November 13, 2006

Terrawinds proposal delayed pending local, provincial approvals

Due to unforeseen delays in obtaining various regulatory approvals for its 201-megawatt (MW) wind farm in Rivière-du-Loup, Quebec, Terrawinds Resources recently reported that is will not be able to complete the installation of up to 26 test wind turbines (the CRCE phase) by the end of December, 2006 as originally anticipated.

Terrawinds, a subsidiary of the SkyPower Wind Energy Fund partnership, has been working with the regional municipality (RM) of Rivière-du-Loup and other local communities to resolve issues and concerns relating to the approvals. For example, at the request of the communities, Terrawinds offered to reduce the size of the facility by 20 wind turbines, from 201 MW to 170 MW. The company will work with the RM and the other municipalities to try to find mutually agreeable alternative locations for these 20 wind turbines for installation during the second phase of the project (called the Infill phase) in 2007.

Terrawinds also reports delays in obtaining the provincial environmental Certificate of Authorization as well as approvals from Quebec's Commission for protection of agricultural lands (CPTAQ). These decisions may not be received until some time during the first quarter of 2007. As a result, part of the CRCE phase, along with the Infill phase will have to be deferred into next year. Terrawinds believes, however, that the rights-of-way and other local permitting issues with the municipalities are settled soon, construction of the CRCE phase could be partially completed by year-end.

Meanwhile, a report on the project just released by Quebec's Office of Public Hearings on the Environment (BAPE) made a number of recommendations, most of which have already been addressed by SkyPower in the course of its work with the local officials. Significant modifications to the Terrawinds project, made in response to concerns expressed by intervenors, commissioners and elected local officials, have resulted in full compliance with municipal regulations with regard to wind turbine placement, in addition to reduced noise levels and lessened potential impacts on birds, agricultural activities and the landscape.

In accordance with another recommendation from the BAPE, no turbine will be set up between the St Lawrence River and adjacent highways in the area. SkyPower has agreed to reduce the number of wind turbines from 134 to 114 by removing all turbines located to the north of Highway 20 (between the highway and the river). This will address visual concerns and will limit the number of turbines in sensitive migratory bird areas.

As part of its proposal, SkyPower has developed and presented a formal plan to establish a dismantlement fund to address the municipalities' requirements. The project has also been designed for full compliance with government standards relating to noise levels and with local regulations governing the distance required between wind turbines and residences. The company says scientific studies, verified by field experience, have indicated that the impact of wind-turbine noise is very low, particularly at distances of more than 486 metres from residences, the distance stipulated by the regional municipality's regulation.

The project design incorporates a turbine layout pattern which will limit the impact on agricultural land and will be implemented with the agreement of each local landowner. SkyPower has been working with an agronomist to ensure minimal impacts on agricultural land and post-construction restoration of these lands to the condition they were in prior to installation of the facility.

In accordance with another recommendation in the BAPE report, the company has committed to setting up a committee of elected local officials, other businesses in the municipal region and representatives of the proponent. Negotiations on the creation and composition of such a committee are currently underway with the municipalities and the Rivière-du-Loup regional municipality Chamber of Commerce.

The BAPE report is an important step in the permitting process for the facility: its recommendations relating to the environmental impact of the facility will be taken into account by the provincial Environment Minister in making a decision whether to grant environmental approval for the facility. The Minister's approval may be granted with or without the requirement to implement some or all of the modifications recommended by the BAPE.

Once built, the Terrawinds facility will generate electricity for sale to Hydro-Québec pursuant to a 21-year power purchase agreement (PPA). Its economic benefits will be felt locally, regionally and provincially, with direct expenditures in the lower St Lawrence area projected at $36.6 million and total expenditures in Quebec estimated at $142.5 million. In addition, the region will obtain an estimated $40 million in economic benefit over the life of the project, through payments to local landowners, tax revenues to municipalities, increased business and tourism in the area and job creation.

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