Merchant Transmission and Wind Powered Generation: A Natural Fit?

1. Merchant Transmission and Wind Powered Generation: A Natural Fit? Environmental Finance Workshop: Infrastructure - Sustainability & Building the Public Realm March 7, 2007, Robert van Beers, COO

2. Outline of My Remarks • Background: The Montana Alberta Tie Project • Wind Power and Merchant Transmission

3. A Quick Backgrounder:The Montana Alberta Tie Project

4. The MATL Line • This is a 330 km 230 kV transmission line between Lethbridge Alberta and Great Falls Montana • The total project cost will be on the order of $140 million and the in-service date is expected at the end of 2007 – three years from concept to revenues • Directional control of power flows will be achieved through the use of a phase-shifting transformer

5. Tonbridge Power and Montana Alberta Tie Ltd Tonbridge Corp. A private merchant bank Minority interest, management contract Tonbridge Power Inc. Publicly traded corporation (TSXV – “TBZ”) Market cap. approx. $60 m 100% MATL The transmission project Wholly-owned subsidiary with management team based in Calgary

6. The (Initial) Strategic Rationale • Alberta is where energy comes from; the US (notably California) needs it • There is today no suitable route for Alberta power to reach US consumers • The industry agrees with us • An open season will prove us right • We will enjoy the ‘first-mover’ advantage

7. At the time… The Calgary Herald, Feb. 2, 2005: “TransAlta would certainly be wanting to access the MATL line if it were built.” -Steve Snyder, CEO

8. Wind Power and Merchant Transmission

9. Our Open Season Results – 100% Wind

10. Conclusion • We were wrong – and shippers are differently segmented with respect to their willingness to commit ahead of an in-service date • We sold out very quickly but in a way that fundamentally changed the nature of our line: from an arbitrage play to a collection system • We learned that transmission capacity is perhaps the greatest constraint on wind power development • We have now become pioneers in solving wind integration issues – but without becoming a participant

11. Wind Shipper Issues • “2 guys and a laptop” - a lack of balance sheet strength undermines the off-take contract value, making project finance much more difficult • Project upon project complexity leads to technical and scheduling challenges • Wind integration is in its infancy – but the utilities’ walls in Alberta and Montana are firmly up: • “Moratorium” on new wind in Alberta • NERC reliability standards in Montana • Wind “firming” is urgently needed

12. Regulatory Concerns • Environmental regulation needs improvement. It is enormously detail-focused (literally ‘in the weeds’), misses the big picture (notably here where wind power is supplementing coal) and appears incapable of being concluded in line with the timeline estimates of the regulators themselves • If we truly want to transform our environmental footprint we should not expect zero change. The environmental bias is against action – this must change. In particular we must debate: • Land access and ‘need’ • The socialization of wind firming costs

13. So How Did We Finance MATL? • Equity raised is $22.7 m for 230 m shares • Market cap now $60 m • Total cash and LCs raised to date is $44.9 m • Negotiations for approx $100 m in senior debt upon Notice to Proceed are proceeding now Est. $80 - $100 million Letter of Credit Debt

14. Contact Details • Robert van Beers, MPA, ICD.D is Chief Operating Officer and Director of Tonbridge Power. His background includes over twenty years of power sector strategy and finance around the world. • Tonbridge Power • 20 Bay St., Suite 1100, Toronto, M5J 2N8 Phone : 416-850-2150 Fax: 416-850-1985 • Robert van Beers, COO: rvanbeers@tonbridgecorp.com • Website: www.tonbridgepower.com