<PAGE>
                      UNITED STATES SECURITIES AND EXCHANGE
                                   COMMISSION
                             WASHINGTON, D.C. 20549

                             -----------------------

                                    FORM 10-K

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

 For the fiscal year ended December 31, 2001 Commission file number: 333-88577

                        NORTHERN BORDER PIPELINE COMPANY
             (Exact name of registrant as specified in its charter)


                      TEXAS                                       74-2684967
          (State or other jurisdiction                        (I.R.S. Employer
        of incorporation or organization)                    Identification No.)


               1111 SOUTH 103RD STREET, OMAHA, NEBRASKA 68124-1000
                  (Address of principal executive offices)(zip
               code) Registrant's telephone number, including area
                               code: 402-398-7700

                               -------------------

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:


<Table>
<Caption>
Title of each class                         Name of each exchange on which registered
-------------------                         -----------------------------------------
<S>                                         <C>
                                      None
</Table>

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                                      None

         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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X

         Aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant on March 1, 2002, was $0.

<PAGE>
                        NORTHERN BORDER PIPELINE COMPANY
                                TABLE OF CONTENTS


<Table>
<Caption>
                                                                     PAGE NO.
<S>      <C>                                                         <C>
                                     PART I

Item 1.  Business                                                           1
Item 2.  Properties                                                         9
Item 3.  Legal Proceedings                                                  9
Item 4.  Submission of Matters to a Vote of Security Holders               10

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related
          Stockholder Matters                                              11
Item 6.  Selected Financial Data                                           12
Item 7.  Management's Discussion and Analysis of Financial
          Condition and Results of Operations                              13
Item 7a. Quantitative and Qualitative Disclosures About
          Market Risk                                                      22
Item 8.  Financial Statements and Supplementary Data                       23
Item 9.  Changes in and Disagreements With Accountants on
          Accounting and Financial Disclosure                              23

                                    PART III

Item 10. Partnership Management                                            24
Item 11. Executive Compensation                                            26
Item 12. Security Ownership of Certain Beneficial Owners
          and Management                                                   31
Item 13. Certain Relationships and Related Transactions                    31

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and
          Reports on Form 8-K.                                             33
</Table>

<PAGE>
                                     PART I

ITEM 1.  BUSINESS

GENERAL

         Northern Border Pipeline Company is a general partnership formed in
1978. Our general partners are Northern Border Partners, L.P. and TC PipeLines,
LP, both of which are publicly traded partnerships. Each of Northern Border
Partners and TC PipeLines holds its interest in us, 70% and 30% of voting power,
respectively, through a subsidiary limited partnership. The general partners of
Northern Border Partners and its subsidiary limited partnership are Northern
Plains Natural Gas Company and Pan Border Gas Company, both subsidiaries of
Enron Corp., and Northwest Border Pipeline Company, a subsidiary of The Williams
Companies, Inc. The general partner of TC PipeLines and its subsidiary limited
partnership is TC PipeLines GP, Inc., a subsidiary of TransCanada PipeLines
Limited.

         We own an interstate pipeline system that transports natural gas from
the Montana-Saskatchewan border to natural gas markets in the midwestern United
States. This pipeline system connects with multiple pipelines that provide
shippers with access to the various natural gas markets served by those
pipelines. In the year ended December 31, 2001, we estimate that we transported
approximately 20% of the total amount of natural gas imported from Canada to the
United States. Over the same period, approximately 90% of the natural gas
transported was produced in the western Canadian sedimentary basin located in
the provinces of Alberta, British Columbia and Saskatchewan.

         We transport gas for shippers under a tariff regulated by the Federal
Energy Regulatory Commission ("FERC"). The tariff specifies the calculation of
amounts to be paid by shippers and the general terms and conditions of
transportation service on the pipeline system. Northern Border Pipeline's
revenues are derived from agreements for the receipt and delivery of gas at
points along the pipeline system as specified in each shipper's individual
transportation contract. Northern Border Pipeline does not own the gas that it
transports, and therefore it does not assume the related natural gas commodity
risk.

         Our management is overseen by a four-member management committee. Three
representatives are designated by Northern Border Partners, with each of its
general partners selecting one representative; and one representative is
designated by TC PipeLines. Voting power on the management committee is
allocated among Northern Border Partners' three representatives in proportion to
their general partner interests in Northern Border Partners. As a result, the
70% voting power of Northern Border Partners' three representatives on the
management committee is allocated as follows: 35% to the representative
designated by Northern Plains, 22.75% to the representative designated by Pan
Border and 12.25% to the representative designated by Northwest Border. Northern
Plains and Pan Border are subsidiaries of Enron. Therefore, Enron controls
57.75% of the voting power of the management committee and has the right to
select two of the members. On December 2, 2001, Enron filed a voluntary petition
for Chapter 11



<PAGE>

protection in bankruptcy court. See Item 7. "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Impact of Enron's
Chapter 11 Filing on Our Business" and Item 13. "Certain Relationships and
Related Transactions."

         Our pipeline system is operated by Northern Plains pursuant to an
operating agreement. As of December 31, 2001, Northern Plains employed
approximately 215 individuals located at its headquarters in Omaha, Nebraska,
and at various locations along the pipeline route. Northern Plains' employees
are not represented by any labor union and are not covered by any collective
bargaining agreements.

THE PIPELINE SYSTEM

         We own a 1,249-mile interstate pipeline system that transports natural
gas from the Montana-Saskatchewan border near Port of Morgan, Montana to natural
gas markets in the midwestern United States. Construction of the pipeline was
initially completed in 1982. Our pipeline system was expanded and/or extended in
1991, 1992, 1998 and 2001. Our pipeline system connects directly and through
multiple pipelines with various natural gas markets.

         Our pipeline system consists of 822 miles of 42-inch diameter pipe
designed to transport 2,374 million cubic feet per day ("mmcfd") from the
Canadian border to Ventura, Iowa; 30-inch diameter pipe and 36-inch diameter
pipe, each approximately 147 miles in length, designed to transport 1,484 mmcfd
in total from Ventura, Iowa to Harper, Iowa; 226 miles of 36-inch diameter pipe
and 19 miles of 30-inch diameter pipe designed to transport 844 mmcfd from
Harper, Iowa to Manhattan, Illinois (Chicago area); and 35 miles of 30-inch
diameter pipe designed to transport 545 mmcfd from Manhattan, Illinois to a
terminus near North Hayden, Indiana. Along the pipeline there are 16 compressor
stations with total rated horsepower of 499,000 and measurement facilities to
support the receipt and delivery of gas at various points. Other facilities
include four field offices and a microwave communication system with 51 tower
sites.

         On October 1, 2001, we completed construction and began operation of
our Project 2000 facilities. Project 2000 gives shippers access to industrial
natural gas consumers in northern Indiana through an interconnect with Northern
Indiana Public Service Company, a major midwest local distribution company, at
the terminus near North Hayden, Indiana and provides 545 mmcfd of transportation
capacity. Project 2000 also expands our delivery capability into the Chicago
area by approximately 30%. Capital expenditures for Project 2000 are
approximately $63 million. Project 2000 facilities include approximately 35
miles of 30-inch pipeline, one 13,000 horsepower compressor station in Illinois,
additional horsepower at two Iowa compressor stations and one meter station.

         Our pipeline system has pipeline access to natural gas reserves in the
western Canadian sedimentary basin in the provinces of Alberta, British Columbia
and Saskatchewan in Canada, as well as the Williston Basin in the United States.
The pipeline system also has access to synthetic gas produced at the Dakota
Gasification plant in North Dakota. At its northern end, the pipeline system's
gas supplies are received through an interconnection with TransCanada's
majority-owned



                                       2
<PAGE>

Foothills Pipe Lines (Sask.) Ltd. system in Canada, which is connected to
TransCanada's Alberta system and the pipeline system owned by Transgas Limited
in Saskatchewan. Our pipeline system also connects with facilities of Williston
Basin Interstate Pipeline at Glen Ullin and Buford, North Dakota, facilities of
Amerada Hess Corporation at Watford City, North Dakota and facilities of Dakota
Gasification Company at Hebron, North Dakota in the northern portion of the
pipeline system. For the year ended December 31, 2001, of the natural gas
transported on our pipeline system, approximately 90% was produced in Canada,
approximately 5% was produced by the Dakota Gasification plant and approximately
5% was produced in the Williston Basin.

INTERCONNECTS

         Our pipeline system connects with multiple pipelines that provide our
shippers with access to the various natural gas markets served by those
pipelines. The pipeline system interconnects with pipeline facilities of:

         o        Northern Natural Gas Company, an Enron subsidiary until
                  February 1, 2002, and now a subsidiary of Dynegy, Inc., at
                  Ventura, Iowa as well as multiple smaller interconnections in
                  South Dakota, Minnesota and Iowa;

         o        Natural Gas Pipeline Company of America at Harper, Iowa;

         o        MidAmerican Energy Company at Iowa City and Davenport, Iowa
                  and Cordova, Illinois;

         o        Alliant Power Company at Prophetstown, Illinois;

         o        Northern Illinois Gas Company at Troy Grove and Minooka,
                  Illinois;

         o        Midwestern Gas Transmission Company, a wholly owned subsidiary
                  of Northern Border Partners, near Channahon, Illinois;

         o        ANR Pipeline Company near Manhattan, Illinois;

         o        Vector Pipeline L.P. in Will County, Illinois;

         o        The Peoples Gas Light and Coke Company near Manhattan,
                  Illinois; and

         o        Northern Indiana Public Service Company near North Hayden,
                  Indiana at the terminus of the pipeline system.

         The Ventura, Iowa interconnect with Northern Natural Gas Company
functions as a large market center, where natural gas transported on the
pipeline system is sold, traded and received for transport to significant
consuming markets in the Midwest and to interconnecting pipeline facilities
destined for other markets.





                                       3
<PAGE>
SHIPPERS

         The pipeline system serves more than 50 firm transportation shippers
with diverse operating and financial profiles. Based upon shippers' contractual
obligations, as of December 31, 2001, 91% of the firm capacity is contracted by
producers and marketers. The remaining firm capacity is contracted to local
distribution companies (6%), interstate pipelines (2%) and end-users (1%). As of
December 31, 2001, the termination dates of these contracts ranged from March
31, 2002 to December 21, 2013, and the weighted average contract life, based
upon annual contractual obligations, was approximately five and one-half years
with just under 99% of capacity contracted through mid-September 2003. Contracts
for approximately 42% of the capacity will expire prior to November 2003. See
Item 7. "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Outlook."

         Our mix and number of shippers may change throughout the year as a
result of our shippers utilizing our capacity release provisions that allow them
to release all or part of their capacity to other shippers, either permanently
for the full term of their contract or temporarily. Under the terms of our
tariff, a temporary capacity release does not relieve the original contract
shipper from its payment obligations if the replacement shipper fails to pay for
the capacity temporarily released to it. Shippers on the pipeline system
temporarily released capacity during 2001 for varying periods of time. There
were also permanent releases of capacity to other shippers for the full term of
the contracts.

         As of December 31, 2001, the largest shipper, Mirant Americas Energy
Marketing, LP, is obligated for approximately 33.7% of the contracted firm
capacity. Of this amount, 24.4% of our contracted firm capacity was obtained
under temporary releases from Pan-Alberta Gas (U.S.) ("Pan Alberta") for a term
through October 31, 2002. Pan-Alberta's firm contracts expire October 31, 2003.
Mirant Americas Energy Marketing, LP, manages the assets of Pan-Alberta Gas,
Ltd., which include Pan-Alberta's contracts with Northern Border Pipeline.

         Some of our shippers are affiliated with our general partners. Enron
North America Corp. ("ENA"), a subsidiary of Enron, which also has filed for
bankruptcy protection, holds firm contracts representing 3.5% of capacity, a
portion of which (1.1%) has been temporarily released to a third party until
October 31, 2002. The third party that holds the 1.1% of capacity has filed a
complaint with the FERC requesting, in effect, that its contract be deemed
terminated as a consequence of ENA's filing for bankruptcy protection. We
believe this shipper's contract will remain in effect until October 31, 2002.
ENA's contractual obligations were supported by guarantees from Enron, which are
subject to Enron's filing for bankruptcy protection. Transcontinental Gas Pipe
Line Corporation, a subsidiary of Williams, holds a contract representing 0.7%
of capacity. See Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Impact of Enron's Chapter 11 Filing On Our
Business" and Item 13. "Certain Relationships and Related Transactions."

DEMAND FOR TRANSPORTATION CAPACITY

         Our long-term financial condition is dependent on the continued
availability of economic western Canadian natural gas supplies for




                                       4
<PAGE>
import into the United States. Natural gas reserves may require significant
capital expenditures by others for exploration and development drilling and the
installation of production, gathering, storage, transportation and other
facilities that permit natural gas to be produced and delivered to pipelines
that interconnect with the interstate pipelines' systems. Low prices for natural
gas, regulatory limitations or the lack of available capital for these projects
could adversely affect the development of additional reserves and production,
gathering, storage and pipeline transmission of western Canadian natural gas
supplies. Additional pipeline export capacity also could accelerate depletion of
these reserves. Furthermore, the availability of export capacity could also
affect the demand or value of the transport on us.

         Our business also depends on the level of demand for natural gas in the
markets the pipeline system serves. The volumes of natural gas delivered to
these markets from other sources affect the demand for both the natural gas
supplies and the use of our pipeline system. Demand for natural gas to serve
other markets also influences the ability and willingness of shippers to use our
pipeline system to meet demand in the markets that we serve.

         A variety of factors could affect the demand for natural gas in the
markets that we serve. These factors include:

      o  economic conditions;

      o  fuel conservation measures;

      o  alternative energy requirements and prices;

      o  climatic conditions;

      o  government regulation; and

      o  technological advances in fuel economy and energy generation devices.

         Interstate pipelines' primary exposure to market risk occurs at the
time existing transportation contracts expire and are subject to renegotiation.
A key determinant of the value that customers can realize from firm
transportation on the pipeline is the basis differential or market price spread
between two points on the pipeline. The difference in natural gas prices between
the points along the pipeline where gas enters and where gas is delivered
represents the gross margin that a customer can expect to achieve from holding
transportation capacity at any point in time. This margin and its variability
become important factors in determining the level of demand charges customers
are willing to commit to when they renegotiate their transportation contracts.
The basis differential between markets can be affected by trends in production,
available capacity, storage inventories, weather, and general market demand in
the respective areas.

         We cannot predict whether these or other factors will have an adverse
effect on demand for use of our pipeline system or how significant that adverse
effect could be.



                                       5
<PAGE>
INTERSTATE PIPELINE COMPETITION

         We compete with other pipeline companies that transport natural gas
from the western Canadian sedimentary basin or that transport natural gas to
end-use markets in the midwest. Our competitive position is affected by the
availability of Canadian natural gas for export, the availability of other
sources of natural gas and demand for natural gas in the United States. Demand
for transportation services on our system is affected by natural gas prices,
the relationship between export capacity from and production in the western
Canadian sedimentary basin and natural gas shipped from producing areas in the
United States. Shippers of natural gas produced in the western Canadian
sedimentary basin also have other options to transport Canadian natural gas to
the United States, including transportation on pipelines eastward in Canada or
to markets on the West Coast.

         The Alliance Pipeline, which was placed in service in December 2000,
competes directly with us in the transportation of natural gas from the western
Canadian sedimentary basin to the Chicago area. Williams has a minority interest
(14.6%) in Alliance Pipeline. Because it transports liquids-rich natural gas,
the Alliance Pipeline has no interconnections with other pipelines upstream of
the liquids extraction facilities, which are located near Chicago. This
contrasts with our pipeline system, which serves various markets through
interconnections with other pipelines along its route.

         The competitive impact of the Alliance Pipeline has been mitigated by
the continuing development of additional capacity to ship natural gas from the
Chicago area to other markets in the United States. Vector Pipeline L.P., which
interconnects with the Alliance Pipeline and transports gas eastward to a
terminus in eastern Canada, commenced operations in December 2000. Guardian
Pipeline proposes to be in service in November 2002 and to interconnect with
Northern Border Pipeline. Guardian Pipeline is targeting markets in northern
Illinois and Wisconsin and could provide access to additional markets for our
shippers.

         TransCanada and other unaffiliated companies own and operate pipeline
systems that transport natural gas from the same natural gas reserves in western
Canada that supply our shippers.

         Natural gas is produced in the United States and is also transported by
competing pipeline systems to the same markets as those served by our pipeline
system.

FERC REGULATION

         We are subject to extensive regulation by the FERC as a "natural gas
company" under the Natural Gas Act. Under the Natural Gas Act and the Natural
Gas Policy Act, the FERC has jurisdiction with respect to virtually all aspects
of our business, including:

      o  transportation of natural gas;

      o  rates and charges;



                                       6
<PAGE>

      o  construction of new facilities;

      o  extension or abandonment of service and facilities;

      o  accounts and records;

      o  depreciation and amortization policies;

      o  the acquisition and disposition of facilities; and

      o  the initiation and discontinuation of services.

         Where required, we hold certificates of public convenience and
necessity issued by the FERC covering the facilities, activities and services.
Under Section 8 of the Natural Gas Act, the FERC has the power to prescribe the
accounting treatment for items for regulatory purposes. Our books and records
may be periodically audited under Section 8.

         The FERC regulates the rates and charges for transportation in
interstate commerce. Natural gas companies may not charge rates exceeding rates
judged just and reasonable by the FERC. Generally, rates are based on the cost
of service including recovery of and a return on the pipeline's actual
historical cost investment. In addition, the FERC prohibits natural gas
companies from unduly preferring or unreasonably discriminating against any
person with respect to pipeline rates or terms and conditions of service. Some
types of rates may be discounted without further FERC authorization and rates
may be negotiated subject to FERC approval. The rates and terms and conditions
for our service are found in our FERC approved Gas Tariff.

         Under our tariff, we are allowed to charge for our services on the
basis of stated transportation rates established in our 1999 rate case. We also
may provide services under negotiated and discounted rates. Approximately 98% of
the agreed upon cost of service or revenue level is attributed to demand
charges. Firm shippers that contract for the stated transportation rate are
obligated to pay a monthly demand charge, regardless of the amount of natural
gas they actually transport, for the term of their contracts. The remaining 2%
of the agreed upon revenue level is attributed to commodity charges based on the
volumes of gas actually transported. Under the terms of settlement in our 1999
rate case, neither our existing shippers nor we can seek rate changes until
November 1, 2005, at which time we must file a new rate case. Prior to the new
rate case, we will not be permitted to increase rates if costs increase, nor
will we be required to reduce rates based on cost savings. Our earnings and cash
flow will depend on future costs, contracted capacity, the volumes of gas
transported and our ability to recontract capacity at acceptable rates.

         Until new transportation rates are approved by FERC, we continue to
depreciate our transmission plant at the FERC approved annual depreciation rate.
Our annual depreciation rate on transmission plant in service is 2.25%. In order
to avoid a decline in transportation rates set in future rate cases as a result
of accumulated depreciation, we must maintain or increase our rate base by
acquiring or constructing assets that replace or add to existing pipeline
facilities or by adding new facilities.



                                       7
<PAGE>

         In our 1995 rate case, the FERC addressed the issue of whether the
federal income tax allowance included in our proposed cost of service was
reasonable in light of recent FERC rulings. In those rulings, the FERC held that
an interstate pipeline is not entitled to a tax allowance for income
attributable to limited partnership interests held by individuals. The
settlement of our 1995 rate case provided that until at least December 2005, we
could continue to calculate the allowance for income taxes in the manner we had
historically used. In addition, a settlement adjustment mechanism of $31 million
was implemented, which effectively reduces the return on rate base. These
provisions of the 1995 rate case were maintained in the settlement of our 1999
rate case.

         We also provide interruptible transportation service. Interruptible
transportation service is transportation in circumstances when capacity is
available after satisfying firm service requests. The maximum rate that may be
charged to interruptible shippers is calculated as the sum of the firm
transportation maximum reservation charge and commodity rate. Under our tariff,
we share net interruptible transportation service revenue and any new services
revenue on an equal basis with our firm shippers through October 31, 2003. In
addition, we are permitted to retain revenue from interruptible transportation
service to offset any decontracted firm capacity.

         After October 31, 2003, all our revenues from interruptible and other
new transportation service will no longer be subject to sharing and thus will be
retained by us. During 2001, we filed and received approval to implement several
new services. We intend to continue to develop other new services to meet
customer needs and seek the FERC's authorization to implement such services.
Revenues from these sources are expected to be minimal for the near term.

         We are subject to the requirements of FERC Order Nos. 497 and 566,
which prohibit preferential treatment by interstate natural gas pipelines of
their marketing affiliates and govern how information may be provided to those
marketing affiliates. In September 2001, the FERC issued a Notice of Proposed
Regulation proposing new standards of conduct that would apply uniformly to
natural gas pipelines and transmitting public utilities. FERC is proposing one
set of standards to govern relationships between regulated transmission
providers and all energy affiliates. Should a final rule be issued in this
proceeding, we may be subject to standards that could result in additional
costs.

ENVIRONMENTAL AND SAFETY MATTERS

         Our operations are subject to federal, state and local laws and
regulations relating to safety and the protection of the environment, which
include the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
Clean Air Act, as amended, the Clean Water Act, as amended, the Natural Gas
Pipeline Safety Act of 1969, as amended, and the Pipeline Safety Act of 1992.



                                       8
<PAGE>

         Although we believe that our operations and facilities are in general
compliance in all material respects with applicable environmental and safety
regulations, risks of substantial costs and liabilities are inherent in pipeline
operations, and we cannot provide any assurances that we will not incur such
costs and liabilities. Moreover, it is possible that other developments, such as
increasingly strict environmental and safety laws, regulations and enforcement
policies thereunder, and claims for damages to property or persons resulting
from our operations, could result in substantial costs and liabilities to us. If
we are unable to recover such resulting costs, earnings and cash distributions
could be adversely affected.

ITEM 2.   PROPERTIES

         We hold the right, title and interest in our pipeline system. With
respect to real property, the pipeline system falls into two basic categories:
(a) parcels which are owned in fee, such as certain of the compressor stations,
meter stations, pipeline field office sites, and microwave tower sites; and (b)
parcels where the interest derives from leases, easements, rights-of-way,
permits or licenses from landowners or governmental authorities permitting the
use of such land for the construction and operation of the pipeline system. The
right to construct and operate the pipeline system across certain property was
obtained through exercise of the power of eminent domain. We continue to have
the power of eminent domain in each of the states in which we operate, although
we may not have the power of eminent domain with respect to Native American
tribal lands.

         Approximately 90 miles of our pipeline are located on fee, allotted and
tribal lands within the exterior boundaries of the Fort Peck Indian Reservation
in Montana. Tribal lands are lands owned in trust by the United States for the
Fort Peck Tribes and allotted lands are lands owned in trust by the United
States for an individual Indian or Indians. We do have the right of eminent
domain with respect to allotted lands.

         In 1980, we entered into a pipeline right-of-way lease with the Fort
Peck Tribal Executive Board, for and on behalf of the Assiniboine and Sioux
Tribes of the Fort Peck Indian Reservation. This pipeline right-of-way lease,
which was approved by the Department of the Interior in 1981, granted to us the
right and privilege to construct and operate our pipeline on certain tribal
lands. This pipeline right-of-way lease expires in 2011.

         In conjunction with obtaining a pipeline right-of-way lease across
tribal lands located within the exterior boundaries of the Fort Peck Indian
Reservation, we also obtained a right-of-way across allotted lands located
within the reservation boundaries. Most of the allotted lands are subject to a
perpetual easement either granted by the Bureau of Indian Affairs for and on
behalf of individual Indian owners or obtained through condemnation. Several
tracts are subject to a right-of-way grant that has a term of 15 years, expiring
in 2015.

ITEM 3.   LEGAL PROCEEDINGS

         On July 31, 2001, the Assiniboine and Sioux Tribes of the Fort Peck
Indian Reservation filed a lawsuit in Tribal Court against us to



                                       9
<PAGE>

collect more than $3 million in back taxes, together with interest and
penalties. The lawsuit relates to a utilities tax on certain of our properties
within the Fort Peck Reservation. Based on recent decisions by the federal
courts and other defenses, we believe that the Tribes do not have authority to
impose the tax and that the lawsuit will not have a material adverse impact on
us.

         We are not currently parties to any other legal proceedings that,
individually or in the aggregate, would reasonably be expected to have a
material adverse impact on our results of operations or financial position.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         There were no matters submitted to a vote of security holders during
2001.



                                       10
<PAGE>
                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

         The general partnership interests of Northern Border Pipeline Company
are not traded in an established public market. See Item 12. "Security Ownership
of Certain Beneficial Owners and Management."

         The payment of distributions to our general partners is restricted
under the terms of the 1997 Pipeline Credit Agreement and the 1992 Senior Notes.
See Note 5, "Credit Facilities and Long-Term Debt," in the Notes to Financial
Statements referred to in Item 8. "Financial Statements and Supplementary Data."
Under the most restrictive covenants, approximately $110 million of partners'
capital could be distributed as of December 31, 2001.



                                       11
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA
(in thousands, except other financial and operating data)

         The following table sets forth, for the periods and at the dates
indicated, selected historical financial data for us. The selected financial
information should be read in conjunction with the Financial Statements and the
Notes and Item 7. "Management's Discussion and Analysis of Financial Condition
and Results of Operations," which are included elsewhere in this report.

<Table>
<Caption>
                                                YEAR ENDED DECEMBER 31,
                          ---------------------------------------------------------------------
                             2001           2000          1999          1998           1997
                          -----------    -----------   -----------   -----------    -----------
<S>                       <C>            <C>           <C>           <C>            <C>
INCOME DATA:
Operating revenues, net   $   313,088    $   311,022   $   298,347   $   196,600    $   186,050
Operations and
   maintenance                 33,695         41,548        38,708        29,447         28,522
Depreciation and
   amortization                57,516         57,328        51,908        40,989         38,708
Taxes other than income        25,636         27,979        30,320        21,381         22,393
Regulatory credit                  --             --            --        (8,878)            --
                          -----------    -----------   -----------   -----------    -----------

   Operating income           196,241        184,167       177,411       113,661         96,427
Interest expense, net          55,351         65,161        60,214        25,541         29,360
Other income (expense)           (432)         8,058         1,363        12,111          5,705
                          -----------    -----------   -----------   -----------    -----------
Net income to partners    $   140,458    $   127,064   $   118,560   $   100,231    $    72,772
                          ===========    ===========   ===========   ===========    ===========


CASH FLOW DATA:
Net cash provided by
   operating activities   $   197,322    $   175,967   $   171,466   $   103,777    $   115,328
Capital expenditures           54,659         15,523       101,678       651,169        152,070
Distributions to
   partners                   143,032        134,904       127,163        61,205         99,322

BALANCE SHEET DATA
   (AT END OF PERIOD):
Property, plant
   and equipment, net     $ 1,685,665    $ 1,686,992   $ 1,731,394   $ 1,714,523    $ 1,100,890
Total assets                1,751,869      1,768,505     1,796,691     1,790,889      1,147,120
Long-term debt,
   including current
   maturities                 863,666        863,267       900,459       862,000        459,000
Partners' equity              833,594        826,995       834,835       843,438        581,412

OTHER FINANCIAL DATA:
Ratio of earnings to
   fixed charges (1)              3.5            2.9           3.0           3.2            3.2

OPERATING DATA:
Natural gas delivered
   (millions of cubic
    feet)                     820,851        852,674       834,833       608,187        621,262
Average throughput
   (millions of cubic
    feet per day)               2,312          2,400         2,353         1,706          1,735
</Table>

----------

(1)      "Earnings" means the sum of net income from continuing operations and
         fixed charges. "Fixed charges" means the sum of (a) interest expensed
         and capitalized; (b) amortized premiums, discounts and capitalized
         expenses related to indebtedness; and (c) an estimate of interest
         within rental expenses.



                                       12
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         Our discussion and analysis of our financial condition and operations
are based on our Financial Statements, which were prepared in accordance with
accounting principles generally accepted in the United States of America. You
should read the following discussion and analysis in conjunction with our
Financial Statements included elsewhere in this report.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         Certain amounts included in or affecting our Financial Statements and
related disclosures must be estimated, requiring us 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 our 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.

         Our significant accounting policies are summarized in Note 2 - Notes to
Financial Statements included elsewhere in this report. Certain of our
accounting policies are of more significance in our financial statement
preparation process than others. Our 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
generally accepted accounting principles for nonregulated entities. Our
long-lived assets are stated at original cost. We 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
extraordinary retirements or sales. The original cost of utility property
retired is charged to accumulated depreciation and amortization, net of salvage
and cost of removal. Finally, our accounting for financial instruments follows
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
which we adopted on January 1, 2001.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2001 COMPARED WITH THE YEAR ENDED DECEMBER 31, 2000

         Our net income to partners increased $13.4 million (11%) for the year
ended December 31, 2001, as compared to the same period in 2000. We benefited
from reductions in interest rates, which reduced our interest expense for 2001
as compared to 2000. We were also able to control our operating costs resulting
in reductions to operations and maintenance expenses.



                                       13
<PAGE>
         Operating revenues, net increased $2.1 million for the year ended
December 31, 2001, as compared to the same period in 2000 primarily due to
additional revenues associated with the completion of Project 2000 in October
2001. See Item 1. "Business - The Pipeline System."

      Operations and maintenance expense decreased $7.9 million (19%) for the
year ended December 31, 2001, as compared to the same period in 2000, due
primarily to a decrease in our regulatory commission expense, decreased costs to
operate two of our electric-powered compressor units and decreased employee
payroll, benefit and administrative expenses for the pipeline. Operations and
maintenance expense for 2001 includes approximately $1.3 million of bad debt
expense related to ENA. See "Impact of Enron's Chapter 11 Filing On Our
Business" and Item 13. "Certain Relationships and Related Transactions."

         Taxes other than income decreased $2.3 million (8%) for the year ended
December 31, 2001, as compared to the same period in 2000, due primarily to a
decrease in use taxes paid to the state of Minnesota. We had been paying
Minnesota a use tax based on the fuel used at our compressor stations located in
the state. A recent ruling by the Minnesota Supreme Court directed that the
compressor fuel used was exempt from this particular tax. We filed for a refund
of amounts previously paid, which was received by us in March 2002.

         Interest expense, net decreased $9.8 million (15%) for the year end
December 31, 2001, as compared to the same period in 2000, due primarily to a
decrease in our average interest rate between 2000 and 2001 as well as a
decrease in average debt outstanding.

         Other income (expense) decreased $8.5 million for the year ended
December 31, 2001, as compared to the same period in 2000. Other income
(expense) for 2001 includes a net charge of approximately $1.5 million for an
uncollectible receivable from a telecommunications company that had purchased
excess capacity on our communication system. In 2000, we had recorded
approximately $1.7 million of income from the sale of excess capacity on our
communication system. Other income (expense) for 2000 also included $5.6 million
of income due to a reduction in reserves previously established for regulatory
issues as the result of the settlement of our rate case.

YEAR ENDED DECEMBER 31, 2000 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1999

         Operating revenues, net for the year ended December 31, 2000 were
$311.0 million as compared to $298.3 million for the same period in 1999, an
increase of $12.7 million (4%). Our net operating revenues for 2000 reflect the
significant terms of the rate case settlement discussed in Item 1. "Business -
FERC Regulation." Operating revenues for 1999 were determined under Northern
Border Pipeline's former cost of service tariff.

         Operations and maintenance expense increased $2.8 million (7%) for the
year ended December 31, 2000, from the same period in 1999, due primarily to
increased employee payroll and benefit expenses and costs to operate our two
electric-powered compressor units.



                                       14
<PAGE>
         Depreciation and amortization expense increased $5.4 million (10%) for
the year ended December 31, 2000, as compared to the same period in 1999, due
primarily to an increase in the depreciation rate applied to transmission plant.
As a result of the rate case settlement, we used a depreciation rate for
transmission plant of 2.25% for 2000. We had used a depreciation rate of 2.0%
for 1999.

         Taxes other than income decreased $2.3 million (8%) for the year ended
December 31, 2000, as compared to the same period in 1999, due primarily to
adjustments to previous estimates of ad valorem taxes.

         Interest expense, net increased $4.9 million (8%) for the year ended
December 31, 2000, as compared to the same period in 1999, due primarily to an
increase in average interest rates between 1999 and 2000. The impact of the
increase in interest rates was partially offset by a decrease in average debt
outstanding.

         Other income increased $6.7 million (491%) for the year ended December
31, 2000, as compared to the same period in 1999, due primarily to a reduction
in reserves previously established for regulatory issues as the result of the
settlement of our rate case.

LIQUIDITY AND CAPITAL RESOURCES

SUMMARY OF CERTAIN CONTRACTUAL OBLIGATIONS

<Table>
<Caption>
                                                     Payments Due by Period
                                      -----------------------------------------------------
                                       Less Than                                   After
                            Total       1 Year       1-3 Years     4-5 Years      5 Years
                        -----------   -----------   -----------   -----------   -----------
                                                   (In Thousands)
<S>                     <C>           <C>           <C>           <C>           <C>
1992 Series C and D
  Senior Notes          $   143,000   $    78,000   $    65,000   $        --   $        --
Senior Notes due 2009       200,000            --            --            --       200,000
Senior Notes due 2021       250,000            --            --            --       250,000
Credit Agreement            272,000       272,000            --            --            --
                        -----------   -----------   -----------   -----------   -----------

Total                   $   865,000   $   350,000   $    65,000   $        --   $   450,000
                        ===========   ===========   ===========   ===========   ===========
</Table>

DEBT AND CREDIT FACILITIES

         In February 2002, Moodys' Investor Services, Inc. ("Moodys") placed us
on credit review for a possible downgrade in credit rating. At this time, no
action has been taken by Moodys. If Moodys was to issue the downgrade, we expect
our credit rating to remain above investment grade.

         We had previously entered into a 1997 credit agreement ("Pipeline
Credit Agreement") with certain financial institutions, which is comprised of a
$100 million five-year revolving credit facility and a $272 million term loan,
both maturing in June 2002. At December 31, 2001, no amounts were outstanding
under the five-year revolving credit facility. We anticipate refinancing the
Pipeline Credit Agreement in the second quarter of 2002. Our refinancing plans
are to issue $225 million of senior notes and to enter into a $175 million
revolving credit facility.

         At December 31, 2001, we also had outstanding $143 million of senior
notes issued in a $250 million private placement under a July




                                       15
<PAGE>

1992 note purchase agreement. The note purchase agreement provides for four
series of notes, Series A through D, maturing between August 2000 and August
2003. The Series A Notes with a principal amount of $66 million and Series B
Notes with a principal amount of $41 million were repaid in August 2000 and
August 2001, respectively. The Series C Notes with a principal amount of $78
million mature in August 2002. We anticipate borrowing on the refinanced
Pipeline Credit Agreement to repay the Series C Notes.

           In September 2001, we completed a private offering of $250 million of
7.50% Senior Notes due 2021 ("2001 Pipeline Senior Notes") and in August 1999,
we completed a private offering of $200 million of 7.75% Senior Notes due 2009
("1999 Pipeline Senior Notes"). Both the 2001 Pipeline Senior Notes and the 1999
Pipeline Senior Notes were subsequently exchanged in a registered offering for
notes with substantially identical terms. The indentures under which the 2001
Pipeline Senior Notes and 1999 Pipeline Senior Notes were issued do not limit
the amount of unsecured debt we may incur, but they do contain material
financial covenants, including restrictions on incurrence of secured
indebtedness. The proceeds from the 2001 Pipeline Senior Notes and 1999 Pipeline
Senior Notes were used to reduce indebtedness outstanding under the Pipeline
Credit Agreement.

           In November 2001, we entered into forward starting interest rate
swaps with notional amounts totaling $150 million related to the planned
issuance of senior notes discussed previously. The swaps were entered into to
hedge the fluctuations in Treasury rates and spreads between the execution date
of the swaps and the issuance date of the senior notes.

           Short-term liquidity needs will be met by operating cash flows and
through the Pipeline Credit Agreement, which is being refinanced in 2002.
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 increased $21.4 million to
$197.3 million for the year ended December 31, 2001, as compared to the same
period in 2000, primarily due to increased earnings and positive changes in
working capital. During 2001, we realized net cash outflows of approximately
$4.7 million related to our rate case refunds.

         Cash flows provided by operating activities increased $4.5 million to
$176.0 million for the year ended December 31, 2000, as compared to the same
period in 1999, primarily due to increased earnings. During 2000, we realized
net cash inflows of approximately $2.4 million related to our rate case, which
included approximately $25.1 million of amounts collected subject to refund less
estimated refunds issued in late December 2000 totaling approximately $22.7
million.

CASH FLOWS FROM INVESTING ACTIVITIES

         Capital expenditures of $54.7 million for the year ended December 31,
2001 included $49.0 million for Project 2000 (see Item 1.




                                       16
<PAGE>

"Business - The Pipeline System"). For the same period in 2000, capital
expenditures were $15.5 million, which included $7.4 million for Project 2000.
The remaining capital expenditures for 2001 and 2000 are primarily related to
renewals and replacements of existing facilities.

         Total capital expenditures for 2002 are estimated to be $12 million,
including $2.5 million for Project 2000. We currently anticipate funding our
2002 capital expenditures primarily by borrowing on debt facilities and using
operating cash flows.

CASH FLOWS FROM FINANCING ACTIVITIES

         Cash flows used in financing activities increased $12.0 million to
$160.7 million for the year ended December 31, 2001, as compared to the same
period in 2000. Distributions to partners increased $8.1 million to $143.0
million for the year ended December 31, 2001, as compared to the same period in
2000, primarily due to an increase in our net income. The net proceeds from the
issuance of the 2001 Pipeline Senior Notes totaled approximately $247.2 million
and were used for repayment of amounts borrowed under the Pipeline Credit
Agreement. In August 2001 and August 2000, we repaid our Series B and A Notes of
$41 million and $66 million, respectively, primarily by borrowing under the
Pipeline Credit Agreement. During the year ended December 31, 2001, we had net
repayments under the Pipeline Credit Agreement of $197.0 million, which
consisted of borrowings of $136.0 million and repayments of $333.0 million. For
the comparable period in 2000, we had net borrowings of $30.0 million, which
consisted of borrowings of $75.0 million and repayments of $45.0 million. For
the year ended December 31, 2001, Northern Border Pipeline recognized a decrease
in bank overdrafts of $22.4 million. At December 31, 2000, Northern Border
Pipeline reflected the bank overdraft primarily due to rate case refund checks
outstanding. In September 2001, Northern Border Pipeline paid approximately $4.1
million to terminate interest rate swap agreements upon issuance of the 2001
Pipeline Senior Notes. The swaps were entered into to hedge the fluctuations in
Treasury rates and spreads between the execution date of the swaps and the
issuance of the 2001 Pipeline Senior Notes.

         Cash flows used in financing activities increased $58.8 million to
$148.7 million for the year ended December 31, 2000, as compared to same period
in 1999. Distributions paid to the general partners increased $7.7 million to
$134.9 million for the year ended December 31, 2000 as compared to the same
period of 1999 primarily due to an increase in our net income. For the year
ended December 31, 2000, borrowings under the Pipeline Credit Agreement, which
were primarily used to repay $66 million of Series A Notes, were $75 million as
compared to borrowings of $90 million for the same period in 1999, which were
primarily used to finance a portion of the capital expenditures for The Chicago
Project, which was our expansion and extension project completed in December
1998. Financing activities for the year ended December 31, 1999 included $197.4
million from the issuance of the 1999 Pipeline Senior Notes, net of associated
debt discounts and issuance costs, and $12.9 million from the termination of
interest rate forward agreements. Payments on the Pipeline Credit Agreement were
$45 million for the year ended December 31, 2000, as compared to $263 million
for the same period 1999. At December 31,



                                       17
<PAGE>

2000, we reflected bank overdrafts of approximately $22.4 million primarily due
to refund checks outstanding.

NEW ACCOUNTING PRONOUNCEMENTS

         In the third quarter of 2001, the Financial Accounting Standards Board
issued SFAS No. 143, "Accounting for Asset Retirement Obligations" and SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets." See Note
9 - Notes to Financial Statements.

IMPACT OF ENRON'S CHAPTER 11 FILING ON OUR BUSINESS

         On December 2, 2001, Enron filed a voluntary petition for bankruptcy
protection under Chapter 11 of the United States Bankruptcy Code. Certain wholly
owned Enron subsidiaries also filed for Chapter 11 bankruptcy protection on
December 2, 2001 and thereafter. We have not filed for bankruptcy protection.
Northern Plains, Pan Border and Northwest Border are the general partners of
Northern Border Partners, our 70% general partner. Each of Northern Plains and
Pan Border are wholly owned subsidiaries of Enron, and Northwest Border is a
wholly owned subsidiary of Williams. Northern Plains and Pan Border were not
among the Enron companies filing for Chapter 11 protection.

         The business of Enron and its subsidiaries that have filed for
bankruptcy protection are currently being administered under the direction and
control of the bankruptcy court. An unsecured creditors committee has been
appointed in the Chapter 11 cases. The creditors committee is responsible for
general oversight of the bankruptcy case, and has the power, among other things,
to: investigate the acts, conduct, assets, liabilities, and financial condition
of the debtor, the operation of the debtor's business and the desirability of
the continuance of such business; participate in the formulation of a plan of
reorganization; and file acceptances or rejections to such a plan. Factors taken
into account by Enron in making its business decisions, while in Chapter 11, may
include decisions with respect to its investment in Northern Plains, Pan Border
and Northern Border Partners, which decisions may affect Northern Border
Pipeline.

         CURRENT EFFECTS

         The deterioration of Enron's creditworthiness and its bankruptcy filing
have had an impact on us. At the time of the filing of the bankruptcy petition,
we had a number of contractual relationships with Enron and its subsidiaries.
Northern Plains provided and continues to provide operating and administrative
services for us. Northern Plains has continued to meet their operational and
administrative service obligations under the existing agreements, and we believe
they will continue to do so.

         ENA, a wholly owned subsidiary of Enron that is in bankruptcy, is a
party to shipper contracts obligating ENA to pay for 3.5% of our capacity.
Through October 31, 2002, ENA has temporarily released 1.1% of this capacity to
a third party. Although this third party has filed a complaint with the FERC
requesting, in effect, that its contract be deemed terminated as a consequence
of ENA's filing for bankruptcy protection, we believe this shipper's contract
will remain in effect until October 31, 2002. ENA has not assumed or rejected
these contracts, but its ability to use the capacity has been suspended until it
provides adequate assurance of credit support. We estimate that we have
aggregate financial exposure over the next 12 months of approximately $9 million
of revenues under the firm transportation contracts with



                                       18
<PAGE>

ENA. We believe that failure by ENA to perform its obligations under the firm
transportation contracts will not have a material adverse impact on our
financial condition.

         We have retained outside counsel and intend to assert and file claims
against ENA's bankruptcy estate related to these agreements. These claims will
likely be deemed to be unsecured claims against certain of the Enron related
Chapter 11 companies. We are uncertain regarding the ultimate amount of damages
for breach of contract or other claims that we will be able to establish in the
bankruptcy proceeding, and we cannot predict the amounts that we will collect or
the timing of collection. We believe, however, that any such delay in collecting
or failure to collect will not have a material adverse effect on our financial
condition, and any amounts collected will not be material to us.

         Enron's filing for bankruptcy protection and related developments have
had other impacts on our business and management. Arthur Andersen LLP resigned
as our auditors, and we retained KPMG LLP as our new auditors. Enron has
received several requests for information from different agencies and committees
of the United States House of Representatives and Senate. Some of the
information requested from Enron may include information about us. In addition,
we are aware that the Senate Committee on Governmental Affairs has issued a
subpoena to Enron requesting documents disclosing Enron's communications with
the SEC and the FERC, as well as information on compensation matters. Because of
Enron's indirect ownership interest in us, we are willing to comply with the
mandate of the subpoena in such a manner that may be determined by the Committee
on Governmental Affairs of the Senate of the United States.

         POSSIBLE EFFECTS

         While Northern Plains and Pan Border have not filed for Chapter 11
bankruptcy protection, their stock is owned by Enron, which is in bankruptcy. It
is possible that in the course of Enron's bankruptcy proceedings, Enron could
attempt to sell its interest in Northern Plains and/or Pan Border, or take other
action with respect to their investment in Northern Border Partners. Enron could
also cause Northern Plains and Pan Border to file for bankruptcy protection. We
have had no current indication from Enron that they intend to sell the stock in
Northern Plains or Pan Border or cause such companies to file for bankruptcy
protection.

         We are managed by a four-member management committee. Three
representatives are designated by Northern Border Partners, with each of its
general partners selecting one representative, and one representative is
designated by TC PipeLines. The vote among Northern Border Partners'
representatives is in proportion to their general partner interests in Northern
Border Partners. As a result, the 70% voting interest of Northern Border
Partners' three representatives is allocated 35%, 22.75% and 12.25% among
Northern Plains, Pan Border and Northwest Border, respectively. If Enron were to
sell the stock of Northern Plains and Pan Border, the purchaser would have the
right to appoint a majority of our management committee and control our
activities, except for those activities requiring a unanimous vote which include
changes to our cash distribution policy, certain



                                       19
<PAGE>

expansions and extensions of the pipeline, some transfers of general partner
interests and settlement of rate cases.

         If Northern Plains and Pan Border were to file for bankruptcy
protection, Northern Border Partners' Partnership Agreement provides that they
would automatically be deemed to have withdrawn as general partners of Northern
Border Partners. It is possible that the enforceability of the automatic
withdrawal provisions in this partnership agreement may be challenged. The
success and impact of a challenge are unknown. Upon the occurrence of such
an event of withdrawal, the remaining general partner of Northern Border
Partners would have the right to purchase the withdrawing partners' general
partnership interests. If the remaining general partner does not purchase such
general partnership interests, the limited partners of Northern Border Partners
would have the right to elect new general partners. In either event, the party
acquiring the general partner interests currently held by Northern Plains and
Pan Border would have the right to appoint a majority of our management
committee and control our activities, except for those activities requiring a
unanimous vote.

         Northern Plains also serves as our operator. If Northern Plains were to
file for bankruptcy protection, it could potentially be removed as operator.
Certain of Northern Border Pipeline's credit agreements provide that it would be
an event of default thereunder if Northern Plains is replaced as operator
without the consent of the lenders thereunder.

         Other than the complaint against us filed with the FERC by the shipper
with temporarily released capacity, we are not aware of any claims made against
us that arise out of the Enron bankruptcy cases. We plan to continue to monitor
developments at Enron, to continue to assess the impact on us of our existing
agreements and relationships with Enron and its subsidiaries, and to take
appropriate action to protect our interests.

OUTLOOK

         We will continue to focus on safe, efficient, and reliable operations
and the further development of our pipeline. We intend to maintain our position
as a low cost transporter of Canadian gas to the midwestern U.S. and provide
highly valued services to our customers. Growth is expected to occur primarily
in market areas we serve through incremental projects supported by long-term
contracts. Project 2000, our recently completed extension into Indiana, is a
good example. This project, completed on time and well under budget, connects us
directly to a large Chicago-area gas distribution company (Northern Indiana
Public Service Company) and to industrial gas consumers in northern Indiana. We
also intend to continue to expand the marketing of new services to meet our
customers' needs. Depending on natural gas prices and gas development
activities, selected opportunities to connect new sources of supply to us may
arise. We are currently working with producers and marketers to develop the
contractual support for a new pipeline project, the Bison Pipeline, to connect
the coal bed methane reserves in the Powder River Basin to markets served by us.

         In 2002, we will begin contract extension discussions with our
customers for contracts that will expire prior to November 1, 2003, which
represents approximately 42% of our system capacity. Similar to other
industries, the value of capacity on interstate pipelines is driven by supply
and demand conditions. In particular, the




                                       20
<PAGE>
relationship between gas prices in Canada and prices in the midwestern U.S.
markets will determine the underlying value of transportation. This
relationship, and natural gas markets overall, has been volatile of late, which
is also an important factor in contracting for firm transportation capacity.
Under our FERC tariff, we may concurrently solicit bids for available capacity
from other parties subject to the existing customer's rights to match the best
offer. We can begin this process during a period that extends from 6 to 18
months before the termination date of the contract. The commencement of any
bidding process will be dependent upon the progress of negotiations and the
market conditions affecting the value of transportation on the pipeline. Based
on current conditions, contracts for service on our pipeline may require
discounts from maximum transportation rates established in our tariff and/or
shorter duration than our existing contract portfolio. Additionally, we may
enter into negotiated rate contracts involving charges established on the basis
of Canadian-midwestern U.S. gas price differentials or other factors.

RISK FACTORS AND INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

         Statements in this Annual Report that are not historical information
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements are identified as any statement that does not
relate strictly to historical or current facts. Forward-looking statements are
not guarantees of performance. They involve risks, uncertainties and
assumptions. The future results of our operations may differ materially from
those expressed in these forward-looking statements. Such forward-looking
statements include:

    o    the discussions in "Management's Discussion and Analysis of Financial
         Condition and Results of Operations - Impact of Enron's Chapter 11
         Filing On Our Business";

    o    the discussions in "Management's Discussion and Analysis of Financial
         Condition and Results of Operations -- Outlook"; and

    o    the discussions in "Management's Discussion and Analysis of Financial
         Condition and Results of Operations -- Liquidity and Capital
         Resources."

         Although we believe that our expectations regarding future events are
based on reasonable assumptions within the bounds of our knowledge of our
business, we cannot assure you that our goals will be achieved or that our
expectations regarding future developments will be realized.

         With this in mind, you should consider the following important factors
that could cause actual results to differ materially from those in the
forward-looking statements:

          o    Any shipper's failure to perform its contractual obligations
               could adversely impact our cash flows and financial condition.
               ENA has 3.5% of our firm capacity and has failed to pay its
               demand and any applicable commodity charges due for November 2001
               transport and thereafter. ENA has neither assumed nor




                                       21
<PAGE>

               rejected its contract and its ability to use the capacity has
               been suspended. Until ENA assumes or rejects its contracts, we
               are unable to recontract all or a portion of this capacity on a
               longer-term basis in the future.

          o    Since Northern Plains, our operator, is a wholly-owned subsidiary
               of Enron and depends on Enron and certain of its affiliates for
               some services it provides to us, potential further developments
               in the Enron Chapter 11 proceeding may cause Northern Plains to
               be unable to perform under its agreement. See "Impacts of Enron's
               Chapter 11 Filing On Our Business" above.

          o    Our ability to recontract capacity as existing contracts
               terminate for maximum transportation rates will be subject to a
               number of factors including availability of natural gas supplies
               from the western Canadian sedimentary basin, the demand for
               natural gas in our market areas and the basis differential
               between the receipt and delivery points on our system. See
               "Outlook" above and Item 1. "Business - Demand For Transportation
               Capacity."

          o    We are subject to extensive regulation by the FERC governing all
               aspects of our business, including our transportation rates.
               Under our 1999 rate case settlement, neither our existing
               customers nor we can seek rate changes until November 2005, at
               which time we are obligated to file a rate case. We can not
               predict what challenges we may have to our rates in the future.
               See Item 1. "Business-FERC Regulation."

          o    Our operations are subject to federal and state agencies for
               environmental protection and operational safety. We may incur
               substantial costs and liabilities in the future as a result of
               stricter environmental and safety laws, regulations and
               enforcement policies. See Item 1. "Business-Environmental and
               Safety Matters."

          o    Our ability to operate the pipeline on certain tribal lands will
               depend on our success in renegotiating before 2011 our
               right-of-way rights on tribal lands within the Fort Peck
               Reservation. See Item 2. "Properties."

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Our interest rate exposure results from variable rate borrowings from
commercial banks. To mitigate potential fluctuations in interest rates, we
attempt to maintain a significant portion of our debt portfolio in fixed rate
debt. As of December 31, 2001, approximately 69% of our debt portfolio is in
fixed rate debt.

         If average interest rates change by one percent point compared to rates
in effect as of December 31, 2001, annual interest expense would change by
approximately $2.7 million. This amount has been determined by considering the
impact of the hypothetical interest rates on variable rate borrowings
outstanding as of December 31, 2001.





                                       22
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The information required hereunder is included in this report as set
forth in the "Index to Financial Statements" on page F-1.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

          (a)  Effective February 5, 2002, Arthur Andersen LLP ("Andersen")
               resigned as auditors of Northern Border Pipeline.

          (b)  The reports of Andersen on Northern Border Pipeline's financial
               statements for the past two fiscal years did not contain an
               adverse opinion or disclaimer of opinion and were not qualified
               or modified as to audit scope, uncertainty or accounting
               principles. Andersen has advised us that it has not withdrawn any
               of its opinions expressed in their auditor's report for any
               periods for which they conducted audits of Northern Border
               Pipeline.

          (c)  The resignation by Andersen was not approved by the Management
               Committee of Northern Border Pipeline.

          (d)  During the preceding two years and in the subsequent interim
               periods, there were no disagreements with Andersen on any matters
               of accounting principles or practices, financial statement
               disclosures, or auditing scope or procedures, which if not
               resolved to the satisfaction of Andersen would have caused
               Andersen to make reference to the matter in their report.

          (e)  During the preceding two years and in the subsequent interim
               periods, there were no "reportable events" within the meaning of
               Item 304(a)(1)(v) of Regulation S-K.

          (f)  Northern Border Pipeline has retained the services of KPMG LLP as
               its independent auditor.




                                       23
<PAGE>
                                    PART III

ITEM 10.  PARTNERSHIP MANAGEMENT

         Northern Border Pipeline Company is overseen by the management
committee, which is composed of the following individuals:

    William R. Cordes, Chairman(1)

    Stanley C. Horton(1)

    Dennis J. McConaghy(2)

    James C. Moore(1)

----------

(1) Designated by Northern Border Partners.

(2) Designated by TC PipeLines.

         William R. Cordes (53) has been a member and Chairman of our management
committee since October 1, 2000. Mr. Cordes was named Chief Executive Officer of
Northern Border Partners in October 2000. Since October 2000, Mr. Cordes has
been the President and a director of Northern Plains, an Enron subsidiary and
our operator. He started his career with another Enron company, Northern
Natural, in 1970 and has worked in several management positions at Northern
Natural. From June of 1993 until September of 2000, he was President of Northern
Natural and from May of 1996 until September of 2000, he was President of
Transwestern Pipeline.

         Stanley C. Horton (52) was appointed to our management committee in
December 1998. Mr. Horton is the Chairman and Chief Executive Officer of Enron
Global Services, and has held that position since August 2001. From January 1997
to August 2001, he was Chairman and Chief Executive Officer of Enron
Transportation Services Company, formerly known as the Enron Gas Pipeline Group.
From February 1996 to January 1997, he was Co-Chairman and Chief Executive
Officer of Enron Operations Corp. From June 1993 to February 1996, he was
President and Chief Operating Officer of Enron Operations Corp. He is a Director
and Chairman of the Board of EOTT Energy Corp., the general partner of EOTT
Energy Partners, L.P. Mr. Horton also holds the elected position of officer
and/or director of the following companies that have filed for Chapter 11
bankruptcy protection:

         Calypso Pipeline, L.L.C. (Director)
         Enron Transportation Services Company (Chairman, President and Chief
            Executive Officer and Director)
         Enron Wind Corp. (Chairman, Director)
         Enron Wind Systems, Inc. (Director)
         Enron Wind Energy Systems Corp. (Chairman, Director)
         Enron Wind Maintenance Corp. (Chairman, Director)
         Enron Wind Constructors Corp. (Chairman, Director)

         Dennis J. McConaghy (50) has been a member of our management committee
since December 2000. He was appointed a director of TC PipeLines GP, Inc. (the
general partner of TC PipeLines, LP) in December 2000. His principal




                                       24
<PAGE>

occupation is Senior Vice-President Business Development for TransCanada, a
position he has held since October 2000. Prior to that time and since June 2000,
Mr. McConaghy was Senior Vice-President, Midstream/Divestments, TransCanada.
Prior to that time and since July 1998, Mr. McConaghy was Vice-President,
Strategy and Planning, TransCanada. Prior to that time and since May 1996, Mr.
McConaghy was Vice-President, Corporate Development, NOVA Corporation. Prior to
that time and since November 1995, Mr. McConaghy was Senior Vice-President and
Chief Financial Officer, NOVA Chemicals Ltd.

         James C. Moore (46) was named to our management committee on December
21, 2001. Mr. Moore has served as Senior Vice President of Group Planning and
Development for Williams Gas Pipeline since August 2001. He joined Williams in
1990 as Director of MIS and in 1992 he became Director of Business Development
for Williams Natural Gas. In August 2000, he was named Vice President of Group
Planning and Development for Williams Gas Pipeline. Mr. Moore serves as one of
Williams' representatives on the Canadian and U.S. boards of Alliance Pipeline.

         Day-to-day management and operations are the responsibility of the
operator, Northern Plains, as set forth in the operating agreement. We have no
employees or executive officers. Officers and employees of Northern Plains
provide services to our operations and we reimburse Northern Plains for such
costs. We do not compensate members of the management committee for their
services.

         There is also an audit and compensation committee composed of members
appointed by the management committee. The audit and compensation committee,
consisting of Mr. Moore and Mr. Paul F. MacGregor, Vice President, Business
Development, TC PipeLines, GP, Inc., oversees the annual audit process and
confers with KPMG LLP, our independent public accountants. The committee is also
responsible for setting up guidelines for compensation to be paid to the
executive officers of Northern Plains, each of whom spends at least a portion of
his or her time on our operations, for which Northern Plains is reimbursed as
indicated above. Currently, there is one vacancy on the committee.



                                       25
<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION

         Jerry L. Peters (44) has served as Treasurer of Northern Plains since
October 1998, Vice President of Finance for Northern Plains since July 1994 and
director of Northern Plains since August 1994. He has also been named Vice
President, Finance for Enron Transportation Services Company. He has been
associated with Northern Plains since 1985.

         The following table summarizes information regarding compensation paid
or accrued during each of the last three fiscal years to Jerry L. Peters and the
last two fiscal year to William R. Cordes (the "Named Officers") by Northern
Plains, our operator. Messrs. Cordes and Peters are both employees of Northern
Plains, but contribute services to our operations, for which we reimburse
Northern Plains.

                           SUMMARY COMPENSATION TABLE

<Table>
<Caption>
                                                                                                                         All Other
                                      Annual Compensation                      Long-Term Compensation                   Compensation
                                      -------------------                      ----------------------                   ------------
                                                                                             Securities
                                                                              Restricted     Underlying
                                                                Other Annual  Stock Awards  Options/SARs  LTIP Payouts
   Name & Position       Year        Salary(1)      Bonus(2)  Compensation(3)  ($)(4)(5)        (#)          ($)(6)         ($)(7)
                      -----------   -----------   ----------- --------------- -----------   -----------   -----------   -----------
<S>                   <C>           <C>           <C>         <C>             <C>           <C>           <C>           <C>
William R. Cordes            2001   $   312,000   $   250,000   $     8,550   $   227,150         6,475   $   300,000   $       255
Chief Executive              2000   $   311,000   $   250,000   $    15,000   $   137,529        17,405   $   131,250   $    13,110
Officer

Jerry L. Peters              2001   $   154,292   $   125,000   $     3,399   $    75,063         7,085   $        --   $       198
Chief Financial and          2000   $   145,293   $   110,000   $     3,708   $    75,036        15,040   $        --   $    10,091
Accounting Officer           1999   $   132,933   $   100,000   $     3,983   $        --         9,070   $        --   $     5,260
</Table>

(1)      Mr. Cordes was appointed President of Northern Plains and Chief
         Executive Officer of the Partnership on October 1, 2000.

(2)      Employees were able to elect to receive Northern Border phantom units,
         Enron Corp. phantom stock, and/or Enron Corp. stock options in lieu of
         all or a portion of an annual bonus payment. Mr. Cordes and Mr. Peters
         elected to receive Northern Border phantom units in lieu of a portion
         of the cash bonus payment under the Northern Border Phantom Unit Plan.
         Mr. Cordes received 1,914 units in 2001. Mr. Peters received 1,532
         units in 1999; 1,450 units in 2000; and 842 units in 2001. In each
         case, units will be released to both five years following the grant
         date.

(3)      Other Annual Compensation includes cash perquisite allowances, service
         awards and vacation payouts. Also, Enron maintained three deferral
         plans for key employees under which payment of base salary, annual
         bonus and long-term incentive awards could be deferred to a later
         specified date. Under the 1985 Deferral Plan, interest is credited on
         amounts deferred based on 150% of Moody's seasoned corporate bond yield
         index with a minimum rate of 12%, which for 1999, 2000 and 2001 was the
         minimum rate of 12%. No interest has been reported as Other Annual
         Compensation under the 1985 Deferral Plan for participating Named
         Officers because the crediting rates during 1999, 2000 and 2001 did not
         exceed 120% of the long-term Applicable Federal Rate of 14.38% in
         effect at the time the 1985 Deferral Plan was implemented. Beginning
         January 1, 1996, the 1994 Deferral Plan credits interest based on fund
         elections chosen by participants. Since earnings on deferred
         compensation invested in third-party investment vehicles, comparable to
         mutual funds, need not be reported, no interest has been reported as
         Other Annual Compensation under the 1994 Deferral Plan during 1999,
         2000 and 2001.

(4)      The aggregate total of shares in unreleased Enron restricted stock
         holdings and their values as of December 31, 2001, for each of the
         Named




                                       26
<PAGE>
         Officers is: Mr. Cordes, 4,295 shares valued at $2,577, and Mr. Peters,
         1,701 shares valued at $1,021. Dividend equivalents for all restricted
         stock awards accrue from date of grant and are typically paid upon
         vesting. Any dividends on Enron Corp. stock accrued and unreleased as
         of the date of Enron Corp's filing for bankruptcy will only be released
         in accordance with applicable bankruptcy law.

(5)      Mr. Cordes' employment agreement, as executed in September 2001,
         provided for a grant of 882 Northern Border Phantom Units valued as of
         July 30, 2001 at $115.6978 per unit and granted on October 1, 2001. The
         phantom units vest 100% on the fifth anniversary of the date of grant.

(6)      Reflects cash payments under the Enron Corp. Performance Unit Plan in
         2000 for the 1996-1999 period and in 2001 for the 1997-2000 period.
         Payments made under the Performance Unit Plan are based on Enron's
         total shareholder return relative to its peers. Enron's performance
         over the 1996-1999 performance period rendered a value of $1.50 based
         on a ranking of second as compared to 11 industry peers. It's
         performance over the 1997-2000 performance period rendered a value of
         $2.00 based on a ranking of first.

(7)      The amounts shown include the value of Enron Common Stock allocated to
         employees' special subaccounts under Enron's Employee Stock Ownership
         Plan, matching contributions to employees' Enron Corp. Savings Plan,
         and imputed income on life insurance benefits.




                                       27
<PAGE>
STOCK OPTION GRANTS DURING 2001

         The following table sets forth information with respect to grants of
stock options pursuant to Enron's stock plans to the Named Officers reflected in
the Summary Compensation Table. No stock appreciation rights were granted during
2001.


<Table>
<Caption>
                                                                                 POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES
                                   INDIVIDUAL GRANTS                               OF STOCK PRICE APPRECIATION FOR OPTION TERM (1)
                                   -----------------                             -------------------------------------------------
                      Number of           % of Total
                      Securities         Options/SARs    Exercise
                      Underlying          Granted to     or Base
                     Options/SARs        Employees in     Price      Expiration
         Name         Granted (#)         Fiscal Year    ($/Sh)        Date           0%(2)              5%               10%
         ----        ------------        ------------    --------    ---------        -----             ---               ---
<S>                  <C>                 <C>             <C>         <C>              <C>               <C>               <C>
William R. Cordes        5,435      (3)      0.03%       $75.0625    1/22/2006         $-0              $-0               $-0
                         1,040      (4)      0.01%       $36.8800    8/21/2006         $-0              $-0               $-0

Jerry L. Peters          3,265      (3)      0.02%       $75.0625    1/22/2006         $-0              $-0               $-0
                         3,300      (5)      0.02%       $75.0625    1/22/2006         $-0              $-0               $-0
                          520       (4)      0.00%       $36.8800    8/21/2006         $-0              $-0               $-0
</Table>

(1)      The dollar amounts under these columns represent the potential
         realizable value of each grant of options assuming that the market
         price on Enron Common Stock appreciates in value from the date of grant
         at the 5% and 10% annual rates prescribed by the SEC and therefore are
         not intended to forecast possible future appreciation, if any, of the
         price of Enron Common Stock.

(2)      An appreciation in stock price, which will benefit all shareholders, is
         required for optionees to receive any gain. A stock price appreciation
         of 0% would render the option without value to the optionees.

(3)      Represents stock options awarded under the Enron Corp. Long-Term
         Incentive Program. Awards vest 15% on the grant date and 15% every 6
         months thereafter with the final vesting of 10% on January 31, 2004.

(4)      All eligible Enron employees received an option grant under the 2001
         Special Stock Option Grant. A grant of options equal to 5% of base
         annual salary as of August 13, 2001 was awarded on August 21, 2001.
         Options granted through the 2001 Special Stock Option Grant were 100%
         vested on the date of grant.

(5)      Mr. Peters elected to receive stock options in lieu of a portion of his
         2000 annual cash bonus payment in the form of stock options, which were
         granted in January, 2001 and were 100% vested on date of grant.



                                       28
<PAGE>
AGGREGATED STOCK OPTION/SAR EXERCISES DURING 2001 AND STOCK OPTION/SAR VALUES AS
OF DECEMBER 31, 2001

    The following table sets forth information with respect to the Named
Officers concerning the exercise of Enron SARs and options during the last
fiscal year and unexercised Enron options and SARs held as of the end of the
fiscal year:

<Table>
<Caption>
                                             Number of Securities
                                             Underlying Unexercised      Value of Unexercised
                    Shares                      Options/SARs at        In-the-Money Options/SARs
                  Acquired on      Value        December 31, 2001        December 31, 2001 (1)
                                                -----------------        --------------------------
     Name         Exercise (#)   Realized  Exercisable  Unexercisable  Exercisable  Unexercisable
     ----         ------------   --------  -----------  -------------  -----------  -------------
<S>               <C>            <C>       <C>          <C>            <C>          <C>
William R. Cordes   20,240       $651,850      223,118         21,482  $        --  $          --
Jerry L. Peters      5,000       $146,233       59,808          7,777  $        --  $          --
</Table>

(1)      The dollar value in this column for Enron Corp. stock options was
         calculated by determining the difference between the fair market value
         underlying the options as of December 31, 2001 ($0.60) and the grant
         price.

RETIREMENT AND SUPPLEMENTAL BENEFIT PLANS

         Enron maintains the Enron Corp. Cash Balance Plan (the "Cash Balance
Plan"), which is a noncontributory defined benefit pension plan to provide
retirement income for employees of Enron and its subsidiaries. Through December
31, 1994, participants in the Cash Balance Plan with five years or more of
service were entitled to retirement benefits in the form of an annuity based on
a formula that uses a percentage of final average pay and years of service. In
1995, Enron's Board of Directors adopted an amendment to and restatement of the
Cash Balance Plan changing the plan's name from the Enron Corp. Retirement Plan
to the Enron Corp. Cash Balance Plan. In connection with a change to the
retirement benefit formula, all employees became fully vested in retirement
benefits earned through December 31, 1994. The formula in place prior to January
1, 1995 was suspended and replaced with a benefit accrual in the form of a cash
balance of 5% of annual base pay beginning January 1, 1996. Under the Cash
Balance Plan, each employee's accrued benefit will be credited with interest
based on ten-year Treasury Bond yields.

         Enron also maintains a noncontributory employee stock ownership plan
("ESOP"), which covers all eligible employees. Allocations to individual
employees' retirement accounts within the ESOP offset a portion of benefits
earned under the Cash Balance Plan prior to December 31, 1994. December 31, 1993
was the final date on which ESOP allocations were made to employees' retirement
accounts.

         In addition, Enron has a Supplemental Retirement Plan that is designed
to assure payments to certain employees of that retirement income that would be
provided under the Cash Balance Plan except for the dollar limitation on accrued
benefits imposed by the Internal Revenue Code of 1986, as amended, and a Pension
Program for Deferral Plan Participants that provides supplemental retirement
benefits equal to any reduction in benefits due to deferral of salary into
Enron's Deferral Plan.


                                       29
<PAGE>
         The following table sets forth the estimated annual benefits payable
under normal retirement at age 65, assuming current remuneration levels without
any salary or bonus projections and participation until normal retirement at age
65, with respect to the Named Officers under the provisions of the foregoing
retirement plans.

<Table>
<Caption>
                 ESTIMATED
                 CURRENT          CREDITED           CURRENT             ESTIMATED
                 CREDITED         YEARS OF         COMPENSATION       ANNUAL BENEFIT
                 YEARS OF          SERVICE           COVERED           PAYABLE UPON
                 SERVICE          AT AGE 65          BY PLANS           RETIREMENT
                 -------          ---------        ------------       --------------
<S>              <C>              <C>              <C>                <C>
Mr. Cordes         31.4             43.1             $312,000            $115,593
Mr. Peters         16.9             37.8             $155,024            $ 59,481
</Table>

--------

NOTE:    The estimated annual benefits payable are based on the straight life
         annuity form without adjustment for any offset applicable to a
         participant's retirement subaccount in Enron's ESOP.

SEVERANCE PLANS

         Northern Plains Severance Pay Plan provides for the payment of benefits
to employees who are terminated for failing to meet performance objectives or
standards or who are terminated due to reorganization or similar business
circumstances. The amount of benefits payable for performance related
terminations is based on length of service and may not exceed eight weeks' pay.
For those terminated as the result of reorganization or similar business
circumstances, the benefit is based on length of service and amount of pay up to
a maximum payment of 52 weeks of base pay. The employee must sign a Waiver and
Release of Claims Agreement in order to receive any severance benefit.



                                       30
<PAGE>
ITEM 12.  BENEFICIAL OWNERSHIP OF PARTNERSHIP INTERESTS

         The following table sets forth the beneficial ownership of general
partnership interests of Northern Border Pipeline Company. There are no limited
partnership interests.

<Table>
<Caption>
                                     GENERAL
 NAME OF BENEFICIAL                PARTNERSHIP
     OWNER                          INTEREST
 ------------------                -----------
<S>                                <C>
Northern Border                       70%
  Partners, L.P. (1)
TC PipeLines, LP (2)                  30%
</Table>

----------

(1)      The address of Northern Border Partners, L.P. is 1111 South 103rd
         Street, Omaha, NE 68124-1000. Northern Border Partners holds its 70%
         general partnership interest through Northern Border Intermediate
         Limited Partnership, a subsidiary limited partnership. Northern Border
         Partners has three general partners: Northern Plains Natural Gas
         Company, Pan Border Gas Company and Northwest Border Pipeline Company.
         Northern Plains and Pan Border are wholly-owned subsidiaries of Enron
         Corp. and Northwest Border is a wholly-owned subsidiary of The Williams
         Companies, Inc.

(2)      The address of TC PipeLines, LP is 110 Turnpike Road, Suite 203,
         Westborough, Massachusetts 01581. TC PipeLines holds its 30% general
         partnership interest through TC PipeLines Intermediate Limited
         Partnership, a subsidiary limited partnership. TC PipeLines has one
         general partner, TC PipeLines GP, Inc., a wholly-owned subsidiary of
         TransCanada PipeLines Limited.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         We have extensive ongoing relationships with our general partners and
certain of their affiliates. Since 1980, Northern Plains, an affiliate of Enron,
has acted and will continue to act as the operator of our pipeline system
pursuant to the terms of the operating agreement with Northern Plains. The
initial term of the operating agreement expires in 2007. The operating agreement
will continue in effect thereafter on a year-to-year basis unless terminated by
us or Northern Plains upon six months written notice by either party. The
operator is entitled to reimbursement for all reasonable costs, including
overhead and administrative expenses, incurred by it and its affiliates in
connection with the performance of its responsibilities as operator. In
addition, we have agreed to indemnify the operator against any claims and
liabilities arising out of the good faith performance by the operator of its
responsibilities under our partnership agreement, to the extent the operator is
acting within the scope of its authority and in the course of our business. For
the year ended December 31, 2001, the aggregate amount charged by Northern
Plains, for its services as operator, was approximately $29.5 million. While
Northern Plains continues to perform its obligations, certain of the services
are provided through Enron and other subsidiaries. We continue to monitor and
assess the impacts of the services and relationships with Enron and its
subsidiaries. We believe that any services affected by the Enron bankruptcy
filings may be obtained from other sources in a manner that will not have a
material adverse impact on the Partnership.



                                       31
<PAGE>

         In addition, ENA, which has filed for Chapter 11 protection, is one of
our firm shippers, and is obligated to pay for 3.5% of the capacity. Guarantees
from Enron supported ENA's obligations. At present, ENA has not assumed or
rejected the contracts on us. ENA's ability to utilize their capacity has been
suspended until ENA provides adequate assurances of credit support and payment.
Our ability to terminate ENA's contracts is stayed as a result of the bankruptcy
court proceedings.

         See Item 7. "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Impact of Enron's Chapter 11 Filing on Our
Business."

         Also, Transcontinental Gas Pipe Line Corporation, an affiliate of
Williams, is one of our firm shippers and is currently obligated to pay for 0.7%
of the capacity.

         Our interests could conflict with the interests of our general partners
or their affiliates, and in such case the members of our management committee
will generally have a fiduciary duty to resolve such conflicts in a manner that
is in our best interest.

         Unless otherwise provided for in a partnership agreement, the laws of
Texas generally require a general partner of a partnership to adhere to
fiduciary duty standards under which it owes its partners the highest duties of
good faith, fairness and loyalty. These rules apply to our management committee.
Because of the competing interests identified above, the Northern Border
Pipeline Company Partnership Agreement contains provisions that modify certain
of these fiduciary duties. For example:

         o   Our partnership agreement provides that we indemnify the members of
             our management committee and Northern Plains, as the operator,
             against all actions if such actions were in good faith and within
             the scope of their authority in the course of our business. It also
             provides that such persons will not be liable for any liabilities
             incurred by us as a result of such acts.

         o   Our partnership agreement states that our general partners will not
             be liable to third persons for our losses, deficits, liabilities or
             obligations (unless our assets have been exhausted).

         o   Our partnership agreement requires that any contract entered into
             on our behalf must contain a provision limiting the claims of
             persons to our assets and expressly waiving any rights of such
             persons to proceed against our general partners individually.

         o   Our partnership agreement relieves Northern Border Partners and TC
             PipeLines, their affiliates and their transferees from any duty to
             offer business opportunities to us, except that neither our general
             partners or their affiliates may pursue Project 2000 or any other
             opportunity relating to expansion or improvements of our pipeline
             system as it existed on January 15, 1999.




                                       32
<PAGE>
                                     PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


         (a) (1) AND (2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

         See "Index to Financial Statements" set forth on page F-1.

         (a) (3) EXHIBITS

             *3.1        Northern Border Pipeline Company General Partnership
                         Agreement between Northern Plains Natural Gas Company,
                         Northwest Border Pipeline Company, Pan Border Gas
                         Company, TransCanada Border Pipeline Ltd. and TransCan
                         Northern Ltd., effective March 9, 1978, as amended
                         (Exhibit 10.2 to Northern Border Partners, L.P.'s Form
                         S-1, SEC File No. 33-66158 ("Form S-1")).

             *4.1        Indenture, dated as of August 17, 1999, between the
                         registrant and Bank One Trust Company, NA, successor to
                         The First National Bank of Chicago, as trustee
                         (Exhibit 4.1 to Northern Border Pipeline Company's Form
                         S-4 Registration Statement, Registration No. 333-88577
                         ("Form S-4")).

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

            *10.1        Operating Agreement between Northern Border Pipeline
                         Company and Northern Plains Natural Gas Company, dated
                         February 28, 1980 (Exhibit 10.3 to Form S-1).

            *10.2        Note Purchase Agreement between Northern Border
                         Pipeline Company and the parties listed therein, dated
                         July 15, 1992 (Exhibit 10.6 to Form S-1).

            *10.3        Supplemental Agreement to the Note Purchase Agreement
                         dated as of June 1, 1995 (Exhibit 10.6.1 to Northern
                         Border Partners L.P.'s Form 10-K for the year ended
                         December 31, 1995, SEC File No. 1-12202 ("1995 10-K")).

            *10.4        Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Enron Gas Marketing, Inc., dated June 22, 1990 (Exhibit
                         10.10 to Form S-1).

            *10.5        Amended Exhibit A to Northern Border Pipeline Company
                         U.S. Shippers Service Agreement between Northern Border
                         Pipeline Company and Enron Gas Marketing, Inc. (Exhibit
                         10.10.1 to Northern Border Partners L.P.'s Form 10-K
                         for the year ended December 31, 1993, SEC File No.
                         1-12202 ("1993 10-K")).

            *10.6        Amended Exhibit A to Northern Border Pipeline U.S.
                         Shippers Service Agreement between Northern Border
                         Pipeline Company and Enron Gas Marketing, Inc.,
                         effective November 1, 1994 (Exhibit 10.10.2 to Northern
                         Border Partners, L.P.'s Form 10-K for the year ended
                         December 31, 1994, SEC File No. 1-12202 ("1994 10-K")).

            *10.7        Amended Exhibit A's to Northern Border Pipeline Company
                         U.S. Shipper Service Agreement effective, August 1,
                         1995 and November 1, 1995 (Exhibit 10.10.3 to 1995
                         10-K).



                                       33
<PAGE>

            *10.8        Amended Exhibit A to Northern Border Pipeline Company
                         U.S. Shipper Service Agreement effective April l, 1998
                         (Exhibit 10.10.4 to Northern Border Partners, L.P.'s
                         Form 10-K for the year ended December 31, 1997, SEC
                         File No. 1-12202 ("1997 10-K")).

             10.9        Guaranty made by Enron Corp., dated August 8, 1989.

            *10.10       Seventh Supplement Amending Northern Border Pipeline
                         Company General Partnership Agreement (Exhibit 10.15 to
                         Form S-1).

            *10.11       Eighth Supplement Amending Northern Border Pipeline
                         Company General Partnership Agreement (Exhibit 10.15
                         of Form S-4).

            *10.12       Form of Conveyance, Contribution and Assumption
                         Agreement among Northern Plains Natural Gas Company,
                         Northwest Border Pipeline Company, Pan Border Gas
                         Company, Northern Border Partners, L.P., and Northern
                         Border Intermediate Limited Partnership (Exhibit 10.16
                         to Form S-1).

            *10.13       Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Transcontinental Gas Pipe Line Corporation, dated July
                         14, 1983, with Amended Exhibit A effective February 11,
                         1994 (Exhibit 10.17 to 1995 10-K).

            *10.14       Form of Credit Agreement among Northern Border Pipeline
                         Company, The First National Bank of Chicago, as
                         Administrative Agent, The First National Bank of
                         Chicago, Royal Bank of Canada, and Bank of America
                         National Trust and Savings Association, as Syndication
                         Agents, First Chicago Capital Markets, Inc., Royal Bank
                         of Canada, and BancAmerica Securities, Inc, as Joint
                         Arrangers and Lenders (as defined therein) dated as of
                         June 16, 1997 (Exhibit 10(c) to Amendment No. 1 to
                         Northern Border Partners, L.P. Form S-3, SEC File No
                         333-40601 ("Form S-3")).

            *10.15       Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Enron Capital & Trade Resources Corp. dated October 15,
                         1997 (Exhibit 10.21 to 1997 10-K).

             10.16       Guaranty made by Enron Corp., dated October 20, 1997.

            *10.17       Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Enron Capital & Trade Resources Corp. dated October 15,
                         1997 (Exhibit 10.22 to 1997 10-K).

             10.18       Guaranty made by Enron Corp., dated October 20, 1997.

            *10.19       Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Enron Capital & Trade Resources Corp. dated August 5,
                         1997 with Amendment dated September 25, 1997 (Exhibit
                         10.25 to 1997 10-K).

             10.20       Guaranty made by Enron Corp., dated April 29, 1997 and
                         Confirmation dated November 19, 1998.

            *10.21       Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Enron Capital & Trade Resources Corp. dated August 5,
                         1997 (Exhibit 10.26 to 1997 10-K).

             10.22       Guaranty made by Enron Corp., dated April 29, 1997.

            *10.23       Northern Border Pipeline Company Agreement among
                         Northern Plains Natural Gas Company, Pan Border Gas
                         Company, Northwest Border Pipeline Company, TransCanada
                         Border PipeLine Ltd., TransCan Northern Ltd., Northern
                         Border Intermediate Limited Partnership, Northern
                         Border Partners, L.P., and the




                                       34
<PAGE>

                         Management Committee of Northern Border Pipeline,
                         dated as of March 17, 1999 (Exhibit 10.21 to
                         Northern Border Partners, L.P.'s Form 10-K for the year
                         ended December 31, 1998, SEC File No. 1-12202
                         ("1998 10-K")).

            *10.24       Form of Contribution, Conveyance and Assumption
                         Agreement among TC PipeLines, LP and certain other
                         parties. (Exhibit 10.2 to TC PipeLines, LP's Form S-1,
                         SEC File No. 333-69947 ("TC Form S-1")).

            *10.25       Amended Exhibit A to Northern Border Pipeline Company
                         U.S. Shippers Service Agreement between Northern Border
                         Pipeline Company and Enron Capital & Trade Resources
                         Corp. effective November 1, 1998 (Exhibit 10.15.1 to TC
                         Form S-1).

            *10.26       Amended Exhibit A to Northern Border Pipeline Company
                         U.S. Shippers Service Agreement between Northern Border
                         Pipeline Company and Enron Capital & Trade Resources
                         Corp. effective April 2, 1999 (Exhibit 10.16.1 to TC
                         Form S-1).

            *10.27       Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Pan-Alberta Gas (U.S.) Inc., dated October 1, 1993,
                         with Amended Exhibit A effective June 22, 1998 (Exhibit
                         10.25 to TC Form S-1).

            *10.28       Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Pan-Alberta Gas (U.S.) Inc. (successor to Natgas U.S.
                         Inc.), dated October 6, 1989, with Amended Exhibit A
                         effective April 2, 1999 (Exhibit 10.26 to TC Form S-1).

            *10.29       Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Pan-Alberta Gas (U.S.) Inc., dated October 1, 1992,
                         with Amended Exhibit A effective June 22, 1998 (Exhibit
                         10.27 to TC Form S-1).

            *10.30       Project Management Agreement by and between Northern
                         Plains Natural Gas Company and Enron Engineering &
                         Construction Company, dated March 1, 1996 (Exhibit
                         10.39 to Form S-4).

            *10.31       Employment Agreement between Northern Plains Natural
                         Gas Company and William R. Cordes effective June 1,
                         2001 (Exhibit 10.27 to Northern Border Partners,
                         L.P.'s Quarterly Report on Form 10-Q for the quarter
                         ended June 30, 2001).

            *10.32       Amendment to Employment Agreement between Northern
                         Plains Natural Gas Company and William R. Cordes,
                         effective September 25, 2001 (Exhibit 10.36 to 2001
                         Form S-4).

            *10.33       Ninth Supplement Amending Northern Border Pipeline
                         Company General Partnership Agreement (Exhibit 10.37
                         to 2001 Form S-4).

            *10.34       Northern Border Pipeline Company U.S. Shipper Service
                         Agreement between Northern Border Pipeline Company and
                         Enron North America Corp., dated October 29, 2001
                         (Exhibit 10.38 to 2001 Form S-4).

             10.35       Northern Border Pipeline Company U.S. Shipper Service
                         Agreement between Northern Border Pipeline Company and
                         Enron North America Corp., dated October 29, 2001.

             10.36       Guaranty made by Enron Corp., dated October 31, 2001.

            *99.1        Northern Border Phantom Unit Plan (Exhibit 99.1 to
                         Northern Border Partners, L.P.'s Registration No.
                         333-66949 and Exhibit 99.1 to Northern Border Partners,
                         L.P.'s Registration No. 333-72696).

            *            Indicates exhibits incorporated by reference as
                         indicated; all other exhibits are filed herewith.



                                       35
<PAGE>

         (b) REPORTS

             Northern Border Pipeline filed a Current Report on Form 8-K, dated
             November 29, 2001, reporting a press release issued by Northern
             Border Pipeline on November 29, 2001.




                                       36
<PAGE>
                                   SIGNATURES


         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on this 29th day of
March, 2002.


                                   NORTHERN BORDER PIPELINE COMPANY
                                   (A Texas General partnership)

                                   BY: Northern Plains Natural Gas Company,
                                       As Operator


                                       BY: /s/ JERRY L. PETERS
                                           -------------------------------------
                                           Jerry L. Peters
                                           Vice President, Finance and Treasurer



       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.

<Table>
<Caption>
       Signature                                     Title                                          Date
       ---------                                     -----                                          ----
<S>                              <C>                                                     <C>
/s/ William R. Cordes            President, Northern Plains Natural Gas Company          March 29, 2002
-------------------------------   (functional equivalent to the registrant's principal
   William R. Cordes             executive officer) and Management Committee Member

/s/ Jerry L. Peters              Vice President, Finance and Treasurer,                  March 29, 2002
-------------------------------   Northern Plains Natural Gas Company (functional
   Jerry L. Peters               equivalent to the registrant's principal financial
                                 and accounting officer)

/s/ Stanley C. Horton            Management Committee Member                             March 29, 2002
-------------------------------
   Stanley C. Horton

/s/ Dennis J. McConaghy          Management Committee Member                             March 29, 2002
-------------------------------
   Dennis J. McConaghy

/s/ James C. Moore               Management Committee Member                             March 29, 2002
-------------------------------
   James C. Moore
</Table>





                                       37
<PAGE>
                        NORTHERN BORDER PIPELINE COMPANY
                          INDEX TO FINANCIAL STATEMENTS

<Table>
<Caption>

                                                                               PAGE NO.
                                                                               --------

<S>                                                                             <C>
Financial Statements

      Independent Auditors' Report                                              F-2
      Report of Independent Public Accountants                                  F-3
      Balance Sheet - December 31, 2001 and 2000                                F-4
      Statement of Income - Years Ended                                         F-5
           December 31, 2001, 2000 and 1999
      Statement of Comprehensive Income - Years Ended                           F-5
           December 31, 2001, 2000 and 1999
      Statement of Cash Flows - Years Ended                                     F-6
           December 31, 2001, 2000 and 1999
      Statement of Changes in Partners' Equity -                                F-7
           Years Ended December 31, 2001, 2000 and 1999
      Notes to Financial Statements                                             F-8 through
                                                                                F-16
  Financial Statements Schedule

      Independent Auditors' Report on Schedule                                  S-1
      Report of Independent Public Accountants on Schedule                      S-2
      Schedule II - Valuation and Qualifying Accounts                           S-3
</Table>






                                       F-1


<PAGE>

INDEPENDENT AUDITORS' REPORT


To Northern Border Pipeline Company:

We have audited the accompanying balance sheet of Northern Border Pipeline
Company (a Texas partnership) as of December 31, 2001, and the related
statements of income, comprehensive income, cash flows and changes in partners'
equity for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The accompanying
financial statements of Northern Border Pipeline Company as of December 31, 2000
and for the years ended December 31, 2000 and 1999 were audited by other
auditors whose report thereon dated January 22, 2001 expressed an unqualified
opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Northern Border Pipeline
Company as of December 31, 2001 and the results of its operations and its cash
flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.

As discussed in note 6 to the financial statements, Northern Border Pipeline
Company adopted the provisions of Statement of Financial Accounting Standards
(SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
which was subsequently amended by SFAS No. 137 and SFAS No. 138.


                                                          KPMG LLP

Omaha, Nebraska,
  March 8, 2002















                                      F-2
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Northern Border Pipeline Company:

We have audited the accompanying balance sheet of Northern Border Pipeline
Company (a Texas partnership) as of December 31, 2000, and the related
statements of income, comprehensive income, cash flows and changes in partners'
equity for each of the two years in the period ended December 31, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Northern Border Pipeline
Company as of December 31, 2000, and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States.



ARTHUR ANDERSEN LLP

Omaha, Nebraska,
  January 22, 2001







                                      F-3
<PAGE>

                        NORTHERN BORDER PIPELINE COMPANY

                                  BALANCE SHEET

                                 (IN THOUSANDS)


<Table>
<Caption>

                                                                DECEMBER 31,
                                                       -------------------------------
                                                           2001              2000
                                                       --------------   --------------
ASSETS
<S>                                                    <C>              <C>

CURRENT ASSETS
   Cash and cash equivalents                           $       11,003   $       29,046
   Accounts receivable (net of allowance for
      doubtful accounts of $1,925 and $0 in
      2001 and 2000, respectively)                             29,249           27,128
   Related party receivables (net of allowance
      for doubtful accounts of $1,251 and $0 in
      2001 and 2000, respectively)                                455            6,008
   Materials and supplies, at cost                              4,873            4,710
   Prepaid expenses and other                                   1,731              247
                                                       --------------   --------------

      Total current assets                                     47,311           67,139
                                                       --------------   --------------

NATURAL GAS TRANSMISSION PLANT
   In service                                               2,429,662        2,364,487
   Construction work in progress                                2,891           14,405
                                                       --------------   --------------

      Total property, plant and equipment                   2,432,553        2,378,892
   Less: Accumulated provision for
      depreciation and amortization                           746,888          691,900
                                                       --------------   --------------

      Property, plant and equipment, net                    1,685,665        1,686,992
                                                       --------------   --------------

OTHER ASSETS                                                   18,893           14,374
                                                       --------------   --------------

      Total assets                                     $    1,751,869   $    1,768,505
                                                       ==============   ==============


LIABILITIES AND PARTNERS' EQUITY

CURRENT LIABILITIES
   Current maturities of long-term debt                $      350,000   $       41,000
   Accounts payable                                             3,089           26,087
   Related party payables                                       2,204               --
   Accrued taxes other than income                             27,167           28,137
   Accrued interest                                            16,526           14,401
   Accumulated provision for rate refunds                          --            4,726
                                                       --------------   --------------

      Total current liabilities                               398,986          114,351
                                                       --------------   --------------

LONG-TERM DEBT, NET OF CURRENT MATURITIES                     513,666          822,267
                                                       --------------   --------------

RESERVES AND DEFERRED CREDITS                                   5,623            4,892
                                                       --------------   --------------

COMMITMENTS AND CONTINGENCIES (Note 7)

PARTNERS' EQUITY
   Partners' capital                                          824,421          826,995
   Accumulated other comprehensive income                       9,173               --
                                                       --------------   --------------

      Total partners' equity                                  833,594          826,995
                                                       --------------   --------------

      Total liabilities and partners' equity           $    1,751,869   $    1,768,505
                                                       ==============   ==============
</Table>

              The accompanying notes are an integral part of these
                             financial statements.





                                      F-4
<PAGE>

                        NORTHERN BORDER PIPELINE COMPANY

                               STATEMENT OF INCOME

                                 (IN THOUSANDS)


<Table>
<Caption>


                                                      YEAR ENDED DECEMBER 31,
                                           --------------------------------------------
                                               2001            2000            1999
                                           ------------    ------------    ------------

<S>                                        <C>             <C>             <C>
OPERATING REVENUES
   Operating revenues                      $    315,145    $    334,978    $    300,664
   Provision for rate refunds                    (2,057)        (23,956)         (2,317)
                                           ------------    ------------    ------------

      Operating revenues, net                   313,088         311,022         298,347
                                           ------------    ------------    ------------

OPERATING EXPENSES
   Operations and maintenance                    33,695          41,548          38,708
   Depreciation and amortization                 57,516          57,328          51,908
   Taxes other than income                       25,636          27,979          30,320
                                           ------------    ------------    ------------

      Operating expenses                        116,847         126,855         120,936
                                           ------------    ------------    ------------

OPERATING INCOME                                196,241         184,167         177,411
                                           ------------    ------------    ------------

INTEREST EXPENSE
   Interest expense                              56,262          65,489          60,312
   Interest expense capitalized                    (911)           (328)            (98)
                                           ------------    ------------    ------------

      Interest expense, net                      55,351          65,161          60,214
                                           ------------    ------------    ------------

OTHER INCOME (EXPENSE)
   Allowance for equity funds used
      during construction                           925             305             101
   Other income, net                             (1,357)          7,753           1,262
                                           ------------    ------------    ------------

        Other income (expense)                     (432)          8,058           1,363
                                           ------------    ------------    ------------

NET INCOME TO PARTNERS                     $    140,458    $    127,064    $    118,560
                                           ============    ============    ============
</Table>



                        NORTHERN BORDER PIPELINE COMPANY

                        STATEMENT OF COMPREHENSIVE INCOME

                                 (IN THOUSANDS)


<Table>
<Caption>

                                                     YEAR ENDED DECEMBER 31,
                                           --------------------------------------------
                                               2001            2000             1999
                                           ------------    ------------    ------------


<S>                                        <C>             <C>             <C>
Net income to partners                     $    140,458    $    127,064    $    118,560
Other comprehensive income:
   Transition adjustment from
     adoption of SFAS No. 133                    10,347              --              --
   Change associated with current
     period hedging transactions                 (1,174)             --              --
                                           ------------    ------------    ------------

Total comprehensive income                 $    149,631    $    127,064    $    118,560
                                           ============    ============    ============
</Table>



              The accompanying notes are an integral part of these
                             financial statements.




                                      F-5
<PAGE>



                        NORTHERN BORDER PIPELINE COMPANY

                             STATEMENT OF CASH FLOWS

                                 (IN THOUSANDS)

<Table>
<Caption>


                                                                   YEAR ENDED DECEMBER 31,
                                                        --------------------------------------------
                                                            2001            2000           1999
                                                        ------------    ------------    ------------

<S>                                                     <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income to partners                               $    140,458    $    127,064    $    118,560
                                                        ------------    ------------    ------------
   Adjustments to reconcile net income to
   partners to net cash provided by
   operating activities:
      Depreciation and amortization                           57,881          57,682          51,962
      Provision for rate refunds                               2,036          25,082           2,317
      Rate refunds paid                                       (6,762)        (22,673)             --
      Allowance for equity funds used
        during construction                                     (925)           (305)           (101)
      Reserves and deferred credits                              736          (5,806)            880
      Changes in components of working capital                 4,583          (3,002)         (2,112)
      Other                                                     (685)         (2,075)            (40)
                                                        ------------    ------------    ------------

           Total adjustments                                  56,864          48,903          52,906
                                                        ------------    ------------    ------------

      Net cash provided by operating activities              197,322         175,967         171,466
                                                        ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures for property, plant
      and equipment, net                                     (54,659)        (15,523)       (101,678)
                                                        ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Distributions to partners                                (143,032)       (134,904)       (127,163)
   Issuance of long-term debt, net                           385,400          75,000         289,026
   Retirement of long-term debt                             (374,000)       (111,000)       (263,000)
   Increase (decrease) in bank overdrafts                    (22,437)         22,437              --
   Proceeds received (paid) upon termination of
      derivatives                                             (4,070)             --          12,896
   Long-term debt financing costs                             (2,567)           (241)         (1,626)
                                                        ------------    ------------    ------------

      Net cash used in financing activities                 (160,706)       (148,708)        (89,867)
                                                        ------------    ------------    ------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                      (18,043)         11,736         (20,079)

Cash and cash equivalents-beginning of year                   29,046          17,310          37,389
                                                        ------------    ------------    ------------

Cash and cash equivalents-end of year                   $     11,003    $     29,046    $     17,310
                                                        ============    ============    ============


Changes in components of working capital:
   Accounts receivable                                  $      3,432    $     (6,087)   $     (8,145)
   Materials and supplies                                       (163)         (1,767)            (10)
   Prepaid expenses and other                                 (1,484)            455            (275)
   Accounts payable                                            1,643           1,585          (4,598)
   Accrued taxes other than income                              (970)          1,847           6,462
   Accrued interest                                            2,125          (2,103)          4,741
   Over/under recovered cost of service                           --           3,068            (287)
                                                        ------------    ------------    ------------

   Total                                                $      4,583    $     (3,002)   $     (2,112)
                                                        ============    ============    ============
</Table>










              The accompanying notes are an integral part of these
                             financial statements.




                                      F-6
<PAGE>

                        NORTHERN BORDER PIPELINE COMPANY

                    STATEMENT OF CHANGES IN PARTNERS' EQUITY

                                 (IN THOUSANDS)


<Table>
<Caption>

                                                                       TC             NORTHERN
                                   TRANSCANADA                      PIPELINES          BORDER        ACCUMULATED
                                     BORDER         TRANSCAN       INTERMEDIATE     INTERMEDIATE        OTHER             TOTAL
                                   PIPELINE         NORTHERN         LIMITED           LIMITED       COMPREHENSIVE      PARTNERS'
                                      LTD.             LTD.         PARTNERSHIP      PARTNERSHIP        INCOME           EQUITY
                                 -------------    -------------    -------------    -------------    -------------    -------------
<S>                              <C>              <C>              <C>              <C>              <C>              <C>

Partners' Equity at
   December 31, 1998             $      50,606    $     202,425    $          --    $     590,407    $          --    $     843,438

Net income to
   partners                              2,930           11,715           20,923           82,992               --          118,560

Distributions paid                      (5,206)         (20,819)         (12,124)         (89,014)              --         (127,163)

Ownership transfer                     (48,330)        (193,321)         241,651               --               --               --
                                 -------------    -------------    -------------    -------------    -------------    -------------

Partners' Equity at
   December 31, 1999                        --               --          250,450          584,385               --          834,835

Net income to
  partners                                  --               --           38,119           88,945               --          127,064

Distributions paid                          --               --          (40,471)         (94,433)              --         (134,904)
                                 -------------    -------------    -------------    -------------    -------------    -------------

Partners' Equity at
   December 31, 2000                        --               --          248,098          578,897               --          826,995

Net income to
   partners                                 --               --           42,138           98,320               --          140,458

Transition adjustment
   from adoption of
   SFAS No. 133                             --               --               --               --           10,347           10,347

Change associated
   with current period
   hedging transactions                     --               --               --               --           (1,174)          (1,174)

Distributions paid                          --               --          (42,910)        (100,122)              --         (143,032)
                                 -------------    -------------    -------------    -------------    -------------    -------------

Partners' Equity at
   December 31, 2001             $          --    $          --    $     247,326    $     577,095    $       9,173    $     833,594
                                 =============    =============    =============    =============    =============    =============

</Table>





              The accompanying notes are an integral part of these
                             financial statements.



                                      F-7
<PAGE>


                        NORTHERN BORDER PIPELINE COMPANY

                          NOTES TO FINANCIAL STATEMENTS

1.      ORGANIZATION AND MANAGEMENT

        Northern Border Pipeline Company (Northern Border Pipeline) is a Texas
        general partnership formed in 1978. The ownership percentages of the
        partners in Northern Border Pipeline (Partners) at December 31, 2001 and
        2000, are as follows:

<Table>
<Caption>

                                                                                                 Ownership
                 Partner                                                                         Percentage
                 -------                                                                         ----------

<S>                                                                                              <C>
        Northern Border Intermediate Limited Partnership                                            70
        TC PipeLines Intermediate Limited Partnership                                               30
</Table>

        Net income and distributions are allocated to the Partners based on
        ownership percentage. Effective May 28, 1999, TransCanada Border
        PipeLine Ltd. and TransCan Northern Ltd. transferred their combined 30%
        ownership interest in Northern Border Pipeline to TC PipeLines
        Intermediate Limited Partnership (TC PipeLines) in connection with an
        initial public offering of limited partner interests in TC PipeLines,
        LP. In accordance with the partnership agreement, net income and
        distributions were prorated at the effective date of the ownership
        transfer.

        Northern Border Pipeline owns a 1,249-mile natural gas transmission
        pipeline system extending from the United States-Canadian border near
        Port of Morgan, Montana, to a terminus near North Hayden, Indiana.

        Northern Border Pipeline is managed by a Management Committee that
        includes three representatives from Northern Border Intermediate Limited
        Partnership (Partnership) and one representative from TC PipeLines. The
        Partnership's representatives selected by its general partners, Northern
        Plains Natural Gas Company (Northern Plains), a wholly-owned subsidiary
        of Enron Corp. (Enron), Pan Border Gas Company (Pan Border), a
        wholly-owned subsidiary of Northern Plains, and Northwest Border
        Pipeline Company, a wholly-owned subsidiary of The Williams Companies,
        Inc. (Williams), have 35%, 22.75% and 12.25%, respectively, of the
        voting interest on the Management Committee. The representative
        designated by TC PipeLines votes the remaining 30% interest. The
        day-to-day management of Northern Border Pipeline's affairs is the
        responsibility of Northern Plains (the Operator), as defined by the
        operating agreement between Northern Border Pipeline and Northern
        Plains. Northern Border Pipeline is charged for the salaries, benefits
        and expenses of the Operator. For the years ended December 31, 2001,
        2000, and 1999, Northern Border Pipeline's charges from the Operator
        totaled approximately $29.5 million, $31.7 million and $29.7 million,
        respectively. Additionally, Northern Border Pipeline has utilized Enron
        affiliates for management on pipeline expansion and extension projects.
        See Note 10 for a discussion of Northern Border Pipeline's relationships
        with Enron and developments involving Enron.

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        (A)    Use of Estimates

               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.



                                      F-8
<PAGE>

                        NORTHERN BORDER PIPELINE COMPANY

                          NOTES TO FINANCIAL STATEMENTS


2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

        (B)    Government Regulation

               Northern Border Pipeline is subject to regulation by the Federal
               Energy Regulatory Commission (FERC). 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. At December
               31, 2001 and 2000, Northern Border Pipeline has reflected
               regulatory assets of approximately $11.5 million and $12.4
               million, respectively, in other assets on the balance sheet.
               Northern Border Pipeline is recovering the regulatory assets from
               its shippers over varying time periods, which range from five to
               44 years.

        (C)    Revenue Recognition

               Northern Border Pipeline transports gas for shippers under a
               tariff regulated by the FERC. The tariff specifies the
               calculation of amounts to be paid by shippers and the general
               terms and conditions of transportation service on the pipeline
               system. Northern Border Pipeline's revenues are derived from
               agreements for the receipt and delivery of gas at points along
               the pipeline system as specified in each shipper's individual
               transportation contract. Northern Border Pipeline does not own
               the gas that it transports, and therefore it does not assume the
               related natural gas commodity risk.

        (D)    Income Taxes

               Income taxes are the responsibility of the Partners and are not
               reflected in these financial statements. However, the Northern
               Border Pipeline FERC tariff establishes the method of accounting
               for and calculating income taxes and requires Northern Border
               Pipeline to reflect in its rates the income taxes, which would
               have been paid or accrued if Northern Border Pipeline were
               organized during the period as a corporation. As a result, for
               purposes of determining transportation rates in calculating the
               return allowed by the FERC, Partners' capital and rate base are
               reduced by the amount equivalent to the net accumulated deferred
               income taxes. Such amounts were approximately $336 million and
               $326 million at December 31, 2001 and 2000, respectively, and are
               primarily related to accelerated depreciation and other
               plant-related differences.

        (E)    Cash and Cash Equivalents

               Cash equivalents consist of highly liquid investments with
               original maturities of three months or less. The carrying amount
               of cash and cash equivalents approximates fair value because of
               the short maturity of these investments.

        (F)    Property, Plant and Equipment and Related Depreciation and
               Amortization

               Property, plant and equipment is stated at original cost. During
               periods of construction, Northern Border Pipeline is permitted to
               capitalize an allowance for funds used during construction, which
               represents the estimated costs of funds used for construction
               purposes.



                                      F-9
<PAGE>


                        NORTHERN BORDER PIPELINE COMPANY

                          NOTES TO FINANCIAL STATEMENTS

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

        (F)    Property, Plant and Equipment and Related Depreciation and
               Amortization (continued)

               The original cost of property retired is charged to accumulated
               depreciation and amortization, net of salvage and cost of
               removal. No retirement gain or loss is included in income except
               in the case of extraordinary retirements or sales.

               Maintenance and repairs are charged to operations in the period
               incurred. The provision for depreciation and amortization of the
               transmission line is an integral part of Northern Border
               Pipeline's FERC tariff. The effective depreciation rates applied
               to Northern Border Pipeline's transmission plant in 2001, 2000
               and 1999 were 2.25%, 2.25% and 2.0%, respectively. Composite
               rates are applied to all other functional groups of property
               having similar economic characteristics.

        (G)    Risk Management

               Financial instruments are used by Northern Border Pipeline in the
               management of its interest rate exposure. A control environment
               has been established which includes policies and procedures for
               risk assessment and the approval, reporting and monitoring of
               financial instrument activities. Northern Border Pipeline does
               not use these instruments for trading purposes. See Note 6 for a
               discussion of Northern Border Pipeline's accounting for
               derivative instruments and hedging activities.

        (H)    Reclassifications

               Certain reclassifications have been made to the financial
               statements for prior years to conform with the current year
               presentation.

3.      RATES AND REGULATORY ISSUES

        Rate Case

        Northern Border Pipeline's revenue is derived from agreements with
        various shippers for the transportation of natural gas. It transports
        gas under a FERC regulated tariff. Northern Border Pipeline had used a
        cost of service form of tariff since its inception but agreed to convert
        to a stated rate form of tariff as part of the settlement of its 1999
        rate case discussed below.

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

        Northern Border Pipeline filed a rate proceeding with the FERC in May
        1999 for, among other things, a redetermination of its allowed equity
        rate of



                                      F-10
<PAGE>

                        NORTHERN BORDER PIPELINE COMPANY

                          NOTES TO FINANCIAL STATEMENTS

3.      RATES AND REGULATORY ISSUES (continued)

        Rate Case (continued)

        return. The total annual cost of service increase due to Northern Border
        Pipeline's proposed changes was approximately $30 million. In June 1999,
        the FERC issued an order in which the proposed changes were suspended
        until December 1, 1999, after which the proposed changes were
        implemented with subsequent billings subject to refund.

        In September 2000, Northern Border Pipeline filed a stipulation and
        agreement with the FERC that documented the proposed settlement of its
        1999 rate case. The settlement was approved by the FERC in December
        2000. Under the approved settlement, effective December 1, 1999,
        shippers began paying stated transportation rates based on a straight
        fixed variable rate design. Under the straight fixed variable rate
        design, approximately 98% of the agreed upon revenue level is attributed
        to demand charges, based upon contracted firm capacity, and the
        remaining 2% is attributed to commodity charges, based on the volumes of
        gas actually transported on the system. Under the settlement, both
        Northern Border Pipeline and its existing shippers will not be able to
        seek rate changes until November 1, 2005, at which time Northern Border
        Pipeline must file a new rate case.

        After the FERC approved the rate case settlement and prior to the end of
        2000, Northern Border Pipeline made estimated refund payments to its
        shippers totaling approximately $22.7 million, primarily related to the
        period from December 1999 to November 2000. During the first quarter of
        2001, Northern Border Pipeline paid the remaining refund obligation to
        its shippers totaling approximately $6.8 million, which related to
        periods through January 2001.

        Certificate application

        On March 16, 2000, the FERC issued an order granting Northern Border
        Pipeline's application for a certificate to construct and operate an
        expansion and extension of its pipeline system into Indiana (Project
        2000). The facilities for Project 2000 were placed into service on
        October 1, 2001. The capital expenditures for the project are expected
        to be approximately $63 million, of which $60.5 million had been
        incurred through December 31, 2001.

4.      TRANSPORTATION SERVICE AGREEMENTS

        Operating revenues are collected pursuant to the FERC tariff through
        firm transportation service agreements. The firm service agreements
        extend for various terms with termination dates that range from March
        2002 to December 2013. Northern Border Pipeline also has interruptible
        service agreements with numerous other shippers. Under the approved
        settlement of the rate case discussed in Note 3, Northern Border
        Pipeline will reduce the billings for the firm service agreements by one
        half of the revenues received from the interruptible service agreements
        through October 31, 2003. Northern Border Pipeline is permitted to
        retain revenue from interruptible transportation service to offset any
        decontracted firm capacity. After October 31, 2003, all revenues from
        interruptible transportation service will be retained by Northern Border
        Pipeline.

        Under the capacity release provisions of Northern Border Pipeline's FERC
        tariff, shippers are allowed to release all or part of their capacity
        either permanently for the full term of the contract or temporarily. A
        temporary




                                      F-11
<PAGE>

                        NORTHERN BORDER PIPELINE COMPANY

                          NOTES TO FINANCIAL STATEMENTS


4.      TRANSPORTATION SERVICE AGREEMENTS (continued)

        capacity release does not relieve the original contract shipper from its
        payment obligations if the replacement shipper fails to pay for the
        capacity temporarily released to it.

        At December 31, 2001, Northern Border Pipeline's largest shipper, Mirant
        Americas Energy Marketing, LP (Mirant) is obligated for approximately
        33.7% of the contracted firm capacity, which consists of the following:
        24.4% from temporary releases of firm capacity from Pan-Alberta Gas
        (U.S.) Inc. (PAGUS) and 9.3% from permanent releases of firm capacity
        from TransCanada Energy Marketing USA, Inc. (TransCanada Energy), an
        affiliate of TC PipeLines. The PAGUS firm service agreements expire in
        October 2003. The permanent release to Mirant commenced in December 2001
        and the firm service agreements expire in October 2006 and December
        2008. The obligations of Mirant and PAGUS are supported by various
        credit support arrangements, including among others, letters of credit
        and escrow accounts and an upstream capacity transfer agreement.
        Operating revenues from the Mirant and PAGUS firm service agreements and
        interruptible service agreements for the years ended December 31, 2001,
        2000 and 1999 were $80.7 million, $78.2 million and $76.6 million,
        respectively.

        Some of Northern Border Pipeline's shippers are affiliated with its
        general partners. Enron North America (ENA), a wholly-owned subsidiary
        of Enron, has firm service agreements representing 3.5% of capacity, a
        portion of which (1.1%) has been temporarily released to a third party
        until October 31, 2002 (see Note 10). Transcontinental Gas Pipe Line
        Corporation, a subsidiary of Williams, holds a firm service agreement
        representing 0.7% of capacity. The firm service agreements with
        affiliates extend for various terms with termination dates that range
        from October 2002 to May 2009. Operating revenues from the affiliated
        firm service agreements and interruptible service agreements, including
        revenues from TransCanada Energy when it held capacity on Northern
        Border Pipeline, were $52.1 million, $58.5 million and $52.5 million for
        the years ended December 31, 2001, 2000 and 1999, respectively.

5.      CREDIT FACILITIES AND LONG-TERM DEBT

        Detailed information on long-term debt is as follows:

                                                             December 31,
        (Thousands of dollars)                            2001         2000
        ----------------------                         ---------    ---------

1992 Pipeline Senior Notes - average 8.53%
     and 8.49% at December 31, 2001 and 2000,
     respectively, due from 2000 to 2003               $ 143,000    $ 184,000
Pipeline Credit Agreement
     Term loan - average 2.46% and 6.95% at
       December 31, 2001 and 2000, respectively,
       due 2002                                          272,000      424,000
     Five-year revolving credit facility -
       average 6.87% at December 31, 2000                     --       45,000
1999 Pipeline Senior Notes - 7.75%, due 2009             200,000      200,000
2001 Pipeline Senior Notes - 7.50%, due 2021             250,000           --
Unamortized proceeds from termination
     of interest rate forward agreements                      --       11,107
Unamortized debt discount                                 (1,334)        (840)
                                                       ---------    ---------

Total                                                    863,666      863,267
Less: Current maturities of long-term debt               350,000       41,000
                                                       ---------    ---------

Long-term debt                                         $ 513,666    $ 822,267
                                                       =========    =========



                                      F-12

<PAGE>





                        NORTHERN BORDER PIPELINE COMPANY

                          NOTES TO FINANCIAL STATEMENTS


5.      CREDIT FACILITIES AND LONG-TERM DEBT (continued)

        In September 2001, Northern Border Pipeline completed a private offering
        of $250 million of 7.50% Senior Notes due 2021, which notes were
        subsequently exchanged in a registered offering for notes with
        substantially identical terms (2001 Pipeline Senior Notes). The proceeds
        from the 2001 Pipeline Senior Notes were used to reduce indebtedness
        outstanding under the Pipeline Credit Agreement.

        In August 1999, Northern Border Pipeline completed a private offering of
        $200 million of 7.75% Senior Notes due 2009, which notes were
        subsequently exchanged in a registered offering for notes with
        substantially identical terms (1999 Pipeline Senior Notes). Also in
        August 1999, Northern Border Pipeline received approximately $12.9
        million from the termination of interest rate forward agreements, which
        is being amortized against interest expense over the life of the 1999
        Pipeline Senior Notes. The interest rate forward agreements, which had
        an aggregate notional amount of $150 million, had been executed in
        September 1998 to hedge the interest rate on a planned issuance of fixed
        rate debt in 1999. The proceeds from the private offering, net of debt
        discounts and issuance costs, and the termination of the interest rate
        forward agreements were used to reduce existing indebtedness under the
        Pipeline Credit Agreement.

        In June 1997, Northern Border Pipeline entered into a credit agreement
        (Pipeline Credit Agreement) with certain financial institutions, which
        is comprised of a $100 million five-year revolving credit facility and a
        $272 million term loan, both maturing in June 2002. The Pipeline Credit
        Agreement permits Northern Border Pipeline to choose among various
        interest rate options, to specify the portion of the borrowings to be
        covered by specific interest rate options and to specify the interest
        rate period, subject to certain parameters. Northern Border Pipeline is
        required to pay a facility fee on the aggregate principal commitment
        amount of $372 million.

        Interest paid, net of amounts capitalized, during the years ended
        December 31, 2001, 2000 and 1999 was $53.9 million, $68.0 million and
        $55.5 million, respectively.

        Aggregate required repayments of long-term debt are as follows: $350
        million and $65 million for 2002 and 2003, respectively. There are no
        required repayment obligations for either 2004, 2005 or 2006.

        Certain of Northern Border Pipeline's long-term debt and credit
        arrangements contain requirements as to the maintenance of minimum
        partners' capital and debt to capitalization ratios which restrict the
        incurrence of other indebtedness by Northern Border Pipeline and also
        place certain restrictions on distributions to the partners of Northern
        Border Pipeline. Under the most restrictive of the covenants, as of
        December 31, 2001 and 2000, respectively, $110 million and $136 million
        of partners' capital of Northern Border Pipeline could be distributed.

        The following estimated fair values of financial instruments represent
        the amount at which each instrument could be exchanged in a current
        transaction between willing parties. Based on quoted market prices for
        similar issues with similar terms and remaining maturities, the
        estimated fair value of the 1992 Pipeline Senior Notes, 1999 Pipeline
        Senior Notes and 2001 Pipeline Senior Notes was approximately $623
        million and $404 million at December 31, 2001 and 2000, respectively.
        Northern Border Pipeline presently intends to maintain the current
        schedule of maturities for the 1992 Pipeline Senior

                                      F-13
<PAGE>

                        NORTHERN BORDER PIPELINE COMPANY

                          NOTES TO FINANCIAL STATEMENTS


5.      CREDIT FACILITIES AND LONG-TERM DEBT (continued)


        Notes, 1999 Pipeline Senior Notes and the 2001 Pipeline Senior Notes,
        which will result in no gains or losses on their respective repayment.
        The fair value of Northern Border Pipeline's variable rate debt
        approximates the carrying value since the interest rates are
        periodically adjusted to reflect current market conditions.

6.      DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

        In 1998, the Financial Accounting Standards Board issued SFAS No. 133,
        "Accounting for Derivative Instruments and Hedging Activities," which
        was subsequently amended by SFAS No. 137 and SFAS No. 138. SFAS No. 133
        requires that every derivative instrument (including certain derivative
        instruments embedded in other contracts) 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, and requires that a company formally
        document, designate and assess the effectiveness of transactions that
        receive hedge accounting. Northern Border Pipeline adopted SFAS No. 133
        beginning January 1, 2001.

        As a result of the adoption of SFAS No. 133, Northern Border Pipeline
        reclassified approximately $11.1 million from long-term debt to
        accumulated other comprehensive income related to unamortized proceeds
        from the termination of interest rate swap agreements. Also upon
        adoption of SFAS No. 133, Northern Border Pipeline recorded a non-cash
        loss in accumulated other comprehensive income of approximately $0.8
        million, related to its outstanding interest rate swap agreement with a
        notional amount of $40 million, which terminated in November 2001.

        In March 2001, Northern Border Pipeline entered into forward starting
        interest rate swaps with notional amounts totaling $200 million related
        to the planned issuance of 10-year and 30-year fixed rate debt. Upon
        issuance of the 2001 Pipeline Senior Notes in September 2001, Northern
        Border Pipeline paid approximately $4.1 million to terminate the swaps,
        which was recorded in accumulated other comprehensive income. The swaps
        were designated as cash flow hedges as they were entered into to hedge
        the fluctuations in Treasury rates and spreads between the execution
        date of the swaps and the issuance of the 2001 Pipeline Senior Notes.

        During the year ended December 31, 2001, Northern Border Pipeline
        amortized approximately $1.2 million related to the terminated interest
        rate swap agreements as a reduction to interest expense from accumulated
        other comprehensive income. Northern Border Pipeline expects to amortize
        a comparable amount in 2002.

        In November 2001, Northern Border Pipeline entered into forward starting
        interest rate swaps with notional amounts totaling $150 million related
        to the planned issuance of senior notes. The swaps have been designated
        as cash flow hedges as they were entered into to hedge the fluctuations
        in Treasury rates and spreads between the execution date of the swaps
        and the issuance date of the senior notes, which is expected to occur in
        the second quarter of 2002. At December 31, 2001, Northern Border
        Pipeline recognized a non-cash gain in accumulated other comprehensive
        income of approximately $3.4 million, with a corresponding amount
        reflected in other assets on the accompanying balance sheet.





                                      F-14
<PAGE>

                        NORTHERN BORDER PIPELINE COMPANY

                          NOTES TO FINANCIAL STATEMENTS


7.      COMMITMENTS AND CONTINGENCIES

        Capital expenditures

        Total capital expenditures for 2002 are estimated to be $12 million.
        This includes approximately $2.5 million for Project 2000 (see Note 3).
        Funds required to meet the capital expenditures for 2002 are anticipated
        to be provided primarily from debt borrowings and operating cash flows.

        Environmental Matters

        Northern Border Pipeline is not aware of any material contingent
        liabilities with respect to compliance with applicable environmental
        laws and regulations.

        Other

        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 Reservation. Based on recent decisions by the federal courts and
        other defenses, Northern Border Pipeline believes that the Tribes do not
        have the authority to impose the tax and that the lawsuit will not have
        a material adverse impact on Northern Border Pipeline.

        Various legal actions that have arisen in the ordinary course of
        business are pending. Northern Border Pipeline believes that the
        resolution of these issues will not have a material adverse impact on
        Northern Border Pipeline's results of operations or financial position.

8.      QUARTERLY FINANCIAL DATA (Unaudited)

<Table>
<Caption>

                                                 Operating         Operating         Net Income

              (In thousands)                  Revenues, net           Income         to Partners
              --------------                  --------------        -----------     ------------


<S>                                                <C>               <C>              <C>
        2001
              First Quarter                        $77,040           $50,318          $35,889
              Second Quarter                        76,950            46,706           31,632
              Third Quarter                         77,932            48,083           35,537
              Fourth Quarter                        81,166            51,134           37,400
        2000
              First Quarter                        $76,241           $44,628          $28,744
              Second Quarter                        77,346            44,305           29,413
              Third Quarter                         78,241            47,584           34,293
              Fourth Quarter                        79,194            47,650           34,614
</Table>

9.      ACCOUNTING PRONOUNCEMENTS

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

        SFAS No. 143 requires entities to record the fair value of a liability
        for an asset retirement obligation in the period in which it is
        incurred. When the liability is initially recorded, the entity
        capitalizes a cost by increasing the carrying amount of the related
        long-lived asset. Over time, the liability is accreted to its present
        value and the capitalized cost is






                                      F-15
<PAGE>


                        NORTHERN BORDER PIPELINE COMPANY

                          NOTES TO FINANCIAL STATEMENTS


9.      ACCOUNTING PRONOUNCEMENTS (continued)

        depreciated over the useful life of the related asset. Upon settlement
        of the liability, an entity either settles the obligation for its
        recorded amount or incurs a gain or loss. SFAS No. 143 is effective for
        fiscal years beginning after June 15, 2002, with earlier application
        encouraged. Northern Border Pipeline is in the process of evaluating the
        application of this pronouncement.

        SFAS No. 144 establishes one accounting model to be used for long-lived
        assets to be disposed of by sale and broadens the presentation of
        discontinued operations to include more disposal transactions. SFAS No.
        144 supersedes both SFAS No. 121, "Accounting for the Impairment of
        Long-Lived Assets and for Long-Lived Assets to be Disposed of," and the
        accounting and reporting provisions of APB Opinion No. 30. This standard
        is effective for fiscal years beginning after December 15, 2001.
        Northern Border Pipeline adopted SFAS No. 144 effective January 1, 2002.
        Northern Border Pipeline does not expect the adoption of SFAS No. 144 to
        have a material impact on its financial position or results of
        operations.

10.     RELATIONSHIPS WITH ENRON

        In December 2001, Enron and certain of its subsidiaries filed voluntary
        petitions for Chapter 11 reorganization with the U.S. Bankruptcy Court.
        Northern Plains was not included in the bankruptcy filing and management
        believes that Northern Plains will continue to be able to meet its
        operational and administrative service obligations under the existing
        operating agreement. ENA, a subsidiary of Enron, was included in the
        bankruptcy filing. As indicated in Note 4, ENA has firm service
        agreements representing approximately 3.5% of contracted capacity, a
        portion of which (1.1%) has been temporarily released to a third party
        until October 31, 2002. Northern Border Pipeline recorded a bad debt
        expense of approximately $1.3 million representing ENA's unpaid November
        and December 2001 transportation, which is included in operations and
        maintenance expense on the statement of income. ENA has not assumed or
        rejected these contracts, but its ability to use the capacity has been
        suspended until ENA provides adequate assurance of credit support and
        payment. The third party that holds the 1.1% of capacity through October
        31, 2002 has filed a complaint with the FERC requesting, in effect, that
        its contract be deemed terminated as a consequence of ENA's filing for
        bankruptcy protection. Management believes this shipper's contract will
        remain in effect until October 31, 2002. For 2002, the estimated
        financial exposure for ENA's firm service agreements is approximately $9
        million. Management believes that even if ENA continues to fail to
        perform its obligations under the firm service agreements, it will not
        have a material adverse impact on Northern Border Pipeline's financial
        condition and results of operations.

        Management plans to continue to monitor developments at Enron, to
        continue to assess the impact on Northern Border Pipeline of its
        existing agreements and relationships with Enron and to take appropriate
        action to protect the interests of Northern Border Pipeline.

11.     SUBSEQUENT EVENTS

        Northern Border Pipeline makes distributions to it general partners
        approximately one month following the end of the quarter. The
        distribution for the fourth quarter of 2001 of approximately $39.2
        million was paid February 1, 2002.

                                      F-16


<PAGE>



INDEPENDENT AUDITORS' REPORT ON SCHEDULE


To Northern Border Pipeline Company:

We have audited in accordance with auditing standards generally accepted in the
United States of America, the financial statements of Northern Border Pipeline
Company included in this Form 10-K and have issued our report thereon dated
March 8, 2002. Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule of Northern Border
Pipeline Company listed in Item 14 of Part IV of this Form 10-K is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.


                                                           KPMG LLP

Omaha, Nebraska,
  March 8, 2002




                                       S-1

<PAGE>


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE


To Northern Border Pipeline Company:

We have audited in accordance with auditing standards generally accepted in the
United States, the financial statements as of December 31, 2000, and for each of
the two years in the period ended December 31, 2000, of Northern Border Pipeline
Company included in this Form 10-K and have issued our report thereon dated
January 22, 2001. Our audits were made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The schedule of Northern Border
Pipeline Company listed in Item 14 of Part IV of this Form 10-K is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.


ARTHUR ANDERSEN LLP

Omaha, Nebraska,
  January 22, 2001















                                       S-2

<PAGE>

                                                                     SCHEDULE II

                        NORTHERN BORDER PIPELINE COMPANY
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                                 (IN THOUSANDS)


<Table>
<Caption>

Column A                   Column B               Column C                        Column D             Column E
-------------------------------------------------------------------------------------------------------------------
                                                  Additions
                                            -----------------------           Deductions
                           Balance at       Charged to      Charged         For Purpose For
                           Beginning        Costs and       to Other        Which Reserves            Balance at
Description                 of Year          Expenses       Accounts        Were Created             End of Year
------------              ------------      ------------------------   ---------------------------------------------

Reserve for
  regulatory issues
<S>                      <C>                <C>              <C>         <C>                   <C>
      2001                  $1,800             $  731           $--                 $   --              $2,531
      2000                  $7,376             $1,800           $--                 $7,376              $1,800
      1999                  $6,726             $  650           $--                 $   --              $7,376

Allowance for
  doubtful accounts
      2001                  $   --             $3,176           $--                 $   --              $3,176

</Table>


                                      S-3
<PAGE>

                               INDEX TO EXHIBITS

<Table>
<Caption>
EXHIBIT
NUMBER                   DESCRIPTION
-------                  -----------
<S>                   <C>
*3.1                     Northern Border Pipeline Company General Partnership
                         Agreement between Northern Plains Natural Gas Company,
                         Northwest Border Pipeline Company, Pan Border Gas
                         Company, TransCanada Border Pipeline Ltd. and TransCan
                         Northern Ltd., effective March 9, 1978, as amended
                         (Exhibit 10.2 to Northern Border Partners, L.P.'s Form
                         S-1, SEC File No. 33-66158 ("Form S-1")).

*4.1                     Indenture, dated as of August 17, 1999, between the
                         registrant and Bank One Trust Company, NA, successor to
                         The First National Bank of Chicago, as trustee
                         (Exhibit 4.1 to Northern Border Pipeline Company's Form
                         S-4 Registration Statement, Registration No. 333-88577
                         ("Form S-4")

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

*10.1                    Operating Agreement between Northern Border Pipeline
                         Company and Northern Plains Natural Gas Company, dated
                         February 28, 1980 (Exhibit 10.3 to Form S-1).

*10.2                    Note Purchase Agreement between Northern Border
                         Pipeline Company and the parties listed therein, dated
                         July 15, 1992 (Exhibit 10.6 to Form S-1).

*10.3                    Supplemental Agreement to the Note Purchase Agreement
                         dated as of June 1, 1995 (Exhibit 10.6.1 to Northern
                         Border Partners L.P.'s Form 10-K for the year ended
                         December 31, 1995, SEC File No. 1-12202 ("1995 10-K")).

*10.4                    Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Enron Gas Marketing, Inc., dated June 22, 1990 (Exhibit
                         10.10 to Form S-1).

*10.5                    Amended Exhibit A to Northern Border Pipeline Company
                         U.S. Shippers Service Agreement between Northern Border
                         Pipeline Company and Enron Gas Marketing, Inc. (Exhibit
                         10.10.1 to Northern Border Partners L.P.'s Form 10-K
                         for the year ended December 31, 1993, SEC File No.
                         1-12202 ("1993 10-K")).

*10.6                    Amended Exhibit A to Northern Border Pipeline U.S.
                         Shippers Service Agreement between Northern Border
                         Pipeline Company and Enron Gas Marketing, Inc.,
                         effective November 1, 1994 (Exhibit 10.10.2 to Northern
                         Border Partners, L.P.'s Form 10-K for the year ended
                         December 31, 1994, SEC File No. 1-12202 ("1994 10-K")).

*10.7                    Amended Exhibit A's to Northern Border Pipeline Company
                         U.S. Shipper Service Agreement effective, August 1,
                         1995 and November 1, 1995 (Exhibit 10.10.3 to 1995
                         10-K).
</Table>



<PAGE>

<Table>
<Caption>
EXHIBIT
NUMBER                   DESCRIPTION
-------                  -----------
<S>                      <C>
*10.8                    Amended Exhibit A to Northern Border Pipeline Company
                         U.S. Shipper Service Agreement effective April l, 1998
                         (Exhibit 10.10.4 to Northern Border Partners, L.P.'s
                         Form 10-K for the year ended December 31, 1997, SEC
                         File No. 1-12202 ("1997 10-K")).

 10.9                    Guaranty made by Enron Corp., dated August 8, 1989.

*10.10                   Seventh Supplement Amending Northern Border Pipeline
                         Company General Partnership Agreement (Exhibit 10.15 to
                         Form S-1).

*10.11                   Eighth Supplement Amending Northern Border Pipeline
                         Company General Partnership Agreement (Exhibit 10.15
                         of Form S-4).

*10.12                   Form of Conveyance, Contribution and Assumption
                         Agreement among Northern Plains Natural Gas Company,
                         Northwest Border Pipeline Company, Pan Border Gas
                         Company, Northern Border Partners, L.P., and Northern
                         Border Intermediate Limited Partnership (Exhibit 10.16
                         to Form S-1).

*10.13                   Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Transcontinental Gas Pipe Line Corporation, dated July
                         14, 1983, with Amended Exhibit A effective February 11,
                         1994 (Exhibit 10.17 to 1995 10-K).

*10.14                   Form of Credit Agreement among Northern Border Pipeline
                         Company, The First National Bank of Chicago, as
                         Administrative Agent, The First National Bank of
                         Chicago, Royal Bank of Canada, and Bank of America
                         National Trust and Savings Association, as Syndication
                         Agents, First Chicago Capital Markets, Inc., Royal Bank
                         of Canada, and BancAmerica Securities, Inc, as Joint
                         Arrangers and Lenders (as defined therein) dated as of
                         June 16, 1997 (Exhibit 10(c) to Amendment No. 1 to
                         Northern Border Partners, L.P. Form S-3, SEC File No
                         333-40601 ("Form S-3")).

*10.15                   Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Enron Capital & Trade Resources Corp. dated October 15,
                         1997 (Exhibit 10.21 to 1997 10-K).

 10.16                    Guaranty made by Enron Corp., dated October 20, 1997.

*10.17                   Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Enron Capital & Trade Resources Corp. dated October 15,
                         1997 (Exhibit 10.22 to 1997 10-K).

 10.18                    Guaranty made by Enron Corp., dated October 20, 1997.

*10.19                   Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Enron Capital & Trade Resources Corp. dated August 5,
                         1997 with Amendment dated September 25, 1997 (Exhibit
                         10.25 to 1997 10-K).

 10.20                    Guaranty made by Enron Corp., dated April 29, 1997 and
                         Confirmation dated November 19, 1998.

*10.21                   Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Enron Capital & Trade Resources Corp. dated August 5,
                         1997 (Exhibit 10.26 to 1997 10-K).

 10.22                   Guaranty made by Enron Corp., dated April 29, 1997.

*10.23                   Northern Border Pipeline Company Agreement among
                         Northern Plains Natural Gas Company, Pan Border Gas
                         Company, Northwest Border Pipeline Company, TransCanada
                         Border PipeLine Ltd., TransCan Northern Ltd., Northern
                         Border Intermediate Limited Partnership, Northern
                         Border Partners, L.P., and the
</Table>



<PAGE>

<Table>
<Caption>
EXHIBIT
NUMBER                   DESCRIPTION
-------                  -----------
<S>          <C>         <C>
                         Management Committee of Northern Border Pipeline,
                         dated as of March 17, 1999 (Exhibit No. 10.21 to
                         Northern Border Partners, L.P.'s Form 10-K for the year
                         ended December 31, 1998, SEC File No. 1-12202
                         ("1998 10-K")).

*10.24                   Form of Contribution, Conveyance and Assumption
                         Agreement among TC PipeLines, LP and certain other
                         parties. (Exhibit 10.2 to TC PipeLines, LP's Form S-1,
                         SEC File No. 333-69947 ("TC Form S-1")).

*10.25                   Amended Exhibit A to Northern Border Pipeline Company
                         U.S. Shippers Service Agreement between Northern Border
                         Pipeline Company and Enron Capital & Trade Resources
                         Corp. effective November 1, 1998 (Exhibit 10.15.1 to TC
                         Form S-1).

*10.26                   Amended Exhibit A to Northern Border Pipeline Company
                         U.S. Shippers Service Agreement between Northern Border
                         Pipeline Company and Enron Capital & Trade Resources
                         Corp. effective April 2, 1999 (Exhibit 10.16.1 to TC
                         Form S-1).

*10.27                   Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Pan-Alberta Gas (U.S.) Inc., dated October 1, 1993,
                         with Amended Exhibit A effective June 22, 1998 (Exhibit
                         10.25 to TC Form S-1).

*10.28                   Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Pan-Alberta Gas (U.S.) Inc. (successor to Natgas U.S.
                         Inc.), dated October 6, 1989, with Amended Exhibit A
                         effective April 2, 1999 (Exhibit 10.26 to TC Form S-1).

*10.29                   Northern Border Pipeline Company U.S. Shippers Service
                         Agreement between Northern Border Pipeline Company and
                         Pan-Alberta Gas (U.S.) Inc., dated October 1, 1992,
                         with Amended Exhibit A effective June 22, 1998 (Exhibit
                         10.27 to TC Form S-1).

*10.30                   Project Management Agreement by and between Northern
                         Plains Natural Gas Company and Enron Engineering &
                         Construction Company, dated March 1, 1996 (Exhibit
                         10.39 to Form S-4).

*10.31                   Employment Agreement between Northern Plains Natural
                         Gas Company and William R. Cordes effective June 1,
                         2001 (Exhibit 10.27 to Northern Border Partners,
                         L.P.'s Quarterly Report on Form 10-Q for the quarter
                         ended June 30, 2001).

*10.32                   Amendment to Employment Agreement between Northern
                         Plains Natural Gas Company and William R. Cordes,
                         effective September 25, 2001 (Exhibit 10.36 to 2001
                         Form S-4).

*10.33                   Ninth Supplement Amending Northern Border Pipeline
                         Company General Partnership Agreement (Exhibit 10.37
                         to 2001 Form S-4).

*10.34                   Northern Border Pipeline Company U.S. Shipper Service
                         Agreement between Northern Border Pipeline Company and
                         Enron North America Corp., dated October 29, 2001
                         (Exhibit 10.38 to 2001 Form S-4).

 10.35                   Northern Border Pipeline Company U.S. Shipper Service
                         Agreement between Northern Border Pipeline Company and
                         Enron North America Corp., dated October 29, 2001

 10.36                   Guaranty made by Enron Corp., dated October 31, 2001.

*99.1                    Northern Border Phantom Unit Plan (Exhibit 99.1 to
                         Northern Border Partners, L.P.'s Registration No.
                         333-66949 and Exhibit 99.1 to Northern Border Partners,
                         L.P.'s Registration No. 333-72696).
</Table>

            *            Indicates exhibits incorporated by reference as
                         indicated; all other exhibits are filed herewith.