<Page>

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

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

                  For the quarterly period ended MARCH 31, 2004

                                       or

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

              For the Transition period from _________ to _________

                        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 reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]          No [ ]

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes [X]          No [ ]

     As of May 7, 2004 there were 16,563,564 of the registrant's common units
outstanding.
<Page>

                                TABLE OF CONTENTS

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

     ITEM 1.  Financial Statements

              Statement of Income - Three months ended March 31, 2004 and 2003                   3
              Statement of Comprehensive Income - Three months ended March 31,
                  2004 and 2003                                                                  3
              Balance Sheet - March 31, 2004 and December 31, 2003                               4
              Statement of Cash Flows - Three months ended March 31, 2004 and 2003               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                                         11
              Liquidity and Capital Resources of TC PipeLines, LP                               12
              Results of Operations of Northern Border Pipeline Company                         14
              Liquidity and Capital Resources of Northern Border Pipeline Company               16
              Results of Operations of Tuscarora Gas Transmission Company                       18
              Liquidity and Capital Resources of Tuscarora Gas Transmission Company             20

     ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk                        22

     ITEM 4.  Controls and Procedures                                                           23

PART II.  OTHER INFORMATION

     ITEM 5.  Other Information                                                                 24

     ITEM 6.  Exhibits and Reports on Form 8-K                                                  25
</Table>


                                       2
<Page>

                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                                TC PIPELINES, LP

                               STATEMENT OF INCOME

<Table>
<Caption>
THREE MONTHS ENDED MARCH 31 (UNAUDITED)
(MILLIONS OF DOLLARS, EXCEPT PER UNIT AMOUNTS)                             2004              2003
----------------------------------------------------------------------------------------------------
<S>                                                               <C>               <C>
Equity Income from Investment in Northern Border Pipeline                  12.5              11.0
Equity Income from Investment in Tuscarora                                  1.8               1.3
General and Administrative Expenses                                        (0.5)             (0.4)
Financial Charges                                                          (0.1)              -
                                                                  ----------------------------------
Net Income                                                                 13.7              11.9
                                                                  ----------------------------------
                                                                  ----------------------------------

NET INCOME ALLOCATION
Common units                                                               12.4              10.3
Subordinated units                                                          0.7               1.2
General partner                                                             0.6               0.4
                                                                  ----------------------------------
                                                                           13.7              11.9
                                                                  ----------------------------------
                                                                  ----------------------------------

Net Income per Unit                                                       $0.75             $0.66
                                                                  ----------------------------------
                                                                  ----------------------------------

Units Outstanding (millions)                                               17.5              17.5
                                                                  ----------------------------------
                                                                  ----------------------------------
</Table>

                        STATEMENT OF COMPREHENSIVE INCOME

<Table>
<Caption>
THREE MONTHS ENDED MARCH 31 (UNAUDITED)
(MILLIONS OF DOLLARS)                                                      2004              2003
----------------------------------------------------------------------------------------------------
<S>                                                               <C>               <C>
Net Income                                                                 13.7              11.9
Other Comprehensive Income
   Change associated with current period hedging transactions              (0.1)             (0.1)
                                                                  ----------------------------------
Total Comprehensive Income                                                 13.6              11.8
                                                                  ----------------------------------
                                                                  ----------------------------------
</Table>

See accompanying Notes to Condensed Financial Statements.


                                       3
<Page>


                    PART I. FINANCIAL INFORMATION (CONTINUED)
                    ITEM 1. FINANCIAL STATEMENTS (CONTINUED)

                                TC PIPELINES, LP

                                  BALANCE SHEET

<Table>
<Caption>
                                                                         MARCH 31, 2004    December 31, 2003
(MILLIONS OF DOLLARS)                                                       (UNAUDITED)            (AUDITED)
---------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                     <C>
ASSETS
Current Assets
   Cash                                                                             2.3                  7.5
Investment in Northern Border Pipeline                                            258.2                240.7
Investment in Tuscarora                                                            40.2                 39.9
                                                                   --------------------------------------------
                                                                                  300.7                288.1
                                                                   --------------------------------------------
                                                                   --------------------------------------------
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities
   Accounts payable                                                                 0.7                  0.6
   Current portion of long-term debt                                                -                    5.5

Long-Term Debt                                                                     14.5                  -

Partners' Equity
   Common units                                                                   263.8                260.4
   Subordinated units                                                              14.2                 13.9
   General partner                                                                  6.0                  6.1
   Other comprehensive income                                                       1.5                  1.6
                                                                   --------------------------------------------
                                                                                  285.5                282.0
                                                                   --------------------------------------------
                                                                                  300.7                288.1
                                                                   --------------------------------------------
                                                                   --------------------------------------------
</Table>

                             STATEMENT OF CASH FLOWS

<Table>
<Caption>
THREE MONTHS ENDED MARCH 31 (UNAUDITED)
(MILLIONS OF DOLLARS)                                                               2004                2003
---------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                     <C>
CASH GENERATED FROM OPERATIONS
Net income                                                                          13.7                11.9
Add/(Deduct):
Distributions received (less than)/in excess of equity income                       (0.4)                1.7
Decrease/(Increase) in operating working capital                                     0.1                (0.1)
                                                                   --------------------------------------------
                                                                                    13.4                13.5
                                                                   --------------------------------------------
INVESTING ACTIVITIES
Return of capital from Northern Border Pipeline                                      2.0                 -
Investment in Northern Border Pipeline                                             (19.5)                -
Investment in Tuscarora                                                              -                  (3.3)
                                                                   --------------------------------------------
                                                                                   (17.5)               (3.3)
                                                                   --------------------------------------------
FINANCING ACTIVITIES
Distributions paid                                                                 (10.1)               (9.6)
Long-term debt issued/(repaid)                                                       9.0                (3.0)
                                                                   --------------------------------------------
                                                                                    (1.1)              (12.6)
                                                                   --------------------------------------------

DECREASE IN CASH                                                                    (5.2)               (2.4)
CASH, BEGINNING OF PERIOD                                                            7.5                 6.4
                                                                   --------------------------------------------
CASH, END OF PERIOD                                                                  2.3                 4.0
                                                                   --------------------------------------------
                                                                   --------------------------------------------
</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 accounting principles generally accepted in the United States of America.
Other comprehensive income recorded by TC PipeLines arises through its equity
investments in Northern Border Pipeline Company (Northern Border Pipeline) and
Tuscarora Gas Transmission Company (Tuscarora) and relates to cash flow hedges
transacted by Northern Border Pipeline and Tuscarora. Amounts are stated in
United States dollars.

     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 of normal recurring accruals) necessary to present
fairly the results of operations for the three months ended March 31, 2004 and
2003, the financial position as at March 31, 2004 and December 31, 2003 and cash
flows for the three months ended March 31, 2004 and 2003.

     The results of operations for the three months ended March 31, 2004 and
2003 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, 2003.

NOTE 2  INVESTMENT IN NORTHERN BORDER PIPELINE COMPANY

The Partnership owns a 30% general partner interest in Northern Border Pipeline,
a partnership which owns a 1,249-mile United States interstate pipeline system
that transports natural gas from the Montana-Saskatchewan border to markets in
the midwestern United States. The remaining 70% partnership interest in Northern
Border Pipeline is held by Northern Border Partners, L.P., a publicly traded
limited partnership. The 2% general partnership interest in Northern Border
Partners, L.P. is controlled by affiliates of Enron Corp. (Enron), which hold a
1.65% general partner interest, and TransCanada Corporation (TransCanada),
parent of TC PipeLines' general partner, which holds the remaining 0.35%
general partner interest. The Northern Border pipeline system is operated by
Northern Plains Natural Gas Company, a wholly owned subsidiary of Enron.
Northern Border Pipeline is regulated by the Federal Energy Regulatory
Commission (FERC).

     TC PipeLines uses the equity method of accounting for its investment in
Northern Border Pipeline. TC PipeLines' equity income for the three months ended
March 31, 2004 and 2003 includes 30% of the net income of Northern Border
Pipeline for the same periods. There were no undistributed earnings from
Northern Border Pipeline as at March 31, 2004 and December 31, 2003. The
following sets out summarized financial information representing 100% of the
operations of Northern Border Pipeline for the three months ended March 31, 2004
and 2003 and as at March 31, 2004 and December 31, 2003.


                                       5
<Page>

                    PART I. FINANCIAL INFORMATION (CONTINUED)
                    ITEM 1. FINANCIAL STATEMENTS (CONTINUED)

                                TC PIPELINES, LP

NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

<Table>
<Caption>
THREE MONTHS ENDED MARCH 31 (UNAUDITED)
(MILLIONS OF DOLLARS)                                                 2004                 2003
--------------------------------------------------------------------------------------------------
<S>                                                    <C>                   <C>
NORTHERN BORDER PIPELINE INCOME STATEMENT
Revenues                                                              83.3                 79.9
Costs and expenses                                                   (17.0)               (16.8)
Depreciation                                                         (14.5)               (14.5)
Financial charges                                                    (10.2)               (11.8)
Other income/(expense)                                                 0.1                 (0.1)
                                                       -------------------------------------------
Net income                                                            41.7                 36.7
                                                       -------------------------------------------
                                                       -------------------------------------------
</Table>

Northern Border Pipeline has recorded other comprehensive income of $(0.4)
million for each of the three month periods ended March 31, 2004 and 2003.

<Table>
<Caption>
                                                            MARCH 31, 2004    December 31, 2003
(MILLIONS OF DOLLARS)                                          (UNAUDITED)            (AUDITED)
--------------------------------------------------------------------------------------------------
<S>                                                    <C>                   <C>
NORTHERN BORDER PIPELINE BALANCE SHEET
ASSETS
Cash and cash equivalents                                             46.0                 28.7
Other current assets                                                  41.5                 40.8
Plant, property and equipment, net                                 1,577.7              1,591.8
Other assets                                                          32.7                 30.0
                                                       -------------------------------------------
                                                                   1,697.9              1,691.3
                                                       -------------------------------------------
                                                       -------------------------------------------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities                                                   64.7                 62.3
Reserves and deferred credits                                          5.0                  5.1
Long-term debt, net of current maturities                            767.6                821.5
Partners' Equity
   Partners' capital                                                 855.8                797.2
   Accumulated other comprehensive income                              4.8                  5.2
                                                       -------------------------------------------
                                                                   1,697.9              1,691.3
                                                       -------------------------------------------
                                                       -------------------------------------------
</Table>

NOTE 3   INVESTMENT IN TUSCARORA GAS TRANSMISSION COMPANY

The Partnership owns a 49% general partner interest in Tuscarora, a partnership
that owns a 240-mile United States interstate pipeline system that transports
natural gas from Oregon, where it interconnects with facilities of Gas
Transmission Northwest Corporation, to northern Nevada. The remaining general
partner interests in Tuscarora are held 50% by Sierra Pacific Resources and 1%
by TransCanada. The Tuscarora pipeline system is operated by Tuscarora Gas
Operating Company, a wholly owned subsidiary of Sierra Pacific Resources. Sierra
Pacific Power Company, a subsidiary of Sierra Pacific Resources, is Tuscarora's
largest shipper, accounting for approximately 68% of Tuscarora's available
capacity. 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 months ended March 31, 2004
and 2003 represents 49% of the net income of Tuscarora for the same periods.
Retained earnings of TC PipeLines as at March 31, 2004 and December 31, 2003
include undistributed earnings from Tuscarora of $0.3 million and zero,
respectively. The following sets out summarized financial information
representing 100% of the operations of Tuscarora for the three months ended
March 31, 2004 and 2003 and as at March 31, 2004 and December 31, 2003.


                                       6
<Page>

                    PART I. FINANCIAL INFORMATION (CONTINUED)
                    ITEM 1. FINANCIAL STATEMENTS (CONTINUED)

                                TC PIPELINES, LP

NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

<Table>
<Caption>
THREE MONTHS ENDED MARCH 31 (UNAUDITED)
(MILLIONS OF DOLLARS)                                         2004                2003
----------------------------------------------------------------------------------------
<S>                                            <C>                  <C>
TUSCARORA INCOME STATEMENT
Revenues                                                       8.3                 7.4
Costs and expenses                                            (1.2)               (1.2)
Depreciation                                                  (1.6)               (1.6)
Financial charges                                             (1.5)               (1.6)
                                               -----------------------------------------
Net income                                                     4.0                 3.0
                                               -----------------------------------------
                                               -----------------------------------------
</Table>

Tuscarora has recorded other comprehensive income of less than $0.1 million and
$(0.1) million for the three months ended March 31, 2004 and 2003, respectively.

<Table>
<Caption>
                                                         MARCH 31, 2004   December 31, 2003
(MILLIONS OF DOLLARS)                                       (UNAUDITED)           (AUDITED)
-----------------------------------------------------------------------------------------------
<S>                                                 <C>                  <C>
TUSCARORA BALANCE SHEET
ASSETS
Cash and cash equivalents                                           7.1                 1.8
Other current assets                                                3.0                 4.3
Plant, property and equipment, net                                140.5               141.9
Other assets                                                        1.5                 1.6
                                                    -----------------------------------------
                                                                  152.1               149.6
                                                    -----------------------------------------
                                                    -----------------------------------------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities                                                 8.3                 6.7
Long-term debt                                                     80.8                80.8
Partners' Equity
   Partners' capital                                               62.9                62.0
   Accumulated other comprehensive income                           0.1                 0.1
                                                    -----------------------------------------
                                                                  152.1               149.6
                                                    -----------------------------------------
                                                    -----------------------------------------
</Table>

NOTE 4   CREDIT FACILITIES AND LONG-TERM DEBT

On March 8, 2004 the Partnership renewed its unsecured credit facility
(Revolving Credit Facility) with Bank One, NA, as administrative agent. Under
the renewed Revolving Credit Facility, the Partnership may borrow up to an
aggregate principal amount of $30.0 million. Loans under the Revolving Credit
Facility bear interest, at the option of the Partnership, at a one-, two-,
three-, or six-month London Interbank Offered Rate (LIBOR) plus 1.25% or at a
floating rate based on the higher of the federal funds effective rate plus 0.5%
and the prime rate. The Revolving Credit Facility matures on February 28, 2006.
Amounts borrowed may be repaid in part or in full prior to that time without
penalty. The Revolving Credit Facility may be used 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 unitholders and
the general partner, if necessary. In the first quarter of 2004, the Partnership
had drawings on the Revolving Credit Facility of $9.0 million. The
Partnership had $14.5 million and $5.5 million outstanding under the
Revolving Credit Facility at March 31, 2004 and December 31, 2003,
respectively. The interest rate on the Revolving Credit Facility averaged
2.39% and 2.70% for the three months ended March 31, 2004 and 2003,
respectively and, at March 31, 2004 and December 31, 2003, the interest rate
was 2.36% and 2.42%, respectively.


                                       7
<Page>

                    PART I. FINANCIAL INFORMATION (CONTINUED)
                    ITEM 1. FINANCIAL STATEMENTS (CONTINUED)

                                TC PIPELINES, LP

NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

     On May 28, 2003, the Partnership renewed its $40.0 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 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 unitholders and
the general partner, if necessary. The Partnership had no borrowings outstanding
under the TransCanada Credit Facility as at March 31, 2004 and December 31,
2003, respectively.

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:

<Table>
<Caption>
THREE MONTHS ENDED MARCH 31 (UNAUDITED)
(MILLIONS OF DOLLARS, EXCEPT PER UNIT AMOUNTS)                     2004              2003
------------------------------------------------------------------------------------------
<S>                                                       <C>               <C>
Net income                                                         13.7              11.9
                                                          --------------------------------
Net income allocated to General Partner
   General Partner interest                                        (0.3)             (0.2)
   Incentive distribution income allocation                        (0.3)             (0.2)
                                                          --------------------------------
                                                                   (0.6)             (0.4)
                                                          --------------------------------
Net income allocable to units                                      13.1              11.5
Weighted average units outstanding (MILLIONS)                      17.5              17.5
                                                          --------------------------------
Basic and diluted net income per unit                             $0.75             $0.66
                                                          --------------------------------
                                                          --------------------------------
</Table>

NOTE 6   SUBORDINATED UNIT CONVERSION

The remaining one third of 936,436 subordinated units, held by the general
partner, upon satisfaction of the tests set forth in the partnership agreement,
will convert into an equal number of common units on the first day after the
record date for distributions for the quarter ending June 30, 2004. Such units
will thereafter participate, pro rata, with the other common units in
distributions of Available Cash.

NOTE 7   DISTRIBUTIONS

On April 20, 2004, the board of directors of the general partner declared a cash
distribution of $0.55 per unit for the three months ended March 31, 2004. The
distribution totaling approximately $10.1 million is payable on May 14, 2004 in
the following manner: $9.1 million to the holders of common units as of the
close of business on April 30, 2004 (including $1.5 million to an affiliate of
TransCanada as holder of 2,800,000 common units and $1.0 million to the general
partner as holder of 1,872,870 common units), $0.5 million to the general
partner as holder of the subordinated units, $0.3 million to the general partner
as holder of incentive distribution rights and $0.2 million to the general
partner in respect of its 2% general partner interest.

NOTE 8   CAPITAL REQUIREMENTS

On January 30, 2004, the Partnership contributed $19.5 million representing its
30% share of a $65.0 million cash call issued by Northern Border Pipeline to its
partners on January 27, 2004. The funds have been used by Northern Border
Pipeline to repay a portion of its existing indebtedness. The payment to
Northern Border Pipeline was funded through the use of cash from operations and
existing credit facilities. This was offset by $2.0 million return of capital
from Northern Border Pipeline in the first quarter of 2004.


                                       8
<Page>

                    PART I. FINANCIAL INFORMATION (CONTINUED)
                    ITEM 1. FINANCIAL STATEMENTS (CONCLUDED)

                                TC PIPELINES, LP

NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 9   SUBSEQUENT EVENTS

On April 27, 2004, Northern Border Pipeline issued a $65.0 million cash call to
its partners. The Partnership will contribute $19.5 million representing its 30%
share to be paid on May 14, 2004. This payment is expected to be funded through
the use of cash from operations and existing credit facilities. The funds will
be used by Northern Border Pipeline to repay a portion of its existing
indebtedness.


                                        9
<Page>

                    PART I. FINANCIAL INFORMATION (CONTINUED)
     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS

                                TC PIPELINES, LP

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

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.
Words such as "anticipates", "believes", "estimates", "expects", "plans",
"intends", "forecasts", and similar expressions, identify forward-looking
statements. These statements reflect the Partnership's current views with
respect to future events and are subject to various risks, uncertainties and
assumptions including:

     o    the Partnership's 30% general partner interest in Northern Border
          Pipeline and 49% general partner interest in Tuscarora represent its
          only material assets. As a result, the Partnership is dependent upon
          Northern Border Pipeline and Tuscarora for all of its available cash;

     o    majority control and operation of Northern Border Pipeline by
          affiliates of Enron Corp., any further developments in the Enron
          bankruptcy proceedings, and the creation of a new pipeline operating
          company;

     o    regulatory decisions, particularly those of the FERC;

     o    the failure of a shipper on either one of the pipelines in which the
          Partnership has an interest to perform its contractual obligations;

     o    the ability of affiliates of Sierra Pacific Resources to continue to
          meet their contractual obligations to Tuscarora;

     o    the ability of Northern Border Pipeline to recontract its capacity;

     o    cost and availability of acquisitions and the availability of Western
          Canadian natural gas for import into the United States;

     o    prevailing economic conditions, particularly conditions of the capital
          and equity markets;

and other risks discussed in the Partnership's filings with the Securities and
Exchange Commission (SEC), including the Partnership's Annual Report on Form
10-K for the year ended December 31, 2003. 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
statements.


                                       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

RESULTS OF OPERATIONS OF TC PIPELINES, LP

AS A RESULT OF THE PARTNERSHIP'S OWNERSHIP OF INVESTMENTS IN BOTH NORTHERN
BORDER PIPELINE AND TUSCARORA, THE FOLLOWING DISCUSSES FIRST THE RESULTS OF
OPERATIONS AND LIQUIDITY AND CAPITAL RESOURCES OF TC PIPELINES, THEN THOSE OF
EACH OF NORTHERN BORDER PIPELINE AND TUSCARORA IN THEIR ENTIRETY.

The following discussions of the financial condition and results of operations
of the Partnership, Northern Border Pipeline and Tuscarora should be read in
conjunction with the financial statement and notes thereto of the Partnership
included elsewhere in this report (see Item 1. Financial Statements). For more
detailed information regarding the basis of presentation for the following
financial information, see the notes to the condensed financial statements of
the Partnership.

OVERVIEW

TC PipeLines, LP was formed in 1998 to acquire, own and participate in the
management of United States based pipeline assets. 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. TC PipeLines GP, Inc., a wholly owned subsidiary of TransCanada, is
the general partner of the Partnership. The Partnership owns a 30% general
partner interest in Northern Border Pipeline and a 49% general partner interest
in Tuscarora.

INVESTMENT IN NORTHERN BORDER PIPELINE COMPANY

Northern Border Pipeline owns a 1,249-mile United States interstate pipeline
system that transports natural gas from the Montana-Saskatchewan border to
markets in the midwestern United States. The Partnership acquired its 30%
interest in Northern Border Pipeline from affiliates of its general partner. The
Partnership has one member and 30% of the voting power of the Northern Border
Pipeline management committee.

The remaining 70% general partner interest in Northern Border Pipeline is held
by Northern Border Partners, L.P., a publicly traded limited partnership. The
general partners of Northern Border Partners are Northern Plains Natural Gas
Company and Pan Border Gas Company, both Enron affiliates, and Northwest Border
Pipeline Company, a subsidiary of TransCanada. TransCanada has one member and
12.25% of the voting power on the Northern Border Pipeline management committee.
TransCanada and TC PipeLines collectively have two members and an aggregate
42.25% of the voting power of the Northern Border Pipeline management committee.
Northern Plains and Pan Border collectively have two members and 57.75% of the
voting power of the Northern Border Pipeline management committee. Northern
Plains also serves as the operator of the Northern Border Pipeline system.

INVESTMENT IN TUSCARORA GAS TRANSMISSION COMPANY

Tuscarora owns a 240-mile United States interstate pipeline system that
transports natural gas from Oregon, where it interconnects with facilities of
Gas Transmission Northwest Corporation, to northern Nevada. The Partnership owns
a 49% general partner interest in Tuscarora. The remaining general partner
interest in Tuscarora is held 50% by Sierra Pacific Resources and 1% by TCPL
Tuscarora Ltd., an indirect subsidiary of TransCanada. Under the Tuscarora
partnership agreement, voting power of the management committee is allocated
among Tuscarora's three general partners in proportion to their general partner
interests in Tuscarora. The Tuscarora pipeline system is operated by Tuscarora
Gas Operating Company, a wholly owned subsidiary of Sierra Pacific Resources.
Sierra Pacific Power Company, a subsidiary of Sierra Pacific Resources, is
Tuscarora's largest shipper, accounting for approximately 68% of Tuscarora's
available capacity.

On December 1, 2002, Tuscarora completed and placed into service an expansion of
its pipeline system. The expansion consisted of the addition of two compressor
stations, located along the Tuscarora mainline, as well as an 11-mile pipeline
extension from Tuscarora's previous terminus near Reno, Nevada to Wadsworth,
Nevada. The expansion increased Tuscarora's capacity from 127 million cubic feet
per day to approximately 182 million cubic feet per day. The new capacity is
contracted under long-term firm contracts ranging from ten to fifteen years.
Under the terms of these transportation contracts, approximately 70% of the
contracts related to the new capacity came into effect upon commencement of
service. The remaining 30% of new contracts came into effect by the end of 2003.


                                       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

CRITICAL ACCOUNTING POLICY

TC PipeLines accounts for its investments in both Northern Border Pipeline and
Tuscarora using the equity method of accounting as detailed in notes two and
three to the condensed financial statements. The equity method of accounting is
appropriate where the investor does not control but is able to exercise
significant influence over the operating and financial policies of an investee.
TC PipeLines is able to exercise significant influence over its investments in
Northern Border Pipeline and Tuscarora as evidenced by its representation on
their respective management committees.

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, respectively.

FIRST QUARTER 2004 COMPARED WITH FIRST QUARTER 2003

Net income increased $1.8 million, or 15%, to $13.7 million for the first
quarter of 2004, compared to $11.9 million for the same period in 2003. 2004
first quarter net income reflects an increase in equity income from both
Northern Border Pipeline and Tuscarora.

Equity income from the Partnership's investment in Northern Border Pipeline
increased $1.5 million, or 14%, to $12.5 million for the first quarter of 2004,
compared to $11.0 million for the same period in 2003. In the first quarter of
2004, Northern Border Pipeline's revenues were higher than the same period in
2003, which is primarily due to an increase in Northern Border Pipeline's
ability to generate and retain more revenues from the sale of short-term
capacity and additional transportation services. Northern Border Pipeline's
interest expense was lower during the first quarter of 2004 compared to the
same period in 2003 due primarily to lower average interest rates and lower
average debt balances outstanding.

Equity income from the Partnership's investment in Tuscarora increased $0.5
million, or 38%, to $1.8 million for the first quarter of 2004, compared to $1.3
million for the same period in 2003. Tuscarora's revenues increased primarily
due to new transportation contracts related to the 2002 expansion.

The Partnership recorded general and administrative expenses of $0.5 million and
$0.4 million for the first quarter of 2004 and 2003, respectively.

The Partnership recorded financial charges of $0.1 million and zero for the
first quarter of 2004 and 2003, respectively.

LIQUIDITY AND CAPITAL RESOURCES OF TC PIPELINES, LP

DEBT AND CREDIT FACILITIES

TC PipeLines, LP's debt and credit facilities outstanding at March 31, 2004 are
as follows:

<Table>
<Caption>
                                                           Payments Due by Period
                                             ----------------------------------------------------
                                              Less Than                                After 5
                                  Total        1 Year      1-3 Years     4-5 Years      Years
                               ------------------------------------------------------------------
                                                     (Millions of dollars)
                               ------------------------------------------------------------------
<S>                            <C>           <C>          <C>           <C>          <C>
Revolving Credit Facility          14.5           -           14.5            -            -
                               ------------------------------------------------------------------
Total                              14.5           -           14.5            -            -
                               ------------------------------------------------------------------
                               ------------------------------------------------------------------
</Table>


                                       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

CASH DISTRIBUTION POLICY OF TC PIPELINES, LP

During the subordination period, which generally cannot end before June 30,
2004, the Partnership makes 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 is 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 is 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 is 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 cash distributions over specified cash
          distribution thresholds.

2004 FIRST QUARTER CASH DISTRIBUTION

On April 20, 2004, the board of directors of the general partner declared the
Partnership's 2004 first quarter cash distribution in the amount of $0.55 per
unit. This distribution will be paid on May 14, 2004 to unitholders of record as
of April 30, 2004. The first quarter cash distribution, totaling $10.1 million,
will be paid in the following manner: $9.1 million to the holders of common
units (including $1.5 million to an affiliate of TransCanada as holder of
2,800,000 common units and $1.0 million to the general partner as holder of
1,872,870 common units), $0.5 million to the general partner as holder of
the subordinated units, $0.3 million to the general partner as holder of
incentive distribution rights, and $0.2 million to the general partner in
respect of its 2% general partner interest.

CASH FLOWS FROM OPERATING ACTIVITIES

Cash flows provided by operating activities decreased $0.1 million, to $13.4
million for the first quarter of 2004 compared to $13.5 million for the same
period in 2003. In the first quarter of 2004 and 2003, the Partnership received
cash distributions of $14.5 million and $12.5 million, respectively, from its
equity investment in Northern Border Pipeline. The Partnership also received
cash distributions of $1.5 million from its equity investment in Tuscarora in
each of the first quarters of 2004 and 2003.

CASH FLOWS FROM INVESTING ACTIVITIES

In the first quarter of 2004, the Partnership contributed $19.5 million,
representing its 30% share of a $65.0 million cash call issued by Northern
Border Pipeline to its partners on January 27, 2004. The funds have been used by
Northern Border Pipeline to repay a portion of its existing indebtedness. The
payment to Northern Border Pipeline was funded through the use of cash from
operations and existing credit facilities. This cash contribution was offset by
$2.0 million return of capital from Northern Border Pipeline.

CASH FLOWS FROM FINANCING ACTIVITIES

In the first quarter of 2004, the Partnership paid $10.1 million in cash
distributions. See 2004 FIRST QUARTER CASH DISTRIBUTION above. On March 8,
2004 the Partnership renewed its Revolving Credit Facility with Bank One, NA,
as administrative agent. Under the renewed Revolving Credit Facility, the
Partnership may borrow up to an aggregate principal amount of $30.0 million.
Loans under the Revolving Credit Facility bear interest, at the option of the
Partnership, at a one-, two-, three-, or six-month LIBOR plus 1.25% or at a
floating rate based on the higher of the federal funds effective rate plus
0.5% and the prime rate. The Revolving Credit Facility matures on February 28,
2006. Amounts borrowed may be repaid in part or in full prior to that time
without penalty. The Revolving Credit Facility may be used 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
unitholders and the general partner, if necessary. In the first quarter of
2004, the Partnership borrowed an aggregate of $9.0 million under the
Revolving Credit Facility. The Partnership had $14.5 million and $5.5 million
outstanding under the Revolving Credit Facility at March 31, 2004 and December
31, 2003, respectively.


                                       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

The interest rate on the Revolving Credit Facility averaged 2.39% and 2.70% for
the three months ended March 31, 2004 and 2003, respectively and, at March 31,
2004 and December 31, 2003, the interest rate was 2.36% and 2.42%, respectively.

On May 28, 2003, the Partnership renewed its $40.0 million 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 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 unitholders and the general partner, if necessary. The Partnership had no
borrowings outstanding under the TransCanada Credit Facility as at March 31,
2004 and December 31, 2003, respectively.

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
during the remainder of 2004, TC PipeLines expects to fund these requirements
with operating cash flows, debt and/or equity.

RESULTS OF OPERATIONS OF NORTHERN BORDER PIPELINE COMPANY

IN THE FOLLOWING DISCUSSION OF THE RESULTS OF NORTHERN BORDER PIPELINE, ALL
AMOUNTS REPRESENT 100% OF THE OPERATIONS OF NORTHERN BORDER PIPELINE, IN WHICH
THE PARTNERSHIP HAS HELD A 30% INTEREST SINCE MAY 28, 1999.

The discussion and analysis of Northern Border Pipeline's financial condition
and operations are based on Northern Border Pipeline's financial statements,
which were prepared in accordance with accounting principles generally accepted
in the United States of America. The following discussion and analysis should be
read in conjunction with Northern Border Pipeline's financial statements
included elsewhere in this report.

OVERVIEW

For Northern Border Pipeline, there are several major business drivers as
summarized in the "Overview, Results of Operations of Northern Border
Pipeline", included in TC PipeLines' Annual Report on Form 10-K for the year
ended December 31, 2003.

Firm transportation contracts representing approximately 30% of Northern
Border Pipeline's contracted capacity, or 778 million cubic feet per day,
expired late in 2004. Northern Border Pipeline has successfully extended
contracts for 88 million cubic feet per day with existing shippers and has
begun a regulatorily mandated process involving existing shippers' rights of
first refusal (ROFR) for their respective contracted capacity. The ROFR
process, which began on April 1, 2004 and will conclude in mid-June 2004, is
an auction process where the current shipper, whose contracted capacity is
expiring, is allowed to match the best bid for that capacity. Any remaining
unsold capacity is then offered on a first come first served basis. The
success of the auction process will depend on natural gas price comparisons
between Alberta, Canada and Ventura, Iowa. Northern Border Pipeline continues
to believe that the fundamentals of supplies and markets support its ongoing
success in re-contracting its capacity.

CRITICAL ACCOUNTING POLICIES

Certain amounts included in or affecting Northern Border Pipeline's Financial
Statements and related disclosures must be estimated, requiring it to make
certain assumptions with respect to values or conditions that cannot be known
with certainty at the time the financial statements are prepared. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Any effects on Northern Border Pipeline's business, financial position or
results of operations resulting from revisions to these estimates are recorded
in the period in which the facts that give rise to the revision become known.


                                       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

Northern Border Pipeline's significant accounting policies are summarized in
Note 2 - Notes to Financial Statements of Northern Border Pipeline Company
included in TC PipeLines' Annual Report on Form 10-K for the year ended December
31, 2003. Certain of Northern Border Pipeline's accounting policies are of more
significance in its financial statement preparation process than others.
Northern Border Pipeline's accounting policies conform to Statement of Financial
Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types
of Regulation." Accordingly, certain assets that result from the regulated
ratemaking process are recorded that would not be recorded under accounting
principles generally accepted in the United States of America for nonregulated
entities. Northern Border Pipeline continually assesses whether the regulatory
assets are probable of future recovery by considering such factors as regulatory
changes and the impact of competition. If future recovery ceases to be probable,
Northern Border Pipeline would be required to write-off the regulatory assets at
that time. At March 31, 2004, Northern Border Pipeline has reflected regulatory
assets of $8.0 million, which are being recovered from its shippers over varying
periods of time.

Northern Border Pipeline's long-lived assets are stated at original cost.
Northern Border Pipeline must use estimates in determining the economic useful
lives of those assets. For utility property, no retirement gain or loss is
included in income except in the case of retirements or sales of entire
regulated operating units. The original cost of utility property retired is
charged to accumulated depreciation and amortization, net of salvage and cost of
removal.

Northern Border Pipeline's accounting for financial instruments follows SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" which
requires that every derivative instrument be recorded on the balance sheet as
either an asset or liability measured at its fair value. The statement requires
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement. At March 31, 2004, Northern
Border Pipeline's balance sheet included assets from derivative financial
instruments of $17.7 million.

RESULTS OF OPERATIONS

The following sets out summarized financial information for Northern Border
Pipeline for the three months ended March 31, 2004 and 2003 and as at March 31,
2004 and December 31, 2003. 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 MARCH 31 (UNAUDITED)
-------------------------------------------------------------------------------------------
(MILLIONS OF DOLLARS)                                           2004                 2003
-------------------------------------------------------------------------------------------
<S>                                               <C>                  <C>
NORTHERN BORDER PIPELINE INCOME STATEMENT
Revenues                                                        83.3                 79.9
Costs and expenses                                             (17.0)               (16.8)
Depreciation                                                   (14.5)               (14.5)
Financial charges                                              (10.2)               (11.8)
Other income/(expense)                                           0.1                 (0.1)
                                                  -----------------------------------------
Net income                                                      41.7                 36.7
                                                  -----------------------------------------
                                                  -----------------------------------------
</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>
                                                       MARCH 31, 2004    December 31, 2003
(MILLIONS OF DOLLARS)                                     (UNAUDITED)            (AUDITED)
---------------------------------------------------------------------------------------------
<S>                                                <C>                  <C>
NORTHERN BORDER PIPELINE BALANCE SHEET
ASSETS
Cash and cash equivalents                                        46.0                 28.7
Other current assets                                             41.5                 40.8
Plant, property and equipment, net                            1,577.7              1,591.8
Other assets                                                     30.6                 30.0
                                                   ------------------------------------------
                                                              1,695.8              1,691.3
                                                   ------------------------------------------
                                                   ------------------------------------------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities                                              64.7                 62.3
Reserves and deferred credits                                     5.0                  5.1
Long-term debt, net of current maturities                       765.5                821.5
Partners' Equity
   Partners' capital                                            855.8                797.2
   Accumulated other comprehensive income                         4.8                  5.2
                                                   ------------------------------------------
                                                              1,695.8              1,691.3
                                                   ------------------------------------------
                                                   ------------------------------------------
</Table>

FIRST QUARTER 2004 COMPARED WITH FIRST QUARTER 2003

Net income to partners increased $5.0 million for the first quarter of 2004, as
compared to the same period in 2003. Northern Border Pipeline's net income was
increased by higher operating revenues and decreases in interest expense.

Operating revenues increased $3.4 million, for the first quarter of 2004, as
compared to the same period in 2003. The increase in Northern Border Pipeline's
revenues was due to several factors. Northern Border Pipeline was able to
generate and retain additional revenue from the sale of short-term capacity,
which represented approximately $1.8 million of the increase. The leap year
added an additional day of transportation, which approximated $0.9 million of
the revenue increase. Under a condition of Northern Border Pipeline's rate case
settlement, it was previously required to share interruptible transportation and
new services revenue with its shippers. This condition expired in October 2003
and allowed Northern Border Pipeline to realize an additional $0.7 million of
revenue during the first quarter of 2004.

Interest expense decreased $1.6 million for the first quarter of 2004, as
compared to the same period in 2003, due to a decrease in Northern Border
Pipeline's average interest rate as well as a decrease in average debt
outstanding.

LIQUIDITY AND CAPITAL RESOURCES OF NORTHERN BORDER PIPELINE COMPANY

DEBT AND CREDIT FACILITIES

Northern Border Pipeline's debt and credit facilities outstanding at March 31,
2004 are as follows:

<Table>
<Caption>
                                                                                  Payments Due by Period
                                                                            -----------------------------------
                                                                              Current Portion      Long-Term
                                                                   Total     (Less Than 1 Year)     Portion
                                                                   --------------------------------------------
                                                                               (Millions of dollars)
<C>                                                                <C>        <C>                   <C>
$175 million Pipeline Credit Agreement, average 2.18%, due 2005      74.0            -                74.0
6.25% Senior Notes due 2007                                         225.0            -               225.0
7.75% Senior Notes due 2009                                         200.0            -               200.0
7.50% Senior Notes due 2021                                         250.0            -               250.0
                                                                   --------------------------------------------
Total                                                               749.0            -               749.0
                                                                   --------------------------------------------
                                                                   --------------------------------------------
</Table>


                                       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

Northern Border Pipeline has outstanding interest rate swap agreements with
notional amounts totaling $225 million that expire in May 2007. Under the
interest rate swap agreements, Northern Border Pipeline makes payments to
counterparties at variable rates based on the LIBOR and in return receives
payments based on a 6.25% fixed rate. At March 31, 2004 the average effective
interest rate on Northern Border Pipeline's interest rate swap agreements was
2.31%.

Short-term liquidity needs will be met by operating cash flows and through the
Northern Border Pipeline credit agreement. Long-term capital needs may be met
through the ability to issue long-term indebtedness.

CASH FLOWS FROM OPERATING ACTIVITIES

Cash flows provided by operating activities were $57.8 million in the first
quarter of 2004 as compared to $43.3 million for the comparable period in 2003.
Increases in operating revenues and lower interest expense for 2004 contributed
approximately $5.0 million to the increase between 2004 and 2003. In addition,
the first quarter of 2003 reflects lower cash flows from operating activities of
approximately $9.6 million due to the discontinuance of certain shipper
transportation prepayments.

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures were $0.3 million for the first quarter of 2004 as compared
to $1.9 million for the comparable period in 2003. The capital expenditures for
2004 and 2003 were primarily related to renewals and replacements of existing
facilities.

Total capital expenditures for 2004 are estimated to be $16 million primarily
related to renewals and replacements of existing facilities. Northern Border
Pipeline currently anticipates funding its 2004 capital expenditures primarily
by borrowing under the Pipeline Credit Agreement and using operating cash flows.

CASH FLOWS FROM FINANCING ACTIVITIES

Cash flows used in financing activities were $40.2 million for the first quarter
of 2004 as compared to $47.8 million for the comparable period in 2003.
Distributions to partners were $48.2 million and $41.8 million in the first
quarters of 2004 and 2003, respectively. Effective January 1, 2004, each
quarterly distribution is equal to 100% of distributable cash flow as determined
by the previous quarter's earnings before interest expense, taxes other than
income, depreciation and amortization, less interest expense and less
maintenance capital expenditures.

A distribution of approximately $56.2 million was declared for the first quarter
of 2004 and paid on May 3, 2004.

Contributions from partners were $65.0 million in the first quarter of 2004. In
the first quarter of 2003, borrowings on long-term debt totaled $22.0 million.
Total payments on debt were $57.0 million and $28.0 million in 2004 and 2003,
respectively.

UPDATE ON THE IMPACT OF ENRON'S CHAPTER 11 FILING ON NORTHERN BORDER PIPELINE'S
BUSINESS

As discussed in TC PipeLines' Annual Report on Form 10-K for the year ended
December 31, 2003, on December 2, 2001, Enron Corp. and certain of its
wholly-owned subsidiaries filed a voluntary petition for bankruptcy protection
under Chapter 11 of the United States Bankruptcy Code. Refer to TC PipeLines'
Annual Report on Form 10-K for the year ended December 31, 2003 for the full
discussion of impacts of Enron's Chapter 11 Filing on Northern Border
Pipeline's business.

Northern Plains Natural Gas Company and Pan Border Gas Company, subsidiaries of
Enron, are two of the general partners of Northern Border Partners, LP, which
owns the 70% interest in Northern Border Pipeline. Northern Plains is also the
operator of the Northern Border pipeline system. On March 31, 2004, Enron
transferred its ownership interest in Northern Plains Natural Gas Company and
Pan Border Gas Company to CrossCountry Energy, LLC (CrossCountry) a newly
formed pipeline operating company. In addition, CrossCountry and Enron entered
into a transition services agreement pursuant to which Enron will provide to
CrossCountry, on an interim, transitional basis, various services, including
but not limited to (i) information technology services (ii) accounting system
usage rights and administrative support and (iii) payroll, employee benefits
and administrative services. In turn, these services are provided to Northern
Border Pipeline through Northern Plains. The agreement terminates on the
earlier of a sale of CrossCountry or December 31, 2004. The agreement may be
extended by mutual agreement of the parties and approval of the Official
Committee of Unsecured Creditors.


                                       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 has been advised by the management of Northern Plains
that they believe these services will continue to be provided either through a
new transition services agreement, from CrossCountry or through agreement with
third parties.

On January 9, 2004, the Bankruptcy Court approved as complete the amended joint
Chapter 11 plan and related disclosure statement (Chapter 11 Plan). The Chapter
11 Plan has been submitted to the creditors for approval. A number of creditors
have filed objections to the Chapter 11 Plan. The Bankruptcy Court rescheduled
to June 3, 2004 a hearing on the approval. Under the Chapter 11 Plan, it is
anticipated that if CrossCountry is not sold to a third party, as permitted by
the Chapter 11 Plan, its shares would be distributed directly or indirectly to
creditors and debtors.

For additional risks associated with Enron's Chapter 11 filing, please read the
Partnership's Annual Report on Form 10-K for the year ended December 31, 2003 -
"Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Results of Operations of Northern Border Pipeline
Company -Impact of Enron's Chapter 11 Filing on Northern Border Pipeline's
Business."

UPDATE TO POTENTIAL PUBLIC UTILITY HOLDING COMPANY ACT (PUHCA) REGULATION

As more fully discussed in TC PipeLines' Annual Report on Form 10-K for the year
ended December 31, 2003, on March 9, 2004, Enron registered as a holding company
under the Public Utility Holding Company Act of 1935 (PUHCA). Under PUHCA,
Northern Border Pipeline is a subsidiary of a registered holding company.
Immediately after Enron registered, the SEC issued an order granting Enron and
its subsidiaries, including Northern Border Pipeline, authority to undertake
certain transactions without further authorization from the SEC under PUHCA.

In April, Northern Border Pipeline entered into an amendment with the lenders
under its credit agreement that will allow Northern Border Pipeline, as a
subsidiary of a registered holding company to continue to borrow funds as
needed.

UPDATE TO FORT PECK INDIAN RESERVATION FILED LAWSUIT AND RIGHT-OF-WAY
SETTLEMENT

On July 31, 2001, the Assiniboine and Sioux Tribes of the Fort Peck Indian
Reservation (Tribes) filed a lawsuit in Tribal Court against Northern Border
Pipeline 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 Indian
Reservation. Since the filing of the lawsuit, the Tribes have continued to
assess annual utilities taxes of approximately $1.8 million per year, which
remain unpaid. Based upon federal court decisions and other defenses,
Northern Border Pipeline believes that the Tribes do not have the authority
to impose these taxes. The Tribes and Northern Border Pipeline, through a
mediation process, have held settlement discussions and have reached a
settlement in principle on pipeline right-of-way lease and taxation issues,
subject to final documentation and necessary government approvals. This
settlement grants to Northern Border Pipeline, among other things, (i) an
option to renew the pipeline right-of-way lease upon agreed terms and
conditions on or before April 1, 2011 for a term of 25 years with a renewal
right for an additional 25 years; (ii) a present right to use additional
tribal lands for expanded facilities; and (iii) release and satisfaction of
all tribal taxes against Northern Border Pipeline. If this settlement is
executed by the Tribes and approved by the Bureau of Indian Affairs, in
consideration of this option and other benefits, Northern Border Pipeline
will pay a lump sum amount of $5.9 million and an annual payment
approximating $1.5 million effective April 2004 until April 2011. Northern
Border Pipeline intends to seek regulatory recovery of the costs resulting
from the settlement. Northern Border Pipeline advises that it is unable to
predict at this time if or when all the approvals will be obtained. Northern
Border Pipeline advises that the outcome of this settlement will not have a
material adverse impact on its results of operations for 2004 or financial
position.

RESULTS OF OPERATIONS OF TUSCARORA GAS TRANSMISSION COMPANY

IN THE FOLLOWING DISCUSSION OF THE RESULTS OF TUSCARORA, ALL AMOUNTS REPRESENT
100% OF THE OPERATIONS OF TUSCARORA, IN WHICH THE PARTNERSHIP HAS HELD A 49%
INTEREST SINCE SEPTEMBER 1, 2000.


                                       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

CRITICAL ACCOUNTING POLICY

Tuscarora's accounting policies conform to SFAS No. 71, "Accounting for the
Effects of Certain Types of Regulation." Accordingly, certain assets that result
from the regulated ratemaking process are recorded that would not be recorded
under generally accepted accounting principles for nonregulated entities.

RESULTS OF OPERATIONS

The following sets out summarized financial information for Tuscarora for the
three months ended March 31, 2004 and 2003 and as at March 31, 2004 and December
31, 2003. 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 MARCH 31 (UNAUDITED)
---------------------------------------------------------------------------------------
(MILLIONS OF DOLLARS)                                       2004                 2003
---------------------------------------------------------------------------------------
<S>                                           <C>                  <C>
TUSCARORA INCOME STATEMENT
Revenues                                                     8.3                  7.4
Costs and expenses                                          (1.2)                (1.2)
Depreciation                                                (1.6)                (1.6)
Financial charges                                           (1.5)                (1.6)
                                              -----------------------------------------
Net income                                                   4.0                  3.0
                                              -----------------------------------------
                                              -----------------------------------------
</Table>

<Table>
<Caption>
                                                     MARCH 31, 2004    December 31, 2003
(MILLIONS OF DOLLARS)                                   (UNAUDITED)            (AUDITED)
-------------------------------------------------------------------------------------------
<S>                                              <C>                  <C>
TUSCARORA BALANCE SHEET
ASSETS
Cash and cash equivalents                                       7.1                  1.8
Other current assets                                            3.0                  4.3
Plant, property and equipment, net                            140.5                141.9
Other assets                                                    1.5                  1.6
                                                 -----------------------------------------
                                                              152.1                149.6
                                                 -----------------------------------------
                                                 -----------------------------------------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities                                             8.3                  6.7
Long-term debt                                                 80.8                 80.8
Partners' Equity
   Partners' capital                                           62.9                 62.0
   Accumulated other comprehensive income                       0.1                  0.1
                                                 -----------------------------------------
                                                              152.1                149.6
                                                 -----------------------------------------
                                                 -----------------------------------------
</Table>

FIRST QUARTER 2004 COMPARED WITH FIRST QUARTER 2003

Net income increased $1.0 million, or 33%, to $4.0 million for the first quarter
of 2004, compared to $3.0 million for the same period in 2003. This increase is
primarily due to higher revenues resulting from new long-term firm
transportation contracts which commenced in November 2003 related to Tuscarora's
recent expansion.

Revenues earned by Tuscarora increased $0.9 million, or 12%, to $8.3 million for
the first quarter of 2004, compared to $7.4 million for the same period in 2003.
This increase is due to incremental revenues generated from new transportation
contracts resulting from Tuscarora's expansion in 2002.

Costs and expenses incurred for the first quarter of 2004 were approximately
the same as the $1.2 million for the same period in 2003.

Depreciation recorded by Tuscarora of $1.6 million for the first quarter of 2004
was unchanged from the first quarter of 2003.


                                       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

Financial charges of Tuscarora decreased $0.1 million, or 6%, to $1.5 million
for the first quarter of 2004, compared to $1.6 million for the same period last
year. This decrease is due primarily to lower interest rates in the first
quarter of 2004.

LIQUIDITY AND CAPITAL RESOURCES OF TUSCARORA GAS TRANSMISSION COMPANY

DEBT AND CREDIT FACILITIES

Tuscarora's debt and credit facilities outstanding at March 31, 2004 are as
follows:

<Table>
<Caption>
                                                                    Payments Due by Period
                                                    -------------------------------------------------------
                                                    Less Than 1                                 After 5
                                         Total          Year       1-3 Years     4-5 Years       Years
                                      ---------------------------------------------------------------------
                                                             (Millions of dollars)
                                      ---------------------------------------------------------------------
<S>                                   <C>            <C>          <C>           <C>           <C>
Series A Senior Notes due 2010                68.9           3.6           7.3           6.7          51.3
Series B Senior Notes due 2010                 7.1           0.3           0.8           1.0           5.0
Series C Senior Notes due 2012                 9.4           0.7           1.5           1.7           5.5
Operating Leases                               0.5           0.1           0.2           0.2             -
Commitments(1)                                 3.9           1.1           2.2           0.6             -
                                      ---------------------------------------------------------------------
Total                                         89.8           5.8          12.0          10.2          61.8
                                      ---------------------------------------------------------------------
                                      ---------------------------------------------------------------------
</Table>

(1) Tuscarora is party to a contract with a third party for maintenance services
on certain components of its pipeline-related equipment. The contract expires in
November 2007.

CASH FLOWS FROM OPERATING ACTIVITIES

Cash flows generated from operating activities increased $3.4 million to $8.5
million in the first quarter of 2004 compared to $5.1 million in the same period
last year primarily due to decreases in working capital and increased net income
relating to new long-term transportation contracts resulting from Tuscarora's
expansion in 2002.

CASH FLOWS FROM INVESTING ACTIVITIES

In the first quarter of 2004, cash flows used in investing activities decreased
by $0.1 million, to $0.1 million compared to the same period last year. This is
primarily due to decreased capital expenditures as a result of the completion of
the 2002 expansion.

In the first quarter of 2003, Tuscarora used $0.2 million for capital
expenditures primarily related to its 2002 expansion.

CASH FLOWS FROM FINANCING ACTIVITIES

In the first quarter of 2004, Tuscarora had no outstanding balance under its
revolving credit facility, and paid cash distributions of $3.1 million.

In the first quarter of 2003, Tuscarora reported cash flows used in financing
activities of $0.7 million. Tuscarora repaid the $4.6 million balance
outstanding on its revolving credit facility which expired on January 3, 2003.
Tuscarora received contributions from partners of $8.5 million and paid a cash
distribution of $3.0 million as well as a return of capital to its partners of
$1.6 million in the first quarter of 2003.


                                       20
<Page>

                    PART I. FINANCIAL INFORMATION (CONTINUED)
     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                        RESULTS OF OPERATIONS (CONCLUDED)

                                TC PIPELINES, LP

UPDATE ON SIERRA PACIFIC RESOURCES

As discussed in the Partnership's Annual Report on Form 10-K for the year ended
December 31, 2003, Enron Power Marketing Inc. (Enron Power Marketing), filed a
lawsuit asserting claims for damages related to termination of its power supply
agreements with Nevada Power Company and Sierra Pacific Power Company
(Tuscarora's largest shipper with approximately 68% of contracted capacity
through 2015). On April 5, 2004, Sierra Pacific Resources, the parent company to
Sierra Pacific Power issued a press release and filed a Current Report on Form
8-K with the SEC advising that the federal bankruptcy court judge overseeing the
bankruptcy case of Enron Power Marketing authorized an agreement that had been
reached between Sierra Pacific Resources' two electric utilities and Enron Power
Marketing. Under the agreement an additional $25 million will be placed into
escrow and Enron Power Marketing will request no additional cash until the
current appeal process involving the dispute over $336 million in terminated
power contracts is resolved.

Sierra Pacific Power to date remains current on its shipping contracts with
Tuscarora.


                                       21
<Page>

                    PART I. FINANCIAL INFORMATION (CONTINUED)
       ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                                TC PIPELINES, LP

TC PipeLines has interest rate exposure resulting from its Revolving Credit
Facility which is subject to variability in LIBOR interest rates. Since
December 31, 2003, there has not been any material change to TC PipeLines'
interest rate exposure.

The Partnership is also influenced by the same factors that influence
Northern Border Pipeline and Tuscarora. Neither Northern Border Pipeline nor
Tuscarora owns any of the natural gas they transport, therefore, does not
assume any of the related natural gas commodity price risk.

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's attempts to maintain a significant portion
of its debt portfolio in fixed rate debt. Northern Border Pipeline also uses
interest rate swaps as a means to manage interest rate expense by converting a
portion of fixed rate debt into variable rate debt to take advantage of
declining interest rates. At March 31, 2004, Northern Border Pipeline had $299.0
million of variable rate debt outstanding (approximately 40% of its debt
portfolio), $255.0 million of which was previously fixed rate debt that had
been converted to variable rate debt through the use of interest rate swaps.

Northern Border Pipeline has advised that if average interest rates change by
one percent compared to rates in effect as of March 31, 2004, its annual
interest expense would change by approximately $3 million. This amount has been
determined by considering the impact of the hypothetical interest rates on
variable rate borrowings outstanding as of March 31, 2004.


                                       22
<Page>

                    PART I. FINANCIAL INFORMATION (CONCLUDED)
                         ITEM 4. CONTROLS AND PROCEDURES

                                TC PIPELINES, LP

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Based on their evaluation for the three months ended March 31, 2004, covered by
the filing of this quarterly report, the President and Chief Executive Officer
and Chief Financial Officer of the general partner of the Partnership have
concluded that the disclosure controls and procedures referred to in paragraph 4
(b) of their certifications included as exhibits in this report were effective.


                                       23
<Page>

                           PART II. OTHER INFORMATION
                            ITEM 5. OTHER INFORMATION

                                TC PIPELINES, LP

In Northern Border Pipeline's pending proceeding before the FERC on procedures
for awarding capacity, the FERC issued an order on April 15, 2004 in which the
FERC requested comments from interested parties on whether the FERC's current
policy on awarding available capacity to a short-haul shipper appropriately
balances the risks to the pipeline, bidding shippers and other shippers on the
pipeline. Comments are due by June 15, 2004.


                                       24
<Page>

                     PART II. OTHER INFORMATION (CONCLUDED)
                    ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

                                TC PIPELINES, LP

(a)  Exhibits

 *   10.8.3   Third Amendment to Credit Agreement among TC PipeLines, LP, the
              Lenders Party thereto and Bank One N.A., as agent, March 8,
              2004 (Exhibit 10.8.3 to TC PipeLines, LP's Form 10-K, March 12,
              2004 ).

      31.1    Certification of President and Chief Executive Officer pursuant
              to Section 302 of the Sarbanes-Oxley Act of  2002.

      31.2    Certification of Chief Financial Officer pursuant to Section 302
              of the Sarbanes-Oxley Act of 2002.

      32.1    Certification of President and Chief Executive Officer pursuant
              to Section 906 of the Sarbanes-Oxley Act of 2002.

      32.2    Certification of Chief Financial Officer pursuant to Section 906
              of the Sarbanes-Oxley Act of 2002.

* Indicates exhibits incorporated by reference

(b)  Reports on Form 8-K

     1.   Report on Form 8-K dated January 16, 2004 and filed on January 20,
          2004 reporting that TC PipeLines, LP issued a press release announcing
          its fourth quarter distribution.

     2.   Report on Form 8-K dated January 29, 2004 and filed on January 30,
          2004 reporting that TC PipeLines, LP issued a press release announcing
          fourth quarter and annual results for the period ended December 31,
          2003.

     3.   Report on Form 8-K dated February 9, 2004 and filed on February 9,
          2004 reporting that Northern Border Pipeline filed a Form 8-K stating
          that, as previously reported on December 31, 2003, Enron and other
          related entities had filed with the SEC an application for exemption
          under Section 3(a)(4) of PUHCA. By SEC order entered January 30, 2004,
          the hearing date on Enron's pending application for exemption under
          PUHCA was postponed until February 9, 2004 and by SEC order entered
          February 6, 2004, the hearing date has now been postponed until
          further notice on the condition that a status report on Enron's offer
          of settlement be provided no later than March 8, 2004.

     4.   Report on Form 8-K dated March 2, 2004 and filed on March 2, 2004,
          furnishing the presentation of Mr. Ron Turner, President and Chief
          Executive Officer of TC PipeLines, LP at the Master Limited
          Partnership Investor Conference 2004, held in New York City on March
          2, 2004.

     5.   Report on Form 8-K dated March 10, 2004 and filed March 11, 2004,
          reporting that, on March 9, 2004, Enron registered as a holding
          company under the PUHCA of 1935. This Form 8-K also reported that on
          March 10, 2004, Northern Border Pipeline filed a Form 8-K announcing
          that the SEC has granted Enron's request on behalf of Northern Border
          Partners, which includes its subsidiary Northern Border Pipeline, to
          allow Northern Border Partners to declare and pay distributions. The
          approval is part of the SEC order issued March 9, 2004, after Enron
          registered as a holding company under PUHCA. The authorizations are
          effective until the earlier of the deregistration of Enron under PUHCA
          or July 31, 2005.

     6.   Report on Form 8-K dated April 26, 2004 and filed on April 26, 2004
          reporting that TC PipeLines, LP issued a press release announcing
          first quarter results for the period ended March 31, 2004.


                                       25
<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: May 7, 2004                         Russell K. Girling
                                          Chief Financial Officer
                                          (duly authorized officer)

                                      By: /s/ Amy Leong
                                          -------------------------------------
Date: May 7, 2004                         Amy Leong
                                          Controller (duly authorized officer)


                                       26