OPG and the Opportunities for New Generation in Ontario Emad Elsayed Vice President Hydroelectric Development Ontario Power Generation to the Electricity Distributors Association Thunder Bay, Ontario September 7, 2006

OPG Profile Generated 108.5 TWh in 2005 Lambton GS Pickering B GS Beck 2 GS Generated 108.5 TWh in 2005 53.9 TWh in first 6 months 2006 Produces approx. 70% of Ontario’s electricity generation Employs approx. 11,000 employees Operates: Three nuclear stations (10 operating units, total) Five fossil-fuelled stations 64 hydroelectric stations

Improving Financial Performance 2005 2004 500 450 400 350 300 250 200 150 100 50 Net Income ($millions) $366 $342 $42 Q1-Q2 2006 In May, 2006 OPG’s Credit rating was upgraded by Standard & Poor’s -- short-term commercial paper debt rating upgraded to “A-1 (low)” from A-2.”

OPG Helps Moderate Electricity Prices

Ontario Electricity Supply Mix Ontario Capacity: 30,631 MW OPG Capacity: 22,173 MW (72%) Ontario Energy: 156,000 GWh/yr OPG Energy: 109,000 GWh/yr (70%) Coal – 21.4% Source: IESO/OPG, January 2006

Station Location Map

OPG’s Hydroelectric Assets Ragged Rapids GS

OPG Mandate Memorandum of Agreement between OPG and Shareholder (Ontario Government), signed August 17, 2005, states in part: “With respect to investment in new generation capacity, OPG’s priority will be hydro-electric generation capacity. OPG will seek to expand, develop and/or improve its hydro-electric generation capacity. This will include expansion and redevelopment on its existing sites as well as the pursuit of new projects where feasible. These investments will be taken by OPG through partnerships or on its own, as appropriate.”

Hydroelectric Development Potential in Ontario Theoretical potential ~ 12,000 MW Practical/economic potential ~ 5,000 MW Most potential sites are in Northern Ontario and are restricted by existing government commitments Need to address key issues: First Nations participation Transmission requirements Restrictions on Northern & Moose Rivers development Environmental considerations

First Nations Participation Active involvement by First Nations in hydroelectric developments includes potential equity participation. Memoranda of Understanding/Final Settlement Agreements signed with: Mattagami FN to explore the development of the Mattagami Lake Control Dam Taykwa Tagamou Nation to explore developments on the Abitibi River Significant involvement by FN’s in the proposed Lower Mattagami River development. Goal is to create framework for all future developments in the Northern Rivers and Moose River Basin. Mattagami First Nation Council and OPG representatives

Transmission Requirements Significant development in northern Ontario will require new transmission lines to southern Ontario. Interim measure necessary for some projects (e.g. Lower Mattagami development). Longer term requirements to be addressed as part of OPA’s Integrated Power System Plan (IPSP).

Restrictions on Northern & Moose Rivers Development Site release commitments on Northern and Moose Rivers (4,500 MW): Commitment restricts developments greater than 25MW in four Northern Rivers (Albany, Attawapiskat, Winisk and Severn) No new development within Moose River basin north of Highway 11 without co-planning with First Nations (exception, Lower Mattagami Project) Parks designations in North restricts additional 1,500MW (Bill11)

Environmental Considerations Some flooding required for Northern Rivers/Moose River Basin developments Need harmonization of Federal and Provincial environmental approval

Current Active Hydroelectric Development Projects in Northern Ontario Lac Seul Development 12.5 MW addition to existing Ear Falls station Construction started in Jan/06 Expected completion Nov/07 Upper Mattagami River Development Replacing 3 existing old stations (Wawaitin, Sandy Falls, Lower Sturgeon) with 3 larger stations producing 35 MW Started pre-qualification process for equipment suppliers and contractors Construction expected to start in mid 2007 Lac Seul: Rock Drilling at the Intake, March 2006

Current Active Hydroelectric Development Projects in Northern Ontario (Con’t) Hound Chute Redevelopment (near Cobalt) Replace an existing 95-year old station (Hound Chute) with a new larger (9 MW) station Started pre-qualification process for equipment suppliers and contractors Construction expected to start in mid 2007

Lower Mattagami River Development Current Active Hydroelectric Development Projects in Northern Ontario (Con’t) Lower Mattagami River Development Replace existing 75-year old Smoky Falls station with a new larger station add an extra generating unit to each of three existing stations (Little Long, Harmon and Kipling) Net increase in generating capacity is 450 MW Construction expected to start in late 2007 Little Long Smoky Falls Harmon Kipling

Current Active Hydroelectric Development Projects in Northern Ontario (Con’t) Other Projects Mattagami Lake Control Dam (5 MW) with Mattagami First Nation Abitibi River sites with Taykwa Tagamou Nation Long Lake Control Dam (5-6 MW) Little Jackfish River Development (132 MW) Long Lake Control Dam Mattagami Lake Control Dam

Recap OPG continues to invest in Northern Ontario. OPG will pursue all economically viable hydroelectric developments in the Province, mostly in Northern Ontario. OPG will seek involvement and partnerships with First Nations. OPG will continue to work with the appropriate government agencies and stakeholders to address existing development restrictions, transmission constraints and environmental considerations.

Other Supply Initiatives: Niagara Tunnel Outlet Intake Sir Adam Beck Pump Generating Station Sir Adam Beck GS No.2 Sir Adam Beck GS No.1

Other Supply Initiatives: Niagara Tunnel (cont’d) Diverts additional water to Beck hydroelectric stations 500 cubic metres of water per second 1.6 billion KWh average per year 10.4 km long Construction work underway Expected completion: late 2009 90 year life-expectancy Project is on schedule and within budget OPG is project manager Niagara Tunnel Boring Machine, “Big Becky”

Other Supply Initiatives: Portlands Energy Centre IESO reports Toronto needs additional 500 MW by 2010 PEC is a 550 MW high efficiency combined-cycle: co-generation capable fuelled by natural gas Located in Toronto’s Portlands area OPG and TransCanada Energy Ltd. are partnering to build PEC Environmental assessment and approvals in place Site clearing is underway in preparation for construction First power in 2008; fully operational by 2009 Site Clearing Underway PEC: Artist’s Conception

Nuclear Refurbishment In June, Ont. Govt. Directed OPG to Undertake feasibility studies re. refurbishment of units at Pickering B & Darlington sites Begin Environmental Assessment (EA) on Pickering B refurbishment as part of this process OPG is now assessing the business case for refurbishing Pickering B OPG’s Plant Life Extension Project Division created in February 2006 On June 15, OPG submitted letter of intent and project description to CNSC re. potential Pickering B refurbishment EA for potential Pickering B refurbishment is proceeding as part of business case Business case study to be reviewed by OPG management and Board in 2008 Solid business case must exist before any decision to refurbish Pickering B (and eventually Darlington) is made Pickering B

New Nuclear In June, Ont. Govt. has also Directed OPG to: Begin federal approvals process for new nuclear units at an existing facility Includes an environmental assessment OPG is developing plan of action to meet this directive OPG believes Darlington is best site for new build Experienced workforce Best-performing multi-unit CANDU station in Canada in 2004 and 2005 Strong community support Room to build on site Darlington Nuclear Generating Station Darlington

OPG’s Fossil-Fuelled Stations Ontario Govt. responded in June to the OPA’s Supply Mix Report (Dec. 2005) The Govt. has asked OPA to determine how best to replace coal-fired generation in Ontario at the earliest possible time As a result…OPG’s coal-fired stations to continue operating beyond 2009 OPG to meet all environmental regulations governing the operation of its coal-fired stations OPG will make additional, prudent investments in environmental equipment and systems to further improve environmental performance of its coal-fired plants Lambton GS Nanticoke GS

Lakeview Stack Demolition Lakeview Generating Station in Mississauga: in service:1961 capacity 1,140 MW lifetime output: 214 TWh 275 employees permanently shut down in April 2005 June 12, 2006: stack demolition Site now being cleared of remaining equipment Potential for future high-efficiency gas plant at the site

The Trust and Confidence of Communities is Essential to our Operations Pickering Neighbourhood Walk Employee Volunteers Kakabeka Falls GS, 100th Anniversary Open House OPG receives Pickering 2005 Local Business Award Darlington Bird houses

OPG: The Big Picture Contributing to Ontario’s Electricity supply Continuous improvement Meeting our commitments Open, transparent and accountable Reliable Providing value to our shareholders -- the people of Ontario

OPG and the Opportunities for New Generation in Ontario Emad Elsayed Vice President Hydroelectric Development Ontario Power Generation to the Electricity Distributors Association Thunder Bay, Ontario September 7, 2006