Fortis Generation includes the operations of non-regulated generating assets across Canada and in Belize and Upper New York State with a combined generating capacity of 139 megawatts (“MW”), 134 MW of which is hydroelectric generation.

In British Columbia the non-regulated generating asset is the 16-MW run-of-river Walden hydroelectric generating plant near Lillooet, which was acquired in May 2004 as part of the assets of FortisBC. The plant sells its entire output to BC Hydro under a long-term contract.

In October 2010 Fortis entered into a partnership with Columbia Power Corporation and Columbia Basin Trust to construct a 335-MW hydroelectric generating facility (the “Waneta Expansion”), at an estimated cost of approximately $900 million. The facility is sited near the Waneta Dam and powerhouse facilities on the Pend d’Oreille River, south of Trail, British Columbia. Fortis owns a controlling 51 per cent interest in the Waneta Expansion and will operate and maintain the non-regulated investment when the facility comes into service, which is expected in spring 2015. The Waneta Expansion will be included in the Canal Plant Agreement and will receive fixed energy and capacity entitlements based upon long-term average water flows, thereby significantly reducing hydrologic risk associated with the project. The energy, approximately 630 gigawatt hours (“GWh”), (and associated capacity required to deliver such energy) for the Waneta Expansion will be sold to BC Hydro under a long-term energy purchase agreement. The surplus capacity, equal to 234 MW on an average annual basis, will be sold to FortisBC under a long-term capacity purchase agreement, which was accepted by the regulator in September 2010 and is expected to be executed in 2011. For more details on the Waneta Expansion Project, visit www.columbiapower.org/wanetaexpansion.

In Ontario non-regulated operations include six small hydroelectric generating stations in eastern Ontario with a combined capacity of 8 MW and a 5-MW gas-powered cogeneration plant in Cornwall. The electricity produced from these facilities is sold in Ontario under fixed-priced contracts

The Exploits River Hydro Partnership (“Exploits Partnership”) is owned 51 per cent by Fortis Generation and 49 per cent by AbitibiBowater Inc. (“Abitibi”). The Exploits Partnership was established in 2001 and had commenced operations in 2003 following the development of additional capacity at Abitibi’s two hydroelectric generating plants in central Newfoundland. In December 2008 the Government of Newfoundland and Labrador passed legislation expropriating most of Abitibi’s assets in Newfoundland, including those assets associated with the generation of electricity, some of which included the capital assets of the Exploits Partnership. The Government of Newfoundland and Labrador has publicly stated that it is not its intention to adversely affect the business interests of lenders or independent partners of Abitibi in the province. Discussions are ongoing with Nalcor Energy, a Crown corporation, as an agent for the Government of Newfoundland and Labrador with respect to expropriation matters.

The hydroelectric generation operations in Belize are conducted under the Corporation’s indirect wholly owned subsidiary Belize Electric Company Limited (“BECOL”) under a franchise agreement with the Government of Belize. BECOL owns and operates the 25-MW Mollejon, the 7-MW Chalillo and, as of March 2010, the 19-MW Vaca hydroelectric generating facilities located on the Macal River, the largest such facilities in Belize, Central America. Energy production in Belize reached a record high of 259 GWh in 2010 compared to 180 GWh in 2009, mainly attributable to the commissioning of the US$53 million Vaca facility in 2010 and higher rainfall. The run of river hydroelectric generating facility, which is situated approximately five kilometres downstream from Mollejon, is the final phase of the three-phase hydroelectric development plan for the Macal River. BECOL sells its entire output to Belize Electricity under 50-year power purchase agreements.

In Upper New York State the non-regulated generating assets are four hydroelectric generating stations located in Moose River, Philadelphia, Dolgeville and Diana. The plants have a combined capacity of approximately 23 MW. The average annual 85 GWh of energy output of these modern facilities is sold at wholesale market rates.