BBP Extending to an integrated energy business Paul Simshauser, CEO November 2007.

BBP Extending to an integrated energy business

Paul Simshauser, CEONovember 2007

2

BBP OVERVIEW

Portfolio

• BBP’s portfolio ~5,000MW: 13 operating power stations; 5 power stations under construction and interests in a number of associated businesses

• BBP’s portfolio is well diversified geographically in Australia and New Zealand

• The portfolio contains predominantly gas-fired generation with over 80% of fuel sourced through gas

Distributions

• Distributions paid substantially from operating cash flow

• Inaugural DPS 2007 half year 14 cps, 11% above IPO forecast

• Forecast distribution yield 9.0%(1) in FY08

• Expected to be fully tax deferred in FY08

Listing

• BBP was listed on the ASX in December 2006

• 694 million securities on issue

• Current market capitalisation approximately A$2 billion(1)

• Since listing, TSR achieved approximately 17%(1)

Management

• Managed by Babcock & Brown an experienced developer and operator of power generation assets

• Experienced operating management team

• Majority independent directors on Board

(1) Based on BBP closing price of $2.91 on 20/11/07

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A MARKET LEADING POWER GENERATION BUSINESS IN AUSTRALIA

Portfolio highlights

• Over 3,300MW of installed capacity

• Nearly 1,700MW under construction

• Largest private generator in Australia

4

2,922

5,088

-

1,000

2,000

3,000

4,000

5,000

6,000

IPO (Dec 2006) Current (Oct 2007)

MW

PORTFOLIO GROWTH

• Acquisition of Alinta assets was a significant transaction for BBP

• Generation portfolio has increased by 70%

• AlintaAGL retail business extends BBP to an integrated energy business

• Post acquisition of Alinta assets, market capitalisation doubled

• BBP currently ranks just outside the top 100 in the S&P/ASX200

Notes:

Includes direct and indirect equity interests

Includes assets under construction

BBP Portfolio Capacity

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DISTRIBUTION GROWTH

14.0

26.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2007 (half year) 2008 guidance

Financial Year

Cen

ts p

er S

tapl

ed S

ecur

ity

• In April 2007, BBP announced a 12.5% upgrade to 2007F EBITDA

• Subsequent upgrade to 2007F distributions to 14 cps, an 11% increase on IPO forecasts

• Directors forecast 2008F distributions of 26.1 cps, representing a 9% yield, fully tax deferred

Note:

As BBP listed in Dec 2006 only one distribution n was payable in the 2007 financial year.

Distributions

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NEAR TERM MARKET CAPACITY CONSTRAINTS

Electricity Capacity Shortfall

• NEMMCO predicts significant capacity constraints

• Existing capacity shortfall

• Approximately 800 mw pa of generation demand to 2015 (1)

• Over $12 billion in new generation investment is required over the next decade

(1) Source: NEMMCO Statement of Opportunities

~800MW pa

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ELECTRICITY PRICE OUTLOOK

• Drought has led to sustained electricity price increases over last six months

• Market sentiment is that the tight supply/demand balance will take several years to correct

• Water storage levels still remain critical– Tarong QLD - Wivenhoe dam at 16%

– Snowy Hydro – Eucumbene dam at 19% (vs 60-70%)

• BBP expects FY08 QLD and SA spot prices to remain robust

Queensland Forward Curve

$51.45

$44.1428.1228.96

41.3344.11

35.34

28.18

52.14 55.32

37.79

51.65

$85.78

20253035404550556065707580859095

98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08YTD

Cal 08 Cal 09 Cal 10

Unit price($/MWh)

QLD Spot QLD fwd curve 1/10/07

Risk Premium $28.12

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FUEL SUPPLY

• Coal reserves are either owned or secure– Leigh Creek mine life testing has progressed well

with reserves beyond 2017 economically mine-able

– Redbank coal tailings fuel supply agreement has a remaining life ~24 years

• Gas supply agreements are in place– Oakey and Ecogen are pass-throughs

– Braemar has 10-15 year gas supply agreements

– NewGen Kwinana has a 15 year gas supply agreement

– Uranquinty has a 15 year gas supply agreement

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ALINTA ACQUISITION

Pool 22%

Significant increase in the size and diversification of BBP

• Further weighting of gas-fired capacity

• Leveraged to the rapidly expanding WA economy

• Entry into retailing through AlintaAGL (gas, I&C)

• Substantial near-term growth opportunities

Energy portfolio management

• Only portfolio in the country with gas-fired power stations in all states of the NEM

• Commonality allows maximisation of margins in highest value regions

Integration is progressing well

• Dedicated Transition Team in place to ensure efficient and successful integration of Alinta assets

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CAPITAL INITIATIVES

• With 100% AlintaAGL, BBP gearing (net debt/net debt + equity) ~66%

• Acquired Alinta debt and sections of BBP debt to be refinanced in CY08– Optimise gearing and reduce BBP’s cost of capital

– Better alignment of debt profile with underlying business cashflow

– Provide flexibility to assist in the growth of BBP by allowing new acquisitions to be funded on a set of pre-agreed parameters

• Recent uncertainty in global debt markets will provide challenges, offset by– Stable underlying asset cashflow

– Stable base demand

– Contracted revenues and fuel supply certainty

• Giving consideration to obtaining a Rating

• Share Purchase Plan (SPP) currently underway to facilitate “top-up”

• Board to implement a DRP for 31 Dec 07 distribution

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STRATEGIC INITIATIVES

Harvest strategy

• Optimise performance and efficiencies from the existing businesses

• Plant modifications, technical improvements, cost management

• Brownfield expansions

Alinta integration

• Optimise business model and structure through shared services

Long term growth

• Consider associated businesses in Australia and internationally which are complementary or provide strategic advantage

• Energy retailing – ability to get output to market

• Fuel procurement – gas contracts, gas contract options etc

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OUTLOOK & CHALLENGES

Outlook

• Performance for 1Q08 has been in line with expectations

• Water storage levels remain critical with shortages continuing to have a favourable impact on electricity prices

• Pricing during the summer months will be one of the key determinants of FY08 earnings

Challenges

• Ensure safe and efficient operations

• BBP to further build in-house capabilities to leverage operational scale

• Carbon trading is an important part of the policy mix on emissions targets– BBP portfolio carbon intensity ~0.8t/MWh which is below national average

• BBP needs to position itself as a leader within a sector that is both quickly consolidating and developing via new technologies

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APPENDIX: DIVERSIFIED PORTFOLIO

Regional (MW) Post Alinta

Fuel Split (MW) Post Alinta

Gas 81%

Coal 19%

WA 27%NSW 17%

QLD 16%

SA 16% VIC 22%

NZ 2%

• Increased weighting towards low CO2 gas fired generation

• Expands footprint in WA and into NZ and TAS

Intermediate 21%

Base 30%Peak 49%

Unhedged22%

Rolling Hedges36%

Contracted42%

Operating Mode (MW) Post Alinta

Generation Revenue Post Alinta

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APPENDIX: KEY FINANCIALS

PDS

$mScheme

$mFY07

$mRevenue 376.0 473.5 534.5EBITDA (after associates) 96.0 117.3 117.6NPAT excl Redbank derivative movement & Incentive fee (16.0) (13.6) (12.8)Distributions (cps) 12.6 14.0 14.0Net debt 928.3Gearing1 50.6%Net interest cover2 2.3x

• In August, BBP delivered inaugural result with FY07 EBITDA 20% above IPO forecasts and in line with Alinta Scheme forecasts

1. Gearing is calculated as Net Debt / (Net Debt + Equity)

2. Net interest cover is calculated as EBITDA / Net Interest. Net interest used is the Finance cost for the 6 months to 30 June 2007 and excludes interest income, interest charge on the Osborne loss provision and interest charge on the site remediation provision.

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APPENDIX: AlintaAGL

• By January 2008, BBP will own 100% of AlintaAGL

• Sizeable retail gas customer base and expanding industrial gas and electricity customer base

• Provides a scaleable retail platform with an established brand

• Leverage to the high growth WA economy and favourable demographics

• Retail exposure could underpin the development of new generation capacity

• Funding has been secured for 100% AlintaAGL taking gearing to ~66%

Enterprise Value $m

Debt 1,582

Equity 506

Total 2,088

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APPENDIX: TOTAL SECURITYHOLDER RETURNS

90

100

110

120

130

140

150

160

08-Dec-06

22-Dec-06

05-Jan-0

7

19-Jan-0

7

02-Feb-0

7

16-Feb-0

7

02-Mar-0

7

16-Mar-0

7

30-Mar-0

7

13-Apr-0

7

27-Apr-0

7

11-May-0

7

25-May-0

7

08-Jun-0

7

22-Jun-0

7

06-Jul-0

7

20-Jul-0

7

03-Aug-07

17-Aug-07

31-Aug-07

14-Sep-07

28-Sep-07

12-Oct-

07

26-Oct-

07

09-Nov-07

ASX200 AI BBP Utilities AI

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APPENDIX: MANAGEMENT OF THE FUND

• The Manager of BBP is Babcock & Brown Power Management Pty Ltd (BBPM) which is a subsidiary of B&B

• The Manager’s objective is to grow Securityholder wealth through the proactive management of the existing portfolio and through the construction and acquisition of additional power generation assets and associated businesses in Australia and internationally

• BBPM receives fees for acting as Manager, including base fees and, subject to outperformance, incentive fees

• B&B currently holds 9.3% of BBP Stapled Securities

• There is a strong alignment of interests between BBP and B&B through branding, investment and manager obligations and incentives

BBP StapledSecurityholders

Power Generation andAssociated businesses

BBPL BBPTStapled

Responsible Entity

Manager

BBPM BBPS

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DISCLAIMER

The information contained in this presentation is given without any liability whatsoever to Babcock & Brown Power Limited, Babcock & Brown Power Services Limited as Responsible Entity for the Babcock & Brown Power Trust, Babcock & Brown Power Management Pty Limited, or any of their related entities (collectively “BBP”) or their respective directors or officers, and is not intended to constitute legal, tax or accounting advice or opinion. No representation or warranty, express or implied, is made as to the accuracy, completeness or thoroughness of the content of the information. The recipient should consult with its own legal, tax or accounting advisers as to the accuracy and application of the information contained herein and should conduct its own due diligence and other enquiries in relation to such information.

The information in this presentation has not been independently verified by BBP. BBP disclaims any responsibility for any errors or omissions in such information, including the financial calculations, projections and forecasts set forth herein. No representation or warranty is made by or on behalf of BBP that any projection, forecast, calculation, forward-looking statement, assumption or estimate contained in this presentation should or will be achieved.

Please note that, in providing this presentation, BBP has not considered the objectives, financial position or needs of the recipient. The recipient should obtain and rely on its own professional advice from its tax, legal, accounting and other professional advisers in respect of the addressee’s objectives, financial position or needs.

This presentation does not carry any right of publication. This presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by BBP. Neither this presentation nor any of its contents may be reproduced or used for any other purpose without the prior written consent of BBP.