EXHIBIT 10.3

Execution Version

SUBORDINATION AND INTERCREDITOR AGREEMENT

THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this “Agreement”) is entered
into as of this February 13, 2007, by and among TRANSCANADA PIPELINES LIMITED, a
Canada corporation  (together with its successors and any permitted assigns, the
“Subordinated Creditor”),(1) TC PIPELINES, LP a Delaware limited partnership
(the “Borrower”) and SUNTRUST BANK, as Administrative Agent for all Senior
Lenders party to the Senior Credit Agreement defined below (“Administrative
Agent”).

R E C I T A L S

A.            The Borrower, Administrative Agent and Senior Lenders (as
hereinafter defined) have entered into an Amended and Restated Revolving Credit
and Term Loan Agreement of even date herewith (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the “Senior
Credit Agreement”), pursuant to which, among other things, Senior Lenders have
agreed, subject to the terms and conditions set forth in the Senior Credit
Agreement, to make certain loans and financial accommodations to the Borrower.

B.            The Borrower and Subordinated Creditor have entered into a
Subordinated Loan Agreement of even date herewith (as the same may be amended,
restated, supplemented or otherwise modified from time to time as permitted
hereunder, the “Subordinated Loan Agreement”), pursuant to which Subordinated
Creditor is extending credit to the Borrower as evidenced by a Subordinated Note
of even date herewith in the principal amount of up to $300,000,000 (as the same
may be amended, restated, supplemented or otherwise modified from time to time
as permitted hereunder, the “Subordinated Note”).

C.            As an inducement to and as one of the conditions precedent to the
agreement of Administrative Agent and Senior Lenders to consummate the
transactions contemplated by the Senior Credit Agreement, Administrative Agent
and Senior Lenders have required the execution and delivery of this Agreement by
Subordinated Creditor and the Borrower in order to set forth the relative rights
and priorities of Administrative Agent, Senior Lenders and Subordinated Creditor
under the Senior Loan Documents and the Subordinated Loan Documents (as
hereinafter defined).

NOW, THEREFORE, in order to induce Administrative Agent and Senior Lenders to
consummate the transactions contemplated by the Senior Credit Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto hereby agree as follows:

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(1)  If additional subordinated lenders are added, this agreement will need to
be revised accordingly.

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1.             Definitions. Terms defined in the Senior Credit Agreement are
used herein with the same meanings. The following terms shall have the following
meanings in this Agreement:

“Administrative Agent” shall mean SunTrust Bank, as Administrative Agent for the
Senior Lenders, or any other Person appointed by the holders of the Senior Debt
as Administrative Agent for purposes of the Senior Loan Documents and this
Agreement.

“Bankruptcy Code” shall mean Chapter 11 of Title 11 of the United States Code,
as amended from time to time and any successor statute and all rules and
regulations promulgated thereunder.

“Distribution” means, with respect to any indebtedness or obligation, (a) any
payment or distribution by any Person of cash, securities or other property, by
set-off or otherwise, on account of such indebtedness or obligation, (b) any
redemption, purchase or other acquisition of such indebtedness or obligation by
any Person or (c) the granting of any lien or security interest to or for the
benefit of the holders of such indebtedness or obligation in or upon any
property of any Person.

“Enforcement Action” shall mean (a) to take from or for the account of the
Borrower or any guarantor of the Subordinated Debt, by set-off or in any other
manner, the whole or any part of any moneys which may now or hereafter be owing
by the Borrower or any such guarantor with respect to the Subordinated Debt, (b)
to sue for payment of, or to initiate or participate with others in any suit,
action or proceeding against the Borrower or any such guarantor to (i) enforce
payment of or to collect the whole or any part of the Subordinated Debt or (ii)
commence judicial enforcement of any of the rights and remedies under the
Subordinated Loan Documents or applicable law with respect to the Subordinated
Debt, (c) to accelerate the Subordinated Debt, (d) to exercise any put option or
to cause the Borrower or any such guarantor to honor any redemption or mandatory
prepayment obligation under any Subordinated Loan Document or (e) to take any
action under the provisions of any state or federal law, including, without
limitation, the Uniform Commercial Code, or under any contract or agreement, to
enforce, foreclose upon, take possession of or sell any property or assets of
the Borrower or any such guarantor.

“Permitted Subordinated Debt Payments” means (a) regularly scheduled payments of
interest on the Subordinated Note due and payable on a non-accelerated basis in
accordance with the terms of the Subordinated Loan Documents as in effect on the
date hereof or as modified in accordance with the terms of this Agreement,
provided that such cash payments of interest cannot exceed 6% of then
outstanding principal amount of the Subordinated Note and (b) so long as the
total principal amount outstanding with respect to the Senior Debt is less than
$600,000,000 and so long as no Default or Event of Default exists or would occur
as a result thereof, voluntary payments of principal of the Subordinated Note,
in whole or in part, by the Borrower with the proceeds of the issuance of common
units by the Borrower, provided that no other

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payments (either mandatory or voluntary prepayments) of principal of the
Subordinated Note shall constitute Permitted Subordinated Debt Payments.

“Person” shall mean any individual, partnership, firm, corporation, association,
joint venture, limited liability company, trust or other entity, or any
Governmental Authority.

“Proceeding” shall mean any voluntary or involuntary insolvency, bankruptcy,
receivership, custodianship, liquidation, dissolution, reorganization,
assignment for the benefit of creditors, appointment of a custodian, receiver,
trustee or other officer with similar powers or any other proceeding for the
liquidation, dissolution or other winding up of the Borrower or any of its
subsidiaries.

“Senior Debt” shall mean all obligations, liabilities and indebtedness of every
nature of the Borrower or any guarantor from time to time owed to Administrative
Agent or any Senior Lender under the Senior Loan Documents, including, without
limitation, the principal amount of all debts, claims and indebtedness, accrued
and unpaid interest thereon and all fees, costs and expenses owed thereunder or
pursuant thereto, whether primary, secondary, direct, contingent, fixed or
otherwise, heretofore, now and from time to time hereafter owing, due or
payable, whether before or after the filing of a Proceeding under the Bankruptcy
Code together with (a) any amendments, modifications, renewals or extensions
thereof to the extent not prohibited by the terms of this Agreement and (b) any
interest accruing thereon after the commencement of a Proceeding, without regard
to whether or not such interest is an allowed claim.  Senior Debt shall be
considered to be outstanding whenever any loan commitment under the Senior Loan
Document is outstanding.

“Senior Default” shall mean any  “Event of Default” as that term is defined the
Senior Loan Documents, or any condition or event that, after notice or lapse of
time or both, would constitute such an Event of Default if that condition or
event were not cured or removed within any applicable grace or cure period set
forth therein.

“Senior Default Notice” shall mean a written notice from Administrative Agent to
Subordinated Creditor pursuant to which Subordinated Creditor is notified of the
occurrence of a Senior Default, which notice incorporates a reasonably detailed
description of such Senior Default.

“Senior Lenders” shall mean the holders of the Senior Debt from time to time.

“Senior Loan Documents” shall mean the Senior Credit Agreement and all other
agreements, documents and instruments executed from time to time in connection
therewith, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

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“Subordinated Debt” shall mean all of the debts, liabilities and obligations of
the Borrower, or any guarantor, to Subordinated Creditor evidenced by, incurred
pursuant to, or arising from the Subordinated Loan Documents.

“Subordinated Loan Documents” shall mean the Subordinated Note, theSubordinated
Loan Agreement and any guaranty with respect to the Subordinated Debt, and all
other documents, agreements and instruments now existing or hereinafter entered
into evidencing or pertaining to all or any portion of the Subordinated Debt.

“Subordinated Debt Default” shall mean any  “Event of Default” as that term is
defined the Subordinated Loan Documents, or any condition or event that, after
notice or lapse of time or both, would constitute such an Event of Default if
that condition or event were not cured or removed within any applicable grace or
cure period set forth therein.

“Subordinated Debt Default Notice” shall mean a written notice from Subordinated
Creditor or the Borrower to Administrative Agent pursuant to which
Administrative Agent is notified of the occurrence of a Subordinated Debt
Default, which notice incorporates a reasonably detailed description of such
Subordinated Debt Default.

2.                                      Subordination.

2.1          Subordination of Subordinated Debt to Senior Debt. The Borrower
covenants and agrees, and Subordinated Creditor by its acceptance of the
Subordinated Loan Documents (whether upon original issue or upon transfer or
assignment) likewise covenants and agrees, notwithstanding anything to the
contrary contained in any of the Subordinated Loan Documents, that the payment
of any and all of the Subordinated Debt shall be subordinate and subject in
right and time of payment, to the extent and in the manner hereinafter set
forth, to the prior indefeasible payment in full in cash of all Senior Debt and
termination of all lending commitments under the Senior Loan Documents. Each
holder of Senior Debt, whether now outstanding or hereafter created, incurred,
assumed or guaranteed, shall be deemed to have acquired Senior Debt in reliance
upon the provisions contained in this Agreement.

2.2          Liquidation, Dissolution, Bankruptcy. In the event of any
Proceeding involving the Borrower or any of its Subsidiaries:

(a)           All Senior Debt shall first be indefeasibly paid in full in cash
and all commitments to lend under the Senior Loan Documents shall be terminated
before any Distribution, whether in cash, securities or other property, shall be
made to Subordinated Creditor on account of any Subordinated Debt.

(b)           Any Distribution, whether in cash, securities or other property
which would otherwise, but for the terms hereof, be payable or deliverable in
respect of the Subordinated Debtshall be paid or delivered directly to
Administrative Agent (to be held and/or applied by Administrative Agent in
accordance with the terms of the Senior Loan Documents) until all Senior Debt is
indefeasibly paid in full in cash and all commitments

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to lend under the Senior Loan Documents shall have been terminated.
 Subordinated Creditor irrevocably authorizes, empowers and directs any debtor,
debtor in possession, receiver, trustee, liquidator, custodian, conservator or
other Person having authority, to pay or otherwise deliver all such
Distributions to Administrative Agent. Subordinated Creditor also irrevocably
authorizes and empowers Administrative Agent, in its name or in the name of
Subordinated Creditor, to demand, sue for, collect and receive any and all such
Distributions.

(c)           Subordinated Creditor agrees not to initiate, prosecute or
participate in any claim, action or other proceeding challenging the creation,
attachment, enforceability, validity of the Senior Debt.  None of the
Subordinated Creditors will take any action that would interfere with any
exercise of any remedies undertaken by the Administrative Agent or any other
Senior Secured Party under the Senior Loan Documents.  No Subordinated Creditor
shall object to any provision in any DIP financing relating to any provision or
content of a plan of reorganization or to any plan of reorganization supported
by the Senior Lenders.

(d)           Subordinated Creditor agrees to execute, verify, deliver and file
any proofs of claim in respect of the Subordinated Debt requested by
Administrative Agent in connection with any such Proceeding and hereby
irrevocably authorizes, empowers and appoints Administrative Agent its
attorney-in-fact to (i) execute, verify, deliver and file such proofs of claim
and (ii) vote such claim in any such Proceeding; provided Administrative Agent
shall have no obligation to execute, verify, deliver, file and/or vote any such
proof of claim. In the event that Administrative Agent votes any claim in
accordance with the authority granted hereby, Subordinated Creditor shall not be
entitled to change or withdraw such vote.

(e)           The Senior Debt shall continue to be treated as Senior Debt and
the provisions of this Agreement shall continue to govern the relative rights
and priorities of Senior Lenders and Subordinated Creditor even if all or part
of the Senior Debt or the security interests securing the Senior Debt are
subordinated, set aside, avoided, invalidated or disallowed in connection with
any such Proceeding or otherwise, and this Agreement shall be reinstated if at
any time any payment of any of the Senior Debt is rescinded or must otherwise be
returned by any holder of Senior Debt or any representative of such holder.

2.3          Subordinated Debt Payment Restrictions.

(a)           Notwithstanding the terms of the Subordinated Loan Documents, the
Borrower hereby agrees that it may not make, directly or indirectly, and
Subordinated Creditor hereby agrees that it will not accept, take or claim from
the Borrower or any guarantor, any Distribution with respect to the Subordinated
Debt until the Senior Debt is indefeasibly paid in full in cash and all
commitments to lend under the Senior Loan Documents have terminated, other than
Permitted Subordinated Debt Payments subject to the terms of Section 2.2;
provided, however, that the Borrower and Subordinated Creditor

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further agree that no Permitted Subordinated Debt Payment may be made by the
Borrower, directly or indirectly, or accepted, taken or claimed by Subordinated
Creditor from the Borrower or any guarantor if, at the time of such payment a
Senior Default exists or would result therefrom and such Senior Default shall
not have been waived.

(b)           The Borrower may resume Permitted Subordinated Debt Payments in
respect of the Subordinated Debt or any judgment with respect thereto in the
case of a Senior Default referred to in paragraph (a) of this Section 2.3, upon
a waiver thereof.

(c)           No Senior Default shall be deemed to have been waived for purposes
of this Section 2.3 unless and until the Borrower shall have received a written
waiver from Administrative Agent or all Senior Lenders.

(d)           Notwithstanding any provision of this Section 2.3 to the contrary,
the failure of the Borrower to make any Distribution with respect to the
Subordinated Debt by reason of the operation of this Section 2.3 shall not be
construed as preventing the occurrence of a Subordinated Debt Default under the
applicable Subordinated Loan Documents.

2.4          Subordinated Debt Standstill Provisions.       Until the Senior
Debt is indefeasibly paid in full in cash and all commitments to lend under the
Senior Loan Documents shall be terminated, Subordinated Creditor shall not,
without the prior written consent of Administrative Agent, take any Enforcement
Action with respect to the Subordinated Debt.  Notwithstanding the foregoing,
any Distributions or other proceeds of any Enforcement Action obtained by
Subordinated Creditor in breach of this Section 2.4 shall in any event be held
in trust by it for the benefit of Administrative Agent and Senior Lenders and
promptly be paid or delivered to Administrative Agent for the benefit of Senior
Lenders in the form received until all Senior Debt is indefeasibly paid in full
in cash and all commitments to lend under the Senior Loan Documents shall have
been terminated.

2.5          Incorrect Payments. If any Distribution on account of the
Subordinated Debt not permitted to be made by the Borrower or accepted, taken or
claimed by Subordinated Creditor under this Agreement is made and received by
Subordinated Creditor, whether from Borrower or any guarantor,  such
Distribution shall not be commingled with any of the assets of Subordinated
Creditor, shall be held in trust by Subordinated Creditor for the benefit of
Administrative Agent and Senior Lenders and shall be promptly paid over to
Administrative Agent for application (in accordance with the Senior Loan
Documents ) to the payment of the Senior Debt then remaining unpaid, until all
of the Senior Debt is paid in full.

2.6          Sale, Transfer or other Disposition of Subordinated Debt.

(a)           Subordinated Creditor shall not sell, assign, pledge, dispose of
or otherwise transfer all or any portion of the Subordinated Debt or any
Subordinated Loan Document:(i) withoutgiving prior written notice of such action
to Administrative Agent,(ii) unless, prior to the consummation of any such
action, the transferee thereof shall

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execute and deliver to Administrative Agent an agreement substantially identical
to this Agreement, providing for the continued subordination of the Subordinated
Debt to the Senior Debt as provided herein and for the continued effectiveness
of all of the rights of Administrative Agent and Senior Lenders arising under
this Agreement, and (iii) unless, following the consummation of any such action,
there shall beno more than four holders of the Subordinated Debt.

(b)           Notwithstanding the failure of any transferee to execute or
deliver an agreement substantially identical to this Agreement, the
subordination effected hereby shall survive any sale, assignment, pledge,
disposition or other transfer of all or any portion of the Subordinated Debt,
and the terms of this Agreement shall be binding upon the successors and assigns
of Subordinated Creditor, as provided in Section 9 hereof.

2.8          Legends. Until the termination of this Agreement in accordance with
Section 15 hereof, Subordinated Creditor will cause to be clearly, conspicuously
and prominently inserted on the face of the Subordinated Note, and any other
Subordinated Debt Document, as well as any renewals or replacements thereof, the
following legend:

“This instrument and the rights and obligations evidenced hereby are subordinate
in the manner and to the extent set forth in that certain Subordination and
Intercreditor Agreement (the “Subordination Agreement”) dated as of February 13,
2007 among TRANSCANADA PIPELINES LIMITED(2) (the “Subordinated Creditor”), TC
PIPELINES, LP (the “Borrower”) and SunTrust Bank (“Administrative Agent”), to
the indebtedness (including interest) owed by the Borrower pursuant to that
certain Amended and Restated Revolving Credit and Term Loan Agreement dated as
of February 13, 2007, among the Borrower, Administrative Agent and the lenders
from time to time party thereto, as suchAmended and Restated Revolving Credit
and Term Loan Agreement has been and hereafter may be amended, supplemented or
otherwise modified from time to time and to indebtedness refinancing the
indebtedness under that agreement as contemplated by the Subordination
Agreement; and each holder of this instrument, by its acceptance hereof,
irrevocably agrees to be bound by the provisions of the Subordination
Agreement.”

3.             Modifications.

3.1          Modifications to Senior Loan Documents. Senior Lenders may at any
time and from time to time without the consent of or notice to Subordinated
Creditor, without incurring liability to Subordinated Creditor and without
impairing or releasing the obligations of Subordinated Creditor under this
Agreement, change the manner or place of payment or extend the time of payment
of or renew or alter any of the terms of the Senior Debt, or amend in any manner
any agreement, note, guaranty or other instrument evidencing or securing or
otherwise relating to the Senior Debt.

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(2)  If additional subordinated lenders are added, this legend will need to be
revised accordingly.

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3.2          Modifications to Subordinated Loan Documents. Until the Senior Debt
has been indefeasibly paid in full in cash and all lending commitments under the
Senior Loan Documents have terminated, and notwithstanding anything to the
contrary contained in the Subordinated Loan Documents, Subordinated Creditor
shall not, without the prior written consent of Administrative Agent, agree to
any amendment, modification or supplement to the Subordinated Loan Documents the
effect of which is to (a) increase the maximum principal amount of the
Subordinated Debt or rate of interest (or cash pay rate of interest) on any of
the Subordinated Debt, (b) change the dates upon which payments of principal or
interest on the Subordinated Debt are due, (c) change or add any event of
default or any covenant with respect to the Subordinated Debt, (d) change any
redemption or prepayment provisions of the Subordinated Debt, (e) alter the
subordination provisions with respect to the Subordinated Debt, including,
without limitation, subordinating the Subordinated Debt to any other
indebtedness, (f) take any liens or security interests in any assets of the
Borrower or any guarantor of the Subordinated Debt or (g) change or amend any
other term of the Subordinated Loan Documents if such change or amendment would
result in a Senior Default, increase the obligations of the Borrower or any
guarantor of the Subordinated Debt or confer additional material rights on
Subordinated Creditor or any other holder of the Subordinated Debt in a manner
materially adverse to the Borrower, any such guarantor or Senior Lenders.

4.                                      Representations and Warranties.

4.1                               Representations and Warranties of Subordinated
Creditor.  Subordinated Creditor hereby represents and warrants to
Administrative Agent and Senior Lenders that as of the date hereof: (a)
Subordinated Creditor is a corporationduly formed and validly existing under the
laws of Canada; (b)  Subordinated Creditor has the power and authority to enter
into, execute, deliver and carry out the terms of this Agreement, all of which
have been duly authorized by all proper and necessary action; (c) the execution
of this Agreement by Subordinated Creditor will not violate or conflict with the
organizational documents of Subordinated Creditor, any material agreement
binding upon Subordinated Creditor or any law, regulation or order or require
any consent or approval which has not been obtained; (d) this Agreement is the
legal, valid and binding obligation of Subordinated Creditor, enforceable
against Subordinated Creditor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by equitable principles; (e) Subordinated
Creditor is the sole owner, beneficially and of record, of the Subordinated Loan
Documents and the Subordinated Debt; and (f) the Subordinated  Debt is, and at
all times prior to the termination of this Agreement shall remain, an unsecured
obligation of the Borrower.

4.2          Representations and Warranties of Administrative Agent. 
Administrative Agent hereby represents and warrants to Subordinated Creditor
that as of the date hereof: (a) Administrative Agent is a corporation duly
formed and validly existing under the laws of the State of Georgia; (b)
Administrative Agent has the power and authority to enter into, execute, deliver
and carry out the terms of this Agreement, all of which have been duly
authorized by all proper and necessary action; (c) the execution of this
Agreement by Administrative Agent will

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not violate or conflict with the organizational documents of Administrative
Agent, any material agreement binding upon Administrative Agent or any law,
regulation or order or require any consent or approval which has not been
obtained; and (d) this Agreement is the legal, valid and binding obligation of
Administrative Agent, enforceable against Administrative Agent in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally or by equitable principles.

5.                                      Subrogation.  Subject to the
indefeasible payment in full in cash of all Senior Debt and the termination of
all lending commitments under the Senior Loan Documents, Subordinated Creditor
shall be subrogated to the rights of Administrative Agent and Senior Lenders to
receive Distributions with respect to the Senior Debt until the Subordinated
Debt is paid in full. Subordinated Creditor agrees that in the event that all or
any part of a payment made with respect to the Senior Debt is recovered from the
holders of the Senior Debt in a Proceeding or otherwise, any Distribution
received by Subordinated Creditor with respect to the Subordinated Debt at any
time after the date of the payment that is so recovered, whether pursuant to the
right of subrogation provided for in this Agreement or otherwise, shall be
deemed to have been received by Subordinated Creditor in trust as property of
the holders of the Senior Debt and Subordinated Creditor shall forthwith deliver
the same to the Administrative Agent for the benefit of the Senior Lenders for
application to the Senior Debt until the Senior Debt is paid in full. A
Distribution made pursuant to this Agreement to Administrative Agent or Senior
Lenders which otherwise would have been made to Subordinated Creditor is not, as
between the Borrower and Subordinated Creditor, a payment by the Borrower to or
on account of the Senior Debt.

6.                                      Modification. Any modification or waiver
of any provision of this Agreement, or any consent to any departure by any party
from the terms hereof, shall not be effective in any event unless the same is in
writing and signed by Administrative Agent and Subordinated Creditor, and then
such modification, waiver or consent shall be effective only in the specific
instance and for the specific purpose given. Any notice to or demand on any
party hereto in any event not specifically required hereunder shall not entitle
the party receiving such notice or demand to any other or further notice or
demand in the same, similar or other circumstances unless specifically required
hereunder.

7.                                      Further Assurances. Each party to this
Agreement promptly will execute and deliver such further instruments and
agreements and do such further acts and things as may be reasonably requested in
writing by any other party hereto that may be necessary or desirable in order to
effect fully the purposes of this Agreement.

8.                                      Notices. Unless otherwise specifically
provided herein, any notice delivered under this Agreement shall be in writing
addressed to the respective party as set forth below and may be personally
served, telecopied or sent by overnight courier service or certified or
registered United States mail and shall be deemed to have been given (a) if
delivered in person, when delivered; (b) if delivered by telecopy, on the date
of transmission if transmitted on a business day before 4:00 p.m. New York, New
York time or, if not, on the next succeeding business day; (c) if delivered by
overnight courier, one business day after delivery to such courier properly

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addressed; or (d) if by United States mail, four business days after deposit in
the United States mail, postage prepaid and properly addressed.

Notices shall be addressed as follows:

If to Subordinated Creditor:

TransCanada PipeLines Limited

c/o TransCanada Corporation

450 1st Street SW

Calgary, AB T2P 5H1

Attention:           Corporate Secretary

Telecopy:           (403) 920-2200

If to Borrower:

TC PipeLines, LP

c/o TC PipeLines GP

450-1 Street SW

Calgary, AB T2P5H1

Attention:  Corporate Secretary

Telecopy Number:  (403) 920-2467

With a copy to:

TC PipeLines, LP

c/o TC PipeLines GP

450-1 Street SW

Calgary, AB T2P5H1

Attention:  Vice President and Treasurer

Telecopy Number:  (403) 920-2358

If to Administrative Agent or Senior Lenders:

SunTrust Bank

303 Peachtree Street, N. E.

Atlanta, Georgia 30308

Attention:  David Edge

Telecopy Number:  (404) 827-6270

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With a copy to:

SunTrust Bank

Agency Services

303 Peachtree Street, N. E./ 25th Floor

Atlanta, Georgia 30308

Attention: Ms. Dorris Folsom

Telecopy Number: (404) 658-4906

and

King & Spalding LLP

1180 Peachtree Street, N.W.

Atlanta, Georgia 30309

Attention: W. Todd Holleman

Telecopy Number: (404) 572-5128

or in any case, to such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this Section 8.

9.                                      Successors and Assigns. This Agreement
shall inure to the benefit of, and shall be binding upon, the respective
successors and assigns of Administrative Agent, Senior Lenders, Subordinated
Creditor and the Borrower. To the extent permitted under the Senior Loan
Documents, Senior Lenders may, from time to time, without notice to Subordinated
Creditor, assign or transfer any or all of the Senior Debt or any interest
therein to any Person and, notwithstanding any such assignment or transfer, or
any subsequent assignment or transfer, the Senior Debt shall, subject to the
terms hereof, be and remain Senior Debt for purposes of this Agreement, and
every permitted assignee or transferee of any of the Senior Debt or of any
interest therein shall, to the extent of the interest of such permitted assignee
or transferee in the Senior Debt, be entitled to rely upon and be the third
party beneficiary of the subordination provided under this Agreement and shall
be entitled to enforce the terms and provisions hereof to the same extent as if
such assignee or transferee were initially a party hereto.

10.                               Relative Rights.         This Agreement shall
define the relative rights of Administrative Agent, Senior Lenders and
Subordinated Creditor with respect to the payment of the Senior Debt and the
Subordinated Debt in accordance with their respective terms.   Nothing in this
Agreement shall (a) impair, as among the Borrower, Administrative Agent and
Senior Lenders and as between the Borrower and Subordinated Creditor, the
obligation of the Borrower with respect to the payment of the Senior Debt and
the Subordinated Debt in accordance with their respective terms or (b) affect
the relative rights of Administrative Agent, Senior Lenders or Subordinated
Creditor with respect to any other creditors of the Borrower.

11.                               Conflict. In the event of any conflict between
any term, covenant or condition of this Agreement and any term, covenant or
condition of any of the Subordinated Loan Documents, the provisions of this
Agreement shall control and govern.

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12.                               Headings. The paragraph headings used in this
Agreement are for convenience only and shall not affect the interpretation of
any of the provisions hereof.

13.                               Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

14.                               Severability. In the event that any provision
of this Agreement is deemed to be invalid, illegal or unenforceable by reason of
the operation of any law or by reason of the interpretation placed thereon by
any court or governmental authority, the validity, legality and enforceability
of the remaining provisions of this Agreement shall not in any way be affected
or impaired thereby, and the affected provision shall be modified to the minimum
extent permitted by law so as most fully to achieve the intention of this
Agreement.

15.                               Continuation of Subordination; Termination of
Agreement. This Agreement shall remain in full force and effect until the
indefeasible payment in full in cash of the Senior Debt and the termination of
all lending commitments under the Senior Loan Documents after which this
Agreement shall terminate without further action on the part of the parties
hereto.

16.                               Applicable Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF EXCEPT FOR SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).

17.                               CONSENT TO JURISDICTION. EACH OF SUBORDINATED
CREDITOR AND THE BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND
IRREVOCABLY AGREES THAT, SUBJECT TO ADMINISTRATIVE AGENT’S ELECTION, ALL ACTIONS
OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED
IN SUCH COURTS. EACH OF SUBORDINATED CREDITOR AND THE BORROWER EXPRESSLY SUBMITS
AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE
OF FORUM NON CONVENIENS.  EACH OF SUBORDINATED CREDITOR AND THE BORROWER HEREBY
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE
OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, ADDRESSED TO SUBORDINATED CREDITOR AND THE BORROWER AT THEIR
RESPECTIVE ADDRESSES SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE
COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED. IN ANY LITIGATION, TRIAL,
ARBITRATION OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING TO THIS AGREEMENT,
ALL DIRECTORS, OFFICERS, EMPLOYEES AND ADMINISTRATIVE AGENTS OF

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SUBORDINATED CREDITOR, THE BORROWER OR ANY OF THEIR RESPECTIVE AFFILIATES SHALL
BE DEEMED TO BE EMPLOYEES OR MANAGING ADMINISTRATIVE AGENTS OF SUBORDINATED
CREDITOR OR THE BORROWER, AS APPLICABLE, FOR PURPOSES OF ALL APPLICABLE LAW OR
COURT RULES REGARDING THE PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY
(WHETHER IN A DEPOSITION, AT TRIAL OR OTHERWISE).  EACH OF SUBORDINATED CREDITOR
AND THE BORROWER AGREES THAT ADMINISTRATIVE AGENT’S OR ANY SENIOR LENDER’S
COUNSEL IN ANY SUCH DISPUTE RESOLUTION PROCEEDING MAY EXAMINE ANY OF THESE
INDIVIDUALS AS IF UNDER CROSS-EXAMINATION AND THAT ANY DISCOVERY DEPOSITION OF
ANY OF THEM MAY BE USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE
DEPOSITION.  EACH OF SUBORDINATED CREDITOR AND THE BORROWER IN ANY EVENT WILL
USE ALL COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH DISPUTE
RESOLUTION PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY ADMINISTRATIVE
AGENT OR ANY LENDER, ALL PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR
OTHER FORM) OR OTHER THINGS UNDER ITS CONTROL AND RELATING TO THE DISPUTE.

18.                               WAIVER OF JURY TRIAL.  SUBORDINATED CREDITOR,
THE BORROWER AND ADMINISTRATIVE AGENT HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE SUBORDINATED LOAN DOCUMENTS OR ANY OF THE SENIOR LOAN
DOCUMENTS. EACH OF SUBORDINATED CREDITOR, THE BORROWER AND ADMINISTRATIVE AGENT
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT
AND THE SENIOR LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS. EACH OF SUBORDINATED CREDITOR, THE BORROWER
AND ADMINISTRATIVE AGENT WARRANTS AND REPRESENTS THAT EACH HAS HAD THE
OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

(Signature Page follows)

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IN WITNESS WHEREOF, Subordinated Creditor, the Borrower and Administrative Agent
have caused this Agreement to be executed as of the date first above written.

 

SUBORDINATED CREDITOR:

 

 

 

TRANSCANADA PIPELINES LIMITED

 

 

 

By

/s/ Donald R. Marchand

 

 

Name:

Donald R. Marchand

 

Title:

Vice President, Finance & Treasurer

 

 

 

 

 

By

/s/ Donald J. DeGrandis

 

 

Name:

Donald J. DeGrandis

 

Title:

Secretary

 

 

 

 

 

BORROWER:

 

 

 

TC PIPELINES, LP,

 

 

 

 

 

By

/s/ Mark Zimmerman

 

 

Name:

Mark Zimmerman

 

Title:

President

 

 

 

 

 

By

/s/ Donald J. DeGrandis

 

 

Name:

Donald J. DeGrandis

 

Title:

Secretary

 

 

 

 

 

ADMINISTRATIVE AGENT:

 

 

 

SUNTRUST BANK

 

 

 

By

/s/ Peter Panos

 

 

Name:

Peter Panos

 

Title:

Vice President

 

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