TORONTO - Ontario Power Generation Inc. ("OPG" or the "Company") today reported its financial and operating results for the year ended December 31, 2008. Net income for the year was $88 million compared to net income of $528 million for the year ended December 31, 2007. "OPG's operational performance improved in 2008 with electricity production and gross margin increasing compared to 2007. However, these favourable increases were more than offset by the negative impact that the capital markets had on the market value of the investment funds that have been established for nuclear fixed asset removal and nuclear waste management," said President and CEO Jim Hankinson.

During the fourth quarter of 2008, OPG revised its reporting segments to align with its strategic business unit and reporting structure, and to reflect the manner in which operating decisions are made and performance assessed. A new business segment titled 'Regulated - Nuclear Waste Management' was created, which includes: certain activities associated with the management of used nuclear fuel and low and intermediate level waste; the decommissioning of OPG's nuclear generating stations; and the management of the investment funds established for nuclear fixed asset removal and nuclear waste management ("Nuclear Funds"). OPG's other business segments include Regulated - Nuclear Generation, Regulated - Hydroelectric, Unregulated - Hydroelectric, and Unregulated - Fossil-Fuelled.

Income before interest and income taxes of $1,028 million from OPG's electricity generating segments in 2008 improved significantly compared to income before interest and income taxes of $594 million in 2007. Gross margin increased as a result of the Ontario Energy Board's ("OEB") rate decision for OPG's regulated hydroelectric and nuclear facilities, higher market prices, and higher nuclear and hydroelectric generation.

Total electricity generated during 2008 of 107.8 TWh increased from 2007 production of 105.1 TWh. The increase of 2.7 TWh was primarily due to higher generation from OPG's hydroelectric and nuclear stations. Higher hydroelectric production was primarily due to increased water flows and excellent station performance. Higher generation at the nuclear stations was mainly a result of improved reliability at the Pickering A and Darlington nuclear generating stations. Generation at the fossil-fuelled stations was lower primarily as a result of the higher production from OPG's nuclear and hydroelectric generating stations, and lower market demand.

The reliability of OPG's nuclear stations improved during 2008 due to a reduction in outage days at the Darlington and Pickering A generating stations. The Darlington station continued to achieve exceptional reliability with a unit capability factor of 94.5 per cent in 2008. The availability of OPG's regulated and unregulated hydroelectric generating stations remained at historically high levels. The reliability of OPG's fossil stations decreased slightly as a result of forced and extended outages at the Lambton and Atikokan generating stations.

A loss before interest and income taxes of $670 million in the Regulated

- Nuclear Waste Management segment in 2008 was significantly higher than the $26 million loss before interest and income taxes in 2007. The loss before interest and income taxes in 2008 primarily resulted from lower returns on the Decommissioning Fund caused by significant reductions in the trading levels of global financial markets, which reduced the current market value of the fund investments. These losses were partially mitigated by the establishment by the OEB of a regulatory variance account associated with the stations leased to Bruce Power, since a portion of the losses from the Nuclear Funds are related to these stations.

On December 2, 2008, the OEB issued new payment amounts for production from OPG's regulated hydroelectric and nuclear facilities. The new regulated prices are $36.66/MWh and $54.98/MWh for OPG's regulated hydroelectric and nuclear facilities, respectively. The OEB determined that the appropriate rate of return on equity for OPG's regulated facilities for the purposes of determining the new payment amounts is 8.65 percent. This rate is higher than the 5 percent rate of return on equity established for the period up to April 1, 2008. The new prices apply retrospectively to production from April 1, 2008.