1. May 30, 2005 Investing in Canadian Power Markets A Sponsor’s Perspective on Debt Financing

2. 2 1Who is Macquarie? 2Debt Financing Options for Power Projects in Canada 3Conclusions Overview

3. 3 Who is Macquarie?

4. 4 Macquarie is an Australian-based global investment bank with a specialist focus on infrastructure Key statistics  Market capitalisation$10.0bn +  Total assets$85.0bn +  Direct infrastructure equity under management$25.0bn +  Credit RatingA(S&P) / A2 (Moody’s)  Employees> 6,500 Focus on Infrastructure  Macquarie has three main focuses in respect of infrastructure:  Infrastructure Funds Management – Manages over $25 billion of infrastructure equity worldwide  Principal – Invests on its own advice  Advisor – One of the largest global advisory teams dedicated to infrastructure

5. 5 Macquarie - Managed Infrastructure in North America

6. 6 Macquarie Funds in Canada Macquarie manages two infrastructure funds in Canada Macquarie Essential Assets Partnership (“MEAP”)  North America’s first unlisted infrastructure fund  Targets regulated utility assets and investments with similar characteristics  AltaLink LP (15% stake)  $644M rate base - North America’s first independent electricity transmission network  Michigan Electric Transmission Company LLC (42.4%)  US$360M rate base – 5,400 miles of transmission lines serving southern Michigan  Duke Point Power Limited Partnership (60%)  Constructing a 296 MW combined cycle power plant on Vancouver Island  Total commitments of $460 million finalised in May 2004 Macquarie Power Income Fund (“MPT”)  Focused on operating power generation assets in North America  Listed on the Toronto Stock Exchange as of April 30, 2004 (trading ticker MPT)  Seed asset is the 156 MW Cardinal Power Station  Market capitalization of ~ $235 million

7. 7 Debt Financing Options for Power Projects in Canada

8. 8 Historical Non-Utility Investment  Until recently, there have been low levels of non-utility investment in (and financing of) power projects in Canada  Limited number of new facilities have been built – uncertainty around power markets in deregulated (and partially-deregulated) markets  Larger merchant (or partial) merchant facilities have been financed on balance sheet  Most transactions have been the result of partnerships with, or power purchase agreements tendered by, incumbent government-owned utilities  Some projects have been financed on the strength of contracts from industrial offtakers, power marketers or transmission authorities (transmission support services)  As a result of this low activity, a number of Canadian lenders scaled down their power financing presence – a number of U.S. and international players withdrew YearTransactionDescription 2005Pingston Power (BC): 45 MW hydroelectric$70M capital markets 2004Lake Superior Power (ON): 110 MW cogeneration$77M capital markets 2003Arrow Lakes (BC): 185 MW hydroelectric station$100M capital markets 2002Cory (SK): 228 MW cogeneration$244M bank and capital markets 2002Brighton Beach (ON): 580 MW combined cycle$403M bank and institutional 2001Muskeg River (AB): 170 MW cogeneration$159M bank and institutional 2001Scotford (AB): 150 MW cogeneration$121M bank and institutional 1999Joffre (AB): 480 MW cogeneration$286M bank and institutional 1999Island (BC): 260 MW combined cycle$202M bank and capital markets

9. 9 Resurgence of Non-Utility Investment  Activity in the power financing sector has increased significantly in the last year  Large new “renewables” commitments in Ontario and Quebec – over 2,000 MW  Ontario completed a tender for 2,500 MW of new power generation  RFP’s are intended to be “financing friendly” and attract private sector investment  Scale and implementation of Ontario’s programs has attracted the attention of both Canadian and international lenders  Canadian lenders have quickly ramped up their activities in the power sector  European and Japanese lenders have begun to focus on opportunities in Canada  Financing alternatives for Canadian projects has increased significantly in the last year alone – additional funders and structures  Debt financing options in the Canadian marketplace include  “True” Private placements – typically with Canadian life companies  “Public-style” private placements – broadly-marketed  Canadian and European lenders

10. 10 Review of Financing Options  Different financing options are available at different stages of a power project’s life cycle TypeBid (Committed)ConstructionTerm Bank Financing  Limited number of Canadian banks capable of lead underwriting committed, non-recourse financing  European banks capable of leading smaller transactions  Bank financing terms will typically require broad syndication prior to commercial operations  For Canadian banks, significantly reduced availability of financing beyond 5-7 years Institutional Debt Financing  Potential to pre-arrange committed financing with specified institutions  Capacity constraints  Larger transactions may required accessing US$ market  “Make-whole” payments required to be paid prior to refinancing a project  Reduced capacity constraints Public Markets Debt Financing  Not available  Limited market pre-COD without completion guarantees  Significant capacity  Additional disclosure requirements

11. 11 Conclusions

12. 12 Conclusions  Range of options (and depth of market) for debt financing has increased substantially over the last year  Increased focus by Canadian lenders  Introduction of European lenders brings increased options and significant experience with renewable energy (wind)  Terms and pricing can be materially different between financing options  Important to have long-term financing plan thought through prior to entering into debt financing arrangements  “Different horses for different (race) courses” – there is no one best solution