thanks very much scott [vokey] for your kind introduction

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Slide 1: Title Slide

• Thanks very much Scott [Vokey] for your kind introduction and good afternoon everyone.

• In this session, I will cover some of the ways in which LDCs [local distribution companies] are meeting new policy mandates and challenges and helping their customers respond to changing circumstances while making their communities more sustainable place to live, work and invest.

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Slide 2: Horizon Utilities – who we are

• Horizon Utilities is owned by the cities of Hamilton and St. Catharines, an arrangement that came to be after the merger of Hamilton Hydro Inc. and St. Catharines Hydro Utilities Services Inc. in 2005.

• It is now one of the largest LDCs with 235,000 customers, 400 employees and $450 million in assets.

• The merger has meant that Horizon has among the lowest operating costs, lowest residential and commercial rates, while simultaneously generating full returns for shareholders.

• This has earned us the highest credit rating of all Ontario municipal utilities (S&P “A” rating).

• We also have extensive community involvement and, as I will note later, are contributing $107 million in “direct economic value” (local economic benefit) to our communities.

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Slide 3: EDA’s ‘Visioning’ Exercise

• LDCs have always played a vital role in community development and general well-being through the safe and reliable distribution of electricity.

• As a result of the Energy Competition Act, 1998, LDCs generally were limited to this relatively narrow role.

• But now, as a result of the Green Energy Act and other new policy innovations, LDCs have been given more opportunities and ways through which we can contribute to the success of our communities.

• The EDA has certainly got the LDCs heading in the right direction – its 2008 Visioning Paper states “LDCs are ready to lead the electricity distribution sector in Ontario to a future that provides flexibility and value to customers, through a modern and efficient grid, and within environmentally sustainable communities.”

• The EDA leaves no doubt that LDCs will play a key role in the future ‘green’ society of Ontario.

• The EDA has clearly set out the right vision: it’s clear, it’s bold, and it recognizes the important role that LDCs can and should play.

• What I would like to do in this presentation is let you know how the sector and Horizon in particular is contributing to these new policy directions and the sustainability of Ontario communities.

New CDM Targets Mandated for all LDCs

• One of the clearest indications that LDCs have new and expanded roles is in the area of conservation and demand management (CDM).

• As a result of the Energy Competition Act, 1998, LDCs were left as strictly regulated wires companies, with conservation to be provided by the competitive marketplace.

• Not even one of Ontario Hydro’s successor companies was left responsible for planning and conservation.

• Similarly, the Ontario Energy Board was structured as a purely economic regulator.

• After the close of the competitive market in 2002 and the generation supply challenges in the early part of the decade, LDCs were required to take on CDM roles as a condition of being able to earn their full rate of return.

• Later, after the creation of the Ontario Power Authority in late 2004, LDCs were given short-term and other financial incentives to encourage conservation.

• And now, as a result of amendments to the objectives of the Ontario Energy Board and a Directive from the Minister of Energy and Infrastructure, the OEB has established a schedule of hard conservation targets for LDCs to meet by 2014.

• These targets may well prove to be a condition of a distributor’s license, and thereby result in sanctions for failure to meet the targets.

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CDM for residential customers

• As has been recently announced, and covered on the agenda of this conference, the OPA has a whole new set of provincial programs for LDCs to act on, in addition to programs that LDCs can develop on their own and in conjunction with other LDCs.

• While these are only now being rolled out, what I would like to tell you about is the success Horizon has had with its aggressive pursuit of conservation and demand management on behalf of its customers.

• With our size as one of the larger distributors, we have been able to build and maintain a conservation team, despite the lack of consistent multi-year funding until now.

• This year we have held more than 60 community events and assisted with 21,000 customers on conservation needs; we have had more than 50 conservation events in each of the last three years.

• The event pictured is in the St. Catharines Farmers Market, with Mayor Brian McMullan an active participant.

• Since the beginning of the OPA programs, we have “rounded-up” more than 14,000 inefficient refrigerators, installed 8,800 peaksaver devices and handed out 135,000 compact fluorescent light bulbs.

• As a municipally-owned local distribution company, we are very committed to working closely with our mayors, councillors, and cities, and one key area is in conservation and demand management.

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CDM for Small Business

• As some of you will know, the Ontario Power Authority’s Power Savings Blitz is a unique program which offers up to $1,000 in FREE energy efficient retrofits, such as lighting upgrades, for the small commercial sector.

• Although you might think that small business owners would jump at this opportunity, the most difficult problem is getting them to believe that there are no strings attached.

• To meet this challenge, Horizon initiated a very innovative program of working with customers through the many Business Improvement Associations in our service territory, a program that has now been adopted by many other LDCs.

• By convincing the BIAs of the merits of Power Savings Blitz, we have experienced extraordinary uptake from customers on this program.

• We then had the firm Energy Shop act as our contract representatives to make face-to-face customer contact.

• Of the11,000 eligible Horizon customers, 5,600 have signed up for the program, which is just over 50% participation -- an extraordinary achievement that is paying dividends for customers.

• This innovative approach has allowed us to expedite the process, minimize costs, and achieve outstanding results.

• This program has generated $5.3MM in OPA incentives and is resulting in an average energy savings of $250 per customer every year.

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CDM for Municipal and Commercial Customers

• Another CDM program we are delivering that is achieving terrific results is the Ontario Power Authority’s Electricity Retrofit Incentive Program (ERIP).

• This electricity “tune-up” program rewards larger customers – including our municipal shareholders – for making upgrades to their facilities and equipment.

• ERIP has been a very successful program for Horizon. Since its inception, we have received approval for 84 projects providing 2,567.33 kW of savings.

• Indeed, Horizon has received for its customers the largest ERIP grants in each of the last 3 years, including the largest ever in 2010.

• You might think this is because there are large electric-intensive businesses in Hamilton and St. Catharines, but two of the awards have been to hospitals.

• In 2010, Hamilton Health Sciences received the largest ERIP award to date -- $640,000.

• In 2009, St. Joseph’s Healthcare in Hamilton received $172,000.

• And In 2008, Air Liquide, a feeder industry to the steel industry, received $120,000.

• The annual energy cost savings from the ERIP project will work out to hundreds of thousands of dollars for these institutions and companies.

• Again, the face-to-face contact with our customers has been critical to help identify savings opportunities tailored to their specific needs and businesses.

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LDCs & MMAH’s “planning by design” initiative

• Another value add that LDCs can assist with their local communities, and one where Horizon is blazing a new trail, is in the broad area of what is know as “smart growth”.

• You might be most familiar with Planning by Design, but there are many such planning documents in Ontario’s efforts to plan for future growth that is stable and sustainable.

• One clear tie-in is in Section 6 of the Green Energy Act, which highlights the government’s desire for the broader public sector in Ontario to conserve energy and develop Energy Management Plans.

• Another focus is Greenhouse Gas Emissions (GHGs).

• Under Section 6, the Minister of Energy has the power, through Regulations under the GEA, to require municipalities and other public agencies to establish a baseline of energy use and GHGs, forecast activities and measures, and provide for progress reports and achievements.

• In these next slides, I would like to show you how Horizon is working with its shareholder municipalities – Hamilton and St. Catharines – to get ahead of this set of issues.

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Slide 9: Ontario’s “places to grow” growth plan

• All of this is very much in keeping with Ontario’s “Places to Grow” Growth Plan – the Ontario government's program is meant to manage growth and development in a way that supports economic prosperity, protects the environment and helps communities achieve a high quality of life.

• Places to Grow puts smart growth principles into action by providing clear instruction for municipalities as they develop their Official Plans.

• Ontario’s Smart Growth strategy is intended to create more opportunities for renewal in urban municipalities.

• The purple regions on this map are areas that have been designated for growth; the green regions represent the greenbelt and areas that are protected; the yellow circles are urban growth centres – areas of major provincial interest that serve as hubs for transportation and intensification.

• For us in the LDC sector, this is a big opportunity – but it means that we need to step up to the plate.

• LDCs that continue to rely heavily on customer base growth driven by ‘sprawl’ development and do not seize the opportunities that are being presented (and mandated) are going to face significant challenges in the future - financial or otherwise.

• This is of particular interest to us at Horizon, because both Hamilton and St. Catharines have been designated as “urban growth centres” in the Places to Grow plan.

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Slide 10: Urban Redevelopment and Intensification

• Urban redevelopment and intensification is a major focus of this smart growth strategy, which leads to a whole host of opportunities and responsibilities for LDCs.

• Without integrated energy plans at the local level, we may miss innovative energy solutions.

• The pictures above and below are demonstrative of what we can do to our urban environment when we seize the opportunities that Ontario’s smart growth policy framework provides us.

• They’re high-level ideas, but typical of many areas in the communities LDCs serve in the Greater Golden Horseshoe.

• The province wants urban growth centres that are vibrant, mixed-use regional centresthat can accommodate a significant share of population and employment growth.

• LDCs have been given an opportunity that doesn’t come very often. The need for infrastructure renewal, the emphasis on smart growth, and the Green Energy Act are all demanding a response from the LDC community.

• The opportunity for LDCs is very clear – a void exists at the community level and LDCs need to transform from simple wires businesses to local energy companies – this is something Horizon has taken to heart.

• It also means that Horizon and other LDCs need to see whether some of the things that we’ve been doing for fifty years or more need to change.

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Slide 11: Municipal Official Plans – Hamilton

• Putting this all together at Horizon, we have been paying very close attention to the future of municipal planning and development locally in Hamilton and St. Catharines.

• One of Hamilton’s key priorities is to increase employment opportunities within its urban boundary.

• Hamilton’s Downtown Urban Growth Centre is actually targeting 250 people and jobs per hectare by 2031, which is 50 above the Grow Plan general requirement of 200.

• On the map, as you can see, the coloured areas within the dotted line are largely the settlement area, and the areas that are the focus of intensification are noted in red, blue and brown.

• While we do not need to cover all the plan’s details here, some of the key objectives in this case, and in other municipal plans, are all smart growth inspired.

• Intensification ensures land, urban services and the transportation network are used more efficiently and sufficient population is maintained to support existing community facilities.

• So this is where the future of the City of Hamilton is moving, and demonstrates what other municipalities are also doing.

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Slide 12: Municipal Official Plans – St. Catharines

• There are similar objectives in the City of St. Catharines.

• Another reason we are paying such close attention to these urban intensification issues is that there are very important opportunities to ensure the planning serves the new standards of CDM and the much talked about smart grid strategies required of LDCs.

• Since we are a tightly regulated sector, there is also the need to ensure our capital planning meets regulatory scrutiny.

• But what is the role of the LDC? … and how do we get on the right path to make the communities we serve more livable?

Partnering on Energy Mapping

• It is for these reasons that Horizon has jumped on the opportunity to work with its shareholder municipalities on integrated energy mapping.

• In Hamilton, we are fortunate to be working with the Canadian Urban Institute on an Ontario Power Authority pilot program that brings together the assessment data from the municipal sector, the electricity consumption data from Horizon and the gas consumption data from the gas company, in this case Union Gas.

• Horizon tried to get Niagara Region into the pilot as well, but when it was not included Horizon worked with Niagara Region on a test pilot in St. Catharines.

• This pilot is based on the municipal assessment data, the electricity consumption data from Horizon and the gas consumption data from the gas company, in this case Enbridge.

• We are therefore fortunate to be doing cutting edge energy mapping work for all of our service territory in Hamilton and St. Catharines.

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Energy Mapping and Targeted CDM

• This slide shows an early indication of the data that we are able to make use of for CDM and capital planning.

• The two maps show residential electricity intensity by postal code, which will be of great benefit as we design the on the ground programs under the OPA’s new CDM initiatives now being rolled out.

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Energy density mapping and targeted CDM

• In the Hamilton energy mapping work, we are already looking at even better maps that show all energy intensity (gas and electric) by actual building, which will make our CDM efforts even more pinpoint in their effectiveness.

• We are working on developing similar maps for St. Catharines too.

• The possibilities here are really eye opening.

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LDC Rate Comparisons

• One very important vehicle for LDCs to contribute to the sustainability of their communities is in the level of distribution rates they charge customers.

• As you will be aware, the rates of all electricity distribution companies are regulated by the Ontario Energy Board (OEB), but you likely are not aware how much rates differ from utility to utility.

• Most Ontarians will think that LDC rates are the same, with local delivery varying only with respect to the level of service delivery and response.

• In fact, Horizon customers have benefitted greatly from the merger of the former LDCs in Hamilton and St. Catharines because this resulted in $5M in operating cost savings.

• Horizon’s board of directors is of the view that, while it can go to the Ontario Energy Board for rate increases, it makes the best sense to find savings through mergers wherever possible as a way to mitigate the need for rate increases.

• There is actually a very beneficial framework for customers and shareholders in OEB approved mergers – the savings go to shareholders for the first 5 years (or to the point of rebasing with the OEB, if earlier) and then they all go to customers.

• While the bills of LDCs do not make it easy to compare rates, the rate orders of the Ontario Energy Board, which are available from the website shown, provide the metrics to do the math for comparisons.

• In the next 4 slides, I will show you how rates differ dramatically across the LDCs, and you can see for yourselves the implications for customers and communities.

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LDC Residential Rates Comparison

• This first graph shows the “distribution only” portion of the bill for a typical residential customer for all Ontario LDCs – that is no charges for energy, transmission, debt retirement, etc. are included – only the current distribution charges.

• (These graphs and figures are with rate riders included, which collect or refund regulatory variance accounts).

• A typical residential customer uses 1,000 kWh; this is the standard OEB comparison for residential customer rates.

• Most LDCs charge between $20 and $40 a month in 2010. That the rate can vary by more than 100% is a story in itself, but some LDCs are actually charging over $50/month.

• Please note Horizon Utilities’ placement in the lower-middle of the pack at $25.09 per month.

• While some LDCs have lower rates, the subsequent slides make it clear that many of these LDCs are artificially keeping residential rates low through cross-subsidies from higher commercial rates.

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LDC Small Commercial Rates Comparison

• This second graph shows a typical small commercial customer using 13,000 kWh per month or 13 times more than a residential customer.

• This would be representative of a large corner store with a lot of lighting and refrigeration.

• These customers, like residential customers, are billed for energy consumption (kilowatt-hours) rather than energy capacity (kilowatts).

• As you can see, most LDCs are charging between $125 per month and $275 per month.

• At Horizon Utilities, the 2010 rate is $92.96 per month, which means that customers in some other LDCs are paying almost three times as much for the same service.

• Since many of these small commercial customers are chain stores, they are likely perplexed by the differences in their energy costs across the LDCs.

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LDC Mid-size Commercial LDC Rates Comparison

• This next graph shows a typical bill for what might be described as a light manufacturing customer.

• This bill profile of 350 kW of capacity is what you might see for a large warehouse with lighting and ventilation, but could just as easily be a municipal arena or community centre complex.

• These customers, unlike residential and small commercial customers, are demand-billed (kW of capacity) rather than energy-billed.

• Again, there is a large rate spread, with most LDCs charging between $500 and $2,500 per month for “distribution”, with a few below and some as high as $3,000.

• The Horizon Utilities rate for this example of a customer is $554.54 by comparison.

• Since this example could also be for many municipal facilities, lower rates mean lower municipal operating costs as well, which means less pressure for tax increases.

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LDC Large Commercial Rates Comparison

• This last rate graph shows the case for a typical manufacturing business requiring 3,500 kW of capacity. This could also be the profile for a large municipal water or wastewater treatment plant.

• As you can see, the bulk of the LDCs are charging between $3,000 and $20,000 for this same size customer, with a few below and a few above – this is an extraordinary range.

• Horizon’s rate is among the least costly at $3,276.14 per month.

• As you can well imagine, these types of rate differences will have an impact on the viability of local companies.

• While electricity rates are not the only factor in the economics of business location, they may very well be affecting the attractiveness of communities for retaining and attracting new businesses.

• There is actually little mystery as to how to get low rates for all customer classes – you need low operating costs from an efficient business.

• For Horizon, the 2005 merger was an important vehicle for keeping rates down and one of the reason we continue to be interested in additional mergers.

• Like other LDCs, we do go to the OEB for rate increases, but mergers mean the pressure for rate increases are less than they would be otherwise.

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LDC Cost and Performance Comparisons

• As the rate data clearly demonstrates, an LDC’s performance can be a significant contributor to the sustainability of its community overall.

• Indeed, Horizon has among the lowest rates of all LDCs in Ontario, and is lowering the cost of using and doing business in Hamilton and St. Catharines.

• It is actually very easy to get to the bottom of what is driving the rate levels in any and all Ontario LDCs.

• Since the industry is regulated by the Ontario Energy Board, all the relevant information is publicly available.

• Indeed, the OEB collates it in the annual Yearbook of Distributors that is shown in the picture and made available in PDF and Excel formats at the above website link.

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All LDC Controllable Cost (OM&A) per Customer

• One simple metric to compare the performance of an LDC is its controllable cost per customer per year.

• In sales-based businesses, this is sometimes spoken of as SG&A (sales, general and administrative expenses).

• In a utility business, it is spoken of as Operations, Maintenance and Administration (OM&A).

• These are controllable costs because they are within management’s control, unlike, for example, depreciation, whose level is set by accounting rules.

• This first graph, then, shows total OM&A in 2009 with the LDCs arranged from smallest on the left to largest on the right.

• As is evident, the general conclusion is that the larger the LDC, the lower the total controllable cost per customer.

• While a few of the smaller LDCs are under $200/customer per year, most of all the large LDCs are under $200/customer per year.

• In this way, operating scale is generally a beneficial condition for lower rates for customers.

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All LDCs Operation and Maintenance (O&M) Cost per Customer

• This second graph separates out the Operation and Maintenance costs from the Administration costs.

• What is evident here is that there are some strong performing LDCs across the entire range of LDCs, suggesting it is possible to reach an efficient scale in smaller LDCs for Operation and Maintenance.

• Indeed, most LDCs are within the $50 to $100/per customer per year range, although there are more larger LDCs in this range.

• The graph also suggests, then, that, on balance, the larger the LDC, the more likely it is to have lower Operation and Maintenance costs, and with it lower rates.

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All LDCs Administration Cost per Customer

• Administration costs per customer is the clearest indication that scale of operation is beneficial to customers in lowering controllable costs.

• What the graph shows is that only the larger LDCs are under $100/customer per year and, while most LDCs are sitting between $100 and $150 per customer, most of the smallest LDCs are over $150 per customer.

• This all stands to reason.

• Administration costs include many fixed costs for billing and customer service systems.

• In many cases, these systems are the same cost no matter what size the LDC, meaning larger LDCs naturally will have lower unit costs of administration.

• These lower administration costs contribute in general to lower costs of operation and, as a result, lower rates to customers.

• This is why Horizon, while it can go to the OEB for higher rates like any LDC, knows that mergers will mitigate the pressure for rate increases.

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LDC Cost and Performance Comparisons

• Having high rates does not translate into high rates of return for shareholders and having low rates does not mean low rates of return for shareholders.

• As this graph of OEB filed data for Return on Equity shows, the larger LDCs, despite generally having lower costs of operation, also have higher rates of return for shareholders.

• Higher rates of return make it possible for higher levels of dividends to shareholders.

• The perplexing issue for customers is that LDCs with high rates do not necessarily mean that there are local benefits for the community in shareholder returns.

• Indeed, most of the best performing LDCs have the lowest costs and the highest returns.

• The result is that many municipal shareholders own LDCs with high rates for customers and low returns for shareholders.

• This is not a situation that has the LDC contributing greatly to the general sustainability of the community.

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All Ontario LDCs Scale in Customers

• While we once had more than 300 local electric utilities in Ontario, and we are much better off for having about 80 now, it is still the case that there are a lot of very small LDCs.

• There are in fact only 9 LDCs with more than 100,000 customers and 40 LDCs have less than 15,000 customers.

• Since every LDC shareholder has a right to continue operation, and the OEB has an obligation to hear the cost of service and other applications that come forward from the LDCs, but the regulatory framework for LDCs increasingly makes it challenging to continue to be profitable in the business.

• Prior to the commercialization and regulation of the LDCs a decade ago, the LDC was a simple poles and wires business that was largely self-regulated by the commissioners who oversaw the businesses.

• Now that the LDCs are formally regulated in a performance based regulation framework by the OEB, the ability to operate continues to be challenging for all LDCs, small and large.

• Larger LDCs, however, may have more resources at their disposal to meet the challenges.

• The cost of operation and rate of return data suggest that the larger LDCs are doing more to contribute to the sustainability of their communities.

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Horizon’s Sustainability Reporting Initiative

• Horizon’s focus on aggressive CDM, energy mapping and low rates is all part of our effort to contribute to making our communities better places to live, work and invest.

• While we have had a long history of corporate social responsibility, we knew we wanted to do more and could do more.

• This is why for the last few years we have been getting increasingly on the path of sustainable development by identifying ways we can contribute to the sustainability of the communities we serve.

• In 2008, we decided the best next step would be to develop a corporate sustainability policy and begin to undertake sustainability reporting.

• By sustainability reporting, we mean the documenting of our social, environmental and economic performance in business in equal measure.

• While we could have developed our own metrics, we arrived at the adoption of the Global Reporting Initiative framework as the best way forward.

• GRI is the de facto international standard for sustainability reporting and we decided to go with this framework because of the public disclosure required and the general acceptance of the framework.

• The additional advantage is that the framework has well constructed Reporting Guidelines – the “RG” note above – and the fact that there is an Electric Utility Sector Supplement – the “EUSS”, among the other sector supplements.

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Horizon’s “self-declared” 2008 GRI Filing

• By making a Global Reporting Initiative filing, our aim at Horizon is to continuously improve our business practices and bring added value to all of Horizon’s stakeholders.

• This gives us a framework for internalizing core sustainable development value.

• The strength of the framework lies also in its year-to-year and company-to-company comparability and its transparency, with the latter based on the requirement that the data be publicly filed and posted on the GRI website.

• For the 2008 reporting year, we collected data within all of Horizon Holdings, which includes Horizon Utilities Corporation and Horizon Energy Solutions Inc.

• For this first year, we made a “self-declared” filing of the required social, environmental and economic indicators and did so at the “B” application level.

• While “A” is higher than “B”, this category is more suited to companies in sectors like mining, where the impacts are greater.

• With this first filing, Horizon became the only utility in Ontario to make a Global Reporting Initiative filing.

• Besides Horizon, the only other utilities in Canada that currently do so are Hydro Quebec and BC Hydro.

• Notably, one metric required a calculation of local economic benefit, which in Horizon’s case was $107M in 2009.

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Slide 29: Horizon’s first Sustainability Based Annual Report

• While Horizon is the only Ontario utility to make a GRI filing, Ontario Power Generation and Toronto Hydro have produced very good sustainability and Corporate Social Responsibility reports that focus on company designed metrics.

• These reports, however, are separate from their corporate annual reports (with financial statements).

• At Horizon, we had produced some very good “community reports” in past years, but rather than move to a corporate annual report with just financial statements, we went a step further.

• We moved right to the new development of corporate reporting by having a triple bottom line annual report – focusing on social, environmental and economic considerations, including financial statements – and explicitly called it a “sustainability-based annual report”.

• And within the sustainability-based annual report, we had a page devoted to explaining our work on GRI and linking the annual report to our GRI filing.

• We are also very proud to be the first utility in Ontario to make this step of producing a sustainability-based annual report .

Website Posting of All Reports and Policies

• As part of the public disclosure requirement for GRI, we also supplemented our website publication of documents with our sustainability policy and our GRI filing.

• This included a new website page for “sustainable development”.

• We also took the opportunity to demonstrate our commitment to transparency by providing easy access to all our past financial and other reports, and have continued to do so in 2009 and will continue to do so in future years.

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Horizon awarded OEA “Company of the Year” in 2009

• In recognition for blazing a path on sustainable development in 2008, Horizon was pleased to be named the Ontario Energy Association’s “Company of the Year” in 2009.

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Received GRI “External Assurance” for 2009

• You will recall, I noted that Horizon’s first GRI filing was made as a “self-declared” filing.

• While this was a respectable first effort, we knew we wanted to advance our sustainability commitment and efforts beyond this level of just being transparent.

• In the fall of 2009, soon after winning the OEA award, we initiated a Request for Proposals for a qualified consultant to perform a “third-party” check and external assurance of our 2009 GRI filing.

• Through this process, we developed a relationship with Ernst & Young that has proved to be a good combination.

• They helped us immensely on improving the quality of our reporting and showed us where we had data reporting challenges and areas that need for improvement.

• As a result of this initiative, we received an “assurance” statement from E&Y for our 2009 GRI filing.

• With external assurance in hand, Horizon was able to make a 2009 GRI filing at the “B+” application level.

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Sustainability Based Annual Report 2009

• With our 2009 annual report, we again structured it as a sustainability-based annual report.

• We also devoted two pages to our GRI filing and its E&Y external assurance so that the reading public could know what we were doing on sustainability reporting without having to read the full filing.

• This experience has won us many accolades with the public and has fostered an interest in sustainability reporting within the LDC community and with the communities of Hamilton and St. Catharines that was not previously apparent.

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Internalizing Sustainability at Horizon

• While the GRI reporting has had an external focus, we have also been doing a lot of work internally to ensure the sustainability of our operations.

• Once we got on the path of sustainable development and sustainability reporting, sustainability metrics were placed into the performance expectations of management.

• This has really given our efforts impressive traction.

• As just some of the more visible examples, we have an internal sustainability measurements report and have done some impressive work with our fleet vehicles.

• All our vehicles now have GPS with electronic reporting of fuel consumption and emissions.

• We also have moved to utilize hybrid vehicles wherever possible.

• Pictured on the right is the first hybrid double-axle bucket truck in Ontario and one of our small hybrid service vehicles from our fleet.

• We also have on order the first hybrid plug-in electric bucket truck, which will arrive in 2011.

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Horizon’s Solar PV Business Initiative

• Another way Horizon determined that it could contribute to the sustainability of its communities was to take advantage of the opportunities afforded under the Green Energy Act.

• The GEA provides the critical incentives through the Feed-In Tariff program for green energy solutions like solar power to be developed.

• The program provides both a ready market and a fee structure that will nurture green power to the point that it will be commercially viable through economies of scale.

• Horizon Energy Solutions Inc. is now in business to provide green energy solutions –beginning with commercial scale solar panel rooftop installations.

• Horizon has been busy throughout 2010 negotiating agreements for solar installations on dozens of commercial, institutional and industrial sites in our service area and beyond.

• To our customers, we know there are many entrants into the green energy field, just as there were many entrants in the “dot-com” bubble a decade ago.

• We believe the players who will succeed in this new green economy will be those who have demonstrated solid business success, as Horizon has done in its more than a century of existence in the electricity business.

• When companies are contemplating entering into long-term leases for solar power, they want to know that their partner is financially solid with a strong track record.

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Golden Horseshoe Strategic Energy Alliance

• As we began to move in response to the Green Energy Act, we also recognized there was a real opportunity to expand on our existing work in assisting the economic development departments in Hamilton and St. Catharines in attracting businesses, providing more than just low rates and connection cost information.

• Within our service territories, we are blessed to have two universities – McMaster and Brock – and two community colleges – Mohawk and Niagara.

• With these resources close at hand, we began working with our municipal and Hamilton educational institution partners on the development of a Golden Horseshoe Strategic Energy Alliance.

• The purpose is to present our combined strengths to industry and encourage them to do research and manufacturing in our area or just to see us as partners.

• There have been some initial successes, including the locating of a solar panel manufacturer in Hamilton.

• We explicitly decided to call this the Golden Horseshoe Strategic Energy Alliance because we believe there is room for other communities and their LDCs to participate in the broader education and other initiatives that are possible beyond solar, such as on electric cars and smart grid systems.

• In all these efforts I have outlined today, we have welcomed and continue to be excited about the role LDCs can play in contributing to the sustainability of our communities.

• Thank you for your attention and I welcome your questions and comments.

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thanks very much scott [vokey] for your kind introduction

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