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MEMO FROM THE FUTURE: TC ENERGY

CEO Edition

BOARD STRATEGY MEMORANDUM June 2030

SUBJECT: Pivoting From Energy Company to AI Infrastructure Provider

TO: Board of Directors, Executive Leadership

FROM: François Poirier, President & CEO

DATE: June 15, 2030

OPENING

When I became CEO of TC Energy in 2019, I inherited a company under pressure. The Keystone XL project was being killed by political opposition. The energy transition narrative was all about moving away from fossil fuels. Investors viewed our pipeline networks as stranded assets that would generate declining cash flows until technological obsolescence.

Our strategy focused on dividend sustainability and capital discipline. We were managing decline, not building for growth.

That narrative has inverted in the last 18 months, and it's time to tell the market and our organization what that inversion means.

THE REALIZATION

In late 2028, I had a conversation with a data center power engineer at a major cloud provider. He said something I've thought about nearly every day since:

"The problem isn't generating renewable power. The problem is that power is variable, and we need power to be constant and on-demand. That's what your pipelines solve."

He was describing TC Energy's natural gas infrastructure, but he wasn't talking about energy in the traditional sense. He was talking about strategic infrastructure for the AI-powered economy.

This insight started a deeper investigation into data center power economics. What I found was remarkable:

  1. Data center buildout is accelerating exponentially. Microsoft, Google, Amazon, Meta, and dozens of smaller AI infrastructure companies are spending $50-80 billion annually on data center capex. This is forecast to grow to $100+ billion annually by 2032.

  2. This buildout requires power. An enterprise-scale AI data center needs 500+ MW of continuous power. A large campus of data centers needs multiple gigawatts. In California alone, new data center power demand is projected to be 20+ GW by 2035.

  3. This power must be dispatchable. Solar and wind are growing, but they're intermittent. You can't run an AI training job that's worth $100 million on intermittent power. You need power you can count on 24/7/365.

  4. Natural gas is the only solution at scale today. Nuclear has longer build times and regulatory uncertainty. Hydroelectric is geographically limited. Coal is being phased out. That leaves natural gas as the only dispatchable power source that can be deployed at scale in the next 3-5 years.

  5. Our pipelines are the constraint. To build data center power generation in specific geographic regions, you need to deliver natural gas to those regions. Our NGTL system, Columbia Gas, Mexico pipelines—these are the constraint on the growth of this entire ecosystem.

The implication was staggering: TC Energy, the company everyone thought was declining, actually controlled critical infrastructure for the most important economic trend of the decade.

THE STRATEGIC PIVOT

Based on this realization, the company has made a fundamental strategic pivot. We're repositioning from a traditional energy company to a critical infrastructure provider for AI-powered digital economy.

This isn't about abandoning our energy business. It's about reframing what our business actually does and where value creation lies.

What This Means Operationally

1. Pipeline Capacity Expansion

We're investing in capacity expansion on the NGTL system, Columbia Gas, and Mexico pipelines. Rather than assuming flat-to-declining throughput, we're planning for 15-25% throughput growth through 2035.

This requires capex. We're allocating CAD 8-10 billion over the next three years for expansion projects. This is aggressive, but the returns justify it.

Why? Because the marginal cost of expanding existing pipeline capacity is 3-5x lower than building new pipelines from scratch. If we can expand NGTL capacity by 20% with CAD 2 billion in capex, that's an enormous return on investment.

2. Pricing Strategy Shift

Historically, TC Energy has priced pipelines based on a cost-of-service model. Shippers paid what it cost us to operate the pipeline plus a regulated return.

Moving forward, we're transitioning to market-based pricing. Because our pipelines are increasingly in a supply-constrained market (high demand for capacity from data center power generation), we can charge market rates rather than cost-based rates.

This is already happening. Utilization on the NGTL is near capacity, and we're seeing shippers willing to pay premium prices for shipping rights. This is a fundamental margin expansion opportunity.

3. Power & Storage Investments

We're investing in new business lines that complement our core pipeline business:

These aren't distractions from the core business. They're expansion of the core business into adjacent infrastructure layers that serve the same AI data center customer base.

4. Geographic Expansion

Our Mexico pipelines are positioned to serve data center power generation in Mexico, which is emerging as a hub for AI infrastructure investment (lower cost of labor, proximity to U.S. market, stable power regulation).

We're also evaluating pipeline investments in other regions with strategic importance for AI infrastructure: the Midwest U.S. (where there's significant data center buildout), and potentially Europe and Asia-Pacific in the medium term.

THE ORGANIZATIONAL SHIFT

This strategic pivot requires organizational change.

1. New Leadership

I'm bringing on a new Chief Technology Officer (joining from a cloud infrastructure company) to ensure we understand data center power requirements and can serve this customer base effectively.

I'm also promoting the VP of Commercial from our traditional energy business into the newly created role of Chief Commercial Officer for AI Infrastructure. Her remit will be to own all customer relationships with data center operators and power generators.

2. Sales Approach

Historically, we've sold pipelines to energy companies. Now we're selling to cloud infrastructure companies (Microsoft, Google, Amazon), independent power producers, and utilities building data center power plants.

This requires a different sales approach: less about commodity pricing negotiations, more about long-term strategic partnerships where we're the infrastructure foundation for their data center expansion plans.

I'm restructuring our sales organization to have dedicated teams focused on each of these customer segments.

3. Financial Metrics

We're shifting from thinking about the company in "net debt / EBITDA" terms to thinking about it in "critical infrastructure value" terms.

This means: - Expecting EBITDA growth of 8-12% annually (vs. historical 3-5%) - Targeting dividend growth of 5-6% annually (vs. historical 2-3%) - Willing to take on more debt to fund capacity expansion (targeting net debt/EBITDA ratio of 4.2x, vs. current 4.4x) - Evaluating M&A opportunities to expand our geographic footprint and customer relationships

MANAGING THE TRANSITION

This pivot is not without risk, and I want to be direct about how we're managing those risks.

Risk #1: What if data center power demand doesn't accelerate as expected?

If the AI buildout slows or cloud providers reduce capex, natural gas demand could plateau. We'd be left with excess capacity on our pipelines.

Mitigation: We're maintaining relationships with traditional natural gas customers (utilities, manufacturers) to ensure baseload demand. We're not betting entirely on data center growth. We're adding on top of a stable base business.

Risk #2: What if nuclear or other dispatchable power sources scale faster than expected?

If SMRs become economical and deployable faster than expected, demand for gas-fired generation could decline. This would reduce natural gas demand.

Mitigation: We're investing in hydrogen and other energy carriers, so we're not dependent entirely on natural gas. We're also invested in carbon capture, which could position us well if natural gas plants become "zero-carbon" through CCUS.

Risk #3: What if we over-invest in capacity and utilization doesn't materialize?

This is the most concrete risk. If we build 20% more pipeline capacity and demand only grows 10%, we've over-invested and returns on that capex will be below our hurdle rates.

Mitigation: We're being disciplined about capacity expansion. We're only building capacity where we have forward commitments or high-confidence demand signals. We're also front-loading capex on existing pipeline expansion rather than building entirely new pipelines (lower capital intensity).

STAKEHOLDER COMMUNICATION

For investors: The narrative is simple. TC Energy is a critical infrastructure company serving a secular growth trend (AI data center buildout). Rather than declining cash flows, expect growing cash flows and dividend growth. The investment thesis has shifted from "income" to "income + growth."

For employees: We're in growth mode for the first time in a decade. Promotions and career advancement opportunities are opening up as we expand the organization. If you're interested in working on the frontier of infrastructure innovation, now is your chance. (We're also being honest that some roles in traditional energy business will be rationalized as we shift resources to AI infrastructure.)

For the government and regulators: We're positioned to support national economic competitiveness in the AI era. Natural gas pipelines are critical infrastructure for data center buildout, which drives competitiveness in cloud computing, which underpins all of AI. By enabling TC Energy to invest and expand, governments are enabling their own economic competitiveness.

For traditional energy customers: We remain committed to serving traditional natural gas customers. The growth in data center power doesn't mean we're abandoning the baseload business. Both are valuable, and we're pursuing both.

THE MULTI-YEAR PLAN

2030-2031: Establish New Positioning

2032-2033: Scale the Model

2034-2035: Reposition the Company

CLOSING THOUGHT

I said at the start that we were managing decline. I was wrong. We were failing to see the structural change happening around us.

TC Energy has been handed an extraordinary opportunity: to be the critical infrastructure foundation for the most important economic transformation of our time. The company that everyone thought was declining is actually perfectly positioned for growth.

This requires us to be bold about our strategy, disciplined about execution, and honest with ourselves about both opportunities and risks.

I believe we can do it. I'm excited about the path ahead.

François

Confidential — For Board and Executive Committee Only