May 30, 2005 Investing in Canadian Power Markets A Sponsor’s Perspective on Debt Financing

May 30, 2005

Investing in Canadian Power Markets

A Sponsor’s Perspectiveon Debt Financing

2

1 Who is Macquarie?

2 Debt Financing Options for Power Projects in Canada

3 Conclusions

Overview

3

Who is Macquarie?

4

Who is Macquarie?Macquarie is an Australian-based global investment bank with a specialist focus on infrastructure

Key statistics

Market capitalisation $10.0bn +

Total assets $85.0bn +

Direct infrastructure equity

under management $25.0bn +

Credit Rating A(S&P) / A2 (Moody’s)

Employees > 6,500

Focus on Infrastructure

Macquarie has three main focuses in

respect of infrastructure:

Infrastructure Funds Management –

Manages over $25 billion of

infrastructure equity worldwide

Principal – Invests on its own advice

Advisor – One of the largest global

advisory teams dedicated to

infrastructure 0

40

80

120

160

200

240

280

320

92 93 94 95 96 97 98 99 00 01 02 03 04

6 mths to 30 Sep 12 mths to 31 Mar

Sydney

New York

LondonToronto

Jupiter

Vancouver

Chicago

Sao Paulo

Seattle

Auckland

SingaporeKuala Lumpur

Hong Kong

Shanghai

Tianjin

Johannesburg

Munich

Seoul

PerthBrisbane

Melbourne

Adelaide

Frankfurt

Cape Town

Tokyo

Wellington

Vienna

Christchurch

Jakarta

DublinGeneva

San Jose

San Diego

Memphis

Houston

Paris

Bahrain

Bangkok

Taiwan

Beijing

Manilla

Labuan

South Carolina

Los Angeles

5

Macquarie - Managed Infrastructure in North America

407ETR Toll Road 70 mile toll road in Toronto US$1.8 billion 99 year concession Macquarie Infrastructure Group holds 43% stake

407ETR Toll Road 70 mile toll road in Toronto US$1.8 billion 99 year concession Macquarie Infrastructure Group holds 43% stake

Path 15 Upgrade of Southern Californian electricity transmission grid US$220 million Development equity from MP Structure Finance Fund (an affiliate of Macquarie)

Thermal Chicago District Energy assets located in Chicago and Las Vegas US$164 million Owned by Macquarie Infrastructure Company

METC Michigan Electricity Transmission Corp US$450 million MEAP is a major equity participant

SR125 Toll Road Greenfield Toll Road in San Diego US$900 million Macquarie Infrastructure Group sole equity participant

PCAA/Avistar Airport Car Parks Off-site airport car parking assets US$193 million Macquarie Infrastructure Company majority owner





METC Michigan Electricity Transmission Corp US$450 million MEAP is a major equity participant

SR125 Toll Road Greenfield Toll Road in San Diego US$900 million Macquarie Infrastructure Group sole equity participant

PCAA/Avistar Airport Car Parks Off-site airport car parking assets US$193 million Macquarie Infrastructure Company majority owner

AltaLink Alberta Electricity Transmission Grid C$800 million Seed asset for MEAP

AvPorts Airport management and FBOoperations US$80 million Owned by Macquarie Infrastructure Company

Cardinal Power C$247 million Seed asset for Macquarie Power Income Fund 156 MW cogen facility in Cardinal, ON

Atlantic Aviation 12 FBO’s US$292 million Owned by Macquarie Infrastructure Company

Chicago Skyway 7.8 mile operating tollroad in Chicago metropolitan US$1.82 billion Macquarie Infrastructure Group/Cintra J V Consortium

Detroit-Windsor Tunnel Tolled Border Tunnel US$90 million Macquarie Global Infrastructure Fund sole equity participant

AltaLink Alberta Electricity Transmission Grid C$800 million Seed asset for MEAP



Cardinal Power C$247 million Seed asset for Macquarie Power Income Fund 156 MW cogen facility in Cardinal, ON







6

Macquarie Funds in CanadaMacquarie manages two infrastructure funds in Canada

Macquarie Essential Assets Partnership (“MEAP”)

North America’s first unlisted infrastructure fund

Targets regulated utility assets and investments with similar characteristics

AltaLink LP (15% stake)

$644M rate base - North America’s first independent electricity transmission network

Michigan Electric Transmission Company LLC (42.4%)

US$360M rate base – 5,400 miles of transmission lines serving southern Michigan

Duke Point Power Limited Partnership (60%)

Constructing a 296 MW combined cycle power plant on Vancouver Island

Total commitments of $460 million finalised in May 2004

Macquarie Power Income Fund (“MPT”)

Focused on operating power generation assets in North America

Listed on the Toronto Stock Exchange as of April 30, 2004 (trading ticker MPT)

Seed asset is the 156 MW Cardinal Power Station

Market capitalization of ~ $235 million

7

Debt Financing Options for Power Projects in Canada

8

Historical Non-Utility Investment Until recently, there have been low levels of non-utility investment in (and financing of) power projects in Canada

Limited number of new facilities have been built – uncertainty around power markets in deregulated (and partially-deregulated) markets

Larger merchant (or partial) merchant facilities have been financed on balance sheet

Most transactions have been the result of partnerships with, or power purchase agreements tendered by, incumbent government-owned utilities

Some projects have been financed on the strength of contracts from industrial offtakers, power marketers or transmission authorities (transmission support services)

As a result of this low activity, a number of Canadian lenders scaled down their power financing presence – a number of U.S. and international players withdrew

Year Transaction Description

2005 Pingston Power (BC): 45 MW hydroelectric $70M capital markets

2004 Lake Superior Power (ON): 110 MW cogeneration $77M capital markets

2003 Arrow Lakes (BC): 185 MW hydroelectric station $100M capital markets

2002 Cory (SK): 228 MW cogeneration $244M bank and capital markets

2002 Brighton Beach (ON): 580 MW combined cycle $403M bank and institutional

2001 Muskeg River (AB): 170 MW cogeneration $159M bank and institutional

2001 Scotford (AB): 150 MW cogeneration $121M bank and institutional

1999 Joffre (AB): 480 MW cogeneration $286M bank and institutional

1999 Island (BC): 260 MW combined cycle $202M bank and capital markets

9

Resurgence of Non-Utility Investment Activity in the power financing sector has increased significantly in the last year

Large new “renewables” commitments in Ontario and Quebec – over 2,000 MW

Ontario completed a tender for 2,500 MW of new power generation

RFP’s are intended to be “financing friendly” and attract private sector

investment

Scale and implementation of Ontario’s programs has attracted the attention of both

Canadian and international lenders

Canadian lenders have quickly ramped up their activities in the power sector

European and Japanese lenders have begun to focus on opportunities in

Canada

Financing alternatives for Canadian projects has increased significantly in the

last year alone – additional funders and structures

Debt financing options in the Canadian marketplace include

“True” Private placements – typically with Canadian life companies

“Public-style” private placements – broadly-marketed

Canadian and European lenders

10

Review of Financing Options Different financing options are available at different stages of a power project’s life cycle

Type Bid (Committed) Construction Term

Bank Financing

Limited number of Canadian banks capable of lead underwriting committed, non-recourse financing

European banks capable of leading smaller transactions

Bank financing terms will typically require broad syndication prior to commercial operations

For Canadian banks, significantly reduced availability of financing beyond 5-7 years

Institutional Debt Financing

Potential to pre-arrange committed financing with specified institutions

Capacity constraints

Larger transactions may required accessing US$ market

“Make-whole” payments required to be paid prior to refinancing a project

Reduced capacity constraints

Public Markets Debt Financing

Not available Limited market pre-COD without completion guarantees

Significant capacity

Additional disclosure requirements

11

Conclusions

12

Conclusions

Range of options (and depth of market) for debt financing has increased

substantially over the last year

Increased focus by Canadian lenders

Introduction of European lenders brings increased options and significant

experience with renewable energy (wind)

Terms and pricing can be materially different between financing options

Important to have long-term financing plan thought through prior to

entering into debt financing arrangements

“Different horses for different (race) courses” – there is no one best

solution

Documents

May 30, 2005 Investing in Canadian Power Markets A Sponsor’s Perspective on Debt Financing