Northland Power Inc.

Northland Power Inc.

October 16, 2006 13:42 ET

Northland Power to Build 236 Megawatt Power Plant at Abitibi-Consolidated Mill

THOROLD, ONTARIO--(CCNMatthews - Oct. 16, 2006) - Northland Power Inc. is pleased to announce that its wholly-owned subsidiary, Thorold Co-Gen LP, has signed a long-term contract with the Ontario Power Authority to supply electricity to Ontario consumers from a new combined heat and power plant to be built at the Abitibi-Consolidated Company of Canada recycled newsprint mill in Thorold, Ontario. Under the contract, the plant will supply an annual average capacity of 236 megawatts of electric power to the OPA. The contract was awarded following Northland's successful bid under the Request for Proposals issued by the OPA in April 2006. Construction of the facility is scheduled to begin in the first quarter of 2007, following the completion of all permitting and financing, and full commercial operations and supply of electricity is expected to commence June 2009.

The plant will be a gas-fired co-generation facility producing both electricity and steam. A 170 megawatt industrial gas turbine and associated 95 megawatt steam turbine will generate enough electricity to provide power to the equivalent of 100,000 homes in Ontario. The plant will result in an investment of over $400 million in the Thorold region.

"The Northland/Abitibi project is important to achieving Ontario's long-term energy objectives", said Paul Bradley, Vice President of Electricity Resources at the Ontario Power Authority, the provincial agency charged with ensuring the province has adequate investment to achieve its electricity goals. "The project supplies much needed electricity, it demonstrates the high-efficiency use of resources and it highlights the role that the private sector can play in our energy future."

In addition, the plant will provide electricity and up to 350,000 lbs per hour of steam to the Abitibi-Consolidated mill, for use in its newsprint manufacturing process. The high efficiency of the new plant, which will replace Abitibi-Consolidated's ageing steam boilers, will reduce the mill's production costs to allow it to improve its competitiveness in the market, and help reduce airborne emissions.

"We are extremely pleased that our partnership with Abitibi, and the support of the city of Thorold and Niagara region, will allow us to complete this very exciting project" said John Brace, CEO and President of Northland Power. "The new facility will efficiently and cleanly produce electricity for Ontario and steam for an important industry in the Niagara region. We are also pleased with the leadership shown by the OPA and the Ontario government in working with private power producers to address Ontario's continuing energy needs."

The project will be financed by Northland Power Inc., The Manufacturers Life Insurance Company, Sun Life Assurance Company of Canada, Bank of Montreal, and Northland Power Income Fund.

Northland Power Inc. is a developer, owner, and operator of thermal, wind, and hydro power plants across Canada, and its wholly-owned subsidiary, Northland Power Income Fund Management Inc., is the manager of Northland Power Income Fund, a leading income trust listed on the Toronto Stock Exchange (TSX: NPI.UN and NPI.DB) that invests in power projects in Canada, the United States and Europe. Northland Power Income Fund Management Inc. manages the 126 MW Iroquois Falls and 110 MW Kingston cogeneration plants in Ontario, and the 54 MW Mont Miller wind farm in Quebec owned by Northland Power Income Fund. Northland Power Inc. manages two gas and biomass power plants in Kirkland Lake (138 MW) and Cochrane (42 MW), and has a large portfolio of development projects.

Abitibi-Consolidated's Thorold Division is an integrated manufacturing facility of high quality newsprint from pulp made from 100% recycled fiber. Its over 400,000 tonnes of annual newsprint production is sold across North America. The division employs approximately 400 full time employees.

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