<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>3
<FILENAME>a2134582zex-2.txt
<DESCRIPTION>EXHIBIT 2
<TEXT>
<Page>

                                                                      EXHIBIT 2
FIRST QUARTER REPORT 2004
TRANSCANADA [17

                                          CONSOLIDATED INCOME

Three months ended March 31 (unaudited)

<Table>
<Caption>
(millions of dollars except per share amounts)                2004           2003
-------------------------------------------------------      -----          -----
<S>                                                          <C>            <C>
REVENUES                                                     1,233          1,336

OPERATING EXPENSES
Cost of sales                                                  127            180
Other costs and expenses                                       374            427
Depreciation                                                   232            215
                                                             -----          -----
                                                               733            822
                                                             -----          -----

OPERATING INCOME                                               500            514

OTHER EXPENSES/(INCOME)
Financial charges                                              195            204
Financial charges of joint ventures                             14             22
Equity income                                                  (58)           (58)
Interest and other income                                      (15)           (13)
                                                             -----          -----
                                                               136            155
                                                             -----          -----

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES          364            359
   AND NON-CONTROLLING INTERESTS

INCOME TAXES
Current                                                        107             62
Future                                                          23             74

NON-CONTROLLING INTERESTS
Preferred securities charges                                     8              9
Preferred share dividends                                        6              6
Other                                                            6              -
                                                             -----          -----

NET INCOME                                                     214            208
                                                             -----          -----
                                                             -----          -----

NET INCOME PER SHARE - BASIC AND DILUTED                     $0.44          $0.43
                                                             -----          -----
                                                             -----          -----

AVERAGE SHARES OUTSTANDING - BASIC (millions)                483.4          480.1
                                                             -----          -----
                                                             -----          -----

AVERAGE SHARES OUTSTANDING - DILUTED (millions)              486.1          481.9
                                                             -----          -----
                                                             -----          -----
</Table>

See accompanying Notes to the Consolidated Financial Statements.
<Page>

FIRST QUARTER REPORT 2004
TRANSCANADA [18

                             CONSOLIDATED CASH FLOWS

Three months ended March 31 (unaudited)

<Table>
<Caption>
(millions of dollars)                                         2004           2003
-------------------------------------------------------      -----          -----
<S>                                                          <C>            <C>
CASH GENERATED FROM OPERATIONS
Net income                                                     214            208
Depreciation                                                   232            215
Future income taxes                                             23             74
Equity income in excess of distributions received              (51)           (51)
Non-controlling interests                                       20             15
Other                                                          (15)            (4)
                                                             -----          -----
Funds generated from operations                                423            457
Increase in operating working capital                          (42)            (8)
                                                             -----          -----
Net cash provided by continuing operations                     381            449
Net cash (used in)/provided by discontinued operations          (2)             4
                                                             -----          -----
                                                               379            453
                                                             -----          -----
INVESTING ACTIVITIES
Capital expenditures                                          (101)           (76)
Acquisitions, net of cash acquired                               -           (409)
Deferred amounts and other                                     (43)           (18)
                                                             -----          -----
Net cash used in investing activities                         (144)          (503)
                                                             -----          -----
FINANCING ACTIVITIES
Dividends and preferred securities charges                    (148)          (139)
Notes payable (repaid)/issued, net                            (229)           209
Long-term debt issued                                          665              -
Reduction of long-term debt                                   (476)            (9)
Non-recourse debt of joint ventures issued                       6             17
Reduction of non-recourse debt of joint ventures                (9)           (16)
Common shares issued                                            13             16
                                                             -----          -----
Net cash (used in)/provided by financing activities           (178)            78
                                                             -----          -----

INCREASE IN CASH AND SHORT-TERM INVESTMENTS                     57             28

CASH AND SHORT-TERM INVESTMENTS
Beginning of period                                            338            212
                                                             -----          -----

CASH AND SHORT-TERM INVESTMENTS
End of period                                                  395            240
                                                             -----          -----
                                                             -----          -----

SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid                                              161             55
Interest paid                                                  172            190
                                                             -----          -----
                                                             -----          -----
</Table>

See accompanying Notes to the Consolidated Financial Statements.
<Page>

FIRST QUARTER REPORT 2004
TRANSCANADA [19

                                    CONSOLIDATED BALANCE SHEET

<Table>
<Caption>
                                                                 March 31, 2004      December 31,
(millions of dollars)                                             (unaudited)           2003
------------------------------------------------------------     --------------      ------------
<S>                                                              <C>                 <C>
ASSETS
CURRENT ASSETS
Cash and short-term investments                                             395               338
Accounts receivable                                                         555               605
Inventories                                                                 161               165
Other                                                                       110                88
                                                                 --------------      ------------
                                                                          1,221             1,196
LONG-TERM INVESTMENTS                                                       782               733
PLANT, PROPERTY AND EQUIPMENT                                            17,336            17,460
OTHER ASSETS                                                              1,483             1,164
                                                                 --------------      ------------
                                                                         20,822            20,553
                                                                 --------------      ------------
                                                                 --------------      ------------

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable                                                               138               367
Accounts payable                                                            911             1,025
Accrued interest                                                            241               208
Current portion of long-term debt                                           489               550
Current portion of non-recourse debt of joint ventures                       25                19
                                                                 --------------      ------------
                                                                          1,804             2,169
DEFERRED AMOUNTS                                                            642               475
LONG-TERM DEBT                                                            9,835             9,465
FUTURE INCOME TAXES                                                         434               427
NON-RECOURSE DEBT OF JOINT VENTURES                                         760               761
PREFERRED SECURITIES                                                         19                22
                                                                 --------------      ------------
                                                                         13,494            13,319
                                                                 --------------      ------------
NON-CONTROLLING INTERESTS
Preferred securities of subsidiary                                          672               672
Preferred shares of subsidiary                                              389               389
Other                                                                        85                82
                                                                 --------------      ------------
                                                                          1,146             1,143
                                                                 --------------      ------------
SHAREHOLDERS' EQUITY
Common shares                                                             4,692             4,679
Contributed surplus                                                         268               267
Retained earnings                                                         1,259             1,185
Foreign exchange adjustment                                                 (37)              (40)
                                                                 --------------      ------------
                                                                          6,182             6,091
                                                                 --------------      ------------
                                                                         20,822            20,553
                                                                 --------------      ------------
                                                                 --------------      ------------
</Table>

See accompanying Notes to the Consolidated Financial Statements.
<Page>

FIRST QUARTER REPORT 2004
TRANSCANADA [20

                                 CONSOLIDATED RETAINED EARNINGS

Three months ended March 31 (unaudited)

<Table>
<Caption>
(millions of dollars)                                           2004    2003
------------------------------------------------------------   -----    ----
<S>                                                            <C>      <C>
Balance at beginning of period                                 1,185     854
Net income                                                       214     208
Common share dividends                                          (140)   (129)
                                                               -----    ----
                                                               1,259     933
                                                               -----    ----
                                                               -----    ----
</Table>

See accompanying Notes to the Consolidated Financial Statements.
<Page>

FIRST QUARTER REPORT 2004
TRANSCANADA [21

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.  SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements of TransCanada Corporation (TransCanada or
the company) have been prepared in accordance with Canadian generally accepted
accounting principles (GAAP). The accounting policies applied are consistent
with those outlined in TransCanada's annual financial statements for the year
ended December 31, 2003 except as stated below. These consolidated financial
statements reflect all normal recurring adjustments that are, in the opinion of
management, necessary to present fairly the financial position and results of
operations for the respective periods. These consolidated financial statements
do not include all disclosures required in the annual financial statements and
should be read in conjunction with the annual financial statements included in
TransCanada's 2003 Annual Report. Amounts are stated in Canadian dollars unless
otherwise indicated. Certain comparative figures have been reclassified to
conform with the current period's presentation.

Since a determination of many assets, liabilities, revenues and expenses is
dependent upon future events, the preparation of these consolidated financial
statements requires the use of estimates and assumptions. In the opinion of
Management, these consolidated financial statements have been properly prepared
within reasonable limits of materiality and within the framework of the
company's significant accounting policies.

2.  ACCOUNTING CHANGES

ASSET RETIREMENT OBLIGATIONS

Effective January 1, 2004, the company adopted the new standard of the Canadian
Institute of Chartered Accountants (CICA) Handbook Section "Asset Retirement
Obligations", which addresses financial accounting and reporting for obligations
associated with asset retirement costs. This section requires that the fair
value of a liability for an asset retirement obligation be recognized in the
period in which it is incurred if a reasonable estimate of fair value can be
made. The fair value is added to the carrying amount of the associated asset.
The liability is accreted at the end of each period through charges to operating
expenses. This accounting change was applied retroactively with restatement of
prior periods.
<Page>

FIRST QUARTER REPORT 2004
TRANSCANADA [22

The plant, property and equipment of the regulated natural gas transmission
operations consist primarily of underground pipelines and above ground
compression equipment and other facilities. No amount has been recorded for
asset retirement obligations relating to these assets as it is not possible to
make a reasonable estimate of the fair value of the liability due to the
indeterminate timing and scope of the asset retirements. Management believes
it is reasonable to assume that all retirement costs associated with the
regulated pipelines will be recovered through tolls in future periods.

The plant, property and equipment in the power business consists primarily of
power plants in Canada and the United States. The impact of this accounting
change resulted in an increase of $6 million and $7 million in the estimated
fair value of the liability for the power plants and associated assets as at
January 1, 2003 and December 31, 2003, respectively. The asset retirement cost,
net of accumulated depreciation that would have been recorded if the cost had
been recorded in the period in which it arose, is recorded as an additional cost
of the assets as at January 1, 2003. The estimated fair value of the liability
as at March 31, 2004 was $9 million. The company has no legal liability for
asset retirement obligations with respect to its investment in Bruce Power and
the Sundance A and B power purchase arrangements.

The impact of this accounting change resulted in an increase of $2 million in
the estimated fair value of the liability for TransCanada's Other Gas
Transmission assets as at January 1, 2003 and December 31, 2003. The estimated
fair value of this liability as at March 31, 2004 was $2 million.

The impact of this change on TransCanada's net income in first quarter 2004 and
prior periods was nil.

HEDGING RELATIONSHIPS

Effective January 1, 2004, the company adopted the provisions of the CICA's new
Accounting Guideline "Hedging Relationships" that specifies the circumstances in
which hedge accounting is appropriate, including the identification,
documentation, designation and effectiveness of hedges, and the discontinuance
of hedge accounting. In accordance with the provisions of this new guideline,
TransCanada has recorded all derivatives on the Consolidated Balance Sheet at
fair value.
<Page>

FIRST QUARTER REPORT 2004
TRANSCANADA [23

This new guideline was applied prospectively and resulted in a decrease to first
quarter 2004 net income of $2 million. The significant impact of the accounting
change on the Consolidated Balance Sheet as at January 1, 2004 is as follows.

<Table>
<Caption>
(unaudited - millions of dollars)                          Increase/(Decrease)
---------------------------------------------------------  -------------------
<S>                                                        <C>
Current Assets
   Other                                                                     8
Other Assets                                                               123
                                                           -------------------
Total Assets                                                               131
                                                           -------------------
Current Liabilities
   Accounts Payable                                                          8
Deferred Amounts                                                           132
Long-Term Debt                                                              (7)
Future Income Taxes                                                         (1)
                                                           -------------------
Total Liabilities                                                          132
                                                           -------------------
</Table>

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Effective January 1, 2004, the company adopted the new standard of the CICA
Handbook Section "Generally Accepted Accounting Principles" that defines primary
sources of generally accepted accounting principles (GAAP) and the other sources
that need to be considered in the application of GAAP. The new standard
eliminates the ability to rely on industry practice to support a particular
accounting policy.

This accounting change was applied prospectively and there was no impact on net
income in first quarter 2004. In prior periods, in accordance with industry
practice, certain assets and liabilities related to the company's regulated
activities, and offsetting deferral accounts, were not recorded on the balance
sheet. The impact of the change on the consolidated balance sheet as at January
1, 2004 is as follows.

<Table>
<Caption>
(unaudited - millions of dollars)                          Increase/(Decrease)
---------------------------------------------------------  -------------------
<S>                                                        <C>
Other Assets                                                               153
                                                           -------------------
Deferred Amounts                                                            80
Long-Term Debt                                                              76
Preferred Securities                                                        (3)
                                                           -------------------
Total Liabilities                                                          153
                                                           -------------------
</Table>
<Page>

FIRST QUARTER REPORT 2004
TRANSCANADA [24

3.  SEGMENTED INFORMATION

<Table>
<Caption>
                                           GAS TRANSMISSION       POWER         CORPORATE         TOTAL
Three months ended March 31                ----------------   ------------    ------------    -------------
(unaudited - millions of dollars)           2004     2003     2004    2003    2004    2003     2004    2003
---------------------------------------    -----     ----     ----    ----    ----    ----    -----   -----
<S>                                        <C>       <C>      <C>     <C>     <C>     <C>     <C>     <C>
Revenues                                     949      960      284     376       -       -    1,233   1,336
Cost of sales                                  -        -     (127)   (180)      -       -     (127)   (180)
Other costs and expenses                    (285)    (304)     (87)   (121)     (2)     (2)    (374)   (427)
Depreciation                                (212)    (194)     (20)    (21)      -       -     (232)   (215)
                                           -----     ----     ----    ----    ----    ----    -----   -----
Operating income/(loss)                      452      462       50      54      (2)     (2)     500     514
Financial charges and non-controlling
   interests                                (192)    (196)      (2)     (2)    (21)    (21)    (215)   (219)
Financial charges of joint ventures          (14)     (22)       -       -       -       -      (14)    (22)
Equity income                                 10       20       48      38       -       -       58      58
Interest and other income                      3        5        4       4       8       4       15      13
Income taxes                                (110)    (111)     (35)    (31)     15       6     (130)   (136)
                                           -----     ----     ----    ----    ----    ----    -----   -----
NET INCOME                                   149      158       65      63       -     (13)     214     208
                                           -----     ----     ----    ----    ----    ----    -----   -----
                                           -----     ----     ----    ----    ----    ----    -----   -----
</Table>

TOTAL ASSETS

<Table>
<Caption>
                                                 March 31, 2004     December 31,
(millions of dollars)                             (unaudited)           2003
--------------------------------------------     --------------     ------------
<S>                                              <C>                <C>
Gas Transmission                                         16,908           16,974
Power                                                     2,830            2,753
Corporate                                                 1,074              815
                                                 --------------     ------------
Continuing Operations                                    20,812           20,542
Discontinued Operations                                      10               11
                                                 --------------     ------------
                                                         20,822           20,553
                                                 --------------     ------------
                                                 --------------     ------------
</Table>

4.  RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

The following represents the material changes to the company's risk management
and financial instruments since December 31, 2003. The tables reflect the impact
of hedge accounting changes adopted prospectively, effective January 1, 2004, as
further discussed under Note 2, Accounting Changes - Hedging Relationships.

FOREIGN EXCHANGE AND INTEREST RATE MANAGEMENT ACTIVITY

The company manages the foreign exchange risk of U.S. dollar debt, U.S. dollar
expenses and the interest rate exposures of the Alberta System, the Canadian
Mainline and the Foothills System through the use of foreign currency and
interest rate derivatives. These derivatives are comprised of contracts for
periods up to eight years. Certain of the realized gains and losses on interest
rate derivatives are shared with shippers on predetermined terms.
<Page>

FIRST QUARTER REPORT 2004
TRANSCANADA [25

<Table>
<Caption>
Asset/(Liability)                         March 31, 2004
(millions of dollars)                      (unaudited)              December 31, 2003
------------------------------------    --------------------       --------------------
                                        Carrying        Fair       Carrying       Fair
                                         Amount        Value        Amount        Value
                                        --------       -----       --------       -----
<S>                                     <C>            <C>         <C>            <C>
FOREIGN EXCHANGE
Cross-currency swaps                        (21)         (21)           (26)        (26)

INTEREST RATE
Interest rate swaps
   Canadian dollars                          23           23              2          15
   U.S. dollars                               9            9              -           8
---------------------------------------------------------------------------------------
</Table>

At March 31, 2004, the principal amounts of cross-currency swaps was US$282
million (December 31, 2003 - US$282 million). Notional principal amounts for
interest rate swaps were $769 million (December 31, 2003 - $964 million) and
US$100 million (December 31, 2003 - US$100 million).

The company manages the foreign exchange risk and interest rate exposures of its
other U.S. dollar debt through the use of foreign currency and interest rate
derivatives. These derivatives are comprised of contracts for periods up to nine
years. The fair values of the interest rate derivatives are shown in the table
below.

<Table>
<Caption>
Asset/(Liability)                         March 31, 2004
(millions of dollars)                      (unaudited)              December 31, 2003
------------------------------------    --------------------       --------------------
                                        Carrying        Fair       Carrying       Fair
                                         Amount        Value        Amount        Value
                                        --------       -----       --------       -----
<S>                                     <C>            <C>         <C>            <C>
INTEREST RATE
Interest rate swaps
   U.S. dollars                               44          44              2          37

FORWARD FOREIGN EXCHANGE CONTRACTS
   U.S. dollars                               (4)         (4)             -           -
---------------------------------------------------------------------------------------
</Table>

At March 31, 2004, the notional principal amount for interest rate swaps was
US$550 million (December 31, 2003 - US$500 million) and the principal amount of
forward foreign exchange contracts was US$200 million (December 31, 2003 - nil).

5.  ACQUISITION

On February 24, 2004, TransCanada announced an agreement to acquire Gas
Transmission Northwest Corporation (GTN) from National Energy & Gas Transmission
Inc. for approximately US$1.7 billion, including US$0.5 billion of assumed debt
and subject to closing adjustments. GTN is a natural gas pipeline company that
owns and operates two pipeline systems. The acquisition is subject to bankruptcy
court approval, including completion of a court-sanctioned auction process,
regulatory approval and an anti-trust review.
<Page>

FIRST QUARTER REPORT 2004
TRANSCANADA [26

6.  SALE OF ASSETS

On March 29, 2004, TransCanada entered into an agreement to sell the ManChief
and Curtis Palmer power facilities for US$402.6 million to Power LP. TransCanada
expects to recognize a gain of approximately $10 million after tax on the sale
of these assets. The sale is subject to certain post closing adjustments,
approval by Power LP's unitholders and applicable regulatory approvals.
TransCanada expects to complete the sale of these assets on or about May 5,
2004. Power LP's unitholders will be asked at a special meeting to be held on
April 29, 2004 to approve the acquisition and to remove Power LP's obligation to
redeem all units not owned by TransCanada in 2017.

Power LP expects to fund the transaction through an offering of 8.11 million
subscription receipts which closed April 15, 2004 and a bridge loan facility
from a Canadian chartered bank. As part of the subscription receipts offering,
TransCanada purchased 540,000 subscription receipts for an aggregate purchase
price of approximately $20 million. Subsequent to the transaction being
completed, TransCanada's ownership interest in Power LP will be reduced from
35.6 per cent to approximately 30.6 per cent. TransCanada expects the removal of
the redemption obligation and the reduction in ownership interest will result in
a gain of approximately $165 million after tax. This amount primarily reflects
the recognition of unamortized gains on previous Power LP transactions.

-------------------------------------------------------------------------------

TransCanada welcomes questions from shareholders and potential investors. Please
telephone:

Investor Relations, at 1-800-361-6522 (Canada and U.S. Mainland) or direct dial
David Moneta/Debbie Stein at (403) 920-7911. The investor fax line is (403)
920-2457. Media Relations: Hejdi Feick/Kurt Kadatz at (403) 920-7859

Visit TransCanada's Internet site at: http://www.transcanada.com

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</TEXT>
</DOCUMENT>
