06 June 2011

ERM Power to purchase an additional 50% of the

Key Points • ERM Power to purchase an additional 50 % of the 332 MW Oakey Power Station for $61.7m • ERM Power’s interest will increase from 12.5% to 62.5% • A 332 MW peaking power station with dual fuel capability (gas and distillate) • Located 150 km west of in a high growth region • Close proximity to fuel supplies and gas and electricity transmission • Purchase price less than 50% of estimated replacement cost • EPS accretive and fully funded without the need to raise equity

Integrated energy company ERM Power Limited (ASX: EPW) has executed agreements to purchase an additional 50% interest in the 332 megawatt (MW) Oakey Power Station (Oakey) from Redbank Energy Ltd (formerly Energy Ltd) for a sum of $61.7 million. ERM Power’s interest in the Oakey Power Station will increase from 12.5% to 62.5%.

Oakey is a 332 MW two unit peaking power station with dual fuel capability (gas and distillate) that is located 150 km west of Brisbane in a high demand growth region and in close proximity to fuel supplies and gas and electricity transmission infrastructure. ERM Power led the development of Oakey, which was commissioned in December 1999. Further details are available in ERM Power’s IPO prospectus.

ERM Power will utilise existing cash and has put in place a $15.6 million corporate debt facility to fund the acquisition.

ERM Power expects this transaction to be accretive to underlying earnings per share (EPS), adding 0.6 cents to the prospectus FY12 underlying EPS forecast of 15.7 cents, and contributing an additional $6.2m to the FY2012 NPAT (excluding one off transaction costs).

Managing Director and CEO Philip St Baker said: “The acquisition provides immediate value for ERM Power shareholders.

“The purchase price is less than 50% of the estimated replacement cost and the asset is in near new condition due to the fact that it is a peaking power station that has operated less than 5% of the time over its 11 years of operation.

“In addition to these obvious benefits, ERM Power has the skills, experience and complementary businesses to exploit substantial upside from this asset over the short, medium and long term.”

Peter Jans Group General Counsel & Company Secretary ERM Power Limited

For further information

Philip St Baker Managing Director and CEO Phone: +61 7 3020 5124 Email: [email protected]

About ERM Power

ERM Power (ASX:EPW) is an integrated energy company which operates electricity sales, generation and gas procurement businesses. Founded in 1980 as a specialist energy advisory firm, it grew through deregulation and privatisation to become Australia’s largest private energy sector company before listing on the Australian Securities Exchange on 10 December 2010. ERM Power is leveraged to the forecast growth in the Australian electricity market through its sales business, ERM Sales, which focuses on larger business customers, and its generation business, which focuses on low emission gas‐fired assets with long term contracts. In the last five years ERM Power has developed five power stations, operating three of them and retaining interests in two. www.ermpower.com.au ERM Power Limited

(ASX:EPW)

Agreement to purchase an additional 50% interest in the 332 MW Oakey Power Station

6 June 2011 Philip St Baker – Managing Director and CEO Important Notice - Disclaimer

This presenttitation contitains certitain fdforward-loo king s ta temen ts w ith respec t to the financ ia l con dition, resu lts o f operations and business of ERM Power Limited (ERM Power) and certain plans and objectives of the management of ERM Power. Such forward-looking statements involve both known and unknown risks, uncertainties, assumptions and other important factors which are beyond the control of ERM Power and could cause the actual outcomes to be materially different from the events or results expressed or implied by such statements. None of ERM Power, its officers, advisers or any other person makes any representation, assurance or guarantee as to the accuracyyy or likelihood of fulfilment of any forward-lookinggyppyy statements or any outcomes expressed or implied by any forward-looking statements. The information contained in this presentation does not take into account your investment objectives, financial situation or particular needs. Before making an investment decision, investors should consconsiderider their own needs and situation and, if necessary, seek professional advice. To the maximum extent permitted by law, none of ERM Power, its directors, employees or agents, nor any other person accepts any liability for any loss arising from the use of this presentation or its contents or otherwise arising out of, or in connection with it.

2 3 Agenda

1 Transaction overview 2 Oakey Power Station overview 3 Acquisition rationale 4 Funding requirements 1. Transaction overview 5 Transaction overview

9 ERM Power Limited to purchase an additional 50% interest in the Oakey Power Station from Redbank Energy (formerly Alinta Energy) for $61.7 million 9 ERM Power’s interest will increase from 12.5% to 62.5% 9 A 332 MW peaking power station with dual fuel capability (gas and distillate) 9 Located 150 km west of Brisbane in a high growth region 9 Close proximity to fuel supplies and gas and electricity transmission 9 Purchase price less than 50% of estimated replacement cost 9 EPS accretive and fully funded without the need to raise equity 2. Oakey Power Station overview Oakey Power Station 7

Oakey •Located in hhhigh growth region in close proximity to Location Darling Downs, 150 km west of Brisbane fuel supplies, gas and electricity transmission •Low operating hours, near new condition with high Type Peaker (< 5% expected ACF^) reliability and life time availability >97% average Capacity (MW) 332 •Project debt scheduled to be repaid without bullet ERM Power payment by December 2014 62.5% (economic interest after purchase) ownership

Partners ERM Oakey/Contact Energy

Operator Contact Energy

Commission December 1999 date

Open cycle (dual fuel) Technology 2 x Siemens V94.2 OCGTs

Fuel supply Customer risk and expense

100% contracted with AGL under a PPA Off‐take until expiry December 2014

^Annual capacity factor 8 Oakey Power Station 3. Acquisition rationale 10 Acquisition rationale

MjMajor ity ownership interest in a peaking power station

9 Consistent with ERM Power’s strategy of building a portfolio of high quality low emission power generation assets in high growth regions

9 Price < 50% of estimated replacement cost (< $550,000 per MW v $1.1m per MW)

9 Price favourably compares with valuations: • Analysts (February and May 2011): > $80m1 • Grant Samuel independent expert report (Jan 2010): $81m ‐ $94m2 9 Upside potential leveraging ERM Power skills and businesses 9 Zero development and construction time, cost and risk

9 Prospectus FY2012 EPS accretion of 060.6 cents3 9 $6.2m additional contribution to FY2012 NPAT3

1 Macquarie Securities, RBS, RBS Morgans 2 Reference Alinta Energy Notice of Meetings and Explanatory Memorandum dated 21/01/2010 3 Excluding impact of one off transaction costs 11 Upside potential

AiitiAcquisition is stttrategi illcally compelling

9 Abbtyility to leeageeverage ERM Poesower’s epetseexpertise in dev elop m ent

9 Internal hedging and/or recontracting potential

9 Capacity upgrading potential

9 Refinancing potential (Project debt repaid and initial off‐take ends by December 2014)

Un‐encumbdbered, un‐contracted and near‐new after December 2014 4. Funding requirements 13 Funding overview

Acquisition fully funded from ERM Power’ s cash reserves and a new $15.6m corporate facility

• Two year facility arranged by Ironstone Capital Partners • Debt placed equally with three significant ERM Power shareholders ‐ Gaffwick Pty Ltd, Ilwella Pty Ltd and Sunset Power Pty Ltd (Trevor St Baker Corporate related entity) debt facility • Arms length and market competitive commercial rates and terms • Key terms: – Unsecured , Upfront fee 4%, Interest rate 12%

• ERM Power will utilise some cash previously earmarked for the Braemer 3 project Existing • Cash will be replenished via a debt facility secured by interest in Oakey cash – Discussions well advanced on Oakey facility – Facility likely to close well ahead of the Braemer 3 financial close (FY12) More Information

Philip St Baker Manag ing Director an d CEO Email: [email protected] Phone: +61 7 3020 5124

Website: www. ermpower.com .au