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An analyst expects the U.S. government to approve Keystone XL sometime in the second quarter, and no later than the third, next year.

Nathan VanderKlippe/The Globe and Mail

A surge in power-generation revenues and higher returns on the mainline natural gas system gave TransCanada Corp. a profit boost in its third quarter, as the company continues the wait for U.S. approval of its controversial Keystone XL project.

TransCanada posted a profit of $481-million in the third quarter, compared with $369-million a year earlier, or 68 cents a share compared with 52 cents.

Bolstered by the August decision to move forward with the $12-billion Energy East pipeline, the energy company also said it now has more than $38-billion of commercially secured capital projects backed by long-term contracts or business models.

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Canaccord Genuity analyst Juan Plessis said the results – including higher earnings from Bruce Power, stronger Alberta and New York power prices and higher Canadian mainline returns – show TransCanada is not taking the focus off existing operations as it pursues growth opportunities.

TransCanada's stock price held relatively steady in Toronto Stock Exchange trading Tuesday.

"I think the market is still is waiting on advancements on some of [TransCanada's] growth initiatives," Mr. Plessis said. "Probably mainly Keystone XL presidential permit news."

When it comes to that $5.4-billion project, TransCanada had little new to say. It said its investments in the proposed pipeline have increased to $2-billion from $1.9-billion in the last quarter. It repeated in a statement that company officials anticipate Keystone XL will be in service about two years following a presidential permit. U.S. approval on the pipeline that would transport Alberta oil-sands bitumen to lucrative markets on the Texas Gulf Coast has been held up by environmental concerns that have led to political opposition to the project.

TransCanada chief executive Russ Girling told reporters in Washington last week that the Keystone XL approval process has been "hijacked" by activists opposed to increased fossil-fuel use. On Tuesday's conference call, he said his trip didn't give him any new clues as to when a decision might finally come, but he believes the U.S. State Department might issue its final environmental impact statement in short order.

"There's nothing left to review. We could get to that relatively quickly," Mr. Girling said Tuesday.

He said after the final environmental impact statement, there's still a 90-day National Interest Comment period, as well as a public comment period. Mr. Girling added he has given up trying to predict when exactly the process would end.

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But FirstEnergy Capital Corp. analyst Steven Paget said he still believes the U.S. government would approve Keystone XL, likely sometime in the second quarter. "But it's possible it could be as late as late third quarter."

He noted with TransCanada's plan to expand its capital program to $38-billion – with the Energy East project now in the mix – Keystone XL figures less significantly in the company's overall plans. Keystone now makes up less than 15 per cent of the company's commercially secured projects that are in various stages of design, regulatory approval or construction. "It changes in its significance now," Mr. Paget said.

In its third-quarter results, the company also noted that the Gulf Coast Project, which will transport oil from Cushing, Okla., to Port Arthur, Tex., is 95-per-cent complete and the company expects to begin delivering oil "near the end" of the year. This is a slight change in wording from the previous quarter, when the company said deliveries on the line would begin "at the end of 2013."

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