TransCanada Corp. third-quarter profit was down from the same time last year, falling slightly more than analysts had anticipated as improved earnings from the Keystone pipeline were offset by down time at key power plants.

The Calgary-based pipeline operator's net income was $369 million or 52 cents per share, down from $386 million or 55 cents per share.

Another measure of profitability, called comparable earnings, dropped more to $349 million or 50 cents per share from $416 million or 59 cents per share.

The more closely watched comparable earnings missed a Thomson Reuters consensus estimate by two cents per share.

TransCanada says reduced earnings at from the Bruce Power nuclear generation complex in Ontario, its Western Power holdings and certain natural gas pipelines more than offset higher earnings from the Keystone oil pipeline.

On other measures including net earnings and revenue, TransCanada was more in line with analyst estimates.

Revenue for the three months ended Sept. 30 was $2.123 billion, up from $2.04 billion in the third quarter of 2011.

"TransCanada's diverse, high-quality energy infrastructure assets performed well in the third quarter," said Russ Girling, TransCanada's president and chief executive officer.

"While the majority of our assets continued to generate stable and predictable earnings and cash flow, plant outages at Bruce Power and Sundance A along with a lower contribution from certain natural gas pipelines did adversely affect our financial results.

Earnings just below expectations

"Looking forward, TransCanada is well positioned to grow earnings, cash flow and dividends as we complete our current capital program, benefit from a recovery in natural gas and power prices and secure attractive new growth opportunities."

Analysts polled by Thomson Reuters were on average expecting earnings per share of 51 cents and revenues of $2.1 billion.

TransCanada announced a partnership Monday with Phoenix Energy Holdings Ltd. to build a $3-billion pipeline connecting an emerging oilsands region to the Edmonton area.

The project — split 50-50 with Phoenix, a unit of China National Petroleum Corp. — would ship 900,000 barrels per day of crude oil south and 330,000 barrels per day of bitumen-thinning diluent north to the sites.

The growing presence in the inter-Alberta oilsands market comes as TransCanada looks to ship more Canadian crude south of the border.

The company began work this summer on a US$2.3-billion crude pipeline connecting an oil storage hub at Cushing Okla. to Texas refineries. It's expected to start up in mid to late 2013.

A supply glut at Cushing has dampened U.S. oil prices, which has hurt the bottom lines of North American producers.

TransCanada's proposal — along with rivals' similar projects — aims to lessen that discount by connecting Cushing crude to the lucrative Gulf Coast refining market.

Pipeline decision expected in new year

The Gulf Coast pipeline was initially part of TransCanada's $7.6-billion Keystone XL proposal, which would have sent Alberta crude to the Gulf via six U.S. states.

The U.S. State Department denied a permit for that project in its entirety in January. It said it rejected the pipeline because Republican manoeuvring to speed up the process, not based on the merits of the project itself. The administration said it needed more time to review a new route through Nebraska to address ecological concerns.

After the decision, TransCanada opted to go ahead with the southern part of Keystone XL first, since it doesn't need a federal permit to go ahead.

In May, TransCanada submitted a new application with the revised Nebraska route to the State Department for the northern part of the pipeline, which would run from the Canada-U.S. border in Montana to Steele City, Neb. Approval for the Canadian portion has been in-hand for years.

A decision on the northern portion is expected early in the new year.

Critics of Keystone XL argue the project would increase U.S. dependence on "dirty" oilsands crude and cause harm to the American heartland in the event of a spill.

Supporters, however, say the project will offer a big boost to the U.S. economy and reduce the amount of crude the United States has to import from unfriendly regimes.

TransCanada is best known as North America's largest natural gas shipper with a vast network of pipelines criss-crossing North America. It also has power generation assets across North America.