TRYING TIMES System Update Central

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TRYING TIMESSystem Update Centrals
Perspective CUMA September 19, 2001
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Overview

• The Economy two views
• The Merger two views
• Mandatory Pooling of Liquidity two views
• Centrals Financials Y-T-D two views

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The Economy

• War good for the econ
• There is a war (?)
• There is re-building
• Armaments
• Medical supplies
• Computers commns
• Jobs

• Terror bad for the econ
• Different kind of war
• Consumer confidence
• Productivity
• More jobloss eg airlines
• Economy already on ropes
• Body blow to economy

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Centrals Merger

• I Hate It
• Central will be too distant
• Smaller Board less repn
• OPCO will be too powerful
• Havent seen Bus. Case
• Furtive
• Must be bad
• like one of ceos canoe trips
• dont even know what river theyre on

• I Love It
• Quicker national decisions
• Reduced backroom costs
• eg, smaller Board 1 CEO
• Higher dividend
• Better bond rating
• Stronger image in finl mkt
• Of course, have to see Bus. Case
• Never have to listen to another speech by Jonathan

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Merger Where we stand

• Positive process and experience
• Challenges?
• Have been
• Will be more tough ones
• Base case approved in July
• Positive case completed in August
• Joint Committee meeting delayed
• To negotiate final form and issues
• To approve joint release of Bus. Case
• Then need Regulatory approval and changes
• Timing Goal Remains December 31, 2002

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Mandatory Participation

• Why not?
• Central is costly
• Never been a problem
• Power grab by Central
• BC pushing us around

• Why introduce it?
• Good consumer protection
• Separate league and Opco
• Strong dividend in Bus. Case
• Have been liqy challenges
• We have supported non-members
• Will we in the future?
• No power grab I wont be here
• Can create own Pool
• Its time to join other provinces

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The Great Dividend Debate

• Dividend is a possibility
• Merger not complete
• How pay for it?
• Assessment?
• Out of earnings?
• Out of extraordinary gains?
• Earnings are good
• Methodologies are working
• Well ahead of Budget
• System growth gt Capital call
• At yearend, Board decides
• something to play with

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DISCUSSIONANDCOMMENT