OPG's Contribution to Ontario's Energy Needs: Performance, Projects and Priorities Pierre Charlebois Chief Operating Officer: Ontario Power Generation.

OPG's Contribution to Ontario's Energy Needs: Performance, Projects and

Priorities

Pierre Charlebois Chief Operating Officer: Ontario Power Generation

Canadian Manufacturers and Exporters Navigating Ontario’s Energy Future

February 20, 2008Mississauga, Ontario

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OPG Profile

OPG’s Contribution to Ont.’s Energy Needs current performance

environmental contribution

OPG’s Contribution Going Forward new hydro projects

nuclear refurbishment

new build nuclear

OPG and Financial Sustainability

Priorities

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OPG: Profile

Owned by Province of Ontario

Produces about 70% of electricity consumed in Ontario

In-service capacity: 22,147MW 64 Hydroelectric stations:

6,956 MW 10 Nuclear Units: 6,606 MW 5 Fossil Stations: 8,578 MW

Approximately 11,500 employees

Generating Facilities

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Safety: OPG’s Fundamental Value

In 2007, OPG achieved its best workplace safety performance in its history

CEA Silver Safety Excellence Award for 2005 and 2006

Numerous Safety Milestones achieved at OPG sites

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Operational Performance: Darlington

Performance recognized worldwide

Most improved performance -- INPO

Darlington units in top quartile among CANDU units

Approx. 90% unit capability in 2007

Major planned outages completed on, or ahead of, schedule

4 million hours worked without a lost time injury

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70

80

90

100

'03 '04 '05 '06 '07

Darlington Unit Capability

Darlington Unit 2

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Operational Performance: Pickering

Pickering A 1.5 million hours without lost time injury Decision to shut down Units 1 & 4 (June

2007) to modify backup electrical system negatively affected production

Pickering B: Inspection completed in 2006 on 1,554

fuel channels 4 million hours without lost time injury Production down slightly during 2007

Pickering A & B site 2007: Corporate Habitat of the year 5,000 trees planted over past four years

Pickering A Employees

Pickering B Employees

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Operational Performance: Hydroelectric

Beck Hydroelectric Complex

GO

OD

100

50

0

%

92.9 92.493 94.2

2007200620052004Q1-Q3

Availability

Chats Falls – 75 years of service Availability well above 90%-- best since 1984 -- top quartile industry performance

Upgrades have added 427 MW since 1992……this will increase to 490 MW by 2012

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Operational Performance: Fossil

GO

OD

20.0

10.0

0.0

%

11.2

14.1

15.9

18.7

2007200620052004Q1-Q3

Forced Outages

Lennox – 30 years of service

Nanticoke –35 years of service

Excellent performance during summer •all 16 units in southern Ontario operating in June heatwave

•satisfied 25%-30% of Ont. demand in early August

Best reliability since 2000

OPG will continue to operate its coal-plants efficiently and responsibly until their closure in 2014

9Source: Ipsos-Reid July 2007

Public Perception in Ontario of Electricity Generation Sources

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Typical Summer Day (June 21, 2007)

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Hours

MW

Lennox GS

Other Oil and Gas

OPG Coal

Other Peaking Hydro

OPG Peaking Hydro

Wind

Bruce Nuclear

OPG Nuclear

OPG Base Hydro

OPG Baseload Hydro

OPG Nuclear

Bruce Nuclear

OPG Peaking Hydro

OPG Coal

Non-OPG Gas

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Fossil Flexibility: Nanticoke GS Example

Fossil plants can start, stop & change output more quickly than most other generation sources

Ideal for meeting minute-to-minute changes in demand and peak electricity demand periods

In 2007, Nanticoke received over 175,000 dispatches Over 146,000 were “changes in direction”

to reduce or increase output

This is impressive performance for a station such as Nanticoke: 3,920 MW 8 units (over 600,000 HP per unit)

200,000

100,000

0

175,116

150,000

Total Dispatches

Dispatches received by Nanticoke GS in 2007

50,000

Changes in

Dispatch Direction

146,602

Nanticoke G1 -- January 19, 2008

# Dispatches on this day for this unit: 191

Unit responds very quickly to fast-changing dispatch pattern.

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OPG’s Environmental Performance: SO2 and NOx Fossil Emission Rates -- 1983-2007

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

1983

1984

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2006

Em

iss

ion

Ra

te (

Gig

ag

ram

s/T

Wh

-ne

t)

Year

2003: 4 SRCs installed

Low Sulphur CoalIntroduced In 1980s

2 FGD systems at Lambton: 1994

Lennox GS converts

from oil to gas: 1999-2002

New Lower NOx Burners

Installed 1997 thru 2003

2007

*

NOx as NO2 Rate

SO2 Rate

*approximate estimate for 2007

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OPG’s Environmental Performance Sources of CO2 in Ontario (2004)

4.4%

15.5%

4.3%

0.3%

12.0%

0.3%

8.0%

10.6%0.5%

34.4%

1.9%0.5% 4.6%

2.6%

OPG

TransportationStationary

Combustion - Manufacturing

Stationary Combustion

- Agriculture & ForestryStationary

Combustion- Residential

OPG accounts for 15.5% of CO2 produced in Ontario

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OPG’s Environmental Performance: Biomass Testing

Biomass provides an option for reducing net CO2

OPG is currently testing biomass co-firing with coal

Biomass fuels being used: wood pellets, agricultural by-products; milling by-products

Nanticoke testing produced electricity to power 1,000 households for one month

OPG is host for provincial Atikokan Biomass Energy Centre

Nanticoke GS

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OPG’s Environmental Performance: GHG Management

Increase generation from nuclear and hydroelectric plants

Promote energy efficiency and GHG reductions at plants

Increase use of biofuels to displace coal Expand biodiversity program as a GHG

mitigation and adaptation strategy Research impacts of climate change on our

existing and future operations

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New Generation Projects: Niagara Tunnel

10.4 KM long

1.6 TWh average annual energy

Over 1,600 metres excavated

Design build approach reduces OPG financial risk

Contractor has extended the completion date

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New Generation Projects: Lac Seul

12.5 MW

Located in Northwest Ontario

Design-Build arrangement with contractor reduces OPG’s financial risk

Contractor has extended completion date

Lac Seul Powerhouse: Fall 2007

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Proposed New Hydroelectric Projects

Smoky Falls: Lower Mattagami

Mattagami Lake Control Dam

Hound Chute Generating Station

•Lower Mattagami • Definition stage • Consultations continuing with First Nations • Study process required under CEAA regulations

Small Hydro Projects Approved by OPG Board • Redevelopment of Upper Mattagami hydro stations• Redevelopment of Hound Chute on the Montreal River.

• Expansion of Healy Falls GS

Ont. Govt. directive to OPA in Dec 2007 • allows OPG to move forward on these projects

Potential New Capacity – 500 MW

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New Generation Projects: Portlands Energy Centre

Summer 2006

November. 2007

• Located in Toronto • 550 MW • On schedule/On budget

• First power in 2008

• Fully operational by 2009

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Potential Gas Opportunities: Lakeview Site

• Lakeview Station shut down in 2005

• Demolition 2006-2007 • OPG is exploring potential development of gas-fired facility at the site

Lakeview station prior to demolition

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

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Existing Committed Planned

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

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Existing Committed Planned

Pic

keri

ng

B R

efu

rbis

hed

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keri

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B N

ot

Ref

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IPSP - 10,000 MW of Nuclear Power through Replacement and/or Refurbishment

Add over 6000 MW of fossil generation to be removed in 2014

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Nuclear Refurbishment

Darlington Pickering B

Pickering B • Plant condition assessment• Preliminary cost estimates on construction• Independent integrated safety review -- continuing

• CNSC to provide feedback in late 2008• OPG submits EA Study Report to CNSC (Dec. 2007) • Management will make a recommendation to the Board • Solid business case is a prerequisite.

Darlington • Work on the refurbishment business case to start in 2008.

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Nuclear New Build

Q1 2007 • EA support initiatives underway

Q2 2007 • Project Description filed

Q3 2007 • new build planning continues, including public consultation • OPG/Bruce Power joint assessment of potential nuclear technologies• Province’s technology assessment

Q4 2007 • Phase 2 community information sessions – 200 individuals attended• over 1,200 individuals reached during the year through OPG communications initiatives

Q1 2008• CNSC requests federal Environment Ministry to refer EA to a review panel.

Darlington Site

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OPG Helps Moderate Electricity Prices

Difference between Market price & OPG’s price2005-2007 ~ $3 billion

OPG’s regulated rates were set in 2005

ROE was set at 5% OEB hearings planned in

2008 for rate adjustment

Difference between Market price & OPG’s price2005-2007 ~ $3 billion

OPG’s regulated rates were set in 2005

ROE was set at 5% OEB hearings planned in

2008 for rate adjustment

¢/kWh 7.2■

4.94.6

2006

~ 4.6

2007

4.9 ■

5.1 ■

2005

Ontario Market Price

OPG’s Average Price

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Focus on Financial Sustainability

• Early Nov. 2007: OPG conducts pre-submission stakeholder consultation to discuss business factors underpinning a proposal to increase rates for its regulated nuclear & baseload hydro output

• Late Nov. 2007: OPG submits a rate application to the OEB

• OPG seeks rate of return consistent with scope and type of business risks associated with reliably operating its regulated assets

• If approved by OEB, the application will result in a 14% rate increase on output from OPG’s regulated assets

• This will be OPG’s first rate increase in three years

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Key Drivers of Rate Increase Application

Nuclear Change in ROE and capital structure Increased costs associated with the nuclear used fuel and

decommissioning liability Changes in Post Employment Benefit costs Inflation and nuclear fuel costs Projects:

Nuclear New Build Nuclear Refurbishment Studies

Hydroelectric Change in ROE and capital structure Projects:

Upgrade and rehabilitation of two older units at Sir Adam Beck I

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Priorities Going Forward

Maintain strong performance

Continue to operate coal-fired stations in an efficient and environmentally responsible manner until their closure

Continue hydroelectric expansion program

Explore opportunities for gas-fired generation

Continue with nuclear new build process “Time is of the Essence”

Achieve financial sustainability

OPG's Contribution to Ontario's Energy Needs: Performance, Projects and

Priorities

Pierre Charlebois Chief Operating Officer: Ontario Power Generation

Canadian Manufacturers and Exporters Navigating Ontario’s Energy Future

February 20, 2008Mississauga, Ontario