<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the quarterly period ended SEPTEMBER 30, 2001

                        Commission File Number: 000-26091
                                TC PIPELINES, LP
             (Exact name of registrant as specified in its charter)

                  DELAWARE                                 52-2135448
     -------------------------------              ------------------------------
     (State or other jurisdiction of                    (I.R.S. Employer
      incorporation or organization)                 Identification Number)

    110 TURNPIKE ROAD, SUITE 203
     WESTBOROUGH, MASSACHUSETTS                               01581
----------------------------------------          ------------------------------
(Address of principal executive offices)                     (Zip code)

                                  508-871-7046
                   ------------------------------------------
               Registrant's telephone number, including area code

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     As of November 9, 2001 there were 14,690,694 of the registrant's common
units outstanding.


                                        1
--------------------------------------------------------------------------------
<PAGE>

                                TC PIPELINES, LP

                                TABLE OF CONTENTS
<Table>
<Caption>
                                                                                             Page No.
                                                                                             --------
<S>           <C>                                                                            <C>
PART I.   FINANCIAL INFORMATION

     ITEM 1.  Financial Statements
              Statement of Income - Three and nine months ended September 30, 2001 and 2000       3
              Balance Sheet - September 30, 2001 and December 31, 2000                            3
              Statement of Cash Flows - Nine months ended September 30, 2001 and 2000             4
              Notes to Condensed Financial Statements                                             5

     ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations
              Results of Operations of TC PipeLines, LP                                          10
              Liquidity and Capital Resources of TC PipeLines, LP                                13
              Results of Operations of Northern Border Pipeline Company                          15
              Liquidity and Capital Resources of Northern Border Pipeline Company                18
              Results of Operations of Tuscarora Gas Transmission Company                        20
              Liquidity and Capital Resources of Tuscarora Gas Transmission Company              21

     ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk                         25

PART II.  OTHER INFORMATION

     ITEM 1.  Legal Proceedings                                                                  26

     ITEM 6.  Exhibits and Reports on Form 8-K                                                   27

EXHIBIT INDEX                                                                                    29
</Table>


                                        2
--------------------------------------------------------------------------------
<PAGE>

                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                                TC PIPELINES, LP

                              STATEMENT OF INCOME
<Table>
<Caption>
                                                                                  THREE MONTHS ENDED         NINE MONTHS ENDED
                                                                                     SEPTEMBER 30               SEPTEMBER 30
(unaudited)                                                                    ---------------------------------------------------
(thousands of dollars, except per unit amounts)                                       2001         2000          2001        2000
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>          <C>           <C>         <C>
EQUITY INCOME FROM INVESTMENT IN NORTHERN BORDER PIPELINE COMPANY                   10,662       10,288        30,918      27,735
EQUITY INCOME FROM INVESTMENT IN TUSCARORA GAS TRANSMISSION COMPANY                    841          226         2,620         226
GENERAL AND ADMINISTRATIVE EXPENSES                                                   (326)        (448)         (982)     (1,018)
FINANCIAL CHARGES                                                                     (205)         (86)         (828)        (86)
                                                                               ---------------------------------------------------
NET INCOME                                                                          10,972        9,980        31,728      26,857
                                                                               ---------------------------------------------------
                                                                               ---------------------------------------------------
NET INCOME ALLOCATION
Common units                                                                         8,891        8,144        25,773      22,028
Subordinated units                                                                   1,700        1,558         4,928       4,213
General partner                                                                        381          278         1,027         616
                                                                               ---------------------------------------------------
                                                                                    10,972        9,980        31,728      26,857
                                                                               ---------------------------------------------------
                                                                               ---------------------------------------------------
NET INCOME PER UNIT                                                                  $0.60         $0.55        $1.75       $1.50
                                                                               ---------------------------------------------------
                                                                               ---------------------------------------------------
UNITS OUTSTANDING (THOUSANDS)                                                       17,500       17,500        17,500      17,500
                                                                               ------------ ------------- ------------ -----------
                                                                               ------------ ------------- ------------ -----------
</Table>

                                                   BALANCE SHEET
<Table>
<Caption>                                                                             SEPTEMBER 30, 2001
(thousands of dollars)                                                                       (unaudited)        December 31, 2000
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>                       <C>
ASSETS
Current Assets
   Cash                                                                                           6,571                     1,566

Investment in Northern Border Pipeline Company                                                  249,349                   248,098
Investment in Tuscarora Gas Transmission Company                                                 28,851                    27,881
Deferred Amounts                                                                                     61                         -
                                                                                --------------------------------------------------
                                                                                                284,832                   277,545
                                                                                --------------------------------------------------
                                                                                --------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
   Accounts payable                                                                                 521                       499
   Accrued interest                                                                                  72                       141
                                                                                --------------------------------------------------
                                                                                                    593                       640
                                                                                --------------------------------------------------

Long-Term Debt                                                                                   21,500                    21,500

Partners' Capital
   Common units                                                                                 216,724                   212,253
   Subordinated units                                                                            38,806                    37,951
   General partner                                                                                5,437                     5,201
   Other comprehensive income                                                                     1,772                         -
                                                                                --------------------------------------------------
                                                                                                262,739                   255,405
                                                                                --------------------------------------------------
                                                                                                284,832                   277,545
                                                                                --------------------------------------------------
                                                                                --------------------------------------------------
</Table>

  See accompanying Notes to Condensed Financial Statements.


                                        3
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                    ITEM 1. FINANCIAL STATEMENTS (CONTINUED)

                                TC PIPELINES, LP

                             STATEMENT OF CASH FLOWS

<Table>
<Caption>
(unaudited)                                                                            NINE MONTHS ENDED
(thousands of dollars)                                                                    SEPTEMBER 30
                                                                           ---------------------------------------
                                                                                          2001               2000
------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>                <C>
CASH GENERATED FROM OPERATIONS
Net income                                                                              31,728             26,857
Add/(Deduct):
Equity income (in excess of)/less than distributions received                             (449)             2,989
(Increase)/decrease in operating working capital                                           (47)               322
                                                                           ---------------------------------------
                                                                                        31,232             30,168
                                                                           ---------------------------------------

INVESTING ACTIVITIES
Investment in Tuscarora Gas Transmission Company                                             -            (28,435)
Deferred amounts                                                                           (61)                 -
                                                                           ---------------------------------------
                                                                                           (61)           (28,435)
                                                                           ---------------------------------------

FINANCING ACTIVITIES
Distributions paid                                                                     (26,166)           (24,107)
Long-term debt issued                                                                        -             24,500
                                                                           ---------------------------------------
                                                                                       (26,166)               393
                                                                           ---------------------------------------

INCREASE IN CASH                                                                         5,005              2,126

CASH, BEGINNING OF PERIOD                                                                1,566                795
                                                                           ---------------------------------------
CASH, END OF PERIOD                                                                      6,571              2,921
                                                                           ---------------------------------------
                                                                           ---------------------------------------
</Table>

See accompanying Notes to Condensed Financial Statements.


                                        4
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                    ITEM 1. FINANCIAL STATEMENTS (CONTINUED)

                                TC PIPELINES, LP

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

NOTE 1    BASIS OF PRESENTATION

TC PipeLines, LP, and its subsidiary limited partnerships, TC PipeLines
Intermediate Limited Partnership, and TC Tuscarora Intermediate Limited
Partnership, all Delaware limited partnerships, are collectively referred to
herein as TC PipeLines or the Partnership. The Partnership commenced operations
on May 28, 1999.

     The financial statements have been prepared by management in accordance
with United States generally accepted accounting principles. Amounts are
stated in United States dollars. Certain comparative figures have been
reclassified to conform with the current year's presentation.

     Since a determination of many assets, liabilities, revenues and
expenses is dependent upon future events, the preparation of these financial
statements requires the use of estimates and assumptions which have been made
using careful judgment. In the opinion of management, these financial
statements have been properly prepared within reasonable limits of
materiality and include all adjustments (consisting primarily of normal
recurring accruals) necessary to present fairly the results of operations for
the three and nine months ended September 30, 2001 and 2000, the financial
position as at September 30, 2001 and December 31, 2000, and the cash flows
for the nine months ended September 30, 2001 and 2000.

     The results of operations for the three and nine months ended September
30, 2001 and 2000 are not necessarily indicative of the results that may be
expected for a full fiscal year. The interim financial statements should be
read in conjunction with the Partnership's financial statements and notes
included in TC PipeLines' Annual Report on Form 10-K for the year ended
December 31, 2000.

NOTE 2    INVESTMENT IN NORTHERN BORDER PIPELINE COMPANY

The Partnership owns a 30% general partner interest in Northern Border
Pipeline Company (Northern Border Pipeline), a partnership which owns a
1,249-mile interstate natural gas pipeline system extending from the
Montana-Saskatchewan border near Port of Morgan, Montana, to a terminus near
North Hayden, Indiana. The remaining 70% partnership interest in Northern
Border Pipeline is held by Northern Border Partners, L.P., a publicly traded
limited partnership that is not affiliated with the Partnership. The general
partners of Northern Border Partners, L.P. are controlled by Enron Corp. and
The Williams Companies, Inc. As a result, TC PipeLines has one member and
controls 30% of the voting power of the Northern Border Pipeline management
committee, Enron has two members and controls 57.75% of the voting power, and
Williams has the one remaining member and 12.25% of the voting power of the
Northern Border Pipeline management committee. The Northern Border pipeline
system is operated by Northern Plains Natural Gas Company, a wholly owned
subsidiary of Enron Corp. Northern Border Pipeline is regulated by the Federal
Energy Regulatory Commission (FERC).

     The Northern Border pipeline system serves more than 50 firm
transportation shippers with diverse operation and financial profiles. As of
September 30, 2001, on an annualized basis, an affiliate of Enron holds firm
contracts representing approximately 2.4% of Northern Border Pipeline's
capacity, or approximately $8 million in annual revenues. The same Enron
affiliate also holds capacity representing approximately 3.9% of Northern
Border Pipeline's capacity, or approximately $12 million in annual revenues,
that has been temporarily released by other shippers.

     TC PipeLines uses the equity method of accounting for its investment in
Northern Border Pipeline. TC PipeLines' equity income for each of the three


                                        5
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                    ITEM 1. FINANCIAL STATEMENTS (CONTINUED)

                                TC PIPELINES, LP


and nine months ended September 30, 2001 and 2000 represents 30% of the net
income of Northern Border Pipeline for the same periods. The following sets
out summarized financial information representing 100% of the operations of
Northern Border Pipeline for the three and nine months ended September 30,
2001 and 2000 and as at September 30, 2001 and December 31, 2000.

<Table>
<Caption>
(unaudited)                                         THREE MONTHS ENDED SEPTEMBER 30    NINE MONTHS ENDED SEPTEMBER 30
(millions of dollars)                                         2001              2000             2001              2000
------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>               <C>              <C>               <C>
NORTHERN BORDER PIPELINE INCOME STATEMENT
Revenues                                                      77.9              78.3            231.9             231.8
Costs and expenses                                           (15.6)            (16.4)           (43.9)            (51.7)
Depreciation                                                 (14.2)            (14.3)           (42.9)            (43.6)
Financial charges                                            (12.7)            (16.4)           (41.5)            (49.1)
Other income/(expense)                                         0.2               3.1             (0.5)              5.0
                                                   ---------------------------------------------------------------------
Net income                                                    35.6              34.3            103.1              92.4
                                                   ---------------------------------------------------------------------
                                                   ---------------------------------------------------------------------
</Table>

Northern Border Pipeline has recorded other comprehensive income of $(12.1)
million and $5.9 million for the three and nine months ended September 30, 2001.

<Table>
<Caption>                                                          SEPTEMBER 30, 2001
(millions of dollars)                                                     (unaudited)         December 31, 2000
---------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                       <C>
NORTHERN BORDER PIPELINE BALANCE SHEET
ASSETS
Cash and cash equivalents                                                       12.2                      29.0
Other current assets                                                            35.3                      38.1
Plant, property and equipment, net                                           1,696.5                   1,687.0
Other assets                                                                    15.5                      14.4
                                                            ---------------------------------------------------
                                                                             1,759.5                   1,768.5
                                                            ---------------------------------------------------
                                                            ---------------------------------------------------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities                                                            409.1                     114.3
Reserves and deferred credits                                                    5.6                       4.9
Long-term debt                                                                 513.6                     822.3
Partners' Equity
   Partners' capital                                                           825.3                     827.0
   Accumulated other comprehensive income                                        5.9                         -
                                                            ---------------------------------------------------
                                                                             1,759.5                   1,768.5
                                                            ---------------------------------------------------
                                                            ---------------------------------------------------
</Table>


                                        6
--------------------------------------------------------------------------------
<PAGE>
                    PART I. FINANCIAL INFORMATION (CONTINUED)

                    ITEM 1. FINANCIAL STATEMENTS (CONCLUDED)

                                TC PIPELINES, LP


NOTE 3    INVESTMENT IN TUSCARORA GAS TRANSMISSION COMPANY

On September 1, 2000, TC PipeLines acquired a 49% general partner interest in
Tuscarora Gas Transmission Company (Tuscarora). Tuscarora owns a 229-mile
interstate natural gas pipeline system extending from Oregon, where it
interconnects with facilities of PG&E National Energy Group, Gas Transmission
Northwest, to northern Nevada. Tuscarora is regulated by the FERC.

     The Partnership uses the equity method of accounting for its investment
in Tuscarora. TC PipeLines' equity income for the three and nine months ended
September 30, 2001 represents 49% of the net income of Tuscarora for the same
periods. Equity income for the three and nine months ended September 30, 2000
represents 49% of the net income of Tuscarora for the month of September 2000.
The following sets out summarized financial information representing 100% of the
operations of Tuscarora for the three and nine months ended September 30, 2001
and 2000 and as at September 30, 2001 and December 31, 2000.

<Table>
<Caption>
(unaudited)                                         THREE MONTHS ENDED SEPTEMBER 30    NINE MONTHS ENDED SEPTEMBER 30
(millions of dollars)                                         2001              2000             2001             2000
-----------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>               <C>              <C>              <C>
TUSCARORA INCOME STATEMENT
Revenues                                                       5.3               4.8             15.8             14.5
Costs and expenses                                            (0.7)             (0.7)            (1.9)            (1.8)
Depreciation                                                  (1.2)             (1.1)            (3.5)            (3.3)
Financial charges                                             (1.5)             (1.5)            (4.7)            (4.5)
Other income                                                   -                 0.1              0.3              0.2
                                                   --------------------------------------------------------------------
Net income                                                     1.9               1.6              6.0              5.1
                                                   --------------------------------------------------------------------
                                                   --------------------------------------------------------------------
</Table>


                                        7
--------------------------------------------------------------------------------
<Page>
                    PART I. FINANCIAL INFORMATION (CONTINUED)

                    ITEM 1. FINANCIAL STATEMENTS (CONCLUDED)

                                TC PIPELINES, LP


<Table>
<Caption>                                                          SEPTEMBER 30, 2001
(millions of dollars)                                                     (unaudited)      December 31, 2000
------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                    <C>
TUSCARORA BALANCE SHEET
ASSETS
Cash and cash equivalents                                                         6.3                    7.1
Other current assets                                                              1.9                    3.2
Plant, property and equipment, net                                              117.2                  115.7
Other assets                                                                      2.0                    2.5
                                                              ----------------------------------------------
                                                                                127.4                  128.5
                                                              ----------------------------------------------
                                                              ----------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities                                                               7.0                    8.9
Reserves and deferred credits                                                    14.4                   12.0
Long-term debt                                                                   82.1                   84.2
Partners' capital                                                                23.9                   23.4
                                                              ----------------------------------------------
                                                                                127.4                  128.5
                                                              ----------------------------------------------
                                                              ----------------------------------------------
</Table>

NOTE 4    CREDIT FACILITIES AND LONG-TERM DEBT

On August 22, 2000, the Partnership entered into an unsecured three-year credit
facility (Revolving Credit Facility) with Bank One, NA, as agent, under which
the Partnership may borrow up to an aggregate principal amount of $30 million.
Loans under the Revolving Credit Facility bear interest at a floating rate. The
Revolving Credit Facility matures on August 31, 2003. Amounts borrowed may be
repaid in part or in full prior to that time without penalty. The Revolving
Credit Facility may be used to finance capital expenditures and for other
general purposes. On September 1, 2000, the Partnership borrowed $24.5 million
under the Revolving Credit Facility to fund a portion of the purchase price of
the 49% general partner interest in Tuscarora. At September 30, 2001, the
Partnership had borrowings of $21.5 million outstanding under the Revolving
Credit Facility at a year-to-date weighted average interest rate of 5.751%.
The fair value of the Revolving Credit Facility approximates its carrying
value.

     On May 28, 2001, the Partnership renewed its $40 million unsecured
two-year revolving credit facility (TransCanada Credit Facility) with
TransCanada PipeLine USA Ltd., an affiliate of the general partner. The
TransCanada Credit Facility bears interest at London Interbank Offered Rate
plus 1.25%. The purpose of the TransCanada Credit Facility is to provide
borrowings to fund capital expenditures, to fund capital contributions to
Northern Border Pipeline, Tuscarora, and any other entity in which the
Partnership directly or indirectly acquires an interest, to fund working
capital and for other general business purposes, including temporary funding
of cash distributions to partners, if necessary. At September 30, 2001, the
Partnership had no amount outstanding under the TransCanada Credit Facility.

NOTE 5    NET INCOME PER UNIT

Net income per unit is computed by dividing net income, after deduction of the
general partner's allocation, by the weighted average number of common and
subordinated units outstanding. The general partner's allocation is equal to an
amount based upon the general partner's 2% interest, adjusted to reflect an
amount equal to incentive distributions. Net income per unit was determined as
follows:


                                        8
--------------------------------------------------------------------------------
<Page>
                    PART I. FINANCIAL INFORMATION (CONTINUED)

                    ITEM 1. FINANCIAL STATEMENTS (CONCLUDED)

                                TC PIPELINES, LP



<Table>
<Caption>
                                                                       THREE MONTHS ENDED             NINE MONTHS ENDED
(unaudited)                                                               SEPTEMBER 30                   SEPTEMBER 30
(thousands of dollars, except per unit amounts)                        2001           2000            2001          2000
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>             <C>            <C>           <C>
Net income                                                           10,972          9,980          31,728        26,857
                                                              -----------------------------------------------------------
Net income allocated to general partner                                (219)          (200)           (635)         (538)
Adjustment to reflect incentive distribution income                    (162)           (78)           (392)          (78)
allocation
                                                              -----------------------------------------------------------
                                                                       (381)          (278)         (1,027)         (616)
                                                              -----------------------------------------------------------
Net income allocable to units                                        10,591          9,702          30,701        26,241
Weighted average units outstanding (thousands)                       17,500         17,500          17,500        17,500
                                                              -----------------------------------------------------------
Net income per unit                                                   $0.60          $0.55           $1.75         $1.50
                                                              -----------------------------------------------------------
                                                              -----------------------------------------------------------
</Table>

NOTE 6    DISTRIBUTIONS

On October 22, 2001, the Partnership declared a cash distribution of $0.50 per
unit for the quarter ended September 30, 2001. The distribution is payable on
November 14, 2001 to unitholders of record at October 31, 2001.


                                        9
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (Continued)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                TC PIPELINES, LP

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report includes forward-looking statements regarding future
events and the future financial performance of TC PipeLines, LP. All
forward-looking statements are based on the Partnership's beliefs as well as
assumptions made by and information currently available to the Partnership. When
used herein, words such as "believes," "expects," "intends," "forecasts,"
"projects," and similar expressions, identify forward-looking statements within
the meaning of the Securities Litigation Reform Act. These statements reflect
the Partnership's current views with respect to future events and are subject to
various risks, uncertainties and assumptions including regulatory decisions,
particularly those of the Federal Energy Regulatory Commission, cost of
acquisitions, future demand for natural gas, overcapacity in the industry, and
prevailing economic conditions, particularly conditions of the capital and
equity markets, and other risks discussed in detail in the Partnership's filings
with the Securities and Exchange Commission, including the Partnership's Annual
Report on Form 10-K for the year ended December 31, 2000. If one or more of
these risks or uncertainties materialize, or if the underlying assumptions prove
incorrect, actual results may vary materially from those described in the
forward-looking statement. Except as required by applicable securities laws, TC
PipeLines, LP does not intend to update these forward-looking statements.

RESULTS OF OPERATIONS OF TC PIPELINES, LP

TC PipeLines, LP (TC PipeLines or the Partnership) was formed by TransCanada
PipeLines Limited (TransCanada) to acquire, own and participate in the
management of United States based pipeline assets. On May 28, 1999, the
Partnership acquired a 30% general partner interest in Northern Border Pipeline
Company (Northern Border Pipeline), previously held by affiliates of its general
partner, TC PipeLines GP, Inc. The remaining 70% partnership interest in
Northern Border Pipeline is held by Northern Border Partners, L.P., a publicly
traded limited partnership that is not affiliated with the Partnership. The
general partners of Northern Border Partners, L.P. are controlled by Enron
Corp. and The Williams Companies, Inc. As a result, TC PipeLines has one
member and controls 30% of the voting power of the Northern Border Pipeline
management committee, Enron has two members and controls 57.75% of the voting
power, and Williams has the one remaining member and 12.25% of the voting
power of the Northern Border Pipeline management committee. The Northern
Border pipeline system is operated by Northern Plains Natural Gas Company, a
wholly owned subsidiary of Enron Corp.

Northern Border Pipeline owns a 1,249-mile interstate pipeline system that
transports natural gas from the Montana-Saskatchewan border to markets in the
midwestern United States. The Northern Border pipeline system serves more than
50 firm transportation shippers with diverse operation and financial profiles.
As of September 30, 2001, on an annualized basis, an affiliate of Enron holds
firm contracts representing approximately 2.4% of Northern Border Pipeline's
capacity, or approximately $8 million in annual revenues. The same Enron
affiliate also holds capacity representing approximately 3.9% of Northern
Border Pipeline's capacity, or approximately $12 million in annual revenues,
that has been temporarily released by other shippers (see - "Northern Border
Pipeline Relationships with Enron Corp. and Recent Developments Involving
Enron Corp.").


                                       10
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                                TC PIPELINES, LP


On September 1, 2000, TC PipeLines, through its wholly owned subsidiary, TC
Tuscarora Intermediate Limited Partnership, acquired a 49% general partner
interest in Tuscarora Gas Transmission Company (Tuscarora) for a cash purchase
price of $28 million. The purchase price was funded with debt (see Liquidity and
Capital Resources of TC PipeLines, LP - General) and cash on hand. Tuscarora
owns a 229-mile interstate pipeline system that transports natural gas from
Oregon, where it interconnects with facilities of PG&E National Energy Group,
Gas Transmission Northwest, to northern Nevada.

TC PipeLines accounts for its interests in Northern Border Pipeline and
Tuscarora using the equity method of accounting.

PROPOSED TUSCARORA EXPANSION

On April 12, 2001, the Partnership announced that Tuscarora filed an application
with the Federal Energy Regulatory Commission (FERC) to expand its pipeline
system from approximately 127 million cubic feet per day to approximately 220
million cubic feet per day to meet new service requests. On September 27, 2001,
Tuscarora received a Preliminary Determination from the FERC that approved the
economic and public necessity portion of their expansion application. The
expansion still requires environmental approval by the FERC. If approved, the
Partnership expects construction to begin in early 2002. Commercial operations
are expected to begin in late 2002 with the full incremental 93 million cubic
feet per day of contracted volumes flowing by late 2003 when construction is
completed. The proposed expansion consists of three compressor stations and a
14-mile pipeline extension from the current terminus of the Tuscarora pipeline
system near Reno, Nevada to Wadsworth, Nevada. The capital cost of the project
is estimated to be approximately $60 million. The Tuscarora expansion is
supported by long-term firm transportation contracts ranging from ten to
fifteen years. Sierra Pacific Power Company, a subsidiary of Sierra Pacific
Resources Company, which holds a 50% general partner interest in Tuscarora,
has contracted for approximately 11 million cubic feet per day of the
increased capacity.

NORTHERN BORDER PIPELINE PROJECT 2000

On October 1, 2001, Northern Border Pipeline announced that construction of
Project 2000 had been completed. The 34-mile pipeline extension and expansion
includes the addition of one compressor station and increased power at two other
existing compressor stations. It provides 545 million cubic feet per day of
transportation capacity into the Midwest via an interconnect with Northern
Indiana Public Service Company (NIPSCO) at North Hayden, Indiana and is fully
supported by contracts of at least ten years in duration. Project 2000 also
expands Northern Border Pipeline's delivery capability into


                                       11
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                                TC PIPELINES, LP


the Chicago area by approximately 30%. The Partnership expects the final capital
cost of the project to be approximately $70 million.

THIRD QUARTER 2001 COMPARED WITH THIRD QUARTER 2000

Equity income from the Partnership's investment in Northern Border Pipeline
increased $0.4 million, or 4%, to $10.7 million for the third quarter of 2001,
compared to equity income of $10.3 million for the same period in 2000. This
increase is primarily attributable to Northern Border Pipeline incurring lower
operations and maintenance expense and lower interest expense due to lower
interest rates. The impact of these cost savings is partially offset by
increased taxes other than income that have been recorded by Northern Border
Pipeline, reflecting current estimates of ad valorem taxes. In addition,
Northern Border Pipeline's other income for the third quarter of 2001 is lower
than the third quarter of 2000 as a result of a reduction to reserves in 2000
that had been previously established for regulatory issues.

For the third quarter of 2001, the Partnership recorded equity income of $0.8
million from its investment in Tuscarora, as compared to $0.2 million for the
same period last year. The $0.6 million increase reflects the Partnership's
acquisition of its 49% interest in Tuscarora on September 1, 2000, resulting in
one month of equity income from Tuscarora in the third quarter of 2000, as
compared to a full quarter of activity in 2001.

The Partnership incurred general and administrative expenses of $0.3 million for
the third quarter of 2001 and $0.4 million for the third quarter of 2000.

The Partnership incurred financial charges of $0.2 million for the third quarter
of 2001 compared to $0.1 million for the same period last year. Financial
charges are comprised primarily of interest expense under the Partnership's
Revolving Credit Facility (see Liquidity and Capital Resources of TC PipeLines,
LP - General). The Partnership entered into the Revolving Credit Facility on
August 22, 2000 and borrowed $24.5 million thereunder on September 1, 2000 to
fund a portion of the purchase price of its 49% general partner interest in
Tuscarora. Third quarter 2000 results include one month of financial charges
from this credit facility.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 2000

Equity income from the Partnership's investment in Northern Border Pipeline
increased $3.2 million, or 12%, to $30.9 million for the first nine months of
2001, compared to equity income of $27.7 million for the same period in 2000.
This increase is primarily attributable to Northern Border Pipeline incurring
lower operations and maintenance expense and lower interest expense due to lower
interest rates and lower average debt balances, in addition to adjustments made
by Northern Border Pipeline to previous estimates of ad valorem taxes. The
impact of these cost savings is partially offset by a charge recorded by
Northern Border Pipeline for an uncollectible receivable from a
telecommunications company that had purchased excess capacity on Northern
Border Pipeline's communication system. In addition, Northern Border
Pipeline's other income for the first nine months


                                       12
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                                TC PIPELINES, LP


of 2001 is lower than 2000 as a result of a reduction to reserves in 2000 that
had been previously established for regulatory issues.

For the first nine months of 2001, the Partnership recorded equity income from
its investment in Tuscarora of $2.6 million compared to $0.2 million for the
same period last year. The $2.4 million increase reflects the Partnership's
acquisition of its 49% interest in Tuscarora on September 1, 2000, resulting in
one month of equity income from Tuscarora in the first nine months of 2000, as
compared to a full nine months of activity in 2001.

The Partnership incurred general and administrative expenses of $1.0 million for
each of the nine months ended September 30, 2001 and 2000.

The Partnership incurred financial charges of $0.8 million for the first nine
months of 2001 and $0.1 million for the same period in 2000. Financial charges
are comprised primarily of interest expense under the Partnership's Revolving
Credit Facility (see Liquidity and Capital Resources of TC PipeLines, LP -
General). The Partnership entered into the Revolving Credit Facility on August
22, 2000 and borrowed $24.5 million thereunder on September 1, 2000 to fund a
portion of the purchase price of its 49% general partner interest in Tuscarora.
Results for the nine months ended September 30, 2000 include one month of
financial charges from this credit facility.

LIQUIDITY AND CAPITAL RESOURCES OF TC PIPELINES, LP

CASH DISTRIBUTION POLICY OF TC PIPELINES, LP

During the subordination period, which generally cannot end before June 30,
2004, the Partnership will make distributions of available cash as defined in
the partnership agreement in the following manner:

     o   First, 98% to the common units, pro rata, and 2% to the general
         partner, until there has been distributed for each outstanding
         common unit an amount equal to the minimum quarterly distribution
         for that quarter;

     o   Second, 98% to the common units, pro rata, and 2% to the general
         partner, until there has been distributed for each outstanding common
         unit an amount equal to any arrearages in payment of the minimum
         quarterly distribution on the common units for that quarter and for any
         prior quarters during the subordination period;

     o   Third, 98% to the subordinated units, pro rata, and 2% to the general
         partner, until there has been distributed for each outstanding
         subordinated unit an amount equal to the minimum quarterly distribution
         for that quarter; and

     o   Thereafter, in a manner whereby the general partner has rights
         (referred to as incentive distribution rights) to receive increasing
         percentages of excess quarterly distributions over specified
         distribution thresholds.

GENERAL

On October 22, 2001, the board of directors of the general partner declared the
Partnership's 2001 third quarter cash distribution in the amount of $0.50


                                       13
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                                TC PIPELINES, LP


per unit. This distribution will be paid on November 14, 2001 to unitholders
of record as of October 31, 2001. The third quarter cash distribution totaling
$9.1 million will be paid in the following manner: $7.4 million to common
unitholders, $1.4 million to the general partner as holder of the subordinated
units, and $0.3 million to the general partner, as holder of incentive
distribution rights and in respect of its 2% general partner interest.

On August 22, 2000, the Partnership entered into an unsecured three-year credit
facility (Revolving Credit Facility) with Bank One, NA, as agent, under which
the Partnership may borrow up to an aggregate principal amount of $30 million.
Loans under the Revolving Credit Facility may bear interest, at the option of
the Partnership, at a one-, two-, three-, or six-month London Interbank Offered
Rate (LIBOR) plus 0.875%, or at a floating rate based on the higher of the
federal funds effective rate plus 0.50% or the prime rate. The Revolving Credit
Facility matures on August 31, 2003. Amounts borrowed may be repaid in part or
in full prior to that time without penalty. The Revolving Credit Facility may be
used to finance capital expenditures and for other general purposes. On
September 1, 2000, the Partnership borrowed $24.5 million under the Revolving
Credit Facility to fund a portion of the purchase price of the 49% general
partner interest in Tuscarora. At September 30, 2001, the Partnership had
borrowings of $21.5 million outstanding under the Revolving Credit Facility
at a year-to-date weighted average interest rate of 5.751%.

On May 28, 2001, the Partnership renewed its $40 million unsecured two-year
revolving credit facility (TransCanada Credit Facility) with TransCanada
PipeLine USA Ltd., an affiliate of the general partner. The TransCanada Credit
Facility bears interest at LIBOR plus 1.25%. The purpose of the TransCanada
Credit Facility is to provide borrowings to fund capital expenditures, to fund
capital contributions to Northern Border Pipeline, Tuscarora, and any other
entity in which it directly or indirectly acquires an interest, to fund working
capital and for other general business purposes, including temporary funding of
cash distributions to partners, if necessary. At September 30, 2001, the
Partnership had no amount outstanding under the TransCanada Credit Facility.

CASH FLOWS FROM OPERATING ACTIVITIES

Cash flows provided by operating activities increased by $1.0 million, or 3%, to
$31.2 million for the nine months ended September 30, 2001 from $30.2 million
for the same period last year. For the nine months ended September 30, 2001, the
Partnership received cash distributions of $31.4 million from its equity
investment in Northern Border Pipeline and $1.7 million from its equity
investment in Tuscarora for a total of $33.1 million. This is a 7% increase over
the $31.0 million in distributions received during the same period last year,
which consisted of $29.5 million and $1.5 million from Northern Border Pipeline
and Tuscarora, respectively.

CASH FLOWS FROM INVESTING ACTIVITIES

Cash flows used in investing activities for the nine months ended September 30,
2000 relate to the Partnership's purchase of a 49% general partner interest in
Tuscarora Gas Transmission Company on September 1, 2000.


                                       14
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                                TC PIPELINES, LP


CASH FLOWS FROM FINANCING ACTIVITIES

For the nine months ended September 30, 2001, the Partnership paid $26.2 million
in distributions: $21.3 million to common unitholders, $4.1 million to the
general partner as holder of the subordinated units, $0.5 million to the general
partner in respect of its 2% general partner interest and $0.3
million to the general partner as holder of incentive distribution rights.
This compares to cash distributions of $24.1 million which were paid by the
Partnership during the nine months ended September 30, 2000.

CAPITAL REQUIREMENTS

To the extent TC PipeLines has any capital requirements with respect to its
investments in Northern Border Pipeline and Tuscarora or makes acquisitions in
the remainder of 2001, TC PipeLines expects to finance these requirements with
debt and/or equity and internal sources.

Since the interests in Northern Border Pipeline and Tuscarora are currently the
Partnership's only significant sources of income, the Partnership's results of
operations are influenced by and reflect the same factors that influence the
financial results of Northern Border Pipeline and Tuscarora.

RESULTS OF OPERATIONS OF NORTHERN BORDER PIPELINE COMPANY

The following sets out summarized financial information for Northern Border
Pipeline for the three and nine months ended September 30, 2001 and 2000 and as
at September 30, 2001 and December 31, 2000. Amounts discussed represent 100% of
the operations of Northern Border Pipeline, in which the Partnership has held a
30% interest since May 28, 1999.

<Table>
<Caption>
                                                      THREE MONTHS ENDED               NINE MONTHS ENDED
(unaudited)                                              SEPTEMBER 30                     SEPTEMBER 30
(millions of dollars)                                2001            2000             2001            2000
-----------------------------------------------------------------------------------------------------------
<S>                                                 <C>             <C>              <C>             <C>
NORTHERN BORDER PIPELINE INCOME STATEMENT
Revenues                                             77.9            78.3            231.9           231.8
Costs and expenses                                  (15.6)          (16.4)           (43.9)          (51.7)
Depreciation                                        (14.2)          (14.3)           (42.9)          (43.6)
Financial charges                                   (12.7)          (16.4)           (41.5)          (49.1)
Other income/(expense)                                0.2             3.1             (0.5)            5.0
                                                   --------------------------------------------------------
Net income                                           35.6            34.3            103.1            92.4
                                                   --------------------------------------------------------
                                                   --------------------------------------------------------
</Table>


                                       15
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                                TC PIPELINES, LP


<Table>
<Caption>
                                                    SEPTEMBER 30, 2001         December 31, 2000
(millions of dollars)                                      (unaudited)
------------------------------------------------------------------------------------------------
<S>                                                 <C>                        <C>
NORTHERN BORDER PIPELINE BALANCE SHEET
ASSETS
Cash and cash equivalents                                         12.2                      29.0
Other current assets                                              35.3                      38.1
Plant, property and equipment, net                             1,696.5                   1,687.0
Other assets                                                      15.5                      14.4
                                                   ---------------------------------------------
                                                               1,759.5                   1,768.5
                                                   ---------------------------------------------
                                                   ---------------------------------------------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities                                              409.1                     114.3
Reserves and deferred credits                                      5.6                       4.9
Long-term debt                                                   513.6                     822.3
Partners' Equity
   Partners' capital                                             825.3                     827.0
   Accumulated other comprehensive income                          5.9                         -
                                                   ---------------------------------------------
                                                               1,759.5                   1,768.5
                                                   ---------------------------------------------
                                                   ---------------------------------------------
</Table>

Northern Border Pipeline's revenue is derived from agreements with its shippers
for the transportation of natural gas. It transports gas under a FERC regulated
tariff. Northern Border Pipeline had used a cost of service form of tariff since
its inception but agreed to convert to a stated rate form of tariff as part of
the settlement of its rate case discussed below.

Under the cost of service tariff, Northern Border Pipeline was provided an
opportunity to recover all of the operations and maintenance costs of the
pipeline, taxes other than income taxes, interest, depreciation and
amortization, an allowance for income taxes and a regulated return on equity.
Northern Border Pipeline was generally allowed to collect from its shippers a
return on regulated rate base as well as recover that rate base through
depreciation and amortization. Billings for the firm transportation agreements
were based on contracted volumes to determine the allocable share of the cost of
service and were not dependent upon the percentage of available capacity
actually used.

Northern Border Pipeline filed a rate proceeding with the FERC in May 1999 for,
among other things, a redetermination of its allowed equity rate of return. In
September 2000, Northern Border Pipeline filed a stipulation and agreement with
the FERC that documented the proposed settlement of its pending rate case. The
settlement was approved by the FERC in December 2000. Under the approved
settlement, effective December 1, 1999, shippers began paying stated
transportation rates based on a straight-fixed variable rate design. Under the
straight-fixed variable rate design, approximately 98% of the agreed upon
revenue level is attributed to demand charges, based upon contracted firm
capacity, and the remaining 2% is attributed to commodity charges, based on the
volumes of gas actually transported on the system.


                                       16
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                                TC PIPELINES, LP


As of December 31, 2000, the termination dates of the shippers' contracts ranged
from October 31, 2001 to December 21, 2013 and the weighted average contract
life was approximately six years with just under 99% of capacity contracted
through mid-September 2003. Contracts for approximately 44% of the capacity will
expire between mid-September 2003 and the end of October 2005.

THIRD QUARTER 2001 COMPARED WITH THIRD QUARTER 2000

Revenues decreased $0.4 million for the third quarter of 2001, as compared to
the same period in 2000. Northern Border Pipeline's net revenues reflect the
rate case settlement discussed above.

Costs and expenses consist of operations and maintenance expense and taxes other
than income.

Operations and maintenance expense decreased $2.9 million (28%) for the third
quarter of 2001, as compared to the same period in 2000, due primarily to a
decrease in Northern Border Pipeline's regulatory commission expense and
decreased costs to operate its two electric-powered compressor units.

Taxes other than income increased $2.1 million (32%) for the third quarter of
2001, as compared to the same period in 2000, due primarily to adjustments to
previous estimates of ad valorem taxes for increases in property valuations.

Financial charges decreased $3.7 million (23%) for the third quarter of 2001, as
compared to the same period in 2000, due primarily to a decrease in Northern
Border Pipeline's average interest rates between 2000 and 2001.

Other income/(expense) decreased $2.9 million for the third quarter of 2001, as
compared to the same period in 2000. Other income/(expense) for the third
quarter of 2000 included $2.7 million of income due to a reduction in reserves
previously established for regulatory issues.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 2000

Revenues increased $0.1 million for the first nine months of 2001, as
compared to the same period in 2000. Northern Border Pipeline's revenues
reflect the rate case settlement discussed above.

Costs and expenses consist of operations and maintenance expense and taxes other
than income.

Operations and maintenance expense decreased $5.2 million (17%) for the first
nine months of 2001, as compared to the same period in 2000, due primarily to a
decrease in Northern Border Pipeline's regulatory commission expense, decreased
costs to operate its two electric-powered compressor units and decreased
administrative expense.

Taxes other than income decreased $2.6 million (12%) for the first nine months
of 2001, as compared to the same period in 2000, due primarily to adjustments to
previous estimates of ad valorem taxes.

Financial charges decreased $7.6 million (15%) for the first nine months of
2001, as compared to the same period in 2000, due primarily to a decrease in


                                       17
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                                TC PIPELINES, LP


Northern Border Pipeline's average interest rate between 2000 and 2001 as well
as a decrease in average debt outstanding.

Other income/(expense) decreased $5.5 million for the first nine months of 2001,
as compared to the same period in 2000. Other income/(expense) for the first
nine months of 2001 includes a charge of approximately $1.7 million for an
uncollectible receivable from a telecommunications company that had purchased
excess capacity on Northern Border Pipeline's communication system. In the first
nine months of 2000, Northern Border Pipeline had recorded approximately $1.4
million of income from the purchase of excess capacity by the telecommunications
company. Other income/(expense) for the first nine months of 2000 also included
$2.7 million of income due to a reduction in reserves previously established for
regulatory issues.

LIQUIDITY AND CAPITAL RESOURCES OF NORTHERN BORDER PIPELINE COMPANY

GENERAL

Northern Border Pipeline had previously entered into a 1997 credit agreement
("Pipeline Credit Agreement") with certain financial institutions, which is
comprised of a $100 million five-year revolving credit facility and a $289
million term loan, both maturing in June 2002. At September 30, 2001, no amounts
were outstanding under the five-year revolving credit facility. Northern Border
Pipeline anticipates refinancing the Pipeline Credit Agreement in the first
quarter of 2002.

At September 30, 2001, Northern Border Pipeline also had outstanding $143
million of senior notes issued in a $250 million private placement under a July
1992 note purchase agreement. The note purchase agreement provides for four
series of notes, Series A through D, maturing between August 2000 and August
2003. The Series A Notes with a principal amount of $66 million and Series B
Note with a principal amount of $41 million were repaid in August 2000 and
August 2001, respectively. The Series C Notes with a principal amount of
$78 million mature in August 2002.

In September 2001, Northern Border Pipeline completed a private offering of $250
million of 7.50% Senior Notes due 2021 ("2001 Pipeline Senior Notes"). Northern
Border Pipeline also entered into a registration rights agreement with the
initial purchasers in the private offering in which Northern Border Pipeline
agreed, among other things, to use its reasonable best efforts to exchange the
2001 Pipeline Senior Notes for notes registered under the Securities Act of
1933 with substantially identical terms. The indenture under which the 2001
Pipeline Senior Notes were issued does not limit the amount of unsecured debt
Northern Border Pipeline may incur, but it does contain material financial
covenants, including restrictions on incurrence of secured indebtedness. The
proceeds from the 2001 Pipeline Senior Notes were used to reduce indebtedness
outstanding under the Pipeline Credit Agreement.

Short-term liquidity needs will be met by internal sources and through the
revolving credit facility discussed above. Long-term capital needs may be met
through the ability to issue long-term indebtedness.



                                       18
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                                TC PIPELINES, LP


CASH FLOWS FROM OPERATING ACTIVITIES

Cash flows provided by operating activities decreased $5.8 million to $139.3
million for the first nine months of 2001, as compared to the same period in
2000. During 2001, Northern Border Pipeline realized net cash outflows of
approximately $4.7 million related to its rate case. During the first quarter of
2001, Northern Border Pipeline made refunds to its shippers totaling $6.8
million, which included $2.1 million collected in the first quarter of 2001 with
the remainder collected previously.

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures of $51.1 million for the first nine months of 2001 included
$46.3 million for Project 2000, Northern Border Pipeline's 34-mile extension and
expansion into Indiana. For the comparable period in 2000, capital expenditures
were $7.2 million and included $3.3 million for Project 2000. The remaining
capital expenditures for 2001 and 2000 were primarily related to renewal and
replacement of existing facilities.

Total capital expenditures for 2001 are estimated to be $63 million, including
$54 million for Project 2000. The remaining capital expenditures planned for
2001 are for renewal and replacement of existing facilities. Northern Border
Pipeline currently anticipates funding its future 2001 capital expenditures
primarily by using internal sources and borrowing on the Pipeline Credit
Agreement.

CASH FLOWS FROM FINANCING ACTIVITIES

Cash flows used in financing activities decreased $14.3 million to $105.1
million for the first nine months of 2001 as compared to the same period in
2000. Distributions to partners increased $6.6 million to $104.8 million for the
first nine months of 2001, as compared to the same period in 2000, primarily due
to an increase in net income. The net proceeds from the issuance of the 2001
Pipeline Senior Notes totaled approximately $247.2 million and were used for
repayment of amounts borrowed under the Pipeline Credit Agreement. In August
2001 and August 2000, Northern Border Pipeline repaid its Series B and A Notes
of $41 million and $66 million, respectively, primarily by borrowing under the
Pipeline Credit Agreement. During the first nine months of 2001, Northern Border
Pipeline had net repayments under the Pipeline Credit Agreement of $180
million as compared to net borrowings in 2000 of $45 million. For the first
nine months of 2001, Northern Border Pipeline recognized a decrease in bank
overdraft of $22.4 million. At December 31, 2000, Northern Border Pipeline
reflected the bank overdraft primarily due to rate case refund checks
outstanding. In September 2001, Northern Border Pipeline paid approximately $4.1
million to terminate interest rate swap agreements upon issuance of the 2001
Pipeline Senior Notes.


                                       19
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                                TC PIPELINES, LP


RESULTS OF OPERATIONS OF TUSCARORA GAS TRANSMISSION COMPANY

The following sets out summarized financial information for Tuscarora for the
three and nine months ended September 30, 2001 and 2000, and as at September 30,
2001 and December 31, 2000. Amounts discussed represent 100% of the operations
of Tuscarora, in which the Partnership has held a 49% interest since September
1, 2000.

<Table>
<Caption>
                                        THREE MONTHS ENDED             NINE MONTHS ENDED
(unaudited)                                SEPTEMBER 30                  SEPTEMBER 30
(millions of dollars)                  2001            2000          2001            2000
-------------------------------------------------------------------------------------------
<S>                                    <C>             <C>           <C>             <C>
TUSCARORA INCOME STATEMENT
Revenues                                5.3             4.8          15.8            14.5
Costs and expenses                     (0.7)           (0.7)         (1.9)           (1.8)
Depreciation                           (1.2)           (1.1)         (3.5)           (3.3)
Financial charges                      (1.5)           (1.5)         (4.7)           (4.5)
Other income                            -               0.1           0.3             0.2
                                    -------------------------------------------------------
Net income                              1.9             1.6           6.0             5.1
                                    -------------------------------------------------------
                                    -------------------------------------------------------
</Table>

<Table>
<Caption>
                                                    SEPTEMBER 30, 2001         December 31, 2000
(millions of dollars)                                      (unaudited)
------------------------------------------------------------------------------------------------
<S>                                                 <C>                        <C>
TUSCARORA BALANCE SHEET
ASSETS
Cash and cash equivalents                                          6.3                       7.1
Other current assets                                               1.9                       3.2
Plant, property and equipment, net                               117.2                     115.7
Other assets                                                       2.0                       2.5
                                                   ---------------------------------------------
                                                                 127.4                     128.5
                                                   ---------------------------------------------
                                                   ---------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities                                                7.0                       8.9
Reserves and deferred credits                                     14.4                      12.0
Long-term debt                                                    82.1                      84.2
Partners' capital                                                 23.9                      23.4
                                                   ---------------------------------------------
                                                                 127.4                     128.5
                                                   ---------------------------------------------
                                                   ---------------------------------------------
</Table>

THIRD QUARTER 2001 COMPARED WITH THIRD QUARTER 2000

Revenues generated by Tuscarora increased $0.5 million, or 10%, to $5.3 million
for the third quarter of 2001, compared to $4.8 million for the third quarter of
2000. The increase is due to additional contracted capacity on the Hungry Valley
lateral, a 14-mile, 16-inch pipeline extension that is Tuscarora's second
connection into Reno, Nevada. The Hungry Valley lateral was completed in January
2001.

Costs and expenses, depreciation and financial charges incurred and other income
earned by Tuscarora in the third quarter of 2001 were consistent with the same
period last year.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 2000

Revenues generated by Tuscarora increased $1.3 million, or 9%, to $15.8


                                       20
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                                TC PIPELINES, LP


million for the nine months ended September 30, 2001, compared to $14.5
million for the same period last year. The increase is due to additional
contracted capacity on the Hungry Valley lateral.

Costs and expenses, depreciation and financial charges incurred and other income
earned by Tuscarora in the first nine months of 2001 were consistent with the
same period last year.

LIQUIDITY AND CAPITAL RESOURCES OF TUSCARORA GAS TRANSMISSION COMPANY

GENERAL

In September 2000, Tuscarora adopted a cash distribution policy that became
effective January 1, 2001. Under the terms of the cash distribution policy,
Tuscarora makes quarterly cash distributions to its general partners in
accordance with their respective general partner interests. Cash distributions
are generally computed as the sum of Tuscarora's net income before income taxes
and depreciation and amortization, less amounts required for debt repayments,
net of refinancings, maintenance capital expenditures, certain non-cash items,
and any cash reserves deemed necessary by the management committee of Tuscarora.
Cash distributions will be computed at the end of each calendar quarter and the
distribution will be made on or before the last day of the month following the
quarter end.

CASH FLOWS FROM OPERATING ACTIVITIES

Cash flows provided by operating activities decreased by $1.8 million, or 16%,
to $9.3 million for the first nine months of 2001, compared to $11.1 million for
the same period in 2000. This change is primarily a result of changes in working
capital.

CASH FLOWS FROM INVESTING ACTIVITIES

Net cash used in investing activities increased $2.2 million to $4.9 million for
the nine month period ended September 30, 2001, compared to $2.7 million for the
same period last year. Capital expenditures during the first nine months of 2001
include $2.5 million in capital costs related to Tuscarora's proposed expansion.

CASH FLOWS FROM FINANCING ACTIVITIES

During the first nine months of 2001, Tuscarora recorded cash flow used in
financing activities of $5.2 million compared to $7.1 million for the same
period in 2000. Tuscarora paid cash distributions totaling $3.4 million during
the first nine months of 2001 compared to $5.3 million for the same period in
2000.

NEW ACCOUNTING PRONOUNCEMENTS

TC PipeLines has implemented Statement of Financial Accounting Standards (SFAS)
No. 133 "Accounting for Derivative Instruments and Hedging Activities" on
January 1, 2001. TC PipeLines does not hold any derivative instruments and does
not participate in hedging activities. Northern Border Pipeline's adoption of
SFAS No. 133 on January 1, 2001 has not had a material impact on TC PipeLines'
investment in or equity income from Northern Border Pipeline. As a result, SFAS
No. 133 does not have a material impact on TC PipeLines' financial position or
results of operations.


                                       21
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONCLUDED)
                                TC PIPELINES, LP


In the third quarter of 2001, the Financial Accounting Standards Board issued
SFAS No. 141, "Business Combinations," SFAS No. 142, "Goodwill and Other
Intangible Assets," SFAS No. 143, "Accounting for Asset Retirement
Obligations," and SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets."

SFAS No. 141 requires all business combinations initiated after June 30, 2001 to
be accounted for using the purchase method.

SFAS No. 142 modifies the accounting and reporting of goodwill and intangible
assets. It requires entities to discontinue the amortization of goodwill,
reallocate goodwill among its reporting segments and perform initial impairment
tests by applying a fair-value-based analysis on the goodwill in each reporting
segment. Subsequent to the initial adoption, goodwill shall be tested for
impairment annually or more frequently if circumstances indicate a possible
impairment. For goodwill and intangible assets on the balance sheet at June 30,
2001, the provisions of SFAS No. 142 must be applied to fiscal years beginning
after December 15, 2001. At September 30, 2001, the Partnership's balance sheet
does not include any goodwill.

SFAS No. 143 requires entities to record the fair value of a liability for an
asset retirement obligation in the period in which it is incurred. When the
liability is initially recorded, the entity capitalizes a cost by increasing the
carrying amount of the

                                       22
--------------------------------------------------------------------------------
<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
                                TC PIPELINES, LP


related long-lived asset. Over time, the liability is accreted to its present
value and the capitalized cost is depreciated over the useful life of the
related asset. Upon settlement of the liability, an entity either settles the
obligation for its recorded amount or incurs a gain or loss upon settlement.
The standard is effective for fiscal years beginning after June 15, 2002, with
earlier application encouraged. The Partnership is in the process of
evaluating the application of this pronouncement on its investments in
Northern Border Pipeline and Tuscarora.

SFAS No. 144 establishes one accounting model to be used for long-lived assets
to be disposed of by sale, and broadens the presentation of discontinued
operations to include more disposal transactions. SFAS No. 144 supercedes both
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of", and the accounting and reporting
provisions of APB Opinion No. 30. This standard is effective for fiscal years
beginning after December 15, 2001. The Partnership is in the process of
evaluating the application of this pronouncement on its investments in Northern
Border Pipeline and Tuscarora.


NORTHERN BORDER PIPELINE RELATIONSHIPS WITH ENRON CORP. AND RECENT DEVELOPMENTS
INVOLVING ENRON CORP.

TC PipeLines holds a 30% general partner interest in Northern Border Pipeline.
There have been several recent developments involving Enron Corp. (Enron) that
could have an impact on Northern Border Pipeline. The trading prices for Enron's
common stock have experienced substantial declines during 2001, and multiple
class action lawsuits have been filed against Enron alleging violations of
securities laws. On October 16, 2001, Enron announced a loss for the quarter
ended September 30, 2001 due in part to the early termination of certain
structured finance arrangements with a related entity. In connection with the
early termination, Enron's shareholders' equity was reduced by approximately
$1.2 billion. Enron also announced the commencement of an investigation by the
Securities and Exchange Commission (SEC) with respect to the related party
transactions, and appointed a special committee of directors to examine and take
appropriate action with respect to such transactions.

On November 8, 2001, Enron filed with the SEC a current report on Form 8-K that
reported that Enron will restate its financial statements for 1997 through 2000
and for the first two quarters of 2001. Enron's filing indicated that the
restatements would have no material impact on its shareholders' equity at
September 30, 2001. On November 9, 2001, Enron announced that it had entered
into a merger agreement with Dynegy Inc. ("Dynegy"), a Houston-based energy
trading and power company. Enron stated that, upon consummation of the proposed
merger, its shareholders will receive shares in a combined company to be called
Dynegy Inc. The announcement stated that Dynegy will make an immediate equity
infusion into Enron in the amount of $1.5 billion.

Some of the recent events have resulted in the downgrading of the obligations of
Enron and certain of its subsidiaries by credit rating agencies. For example,
Moody's Investors Service downgraded the senior unsecured debt

                                       23
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<PAGE>

                    PART I. FINANCIAL INFORMATION (CONTINUED)

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONCLUDED)
                                TC PIPELINES, LP


ratings of Enron to Baa3 and Standard & Poor's lowered its long-term corporate
credit rating on Enron to BBB-.

Northern Border Pipeline has a number of relationships with Enron and its
subsidiaries. Through Enron's ownership of two of the general partners of
Northern Border Intermediate Limited Partnership (which is not affiliated with
TC PipeLines), which holds a 70% general partner interest in Northern Border
Pipeline, Enron is able to elect members with a majority of the voting power on
Northern Border Pipeline's management committee. Northern Plains Natural Gas
Company, a wholly-owned subsidiary of Enron, provides operating and
administrative services for Northern Border Pipeline. Certain of the services
are provided through subsidiaries of Enron. Enron North America Corp. ("ENA"), a
wholly-owned subsidiary of Enron, is one of Northern Border Pipeline's firm
shippers and is obligated as of September 30, 2001, to pay for 6.3% of Northern
Border Pipeline's capacity, consisting of (i) approximately 2.4% of Northern
Border Pipeline's capacity, equating to approximately $8 million in annual
revenues, representing firm demand contracts, and (ii) approximately 3.9% of
Northern Border Pipeline's capacity, equating to approximately $12 million in
annual revenues, representing temporary capacity releases from other shippers
who would be responsible for payment in the event of a default in payment by
ENA. Northern Border Pipeline could be adversely affected if Enron or any of its
subsidiaries were to fail to perform its contractual obligations under contracts
with Northern Border Pipeline.


                                       24
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<Page>
                    PART I. FINANCIAL INFORMATION (CONCLUDED)

       ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                                TC PIPELINES, LP

TC PipeLines, LP's interest rate exposure results from its Revolving Credit
Facility, which is subject to variability in LIBOR interest rates. Since
December 31, 2000, there has not been any material change to TC PipeLines'
interest rate exposure.

The Partnership's market risk sensitivity is also influenced by and reflects the
same factors that influence Northern Border Pipeline.

Northern Border Pipeline's interest rate exposure results from variable rate
borrowings from commercial banks. To mitigate potential fluctuations in interest
rates, Northern Border Pipeline attempts to maintain a significant portion of
its debt portfolio in fixed rate debt. Northern Border Pipeline also uses
interest rate swap agreements to increase the portion of its fixed rate debt. As
of September 30, 2001, approximately 72% of Northern Border Pipeline's debt
portfolio, after considering the effect of interest rate swap agreements, is in
fixed rate debt.

If average interest rates change by one percentage point compared to rates in
effect as of September 30, 2001, annual interest expense would change by
approximately $2.5 million. This amount has been determined by considering the
impact of the hypothetical interest rates on variable rate borrowings
outstanding as of September 30, 2001.


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<PAGE>

                           PART II. OTHER INFORMATION

                           ITEM 1. LEGAL PROCEEDINGS
                                TC PIPELINES, LP

On July 31, 2001, the Assiniboine and Sioux Tribes of the Fort Peck Indian
Reservation filed a lawsuit in Tribal Court against Northern Border Pipeline
Company to collect more than $3 million in back taxes, together with interest
and penalties. The lawsuit relates to a utilities tax on certain of Northern
Border Pipeline's properties within the Fort Peck Reservation. Based on recent
decisions by the federal courts and other defenses, Northern Border Pipeline
believes that the Tribes do not have the authority to impose the tax. In any
event, TC PipeLines believes that the lawsuit will not have a material adverse
impact on the Partnership.


                                       26
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<PAGE>

                   PART II. OTHER INFORMATION (CONCLUDED)

                  ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
                                TC PIPELINES, LP

(a)  Exhibits.

<Table>
<S>           <C>
     *4.1     Indenture dated September 17, 2001, between Northern
              Border PipeLine Company and Bank One Trust Company, N.A.
              (Exhibit 4.2 to Northern Border Pipeline Company's Registration
              Statement on Form S-4, Registration No. 333-73282 ("Form S-4")).

     *4.2     Registration Rights Agreement, dated September 17, 2001, among
              Northern Border Pipeline Company, Banc of America Securities
              LLC, Banc One Capital Markets, inc. and BMO Nesbitt Burns
              Corp., as initial purchasers. (Exhibit 4.3 to Northern Border
              Pipeline Company's Registration Statement on Form S-4)

     *10.1    Ninth Supplement Amending Northern Border Pipeline Company
              General Partnership Agreement (Exhibit 10.37 to Northern Border
              Pipeline Company's Registration Statement on Form S-4)

     *10.2    Northern Border Pipeline Company U.S. Shippers Service Agreement
              between Northern Border Pipeline Company and Enron North
              America Corp., dated October 29, 2001 (Exhibit 10.38 to
              Northern Border Pipeline Company's Registration Statement on
              Form S-4)
</Table>

     *Indicates exhibit incorporated by reference as indicated.

(b)  Reports on Form 8-K

     None


                                       27
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<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                       TC PIPELINES, LP
                                       (a Delaware Limited Partnership)

                                       By: TC PipeLines GP, Inc.,
                                           its general partner

                                       By: /s/ Russell K. Girling
                                           -----------------------------------
Date: November 14, 2001                    Russell K. Girling
                                           Chief Financial Officer
                                           (duly authorized officer)

                                       By: /s/ Theresa Jang
                                           -----------------------------------
Date: November 14, 2001                    Theresa Jang
                                           Controller
                                           (duly authorized officer)


                                       28
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<Page>

                                  EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT NO.   DESCRIPTION
<S>           <C>

*4.1          Indenture dated September 17, 2001, between Northern Border
              PipeLine Company and Bank One Trust Company, N.A. (Exhibit 4.2
              to Northern Border Pipeline Company's Registration Statement on
              Form S-4, Registration No. 333-73282 ("Form S-4")).

*4.2          Registration Rights Agreement, dated September 17, 2001, among
              Northern Border Pipeline Company, Banc of America Securities LLC,
              Banc One Capital Markets, inc. and BMO Nesbitt Burns Corp., as
              initial purchasers. (Exhibit 4.3 to Northern Border Pipeline
              Company's Registration Statement on Form S-4)

*10.1         Ninth Supplement Amending Northern Border Pipeline Company General
              Partnership Agreement (Exhibit 10.37 to Northern Border Pipeline
              Company's Registration Statement on Form S-4)

*10.2         Northern Border Pipeline Company U.S. Shippers Service Agreement
              between Northern Border Pipeline Company and Enron North America
              Corp., dated October 29, 2001 (Exhibit 10.38 to Northern Border
              Pipeline Company's Registration Statement on Form S-4)
</Table>


*Indicates exhibit incorporated by reference as indicated.

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