OPG Update

John Murphy Executive Vice President -- Hydro

Ontario Power Generationto the

NYPA/OPG Joint Works Committee

Sir Adam Beck GSSeptember 29, 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

Capacity: 22,173 MW (at end of 2005)

Beck 2 GS Lambton GS Pickering B GS

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OPG Generation Performance

Electricity ProductionTWh

45.0

32.6

30.9

108.5

42.3

35.7

27.0

105.0

2005 2004

Fossil

Hydro

Nuclear23.9

17.7

12.3

Q1-Q2 2006

53.9

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OPG Financial Performance

2005 2004

500

450

400

350

300

250

200

150

100

50

Net Income ($millions)

$366$342

$42

Q1-Q2 2006

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Hydroelectric Profile STATIONS PROFILE

NO. OF STATIONS 64

AVERAGE ENERGY 34.5 TWh

CAPACITY 6947 MW

AVERAGE AGE 71 yrs.

NO. OF GENERATING UNITS 240

SMALLEST / LARGEST UNIT 1 MW / 137 MW

NO. OF DAMS 232

PEOPLE / WORK CENTRES / LAND

PLANT GROUPS 5

WORK CENTRES 22

CONTROL CENTRES (includes ICD)

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TOTAL STAFF ~938

OPERATORS ~100

NO OF RIVER SYSTEMS 26

HYDRO OWNED LAND ~17,000 hectares

LEASED LAND (flooded) ~800, 000 hectares

RH Saunders GS

Ragged Rapids GS

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OPG’s Management of Existing Hydroelectric Assets

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

Production Cost per MWh(excluding GRC/Water Rentals)

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Graphs show number of OPG hydroelectric units in each quartile (Q) in their peer group.

O&M Cost per Net KW

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EUCG Benchmarking Results (2003) – Includes total of 764 units from North American utilities

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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

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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

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Hydroelectric 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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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”

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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.

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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

Smoky Falls GS

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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

Mattagami First Nation Council and OPG representatives

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Timeline of OPG’s Existing Hydroelectric Projects

Beyond 2011

Niagara Tunnel Project

Lac Seul (12.5 MW)

Lower Mattagami (450 MW)

CONCEPT

Upper Mattagami (35 MW)

Hound Chute (9 MW)

Mattagami Lake Dam (5 MW)

CONCEPT

Long Lake Dam (5-6 MW)

Healey Falls(6 MW)

CONCEPT DEFINITION

Ranney Falls(6-8 MW)

CONCEPT

Lake Gibson (5 MW)

Other Control Dams (10 MW)

Beyond 2011

EXECUTION

201120102006 2007 2008 2009

EXECUTION

EXECUTION

DEFINITION

DEFINITION

EXECUTION

2008

EXECUTIONCONCEPT

2010 2011

DEFINITION

2006 2007 2009

EXECUTION

EXECUTION

EXECUTION

EXECUTION

DEFINITION

CONCEPT DEFINITION

DEFINITION

DEFINITION

CONCEPT

DEFINITION EXECUTION

EXECUTION

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Timeline of OPG’s Greenfield Hydroelectric Projects

Beyond 2011

New Post Creek (25 MW)

Little Jackfish (130 MW)

Albany (Hat and Chard) (350-1,000 MW)

Big Falls (2-4 MW)

Maynard Falls (50 MW)

Other Moose River Basin Greenfield (200 MW)

Northern Rivers - Other Sites (200 MW)

Beyond 2011

CONCEPT DEFINITION EXECUTION

2006 2007 2008

2006 2007 2008 2009

2009 2010 2011

DEFINITION EXECUTION

CONCEPT DEFINITION EXECUTION

CONCEPT

CONCEPT

CONCEPT DEFINITION EXECUTION

2010 2011

CONCEPT DEFINITION EXECUTION

CONCEPT DEFINITION

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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

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. 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

Darlington Nuclear Generating Station

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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

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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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Earning the Trust and Confidence of our Stakeholders is Essential to our Operations

Kakabeka Falls GS, 100th Anniversary Open House

Ontario Premier Dalton McGuinty at TBM Launch

OPG receives Pickering 2005 Local Business Award

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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