Annual Information Form for the Year Ended December 31, 2013
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INNERGEX RENEWABLE ENERGY INC. ANNUAL INFORMATION FORM FOR THE YEAR ENDED DECEMBER 31, 2013 March 28, 2014 TABLE OF CONTENTS INTRODUCTION .......................................................................... 3 Various Other Prospective British Columbia Hydro CAUTIONARY STATEMENT ON FORWARD-LOOKING Projects (BC - 100% ownership) ..................................... 28 INFORMATION ............................................................................ 3 Other Prospective Québec Hydro Projects CORPORATE STRUCTURE ....................................................... 4 (QC – 48% ownership) ................................................... 28 GENERAL DEVELOPMENT OF THE BUSINESS ...................... 5 INTANGIBLE ASSETS ............................................................... 28 RECENT DEVELOPMENTS .......................................................... 5 ENVIRONMENTAL PROTECTION ................................................ 28 THREE-YEAR SUMMARY ........................................................... 6 EMPLOYEES .......................................................................... 29 Financial Year 2013 .......................................................... 6 SOCIAL AND ENVIRONMENTAL PROTECTION POLICIES ............... 29 Financial Year 2012 .......................................................... 6 RISK FACTORS ........................................................................ 29 Financial Year 2011 .......................................................... 8 DIVIDENDS ............................................................................... 36 INDUSTRY OVERVIEW AND MARKET TRENDS ...................... 9 DESCRIPTION OF CAPITAL STRUCTURE ............................. 38 GENERAL DESCRIPTION OF CAPITAL STRUCTURE ...................... 38 RENEWABLE POWER GENERATION INDUSTRY ............................. 9 RATINGS ............................................................................... 40 RENEWABLE POWER IN CANADA ................................................ 9 MARKET FOR SECURITIES..................................................... 42 REGULATORY FRAMEWORK OF AND MARKET FOR RENEWABLE COMMON SHARES ................................................................. 42 POWER IN THE CORPORATION’S KEY MARKETS ......................... 10 5.75% CONVERTIBLE DEBENTURES ........................................ 42 Québec............................................................................ 10 SERIES A SHARES ................................................................. 42 British Columbia .............................................................. 11 SERIES C SHARES ................................................................. 42 Ontario ............................................................................ 11 THE SERIES C SHARES ARE LISTED ON THE TSX UNDER METHOD OF PRODUCTION........................................................ 12 THE SYMBOL “INE.PR.C”. ...................................................... 42 Hydroelectric Power Generating Process ........................ 12 DIRECTORS AND EXECUTIVE OFFICERS ............................. 43 DIRECTORS ........................................................................... 43 Wind Power Generating Process .................................... 12 EXECUTIVE OFFICERS ............................................................ 44 Solar Photovoltaic Power Generating Process ................ 13 BANKRUPTCY, INSOLVENCY, CEASE TRADE ORDER FACTORS AFFECTING RENEWABLE ENERGY PRODUCTION AND PENALTIES ..................................................................... 44 PERFORMANCE ...................................................................... 14 CONFLICTS OF INTEREST ...................................................... 45 COMPETITIVE CONDITIONS ...................................................... 14 LEGAL PROCEEDINGS AND REGULATORY ACTIONS ....... 45 ECONOMIC DEPENDENCE ........................................................ 15 INTEREST OF MANAGEMENT AND OTHERS IN SEASONALITY AND CYCLICALITY .............................................. 15 MATERIAL TRANSACTIONS ................................................... 45 DESCRIPTION OF THE BUSINESS AND ASSETS OF TRANSFER AGENT AND REGISTRAR ................................... 45 THE CORPORATION ................................................................ 15 MATERIAL CONTRACTS ......................................................... 45 GENERAL OVERVIEW - SEGMENT INFORMATION ........................ 15 INTEREST OF EXPERTS ......................................................... 46 PORTFOLIO OF ASSETS ........................................................... 16 AUDIT COMMITTEE DISCLOSURE ......................................... 46 OPERATING FACILITIES ........................................................... 17 ADDITIONAL INFORMATION ................................................... 47 OPERATING HYDROELECTRIC FACILITIES .................................. 17 GLOSSARY OF TERMS ........................................................... 47 Hydroelectric Facilities Located in Québec ..................... 17 Hydroelectric Facilities Located in Ontario ...................... 19 SCHEDULE A – CORPORATE STRUCTURE SCHEDULE B – CHARTER OF THE AUDIT COMMITTEE Hydroelectric Facilities Located in British-Columbia ........ 20 Hydroelectric Facility located in Idaho, USA .................... 22 OPERATING WIND FARMS ....................................................... 22 Wind Farms Located in Québec ...................................... 22 OPERATING SOLAR FARM ....................................................... 24 Solar Farm Located in Ontario ........................................ 24 DEVELOPMENT PROJECTS ...................................................... 24 HYDROELECTRIC DEVELOPMENT PROJECTS ............................. 24 Boulder Creek Project (BC - 66.7% ownership) .............. 24 Upper Lillooet River Project (BC - 66.7% ownership) ...... 25 Tretheway Creek Project (BC - 100% ownership) ........... 26 Big Silver Creek Project (BC – 100 % ownership) ........... 26 WIND DEVELOPMENT PROJECTS.............................................. 27 Mesgi’g Ugju’s’n (MU) Project (QC - 50% ownership) ..... 27 PROSPECTIVE PROJECTS ........................................................ 27 Various Other Creek Power Prospective Projects (BC – 66.7% ownership) ................................................. 27 Various Other Prospective Québec Wind Projects (QC – 50-100% ownership) ............................................. 28 Prospective Ontario Projects (ON - 49-100% ownership) .............................................. 28 Other Prospective British Columbia Wind Projects (BC - 100% ownership) ................................................... 28 _____________________________________________________________________________________________ Innergex Renewable Energy Inc. – 2013 Annual Information Form - 2 INTRODUCTION The information set out in this Annual Information Form is stated as at December 31, 2013, unless otherwise specified. Unless otherwise indicated or the context otherwise requires, all reference to the “Corporation”, to “Innergex, “we” “our” and “us” refers to Innergex Renewable Energy Inc. and its subsidiaries. Terms not otherwise defined have the meaning set forth in the “Glossary of Terms” included at the end of this document. CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION To inform readers of the Corporation's future prospects, this Annual Information Form contains forward-looking information within the meaning of applicable securities laws (“Forward-Looking Information”). Forward-Looking Information can generally be identified by the use of words such as “approximately”, “may”, “will”, "could", “believes", “expects", “intends”, "should", “plans”, “potential”, "project", “anticipates”, “estimates”, “scheduled” or “forecasts”, or similar words or other comparable terminology that state that certain events will or will not occur. It represents the projections and expectations of the Corporation relating to future events or results, as of the date of this Annual Information Form. Future-Oriented Financial Information: Forward-Looking Information includes future-oriented financial information or financial outlook within the meaning of securities laws, such as expected production and estimated project costs, to inform readers of the potential financial impact of expected results, of the expected commissioning of Development Projects, of recently announced acquisitions and its ability to fund its growth. Such information may not be appropriate for other purposes. Assumptions: Forward-Looking Information is based on certain key assumptions made by the Corporation, including, without restriction, those concerning hydrology, wind regimes and solar irradiation, performance of operating facilities, financial market conditions and the Corporation’s success in developing new facilities. Risks and Uncertainties: Forward-Looking Information involves risks and uncertainties that may cause actual results or performance to be materially different from those expressed, implied or presented by the Forward-Looking Information. These are referred to in the “Risk Factors” section of this Annual Information Form and include, without limitation: the ability of the Corporation to execute its strategy for building shareholder value; its ability to raise additional capital and the state of the capital market; liquidity risks related to derivative