas-firedpowerplantand

CoastalGasLinkLPsaletransactionsandthenon-taxableportionofcapitalgainsrecognizedinsecondquarter2020.Income

taxrecoveryincreasedby$181millionforthesixmonthsendedJune30,2021comparedtothesameperiodin2020primarily

duetotheincometaximpactoftheKeystoneXLpipelineprojectassetimpairmentchargein2021,partiallyoffsetbythe

incometaxvaluationallowancereleaseof$281millionwhichwasrecordedinfirstquarter2020followingourreassessment

ofdeferredincometaxassetsthataredeemedmorelikelythannottoberealizedalongwiththereleaseofincometax

valuationallowancesrelatedtotheOntarionaturalgas-firedpowerplantandCoastalGasLinkLPsaletransactionsandthe

non-taxableportionofcapitalgainsrecognizedinsecondquarter2020.TheseitemswereremovedfromIncometaxexpense

includedincomparableearningsinadditiontotheincometaximpactsofthespecificitemsreferencedelsewhereinthis

MD&A.

Incometaxexpenseincludedincomparableearningsincreasedby$50millionand$43millionforthethreeandsixmonths

endedJune30,2021comparedtothesameperiodsin2020primarilyduetohigherflow-throughincometaxesonCanadian

rate-regulatedpipelinesandincreasedearnings,partiallyoffsetbyhigherforeignincometaxratedifferentials.


Netincomeattributabletonon-controllinginterests

threemonthsended


June30

(millionsof$) 2021 2020 2021 2020


Netincomeattributabletonon-controllinginterestsforthethreeandsixmonthsendedJune30,2021decreasedby

$57millionand$84millioncomparedtothesameperiodsin2020primarilyasaresultoftheMarch3,2021acquisitionofall

outstandingcommonunitsofTCPipeLines,LPnotbeneficiallyownedbyTCEnergy.Subsequenttotheacquisition,

TCPipeLines,LPbecameanindirect,wholly-ownedsubsidiaryofTCEnergy.RefertotheU.S.NaturalGasPipelinessectionand

Note10,Non-controllinginterests,ofourCondensedconsolidatedfinancialstatementsforadditionalinformation.

Preferredsharedividends



(millionsof$) 2021 2020 2021 2020


Preferredsharedividendsdecreasedby$8millionand$11millionforthethreeandsixmonthsendedJune30,2021

comparedtothesameperiodsin2020primarilyduetotheredemptionofallissuedandoutstandingSeries13preferred

sharesonMay31,2021.


Recentdevelopments

COVID-19AmidtheongoingadaptationsandrestrictionsinplaceasaresultoftheCOVID-19pandemic,wecontinuetoeffectively

operateourassets,conductcommercialactivitiesandexecuteonprojectswithafocusonhealth,safetyandreliability.While

itremainsprematuretoascertainanylong-termimpactthatCOVID-19mayhaveonourcapitalprogram,directionallywe

haveobservedsomeslowdownoncertainofourconstructionactivitiesandcapitalexpenditureslargelyduetopermitting

delaysasregulatorshavebeenunabletoprocesspermitsandconductconsultationswithintimeframesthatwereoriginally

anticipated.AdditionaldetailsforcapitalprojectsmoresignificantlyimpactedbyCOVID-19areprovidedbelow.

ThedegreetowhichCOVID-19hasamorepronouncedlonger-termimpactonouroperationsandgrowthprojectswill

dependonfuturedevelopments,policiesandactions,allofwhichremainsomewhatuncertain.Additionalinformation

regardingtherisks,uncertaintiesandimpactonourbusinessfromCOVID-19canbefoundthroughoutthisMD&Aincluding

theCapitalprogram,OutlookandtheFinancialrisksandfinancialinstrumentssections.

CANADIANNATURALGASPIPELINES

CoastalGasLinkFromDecember2020untilApril13,2021,inresponsetotheCOVID-19pandemic,anorderoftheBritishColumbiaProvincial

HealthOfficerrestrictedthenumberofworkersonindustrialsitesacrossnorthernBritishColumbia,includingCoastalGasLink,

and,asaresult,onlycriticalconstructionactivitiescontinuedduringthistime.Majorerosionandsedimentcontrolworkwas

requiredintheabsenceofcontinuedpipelineconstructionduringthewinterperiod.OnApril13,2021,theprovincialhealth

orderwasliftedallowingtheprojecttofinalizeremobilizationplansforthesummerconstructionprogram.

Asaresultofscopechanges,permitdelaysandtheimpactsfromCOVID-19,includingtheprovincialhealthorder,wecontinue

toexpectprojectcoststoincreasesignificantlyalongwithadelaytoprojectcompletioncomparedtotheoriginalprojectcost

andschedule.CoastalGasLinkhassoughtandwillcontinuetomitigatecostincreasesandscheduledelays.CoastalGasLink

expectsincrementalcostswillbeincludedinthefinalpipelinetolls,subjecttocertainconditions.

CoastalGasLinkisindisputewithLNGCanadawithrespecttotherecognitionofcertaincostsandtheimpactsonschedule.If

aresolutionisnotreachedinthenearterm,CoastalGasLinkmayberequiredtosuspendcertainkeyconstructionactivities

butwouldcontinuewithworkrequiredforsafetyreasonsandcompliancewithregulatoryrequirements.Anyequityrequired

tobecontributedbyCoastalGasLinkLPpartners,includingus,tofundincrementalcostswillbedeterminedbythesubstance

ofaresolutionwithLNGCanada.

CoastalGasLinkcontinuestohaveaccesstoasubordinateddemandrevolvingfacilitywithTCEnergywhichprovidesthe

projectwithadditionalshort-termfundingandfinancialflexibilityandonwhich$220millionwasdrawnatJune30,2021.If

necessary,asaninterimmeasure,thetotalamountofavailablecreditfacilitiesprovidedtoCoastalGasLinkbyTCEnergymay

beexpandedtoallowCoastalGasLinktoaccessincrementalshort-termfundingasabridgetoarequiredincreasein

project-levelfinancingorprojectrecoveries.

NGTLSystemInthesixmonthsendedJune30,2021,theNGTLSystemplacedapproximately$0.1billionofcapacityprojectsinservice.


U.S.NATURALGASPIPELINES

ColumbiaGasSection4RateCaseColumbiaGasfiledaSection4RateCasewithFERCinJuly2020requestinganincreasetoitsmaximumtransportationrates

effectiveFebruary1,2021,subjecttorefunduponcompletionoftherateproceeding.OnJuly28,2021,ColumbiaGasnotified

FERCthatithasreachedasettlement-in-principlewithitscustomersaddressingallremainingissuesinthecase,includingbut

notlimitedtotheresolutionofratesandcontinuationofColumbiaGas'smodernizationprogram.Whiledefinitivetermsare

stillbeingfinalized,ColumbiaGasexpectsafinalsettlementtobefiledwithFERCinthirdquarter2021,with2021revenue

expectedtobegenerallyconsistentwithestimatesrecordedtodate,subjecttorevisionfollowingcompletionandapprovalof

settlementterms.

AcquisitionofTCPipeLines,LPOnMarch3,2021,wecompletedthepreviouslyannouncedacquisitionpursuanttotheagreementdatedDecember14,2020.

RefertotheRecentdevelopments–Corporatesectionforadditionalinformation.

GrandChenierXPressPhaseIofGrandChenierXPress,anexpansionprojectontheANRpipelinesystemconnectingsupplydirectlyto

U.S.GulfCoastLNGexportfacilities,wentintoserviceinApril2021.PhaseIIisexpectedtobeplacedinserviceinearly2022.

VRProjectWeareactivelydevelopingprojectsthatwillreplaceandupgradecertainfacilitieswhilereducingemissionsalongportionsof

ourpipelinesystemsinprincipaldeliverymarkets.Theenhancedfacilitieswillimprovereliabilityofthesystemsandallowfor

additionaltransportationservicestoaddressgrowingdemandunderlong-termcontractswhilereducingdirectcarbondioxide

equivalent(CO2e)emissions.Consistentwiththisinitiative,theVRprojectontheColumbiaGassystemhasbeensanctioned,

subjecttocustomaryconditionsprecedentandnormal-courseregulatoryapprovalsandisincludedintheSecuredprojects

tablewithintheCapitalprogramsectionofthisMD&A.ThisprojectrepresentsanapproximateUS$0.7billioncapital

investmentandistargetedtobeplacedinserviceduringthesecondhalfof2025.

MEXICONATURALGASPIPELINES

TulaandVilladeReyesTheCFEinitiatedarbitrationinJune2019fortheTulaandVilladeReyesprojects,disputingfixedcapacitypaymentsdueto

forcemajeureevents.Arbitrationproceedingsarecurrentlysuspendedwhilemanagementadvancessettlementdiscussions

withtheCFE.

VilladeReyesconstructionisongoingbuthasbeendelayedduetoCOVID-19contingencymeasureswhichhaveimpededour

abilitytoobtainworkauthorizationsasaresultofadministrativeclosures.Weexpecttoreachpartialin-servicebytheendof

2021,withtheremainderoftheconstructionofVilladeReyescompletedinthefirsthalfof2022.

LIQUIDSPIPELINES

KeystoneXLOnJune9,2021,followingtherevocationofthePresidentialPermitfortheKeystoneXLpipelineprojectonJanuary20,2021,

andafteracomprehensivereviewofoptionsinconsultationwithourpartner,theGovernmentofAlberta,weterminatedthe

KeystoneXLpipelineproject.

TheKeystoneXLinvestmentwasevaluatedforimpairmentinfirstquarter2021alongwithourinvestmentsinrelatedcapital

projectsincludingHeartlandPipeline,TCTerminalsandKeystoneHardistyTerminal.Wedeterminedthatthecarryingamount

oftheseassetswasnolongerfullyrecoverable.Asaresult,werecognizedanassetimpairmentcharge,netofexpected

contractualrecoveriesandothercontractualandlegalobligationsrelatedtoterminationactivities,of$2.8billion($2.2billion

aftertax)forthesixmonthsendedJune30,2021,whichwasexcludedfromcomparableearnings.Theassetimpairment

chargewasbasedontheexcessofthecarryingvalueof$3.3billionovertheestimatedfairvalueof$0.2billion.


Terminationactivitiesandrelatedcostswillcontinuethrough2022withanyadjustmentstotheestimatedfairvalueand

futurecontractualandlegalobligationsexpensedasdeterminedandexcludedfromcomparableearnings.RefertoNote5,

KeystoneXL,ofourCondensedconsolidatedfinancialstatementsforadditionalinformation.

Althoughwerecordeda$2.2billionafter-taxassetimpairmentcharge,netofexpectedcontractualrecoveriesandother

contractualandlegalobligationsrelatedtotheKeystoneXLpipelineprojectterminationactivities,asignificantportionofthis

amountwassharedwiththeGovernmentofAlberta,therebyreducingthenetfinancialimpacttoTCEnergy.InJune2021,

ClassAInterestspreviouslyissuedtotheGovernmentofAlbertatotaling$394millionwererepurchasedforanominal

amount,the$1.0billion(US$849million)balanceonthecreditfacilitywasguaranteedandfullypaidbytheGovernmentof

Albertaand$91millionofClassCInterestswereissuedtotheGovernmentofAlbertaentitlingthemtofutureliquidation

proceedsfromspecifiedKeystoneXLprojectassets.Afterconsideringthesetransactions,includingthetaximpactthereon,

thenetfinancialimpacttousasaresultoftheterminationofKeystoneXLandrelatedprojectsatJune30,2021was

$1.1billiondeterminedasfollows:

(millionsof$) June30,2021

Assetimpairmentchargeandother(aftertax)1 2,194

GovernmentofAlbertaClassAInterestsrepurchasedforanominalamount2 (394)

Creditfacilitybalance–guaranteedandpaidbytheGovernmentofAlberta(net)2,3 (737)

NetfinancialimpactoftheterminationoftheKeystoneXLpipelineproject 1,063

1 RefertoNote5,KeystoneXL,ofourCondensedconsolidatedfinancialstatementsforadditionalinformation.

2 RecognizedthroughtheCondensedconsolidatedstatementofequity.

3 NetofincometaxesandClassCInterestsissued.

AfterthePresidentialPermitwasrevoked,constructionactivitiesceasedexceptforcertainactivitiesrequiredtocleanupand

reclaimworksitesinadherencetoourcommitmenttosafety,theenvironment,andourregulatoryrequirements.Wewill

continuetocoordinatewithregulators,stakeholdersandIndigenousgroupstomeetourenvironmentalandregulatory

commitmentsandensureasafeexitfromtheKeystoneXLpipelineproject.Themajorityoftheseassociatedcostswere

fundedthroughafinaldrawdownontheproject-levelcreditfacilitywhichoccurredinJune2021,subsequenttowhichthe

creditfacilitywasfullyrepaidbytheGovernmentofAlbertaandterminated.

Legacychallengestothe2019PresidentialPermitandtheBureauofLandManagementGrantofRight-of-Wayremain

pendingbeforethefederaldistrictcourtinMontana.WiththerevocationofthePresidentialPermitandterminationofthe

project,wehavemovedtodismissthependingchallengetothePresidentialPermitandarecoordinatingwiththe

DepartmentofJusticewithrespecttodismissaloftheremainingcases.

OnJuly2,2021,TCEnergyfiledaNoticeofIntenttoinitiatealegacyNorthAmericanFreeTradeAgreement(NAFTA)claimto

recovereconomicdamagesresultingfromtherevocationofthePresidentialPermitfortheKeystoneXLpipeline.Wewillbe

seekingtorecovermorethanUS$15billionindamagesasaresultoftheU.S.Government'sbreachofitsNAFTAobligations.

Thisclaimisinapreliminarystageandthetimingofoutcomeisunknownatpresent.

PortNechesOnMarch8,2021,weenteredajointventurewithMotivaEnterprises(Motiva)toconstructtheUS$152millionPortNeches

LinkpipelinesystemwhichwillconnecttheKeystonePipelineSystemtoMotiva’sPortNechesTerminal,whichsupplies

630,000Bbl/dtotheirPortArthurrefinery.Thiscommoncarrierpipelinesystemwillalsoincludefacilitiestotieinadditional

liquidsterminalstotheKeystonePipelineSystemwithotherdownstreaminfrastructureandisexpectedtobeinserviceinthe

secondhalfof2022.


POWERANDSTORAGE

Renewableenergyrequestsforinformation(RFI)ThroughanRFIprocessinsecondquarter2021,weannouncedthatwewereseekingtoidentifypotentialcontractsand/or

investmentopportunitiesinupto620MWofwindenergyprojects,300MWofsolarprojectsand100MWofenergystorage

projectstomeettheelectricityneedsofaportionofourU.S.pipelineassets.Wearecurrentlyevaluatingtheresponses

received.

BrucePoweroutageAspartoftheplannedinspections,testing,analysisandmaintenanceactivitiesatBrucePowerduringthecurrentUnit6MCR

outageandplannedUnit3outage,higherthananticipatedreadingsofhydrogenconcentrationinpressuretubeswere

detected.Theothersixunitscurrentlyinoperationatthefacilityhaveallbeeninspectedduringrecentplannedoutagesandit

wasdeterminedthatthereisnoimpactontheirsafeoperation.BrucePowerhasadvisedtheCanadianNuclearSafety

Commission(CNSC)andisworkingonnextsteps.

ThesedevelopmentsareexpectedtoresultinadelaytothereturntoserviceofUnit3followingitsplannedoutagewhichwas

expectedtobecompletedinearlyfourthquarter2021.Thetimingofthereturntoservicewilldependuponthefinalresults

oftheanalysisandBrucePower’ssubmissiontoCNSC.Wedonotexpectthisdevelopmenttohaveamaterialimpactonour

earningsorcashflows.

ALBERTACARBONGRIDOnJune17,2021,weannouncedapartnershipwithPembinaPipelineCorporationtojointlydevelopacarbontransportation

andsequestrationsystemwhich,whenfullyconstructed,wouldbecapableoftransportingmorethan20milliontonnesof

CO2annually.Byleveragingexistingpipelinesandanewlydevelopedsequestrationhub,theAlbertaCarbonGrid(ACG)is

expectedtoprovideaninfrastructureplatformforAlberta-basedindustriestomanagetheiremissionsandcontributetoa

lower-carboneconomy.Designedtobeanopen-accesssystem,theACGwouldconnecttheFortMcMurray,AlbertaIndustrial

HeartlandandDraytonValleyregionstokeysequestrationlocationsanddeliverypointsacrosstheprovince.

CORPORATE

RetirementandappointmentofourExecutiveVice-PresidentandCFOOnMay17,2021,weannouncedthatDonMarchand,ExecutiveVice-PresidentandChiefFinancialOfficer(CFO),willretire

fromTCEnergyonNovember1,2021,steppingdownasCFOonJuly31,2021.JoelHunter,currentlySeniorVice-President,

CapitalMarkets,willsucceedMr.MarchandasExecutiveVice-PresidentandCFO.Mr.MarchandwillassistMr.Hunterwith

thetransitionfromAugustthroughNovember.

AcquisitionofTCPipeLines,LPOnMarch3,2021,wecompletedtheacquisitionofalloftheoutstandingcommonunitsofTCPipeLines,LPnotbeneficially

ownedbyTCEnergy,resultinginTCPipeLines,LPbecominganindirect,wholly-ownedsubsidiaryofTCEnergy.Uponcloseof

thetransactionandinaccordancewiththeacquisitionterms,TCPipeLines,LPcommonunitholdersreceived0.70common

sharesofTCEnergyforeachissuedandoutstandingpublicly-heldTCPipeLines,LPcommonunitresultingintheissuanceof

38millionTCEnergycommonsharesvaluedatapproximately$2.1billion,netoftransactioncosts.RefertoNote10,Non-

controllinginterests,ofourCondensedconsolidatedfinancialstatementsforadditionalinformation.


Financialcondition

Westrivetomaintainfinancialstrengthandflexibilityinallpartsoftheeconomiccycle.Werelyonouroperatingcashflows

tosustainourbusiness,paydividendsandfundaportionofourgrowth.Inaddition,weaccesscapitalmarketsandengagein

portfoliomanagementtomeetourfinancingneeds,manageourcapitalstructureandtopreserveourcreditratings.

Webelievewehavethefinancialcapacitytofundourexistingcapitalprogramthroughpredictableandgrowingcashflows

fromoperations,accesstocapitalmarkets,portfoliomanagement,jointventures,asset-levelfinancing,cashonhandand

substantialcommittedcreditfacilities.Annually,infourthquarter,werenewandextendourcreditfacilitiesasrequired.

AtJune30,2021,ourcurrentassetstotaled$8.3billionandcurrentliabilitiesamountedto$13.7billion,leavinguswitha

workingcapitaldeficitof$5.4billioncomparedto$6.8billionatDecember31,2020.Ourworkingcapitaldeficiencyis

consideredtobeinthenormalcourseofbusinessandismanagedthrough:

• ourabilitytogeneratepredictableandgrowingcashflowsfromoperations

• atotalof$9.8billionofcommittedrevolvingcreditfacilitiesofwhich$8.3billionofshort-termborrowingcapacityremains

available,netof$1.5billionbackstoppingoutstandingcommercialpaperbalances.Wealsohavearrangementsinplacefor

afurther$2.4billionofdemandcreditfacilitiesofwhich$1.2billionremainsavailableasofJune30,2021

• ouraccesstocapitalmarkets,includingthroughsecuritiesissuances,incrementalcreditfacilities,portfoliomanagement

activities,DRPandCorporateATMprograms,ifdeemedappropriate.

CASHPROVIDEDBYOPERATINGACTIVITIES

threemonthsended


June30

(millionsof$) 2021 2020 2021 2020

Netcashprovidedbyoperations 1,711 1,613 3,377 3,336

Increase/(decrease)inoperatingworkingcapital 27 (64) 259 307

Fundsgeneratedfromoperations 1,738 1,549 3,636 3,643

Specificitem:

Currentincometax(recovery)/expenseonKeystoneXLassetimpairmentcharge,preservationandother (5) — 120 —

KeystoneXLpreservationandother 21 — 21 —

Comparablefundsgeneratedfromoperations 1,754 1,549 3,777 3,643

NetCashProvidedbyOperationsNetcashprovidedbyoperationsincreasedby$98millionforthethreemonthsendedJune30,2021comparedtothesame

periodin2020primarilyduetohigherfundsgeneratedfromoperations,partiallyoffsetbytheamountandtimingofworking

capitalchanges.Netcashprovidedbyoperationsincreasedby$41millionforthesixmonthsendedJune30,2021compared

tothesameperiodin2020mainlyduetotheamountandtimingofworkingcapitalchanges.

ComparableFundsGeneratedFromOperationsComparablefundsgeneratedfromoperations,anon-GAAPmeasure,helpsusassessthecashgeneratingabilityofour

businessesbyexcludingthetimingeffectsofworkingcapitalchangesaswellasthecashimpactofourspecificitems.

Comparablefundsgeneratedfromoperationsincreasedby$205millionforthethreemonthsendedJune30,2021compared

tothesameperiodin2020primarilyduetohighercomparableearnings,includinglowercurrentincometaxes.

Comparablefundsgeneratedfromoperationsincreasedby$134millionforthesixmonthsendedJune30,2021comparedto

thesameperiodin2020primarilyduetohighercomparableearnings,includinglowercurrentincometaxes,whichwas

partiallyoffsetbyfeescollectedin2020associatedwiththesuccessfulcompletionoftheSurdeTexaspipeline.


CASHUSEDININVESTINGACTIVITIES

threemonthsended


June30

(millionsof$) 2021 2020 2021 2020

Capitalspending

Capitalexpenditures (1,214) (1,990) (2,859) (3,986)

Capitalprojectsindevelopment — — — (122)

Contributionstoequityinvestments (225) (160) (465) (311)

(1,439) (2,150) (3,324) (4,419)

Proceedsfromsaleofassets,netoftransactioncosts — 3,407 — 3,407

Loantoaffiliate (220) — (220) —

Deferredamountsandother (98) (73) (404) (222)

Netcash(usedin)/providedbyinvestingactivities (1,757) 1,184 (3,948) (1,234)

Capitalexpendituresin2021wereincurredprimarilyfortheexpansionoftheNGTLSystem,theANRpipelinesystemand

ColumbiaGasprojectsaswellasmaintenancecapitalexpenditures.Lowercapitalspendingin2021comparedto2020reflects

thesaleofa65percentequityinterestinandsubsequentequityaccountingforCoastalGasLinkLPinsecondquarter2020,

alongwithreducedspendingontheNGTLSystemandColumbiaGasprojectsandthecompletionoftheNapaneepowerplant

in2020.

Costsincurredoncapitalprojectsindevelopmentin2020weremostlyattributabletospendingontheKeystoneXLpipeline

projectpriortoitsreclassificationtoPlant,propertyandequipmentuponreachingapositivefinalinvestmentdecisionin

March2020.

Contributionstoequityinvestmentsincreasedin2021comparedto2020mainlyduetohigherinvestmentinBrucePower.

Insecondquarter2020,weclosedthesaleofourOntarionaturalgas-firedpowerplantsfornetproceedsofapproximately

$2.8billionandthesaleofa65percentequityinterestinCoastalGasLinkLPfornetproceedsof$656million.

TCEnergyenteredintoasubordinateddemandrevolvingcreditfacilitywithCoastalGasLinkLPtoprovideadditional

short-termliquidityandfundingflexibilitytotheproject.DuringthethreemonthsendedJune30,2021,$220millionwas

drawnonthisfacility.RefertoNote7,Loansreceivablefromaffiliates,ofourCondensedconsolidatedfinancialstatements

foradditionalinformation.


CASHPROVIDEDBYFINANCINGACTIVITIES

threemonthsended


June30

(millionsof$) 2021 2020 2021 2020

Notespayableissued/(repaid),net 247 (6,022) (2,460) (3,103)

Long-termdebtissued,netofissuecosts 1,822 5,528 7,751 5,536

Long-termdebtrepaid — (1,170) (980) (2,241)

Juniorsubordinatednotesissued,netofissuecosts (1) — 495 —

Lossonsettlementoffinancialinstruments — (130) — (130)

Redeemablenon-controllinginterestrepurchased — — (633) —

Contributionsfromredeemablenon-controllinginterest — 54 — 54

Dividendsanddistributionspaid (898) (860) (1,749) (1,660)

Commonsharesissued 26 2 60 83

Preferredsharesredeemed (500) — (500) —

AcquisitionofTCPipeLines,LPtransactioncosts (10) — (15) —

Netcashprovidedby/(usedin)financingactivities 686 (2,598) 1,969 (1,461)

Long-termdebtissuedOnJune9,2021,TCPLissued$750millionofMediumTermNotesdueinJune2024bearinginterestatafloatingrate,

$500millionofMediumTermNotesdueinJune2031bearinginterestatafixedrateof2.97percent,and$250millionof

MediumTermNotesdueinSeptember2047bearinginterestatafixedrateof4.33percent.

OnJanuary4,2021,weestablishedaUS$4.1billionproject-levelcreditfacilitytosupporttheconstructionoftheKeystoneXL

pipelineproject,whichwasfullyguaranteedbytheGovernmentofAlbertaandnon-recoursetous.Theavailabilityofthis

creditfacilitywassubsequentlyreducedtoUS$1.6billion,ofwhichwedrewUS$849millionintotal(US$230millionduring

thethreemonthsendedJune30,2021),withfullrepaymentbytheGovernmentofAlbertaoftheamountoutstandingin

June2021.RefertoNote5,KeystoneXL,ofourCondensedconsolidatedfinancialstatementsforadditionalinformation.

InDecember2020,oursubsidiary,ColumbiaPipelineGroup,Inc.,enteredintoaUS$4.2billionTermLoandueinJune2022,

bearinginterestatafloatingrate.InJanuary2021,US$4.0billionwasdrawnontheTermLoanandthetotalavailabilityunder

theloanagreementwasreducedaccordingly.

Long-termdebtrepaid/retiredInMarch2021,oursubsidiary,TCPipeLines,LP,redeemedUS$350millionofSeniorUnsecuredNotesbearinginterestata

fixedrateof4.65percent.

InJanuary2021,TCPLrepaidUS$400millionofDebenturesbearinginterestatafixedrateof9.875percent.

InJune2021,theGovernmentofAlbertarepaidtheUS$849million($1.0billion)outstandingbalanceundertheKeystoneXL

project-levelcreditfacility,withnocashimpacttous,andthefacilitywassubsequentlyterminated.RefertoNote5,Keystone

XL,ofourCondensedconsolidatedfinancialstatementsforadditionalinformation.

JuniorsubordinatednotesissuedInMarch2021,weissued$500millionofJuniorSubordinatedNotesthroughTransCanadaTrust,awholly-ownedfinancing

trustsubsidiaryofTCPL.WeusedtheproceedsfromtheissuancetoredeemallissuedandoutstandingTCEnergySeries13

preferredsharesonMay31,2021pursuanttotheirterms.RefertoNote9,Juniorsubordinatednotesissued,ofour

Condensedconsolidatedfinancialstatementsforadditionalinformation.


Redeemablenon-controllinginterestrepurchasedOnJanuary8,2021,weexercisedourcallrightinaccordancewithcontractualtermsandpaidUS$497milliontorepurchase

theGovernmentofAlbertaClassAInterestswhichwereclassifiedasCurrentliabilitiesontheConsolidatedbalancesheetat

December31,2020.ThistransactionwasfundedbydrawsontheKeystoneXLproject-levelcreditfacilitywhichwas

guaranteedbytheGovernmentofAlbertaasdiscussedabove.

DIVIDENDSOnJuly28,2021,wedeclaredquarterlydividendsonourcommonsharesof$0.87persharepayableonOctober29,2021to

shareholdersofrecordatthecloseofbusinessonSeptember30,2021.

SHAREINFORMATIONAtJuly23,2021,wehad979millionissuedandoutstandingcommonsharesand9millionoutstandingoptionstobuy

commonshares,ofwhich6millionwereexercisable.

OnMay31,2021,weredeemedallofthe20millionissuedandoutstandingSeries13preferredsharesataredemptionprice

of$25.00pershareandpaidthefinalquarterlydividendof$0.34375perSeries13preferredsharefortheperioduptobut

excludingMay31,2021aspreviouslydeclaredonMay6,2021.

OnMarch3,2021,weissued37,955,093TCEnergycommonsharestoacquirealltheoutstandingcommonunitsof

TCPipeLines,LP,valuedatapproximately$2.1billion,netoftransactioncosts.RefertotheRecentdevelopments–Corporate

sectionforadditionalinformationontheacquisition.

OnFebruary1,2021,818,876Series5preferredshareswereconverted,onaone-for-onebasis,intoSeries6preferredshares

and175,208Series6preferredshareswereconverted,onaone-for-onebasis,intoSeries5preferredshares.

CREDITFACILITIESOnMarch4,2021,oursubsidiary,TCPipeLines,LP,terminatedaUS$500millionunsecuredrevolvingcreditfacilitybearing

interestatafloatingrateonwhichnoamountwasoutstanding.

RefertotheFinancialrisksandfinancialinstrumentssectionformoreinformationaboutliquidity,marketandotherrisks.

CONTRACTUALOBLIGATIONSCapitalexpenditurecommitmentsatJune30,2021arelargelyconsistentwithDecember31,2020,reflectingtheneteffectof

anapproximate$0.9billionreductionrelatedtotheterminationoftheKeystoneXLpipelineprojectandanincreaseinnew

capitalcommitmentsprimarilyrelatedtoNGTLSystemexpansionandANRpipelineprojects.

Therewerenoothermaterialchangestoourcontractualobligationsinsecondquarter2021ortopaymentsdueinthenext

fiveyearsorafter.Refertoour2020AnnualReportformoreinformationaboutourcontractualobligations.


Financialrisksandfinancialinstruments

Weareexposedtomarketriskandcounterpartycreditriskandhavestrategies,policiesandlimitsinplacetomanagethe

impactoftheserisksonourearnings,cashflowsand,ultimately,shareholdervalue.

Riskmanagementstrategies,policiesandlimitsaredesignedtoensureourrisksandrelatedexposuresareinlinewithour

businessobjectivesandrisktolerance.

Refertoour2020AnnualReportformoreinformationabouttheriskswefaceinourbusinesswhichhavenotchanged

substantiallysinceDecember31,2020,otherthanasnotedwithinthisMD&A.RefertotheRecentdevelopmentssectionof

thisMD&AforfurtherinformationregardingtheimpactofCOVID-19onourfinancialrisks.

INTERESTRATERISKWeutilizebothshort-andlong-termdebttofinanceouroperationswhichexposesustointerestraterisk.Wetypicallypay

fixedratesofinterestonourlong-termdebtandfloatingratesonshort-termdebtincludingourcommercialpaperprograms

andamountsdrawnonourcreditfacilities.Asmallportionofourlong-termdebtbearsinterestatfloatingrates.Inaddition,

weareexposedtointerestrateriskonfinancialinstrumentsandcontractualobligationscontainingvariableinterestrate

components.Weactivelymanageourinterestrateriskusinginterestratederivatives.

ManyofourfinancialinstrumentsandcontractualobligationswithvariableratecomponentsreferenceU.S.dollarLIBOR,of

whichcertainratesettingswillceasetobepublishedattheendof2021withfullcessationbymid-2023.Wecontinueto

monitordevelopmentsandareaddressingnecessarysystemandcontractualchangeswhileassessingtheadoptionofthe

standardmarketproposedreferencerates.Thisincludestestingsystemsolutionsandanalyzingexistingagreementsto

determinetheeffectofreferenceratereformonourconsolidatedfinancialstatements.

FOREIGNEXCHANGERISKCertainofourbusinessesgenerateallormostoftheirearningsinU.S.dollarsand,sincewereportourfinancialresultsin

Canadiandollars,changesinthevalueoftheU.S.dollaragainsttheCanadiandollarcanaffectourcomparableEBITDAandnet

income.RefertotheConsolidatedresults–Foreignexchangesectionforadditionalinformation.

AsmallportionofourMexicoNaturalGasPipelinesmonetaryassetsandliabilitiesarepeso-denominated,whilethe

functionalcurrencyforourMexicooperationsisU.S.dollars.Thesepeso-denominatedbalancesarerevaluedtoU.S.dollars

and,asaresult,changesinthevalueoftheMexicanpesoagainsttheU.S.dollarcanaffectournetincome.Thisexposureis

managedusingforeignexchangederivatives.

NetinvestmenthedgesWehedgeaportionofournetinvestmentinforeignoperations,onanafter-taxbasis,withU.S.dollar-denominateddebt,

cross-currencyswaps,foreignexchangeforwardsandforeignexchangeoptionsasappropriate.

COUNTERPARTYCREDITRISKWehaveexposuretocounterpartycreditriskinanumberofareasincluding:

• cashandcashequivalents

• accountsreceivableandcertaincontractualrecoveries

• available-for-saleassets

• fairvalueofderivativeassets

• loansreceivable.


Whilethemajorityofourcreditexposureistolargecreditworthyentities,wemaintainclosemonitoringandcommunication

withthosecounterpartiesexperiencinggreaterfinancialpressuresduetosignificantmarketevents.Althoughtheeffectsof

theCOVID-19pandemicandothermarketdisruptionsonourcustomersaredifficulttopredict,similarto2020,wearenot

expectingamaterialnegativeimpacttoour2021earningsorcashflows.Refertoour2020AnnualReportformore

informationaboutthefactorsthatmitigateourcounterpartycreditriskexposure.

Wereviewfinancialassetscarriedatamortizedcostforimpairmentusingthelifetimeexpectedlossofthefinancialassetat

initialrecognitionandthroughoutthelifeofthefinancialasset.Weusehistoricalcreditlossandrecoverydata,adjustedfor

ourjudgmentregardingcurrenteconomicandcreditconditions,alongwithsupportableforecaststodetermineany

impairment,whichisrecognizedinPlantoperatingcostsandother.AtJune30,2021,wehadnosignificantcreditlosses,no

significantcreditriskconcentrationandnosignificantamountspastdueorimpaired.

Wehavesignificantcreditandperformanceexposuretofinancialinstitutionsbecausetheyholdcashdepositsandprovide

committedcreditlinesandlettersofcreditthathelpmanageourexposuretocounterpartiesandprovideliquidityin

commodity,foreignexchangeandinterestratederivativemarkets.

LIQUIDITYRISKLiquidityriskistheriskthatwewillnotbeabletomeetourfinancialobligationsastheycomedue.Wemanageourliquidity

riskbycontinuouslyforecastingourcashflowsandensuringwehaveadequatecashbalances,cashflowsfromoperations,

committedanddemandcreditfacilitiesandaccesstocapitalmarketstomeetouroperating,financingandcapital

expenditureobligationsunderbothnormalandstressedeconomicconditions.

RELATEDPARTYTRANSACTIONS

LoansReceivablefromAffiliatesRelatedpartytransactionsareconductedinthenormalcourseofbusinessandaremeasuredattheexchangeamount,which

istheamountofconsiderationestablishedandagreedtobytherelatedparties.

SurdeTexas

AtJune30,2021andDecember31,2020,theLoanreceivablefromaffiliateonourCondensedconsolidatedbalancesheetof

MXN$20.9billionor$1.3billion,representedour60percentproportionateshareoflong-termdebtfinancingtothe

SurdeTexasjointventure.OurCondensedconsolidatedstatementofincomereflectstherelatedinterestincomeandforeign

exchangeimpactonthisloanreceivablewhichwerefullyoffsetuponconsolidationwithcorrespondingamountsincludedin

our60percentproportionateshareofSurdeTexasequityearningsasfollows:



AffectedlineitemintheCondensedconsolidatedstatementofincome(millionsof$) 2021 2020 2021 2020

Interestincome1 21 29 42 62 Interestincomeandother

Interestexpense2 (21) (29) (42) (62) Incomefromequityinvestments

Foreignexchangegains/(losses)1 32 26 (3) (277) Interestincomeandother

Foreignexchange(losses)/gains1 (32) (26) 3 277 Incomefromequityinvestments

1 IncludedinourCorporatesegment.

2 IncludedinourMexicoNaturalGasPipelinessegment.

CoastalGasLinkPipelineLimitedPartnership

Weholda35percentequityinterestinCoastalGasLinkLPwhichhascontractedustoconstructandoperatetheCoastal

GasLinkpipeline.In2020,weenteredintoasubordinateddemandrevolvingcreditfacilitywithCoastalGasLinkLPtoprovide

additionalshort-termliquidityandfundingflexibilitytotheproject.Thefacilitybearsinterestatafloatingmarket-basedrate

andhadacapacityof$500millionatJune30,2021withanoutstandingbalanceof$220million(December31,2020–nil)

reflectedinOthercurrentassetsonourCondensedconsolidatedbalancesheet.


FINANCIALINSTRUMENTSWiththeexceptionofLong-termdebtandJuniorsubordinatednotes,ourderivativeandnon-derivativefinancial

instrumentsarerecordedonthebalancesheetatfairvalueunlesstheywereenteredintoandcontinuetobeheldfor

thepurposeofreceiptordeliveryinaccordancewithournormalpurchaseandsalesexemptionsandaredocumentedassuch.

Inaddition,fairvalueaccountingisnotrequiredforotherfinancialinstrumentsthatqualifyforcertainaccounting

exemptions.

DerivativeinstrumentsWeusederivativeinstrumentstoreducevolatilityassociatedwithfluctuationsincommodityprices,interestratesandforeign

exchangerates.Derivativeinstruments,includingthosethatqualifyandaredesignatedforhedgeaccountingtreatment,are

recordedatfairvalue.

Themajorityofderivativeinstrumentsthatarenotdesignatedordonotqualifyforhedgeaccountingtreatmenthavebeen

enteredintoaseconomichedgestomanageourexposuretomarketriskandareclassifiedasheldfortrading.Changesinthe

fairvalueofheld-for-tradingderivativeinstrumentsarerecordedinnetincomeintheperiodofchange.Thismayexposeusto

increasedvariabilityinreportedoperatingresultssincethefairvalueoftheheld-for-tradingderivativeinstrumentscan

fluctuatesignificantlyfromperiodtoperiod.

TherecognitionofgainsandlossesonderivativesforCanadiannaturalgasregulatedpipelineexposuresisdetermined

throughtheregulatoryprocess.Gainsandlossesarisingfromchangesinthefairvalueofderivativesaccountedforaspartof

RRA,includingthosethatqualifyforhedgeaccountingtreatment,areexpectedtoberecoveredorrefundedthroughthetolls

chargedbyus.Asaresult,thesegainsandlossesaredeferredasregulatoryassetsorregulatoryliabilitiesandarerefundedto

orcollectedfromtheratepayersinsubsequentyearswhenthederivativesettles.

Balancesheetpresentationofderivativeinstruments

Thebalancesheetpresentationofthefairvalueofderivativeinstrumentsisasfollows:

(millionsof$) June30,2021 December31,2020

Othercurrentassets 252 235

Otherlong-termassets 64 41

Accountspayableandother (138) (72)

Otherlong-termliabilities (52) (59)

126 145


Unrealizedandrealized(losses)/gainsonderivativeinstruments

Thefollowingsummarydoesnotincludehedgesofournetinvestmentinforeignoperations:



(millionsof$) 2021 2020 2021 2020

DerivativeInstrumentsHeldforTrading1

Amountofunrealized(losses)/gainsintheperiod

Commodities (15) (50) 16 16


Amountofrealizedgains/(losses)intheperiod

Commodities 48 42 109 78

Foreignexchange 117 (39) 158 (51)

DerivativeInstrumentsinHedgingRelationships2

Amountofrealized(losses)/gainsintheperiod

Commodities (12) 5 (23) 2

Interestrate (6) (5) (12) (4)

1 Realizedandunrealizedgainsandlossesonheld-for-tradingderivativeinstrumentsusedtopurchaseandsellcommoditiesareincludedonanetbasisin

Revenues.Realizedandunrealizedgainsandlossesonforeignexchangeheld-for-tradingderivativeinstrumentsareincludedonanetbasisinInterest

incomeandother.

2 TherewerenogainsorlossesincludedinNetincome/(loss)relatingtodiscontinuedcashflowhedgeswhereitwasprobablethattheanticipated

transactionwouldnotoccur.

Forfurtherdetailsonournon-derivativeandderivativefinancialinstruments,includingclassificationassumptionsmadeinthe

calculationoffairvalueandadditionaldiscussionofexposuretorisksandmitigationactivities,refertoNote14,Risk

managementandfinancialinstruments,ofourCondensedconsolidatedfinancialstatements.


Otherinformation

CONTROLSANDPROCEDURESManagement,includingourPresidentandCEOandourCFO,evaluatedtheeffectivenessofourdisclosurecontrolsand

proceduresasatJune30,2021,asrequiredbytheCanadiansecuritiesregulatoryauthoritiesandbytheSEC,andconcluded

thatourdisclosurecontrolsandproceduresareeffectiveatareasonableassurancelevel.

Therewerenochangesinsecondquarter2021thathadorarelikelytohaveamaterialimpactonourinternalcontrolover

financialreporting.

CRITICALACCOUNTINGESTIMATESANDACCOUNTINGPOLICYCHANGESWhenwepreparefinancialstatementsthatconformwithU.S.GAAP,wearerequiredtomakeestimatesandassumptions

thataffectthetimingandamountswerecordforourassets,liabilities,revenuesandexpensesbecausetheseitemsmaybe

affectedbyfutureevents.Webasetheestimatesandassumptionsonthemostcurrentinformationavailable,usingourbest

judgment.Wealsoregularlyassesstheassetsandliabilitiesthemselves.Asummaryofourcriticalaccountingestimatesis

includedinour2020AnnualReport.

AccountingChangesOursignificantaccountingpolicieshaveremainedunchangedsinceDecember31,2020otherthanasdescribedinNote2,

Accountingchanges,ofourCondensedconsolidatedfinancialstatements.Asummaryofoursignificantaccountingpoliciesis

includedinour2020AnnualReport.


Quarterlyresults

SELECTEDQUARTERLYCONSOLIDATEDFINANCIALDATA

2021 2020 2019

(millionsof$,exceptpershareamounts) Second First Fourth Third Second First Fourth Third

Revenues 3,182 3,381 3,297 3,195 3,089 3,418 3,263 3,133

Netincome/(loss)attributabletocommonshares 982 (1,057) 1,124 904 1,281 1,148 1,108 739

Comparableearnings 1,045 1,108 1,080 893 863 1,109 970 970

Persharestatistics:

Netincome/(loss)percommonshare–basic $1.00 ($1.11) $1.20 $0.96 $1.36 $1.22 $1.18 $0.79

Comparableearningspercommonshare $1.07 $1.16 $1.15 $0.95 $0.92 $1.18 $1.03 $1.04

Dividendsdeclaredpercommonshare $0.87 $0.87 $0.81 $0.81 $0.81 $0.81 $0.75 $0.75

FACTORSAFFECTINGQUARTERLYFINANCIALINFORMATIONBYBUSINESSSEGMENTQuarter-over-quarterrevenuesandnetincomefluctuateforreasonsthatvaryacrossourbusinesssegments.

InourCanadianNaturalGasPipelines,U.S.NaturalGasPipelinesandMexicoNaturalGasPipelinessegments,exceptfor

seasonalfluctuationsinshort-termthroughputvolumesonU.S.pipelines,quarter-over-quarterrevenuesandsegmented

earningsgenerallyremainrelativelystableduringanyfiscalyear.Overthelongterm,however,theyfluctuatebecauseof:

• regulatorydecisions

• negotiatedsettlementswithshippers

• newlyconstructedassetsbeingplacedinservice

• acquisitionsanddivestitures

• developmentsoutsideofthenormalcourseofoperations.

InLiquidsPipelines,annualrevenuesandsegmentedearningsarebasedoncontractedanduncontractedspottransportation,

aswellasliquidsmarketingactivities.Quarter-over-quarterrevenuesandsegmentedearningsareaffectedby:

• regulatorydecisions



• demandforuncontractedtransportationservices

• liquidsmarketingactivitiesandcommodityprices

• developmentsoutsideofthenormalcourseofoperations

• certainfairvalueadjustments.

InPowerandStorage,quarter-over-quarterrevenuesandsegmentedearningsareaffectedby:

• weather

• customerdemand



• marketpricesfornaturalgasandpower

• capacitypricesandpayments

• plannedandunplannedplantoutages

• developmentsoutsideofthenormalcourseofoperations

• certainfairvalueadjustments.


FACTORSAFFECTINGFINANCIALINFORMATIONBYQUARTERWecalculatecomparablemeasuresbyadjustingcertainGAAPandnon-GAAPmeasuresforspecificitemswebelieveare

significantbutnotreflectiveofourunderlyingoperationsintheperiod.

Comparableearningsexcludetheunrealizedgainsandlossesfromchangesinthefairvalueofcertainderivativesusedto

reduceourexposuretospecificfinancialandcommoditypricerisks.Thesederivativesgenerallyprovideeffectiveeconomic

hedgesbutdonotmeetthecriteriaforhedgeaccounting.Asaresult,thechangesinfairvaluearerecordedinnetincome.As

theseamountsdonotaccuratelyreflectthegainsandlossesthatwillberealizedatsettlement,wedonotconsiderthempart

ofourunderlyingoperations.WealsoexcludetheunrealizedforeignexchangegainsandlossesontheLoanreceivablefrom

affiliateaswellasthecorrespondingproportionateshareofSurdeTexasforeignexchangegainsandlosses,astheseamounts

donotaccuratelyreflectthegainsandlossesthatwillberealizedatsettlement.Theseamountsoffsetwithineachreporting

period,resultinginnoimpactonnetincome.

Insecondquarter2021,comparableearningsalsoexcluded:

• anincremental$2millionafter-taxassetimpairmentcharge,netofexpectedcontractualrecoveriesandothercontractual

andlegalobligations,relatedtotheterminationoftheKeystoneXLpipelineproject

• preservationandothercostsof$16millionaftertaxprimarilyrelatedtothepreservationandstorageofKeystoneXL

pipelineprojectassets,whichcouldnotbeaccruedaspartoftheKeystoneXLimpairmentcharge,andinterestexpenseon

theKeystoneXLproject-levelcreditfacilitypriortoitstermination

• a$13millionafter-taxrecoveryofcertaincostsfromtheIESOassociatedwiththeOntarionaturalgas-firedpowerplants

soldin2020.

Infirstquarter2021,comparableearningsalsoexcluded:

• anafter-taxassetimpairmentcharge,netofexpectedcontractualrecoveriesandothercontractualandlegalobligations,of

$2.2billionrelatedtotheformalsuspensionoftheKeystoneXLpipelineprojectfollowingtheJanuary20,2021revocation

ofthePresidentialPermit.

Infourthquarter2020,comparableearningsalsoexcluded:

• anincometaxvaluationallowancereleaseof$18millionrelatedtocertainprioryears'U.S.incometaxlossesresultingfrom

ourreassessmentofdeferredincometaxassetsthataremorelikelythannottoberealized

• anadditional$18millionincometaxrecoveryrelatedtostateincometaxesonthesaleofcertainColumbiaMidstream

assetsin2019

• anincrementalafter-taxlossof$81millionforthethreemonthsendedDecember31,2020relatedtothesaleofour

Ontarionaturalgas-firedpowerplants.

Inthirdquarter2020,comparableearningsalsoexcluded:

• anincrementalafter-taxlossof$45millionrelatedtothesaleoftheOntarionaturalgas-firedpowerplants

• a$6millionreductionintheafter-taxgainrelatedtothesaleofa65percentequityinterestinCoastalGasLinkLP.

Insecondquarter2020,comparableearningsalsoexcluded:

• anafter-taxgainof$408millionrelatedtothesaleofa65percentequityinterestinCoastalGasLinkLP

• anincrementalafter-taxlossof$80millionrelatedtothesaleoftheOntarionaturalgas-firedpowerplants.

Infirstquarter2020,comparableearningsalsoexcluded:

• anincometaxvaluationallowancereleaseof$281millionfollowingourreassessmentofdeferredincometaxassetsthat

aredeemedmorelikelythannottoberealized

• anincrementalafter-taxlossof$77millionrelatedtotheOntarionaturalgas-firedpowerplantassetsheldforsale.


Infourthquarter2019,comparableearningsalsoexcluded:

• anincometaxvaluationallowancereleaseof$195millionrelatedtocertainprioryears'U.S.incometaxlossesresulting

fromourreassessmentofdeferredincometaxassetsthataremorelikelythannottoberealized

• anincrementalafter-taxlossof$61millionrelatedtotheOntarionaturalgas-firedpowerplantassetsheldforsale

• anadditional$19millionexpenserelatedtostateincometaxesonthesaleofcertainColumbiaMidstreamassets.

Inthirdquarter2019,comparableearningsalsoexcluded:

• anafter-taxlossof$133millionrelatedtotheOntarionaturalgas-firedpowerplantassetsheldforsale

• anafter-taxlossof$133millionrelatedtothesaleofcertainColumbiaMidstreamassets

• anafter-taxgainof$115millionrelatedtothepartialsaleofNorthernCourier.


Condensedconsolidatedstatementofincome



(unaudited-millionsofCanadian$,exceptpershareamounts) 2021 2020 2021 2020

Revenues

CanadianNaturalGasPipelines 1,126 1,087 2,245 2,119

U.S.NaturalGasPipelines 1,206 1,204 2,557 2,559


LiquidsPipelines 516 544 1,089 1,221

PowerandStorage 185 90 369 202

3,182 3,089 6,563 6,507

IncomefromEquityInvestments 157 166 416 734

OperatingandOtherExpenses

Plantoperatingcostsandother 959 933 1,845 1,853

Propertytaxes 196 199 392 375

Depreciationandamortization 633 635 1,278 1,265

Assetimpairmentchargeandother 9 — 2,854 —

1,797 1,767 6,369 3,493

NetGainonSaleofAssets 17 225 17 109

FinancialCharges

Interestexpense 583 561 1,153 1,139

Allowanceforfundsusedduringconstruction (64) (81) (114) (163)

Interestincomeandother (127) (203) (189) 324

392 277 850 1,300

Income/(Loss)beforeIncomeTaxes 1,167 1,436 (223) 2,557

IncomeTaxExpense/(Recovery)

Current 58 96 267 187

Deferred 89 (44) (560) (299)

147 52 (293) (112)

NetIncome 1,020 1,384 70 2,669

Netincomeattributabletonon-controllinginterests 6 63 75 159

NetIncome/(Loss)AttributabletoControllingInterests 1,014 1,321 (5) 2,510

Preferredsharedividends 32 40 70 81

NetIncome/(Loss)AttributabletoCommonShares 982 1,281 (75) 2,429

NetIncome/(Loss)perCommonShare

Basic $1.00 $1.36 ($0.08) $2.59

Diluted $1.00 $1.36 ($0.08) $2.58

WeightedAverageNumberofCommonShares(millions)

Basicanddiluted 979 940 966 940

SeeaccompanyingnotestotheCondensedconsolidatedfinancialstatements.


Condensedconsolidatedstatementofcomprehensiveincome

threemonthsended


June30

(unaudited-millionsofCanadian$) 2021 2020 2021 2020

NetIncome 1,020 1,384 70 2,669

OtherComprehensive(Loss)/Income,NetofIncomeTaxes

Foreigncurrencytranslationgainsandlossesonnetinvestmentinforeignoperations (233) (794) (531) 908

Changeinfairvalueofnetinvestmenthedges 13 60 24 (32)

Changeinfairvalueofcashflowhedges (11) (82) — (577)

Reclassificationtonetincomeofgainsandlossesoncashflowhedges 10 466 18 470

Reclassificationtonetincomeofactuarialgainsandlossesonpensionandotherpost-retirementbenefitplans 4 4 7 (3)

Othercomprehensive(loss)/incomeonequityinvestments (57) (24) 130 (20)

Othercomprehensive(loss)/income (274) (370) (352) 746

ComprehensiveIncome/(Loss) 746 1,014 (282) 3,415

Comprehensiveincome/(loss)attributabletonon-controllinginterests 5 (2) 62 228

ComprehensiveIncome/(Loss)AttributabletoControllingInterests 741 1,016 (344) 3,187

Preferredsharedividends 32 40 70 81

ComprehensiveIncome/(Loss)AttributabletoCommonShares 709 976 (414) 3,106



Condensedconsolidatedstatementofcashflows

threemonthsended


June30


CashGeneratedfromOperations Netincome 1,020 1,384 70 2,669Depreciationandamortization 633 635 1,278 1,265Deferredincometaxes 89 (44) (560) (299)Assetimpairmentchargeandother 9 — 2,854 —Incomefromequityinvestments (157) (166) (416) (734)Distributionsreceivedfromoperatingactivitiesofequityinvestments 215 236 502 525Employeepost-retirementbenefitsfunding,netofexpense 1 4 6 16Netgainonsaleofassets (17) (225) (17) (109)Equityallowanceforfundsusedduringconstruction (45) (54) (79) (105)Unrealizedlosses/(gains)onfinancialinstruments 78 (120) 42 86Foreignexchange(gains)/lossesonLoanreceivablefromaffiliate (32) (26) 3 277Other (56) (75) (47) 52(Increase)/decreaseinoperatingworkingcapital (27) 64 (259) (307)Netcashprovidedbyoperations 1,711 1,613 3,377 3,336InvestingActivities Capitalexpenditures (1,214) (1,990) (2,859) (3,986)Capitalprojectsindevelopment — — — (122)Contributionstoequityinvestments (225) (160) (465) (311)Proceedsfromsaleofassets,netoftransactioncosts — 3,407 — 3,407Loantoaffiliate (220) — (220) —Deferredamountsandother (98) (73) (404) (222)Netcash(usedin)/providedbyinvestingactivities (1,757) 1,184 (3,948) (1,234)FinancingActivities Notespayableissued/(repaid),net 247 (6,022) (2,460) (3,103)Long-termdebtissued,netofissuecosts 1,822 5,528 7,751 5,536Long-termdebtrepaid — (1,170) (980) (2,241)Juniorsubordinatednotesissued,netofissuecosts (1) — 495 —Lossonsettlementoffinancialinstruments — (130) — (130)Redeemablenon-controllinginterestrepurchased — — (633) —Contributionsfromredeemablenon-controllinginterest — 54 — 54Dividendsoncommonshares (852) (761) (1,613) (1,465)Dividendsonpreferredshares (38) (41) (77) (82)Distributionstonon-controllinginterests (8) (58) (59) (113)Commonsharesissued 26 2 60 83Preferredsharesredeemed (500) — (500) —AcquisitionofTCPipeLines,LPtransactioncosts (10) — (15) —Netcashprovidedby/(usedin)financingactivities 686 (2,598) 1,969 (1,461)EffectofForeignExchangeRateChangesonCashandCashEquivalents (9) (70) (40) 35IncreaseinCashandCashEquivalents 631 129 1,358 676CashandCashEquivalents Beginningofperiod 2,257 1,890 1,530 1,343CashandCashEquivalents Endofperiod 2,888 2,019 2,888 2,019



Condensedconsolidatedbalancesheet

(unaudited-millionsofCanadian$) June30,2021 December31,2020

ASSETS CurrentAssets Cashandcashequivalents 2,888 1,530Accountsreceivable 2,724 2,162Inventories 758 629Othercurrentassets 1,975 880 8,345 5,201

Plant,PropertyandEquipmentnetofaccumulateddepreciationof$30,615and$29,597,respectively 67,192 69,775

LoanReceivablefromAffiliate 1,301 1,338EquityInvestments 7,178 6,677RestrictedInvestments 2,034 1,898RegulatoryAssets 1,827 1,753Goodwill 12,332 12,679OtherLong-TermAssets 992 979 101,201 100,300LIABILITIES CurrentLiabilities Notespayable 1,692 4,176Accountspayableandother 4,581 3,816Redeemablenon-controllinginterest — 633Dividendspayable 864 795Accruedinterest 571 595Currentportionoflong-termdebt 6,013 1,972 13,721 11,987RegulatoryLiabilities 4,107 4,148OtherLong-TermLiabilities 1,401 1,475DeferredIncomeTaxLiabilities 5,251 5,806Long-TermDebt 35,790 34,913JuniorSubordinatedNotes 8,800 8,498 69,070 66,827RedeemableNon-ControllingInterest — 393EQUITY Commonshares,noparvalue 26,618 24,488

Issuedandoutstanding: June30,2021–979millionsharesDecember31,2020–940millionshares

Preferredshares 3,487 3,980Additionalpaid-incapital 734 2Retainedearnings 3,596 5,367Accumulatedothercomprehensiveloss (2,426) (2,439)ControllingInterests 32,009 31,398Non-ControllingInterests 122 1,682 32,131 33,080 101,201 100,300

Commitments,ContingenciesandGuarantees(Note15)

VariableInterestEntities(Note16)

SubsequentEvent(Note17)



Condensedconsolidatedstatementofequity




CommonShares

Balanceatbeginningofperiod 26,589 24,477 24,488 24,387

Sharesissued:

AcquisitionofTCPipeLines,LP,netoftransactioncosts — — 2,063 —

Exerciseofstockoptions 29 3 67 93

Balanceatendofperiod 26,618 24,480 26,618 24,480

PreferredShares


Redemptionofshares (493) — (493) —


AdditionalPaid-InCapital

Balanceatbeginningofperiod — — 2 —KeystoneXLproject-levelcreditfacilityretirementandissuanceofClassCInterests 737 — 737 —

AcquisitionofTCPipeLines,LP — — (398) —

Repurchaseofredeemablenon-controllinginterest 394 — 394 —

Issuanceofstockoptions,netofexercises — 3 (1) (3)

Reclassificationofadditionalpaid-incapitaldeficittoretainedearnings (397) (3) — 3

Balanceatendofperiod 734 — 734 —

RetainedEarnings


Netincome/(loss)attributabletocontrollinginterests 1,014 1,321 (5) 2,510

Commonsharedividends (852) (761) (1,704) (1,522)


Redemptionofpreferredshares (7) — (7) —

Reclassificationofadditionalpaid-incapitaldeficittoretainedearnings 397 3 — (3)


AccumulatedOtherComprehensiveLoss

Balanceatbeginningofperiod (2,152) (577) (2,439) (1,559)

Othercomprehensive(loss)/incomeattributabletocontrollinginterests (274) (305) (340) 677

AcquisitionofTCPipeLines,LP — — 353 —

Balanceatendofperiod (2,426) (882) (2,426) (882)

EquityAttributabletoControllingInterests 32,009 32,458 32,009 32,458

EquityAttributabletoNon-ControllingInterests

Balanceatbeginningofperiod 125 1,810 1,682 1,634

Netincomeattributabletonon-controllinginterests 6 66 74 162Othercomprehensive(loss)/incomeattributabletonon-controllinginterests — (65) (12) 69

Distributionsdeclaredtonon-controllinginterests (9) (58) (59) (112)

AcquisitionofTCPipeLines,LP — — (1,563) —

Balanceatendofperiod 122 1,753 122 1,753

TotalEquity 32,131 34,211 32,131 34,211



NotestoCondensedconsolidatedfinancialstatements

(unaudited)

1.BASISOFPRESENTATION

TheseCondensedconsolidatedfinancialstatementsofTCEnergyCorporation(TCEnergyortheCompany)havebeen

preparedbymanagementinaccordancewithU.S.GAAP.Theaccountingpoliciesappliedareconsistentwiththoseoutlinedin

TCEnergy’sannualauditedConsolidatedfinancialstatementsfortheyearendedDecember31,2020,exceptasdescribedin

Note2,Accountingchanges.Capitalizedandabbreviatedtermsthatareusedbutnototherwisedefinedhereinareidentified

inthe2020auditedConsolidatedfinancialstatementsincludedinTCEnergy’s2020AnnualReport.

TheseCondensedconsolidatedfinancialstatementsreflectadjustments,allofwhicharenormalrecurringadjustmentsthat

are,intheopinionofmanagement,necessarytoreflectfairlythefinancialpositionandresultsofoperationsforthe

respectiveperiods.TheseCondensedconsolidatedfinancialstatementsdonotincludealldisclosuresrequiredintheannual

financialstatementsandshouldbereadinconjunctionwiththe2020auditedConsolidatedfinancialstatementsincludedin

TCEnergy’s2020AnnualReport.

EarningsforinterimperiodsmaynotbeindicativeofresultsforthefiscalyearincertainoftheCompany’ssegmentsprimarily

dueto:

• Naturalgaspipelinessegments–thetimingofregulatorydecisionsandseasonalfluctuationsinshort-termthroughput

volumesonU.S.pipelines

• LiquidsPipelines–fluctuationsinthroughputvolumesontheKeystonePipelineSystemandmarketingactivities

• PowerandStorage–theimpactofseasonalweatherconditionsoncustomerdemandandmarketpricinginadditionto

maintenanceoutagesincertainoftheCompany’sinvestmentsinelectricalpowergenerationplantsandCanadian

non-regulatedgasstoragefacilities.

UseofEstimatesandJudgmentsInpreparingthesefinancialstatements,TCEnergyisrequiredtomakeestimatesandassumptionsthataffectboththe

amountandtimingofrecordingassets,liabilities,revenuesandexpensessincethedeterminationoftheseitemsmaybe

dependentonfutureevents.TheCompanyusesthemostcurrentinformationavailableandexercisescarefuljudgmentin

makingtheseestimatesandassumptions.Intheopinionofmanagement,theseCondensedconsolidatedfinancialstatements

havebeenproperlypreparedwithinreasonablelimitsofmaterialityandwithintheframeworkoftheCompany’ssignificant

accountingpoliciesincludedintheannualauditedConsolidatedfinancialstatementsfortheyearendedDecember31,2020,

exceptasdescribedinNote2,Accountingchanges.

2.ACCOUNTINGCHANGES

ReferenceRateReformInresponsetotheexpectedcessationoftheLondonInterbankOfferedRate(LIBOR),ofwhichcertainratesettingswillcease

tobepublishedattheendof2021withfullcessationbymid-2023,theFASBissuednewoptionalguidanceinMarch2020that

easesthepotentialburdeninaccountingforsuchreferenceratereform.Thenewguidanceprovidesoptionalexpedientsfor

contractsandhedgingrelationshipsthatareaffectedbyreferenceratereformifcertaincriteriaaremet.Eachofthe

expedientscanbeappliedasofJanuary1,2020throughDecember31,2022.Foreligiblehedgingrelationshipsexistingasof

January1,2020andprospectively,theCompanyhasappliedanoptionalexpedientallowinganentitytoassumethatthe

hedgedforecastedtransactioninacashflowhedgeisprobableofoccurring.TheCompanycontinuestomonitor

developmentsandisaddressingnecessarysystemandcontractualchangeswhileassessingtheadoptionofthestandard

marketproposedreferencerates.Thisincludestestingsystemsolutionsandanalyzingexistingagreementstodeterminethe

effectofreferenceratereformonitsconsolidatedfinancialstatements.TheCompanywillcontinuetoevaluatethetiming

andpotentialimpactofadoptionforotheroptionalexpedientswhendeemednecessary.


ChangesinAccountingPoliciesfor2021

Incometaxes

InDecember2019,theFASBissuednewguidancethatsimplifiedtheaccountingforincometaxesandclarifiedexisting

guidance.ThisnewguidancewaseffectiveJanuary1,2021anddidnothaveamaterialimpactontheCompany'sconsolidated

financialstatements.

3.SEGMENTEDINFORMATION

threemonthsendedJune30,2021

CanadianNatural

GasPipelines

U.S.Natural

GasPipelines

MexicoNatural

GasPipelines

LiquidsPipelines

Powerand

Storage(unaudited-millionsofCanadian$) Corporate1 Total

Revenues 1,126 1,206 149 516 185 — 3,182

Intersegmentrevenues — 36 — — — (36)2 —

1,126 1,242 149 516 185 (36) 3,182

Income/(loss)fromequityinvestments 2 51 28 18 90 (32)3 157

Plantoperatingcostsandother (369) (327) (13) (169) (113) 32 2 (959)

Propertytaxes (75) (91) — (28) (2) — (196)

Depreciationandamortization (323) (187) (26) (78) (19) — (633)

Assetimpairmentchargeandother — — — (9) — — (9)

Gainonsaleofassets — — — — 17 — 17

SegmentedEarnings/(Losses) 361 688 138 250 158 (36) 1,559

Interestexpense (583)

Allowanceforfundsusedduringconstruction 64

Interestincomeandother3 127

IncomebeforeIncomeTaxes 1,167

Incometaxexpense (147)

NetIncome 1,020

Netincomeattributabletonon-controllinginterests (6)

NetIncomeAttributabletoControllingInterests 1,014

Preferredsharedividends (32)

NetIncomeAttributabletoCommonShares 982

1 Includesintersegmenteliminations.

2 TheCompanyrecordsintersegmentsalesatcontractedrates.Forsegmentedreporting,thesetransactionsareincludedasIntersegmentrevenuesinthe

segmentprovidingtheserviceandPlantoperatingcostsandotherinthesegmentreceivingtheservice.Thesetransactionsareeliminatedon

consolidation.Intersegmentprofitisrecognizedwhentheproductorservicehasbeenprovidedtothirdpartiesorotherwiserealized.

3 Income/(loss)fromequityinvestmentsincludestheCompany'sproportionateshareofSurdeTexasforeignexchangegainsandlossesonthe

peso-denominatedloansfromaffiliateswhicharefullyoffsetinInterestincomeandotherbythecorrespondingforeignexchangelossesandgainson

theaffiliatereceivablebalance.RefertoNote7,Loansreceivablefromaffiliates,foradditionalinformation.


threemonthsendedJune30,2020

CanadianNatural

GasPipelines

U.S.Natural

GasPipelines

MexicoNatural

GasPipelines

LiquidsPipelines

Powerand


Revenues 1,087 1,204 164 544 90 — 3,089

Intersegmentrevenues — 43 — — — (43)2 —

1,087 1,247 164 544 90 (43) 3,089

Income/(loss)fromequityinvestments 2 57 33 17 83 (26)3 166

Plantoperatingcostsandother (394) (384) (16) (142) (46) 49 2 (933)

Propertytaxes (74) (96) — (28) (1) — (199)

Depreciationandamortization (309) (199) (30) (85) (12) — (635)

Netgain/(loss)onsaleofassets 370 — — — (145) — 225

SegmentedEarnings/(Losses) 682 625 151 306 (31) (20) 1,713

Interestexpense (561)




Incometaxexpense (52)

NetIncome 1,384




NetIncomeAttributabletoCommonShares 1,281





3 Income/(loss)fromequityinvestmentsincludestheCompany'sproportionateshareofSurdeTexasforeignexchangegainsandlossesonthe




sixmonthsendedJune30,2021

CanadianNatural

GasPipelines

U.S.Natural

GasPipelines

MexicoNatural

GasPipelines

LiquidsPipelines

Powerand


Revenues 2,245 2,557 303 1,089 369 — 6,563

Intersegmentrevenues — 74 — — 13 (87)2 —

2,245 2,631 303 1,089 382 (87) 6,563

Incomefromequityinvestments 4 122 66 36 185 3 3 416

Plantoperatingcostsandother (729) (634) (25) (315) (222) 80 2 (1,845)

Propertytaxes (150) (183) — (56) (3) — (392)

Depreciationandamortization (653) (375) (54) (158) (38) — (1,278)

Assetimpairmentchargeandother — — — (2,854) — — (2,854)

Gainonsaleofassets — — — — 17 — 17

SegmentedEarnings/(Losses) 717 1,561 290 (2,258) 321 (4) 627

Interestexpense (1,153)



LossbeforeIncomeTaxes (223)

Incometaxrecovery 293

NetIncome 70


NetLossAttributabletoControllingInterests (5)


NetLossAttributabletoCommonShares (75)





3 IncomefromequityinvestmentsincludestheCompany'sproportionateshareofSurdeTexasforeignexchangegainsandlossesonthe





CanadianNatural

GasPipelines

U.S.Natural

GasPipelines

MexicoNatural

GasPipelines

LiquidsPipelines

Powerand


Revenues 2,119 2,559 406 1,221 202 — 6,507

Intersegmentrevenues — 85 — — 7 (92)2 —

2,119 2,644 406 1,221 209 (92) 6,507

Incomefromequityinvestments 5 131 73 37 211 277 3 734

Plantoperatingcostsandother (760) (747) (29) (320) (93) 96 2 (1,853)

Propertytaxes (146) (172) — (54) (3) — (375)

Depreciationandamortization (615) (393) (60) (167) (30) — (1,265)

Netgain/(loss)onsaleofassets 370 — — — (261) — 109

SegmentedEarnings 973 1,463 390 717 33 281 3,857

Interestexpense (1,139)


Interestincomeandother3 (324)


Incometaxrecovery 112

NetIncome 2,669




NetIncomeAttributabletoCommonShares 2,429





3 IncomefromequityinvestmentsincludestheCompany'sproportionateshareofSurdeTexasforeignexchangegainsandlossesonthe



TotalAssetsbySegment


CanadianNaturalGasPipelines 23,880 22,852

U.S.NaturalGasPipelines 43,113 43,217

MexicoNaturalGasPipelines 7,290 7,215

LiquidsPipelines 14,762 16,744

PowerandStorage 5,411 5,062

Corporate 6,745 5,210

101,201 100,300


4.REVENUES

DisaggregationofRevenuesThefollowingtablessummarizetotalRevenuesforthethreeandsixmonthsendedJune30,2021and2020:

threemonthsendedJune30,2021 CanadianNatural

GasPipelines

U.S.Natural

GasPipelines

MexicoNatural

GasPipelines

LiquidsPipelines

PowerandStorage Total(unaudited-millionsofCanadian$)

Revenuesfromcontractswithcustomers

Capacityarrangementsandtransportation 1,103 948 141 485 — 2,677

Powergeneration — — — — 79 79

Naturalgasstorageandother1 23 247 8 1 82 361

1,126 1,195 149 486 161 3,117

Otherrevenues2,3 — 11 — 30 24 65

1,126 1,206 149 516 185 3,182

1 Includes$23millionoffeerevenuesfromanaffiliaterelatedtodevelopmentandconstructionoftheCoastalGasLinkpipelineprojectwhichis

35percentownedbyTCEnergy.

2 OtherrevenuesincludeincomefromtheCompany'smarketingactivities,financialinstrumentsandleasearrangements.RefertoNote14,Risk

managementandfinancialinstruments,foradditionalinformationonfinancialinstruments.

3 Includes$32millionofoperatingleaseincome.

threemonthsendedJune30,2020 CanadianNatural

GasPipelines

U.S.Natural

GasPipelines

MexicoNatural

GasPipelines

LiquidsPipelines



Capacityarrangementsandtransportation 1,075 1,031 156 551 — 2,813



1,087 1,182 164 552 64 3,049

Otherrevenues2,3 — 22 — (8) 26 40

1,087 1,204 164 544 90 3,089







sixmonthsendedJune30,2021 CanadianNatural

GasPipelines

U.S.Natural

GasPipelines

MexicoNatural

GasPipelines

LiquidsPipelines



Capacityarrangementsandtransportation 2,195 2,067 287 971 — 5,520



2,245 2,524 303 973 316 6,361

Otherrevenues2,3 — 33 — 116 53 202

2,245 2,557 303 1,089 369 6,563






sixmonthsendedJune30,2020 CanadianNatural

GasPipelines

U.S.Natural

GasPipelines

MexicoNatural

GasPipelines

LiquidsPipelines



Capacityarrangementsandtransportation 2,107 2,189 308 1,133 — 5,737



2,119 2,518 406 1,135 142 6,320

Otherrevenues2,3 — 41 — 86 60 187

2,119 2,559 406 1,221 202 6,507

1 Includes$89millionoffeerevenuesfromaffiliates,ofwhich$77millionisrelatedtotheconstructionoftheSurdeTexaspipelineprojectwhichis

60percentownedbyTCEnergyand$12millionisrelatedtodevelopmentandconstructionoftheCoastalGasLinkpipelineprojectwhichis35percent

ownedbyTCEnergy.


managementandfinancialinstruments,foradditionalinformationonincomefromfinancialinstruments.


ContractBalances

(unaudited-millionsofCanadian$) June30,2021 December31,2020AffectedlineitemontheCondensedconsolidatedbalancesheet

Receivablesfromcontractswithcustomers 1,435 1,330 Accountsreceivable

Contractassets 300 132 Othercurrentassets

Long-termcontractassets 194 192 Otherlong-termassets

Contractliabilities1 88 129 Accountspayableandother

Long-termcontractliabilities 192 203 Otherlong-termliabilities

1 DuringthesixmonthsendedJune30,2021,$8million(2020–$6million)ofrevenueswererecognizedthatwereincludedincontractliabilitiesatthe

beginningoftheperiod.


Contractassetsandlong-termcontractassetsprimarilyrelatetotheCompany’srighttorevenuesforservicescompletedbut

notinvoicedatthereportingdateonlong-termcommittedcapacitynaturalgaspipelinescontracts.Thechangeincontract

assetsisprimarilyrelatedtothetransfertoAccountsreceivablewhentheserightsbecomeunconditionalandthecustomeris

invoiced,aswellastherecognitionofadditionalrevenuesthatremaintobeinvoiced.Contractliabilitiesandlong-term

contractliabilitiesprimarilyrelatetoforcemajeurefixedcapacitypaymentsreceivedonlong-termcapacityarrangementsin

Mexico.

FutureRevenuesfromRemainingPerformanceObligationsAsatJune30,2021,futurerevenuesfromlong-termpipelinecapacityarrangementsandtransportationaswellasnaturalgas

storageandothercontractsextendingthrough2048areapproximately$24.6billion,ofwhichapproximately$3.2billionis

expectedtoberecognizedduringtheremainderof2021.

5.KEYSTONEXL

AssetImpairmentChargeandOtherOnJune9,2021,followingtherevocationofthePresidentialPermitfortheKeystoneXLpipelineonJanuary20,2021,and

afteracomprehensivereviewofoptionsinconsultationwiththeGovernmentofAlberta,theCompanyterminatedthe

KeystoneXLpipelineproject.TheKeystoneXLinvestmentwasevaluatedforimpairmentinfirstquarter2021alongwith

TCEnergy'sinvestmentsinrelatedcapitalprojects,includingHeartlandPipeline,TCTerminalsandKeystoneHardisty

Terminal.Asaresult,theCompanydeterminedthatthecarryingamountoftheseassetswithintheLiquidsPipelinessegment

wasnolongerfullyrecoverableandrecognizedanassetimpairmentcharge,netofexpectedcontractualrecoveriesandother

contractualandlegalobligationsrelatedtoterminationactivities,of$2,854million($2,194millionaftertax)forthesix

monthsendedJune30,2021.Theassetimpairmentchargewasbasedontheexcessofthecarryingvalueof$3,301million

overtheestimatedfairvalueof$175million.Terminationactivitiesandrelatedcostswillcontinuethrough2022withany

adjustmentstotheestimatedfairvalueandfuturecontractualandlegalobligationsexpensedasdetermined.


EstimatedFairValue

Assetimpairmentchargeandother

(unaudited-millionsofCanadian$) Pre-tax After-tax

Assetimpairmentcharge

Plantandequipment 175 412 312

Relatedcapitalprojectsindevelopment — 230 175

Othercapitalizedcosts — 2,158 1,642

Capitalizedinterest — 326 248

175 3,126 2,377

Other

Contractualrecoveries n/a (697) (531)

Contractualandlegalobligationsrelatedtoterminationactivities n/a 425 348

175 2,854 2,194

Theestimatedfairvalueof$175millionrelatedtoplantandequipmentisbasedonthepricethatisexpectedtobereceived

fromsellingtheseassetsintheircurrentconditionandisupdatedasrequired.Keyassumptionsusedinthedeterminationof

sellingpriceincludedanestimatedtwo-yeardisposalperiodandcurrentenergymarketdemand.Thevaluationconsidereda

varietyofpotentialsellingpricesbasedonvariousmarketsthatcouldbeusedtodisposeoftheseassetsandrequiredtheuse

ofunobservableinputs.Asaresult,thefairvalueisclassifiedinLevelIIIofthefairvaluehierarchy.


AstheCompanydidnotseetherelatedcapitalprojectsindevelopmentproceedingatthetimeoftheassessmentinfirst

quarter2021,itrecordedanassetimpairmentchargeequaltothecarryingvalueoftheseprojectsincludedinOther

long-termassetsontheCondensedconsolidatedbalancesheetastheestimatedfairvalueoftheserelatedprojectswas

determinedtobenil.

RedeemableNon-ControllingInterestandLong-TermDebtOnJanuary8,2021,theCompanyexerciseditscallrightinaccordancewithcontractualtermsandpaid$633million

(US$497million)torepurchasetheGovernmentofAlbertaClassAInterestsincertainKeystoneXLsubsidiarieswhichwere

classifiedasCurrentliabilitiesontheConsolidatedbalancesheetatDecember31,2020.Thistransactionwasfundedbydraws

ontheproject-levelcreditfacilitywhichwasguaranteedbytheGovernmentofAlbertaandnon-recoursetoTCEnergy.

FollowingtherevocationofthePresidentialPermitfortheKeystoneXLpipelineonJanuary20,2021,theCompanyceased

accruingareturnontheremainingGovernmentofAlbertaClassAInterests.

InthesixmonthsendedJune30,2021,theCompanymadedrawsundertheKeystoneXLproject-levelcreditfacilitytotaling

$1,028million(US$849million).InJune2021,inaccordancewiththetermsoftheguarantee,theGovernmentofAlberta

repaidthefulloutstandingbalanceonthisproject-levelcreditfacility,whichwassubsequentlyterminated.Aspartofthis

arrangement,TCEnergyissued$91millionofClassCInterestsintheKeystoneXLsubsidiarieswhichentitletheGovernment

ofAlbertatofutureliquidationproceedsfromspecifiedKeystoneXLprojectassets.TheClassCInterestswererecordedin

AccountspayableandotherontheCondensedconsolidatedbalancesheetattheirfairvalue.Terminationoftheproject-level

creditfacility,netoftheissuanceofClassCInterests,resultedin$937million($737millionaftertax)recordedtoAdditional

paid-incapital.

InJune2021,theCompanyrepurchasedtheremainingGovernmentofAlbertaClassAInterestsforanominalamount,which

wasaccountedforasanequitytransactionandresultedin$394millionrecognizedinAdditionalpaid-incapital.

ThechangesinRedeemablenon-controllinginterestclassifiedinmezzanineequitywereasfollows:




Balanceatbeginningofperiod 394 102 393 —

ClassAInterestsissued — 226 — 328

Net(loss)/incomeattributabletoredeemablenon-controllinginterest1 — (3) 1 (3)

ClassAInterestsrepurchased (394) — (394) —

Balanceatendofperiod — 325 — 325

1 IncludesareturnaccrualuptoJanuary20,2021andaforeigncurrencytranslationlossonClassAInterests,bothofwhichwerepresentedwithinNet

incomeattributabletonon-controllinginterestsintheCondensedconsolidatedstatementofincome.

6.INCOMETAXES

EffectiveTaxRatesTheeffectiveincometaxrateswere132percentandnegativefourpercentforthesixmonthsendedJune30,2021and

2020,respectively.TheincreaseintheeffectiveincometaxrateisprimarilyduetotheimpactsoftheKeystoneXLasset

impairmentchargerecordedinthesixmonthsendedJune30,2021aswellasthereleaseofincometaxvaluationallowances

andthenon-taxableportionofcapitalgainsrecognizedinthesixmonthsendedJune30,2020.


7.LOANSRECEIVABLEFROMAFFILIATES

Relatedpartytransactionsareconductedinthenormalcourseofbusinessandaremeasuredattheexchangeamount,which

istheamountofconsiderationestablishedandagreedtobytherelatedparties.

SurdeTexasAtJune30,2021andDecember31,2020,LoanreceivablefromaffiliateontheCompany'sCondensedconsolidatedbalance

sheetreflectedaMXN$20.9billionor$1.3billionloanreceivablefromtheSurdeTexasjointventurewhichrepresents

TCEnergy's60percentproportionateshareoflong-termdebtfinancingtothejointventure.TheCompany'sCondensed

consolidatedstatementofincomereflectedtherelatedinterestincomeandforeignexchangeimpactonthisloanreceivable

whichwerefullyoffsetuponconsolidationwithcorrespondingamountsincludedinTCEnergy’s60percentproportionate

shareofSurdeTexasequityearningsasfollows:

(unaudited-millionsofCanadian$)


sixmonthsendedJune30 AffectedlineitemintheCondensed

consolidatedstatementofincome2021 2020 2021 2020

Interestincome1 21 29 42 62 Interestincomeandother

Interestexpense2 (21) (29) (42) (62) Incomefromequityinvestments

Foreignexchangegains/(losses)1 32 26 (3) (277) Interestincomeandother

Foreignexchange(losses)/gains1 (32) (26) 3 277 Incomefromequityinvestments

1 IncludedintheCorporatesegment.

2 IncludedintheMexicoNaturalGasPipelinessegment.

CoastalGasLinkPipelineLimitedPartnershipTCEnergyholdsa35percentequityinterestinCoastalGasLinkPipelineLimitedPartnership(CoastalGasLinkLP),whichhas

contractedtheCompanytoconstructandoperatetheCoastalGasLinkpipeline.In2020,theCompanyenteredintoa

subordinateddemandrevolvingcreditfacilitywithCoastalGasLinkLPtoprovideadditionalshort-termliquidityandfunding

flexibilitytotheproject.Thefacilitybearsinterestatafloatingmarket-basedrateandhadacapacityof$500millionat

June30,2021withanoutstandingbalanceof$220million(December31,2020–nil)reflectedinOthercurrentassetsonthe

Company'sCondensedconsolidatedbalancesheet.

8.LONG-TERMDEBT

Long-TermDebtIssuedLong-termdebtissuedbytheCompanyinthesixmonthsendedJune30,2021includedthefollowing:

(unaudited-millionsofCanadian$,unlessotherwisenoted)

Company Issuedate Type Maturitydate Amount Interestrate

TransCanadaPipeLinesLimited June2021 MediumTermNotes June2024 750 Floating

TransCanadaPipeLinesLimited June2021 MediumTermNotes June2031 500 2.97%

TransCanadaPipeLinesLimited June2021 MediumTermNotes September2047 250 4.33%

KeystoneXLsubsidiaries1 Various Project-LevelCreditFacility June2021 US849 Floating

ColumbiaPipelineGroup,Inc. January2021 TermLoan June2022 US4,040 Floating

1 OnJanuary4,2021,theCompanyestablishedaUS$4.1billionproject-levelcreditfacilitytosupporttheconstructionoftheKeystoneXLpipeline,which

wasfullyguaranteedbytheGovernmentofAlbertaandnon-recoursetoTCEnergy.Theavailabilityofthiscreditfacilitywassubsequentlyreducedto

US$1.6billionandallamountsoutstandingwerefullyrepaidbytheGovernmentofAlbertainJune2021.RefertoNote5,KeystoneXL,foradditional

information.


Long-TermDebtRetired/RepaidLong-termdebtretired/repaidbytheCompanyinthesixmonthsendedJune30,2021includedthefollowing:

(unaudited-millionsofCanadian$,unlessotherwisenoted)

Company Retirement/Repaymentdate Type Amount Interestrate

TransCanadaPipeLinesLimited January2021 Debentures US400 9.875%

TCPipeLines,LP March2021 SeniorUnsecuredNotes US350 4.65%

KeystoneXLsubsidiaries1 June2021 Project-LevelCreditFacility US849 Floating

1 InJune2021,inaccordancewiththetermsoftheguarantee,theGovernmentofAlbertarepaidtheUS$849millionoutstandingbalanceunderthe

KeystoneXLproject-levelcreditfacilitybearinginterestatafloatingrate,subsequenttowhichitwasterminated,resultinginnocashimpactto

TCEnergy.RefertoNote5,KeystoneXL,foradditionalinformation.

OnMarch4,2021,theCompany'ssubsidiary,TCPipeLines,LP,terminatedaUS$500millionunsecuredrevolvingcreditfacility

bearinginterestatafloatingrateonwhichnoamountwasoutstanding.

CapitalizedInterestInthethreeandsixmonthsendedJune30,2021,TCEnergycapitalizedinterestrelatedtocapitalprojectsof$1millionand

$18million,respectively(2020–$87millionand$151million,respectively).

9.JUNIORSUBORDINATEDNOTESISSUED

JuniorsubordinatednotesissuedbytheCompanyinthesixmonthsendedJune30,2021includedthefollowing:


Company Issuedate Type Maturitydate Amount Interestrate

TransCanadaPipeLinesLimited March2021 JuniorSubordinatedNotes1 March2081 500 4.45%

1 TheJuniorsubordinatednoteswereissuedtoTransCanadaTrust,afinancingtrustsubsidiarywhollyownedbyTCPL.Whiletheobligationsof

TransCanadaTrustarefullyandunconditionallyguaranteedbyTCPLonasubordinatedbasis,TransCanadaTrustisnotconsolidatedinTCEnergy's

financialstatementssinceTCPLdoesnothaveavariableinterestinTransCanadaTrustandtheonlysubstantiveassetsofTransCanadaTrustarejunior

subordinatednotesofTCPL.

InMarch2021,TransCanadaTrust(theTrust)issued$500millionofTrustNotes–Series2021-Atoinvestorswithafixed

interestrateof4.20percentperannumforthefirst10yearsandresettingonthe10thanniversaryandeveryfiveyears

thereafter.AlloftheproceedsoftheissuancebytheTrustwereloanedtoTCPLfor$500millionofjuniorsubordinatednotes

ofTCPLataninitialfixedrateof4.45percentperannum,includinga0.25percentadministrationcharge.Therateonthe

juniorsubordinatednotesofTCPLwillreseteveryfiveyearscommencingMarch2031untilMarch2051tothethenFiveYear

GovernmentofCanadaYield,asdefinedinthedocumentgoverningthesubordinatednotes,plus3.316percentperannum;

fromMarch2051untilMarch2081,theinterestratewillresettothethenFiveYearGovernmentofCanadaYieldplus

4.066percentperannum.ThejuniorsubordinatednotesarecallableatTCPL'soptionatanytimefromDecember4,2030to

March4,2031andoneachinterestpaymentandresetdatethereafterat100percentoftheprincipalamountplusaccrued

andunpaidinteresttothedateofredemption.

TheJuniorsubordinatednotesaresubordinatedinrightofpaymenttoexistingandfutureseniorindebtednessandother

obligationsofTCPL.


10.NON-CONTROLLINGINTERESTS

AcquisitionofTCPipeLines,LPOnDecember14,2020,theCompanyenteredintoadefinitiveagreementandplanofmergertoacquirealltheoutstanding

commonunitsofTCPipeLines,LPnotbeneficiallyownedbyTCEnergyoritsaffiliatesinexchangeforTCEnergycommon

shares.UponcloseofthetransactiononMarch3,2021,TCPipeLines,LPcommonunitholdersreceived0.70TCEnergy

commonsharesforeachissuedandoutstandingpublicly-heldTCPipeLines,LPcommonunitrepresenting,inaggregate,

37,955,093TCEnergycommonshares.Asaresult,TCPipeLines,LPbecameanindirect,wholly-ownedsubsidiaryofTCEnergy.

AstheCompanycontrolledTCPipeLines,LP,thisacquisitionwasaccountedforasanequitytransactionwiththefollowing

impactreflectedontheCondensedconsolidatedbalancesheet:

(unaudited-millionsofCanadian$) March3,2021

Commonshares 2,063

Additionalpaid-incapital (398)

Accumulatedothercomprehensiveloss 353

Non-controllinginterests (1,563)

Deferredincometaxliabilities (443)

Other (12)

11.COMMONSHARESANDPREFERREDSHARES

TheBoardofDirectorsofTCEnergydeclaredquarterlydividendsasfollows:

threemonthsendedJune30 sixmonthsendedJune30

(unaudited-Canadian$,roundedtotwodecimals) 2021 2020 2021 2020

percommonshare 0.87 0.81 1.74 1.62

perSeries1preferredshare 0.22 0.22 0.43 0.43











AcquisitionofTCPipeLines,LPOnMarch3,2021,TCEnergyissued37,955,093commonsharestoacquirealltheoutstandingpublicly-heldcommonunitsof

TCPipeLines,LP.RefertoNote10,Non-controllinginterests,foradditionalinformation.


PreferredSharesOnMay31,2021,TCEnergyredeemedallofthe20,000,000issuedandoutstandingSeries13preferredsharesata

redemptionpriceof$25.00pershareandpaidthefinalquarterlydividendof$0.34375perSeries13preferredshareforthe

perioduptobutexcludingMay31,2021aspreviouslydeclaredonMay6,2021.TheCompanyusedtheproceedsfromthe

March2021issuanceof$500millionofJuniorSubordinatedNotesthroughtheTrusttofinancethispreferredshare

redemption.

OnFebruary1,2021,818,876Series5preferredshareswereconverted,onaone-for-onebasis,intoSeries6preferredshares

and175,208Series6preferredshareswereconverted,onaone-for-onebasis,intoSeries5preferredshares.

12.OTHERCOMPREHENSIVE(LOSS)/INCOMEANDACCUMULATEDOTHER

COMPREHENSIVELOSS

Componentsofothercomprehensive(loss)/income,includingtheportionattributabletonon-controllinginterestsandrelated

taxeffects,areasfollows:

threemonthsendedJune30,2021BeforeTax

Amount

IncomeTaxRecovery/(Expense)

NetofTaxAmount(unaudited-millionsofCanadian$)

Foreigncurrencytranslationlossesonnetinvestmentinforeignoperations (231) (2) (233)

Changeinfairvalueofnetinvestmenthedges 17 (4) 13

Changeinfairvalueofcashflowhedges (14) 3 (11)

Reclassificationtonetincomeofgainsandlossesoncashflowhedges 12 (2) 10

Reclassificationtonetincomeofactuarialgainsandlossesonpensionandotherpost-retirementbenefitplans 6 (2) 4

Othercomprehensivelossonequityinvestments (76) 19 (57)

OtherComprehensiveLoss (286) 12 (274)

threemonthsendedJune30,2020BeforeTax

Amount









OtherComprehensiveLoss (209) (161) (370)

sixmonthsendedJune30,2021BeforeTax

Amount







Othercomprehensiveincomeonequityinvestments 173 (43) 130

OtherComprehensiveLoss (282) (70) (352)


sixmonthsendedJune30,2020BeforeTax

Amount



Foreigncurrencytranslationgainsonnetinvestmentinforeignoperations 836 72 908

Changeinfairvalueofnetinvestmenthedges (42) 10 (32)



Reclassificationtonetincomeofactuarialgainsandlossesonpensionandotherpost-retirementbenefitplans (4) 1 (3)


OtherComprehensiveIncome 625 121 746

ThechangesinAOCIbycomponentareasfollows:

threemonthsendedJune30,2021 CurrencyTranslation

AdjustmentsCashFlow

Hedges

PensionandOPEBPlan

AdjustmentsEquity

Investments Total1(unaudited-millionsofCanadian$)

AOCIbalanceatApril1,2021 (1,184) (138) (282) (548) (2,152)

Othercomprehensivelossbeforereclassifications2 (220) (11) — (64) (295)

AmountsreclassifiedfromAOCI — 10 4 7 21

Netcurrentperiodothercomprehensive(loss)/income (220) (1) 4 (57) (274)

AOCIbalanceatJune30,2021 (1,404) (139) (278) (605) (2,426)

1 Allamountsarenetoftax.AmountsinparenthesesindicatelossesrecordedtoOCI.

2 Othercomprehensivelossbeforereclassificationsoncurrencytranslationadjustments,cashflowhedgesandequityinvestmentsarenetof

non-controllinginterestofnil.

sixmonthsendedJune30,2021 CurrencyTranslation

AdjustmentsCashFlow

Hedges

PensionandOPEBPlan

AdjustmentsEquity

Investments Total1(unaudited-millionsofCanadian$)

AOCIbalanceatJanuary1,2021 (1,273) (143) (285) (738) (2,439)

Othercomprehensive(loss)/incomebeforereclassifications2 (493) (1) — 116 (378)

AmountsreclassifiedfromAOCI3 — 18 7 13 38

Netcurrentperiodothercomprehensive(loss)/income (493) 17 7 129 (340)

AcquisitionofTCPipeLines,LP4 362 (13) — 4 353

AOCIbalanceatJune30,2021 (1,404) (139) (278) (605) (2,426)

1 Allamountsarenetoftax.AmountsinparenthesesindicatelossesrecordedtoOCI.

2 Othercomprehensive(loss)/incomebeforereclassificationsoncurrencytranslationadjustments,cashflowhedgesandequityinvestmentsarenetof

non-controllinginterestlossesof$14millionandgainsof$1millionand$1million,respectively.

3 LossesrelatedtocashflowhedgesreportedinAOCIandexpectedtobereclassifiedtonetincomeinthenext12monthsareestimatedtobe$55million

($41million,netoftax)atJune30,2021.Theseestimatesassumeconstantcommodityprices,interestratesandforeignexchangeratesovertime,

however,theamountsreclassifiedwillvarybasedontheactualvalueofthesefactorsatthedateofsettlement.

4 RepresentsthehistoricalOCIattributabletonon-controllinginterestsofTCPipeLines,LPwhichwasreclassifiedtoAOCIuponcompletionofthe

acquisitionofalltheoutstandingpublicly-heldcommonunitsofTCPipeLines,LPonMarch3,2021.RefertoNote10,Non-controllinginterests,for



DetailsaboutreclassificationsoutofAOCIintotheCondensedconsolidatedstatementofincomeareasfollows:

AmountsReclassifiedfromAOCI

AffectedlineitemintheCondensedconsolidatedstatementofincome1




Cashflowhedges

Commodities (3) 2 (5) — Revenues(PowerandStorage)

Interestrate (9) (8) (18) (11) Interestexpense

Interestrate — (613) — (613) Netgainonsaleofassets2

(12) (619) (23) (624) Totalbeforetax

2 155 5 156 Incometaxexpense/(recovery)2

(10) (464) (18) (468) Netoftax3

Pensionandotherpost-retirementbenefitplanadjustments

Amortizationofactuarial(losses)/gains (6) (5) (9) 4 Plantoperatingcostsandother4

2 1 2 (1) Incometaxexpense/(recovery)

(4) (4) (7) 3 Netoftax

Equityinvestments

Equityincome (10) (3) (18) (7) Incomefromequityinvestments

3 1 5 2 Incometaxexpense/(recovery)

(7) (2) (13) (5) Netoftax

1 AllamountsinparenthesesindicateexpensestotheCondensedconsolidatedstatementofincome.

2 Includesalossof$613million($459million,netoftax)relatedtoacontractuallyrequiredderivativeinstrumentusedtohedgetheinterestraterisk

associatedwithproject-levelfinancingoftheCoastalGasLinkpipelineconstruction.Thederivativeinstrumentwasderecognizedaspartofthesaleofa

65percentequityinterestinCoastalGasLinkLP.

3 AmountsreclassifiedfromAOCIoncashflowhedgesarenetofnon-controllinginterestsofnilforthethreeandsixmonthsendedJune30,2021

(2020–lossesof$2millionand$2million,respectively).

4 TheseAOCIcomponentsareincludedinthecomputationofnetbenefitcost.RefertoNote13,Employeepost-retirementbenefits,foradditional

information.


13.EMPLOYEEPOST-RETIREMENTBENEFITS

ThenetbenefitcostrecognizedfortheCompany’spensionbenefitplansandotherpost-retirementbenefitplansisasfollows:


Pensionbenefit

plans

Otherpost-retirementbenefitplans

Pensionbenefitplans

Otherpost-retirementbenefitplans

(unaudited-millionsofCanadian$) 2021 2020 2021 2020 2021 2020 2021 2020

Servicecost1 42 39 2 2 85 77 3 3

Othercomponentsofnetbenefitcost1

Interestcost 30 33 3 4 60 68 6 8

Expectedreturnonplanassets (59) (58) (3) (4) (117) (115) (6) (8)

Amortizationofactuariallosses 5 6 — — 11 11 1 1

Amortizationofregulatoryasset 8 6 1 1 14 12 1 1

(16) (13) 1 1 (32) (24) 2 2

NetBenefitCost 26 26 3 3 53 53 5 5

1 ServicecostandothercomponentsofnetbenefitcostareincludedinPlantoperatingcostsandotherintheCondensedconsolidatedstatementof

income.


14.RISKMANAGEMENTANDFINANCIALINSTRUMENTS

RiskManagementOverviewTCEnergyhasexposuretomarketriskandcounterpartycreditrisk,andhasstrategies,policiesandlimitsinplacetomanage

theimpactoftheserisksonearnings,cashflowsandshareholdervalue.

CounterpartycreditriskTCEnergy’sexposuretocounterpartycreditriskincludesitscashandcashequivalents,accountsreceivableandcertain

contractualrecoveries,available-for-saleassets,thefairvalueofderivativeassetsandloansreceivable.

WhilethemajorityoftheCompany'screditexposureistolargecreditworthyentities,TCEnergymaintainsclosemonitoring

andcommunicationwiththosecounterpartiesexperiencinggreaterfinancialpressuresduetosignificantmarketevents,

includingtheCOVID-19pandemic.RefertoTCEnergy's2020AnnualReportformoreinformationaboutthefactorsthat

mitigatetheCompany'scounterpartycreditriskexposure.

TheCompanyreviewsfinancialassetscarriedatamortizedcostforimpairmentusingthelifetimeexpectedlossofthe

financialassetatinitialrecognitionandthroughoutthelifeofthefinancialasset.TCEnergyuseshistoricalcreditlossand

recoverydata,adjustedformanagement'sjudgmentregardingcurrenteconomicandcreditconditions,alongwith

supportableforecaststodetermineanyimpairment,whichisrecognizedinPlantoperatingcostsandother.AtJune30,2021,

therewerenosignificantcreditlosses,nosignificantcreditriskconcentrationandnosignificantamountspastdueor

impaired.

NetinvestmentinforeignoperationsTheCompanyhedgesaportionofitsnetinvestmentinforeignoperations(onanafter-taxbasis)withU.S.dollar-denominated

debt,cross-currencyswaps,foreignexchangeforwardsandforeignexchangeoptionsasappropriate.

Thefairvaluesandnotionalamountsforthederivativesdesignatedasanetinvestmenthedgewereasfollows:

June30,2021 December31,2020

(unaudited-millionsofCanadian$,unlessotherwisenoted) Fairvalue1,2Notionalamount Fairvalue1,2

Notionalamount

U.S.dollarforeignexchangeoptions(maturing2021to2023) 41 US3,200 45 US2,200

U.S.dollarcross-currencyinterestrateswaps(maturing2022to2025) 35 US400 23 US400

76 US3,600 68 US2,600

1 Fairvalueequalscarryingvalue.

2 Noamountshavebeenexcludedfromtheassessmentofhedgeeffectiveness.

ThenotionalamountsandfairvaluesofU.S.dollar-denominateddebtdesignatedasanetinvestmenthedgewereasfollows:

(unaudited-millionsofCanadian$,unlessotherwisenoted) June30,2021 December31,2020

Notionalamount 25,200(US20,300) 27,700(US21,800)

Fairvalue 30,700(US24,700) 33,800(US26,500)


Non-derivativefinancialinstruments

Fairvalueofnon-derivativefinancialinstruments

Available-for-saleassetsarerecordedatfairvaluewhichiscalculatedusingquotedmarketpriceswhereavailable.Certain

non-derivativefinancialinstrumentsincludedinCashandcashequivalents,Accountsreceivable,Othercurrentassets,

Loanreceivablefromaffiliate,Restrictedinvestments,Otherlong-termassets,Notespayable,Accountspayableandother,

Dividendspayable,AccruedinterestandOtherlong-termliabilitieshavecarryingamountsthatapproximatetheirfairvalue

duetothenatureoftheitemortheshorttimetomaturity.EachoftheseinstrumentsareclassifiedinLevelIIofthefairvalue

hierarchy,exceptfortheCompany'sLMCIequitysecuritieswhichareclassifiedinLevelI.

Creditriskhasbeentakenintoconsiderationwhencalculatingthefairvalueofnon-derivativeinstruments.

Balancesheetpresentationofnon-derivativefinancialinstruments

Thefollowingtabledetailsthefairvalueofnon-derivativefinancialinstruments,excludingthosewherecarryingamounts

approximatefairvalue,andwouldbeclassifiedinLevelIIofthefairvaluehierarchy:


(unaudited-millionsofCanadian$)Carryingamount

Fairvalue

Carryingamount

Fairvalue

Long-termdebtincludingcurrentportion (41,803) (49,437) (36,885) (46,054)

Juniorsubordinatednotes (8,800) (9,318) (8,498) (8,908)

(50,603) (58,755) (45,383) (54,962)

Available-for-saleassetssummary

ThefollowingtablessummarizeadditionalinformationabouttheCompany'srestrictedinvestmentsthatwereclassifiedas

available-for-saleassets:


(unaudited-millionsofCanadian$)LMCIrestricted

investmentsOtherrestricted

investments1LMCIrestricted

investmentsOtherrestricted

investments1

Fairvaluesoffixedincomesecurities2,3

Maturingwithin1year — 36 — 17

Maturingwithin1-5years — 86 — 66

Maturingwithin5-10years 1,058 — 985 —

Maturingafter10years 76 — 85 —

Fairvalueofequitysecurities2,4 798 — 736 —

1,932 122 1,806 83

1 OtherrestrictedinvestmentshavebeensetasidetofundinsuranceclaimlossestobepaidbytheCompany'swholly-ownedcaptiveinsurance

subsidiary.

2 Available-for-saleassetsarerecordedatfairvalueandincludedinOthercurrentassetsandRestrictedinvestmentsontheCompany'sCondensed

consolidatedbalancesheet.

3 ClassifiedinLevelIIofthefairvaluehierarchy.

4 ClassifiedinLevelIofthefairvaluehierarchy.


June30,2021 June30,2020

(unaudited-millionsofCanadian$)LMCIrestrictedinvestments1

Otherrestrictedinvestments2

LMCIrestrictedinvestments1

Otherrestrictedinvestments2

Netunrealizedgains/(losses)intheperiod

threemonthsended 49 — 84 2

sixmonthsended 9 (1) 61 3

Netrealized(losses)/gainsintheperiod3

threemonthsended (2) — 8 —

sixmonthsended (3) — 10 —

1 GainsandlossesarisingfromchangesinthefairvalueofLMCIrestrictedinvestmentsimpactthesubsequentamountstobecollectedthroughtollsto

coverfuturepipelineabandonmentcosts.Asaresult,theCompanyrecordsthesegainsandlossesasregulatoryassetsorliabilities.

2 GainsandlossesonotherrestrictedinvestmentsareincludedinInterestincomeandotherintheCondensedconsolidatedstatementofincome.

3 RealizedgainsandlossesonthesaleofLMCIrestrictedinvestmentsaredeterminedusingtheaveragecostbasis.

Derivativeinstruments

Fairvalueofderivativeinstruments

Thefairvalueofforeignexchangeandinterestratederivativeshasbeencalculatedusingtheincomeapproachwhichuses

period-endmarketratesandappliesadiscountedcashflowvaluationmodel.Thefairvalueofcommodityderivativeshas

beencalculatedusingquotedmarketpriceswhereavailable.Intheabsenceofquotedmarketprices,third-partybroker

quotesorothervaluationtechniqueshavebeenused.ThefairvalueofoptionshasbeencalculatedusingtheBlack-Scholes

pricingmodel.Creditriskhasbeentakenintoconsiderationwhencalculatingthefairvalueofderivativeinstruments.

Unrealizedgainsandlossesonderivativeinstrumentsarenotnecessarilyrepresentativeoftheamountsthatwillberealized

onsettlement.

Insomecases,eventhoughthederivativesareconsideredtobeeffectiveeconomichedges,theydonotmeetthespecific

criteriaforhedgeaccountingtreatmentorarenotdesignatedasahedgeandareaccountedforatfairvaluewithchangesin

fairvaluerecordedinnetincomeintheperiodofchange.ThismayexposetheCompanytoincreasedvariabilityinreported

earningsbecausethefairvalueofthederivativeinstrumentscanfluctuatesignificantlyfromperiodtoperiod.


Balancesheetpresentationofderivativeinstruments

Thebalancesheetclassificationofthefairvalueofderivativeinstrumentswasasfollows:

atJune30,2021CashFlow

Hedges

NetInvestment

HedgesHeldforTrading

TotalFairValueofDerivativeInstruments1(unaudited-millionsofCanadian$)

Othercurrentassets

Commodities2 — — 68 68

Foreignexchange — 42 142 184

— 42 210 252

Otherlong-termassets



— 45 19 64

TotalDerivativeAssets — 87 229 316

Accountspayableandother

Commodities2 (18) — (78) (96)

Foreignexchange — — (21) (21)

Interestrate (21) — — (21)

(39) — (99) (138)

Otherlong-termliabilities

Commodities2 (6) — (6) (12)

Foreignexchange — (11) (6) (17)


(29) (11) (12) (52)

TotalDerivativeLiabilities (68) (11) (111) (190)

TotalDerivatives (68) 76 118 126


2 Includespurchasesandsalesofpower,naturalgasandliquids.


atDecember31,2020CashFlow

Hedges

NetInvestment

HedgesHeldforTrading

TotalFairValueofDerivativeInstruments1(unaudited-millionsofCanadian$)

Othercurrentassets



— 47 188 235

Otherlong-termassets


— 22 19 41

TotalDerivativeAssets — 69 207 276

Accountspayableandother

Commodities2 (8) — (32) (40)

Foreignexchange — (1) (10) (11)


(29) (1) (42) (72)

Otherlong-termliabilities

Commodities2 (6) — (4) (10)

Interestrate3 (49) — — (49)

(55) — (4) (59)

TotalDerivativeLiabilities (84) (1) (46) (131)

TotalDerivatives (84) 68 161 145


2 Includespurchasesandsalesofpower,naturalgasandliquids.

3 ForthethreeandsixmonthsendedJune30,2020,a$130millionpaymenttosettlealossonfinancialinstrumentswasincludedinNetcashprovided

by/(usedin)financingactivitiesintheCondensedconsolidatedstatementofcashflows.

Themajorityofderivativeinstrumentsheldfortradinghavebeenenteredintoforriskmanagementpurposesandallare

subjecttotheCompany'sriskmanagementstrategies,policiesandlimits.Theseincludederivativesthathavenotbeen

designatedashedgesordonotqualifyforhedgeaccountingtreatmentbuthavebeenenteredintoaseconomichedgesto

managetheCompany'sexposurestomarketrisk.

Notionalandmaturitysummary

ThematurityandnotionalamountorquantityoutstandingrelatedtotheCompany'sderivativeinstrumentsexcludinghedges

ofthenetinvestmentinforeignoperationswasasfollows:

atJune30,2021

Power NaturalGas LiquidsForeign

Exchange InterestRate(unaudited)

Purchases1 685 147 22 — —

Sales1 1,481 77 24 — —

MillionsofU.S.dollars — — — 5,861 1,100

MillionsofMexicanpesos — — — 4,222 —

Maturitydates 2021-2026 2021-2027 2021 2021-2023 2022-2026

1 Volumesforpower,naturalgasandliquidsderivativesareinGWh,BcfandMMBbls,respectively.


atDecember31,2020

Power NaturalGas LiquidsForeign

Exchange InterestRate(unaudited)

Purchases1 185 13 26 — —

Sales1 1,786 14 30 — —

MillionsofU.S.dollars — — — 4,432 1,100

MillionsofMexicanpesos — — — 1,700 —

Maturitydates 2021-2025 2021-2027 2021 2021-2022 2022-2026

1 Volumesforpower,naturalgasandliquidsderivativesareinGWh,BcfandMMBbls,respectively.

Unrealizedandrealized(losses)/gainsonderivativeinstrumentsThefollowingsummarydoesnotincludehedgesofthenetinvestmentinforeignoperations:



DerivativeInstrumentsHeldforTrading1

Amountofunrealized(losses)/gainsintheperiod

Commodities (15) (50) 16 16


Amountofrealizedgains/(losses)intheperiod

Commodities 48 42 109 78

Foreignexchange 117 (39) 158 (51)

DerivativeInstrumentsinHedgingRelationships2

Amountofrealized(losses)/gainsintheperiod


Interestrate (6) (5) (12) (4)

1 Realizedandunrealizedgainsandlossesonheld-for-tradingderivativeinstrumentsusedtopurchaseandsellcommoditiesareincludedonanetbasisin

Revenues.Realizedandunrealizedgainsandlossesonforeignexchangeheld-for-tradingderivativeinstrumentsareincludedonanetbasisinInterest

incomeandother.

2 InthethreeandsixmonthsendedJune30,2021and2020,therewerenogainsorlossesincludedinNetincomerelatingtodiscontinuedcashflow

hedgeswhereitwasprobablethattheanticipatedtransactionwouldnotoccur.

Derivativesincashflowhedgingrelationships

ThecomponentsofOCI(Note12)relatedtothechangeinfairvalueofderivativesincashflowhedgingrelationshipsbefore

taxandincludingtheportionattributabletonon-controllinginterestswereasfollows:


(unaudited-millionsofCanadian$,pre-tax) 2021 2020 2021 2020

ChangeinfairvalueofderivativeinstrumentsrecognizedinOCI1


Interestrate (3) (111) 15 (771)

(14) (109) — (765)

1 Noamountshavebeenexcludedfromtheassessmentofhedgeeffectiveness.AmountsinparenthesesindicatelossesrecordedtoOCI.


Effectoffairvalueandcashflowhedgingrelationships

ThefollowingtabledetailsamountspresentedintheCondensedconsolidatedstatementofincomeinwhichtheeffectsoffair

valueorcashflowhedgingrelationshipswererecorded:



FairValueHedges

Interestratecontracts1

Hedgeditems — (2) — (5)

Derivativesdesignatedashedginginstruments — — — 1

CashFlowHedges

Reclassificationof(losses)/gainsonderivativeinstrumentsfromAOCItonetincome2,3

Interestratecontracts1 (9) (623) (18) (626)

Commoditycontracts4 (3) 2 (5) —

1 PresentedwithinInterestexpenseintheCondensedconsolidatedstatementofincome,exceptforalossof$613millionrecordedinMay2020related

toacontractuallyrequiredderivativeinstrumentusedtohedgetheinterestrateriskassociatedwithproject-levelfinancingoftheCoastalGasLink

pipelineconstruction.Thederivativeinstrumentwasderecognizedaspartofthesaleofa65percentequityinterestinCoastalGasLinkLP.Thelosswas

includedinNetgainonsaleofassets.

2 RefertoNote12,Othercomprehensive(loss)/incomeandaccumulatedothercomprehensiveloss,forthecomponentsofOCIrelatedtoderivativesin

cashflowhedgingrelationshipsincludingtheportionattributabletonon-controllinginterests.

3 Therearenoamountsrecognizedinearningsthatwereexcludedfromeffectivenesstesting.

4 PresentedwithinRevenues(PowerandStorage)intheCondensedconsolidatedstatementofincome.

Offsettingofderivativeinstruments

TheCompanyentersintoderivativecontractswiththerighttooffsetinthenormalcourseofbusinessaswellasintheevent

ofdefault.TCEnergyhasnomasternettingagreements,however,similarcontractsareenteredintocontainingrightsto

offset.TheCompanyhaselectedtopresentthefairvalueofderivativeinstrumentswiththerighttooffsetonagrossbasison

theCondensedconsolidatedbalancesheet.Thefollowingtableshowstheimpactonthepresentationofthefairvalueof

derivativeinstrumentassetsandliabilitieshadtheCompanyelectedtopresentthesecontractsonanetbasis:

atJune30,2021 Grossderivativeinstruments

Amountsavailableforoffset1 Netamounts(unaudited-millionsofCanadian$)

Derivativeinstrumentassets

Commodities 77 (53) 24

Foreignexchange 239 (34) 205

316 (87) 229

Derivativeinstrumentliabilities

Commodities (108) 53 (55)

Foreignexchange (38) 34 (4)

Interestrate (44) — (44)

(190) 87 (103)

1 Amountsavailableforoffsetdonotincludecashcollateralpledgedorreceived.


atDecember31,2020 Grossderivativeinstruments

Amountsavailableforoffset1 Netamounts(unaudited-millionsofCanadian$)


Commodities 13 (7) 6

Foreignexchange 263 (11) 252

276 (18) 258


Commodities (50) 7 (43)

Foreignexchange (11) 11 —

Interestrate (70) — (70)

(131) 18 (113)

1 Amountsavailableforoffsetdonotincludecashcollateralpledgedorreceived.

Withrespecttothederivativeinstrumentspresentedabove,theCompanyprovidedcashcollateralof$96millionandletters

ofcreditof$52millionatJune30,2021(December31,2020–$54millionand$39million,respectively)toitscounterparties.

AtJune30,2021,theCompanyheldnocashcollateralanda$1millionbalanceinlettersofcredit(December31,2020–nil

andnil,respectively)fromcounterpartiesonassetexposures.

Credit-risk-relatedcontingentfeaturesofderivativeinstrumentsDerivativecontractsenteredintotomanagemarketriskoftencontainfinancialassuranceprovisionsthatallowpartiestothe

contractstomanagecreditrisk.Theseprovisionsmayrequirecollateraltobeprovidedifacredit-risk-relatedcontingentevent

occurs,suchasadowngradeintheCompany’screditratingtonon-investmentgrade.TheCompanymayalsoneedtoprovide

collateralifthefairvalueofitsderivativefinancialinstrumentsexceedspre-definedexposurelimits.

BasedoncontractsinplaceandmarketpricesatJune30,2021,theaggregatefairvalueofallderivativeinstrumentswith

credit-risk-relatedcontingentfeaturesthatwereinanetliabilitypositionwas$5million(December31,2020–$4million),for

whichtheCompanyhasprovidednocollateralinthenormalcourseofbusiness.Ifthecredit-risk-relatedcontingentfeatures

intheseagreementsweretriggeredonJune30,2021,theCompanywouldhavebeenrequiredtoprovidecollateralequalto

thefairvalueoftherelatedderivativeinstrumentsdiscussedabove.Collateralmayalsoneedtobeprovidedshouldthefair

valueofderivativeinstrumentsexceedpre-definedcontractualexposurelimitthresholds.

TheCompanyhassufficientliquidityintheformofcashandundrawncommittedrevolvingcreditfacilitiestomeetthese

contingentobligationsshouldtheyarise.


FairValueHierarchyTheCompany’sfinancialassetsandliabilitiesrecordedatfairvaluehavebeencategorizedintothreecategoriesbasedona

fairvaluehierarchy.

Levels Howfairvaluehasbeendetermined

LevelI QuotedpricesinactivemarketsforidenticalassetsandliabilitiesthattheCompanyhastheabilitytoaccessatthemeasurementdate.Anactivemarketisamarketinwhichfrequencyandvolumeoftransactionsprovidespricinginformationonanongoingbasis.

LevelII Thiscategoryincludesinterestrateandforeignexchangederivativeassetsandliabilitieswherefairvalueisdeterminedusingtheincomeapproachandcommodityderivativeswherefairvalueisdeterminedusingthemarketapproach.

Inputsincludepublishedexchangerates,interestrates,interestrateswapcurves,yieldcurvesandbrokerquotesfromexternaldataserviceproviders.

LevelIII Thiscategoryincludeslong-datedcommoditytransactionsincertainmarketswhereliquidityislowandtheCompanyusesthemostobservableinputsavailableor,ifnotavailable,long-termbrokerquotestoestimatethefairvalueforthesetransactions.

Thereisuncertaintycausedbyusingunobservablemarketdatawhichmaynotaccuratelyreflectpossiblefuturechangesinfairvalue.

ThefairvalueoftheCompany’sderivativeassetsandliabilitiesmeasuredonarecurringbasis,includingbothcurrentand

non-currentportions,werecategorizedasfollows:

atJune30,2021Quotedpricesinactivemarkets

(LevelI)

Significantotherobservableinputs

(LevelII)1

Significantunobservable

inputs(LevelIII)1(unaudited-millionsofCanadian$) Total


Commodities 5 72 — 77

Foreignexchange — 239 — 239


Commodities (22) (81) (5) (108)

Foreignexchange — (38) — (38)

Interestrate — (44) — (44)

(17) 148 (5) 126

1 TherewerenotransfersfromLevelIItoLevelIIIforthesixmonthsendedJune30,2021.

atDecember31,2020Quotedpricesinactivemarkets

(LevelI)

Significantotherobservableinputs

(LevelII)1

Significantunobservable

inputs(LevelIII)1(unaudited-millionsofCanadian$) Total


Commodities 3 10 — 13

Foreignexchange — 263 — 263


Commodities (15) (31) (4) (50)

Foreignexchange — (11) — (11)

Interestrate — (70) — (70)

(12) 161 (4) 145

1 TherewerenotransfersfromLevelIItoLevelIIIfortheyearendedDecember31,2020.


ThefollowingtablepresentsthenetchangeinfairvalueofderivativeassetsandliabilitiesclassifiedasLevelIIIofthefair

valuehierarchy:



Balanceatbeginningofperiod (4) (3) (4) (7)

Total(losses)/gainsincludedinNetincome (1) (1) (1) 3

Balanceatendofperiod1 (5) (4) (5) (4)

1 ForthethreeandsixmonthsendedJune30,2021,therewereunrealizedlossesof$1millionrecognizedinRevenuesattributedtoderivativesinthe

LevelIIIcategorythatwereheldatJune30,2021(2020–unrealizedlossesof$1millionandgainsof$3million,respectively).

15.COMMITMENTS,CONTINGENCIESANDGUARANTEES

CommitmentsTCEnergy’scapitalexpenditurecommitmentsatDecember31,2020includedcertainconstructioncostsassociatedwiththe

KeystoneXLpipelineproject.FollowingtherevocationofthePresidentialPermitfortheKeystoneXLpipelineon

January20,2021,theCompanyanditspartnerterminatedtheprojectonJune9,2021.Asaresult,capitalcommitments

relatedtoKeystoneXLhavebeenreducedbyapproximately$0.9billion.RefertoNote5,KeystoneXL,formoreinformation.

ContingenciesTCEnergyanditssubsidiariesaresubjecttovariouslegalproceedings,arbitrationsandactionsarisinginthenormalcourseof

business.Whilethefinaloutcomeofsuchlegalproceedingsandactionscannotbepredictedwithcertainty,itistheopinionof

managementthattheresolutionofsuchproceedingsandactions,excludingtheKeystoneXLlegalproceedingdescribedin

Note17,Subsequentevent,willnothaveamaterialimpactontheCompany’sconsolidatedfinancialpositionorresultsof

operations.

GuaranteesAspartofitsroleasoperatoroftheNorthernCourierpipeline,TCEnergyhasguaranteedthefinancialperformanceofthe

pipelinerelatedtodeliveryandterminallingofbitumenanddiluentandcontingentfinancialobligationsundersub-lease

agreements.

TCEnergyanditspartnerontheSurdeTexaspipeline,IEnova,havejointlyguaranteedthefinancialperformanceoftheentity

whichownsthepipeline.Suchagreementsincludeaguaranteeandaletterofcreditwhichareprimarilyrelatedtothe

deliveryofnaturalgas.

TCEnergyanditsjointventurepartneronBrucePower,BPCGenerationInfrastructureTrust,haveeachseverallyguaranteed

certaincontingentfinancialobligationsofBrucePowerrelatedtoaleaseagreementandcontractorandsupplierservices.

TheCompanyanditspartnersincertainotherjointly-ownedentitieshaveeither(i)jointlyandseverally,(ii)jointlyor

(iii)severallyguaranteedthefinancialperformanceoftheseentities.Suchagreementsincludeguaranteesandlettersofcredit

whichareprimarilyrelatedtoconstructionservicesandthepaymentofliabilities.Forcertainoftheseentities,anypayments

madebyTCEnergyundertheseguaranteesinexcessofitsownershipinterestaretobereimbursedbyitspartners.


ThecarryingvalueoftheseguaranteeshasbeenincludedinOtherlong-termliabilitiesontheCondensedconsolidated

balancesheet.InformationregardingtheCompany’sguaranteesisasfollows:



TermPotentialexposure1

Carryingvalue

Potentialexposure1

Carryingvalue

NorthernCourier to2055 300 26 300 26

SurdeTexas to2043 98 — 100 —

BrucePower to2023 88 — 88 —

Otherjointly-ownedentities to2043 77 4 78 4

563 30 566 30

1 TCEnergy'sshareofthepotentialestimatedcurrentorcontingentexposure.

16.VARIABLEINTERESTENTITIES

ConsolidatedVIEsTheCompany'sconsolidatedVIEsconsistoflegalentitieswheretheCompanyistheprimarybeneficiary.Astheprimary

beneficiary,theCompanyhasthepower,throughvotingorsimilarrights,todirecttheactivitiesoftheVIEthatmost

significantlyimpacteconomicperformanceincludingpurchasingorsellingsignificantassets;maintenanceandoperationsof

assets;incurringadditionalindebtedness;ordeterminingthestrategicoperatingdirectionoftheentity.Inaddition,the

CompanyhastheobligationtoabsorblossesortherighttoreceivebenefitsfromtheconsolidatedVIEthatcouldpotentially

besignificanttotheVIE.AsignificantportionoftheCompany’sassetsareheldthroughVIEsinwhichtheCompanyholdsa

100percentvotinginterest,theVIEmeetsthedefinitionofabusinessandtheVIE’sassetscanbeusedforgeneralcorporate

purposes.TheconsolidatedVIEswhoseassetscannotbeusedforpurposesotherthanthesettlementoftheVIE’sobligations,

orarenotconsideredabusiness,areasfollows:



ASSETS

CurrentAssets

Cashandcashequivalents 38 254

Accountsreceivable 58 61

Inventories 27 26

Other 12 11

135 352

Plant,PropertyandEquipment 3,428 3,325

EquityInvestments 690 714

Goodwill 412 424

OtherLong-TermAssets — 8

4,665 4,823

LIABILITIES

CurrentLiabilities

Accountspayableandother 250 109

Redeemablenon-controllinginterest — 633

Accruedinterest 19 21

Currentportionoflong-termdebt 129 579

398 1,342

RegulatoryLiabilities 61 60

OtherLong-TermLiabilities 7 11

DeferredIncomeTaxLiabilities 12 12

Long-TermDebt 2,429 2,468

2,907 3,893

AtDecember31,2020,certainconsolidatedVIEshadaredeemablenon-controllinginterestthatrankedabovetheCompany's

equityinterest.RefertoNote5,KeystoneXL,foradditionalinformation.


Non-ConsolidatedVIEsTheCompany’snon-consolidatedVIEsconsistoflegalentitieswheretheCompanyisnottheprimarybeneficiaryasitdoesnot

havethepowertodirecttheactivitiesthatmostsignificantlyimpacttheeconomicperformanceoftheseVIEsorwherethis

powerissharedwiththirdparties.TheCompanycontributescapitaltotheseVIEsandreceivesownershipintereststhat

provideitwithresidualclaimsonassetsafterliabilitiesarepaid.

ThecarryingvalueoftheseVIEsandthemaximumexposuretolossasaresultoftheCompany'sinvolvementwiththeseVIEs

areasfollows:


Balancesheet

Equityinvestments

BrucePower 3,611 3,306

Pipelineequityinvestments 1,557 1,371

Currentloanreceivablefromaffiliate1 220 —

Off-balancesheetexposure2

BrucePower 1,189 1,183

Pipelineequityinvestments 1,651 1,506

Maximumexposuretoloss 8,228 7,366

1 RefertoNote7,Loansreceivablefromaffiliates,foradditionalinformation.

2 Includesmaximumpotentialexposuretoguaranteesandfuturefundingcommitments.

17.SUBSEQUENTEVENT

KeystoneXLLegalProceedingOnJuly2,2021,TCEnergyfiledaNoticeofIntenttoinitiatealegacyNorthAmericanFreeTradeAgreement(NAFTA)claimto

recovereconomicdamagesresultingfromtherevocationofthePresidentialPermitfortheKeystoneXLpipeline.The

CompanywillbeseekingtorecovermorethanUS$15billionindamagesasaresultoftheU.S.Government’sbreachofits

NAFTAobligations.Thisclaimisinapreliminarystageandthetimingofoutcomeisunknownatpresent.


Documents

Quarterly Report to Shareholders