1. Ontario Power Generation: Profile and Performance Jim Twomey Executive Vice President – Fossil Ontario Power Generation to the American Society of Mechanical Engineers Research Committee on Power Plant and Environmental Chemistry Niagara Falls, Ontario October 2, 2006

2. Topics to be Covered OPG Profile Recent Ontario Electricity Market Developments OPGs Fossil Fleet OPG Fossil Performance Plant and Environmental Chemistry at OPG Conclusion

3. OPG Profile Generated 108.5 TWh in 2005 53.9 TWh in first 6 months 2006 Produces approx. 70% of Ontarios electricity generation Employs approx. 11,000 employees Operates: Three nuclear stations (10 operating units, total) Five fossil-fuelled stations 64 hydroelectric stations Capacity: 22,173 MW (at end of 2005) Beck 2 GS Lambton GS Pickering B GS

4. Ontarios Supply Gap In December 2005, the Ontario Power Authority released its Supply Mix Advice Report. The Report estimates that Ontario demand will begin to exceed available supply by 2014. By 2025, the OPA estimates the energy gap will be about 10,000 megawatts. Ontarios Projected Supply Gap Source: Ontario Ministry of Energy

5. Ontario Govt. Response to OPA Supply Mix Report Double conservation efforts suggested in the OPA report to reduce electricity demand by 6,300 MW by 2025. Double the electricity from renewables, for a total of 15,700 MW by 2025. Plan for nuclear capacity to meet base-load electricity needs, but limit in-service capacity of nuclear power to its current 14,000 MW. OPG is directed to begin feasibility study on the refurbishment of its existing facilities to review the economic, technological and environmental aspects of refurbishment. OPG is directed to begin work on entering into an approvals process, including environmental assessment for new units to be built at an existing facility. Develop a revised schedule for the replacement of coal-fired generation with cleaner sources of energy in the earliest practical timeframe. Maintain the ability to use natural gas capacity at peak times and pursue applications that allow high efficiency and high value use of the fuel. Enhance transmission to meet the supply mix goals and ensure reliability.

6. Integrated Power System Plan Coal 6434 MW Conservation 675 MW Nuclear* 14,000 MW Gas & Cogen 4,976 MW Renewables 7,855 MW Conservation 6,300 MW Nuclear 14,000 MW or less Renewables 15,700 MW Gas & Cogen 9,400 MW (est.) Gasification 250 MW Ontario Installed Capacity Today Ontario Installed Capacity 2025 Late 2006: OPA launches IPSP public stakeholder consultation process March 2007: Final version of IPSP filed with Ontario Energy Board (OEB) Review of IPSP by OEB -- scheduled completion by early 2008 Source: Ontario Ministry of Energy

7. OPGs Hydroelectric Mandate OPG has a mandate from the government to develop and/or improve its hydroelectric capacity through: expansion and redevelopment of its existing sites and pursuit of new projects where feasible Current and proposed hydroelectric initiatives include: Niagara Tunnel (1.6 billion kWh average per year) Lower Mattagami River Development (450 MW) Lac Seul Development (12.5 MW) Upper Mattagami River Development (35 MW) Hydroelectric Improvements investing an average of $95 million per year to maintain/enhance hydroelectric capability existing plant capacity increased by 400 MW since 1992. further upgrades will add about another 150 MW by 2015 Niagara Tunnel Boring Machine, Big Becky

8. Government Directives: Nuclear Nuclear Refurbishment: Ont. Govt. has 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 New Nuclear Ont. Govt. has directed OPG to: Begin federal approvals process for new nuclear units at an existing facility Includes an environmental assessment On Sept. 22, OPG filed application for a Site Preparation Licence for new nuclear units at its Darlington nuclear site Pickering B Darlington

9. Ontario Governments Coal Policy Commitment to eliminate coal-fired generation in Ontario. Ontarios market operator (IESO) reviewed its forecasting methods and concluded it had under-estimated demand, especially for the summer, by as much as 3,000 MW. As a result, government decided it can no longer proceed with timetable to close all coal-fired generation by 2009. Govt. directed OPA to develop a revised schedule for replacing coal at the earliest practical time to ensure system reliability. OPA to recommend to government on cost effective measures to reduce emissions including greenhouse gas emissions.

10. OPGs Approach to Operation of Its Coal Plants Until coal-plants are closed: 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

11. OPGs Fossil Fleet Lambton Nanticoke Atikokan Thunder Bay Lennox

12. OPGs Fossil Fleet (contd.): Lakeview GS 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

13. OPGs Fossil Fleet (Contd.) Brighton Beach (in partnership with ATCO Power ) Portlands Energy Centre (in partnership with TransCanada Energy)

14. Portlands Energy Centre Update Toronto needs extra 500 MW by 2010 PEC is a 550 MW high efficiency combined-cycle facility: co-generation capable fuelled by natural gas Located in Torontos Portlands area Environmental assessment and approvals in place Accelerated Clean Energy Supply contract signed with Ontario Power Authority Construction underway First power in 2008; fully operational by 2009 capital cost: approx. $730 million Construction Underway

15. OPGs Fossil Performance: Fossil Generation & Emissions

16. Flexible Fossil Production 18 15 16 19 24 34 36 42 40 31 199319941995199619971998199920002001200220032004 TWh Nuclear Units operating Nuclear Units laid-up 27 2005 Nuclear Units returning to service 39

17. 2005 Fossil Performance Highlights 31 TWh -- 14% increase in generation over 2004 62% increase in summer generation over 2004 OPG Darlington and Nanticoke GS the number 1 and 2 producers in June and July Lambton GS and Nanticoke GS production increase over 2004 > provincial increase in demand in 2005 among best years for lowest total acid gas emissions lowest acid gas emission rate ever – 70% reduction over 20 years Thunder Bay GS

18. Jan. - June 2006 Fossil Performance Highlights Produced 12.3 TWh approx. 22% of OPG total Acid gas emissions: 54,900 tonnes compared to 78,900 tonnes (Q1-Q2 2005) Reduction due to improved acid-gas emission rates and reduced fossil generation on track in 2006 to perform better than regulatory limit on acid gas emissions Continued improved reliability improved equipment reliability at Nanticoke EFOR declined from 16.1% (Q1-Q2, 2005) to 12.9% (Q1-Q2 2006) Excellent performance during mid- summer heat wave Lambton GS maintainers retrofitting new boiler feedpump turbine on Unit 2. This work helped ensure that Lambtons capacity was at maximum during mid-summer heat wave.

19. Fossils Critical Role as a Swing Fuel New Ontario Demand Record: 27,000 MW set on Aug. 1 Total Ontario energy demand during period: 1.6 million MWh All OPG stations generated: 1.1 million MWh OPGs fossil stations generated: 425 thousand MWh 39 per cent of OPGs total production 26 per cent of Ontario demand (x1000)

20. Plant and Environmental Chemistry at OPG: a Key Contributor to Performance Selective Catalytic Reduction SCRs installed 2002-2003 on Lambton units 3&4 and Nanticoke Units 7&8 OPG first utility in Canada to install SCRs $250 million investment Chemistry personnel involved in all major aspects of project Flue Gas Desulphurization OPG units first in Canada to employ FGD technology Lambton Gypsum Quality Assurance Lab Chemistry and environmental personnel key contributors Mercury Research SCR/FGD technology at Lambton has led to over 90 per cent mercury capture Chemistry Transformation at OPG Focus on chemistry has produced significant cost savings SCRs at Nanticoke GS

21. OPG Fossil Chemistry Challenges and Success Challenge Ineffective Boiler Treatment: Congruent Phosphate Treatment (Prior to 1986) Chemical cleans every 4 years, numerous chemically influenced Boiler Tube Failures - Fossil Units Switch From Primarily Baseload Operation to Intermediate / Peaking Operation (1980s-2006) Increased Starts, result in increased Cycle contamination Events, potentially significantly reducing lifespan of Fossil Generating Assets Success Equilibrium Phosphate Treatment (1986 Onward) Chemical clean interval increased to >10 years, In 1990s no chemically influenced Boiler Tube Failures (aside from corrosion fatigue) Cost Savings: ~$110,000 / Fossil Boiler* / year in Clean Costs Chemistry Program Updated Dosing Practices for Start-ups developed Pressure Dependant Boiler Chemistry Curves introduced (maximize unit protection, minimize chemistry control Unit restrictions) Cost Savings: Infrequent holds on Start-ups due to Chemistry No measurable decrease in Generating Asset Lifespan from Chemistry Impacts *In 2006 $s based on current avg Cost of Boiler Chemical Cleans on 500 MW Units

22. OPG Fossil Chemistry Challenges and Successes Challenge Nanticoke GS: Condenser Leaks (1995-2000) Operation with significant Condenser Leakage over 5 year period resulted in numerous Overheating Failures Cost of Overheat Tube Failures: 2001: 3000 FO Hours (~$45,000,000*) 2002: 1200 FO Hours (~$17,000,000*) 2003: 1000 FO Hours (~$13,000,000*) Lambton GS: HP Turbine Copper Deposits (2001-2003) Excessive Deposition of Copper on High Pressure Turbines resulting in dramatic loss in Unit Efficiency and Capacity Cost of Copper Deposition: 2003: $10,000,000* in Loss Efficiency and Unit Capacity Success Boiler Condition Improvement Program (2001-Present) Boiler Chemistry Reporting Program Developed, Condenser Leakage dramatically reduced 8 Boilers Chemically Cleaned (2001-5) Condenser Condition Improvement Program Developed Cost of Overheat Tube Failures: 2005: 0 FO Hours ($0) Lambton GS Chemistry Management System (CMS) CMS Introduced holistic approach to chemistry control integrating inspections, chemistry control performance, industry affiliations, etc. Cost of Copper Deposition: 2004-6: Minor Efficiency Losses *Cost in Commercial Losses

23. Plant and Environmental Chemistry at OPG: Reward and Recognition Chemistry Management System implemented at Lambton and Nanticoke by OPG Fossil employees Keeps staff regularly informed on chemistry cycle performance Results reduced losses improved performance improved boiler water chemistry compliance significant cost savings Received Power Within award, OPGs highest employee achievement award Michael Caravaggio (Lambton GS), Jim Twomey (Presenter), Chris Fralick (Nanticoke GS)

24. Ongoing Importance of Plant and Environmental Chemistry at OPG Challenges going forward include: copper deposits on HP turbines condenser leakage OPGs Chemistry Management System and other station programs enhance our ability to address these challenges Continuing focus on recruitment of chemistry professionals

25. Summary OPG Priorities Going Forward Continuing performance improvement Contribute to Ontarios electricity supply through new power initiatives Implement Ont. government directives on nuclear refurbishment and new build Operate coal plants efficiently and in an environmentally responsible manner until they are closed

26. Ontario Power Generation: Profile and Performance Jim Twomey Executive Vice President – Fossil Ontario Power Generation to the American Society of Mechanical Engineers Research Committee on Power Plant and Environmental Chemistry Niagara Falls, Ontario October 2, 2006