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United States Securities and Exchange Commission Division of Corporation Finance Email: russ_girling@transcanada.com Attn: Michael Moran, Esq. Branch Chief

Dear Mr. Moran:

Re:

TransCanada Corporation

File No. 1-31690

Form 40-F for the year ended December 31, 2004

TransCanada PipeLines Limited

File No. 1-08887

Form 40-F for the year ended December 31, 2004

We acknowledge receipt of your reply dated May 25 to our submission on your April 22 comment letter. We will amend the U.S. GAAP Note to the consolidated financial statements (“Note”) in both the TransCanada Corporation and TransCanada PipeLines Limited 40-Fs for the year ended December 31, 2004 to comply with the staff comment set out therein. We have attached a copy of the amended Notes for your information and comment should you feel it necessary. This amendment to our financial statements will now have to be approved by both companies' Audit Committees and Boards of Directors under the governance rules applicable to us in Canada. We have also taken the opportunity to discuss this amendment with the Alberta Securities Commission our principal securities regulator in Canada pursuant to the protocol established by the Canadian Securities Administrators.

Given the nature of the amendment to the Notes and its historical context, we would propose to file the amended Notes on Form 40-F/As at the same time we file our second quarter results in Canada and the United States. Our disclosure in this regard would also specifically explain the nature of the Note amendment to our shareholders. We are advised that this approach is acceptable to the Alberta Securities Commission. We believe this approach, if acceptable to your staff, would fully satisfy the Securities and Exchange Commission’s concerns.

We look forward to hearing from you or a staff member should that be required.

Yours truly,

/s/ Russell K. Girling

Russell K. Girling

Executive Vice-President, Corporate Development

and Chief Financial Officer

cc: Robert Babula, Staff Accountant

United States SEC, Division of Corporation Finance

TransCanada Corporation Consolidated Financial Statements

NOTE 22 U.S. GAAP (Restated(13))

The Company’s consolidated financial statements have been prepared in accordance with Canadian GAAP, which, in some respects, differ from U.S. GAAP. The effects of these differences on the Company’s financial statements are as follows.

Condensed Statement of Consolidated Income and Comprehensive Income in Accordance with U.S. GAAP(1)

Year ended December 31 (millions of dollars except

Restated

Restated

Restated

per share amounts)

Revenues

4,700

4,919

4,565

Cost of sales

Other costs and expenses

1,638

1,663

1,532

Depreciation

2,935

3,074

2,702

Operating income

1,765

1,845

1,863

Other (income)/expenses

Equity income(1)

(353

)

(334

)

(260

)

Other expenses(2)(12)(13)

Dilution gain(12)

(40

)

—

—

Income taxes

1,054

1,121

Income from continuing operations - U.S. GAAP

Net income from discontinued operations - U.S. GAAP

—

Income before cumulative effect of the application of accounting changes in accordance with U.S. GAAP

Cumulative effect of the application of accounting changes, net of tax(3)

—

(13

)

—

Net Income in Accordance with U.S. GAAP

Adjustments affecting comprehensive income under U.S. GAAP

Foreign currency translation adjustment, net of tax

(31

)

(54

)

Changes in minimum pension liability, net of tax(4)

(2

)

(40

)

Unrealized gain/(loss) on derivatives, net of tax(5)

(4

)

Comprehensive Income in Accordance with U.S. GAAP

Net Income Per Share in Accordance with U.S. GAAP

Continuing operations

$

1.74

$

1.65

$

1.55

Discontinued operations

0.11

0.10

—

Income before cumulative effect of the application of accounting changes in accordance with U.S. GAAP

$

1.85

$

1.75

$

1.55

Cumulative effect of the application of accounting changes, net of tax(3)

—

(0.03

)

—

Basic

$

1.85

$

1.72

$

1.55

Diluted(6)

$

1.84

$

1.71

$

1.54

Net Income Per Share in Accordance with Canadian GAAP

Basic

$

2.13

$

1.76

$

1.56

Diluted

$

2.12

$

1.76

$

1.55

Dividends per common share

$

1.16

$

1.08

$

1.00

Reconciliation of Income from Continuing Operations

Restated

Restated

Restated

Year ended December 31 (millions of dollars)

Net Income from Continuing Operations in Accordance with Canadian GAAP

U.S. GAAP adjustments

Unrealized (loss)/gain on foreign exchange and interest rate derivatives(5)

(12

)

(9

)

Tax impact of (loss)/gain on foreign exchange and interest rate derivatives

(12

)

Unrealized gain/(loss) on energy marketing contracts(3)

(21

)

Tax impact of unrealized gain/(loss) on energy marketing contracts

(3

)

(10

)

Equity loss(7)

(2

)

(18

)

—

Tax impact of equity loss

—

—

Amortization of deferred gains related to Power LP(12)(13)

(3

)

(10

)

(10

)

Deferred gains related to Power LP(12)(13)

(132

)

—

—

Income from Continuing Operations in Accordance with U.S. GAAP

Condensed Statement of Consolidated Cash Flows in Accordance with U.S. GAAP

Year ended December 31 (millions of dollars)

Cash Generated from Operations

Funds generated from continuing operations

1,529

1,619

1,610

Decrease in operating working capital

Net cash provided by continuing operations

1,574

1,727

1,650

Net cash (used in)/provided by discontinued operations

(6

)

(17

)

1,568

1,710

1,709

Investing Activities

Net cash used in investing activities

(1,304

)

(943

)

(796

)

Financing Activities

Net cash used in financing activities

(336

)

(581

)

(990

)

Effect of Foreign Exchange Rate Changes on Cash and Short-Term Investments

(87

)

(52

)

(3

)

(Decrease)/ Increase in Cash and Short-Term Investments

(159

)

(80

)

Cash and Short-Term Investments

Beginning of year

Cash and Short-Term Investments

End of year

Condensed Balance Sheet in Accordance with U.S. GAAP(1)

Restated

December 31 (millions of dollars)

Current assets

1,020

Long-term investments(7)(8)

1,887

1,760

Plant, property and equipment

17,083

15,753

Regulatory asset(9)

2,606

2,721

Other assets

1,235

1,385

23,719

22,639

Current liabilities(10)

2,573

2,135

Deferred amounts(3)(5)(8)(12)(13)

Long-term debt(5)

9,753

9,494

Deferred income taxes(9)

3,048

3,039

Preferred securities(11)

Non-controlling interests

Shareholders’ equity(12)(13)

6,523

6,114

23,719

22,639

Statement of Other Comprehensive Income in Accordance with U.S. GAAP

(millions of dollars)

Cumulative

Translation

Account

Minimum

Pension

Liability

(SFAS No.

87)

Cash Flow

Hedges

(SFAS No.

133)

Total

Balance at January 1,

(56

)

(9

)

(52

)

Changes in minimum pension liability, net of tax of $22(4)

—

(40

)

—

(40

)

Unrealized loss on derivatives, net of tax of $(1)(5)

—

—

(4

)

(4

)

Foreign currency translation adjustment, net of tax of nil

—

—

Balance at December 31,

(96

)

(13

)

(95

)

Changes in minimum pension liability, net of tax of $1(4)

—

(2

)

—

(2

)

Unrealized gain on derivatives, net of tax of nil(5)

—

—

Foreign currency translation adjustment, net of tax of $(64)

(54

)

—

—

(54

)

Balance at December 31,

(40

)

(98

)

(5

)

(143

)

Changes in minimum pension liability, net of tax of $(39)(4)

—

—

Unrealized gain on derivatives, net of tax of $(3)(5)

—

—

Foreign currency translation adjustment, net of tax of $(44)

(31

)

—

—

(31

)

Balance at December 31, 2004

(71

)

(26

)

(4

)

(101

)

(1) In accordance with U.S. GAAP, the Condensed Statement of Consolidated Income and Balance Sheet are prepared using the equity method of accounting for joint ventures. Excluding the impact of other U.S. GAAP adjustments, the use of the proportionate consolidation method of accounting for joint ventures, as required under Canadian GAAP, results in the same net income and shareholders’ equity.

(2) Other expenses included an allowance for funds used during construction of $3 million for the year ended December 31, 2004 (2003 - $2 million; 2002 - $4 million).

(3) Subsequent to October 1, 2003, the energy contracts that were accounted for as hedges under the provisions of Statement of Financial Accounting Standards (SFAS) No. 133 qualified as hedges. Substantially all derivative energy contracts are now accounted for as hedges under both U.S. and Canadian GAAP. All gains or losses on the contracts that did not qualify as hedges under SFAS No. 133, and the amounts of any ineffectiveness on the hedging contracts, are included in income each period. Substantially all of the amounts recorded in 2004 and 2003 as differences between U.S. and Canadian GAAP relate to gains and losses on contracts for periods before they were documented as hedges for purposes of U.S. GAAP and to differences in accounting with respect to physical energy trading contracts in the U.S. and Canada.

(4) Under U.S. GAAP, a net loss recognized pursuant to SFAS No. 87 “Employers’ Accounting for Pensions” as an additional pension liability not yet recognized as net period pension cost, must be recorded as a component of comprehensive income. The net amount recognized at December 31 is as follows.

December 31 (millions of

dollars)

Prepaid benefit cost

Accounts payable

(42

)

(58

)

Intangible assets

(1

)

(41

)

Accumulated other comprehensive income

(40

)

(151

)

Net amount recognized

(49

)

The accumulated benefit obligation for the Company’s DB Plans was $943 million at December 31, 2004 (2003 - $819 million).

(5) Effective January 1, 2004, all foreign exchange and interest rate derivatives are recorded in the Company’s consolidated financial statements at fair value under Canadian GAAP. Under the provisions of SFAS No. 133 “Accounting for Derivatives and Hedging Activities”, all derivatives are recognized as assets and liabilities on the balance sheet and measured at fair value. For derivatives designated as fair value hedges, changes in the fair value are recognized in earnings together with an equal or lesser amount of changes in the fair value of the hedged item attributable to the hedged risk. For derivatives designated as cash flow hedges, changes in the fair value of the derivative that are effective in offsetting the hedged risk are recognized in other comprehensive income until the hedged item is recognized in earnings. Any ineffective portion of the change in fair value is recognized in earnings each period. Substantially all of the amounts recorded in 2004 as differences between U.S. and Canadian GAAP, for income from continuing operations, relate to the differences in accounting treatment with respect to the hedged item and, for comprehensive income, relate to cash flow hedges.

During 2004, under the provisions of SFAS 133, net gains of $10 million (2003 - $47 million; 2002 - $38 million) from the hedges of changes in the fair value of long-term debt, and net losses of $18 million (2003 – $53 million; 2002 - $20 million) in the fair value of the hedged item were included in earnings for U.S. GAAP purposes as an adjustment to interest expense and foreign exchange losses. No amounts of the derivatives’ gains or losses were excluded from the assessment of hedge effectiveness in fair value hedging relationships.

No amounts were included in income in 2004, 2003 and 2002 with respect to ineffectiveness of cash flow hedges. For amounts included in other comprehensive income at December 31, 2004, $2 million (2003 - $9 million; 2002 - $(5) million) relates to the hedging of interest rate risk, $(3) million (2003 - $5 million; 2002 - $1 million) relates to the hedging of foreign exchange rate risk, and $2 million (2003 – $(6) million; 2002 – nil) relates to the hedging of energy price risk. Of these amounts, $2 million is expected to be recorded in earnings during 2005.

At December 31, 2004, assets of $(29) million (2003 - $91 million) and liabilities of $(27) million (2003 - $93 million) were (reduced)/added for U.S. GAAP purposes to reflect

the fair value of derivatives and the corresponding change in the fair value of hedged items.

(6) Diluted net income per share in accordance with U.S. GAAP for the year ended December 31, 2004 consists of continuing operations - $1.73 per share (2003 - $1.61 per share; 2002 - $1.54 per share), and discontinued operations - $0.11 per share (2003 - $0.10 per share; 2002 – nil).

(7) Under Canadian GAAP, pre-operating costs incurred during the commissioning phase of a new project are deferred until commercial production levels are achieved. After such time, those costs are amortized over the estimated life of the project. Under U.S. GAAP, such costs are expensed as incurred. Certain start-up costs incurred by Bruce Power, L.P. (an equity investment) are required to be expensed under U.S. GAAP.

Under both Canadian GAAP and U.S. GAAP, interest is capitalized on expenditures relating to construction of development projects actively being prepared for their intended use. In Bruce Power, L.P. under U.S. GAAP, the carrying value of development projects against which interest is capitalized is lower due to the expensing of pre-operating costs.

(8) Effective January 1, 2003, the Company adopted the provisions of Financial Interpretation (FIN) 45 that require the recognition of a liability for the fair value of certain guarantees that require payments contingent on specified types of future events. The measurement standards of FIN 45 are applicable to guarantees entered into after January 1, 2003. For U.S. GAAP purposes, the fair value of guarantees recorded as a liability at December 31, 2004 was $9 million (2003 - $4 million) and relates to the Company’s equity interest in Bruce Power.

(9) Under U.S. GAAP, the Company is required to record a deferred income tax liability for its cost-of-service regulated businesses. As these deferred income taxes are recoverable through future revenues, a corresponding regulatory asset is recorded for U.S. GAAP purposes.

(10) Current liabilities at