Version 16, January 2006

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Welcome to Version 16 of the Breeze

Many, many announcements in this newsletter: A new Board of Directors and the design of a community bond offering. While there continue to be a few wrinkles to iron out, the Finance Committee, with the support of the Board of Directors has finalized the structure of the Bond Offering. In this newsletter Jennifer Heneberry describes that structure. The Bond Offering is a fantastic administrative milestone. As it is implemented it will represents a shift in PPC's focus from the field to the community at large. The challenge for our new Board of Directors will be balancing the very different demands that these two foci represent as they lead PPC toward its goal of becoming an energy producer. Onward and upward!

The Breeze is made possible through the generous contributions of Livio Filice, James Murphy and Jennifer Heneberry. My thanks for their enduring support.

– Nancy Pyette, Editor

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In this issue

The Big Bond - Creation of a co-op energy producer
AGM Update
Developments in Ontario
Final Thoughts

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The Big Bond - Creation of a Co-op Energy Producer

– Jen Heneberry

Community Bond Offering

This is an exciting time for Positive Power Co-operative. We are about to embark on our first community investment offering. The investment offering was first presented to the membership at the 2005 Annual General Meeting, and we are planning more meetings in the new year to provide additional information about it.

What is a Community Investment Offering?

Co-ops utilize direct investment from community to operate and develop their projects. This allows the residents of Haldimand, Halton and Hamilton to help develop Positive Power Co-op (PPC) projects. Residents, businesses, institutions and industries can invest in the co-op through the direct purchase of bonds or shares made possible through an Offering Statement. While there are many different models of investment, the PPC investment opportunity is based on the same idea as the Toronto Exhibition Place wind turbine. That project was financed by community investment through the WindShare Co-operative, - members of the community can directly support the generation of renewable energy by investing in co-operatives that are developing projects.

Why are we doing this?

Positive Power Co-operative is ready to move to the next phase of project development. Haldimand and Hamilton Drumlin, our two projects, have until recently been in the viability assessment stages. While there are resources requirements to assess the viability of these projects, they are small compared to the resources needed to grow the projects into power producing installations. The type of funding that Positive Power Co-operative has received to date is not designed to support the business of power generation. In addition, the amounts required are beyond the scope of traditional funding agencies for not-for-profit organizations. However, as a co-operative we have the flexibility to structure community investment to provided phases of financing leading up to construction and operation. The Bond Offering represents a solution that will support our continued growth.

How will Positive Power Co-op make this work?

As a non-profit, PPC is restricted from using shares as a way to generate investment. Positive Power Co-op is using bonds as the investment mechanism due to our non-profit status.

We have designed a Community Bond Offering that will have two phases. Bonds will be offered to the community at a reasonable interest rate to compensate investors for the risk involved with investing. Any surplus that our projects may generate over time will be used by PPC to further our Mission, Vision and Values. The bond offering will allow for investment from both member individuals and households, but will also allow institutions and businesses to invest as well.

What form will the Community Bond Offering take?

Phase 1: Lake Erie Project development costs Down payment on turbines Feasibility work for additional projects Operational costs for 1 year 2 series - "A" for members, "B" for non-members $2 million

Phase 2: Remaining equipment costs Construction / engineering costs Refinancing costs Maximum of $6.8 million

What are these 'series' that were mentioned?

Positive Power Co-op will be accepting funds from both existing members and new members that wish to join us, and from the institutional sector. Only members will have voting rights in the co-op. As a result, we make a distinction between the two types of investments, and there are some other differences between the two sectors of investors that we are hoping to attract. The differences between the two are as follows:

Series A For PPC members $500 bonds, max of 10 bonds Target of $500,000 6.5% rate of return Annual return of interest 5 year term

Series B For non-members $5,000 bonds, no max Target of $1.5 mill 6.0% rate of return Compound interest, paid out year 5 5 year term

What about Phase 2?

• Will begin in late 2006
• Will be one series of 15 year bonds
• Maximum of $6.5 million will be sought
• Cover balance of costs related to equipment and construction of Lake Erie, and additional costs for new projects

When will all this start?

The Finance Committee, with the assistance of a consultant made possible through the Ontario Co-operatives Association, developed the offering statement and submitted it in early January of this year. The offering statement is the document that is given to all potential investors and outlines the investment opportunity, the risks involved, and other issues of importance that investors will need to know before they invest their money. That document was submitted to the Financial Services Commission of Ontario (FSCO) in January. Once it is processed, the FSCO will provide a receipt, and this will give us the go-ahead to begin accepting investment.

Members of the co-operative who have memberships in good standing as of December 15th, 2005, will be able to invest exclusively for a period of two weeks when the investment period opens. The investment offering will open to new members in Feburary or March of 2006 and the larger community after that window has closed. New members will have to demonstrate that they are physically located in the City of Hamilton, Region of Halton or Haldimand County in order to invest in the Series A Bonds.

Who will be involved?

The success of the community bond offering will depend on collaboration between the board, staff and volunteers of Positive Power Co-op.

• Board of Directors will direct and protect Positive Power Co-op's financial interests and make strategic decisions
• Positive Power Co-op's General Manager will administer membership, contracts, operations and project development
• Volunteers will participate in project development, operations (as they do now)

There will be an expanded role for volunteers in the bond offering starting in January 2006 If you have questions or want more information about the bond offering, keep checking the website for more details, or contact Jen Heneberry, General Manager at 905.971.5366 or by email at info@positivepowerco-op.com.

Developments in Ontario

– James Murphy

There has been terrific progress over 2005 in developing a thriving wind energy industry in Ontario. As we close the door on 2005, I thought it would be worthwhile to briefly recap some of those important milestones.

Installed Capacity Grows from 15 MW To 320 MW!

Beginning the year with a measly 15 MW of installed capacity, Ontario saw the installation and start of commissioning of over 300 MW of wind turbines by Canadian Hydro Developers (67.5 MW Shelburne), AIM (99 MW Port Burwell), Brascan Power Wind (99 MW Sault Ste. Marie) and EPCOR (39.6 MW Kingsbridge).

An additional total 975 MW of contracts under RFP 2 were announced in November in 2005. For more information on these projects and the upcoming RFP 3 for 200 MW visit www.ontarioelectricityrfp.ca.

Wind Atlas and Landowners Guide

For developers and interested landowners, several impressive new tools became available. The Canadian Wind Energy atlas www.windatlas.ca was brought online early in 2005. The atlas provides users with a good wind prospecting tool. This was followed up by the Ontario Wind Energy Atlas www.ontariowindatlas.ca The latter provides a similar tool with greater resolution and more features specifically for Ontario.

In August, the Ontario Sustainable Energy Association, sponsored by the Canadian Wind Energy Association and the Ontario Federation of Agriculture released the "Ontario Landowners Guide to Wind Energy", an authoritative guide on wind turbines for farmers, landowners and everyone interested in wind power. Co-authored by myself and Paul Gipe this Landowners Guide is essential reading. The guide can be downloaded from www.communitygreenpower.ca.

Standard Offer Contracts

The Ontario Sustainable Energy Association was commissioned by the Ministry of Energy to draft a report on mechanisms that could be used to stimulate the development of wind power in Ontario. The resulting report "Powering Ontario Communities" resulted in the province moving forward to implement Standard Offer Contracts (SOC) for distributed wind projects (under 20 MW) in Ontario.

SOC are modelled after the highly successful renewable energy feed in laws in Germany and Denmark simplify the process of the existing RFP's and ensure equal access of wind developers to government contracts. SOC guarantee a fixed price for a fixed term to project developers and are seen as essential to ensuring that farmers, developers and community groups such as Positive Power are able to develop wind projects.

SOC process has been moved under the umbrella of both the Ontario Energy Board (OEB) and the Ontario Power Authority (OPA). Both the OEB and OPA are reporting back to the Ministry of Energy regarding the steps, issues and necessary changes for the implementation of SOC. We expect further announcement to be made by Spring 2006.

So it's been a busy year and the signs on the horizon are very promising for Ontario. Ontarians are lucky to have so many good resources available at their disposal to help build a thriving wind energy sector in the province. Said the newly minted Energy Minister to a standing ovation at the Canadian Wind Energy Association conference in Toronto this fall "Compared to Germany (which has 17,000 MW of installed wind energy) we have a lot of work to do!" It appears the many successes of 2005 are putting us on that course.

AGM Updates

Positive Power Co-operative's 4th Annual General Meeting was held November 23rd at the offices of the Hamilton Conservation Authority in Ancaster, ON. The meeting started at 6:30, with a welcome from Dave Braden, City of Hamilton councillor for the Flamborough area.

The membership was presented with material from the Annual Report - covering the important milestones that we made this past year. The 2005 Annual Report is available on the PPC website at http://www.positivepowerco-op.com/members/downloads/PPC2005AR.pdf.

Curt Hammond, 2004-2005 Board Chair, made a report on the progress and activities of the Board over the last year. Curt report laid a path to the centerpiece of the evening - the presentation on the community bond offering. The bond offering represents the vehicle by which Positive Power Co-op will fund our next stage of projects and development, begin construction and supply electricity.

Todd Mooney, Director and Chair of Positive Power Co-op's Finance Committee, walked the audience through the bond offering and outlined the process, timelines and dollar figures associated with the community offering. For more details on the offering itself, please see the section in this newsletter on the bond offering.

The business portion of the meeting began with the presentation of the audited financial statements. These were approved. BDO Dunwoody was nominated as the auditors for 2005-2006. This was also approved. No changes to the bylaws were required for this year.

Curt Hammond graciously thanked those Directors that were leaving the Board this year: Don Brown, Sam DeAth, Dan Hall, Mark Lobsinger, Roland Vander Straeten and Ian Wright. The last item of the evening was the election of the Board of Directors for 2005-2006. Three of the 2004-2005 Directors, Tom Brown, Jacqueline McNeilly and Douglas Prest, all renewed their terms, while Curt Hammond and Todd Mooney were at the end of two-year terms, and were standing again for consideration. Three new community leaders were put forth as candidates for the 2005-2006 Board - Blake Laufer, a software developer in Hamilton, Sam Sidawi, an engineer with the Region of Niagara, and Edward Stavin, a relationship manager with Bell Enterprise. The membership voted on the slate of Directors, and the 2005-2006 Board is:

• Tom Brown
• Curt Hammond
• Blake Laufer
• Jacqueline McNeilly
• Todd Mooney
• Douglas Prest
• Sam Sidawi
• Edward Stavin

With the election of the 2005-2006 Board, the business portion of the meeting concluded, and the meeting adjourned. At the Board meetings following the AGM, Curt Hammond was elected Board Chair for a second term, Doug Prest moved into the Vice-Chair role, Todd Mooney was elected Treasurer and Edward Stavin was elected Secretary.

Thanks to everyone that attended the meeting and participated. More meetings will be scheduled in the new year to discuss the bond offering in more detail.

Final Thoughts - A word from a retiring member of the Board of Directors

– Don Brown

What a spirited, well-organized, well-attended and smoothly executed Annual General Meeting we had on November 23! The tastefully appointed conference room at the home of the Hamilton Conservation Authority was carefully chosen to highlight the remarkable progress that our co-operative has achieved this year. The colourful brochure summarizing all the details of the year's activities suitably complemented the agenda and presentations.

What may not have been apparent at the meeting are: the number of meetings; the hours spent in deliberations about what model to use for an investment offering that would be both financially viable and consistent with the values inherent in the mission and vision statements of our co-operative; the time consumed, the distances to overcome, to get one land lease option signed and the second one on the verge of being signed; and the diligence in preparing a sound business plan for two wind project sites. These have been monumental tasks. They were the backdrop to the planning and execution of a highly successful annual meeting.

The bulk of this work was shouldered by our General Manager, Jennifer Heneberry under the leadership of the Chair of the Board of Directors, Curt Hammond. Director Todd Mooney has shepherded us through the process whereby we are now able to confidently launch our bond offering. Ken Baigent, a volunteer, has guided much of the development of our project in Haldimand County. Thanks to all who have worked tirelessly to achieve all that we celebrated on November 23.

As retiring Treasurer I would like to extend a personal thanks to Todd Mooney and Roland Vander Straeten. I owe much of my learning on the job to their mentorship.

Best wishes to the new Board of Directors.

Carpe Diem