City of Port Colborne And Canadian Niagara Power Complete Lease Agreement for Port Colborne Hydro

PORT COLBORNE, ON - -- Canadian Niagara Power Company Limited and the City of Port Colborne, have announced, the signing of a "Lease Agreement" whereby the City will lease the electricity distribution business of Port Colborne Hydro Inc. to Canadian Niagara Power Inc. (CNPI). A Letter of Intent between the parties was previously announced in January 2001. Completion of the deal is subject to Ontario Energy Board review and approval.

Under the terms of the 10-year agreement, the City will receive approximately $1.5 million per year, paid in monthly lease payments from CNPI. CNPI will be responsible for operating Port Colborne Hydro and will be committed to specific performance requirements including the continuance of a local customer service presence in Port Colborne. CNPI will finance and own all capital additions. The total value of the transaction is approximately $15.7 million. In exchange, CNPI will receive all revenues from the business and will hold an option to purchase the business for $6.9 million at the end of the 10-year term. The existing Port Colborne Hydro Inc. employees will become employees of CNPI. CNPI has also reached an agreement with the International Brotherhood of Electrical Workers, Local 636, finalizing the terms and conditions of the employee transfers. Port Colborne Hydro serves approximately 9,100 customers within the City of Port Colborne.

Mayor Vance Badawey stated, "We are extremely happy to have negotiated an agreement with Canadian Niagara Power. This lease is the first of its kind in the Province of Ontario, enabling both the City of Port Colborne, and other communities throughout the Province that may follow in the same direction, to best meet the needs of our customers under a deregulated market. We look forward to working closely with CNP in furthering the aggressive approach Port Colborne continues to take in offering, to all sectors, a community where business and lifestyle are a perfect match."

According to Mardon J. Erbland, President and CEO, "Canadian Niagara Power is delighted that the City of Port Colborne has chosen CNP as its business partner. We will be working hard to ensure that this agreement represents the beginning of a long and mutually beneficial relationship between the City of Port Colborne and Canadian Niagara Power."

CNPI is a wholly owned subsidiary of Canadian Niagara Power Company Limited, which is owned equally by Fortis Inc. and Niagara Mohawk Holdings, Inc. The Company is headquartered in Fort Erie, Ontario. Canadian Niagara Power was founded in 1892. Fortis Inc. is a diversified services company whose principal assets are electric utility companies. Fortis Inc. is listed on the Toronto Stock Exchange and trades under the ticker symbol FTS. Niagara Mohawk is an investor-owned utility based in New York State and trades on the New York Stock Exchange under the ticker symbol NMK.