CIMFP Exhibit P-01372 Page 1

Lower Churchill Project -

Technical Briefing

~ Boundless Ener

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Summary of Decision Proce s - Two Steps

• Step 1: Next Generation Source for the Island - A decision is required on the next generation sources to meet Island demand - Muskrat Falls with an Island Link is the preferred option - This analysis assumes that there is no sale of power which is surplus to domestic needs and it will be spilled and not utilized (flow over the )

• Step 2: Maximizing Value of Spilled Water - What is best approach to obtain value for the spilled water

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Next Generation Source

• A capacity deficit will emerge in the province by 2015, and an energy deficit will emerge by 2019. • Nalcor has evaluated alternatives to develop new generation sources to avoid this deficit. • Nalcor assessed five alternatives and found the Muskrat Falls project with a transmission link to the Island to be the least cost alternative, even if surplus energy is spilled.

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Island System Load Growth Projection

Island System Load Forecast by Generating Source 14,000 . t••• .... r. ... r ....-.~...... - ' (: .. I:.. l I • . ~ l~ 1 . I ' •ii- -- ... ' ~.i !:~· ·r.. ;:.,.,. -~ -~d:.· ,.,, . .. -i~ ~ t , . I -~ :...~-r1 ' ~ ,I ~...... ! . ~- .,w ~ 12,000 .. ,,..,1:_ II'. .• ,·j~ . ' 1i

10,000

~ 8,000 C,

6,000

4,000

2,000

0 2010 2014 2018 2022 2026 2030 2034 2038 2042 2046 2050 2054 2058 2062 2066

• Island Renewables / NUGs • Thermal Muskrat Fal ls (at So ldiers Pond)

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Step 1 - Island Alternatives Decision Criteria

1. Rel ia bi Iity Need to meet minimum system reliability standards 2. Cost Based on Cumulative Present Worth (Consistent with standard utility practice) 3. Security of Supply Control within the province and subject to NL laws and regulations 4. Other Considerations Benefits to the Province Level of GHG reduction & potential economic benefits Long term strategic value

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Options Considered - Island Alternatives

1. Isolated Island No interconnection with or Maritimes Holyrood remains in operation Hydro developments {2015 - 2020) • Island Pond - 36 MW, Portland Creek - 23MW, Round Pond - 18 MW 170 MW Combined Cycle Gas Turbine {2022) 50 MW of Combustion Turbine {2024) Further thermal additions (post 2029)

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Options Considered - Island Alternatives

2. Muskrat Falls & Labrador-Island Link - 824 MW; 4.9 TWh - 1,100 km HVdc line - 2.0 TWh growing to 3.9 TWh until 2041 - Unused water assumed to be spilled

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Options Considered - Island Alternatives

3. Gull Island & Labrador-Island Link - 2,250 MW; 11.9 TWh - 1,100 km HVdc line - 2.0 TWh growing to 3.9 TWh until 2041 - Unused water assumed to be spilled

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Option Considered

4. Imports via Hydro Quebec Completion of an HVdc transmission link from the Labrador border to the Island No new generating capacity in Labrador Energy needs are met by importing energy and capacity via Hydro Quebec Power would be procured on the open market

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Options Considered

s. Imports from New England Independent System Operator {NEISO) via HVdc Maritime Link Completion of an HVdc transmission link from to the Island No new generating capacity on the Island Energy needs are met through the importation of power via Nova Scotia

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Summ ry - Next Generation Sourc

• Muskrat Falls and Link to the Island is best solution - Most economic over the long-term - Provides necessary system reliability - Rate stability - Generates a positive rate of return - The Holyrood plant will be taken off-line (capital upgrades and replacement are avoided) • Electricity demand growth in the province up to 2041 • Electrical generation will be >98% greenhouse gas emissions free

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Electricity Rates

Newfoundland and Labrador Hydro: Island Regulated Revenue Requirements

$400 ,.:,...... ,- • ":d· 1·. (' . 1•• ...... ,, ...... ·'-, ' ' . ... $350 . - .... L.!.!• Thermal Power Future •• -; '.:"% 1 - .... ~... .- (excluding CO 2 costs)

$300 I ~ •• T .. ~-. ) ~· :;-e. . ~ -·-t 11 .... ' .... '..1,-• .J ni $250 .E ·~ ,_.,, .-.~ .. _!_ ...""i,.. __ - - • E Long Term Superior Value 0 I 1lfl"}.~ .. .. :- .. z :..-~- -~· Associated with Labrador Option ~:-.f• Hol rood Re lacement .s::.' $200 3: ~... ., ... I.,.. -- V cu . i;~-~.-.-.1-t, . !..,....er .. a. 11). $150

$100 -~ -.-,.r $SO r:.>_. . -~J-· ....."* ... L ~.~,.! •,

$0 2010 2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046 2049 2052 2055 2058 2061 2064 2067

- isolated Island - Muskrat Fa lls w ith Labrador Interconnection

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Step 2: Maximizing Value of Spilled Water

• Focused on how to best optimize the value of excess power • Decision criteria included:

1. Value Creation - Net Present Value (NPV} & Internal Rate of Return (IRR} 2. Reliability Improvement - Enhancement of grid through NA interconnection 3. Strategic Value - Enhances future options & offers flexibility

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Options Considered

1. Sales through Quebec to , New England, Ontario and Quebec markets Muskrat Falls power would be sold via surplus transmission capacity on the Hydro-Quebec (HQ) transmission system. Utilize excess capacity from Recall transmission booking Based on expected Recall sales, approximately 1 TWh of production from Muskrat Falls may be sold on a firm basis. Potential of selling additional power by purchasing non­ firm transmission rights on a short-term basis in the future.

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Options Considered

2. Sales into the Maritime Provinces and through to New England via a Maritime Link connecting the Island of with Nova Scotia Arrangements with Emera to sell 1 TWh of energy in NS at renewable energy prices and achieve access through NS to NB, PEI and New England Enables the option to explore sales arrangements with NB and PEI

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Preferre ption: Ma imizing Value of Spilled Water

• The preferred option is agreement with Emera to sell power in NS and achieve access through NS to NB, PEI and New England This agreement will generate value for both companies and builds on Nalcor's existing relationship with Emera for the marketing of a portion of Recall power from the Upper Churchill in the United States. For the first time in history, the Island will no longer be an isolated grid, but instead linked via two routes into the North American grid.

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m I

• Nalcor builds and owns 100% of Muskrat Falls • Nalcor builds Island Link and has ownership of 71% - Ability to acquire 100% at our option - Opportunity to invest in other Emera projects • Emera owns Maritime Link 100% - Ownership reverts to Nalcor for $1 following termination of delivery of the NS Block • Nalcor always retains at least 51% controlling interest in overall transmission system

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• Nalcor makes sales arrangements with NS and gains access to NS transmission through to NB, PEI and New England - System coordination in NS - Transmission rights in NB - Transmission rights in Maine • Nalcor has decision making control on all elements of the project

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Tran mission Overview

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Project Readiness

• Project planning and execution is following a Decision Gate / Gateway Process • All key deliverables associated with Decision Gate 2 have been achieved and a business case has been confirmed. • Three reviews to test the adequacy of Nalcor readiness to proceed to the next phase of development conducted: - Internal Review - Gateway Process Deliverables - External Review - Independent Project Analysis (IPA) - External Review - Independent Project Review (IPR)

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Economic Benefits - Construction

• Employment - Total NL direct employment of 8,600 person years - Peak Direct NL employment 2,700 in 2013 - Total Labrador direct employment of 5,400 person years - Total Canadian employment - direct, indirect and induced of 47,841 person years • Income impact - Total NL income to labour and business of $1.4 billion from Phase 1; $220 million per year - -wide income to labour and business of $3.49 million; $537 million per year • Taxation impact - Over $212 million in taxes to the NL government - Over $525 million in taxes to the Federal Government

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Generation Expansion Summ ry

• Generation - Muskrat Falls 824 MW (4.9 TWh/yr) - Construction start 2011 - In-service 2016 - Capex $2.9 billion • Island Link - HVDC link (Labrador to Soldier's Pond) 1100 km - Capacity 900MW - Capex $2.1 billion

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Maximizing V ue of Spilled Water

• Maritime Link • New transmission and upgrades on the Island • Submarine HVDC line 180 km • Capacity 500 MW • Capex $1.2 billion

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Summary

• Newfoundland and Labrador - Least cost generation expansion plan - Provincial power needs met to 2041 and beyond - 98% non-GHG emitting generation - Island no longer isolated from North America

• Surplus Energy From Muskrat is Exported - Direct market access to Maritimes and New England - Significant sales at full market value

LOWER CHURCHILL PROJECT