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

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OPG Profile

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

Beck 2 GS Lambton GS Pickering B GS

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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.”

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OPG Helps Moderate Electricity Prices

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Source: IESO/OPG, January 2006

Ontario Capacity: 30,631 MW OPG Capacity: 22,173 MW (72%)

Coal – 21.4%

Ontario Electricity Supply MixOntario Energy: 156,000 GWh/yr OPG Energy: 109,000 GWh/yr (70%)

Capacity Mix In Ontario

Coal21.0%

Nuclear36.0%

Hydro26.0%

Oil/Gas17%

OPG = 7%

OPG = 22.7%

OPG = 21.6%

OPG = 21%

Energy Mix In Ontario

Oil/Gas8.0%

Hydro22.0%

Nuclear51.0%

Coal19%

OPG = 1%

OPG = 21.0%

OPG = 29%

OPG = 19%

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Station Location Map

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OPG’s Hydroelectric Assets

STATIONS PROFILE

NO. OF STATIONS 64

AVERAGE ENERGY 34.0 TWh

CAPACITY 6947 MW

AVERAGE AGE 71 yrs.

NO. OF GENERATING UNITS 240

NO OF RIVER SYSTEMS 26

NO. OF DAMS 232

PLANT GROUPS / WORK CENTRES

PLANT GROUPS 5

WORK CENTRES 22

CONTROL CENTRES 7

Ragged Rapids GS

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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.”

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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

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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

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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).

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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)

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Environmental Considerations

Some flooding required for Northern Rivers/Moose River Basin developments

Need harmonization of Federal and Provincial environmental approval

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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

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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

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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

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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)

Mattagami Lake Control Dam

Long Lake Control Dam

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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.

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Other Supply Initiatives: Niagara Tunnel

Sir Adam Beck GS No.1

Sir Adam Beck GS No.2

Sir Adam Beck Pump Generating Station

Outlet

Intake

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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”

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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

PEC: Artist’s Conception

Site Clearing Underway

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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

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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

Darlington Nuclear Generating Station

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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

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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

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The Trust and Confidence of Communities is Essential to our Operations

Kakabeka Falls GS, 100th Anniversary Open House

Pickering Neighbourhood Walk Employee Volunteers

Darlington Bird houses OPG receives Pickering 2005 Local Business Award

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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