Hydro One and TransEnergie U.S partner on proposed underwater transmission project to U.S.

TORONTO, Nov. 27, 2001 — Hydro One Inc. and TransEnergie U.S. have formed a partnership to build a High Voltage Direct Current (HVDC) transmission project beneath Lake Erie between Ontario and the U.S.

The partners have applied to the U.S. Federal Energy Regulatory Commission for approval of a process for the sale of transmission rights. Subsequent Canadian and U.S. approvals for the construction and operation of the proposed project will be sought at a later date.

The project would link the Hydro One transmission system near Simcoe, Ontario with the American Transmission Systems Inc. network at Ashtabula, Ohio or the GPU Energy network at Erie West in Pennsylvania. Connecting with both U.S. terminals is also an option. The new underwater links would have a bi- directional transmission capacity of up to 975 megawatts.

“This project is an example of Hydro One’s efforts to expand the electricity interconnection capability for buyers and sellers in Ontario and the U.S.,” explained Hydro One President and CEO Eleanor Clitheroe. “The new interconnection will be funded totally via the sale of transmission rights with no impact on the regulated cost of transmission service in Ontario, and provide benefits to Ontario electricity customers through better access to out- of-province power suppliers and a more competitive Ontario market.”

Jeffrey Donahue, President and CEO of TransEnergie US, said, “In addition to enhancing transmission system reliability by providing needed infrastructure investment, the Lake Erie Link project will provide significant benefits to Ontario, Pennsylvania and Ohio in the form of increased competition and electricity trading between these regions.”

This is a “merchant” proposal in which the partners will decide whether to proceed with the project based on the ability to sell transmission rights at market-based rates.

The interconnection is expected to encourage additional generation development in Ontario by providing better access to new markets for power generation projects. In addition, it allows improved access to the Ontario market for competitive suppliers outside the Province, which will have a dampening effect on the volatility of electricity prices and provide a more secure supply for Ontario customers during periods of high demand.

Preliminary environmental studies are underway, and the schedule calls for all necessary environmental approvals in Ontario as well as Ohio and Pennsylvania to be obtained by early 2003. To meet the anticipated market demand, construction is scheduled to start later that year for a summer 2004 target in-service date.

Both partners will be initiating public information programs on the project in Ontario, Ohio and Pennsylvania.

The HVDC technology offers substantial benefits that an alternating current (AC) system does not. These include better control of power flows between interconnected systems, and environmentally sound installation techniques that ensure the impact of the project on the Lake Erie ecosystem will be minimal and short term in nature.

Hydro One Inc. is a holding company that operates through its subsidiaries in electricity transmission and distribution, telecom, and energy services businesses.

TransEnergie U.S. is the U.S. transmission project development subsidiary of TransEnergie, the transmission division of Hydro-Quebec. Hydro-Quebec is the provincially owned electric utility in the province of Quebec, Canada. TransEnergie independently manages and operates Hydro-Quebec’s extensive high voltage transmission system.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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