PACIFIC ENERGY LIMITED A.C.N. 009 191 744 Level 5, 150 St George’s Terrace, Perth WA 6000, Australia Postal Address: PO Box 5620, Perth WA 6831 Email: [email protected] Telephone: (+61 8) 9241 7888 Facsimile: (+61 8) 9324 2888 ASX Announcement Release Date: Thursday, 3 May 2007 (ASX: PEA) Blue Rock Dam Water Rights Extension and $1.0M Tariff Settlement The Directors of Pacific Energy Limited (“Pacific Energy”) are pleased to confirm that the Company has reached agreement with the relevant authorities to extend Pacific Energy’s rights to water and site access for hydro electric generation purposes from the Blue Rock Dam for a further 10-year period to 30 June 2021. On this basis, TRUenergy and Pacific Energy have agreed, by 15 February 2011, to explore the possibility of extending or renegotiating the purchase of energy for a further 10-year period to 30 June 2021 to match the term of the extended water rights held by Pacific Energy. In addition, Pacific Energy and TRUenergy have settled a dispute over the tariff to be paid for the renewable electricity generated at the Blue Rock Dam Power Station. The terms of the settlement provide for the payment to Pacific Energy of $1.0 million and a 30% increase in the total tariff payable for energy (and environmental rights) generated by the Blue Rock Power Station in the future. The dispute arose as a result of ambiguity in the energy price payable by TRUenergy for the final 10 years of the 20 year contract which was assigned by the Victorian government to a predecessor entity of TRUenergy as part of the privatisation process Mr John Fletcher, Pacific Energy Chairman said that “the extension of the Blue Rock Dam water rights and reaching agreement with TRUenergy are important steps in ensuring new management is able to build and execute the planned growth strategy for the Company.” Enquiries to Mr Adam Boyd – Managing Director Contact Details: Telephone: (+61 8) 9214 7888 Facsimile: (+61 8) 9324 2888 2 Background The Blue Rock Power Station is a 2.6MW rated capacity hydro electric facility located approximately 130 km east of Melbourne in the Latrobe Valley. The power station commenced operations in 1992 under a 20-year power purchase agreement with the State Electricity Commission of Victoria. This power purchase agreement was assigned by the Victorian government to a predecessor entity of TRUenergy in 1994. Water Rights Extended 10-years The Company has reached agreement with the Gippsland and Southern Rural Water Authority and the Central Gippsland Region Water Authority to extend Pacific Energy’s rights to water and site access for hydro generation purposes from the Blue Rock Dam for a further 10-year period to 30 June 2021. On this basis, TRUenergy and Pacific Energy have agreed, by 15 February 2011, to discuss the possibility of extending or renegotiating the purchase of energy for a further 10-year period to match the term of the extended water rights and site access arrangements held by Pacific Energy. Tariff Settlement Pacific Energy and TRUenergy have settled a dispute over the tariff to be paid for the renewable electricity generated at the Blue Rock Power Station for the period from 1 March 2002 to 29 February 2012. The dispute arose as a result of ambiguity in the energy price payable by TRUenergy to Pacific Energy for the final 10 years of the 20 year contract. The contract was assigned by the Victorian government to a predecessor entity of TRUenergy as part of the privatisation process. The energy pricing under the contract was referable to tariffs published by the SECV. These tariffs ceased to be published in 1992. The terms of the settlement with TRUenergy provide for: ¾ The payment of $1.0 million to Pacific Energy for the energy acquired for the period from 1 March 2002 to 31 December 2006 and the right for TRUenergy to derive environmental benefits from the Blue Rock Power Station; and ¾ An approximate increase of 30% in the total tariff to be paid for the purchase of electricity generated and associated environmental rights created by the Blue Rock Power Station. This tariff increase will apply for the remaining 5-year term (approx.) of the existing power purchase agreement. Pacific Energy will also receive 50% of any increase in the market value of environmental rights above the price paid by TRUenergy for those environmental rights. The Blue Rock Dam facility has been accredited under the NSW Greenhouse Gas Abatement Scheme. .