Annual Meeting

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Annual Meeting May 11, 2006 Calgary, Alberta
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Management Team
Gary Reynolds President and CEO Gloria
Fournier Chief Financial Officer Doug
Heath Director, Operations Aggregator Kim
Verrier Manager, Finance Accounting Jim
Pasieka Corporate Secretary
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Meeting Agenda

• Overview of key activities
• Review of 2005 financial results
• Activities and outlook for 2006
• Closing remarks and questions

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• Overview of Key Activities
• Clover Bar PPA Termination
• Sale of Sheerness PPA
• Financial Position and Consumer
• Allocation
• Genesee PPA Arbitration

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Clover Bar PPA Termination

• Conducted economic review of the Clover Bar
  PPA as part of assessment for early termination.
• Shortfall of over 50 million per year on
  Clover Bar PPA.
• Unable to negotiate any changes that would
  decrease the costs and increase the value of
  the PPA.

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Clover Bar PPA Termination

• On October 1, 2005 the Balancing Pool
  terminated the Clover Bar PPA, with a
  termination payment of 83 million.
• PPA Fixed costs avoided 262 million
• Termination Payment (83)million
• Net Savings 179 million
• EPCOR subsequently announced plans to
  decommission the plant and application is
  expected in fall of 2006.

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Sale of Sheerness PPA

• During 2005, the Balancing Pool carried out a
  sale process for the Sheerness PPA and Strip
  Contracts for a total of 756 MWs of capacity.
• Bids were accepted from the marketplace for
  Strip Contracts with 1 to 5, 10 and 15 year
  terms as well as the entire PPA.
• Strong interest was received from Canadian
  and US bidders for all products.

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Sale of Sheerness PPA

• Bid evaluation process compared the best
  package of Strip bids to the best PPA bid.
• Successful bid was from TransCanada for 585
  million for the Sheerness PPA.
• Sale price was 750 million above reserve
  price set in original 2000 PPA auction.

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Sale of Sheerness PPA
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Financial Position and Consumer Allocation

• Following the sale of Sheerness PPA and the
  Clover Bar PPA
• termination, the Balancing Pool was in a
  positive cash position at
• December 31, 2005.

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Financial Position and Consumer Allocation

• In 2001, the Balancing Pool paid out 800
  million to consumers from internal cash flow.
• As per the 2003 Electric Utilities Act, the
  Balancing Pool is required to allocate any
  surplus funds on an annual basis.
• On January 1, 2006, the Balancing Pool began
  allocating 1 per MWh of consumption or
  approximately 60 million per annum of the cash
  surplus to Albertas electricity consumers.
• The allocation is expected to continue for
  many years and will be reviewed on an annual
  basis.

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Genesee PPA Arbitration

• In 2005, Balancing Pool disputed the method by
  which EPCOR calculated availability incentive
  payment (AIP) under the Genesee PPA.
• In March 2006, an Arbitration Panel decision was
  reached with a favourable decision for the
  Balancing Pool.

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Review of 2005 Financial Results
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2005 Metrics
Market Prices 2005 2004 Average
Pool price 70.19 54.59 Market Heat rate
8.3 8.8 PPA Generation Volumes (in
GWh) Avg
Capacity 2005 2004
Factor Sheerness 5,886 6,013
89 Genesee 6,073 6,279 91 Clover Bar (to
Sept. 30) 25 163 0.5 Hydro
(fixed volume) 1,650 1,650 N/A
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Statement of Operations Revenues and Funding
(in millions)
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Statement of Operations Expenses
(in millions)
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Operating Results
(in millions)
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Other Income Expense
( in millions )
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Balance Sheet
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Operating Income (Loss)
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Credit Rating

• In October 2005 the Dominion Bond Rating
  Service upgraded the Balancing Pools Credit
  Rating from AA (low) to AA.
• The upgrade was mainly due to the completion
  of the two credit facilities and the termination
  of the Clover Bar PPA.

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Financial Forecast

• The Balancing Pool is projecting positive
  cash flow for 2006
• MAP II contracts maturing
• Clover Bar termination
• Investment income
• Cash flow negatively impacted due to a
  decrease in PILOT receipts.

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Update for 2006 Genesee Sale Process

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Genesee Sale Process

• PPA represents 762 MWs of base load
  coal-fired capacity.
• Genesee station has reliable performance with
  over 94 historical availability factor.
• Value to existing participants Opportunity
  to diversify plant risk.
• Value to new participants Immediate low risk
  entry into Alberta power market.

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Genesee Sale Process

• Term offering varying maturities of 3, 5,10
  and 15 years.
• Contract Size offering strip contract sizes of
  25, 81 and 100 MWs.
• PPA Risk Sharing for change of law re CASA
  and Kyoto.
• Also accepting bids for whole PPA.

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Genesee Sale Process
PPA Holding Restrictions revised in 2005

• Prior limit of maximum 1,390 MW of PPA
  capacity has been eliminated.
• Continuance of restrictions of PPA ownership
  by
• Crown corporations or subsidiaries.
• Plant owner cannot hold PPA for
• their plant
• e.g. EPCOR restricted on Genesee PPA.

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Genesee Sale Process

• Flexibility in contract size and maturity
  dates will allow participants to bid where they
  see the most value, and optimize the value of
  MAP sale process.
• It is anticipated that demand for Genesee PPA
  capacity will be very high.
• Balancing Pool will establish reserve prices,
  and MAP contracts will be sold only if market
  prices exceed reserve prices.

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Genesee Sale Process

• The timing of the Genesee Sale will follow the
  finalization of the DOEs regulatory process and
  proposed compliance plans.
• The Genesee sale process will resume
• no earlier than Q4 2006.
• The Balancing Pool will endeavour to inform
  participants of the revised timing in June 2006.

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In Closing

• We remain focused on operating in a commercial
  manner to enhance asset value and manage
  liabilities.
• We will provide regular updates to stakeholders
  on the Genesee Sale process and a mid-year report
  on our six month financial results.
• Our thanks go to our stakeholders for your
  continued input and support.
• www.balancingpool.ca

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Comments and Questions ?
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