OPG Update John Murphy Executive Vice President -- Hydro Ontario Power Generation to the NYPA/OPG Joint Works Committee Sir Adam Beck GS September 29, 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 Capacity: 22,173 MW (at end of 2005)

OPG Generation Performance Electricity Production TWh 45.0 32.6 30.9 108.5 42.3 35.7 27.0 105.0 2005 2004 Fossil Hydro Nuclear 23.9 17.7 12.3 Q1-Q2 2006 53.9

OPG Financial Performance 2005 2004 500 450 400 350 300 250 200 150 100 50 Net Income ($millions) $366 $342 $42 Q1-Q2 2006

Hydroelectric Profile RH Saunders GS Ragged Rapids GS

OPG’s Management of Existing Hydroelectric Assets Graphs show number of OPG hydroelectric units in each quartile (Q) in their peer group. EUCG Benchmarking Results (2003) – Includes total of 764 units from North American utilities Independent benchmarking studies show plant performance and management systems are strong within the industry OPG is investing an average of $95 million per year to maintain and enhance hydroelectric capability OPG increased existing plant capacity by 400 MW since 1992. Further upgrades will add about another 150 MW by 2015

Hydro’s Safety Performance Hydro has surpassed 1 YEAR (> 1.63 million hours) without a lost time accident. Other injury-free milestones: Niagara Plant Group – 2.8 years Evergreen Energy – 6.1 years Northwest Plant Group – 6.3 years Ottawa/St. Lawrence Plant Group – 5.8 years Some work centres have achieved > 11 years without a lost time injury. OPG received the Electrical and Utilities Safety Award Gold Award in 2005

Keys to Safety Success OPG and Hydro have established a high performance safety culture Safety more than just a top priority…it’s a core value Clear goals & objectives have been established Ultimate goal of “Zero Injuries” Visible commitment to safety…from board room to the shop floor Legislative compliance seen as the “minimum” standard Robust Safety Management Systems (based on OHSAS 18001) ensure continuous improvement Engaged employees Strong “partnership” approach to health & safety management Effective Joint Health & Safety Committees There is no “magic bullet” to building an effective safety culture. You have probably heard many of these ideas discussed in the past. However, we have found that sustained, deliberate action in each of these areas yields results. These 5 points will identify “what” we have done. Additional presentation slides will focus on “how” we did it: Establish Safety Goals and Objectives – and even more importantly, moving safety from a “priority” to a “value” Ensure Senior Management Commitment – there are a number of visible activities that indicate to employees that management is walking the walk Move beyond Legislative Compliance - compliance is necessary, but only the beginning. Engage Employees – more and more, we are speaking about safety in a way that is meaningful to employees; personalizing safety. Partner with Stakeholders – we are a unionized company, but partnerships include employees, their representatives and our regulators as well

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

Hydroelectric Supply Initiatives: Niagara Tunnel (cont’d) OPG’s largest current capital project 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 Tunnel Boring began Sept 1 Niagara Tunnel Boring Machine, “Big Becky”

Hydroelectric Development Potential in Ontario OPG will pursue economically viable hydroelectric developments 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 Key issues: First Nations participation Transmission requirements Restrictions on Northern & Moose Rivers development Environmental considerations OPG works with govt. agencies & stakeholders to address existing development restrictions, transmission constraints and environmental considerations.

OPG’s Hydroelectric Development Projects in Northern Ontario Lower Mattagami River Development (450 MW) Replace existing 75-year Smoky Falls station with new larger station add a generating unit to each of three existing stations Lac Seul Development (12.5 MW) Construction underway --completion expected late ‘07 Upper Mattagami River Development (35MW) Replacing 3 existing old stations with 3 larger stations -- construction expected to start in mid 2007 Hound Chute Redevelopment Replace existing 95-year old station with a new larger (9 MW) station Other Projects Little Jackfish River Development (132 MW) Mattagami Lake Control Dam (5 MW) with Mattagami First Nation Long Lake Control Dam (5-6 MW) Abitibi River sites with Taykwa Tagamou Nation Lac Seul Construction 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 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 Hound Chute Redevelopment (near Cobalt) Replace an existing 95-year old station (Hound Chute) with a new larger (9 MW) station Other Projects Little Jackfish River Development (132 MW) Mattagami Lake Control Dam (5 MW) with Mattagami First Nation Long Lake Control Dam (5-6 MW) Abitibi River sites with Taykwa Tagamou Nation. The project is a 25 MW greenfield development Smoky Falls GS

First Nations Participation Active involvement by First Nations in hydroelectric developments includes potential equity participation. Recent OPG Agreements signed with First Nations, including: Mattagami FN Taykwa Tagamou Nation Lac Seul First Nation Long Lake #58 First Nation These agreements are critical to ongoing hydro-electrical operations and future hydroelectric development Active involvement by First Nations in hydroelectric developments includes potential equity participation. Recent OPG Agreements signed with First Nations, including: Memorandum of Understanding with Mattagami FN to explore the development of the Mattagami Lake Control Dam Memorandum of Understanding with Taykwa Tagamou Nation to explore developments on the Abitibi River Agreement in Principle with Lac Seul First Nation to resolve past grievances Final Settlement Agreement on past grievances with the Long Lake 3%8 First Nations These agreements are helping to lay the foundation for future hydroelectric development in Northern Ontario. Mattagami First Nation Council and OPG representatives

Timeline of OPG’s Existing Hydroelectric Projects

Timeline of OPG’s Greenfield Hydroelectric Projects

Other OPG Supply Initiatives: Portlands Energy Centre 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 Toronto’s Portlands area OPG/TransCanada Energy Ltd. are partnering to build PEC 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 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. 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 its Darlington nuclear site best location 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 On Sept. 22, OPG filed application for a Site Preparation Licence for new nuclear units at Darlington formally starts the federal approvals process with the Canadian Nuclear Safety Commission Darlington Nuclear Generating Station Darlington

OPG’s Fossil-Fuelled Stations Ontario Govt. responded in June to the Ontario Power Authority’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

Earning the Trust and Confidence of our Stakeholders is Essential to our Operations Ontario Premier Dalton McGuinty at TBM Launch Kakabeka Falls GS, 100th Anniversary Open House OPG receives Pickering 2005 Local Business Award

Summary OPG Priorities Going Forward Continuing performance improvement Contribute to Ontario’s electricity supply through new power initiatives Focus on expanding and developing hydroelectric capacity Implement Ont. government directives on nuclear refurbishment and new build Operate coal plants efficiently and in an environmentally responsible manner until they are closed