Canadian Hydro's CG&E To Build 25 MW Power Plant

Canadian Gas & Electric Inc. ("CG&E"), a wholly owned subsidiary of Canadian Hydro Developers, Inc. (TSE:KHD), and Canadian Forest Products Ltd. ("Canfor") have entered into a definitive agreement to construct a 25 megawatt wood residue fueled power facility adjacent to Canfor's Grande Prairie, Alberta lumber mill. The facility will produce electrical and steam energy from wood waste that is currently being incinerated. Canfor will utilize approximately 40% of the produced energy at their Alberta operations, with the balance being available for sale to other customers and the spot market.

"This showcase facility will provide a long term stable energy supply to Canfor for its Alberta operations. The project will have a major economic impact on the City of Grande Prairie through the creation of over 20 new temporary and permanent jobs for its residents. There is also the potential to develop a unique opportunity to provide district heating for local buildings", says CG&E President Guido Bachmann.

"Canfor has made significant progress in minimizing the wood waste generated at our facilities while we continue to research value added applications for its use," said Chris Andersen, General Manager Alberta and Peace Region. "This project eliminates the cost to Canfor of disposing of the wood waste and it creates value for the company in the form of needed energy which will help further reduce and stabilize our operating costs."

CG&E is currently applying for permits, ordering equipment and starting some preliminary construction work. Subject to financing, the major construction activity will take place during 2002 with an anticipated completion date late in 2002.