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News Release

Feb 14 2023

TC Energy reports strong 2022 results

Increases common share dividend for the twenty-third consecutive year

CALGARY, Alberta, Feb. 14, 2023 (GLOBE NEWSWIRE) -- TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) released its fourth quarter results today. François Poirier, TC Energy’s President and Chief Executive Officer, commented “2022 has been a record setting year with continued demand and strong utilization across our systems, which is highlighted by TC Energy's comparable earnings per common share1 of $4.30 and comparable EBITDA1 of $9.9 billion.” Poirier continued, “Our business remains resilient and is expected to deliver strong comparable EBITDA growth in 2023. We have a defined funding plan in place that will allow us to continue to progress our industry leading capital program and accelerate our deleveraging target. Reflecting the confidence in our outlook, TC Energy’s Board of Directors has declared a quarterly dividend increase to $0.93 per common share for the quarter ending March 31, 2023, equivalent to $3.72 per common share on an annualized basis, an increase of 3.3 per cent. This is the twenty-third consecutive year the Board has raised the dividend.”

Highlights

(All financial figures are unaudited and in Canadian dollars unless otherwise noted)

  • Reaffirmed 2023 financial outlook with comparable EBITDA expected to be five to seven per cent higher than 2022, while comparable earnings per common share is expected to be modestly higher than 2022
  • Capital spending in 2023 is expected to be approximately $11.5 to $12.0 billion which we anticipate will be funded through a combination of internally generated cash flow, incremental long-term debt and hybrid capacity and through our asset divestiture program
    • Majority of the 2023 capital program is focused on NGTL System expansions, advancement of the Southeast Gateway Pipeline and the Coastal GasLink pipeline project, U.S. Natural Gas Pipelines projects, the Bruce Power life extension program and normal course maintenance capital expenditures
  • Fourth quarter 2022 results were underpinned by strong utilization across our assets, reflecting the continued high demand for our services
    • On December 19, 2022, NGTL System set a new record for delivery of 16.4 Bcf
    • On December 23, 2022, U.S. Natural Gas Pipelines experienced an all-time peak delivery record of 36.6 Bcf
    • Bruce Power achieved 87 per cent availability and the Unit 4 planned outage was completed approximately 22 days ahead of schedule
    • Power and Energy Solutions had high power plant availability during the coldest days in December when the average of Alberta power prices reached approximately $312/MWh
  • Financial results: Fourth quarter 2022
    • Net losses attributable to common shares of $1.4 billion or $1.42 per common share, compared to net income of $1.1 billion or $1.14 per common share in 2021
    • Segmented losses of $1.0 billion compared to segmented earnings of $1.9 billion in 2021 and comparable EBITDA of $2.7 billion compared to $2.4 billion in 2021
  • Financial results: year ended December 31, 2022
    • Net income attributable to common shares of $0.6 billion or $0.64 per common share, compared to net income of $1.8 billion or $1.87 per common share in 2021
    • Segmented earnings of $3.6 billion compared to $4.1 billion in 2021 and comparable EBITDA of $9.9 billion compared to $9.4 billion in 2021
  • TC Energy's Board of Directors approved a 3.3 per cent increase in the quarterly common share dividend to $0.93 per common share for the quarter ending March 31, 2023
  • Dividend Reinvestment and Share Repurchase Plan (DRP) participation rate amongst common shareholders was approximately 33 per cent, resulting in $607 million reinvested in common equity from the dividends declared in 2022
  • Sanctioned $8.8 billion of projects and placed $5.8 billion of projects in service in 2022, and expect to place approximately $6 billion of new projects in service in 2023
  • Continued to advance industry leading $34 billion secured capital program, with various projects helping advance GHG emissions reduction goals
  • Placed the Alberta XPress project in service in January 2023 and approved a 63 km (39 mile), 1.4 Bcf/d extension of the Gillis Access project in February 2023 to further connect supplies from the Haynesville basin at Gillis
  • Executed main land acquisition agreements required for land falls and compressor stations in Veracruz and Tabasco for the Southeast Gateway Pipeline project, supporting our commitment and execution of the first critical path milestones
  • Announced updated cost estimates to the Coastal GasLink pipeline project on February 1, 2023. TC Energy's project cost estimate has increased to $14.5 billion.

  three months ended
December 31		   year ended
December 31
(millions of $, except per share amounts) 2022       2021       2022       2021  
               
Income              
Net (loss)/income attributable to common shares (1,447)       1,118       641       1,815  
per common share – basic ($1.42)       $1.14       $0.64       $1.87  
               
Segmented (losses)/earnings              
Canadian Natural Gas Pipelines (2,592)       389       (1,440)       1,449  
U.S. Natural Gas Pipelines 882       818       2,617       3,071  
Mexico Natural Gas Pipelines 96       123       491       557  
Liquids Pipelines 322       373       1,123       (1,600)  
Power and Energy Solutions 298       191       833       628  
Corporate (4)       (6)       8       (46)  
Total segmented (losses)/earnings (998)       1,888       3,632       4,059  
               
Comparable EBITDA              
Canadian Natural Gas Pipelines 768       674       2,806       2,675  
U.S. Natural Gas Pipelines 1,141       1,032       4,089       3,856  
Mexico Natural Gas Pipelines 211       151       753       666  
Liquids Pipelines 364       380       1,366       1,526  
Power and Energy Solutions 203       168       907       669  
Corporate (4)       (10)       (20)       (24)  
Comparable EBITDA 2,683       2,395       9,901       9,368  
Depreciation and amortization (670)       (634)       (2,584)       (2,522)  
Interest expense included in comparable earnings (722)       (611)       (2,588)       (2,354)  
Allowance for funds used during construction 115       72       369       267  
Foreign exchange (loss)/gain, net included in comparable earnings (40)       44       (8)       254  
Interest income and other 53       59       146       190  
Income tax expense included in comparable earnings (259)       (257)       (813)       (830)  
Net income attributable to non-controlling interests (9)       (8)       (37)       (91)  
Preferred share dividends (22)       (32)       (107)       (140)  
Comparable earnings 1,129       1,028       4,279       4,142  
Comparable earnings per common share $1.11       $1.05       $4.30       $4.26  
               
Net cash provided by operations 2,025       1,801       6,375       6,890  
Comparable funds generated from operations 2,285       2,073       7,353       7,406  
Capital spending¹ 3,139       2,123       8,961       7,134  
Proceeds from sales of assets, net of transaction costs —       35       —       35  
               
Dividends declared              
Per common share $0.90       $0.87       $3.60       $3.48  
               
Basic common shares outstanding(millions)              
– weighted average for the period 1,016       980       995       973  
– issued and outstanding at end of period 1,018       981       1,018       981  

¹ Includes Capital expenditures, Capital projects in development and Contributions to equity investments.


CEO Message

Throughout 2022 we saw how geopolitical events heightened energy security and the importance of sustainability when planning for the future. TC Energy has a significant role in contributing to local and global energy transition solutions, and we continue to leverage our vast infrastructure to deliver safe, affordable and reliable energy. Our team and, by extension, our assets continue to achieve high utilization across our systems and our focus on operational excellence allowed us to provide peak availability of our assets during periods of peak demand. This record operational performance is demonstrated by TC Energy reporting comparable earnings per common share of $4.30 and comparable EBITDA of $9.9 billion – approximately six per cent above 2021 comparable EBITDA.

During the year we set new records, including peak deliveries on our Canadian and U.S. natural gas systems. Additionally, we executed a first-of-its kind strategic alliance with the Comisión Federal de Electricidad (CFE) in Mexico to build the Southeast Gateway Pipeline, while investing in reducing our emission intensities with our VNBR and Gillis Access projects. In the U.S., we increased our share of LNG feedgas deliveries from approximately 25 to 30 per cent and remain on-track to increase our market share to 35 per cent by 2025. TC Energy remains well positioned to expand the connection between North America’s premier basins and LNG export facilities to support energy security, reliability and affordability.

We expect this positive momentum to continue into 2023 despite macroeconomic challenges, with 2023 comparable EBITDA expected to be five to seven per cent higher than 2022. This further showcases the resiliency and sustainability of our earnings and cash flows that provides the foundation for TC Energy’s Board of Directors to declare a quarterly dividend increase to $0.93 per common share for the quarter ending March 31, 2023, equivalent to $3.72 per common share on an annualized basis, an increase of 3.3 per cent. This is the twenty-third consecutive year the Board has raised the dividend.

We continue to expand, extend and modernize our diversified energy portfolio. In 2022, we sanctioned $8.8 billion of projects that are consistent with our risk preferences and expected to deliver a combined return that is above our targeted range of seven to nine per cent. We placed $5.8 billion of projects in service during 2022, with an additional $6 billion expected in 2023. We are advancing our unparalleled $34 billion fully sanctioned secured capital program that is expected to generate comparable EBITDA growth and grow our common share dividend at an annual rate of three to five per cent. To enhance and extend our growth outlook, we anticipate sanctioning additional high-quality projects that are consistent with our risk and return preferences, underpinned by long-term take-or-pay contracts or rate regulation and capturing a spread above our cost of capital to maximize shareholder value. However, we are actively managing our capital spending to minimize incremental funding requirements as we realize our deleveraging target. Capital rotation will feature more prominently in our go-forward funding plan in the event that capital spending exceeds an annual run-rate of $5 to $7 billion.

We are advancing our 2023 $5+ billion asset divestiture program to accelerate our deleveraging, execute on our vast opportunity set and provide a self-funding source for high-value growth opportunities. Our sanctioned capital program is expected to be funded through a combination of growing cash flows, incremental long-term debt and hybrid security capacity, commercial paper and our discounted DRP that is expected to be in place through the dividend declarations for the quarter ending June 30, 2023.

While 2022 was a record setting year in many ways, we were faced with challenges. On December 7, 2022, we activated our emergency response protocols after detecting an oil release on the Keystone Pipeline System in Washington County, Kansas. We replaced the impacted section of pipe and have engaged a third-party to analyze the incident to determine the root cause. On December 31, 2022, we accrued an environmental remediation liability of $650 million (US$480 million), before expected insurance recoveries. This amount represents our estimate of costs relating to emergency response, environmental remediation and cleanup activities required to fully remediate the site and has been recorded on an undiscounted basis. While no incident is ever acceptable to us, the effectiveness of our emergency response protocols resulted in a quick response by our team to begin the remediation process. Within seven minutes of detecting a volume imbalance, the Keystone Pipeline System was shut down and isolation valves were closed while field resources located the incident and installed containment booms. We continue to progress our recovery and remediation efforts and are working closely with the Environmental Protection Agency, Kansas Department of Health and Environment, impacted landowners, communities, Tribal Nations, agencies and local, state and federal officials. To date, our oil recovery efforts continue to progress successfully with 90 per cent of the release volume recovered. We expect to continue to be able to fulfill our Keystone Pipeline System contract commitments and will continue to provide updates on the Milepost 14 incident as information becomes available.

On February 1, 2023 we announced updated cost estimates for the Coastal GasLink pipeline project after conducting a comprehensive cost and schedule risk analysis (CSRA) to assess current market conditions and potential risks and uncertainties facing the remaining project scope. As a result of the CSRA, TC Energy's estimate of the costs to complete the pipeline has increased to approximately $14.5 billion. The CSRA review also considered the potential impact of an extension of construction well into 2024, which would further increase costs by up to $1.2 billion. We continue to make significant progress and, to date, the project is approximately 84 per cent complete and we are targeting mechanical completion by year-end 2023. In addition, the entire route has been cleared, grading is more than 96 per cent complete and more than 510 km of pipeline has been welded, lowered and backfilled with restoration activities underway in many areas.

Safety, project execution and operational excellence will continue to be key focus areas, and we will look for new ways to maximize the value of our existing assets by optimizing system availability and throughput. Finally, we remain committed to the sustainable development of our business. By leveraging our highly integrated North American energy footprint, we will further advance opportunities to originate low-carbon solutions, expand our capabilities and establish partnerships to support decarbonization initiatives for both us and our customers.

OUTLOOK

Comparable EBITDA and comparable earnings

We expect our 2023 comparable EBITDA to be higher than 2022 and our 2023 comparable earnings per common share are expected to be modestly higher than 2022 due to the net impact of the following:

  • growth in the NGTL System from advancement of expansion programs
  • higher contributions from our Mexico Natural Gas Pipelines segment primarily related to the new Transportadora de Gas Natural de la Huasteca (TGNH) Transport Service Agreement (TSA) with the CFE
  • full-year impact from assets placed in service in 2022 and new projects anticipated to be placed in service in 2023, net of incremental depreciation expense
  • lower contributions from the Keystone Pipeline System including liquids marketing, primarily as a result of the de-rate associated with the Milepost 14 incident and continuing lower margins
  • higher Interest expense as a result of long-term debt issuances, net of maturities and higher floating interest rates
  • higher AFUDC related to the Southeast Gateway Pipeline.

We continue to monitor developments in energy markets, our construction projects, regulatory proceedings and our asset divestiture program for any potential impacts on the above outlook.

Consolidated capital spending and equity investments

We expect to spend approximately $11.5 to $12.0 billion in 2023 on growth projects, maintenance capital expenditures and contributions to equity investments. The majority of the 2023 capital program is focused on NGTL System expansions, advancement of the Southeast Gateway Pipeline and the Coastal GasLink pipeline project, U.S. Natural Gas Pipelines projects, the Bruce Power life extension program and normal course maintenance capital expenditures.

Canadian Natural Gas Pipelines

Comparable EBITDA and earnings in 2023 are expected to be higher than 2022 mainly due to continued growth of the NGTL System as we advance expansion programs which extend and expand supply facilities, enhance delivery facilities in Alberta and provide incremental service at our major border delivery locations in response to requests for firm service on the system. Due to the flow-through treatment of certain costs on our Canadian rate-regulated pipelines, changes in these costs can impact our comparable EBITDA despite having no significant effect on comparable earnings.

  • Capital spending: We expect to spend approximately $2.8 billion in 2023, primarily on NGTL System expansion projects and maintenance capital expenditures, all of which are immediately reflected in investment base and related earnings. We also contributed $1.4 billion to our investment in Coastal GasLink LP in 2022, and are obligated to contribute an additional $0.5 billion in 2023, primarily related to installments of partner equity contributions in accordance with the July 2022 agreements with Coastal GasLink LP. We also expect to make further contributions related to the revised estimated capital cost of the project in 2023.

U.S. Natural Gas Pipelines

Comparable EBITDA in 2023 is expected to be consistent with 2022. This is due to, among other factors, completion of expansion projects in 2022 and 2023 on the ANR and Columbia Gulf systems as well as higher revenues on ANR due to the full-year implementation of higher transportation rates as part of the uncontested Section 4 rate case settlement filed with the Federal Energy Regulatory Commission (FERC). Our pipeline systems continue to see historically strong demand for service and we anticipate our assets will maintain the high utilization levels experienced in 2022. These positive results are expected to be partially offset by higher operational costs, reflective of increased system utilization across our footprint, and an anticipated increase in property taxes from capital projects placed in service.

  • Capital spending: We expect to spend approximately US$1.9 billion in 2023 primarily on our Gillis Access, North Baja and Columbia Gas expansion projects and our Columbia Gas Modernization III program, as well as Columbia Gas and ANR maintenance capital expenditures, the return on and recovery of which is expected to be reflected in future tolls.

Mexico Natural Gas Pipelines

Comparable EBITDA for 2023 is expected to be higher than 2022 due to full-year revenues from the north section of the Villa de Reyes pipeline (VdR North) and east section of the Tula pipeline (Tula East) which were placed in service in third quarter 2022 under the new TGNH TSA with the CFE.

  • Capital spending: We expect to spend US$2.1 billion in 2023 to advance construction of the Southeast Gateway, Villa de Reyes and Tula pipelines.

Liquids Pipelines

Comparable EBITDA in 2023 is expected to be modestly lower than 2022 for the Keystone Pipeline System including liquids marketing as a result of the de-rate associated with the Milepost 14 incident and continuing lower margins on the U.S. Gulf Coast section of the Keystone Pipeline System; however, we expect to continue to be able to fulfill our Keystone Pipeline System contract commitments.

  • Capital spending: We expect to spend approximately $0.1 billion in 2023.

Power and Energy Solutions

Comparable EBITDA in 2023 is expected to be consistent with 2022 provided Alberta power prices experienced in 2022 continue into 2023. We expect that Bruce Power's equity income will be higher in 2023 than 2022 due to the full year impact of the Unit 3 Major Component Replacement (MCR) program contract price increase and fewer non-MCR planned outage days, partially offset by greater MCR outage days. The planned maintenance for 2023 is currently scheduled to begin on Unit 4 in the second quarter and on Unit 8 in the second half of 2023. The average 2023 plant availability percentage, excluding the Unit 3 and Unit 6 MCR programs, is expected to be in the low-90 per cent range.

  • Capital spending: We expect to invest approximately $1.0 billion in 2023.

NOTABLE RECENT DEVELOPMENTS INCLUDE:

Canadian Natural Gas Pipelines

  • Coastal GasLink: The Coastal GasLink pipeline project is approximately 84 per cent complete. The entire route has been cleared, grading is more than 96 per cent complete and more than 510 km of pipeline has been welded, lowered and backfilled with restoration activities underway in many areas.

    Subsequent to execution of the July 2022 agreements, the project has faced material cost pressures that reflect challenging conditions in the Western Canadian labour market, shortages of skilled labour, impacts of contractor underperformance and disputes, as well as other unexpected events, including drought conditions and erosion and sediment control challenges. A CSRA was conducted to assess current market conditions and potential risks and uncertainties facing the remaining project scope. As a result of the CSRA, the estimate of the cost to complete the pipeline has increased to approximately $14.5 billion. This estimate excludes potential cost recoveries and incorporates contingencies for certain factors that may be outside the control of Coastal GasLink LP such as labour conditions, contractor performance and weather-related events. The work plan continues to target mechanical completion by year-end 2023, with commissioning and restoration work continuing into 2024 and 2025. TC Energy expects to fund the incremental project costs and is actively pursuing cost mitigants and recoveries that may partially offset a portion of these costs, some of which may not be conclusively determined until after the pipeline is in service. The CSRA review also considered the potential impact of an extension of construction well into 2024. In that event, costs would increase further by up to $1.2 billion.

    This increase in the capital cost estimate for the project and our corresponding funding requirements were indicators that a decrease in the value of our equity investment had occurred.

    As a result, we completed a valuation assessment and concluded that the fair value of our investment was below its carrying value at December 31, 2022. We determined that this was an other-than-temporary impairment of our equity investment in Coastal GasLink LP and, as a result, we recognized a pre-tax impairment of $3.0 billion ($2.6 billion after tax) in fourth quarter 2022. The pre-impairment carrying value of our investment in Coastal GasLink LP at December 31, 2022 consisted of amounts in Equity investments ($2.8 billion) and Loans receivable from affiliates ($250 million), which were reduced to a nil balance. Due to the funding provisions of the July 2022 agreements, we expect to fund an additional $3.3 billion related to the revised estimated capital cost to complete the Coastal GasLink pipeline. A portion of this funding is expected to be impaired. We will continue to assess for other-than-temporary declines in the fair value of our investment and the extent of any additional impairment charges will depend on our valuation assessment performed at the respective reporting date. Refer to Note 7, Coastal GasLink, of our Consolidated financial statements for additional information.
  • NGTL System: In the year ended December 31, 2022, the NGTL System placed approximately $3.0 billion of capacity projects in service.
  • Valhalla North and Berland River Project: In November 2022, we sanctioned the Valhalla North and Berland River (VNBR) project which will serve aggregate system requirements and connect migrating supply to key demand markets, providing incremental capacity on the NGTL System of approximately 527 TJ/d (500 MMcf/d) and is expected to contribute to lower GHG emission intensity for the overall system. With an estimated capital cost of $0.6 billion, the project consists of approximately 33 km (21 miles) of new pipeline, one new non-emitting electric compressor unit and associated facilities. An application for the project is expected to be submitted to the CER in third quarter 2023, with an anticipated in-service date in 2026 subject to regulatory approval.

U.S. Natural Gas Pipelines

  • ANR Section 4 Rate Case: ANR filed a Section 4 rate case with FERC in January 2022 requesting an increase to ANR's maximum transportation rates effective August 1, 2022, subject to refund upon completion of the rate proceeding. In November 2022, ANR notified FERC that it reached a settlement-in-principle with its customers. In January 2023, the presiding Administrative Law Judge certified the settlement as uncontested and recommended it for approval by FERC. While there is no timeframe in which FERC must act on the settlement, in line with other recent rate case settlement approval timelines, we expect to receive FERC approval of the settlement in early 2023.
  • Alberta XPress Project: The Alberta XPress project, an expansion project on ANR that utilizes existing capacity on the Great Lakes and the Canadian Mainline systems to connect growing supply from the WCSB to U.S. Gulf Coast LNG export markets, was placed in service in January 2023.
  • Elwood Power and Wisconsin Access Projects: The Elwood Power and Wisconsin Access projects, both including upgrade and reliability components, while reducing GHG emissions along portions of the ANR pipeline system, were placed in commercial service on November 1, 2022.
  • Gillis Access Project: In November 2022, we sanctioned the development of the Gillis Access project, a 1.5 Bcf/d greenfield pipeline system that will connect supplies from the Haynesville basin at Gillis to markets elsewhere in Louisiana. The 68 km (42 mile) Louisiana header system will also enable the rapidly growing Louisiana LNG export market to access Haynesville-sourced gas production as well as create a platform for further growth into the southeast Louisiana markets. The project has an anticipated in-service date in 2024 and a total estimated cost of US$0.4 billion.
  • In February 2023, we approved a 63 km (39 mile), 1.4 Bcf/d extension of the Gillis Access project to further connect supplies from the Haynesville basin at Gillis. Subject to customer FID, the project has an anticipated in-service date in 2025 and a total estimated cost of US$0.3 billion.
  • Ventura XPress Project: In December 2022, we approved the Ventura XPress project, a set of ANR projects designed to improve base system reliability and allow for additional long-term contracted transportation services to a point of delivery on the Northern Border pipeline at Ventura, Iowa. The project has an anticipated in-service date in 2025 and a total estimated cost of US$0.2 billion.

Mexico Natural Gas Pipelines

  • Strategic Alliance with the CFE: On August 4, 2022, we announced a strategic alliance with Mexico’s state-owned electric utility, the CFE, for the development of new natural gas infrastructure in central and southeast Mexico. This alliance consolidates previous TSAs executed between TC Energy’s Mexico-based subsidiary TGNH and the CFE in connection with our natural gas pipeline assets in central Mexico (including the Tamazunchale, Villa de Reyes and Tula pipelines) under a single, U.S. dollar-denominated, take-or-pay contract that extends through 2055. This agreement also resolved and terminated previous international arbitrations with the CFE related to the Villa de Reyes and Tula pipelines.

    In connection with the strategic alliance, we reached an FID to develop and construct the Southeast Gateway Pipeline, a 1.3 Bcf/d, 715 km (444 mile) offshore natural gas pipeline to serve the southeast region of Mexico with an expected in-service by mid-2025 and an estimated project cost of US$4.5 billion.

    The lateral section of the Villa de Reyes pipeline was mechanically completed in second quarter 2022, while VdR North and Tula East were placed in commercial service in third quarter 2022. We are working with the CFE, and expect the lateral and the south sections of the Villa de Reyes pipeline to begin commercial service in 2023. Additionally, we have agreed to jointly develop and complete the central segment of the Tula pipeline, subject to an FID in the first half of 2023. Finally, we are working with the CFE on the Tula pipeline’s west section to procure necessary land access and resolve legal claims.

    Subject to regulatory approvals from Mexico’s economic competition commission and the Regulatory Energy Commission, the strategic alliance provides the CFE with the ability to hold an equity interest in TGNH, which is conditional upon the CFE contributing capital, acquiring land and supporting permitting on the TGNH projects. Upon in-service of the Southeast Gateway Pipeline, the CFE’s equity interest in TGNH will equal 15 per cent, and will increase to approximately 35 per cent upon expiry of the contract in 2055. Regulatory approvals related to the CFE's equity participation in TGNH are expected to take up to 24 months.

Liquids Pipelines

  • Milepost 14 Incident: In December 2022, a pipeline rupture occurred in Washington County, Kansas on the Cushing Extension section of the Keystone Pipeline System. Recovery and remediation efforts are underway and we are committed to fully remediating the site. To date, our oil recovery efforts continue to progress successfully with 90 per cent of the 12,937 barrel measured release volume recovered. The affected segment was restarted following approval of the repair and restart plan by PHMSA. Per the terms of a Corrective Action Order, the pipeline is required to operate under a pressure de-rate until the conditions are satisfied. The cause of the release remains the subject of an investigation.

    At December 31, 2022, we accrued an environmental remediation liability of $650 million, before expected insurance recoveries and not including potential fines and penalties which are currently indeterminable. This amount represents our estimate of costs relating to emergency response, environmental remediation and cleanup activities required to fully remediate the site and has been recorded on an undiscounted basis. The accrual is based on certain assumptions such as the scope of remediation efforts that are subject to revision in future periods which could result in future modifications of this accrual. Therefore, it is reasonably possible that we will incur additional costs beyond the amounts accrued; however, we are currently unable to estimate the range of possible additional costs.

    We have appropriate insurance policies in place and it is probable that the majority of estimated environmental remediation costs will be eligible for recovery under our existing insurance coverage. We have recorded an asset of $650 million, representing the expected recovery of the estimated environmental remediation costs. To the extent costs beyond the amounts accrued are incurred, they will be evaluated under our existing insurance policies. We expect remediation activities to be substantially completed within a year.
  • CER and FERC Proceedings: In 2019 and 2020, certain Keystone customers initiated complaints before FERC and the CER. The complaints indicated that Keystone had provided insufficient information to support its 2020 and 2021 estimated variable rates and challenged the just and reasonableness of Keystone’s committed rates charged dating back to 2018 and 2020 at FERC and the CER, respectively.

    CER proceedings concluded in September 2022 and in December 2022, the CER issued a decision which has resulted in a one-time adjustment related to previously charged tolls of $38 million. In January 2023, Keystone filed a Review and Variance application with the CER challenging the correctness of the original decision.

    The FERC hearing commenced in June 2022 and concluded in August, with a judiciary recommendation expected to be issued in early 2023.

Power and Energy Solutions

  • Bruce Power Life Extension: On March 7, 2022, the IESO verified Bruce Power's Unit 3 MCR program final cost and schedule duration estimate submitted in December 2021. The Unit 3 MCR program is scheduled to begin in March 2023 with expected completion in 2026.

    Bruce Power's contract price increased on April 1, 2022, in accordance with contract terms, reflecting capital to be invested under the Unit 3 MCR program and the 2022 to 2024 Asset Management program, plus normal annual inflation adjustments.

    Unit 4, the third unit in the Bruce Power MCR program, completed its definition phase in June 2022 and is now in the preparation phase leading up to an FID, expected in fourth quarter 2023. A preliminary basis of estimate (including an initial cost and schedule duration estimate) was submitted to the IESO in fourth quarter 2022.
  • Saddlebrook Solar Project: On October 4, 2022, we announced that we have commenced pre-construction activities on the 81 MW Saddlebrook Solar project located near Aldersyde, Alberta. The expected capital cost is $146 million, with the project partially supported by $10 million from Emissions Reduction Alberta. Construction is expected to be completed in 2023.

Other Energy Solutions

  • Alberta Carbon Grid: In June 2021, we announced a partnership with Pembina Pipeline Corporation to jointly develop a world-scale carbon transportation and sequestration system which, when fully constructed, is expected to be capable of transporting more than 20 million tonnes of carbon dioxide annually. On October 18, 2022, ACG announced that it has entered into a carbon sequestration evaluation agreement with the Government of Alberta to further evaluate one of the largest AOI for safely storing carbon from industrial emissions in Alberta. This agreement will allow ACG to continue evaluating the suitability of its AOI and move forward into the next stage of the province’s CCUS process to provide confidence to customers, Indigenous communities, stakeholders and the Government of Alberta in the project's carbon storage capabilities. ACG is exploring options to potentially leverage existing infrastructure and right-of-ways to connect the Alberta Industrial Heartland emissions region to a key sequestration location.
  • Lynchburg Renewable Fuels: On October 17, 2022, we announced a US$29 million investment for a 30 per cent ownership interest in the Lynchburg Renewable Fuels project, a Renewable Natural Gas (RNG) production facility in Lynchburg, Tennessee being developed by 3 Rivers Energy Partners, LLC. Along with our ownership interest, we will market all RNG and environmental attributes generated from the facility once operational, which we expect in 2024. We also have the option to jointly develop future RNG projects with 3 Rivers Energy Partners, LLC.

Corporate

  • Dividend Reinvestment and Share Purchase Plan: To prudently fund our growth program that includes increased project costs on the NGTL System and following our July 2022 obligation to make an equity contribution of $1.9 billion to Coastal GasLink LP, we reinstated the issuance of common shares from treasury at a two per cent discount under our DRP commencing with the dividends declared on July 27, 2022. On dividends declared in 2022, the participation rate by common shareholders was approximately 33 per cent, resulting in $607 million reinvested in common equity under the program. The discounted DRP is expected to be in place through the dividend declarations for the quarter ending June 30, 2023.
  • Common Shares Issued Under Public Offering: On August 10, 2022, we issued 28.4 million common shares at a price of $63.50 each for gross proceeds of approximately $1.8 billion. Proceeds from the offering are being used, directly or indirectly, together with other financing sources and cash on hand, to fund costs associated with the construction of the Southeast Gateway Pipeline.
  • Asset Divestiture Program: In late 2022, we announced our plan to proceed with a $5+ billion asset divestiture program that will include the sale of assets, and may include partial monetization of certain assets.

    The objectives of this asset divestiture program are to accelerate our deleveraging, execute on our vast opportunity set and provide a self-funding source for high-value growth opportunities. We believe that executing these steps will strengthen our balance sheet to ensure we remain competitively positioned to capitalize on future opportunities.

Teleconference and Webcast

We will hold a teleconference and webcast on Tuesday, February 14, 2023 at 6:30 a.m. (MST) / 8:30 a.m. (EST) to discuss our fourth quarter 2022 financial results and company developments. Presenters will include François Poirier, President and Chief Executive Officer; Joel Hunter, Executive Vice-President and Chief Financial Officer; and other members of the executive leadership team.

Members of the investment community and other interested parties are invited to participate by calling 1.800.319.4610. No pass code is required. Please dial in 15 minutes prior to the start of the call. A live webcast of the teleconference will be available on TC Energy's website at www.TCEnergy.com/events or via the following URL: https://www.gowebcasting.com/12438.

A replay of the teleconference will be available two hours after the conclusion of the call until midnight EST on Tuesday, February 21, 2023. Please call 1.855.669.9658 and enter pass code 9820.

The audited annual consolidated financial statements and Management’s Discussion and Analysis (MD&A) are available on our website at www.TCEnergy.com and will be filed today under TC Energy's profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission on EDGAR at www.sec.gov.

About TC Energy

We’re a team of 7,000+ energy problem solvers working to move, generate and store the energy North America relies on. Today, we’re taking action to make that energy more sustainable and more secure. We’re innovating and modernizing to reduce emissions from our business. And, we’re delivering new energy solutions – from natural gas and renewables to carbon capture and hydrogen – to help other businesses and industries decarbonize too. Along the way, we invest in communities and partner with our neighbours, customers and governments to build the energy system of the future.

TC Energy's common shares trade on the Toronto (TSX) and New York (NYSE) stock exchanges under the symbol TRP. To learn more, visit us at www.TCEnergy.com.

Forward-Looking Information

This release contains certain information that is forward-looking, including the sustainability commitments and targets contained in our 2022 Report on Sustainability and our GHG Emissions Reduction Plan, and is subject to important risks and uncertainties (such statements are usually accompanied by words such as "anticipate", "expect", "believe", "may", "will", "should", "estimate", "intend" or other similar words). Forward-looking statements in this document are intended to provide TC Energy security holders and potential investors with information regarding TC Energy and its subsidiaries, including management's assessment of TC Energy's and its subsidiaries' future plans and financial outlook. All forward-looking statements reflect TC Energy's beliefs and assumptions based on information available at the time the statements were made and as such are not guarantees of future performance. As actual results could vary significantly from the forward-looking information, you should not put undue reliance on forward-looking information and should not use future-oriented information or financial outlooks for anything other than their intended purpose. We do not update our forward-looking information due to new information or future events, unless we are required to by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from the anticipated results, refer to the most recent Quarterly Report to Shareholders and the 2022 Annual Report filed under TC Energy's profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission at www.sec.gov and the "Forward-looking information" section of our 2022 Report on Sustainability and our GHG Emissions Reduction Plan which are available on our website at www.TCEnergy.com.

Non-GAAP Measures

This release contains references to the following non-GAAP measures: comparable earnings, comparable earnings per common share, comparable EBITDA and comparable funds generated from operations. These non-GAAP measures do not have any standardized meaning as prescribed by GAAP and therefore may not be comparable to similar measures presented by other entities. These non-GAAP measures are calculated by adjusting certain GAAP measures for specific items we believe are significant but not reflective of our underlying operations in the period. These comparable measures are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable except as otherwise described in the Condensed consolidated financial statements and MD&A. Refer to: (i) each business segment for a reconciliation of comparable EBITDA to segmented earnings; (ii) Consolidated results section for reconciliations of comparable earnings and comparable earnings per common share to Net income attributable to common shares and Net income per common share, respectively; and (iii) Financial condition section for a reconciliation of comparable funds generated from operations to Net cash provided by operations. Refer to the Non-GAAP measures section of the MD&A in our most recent quarterly report for more information about the non-GAAP measures we use, which section of the MD&A is incorporated by reference herein. The MD&A can be found on SEDAR (www.sedar.com) under TC Energy's profile.

Additional Information

This release should also be read in conjunction with our December 31, 2022 audited Consolidated financial statements and notes and the MD&A in our 2022 Annual Report. Capitalized abbreviated terms that are used but not otherwise defined herein are defined in our 2022 Annual Report. Certain comparative figures have been adjusted to reflect the current period's presentation.

Media Inquiries:

Stone Grissom / Suzanne Wilton

media@tcenergy.com

403.920.7859 or 800.608.7859

Investor & Analyst Inquiries:

Gavin Wylie / Hunter Mau

investor_relations@tcenergy.com

403.920.7911 or 800.361.6522

Download full report here: https://www.tcenergy.com/siteassets/pdfs/investors/reports-and-filings/annual-and-quarterly-reports/2022/tc-2022-q4-quarterly-report.pdf

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¹ Comparable earnings, comparable earnings per common share, comparable funds generated from operations and comparable EBITDA are non-GAAP measures used throughout this news release. These measures do not have any standardized meaning under GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. The most directly comparable GAAP measures are Net income attributable to common shares, Net income per common share, Net cash provided by operations and Segmented earnings. For more information on non-GAAP measures, refer to the Non-GAAP section of this news release.