Our 2007 Environmental Performance Report, which is our 8th annual report, highlights our accomplishments, our ongoing commitment to the environment, our focus on environmental efforts and opportunities for future improvements. Building on our environmental planning process and work in previous years, we continued focusing efforts towards eight corporate goals: Safety, Environment, Finance and Governance, Growth, Operational Excellence, Lower Churchill, People and Community. While many of these goals focus on specific aspects of our business, one goal overlaps and impacts the entire company – “To Be an Environmental Leader.” Over the past decade, public concern around environmental issues related to climate change and associated government and industry actions have grown. In September 2007, our Shareholder, the Government of Newfoundland and Labrador released its long-term energy policy direction through the Energy Plan - Focusing Our Energy. This progressive document lays out a strong vision for the province focused on the maximization of its energy resources. It also sets a policy framework for environmental leadership, energy conservation, security of energy supply and investment in alternative energy sources. The province’s Energy Plan specifically outlines plans to address environmental concerns related to the Holyrood Thermal Generating Station. The long-term plan is to replace the energy provided by the plant with electricity from the lower Churchill development through a transmission link to the island. In the event the Lower Churchill Project does not proceed, scrubbers and precipitators will be installed at the plant. This is a very positive step for the company, the community and the province. As concern for the environment grows, so too does the need for clean, renewable and cost-efficient energy sources. In 2007, the Lower Churchill Project advanced on multiple fronts, and a comprehensive planning schedule is in place leading to first commercial power in 2015. Combined with the existing Churchill Falls Generating Station, the three developments could produce the electrical equivalent of 225,000 barrels of oil a day - forever. This much needed resource of clean, stable, renewable energy will allow Newfoundland and Labrador to meet its own domestic and industrial needs, with enough power remaining to export to other jurisdictions where the demand for clean energy continues to grow. Increasing wind generation will also augment our renewable energy capacity and help reduce our reliance on thermal generation. In 2007, we awarded two 27 megawatt (MW) wind power contracts in the communities of St. Lawrence and Fermeuse. Together, these projects, when on stream in late 2008, will displace 300,000 barrels of oil annually at the Holyrood plant, reduce emissions by almost 141,000 tonnes and generate green power for 14,000 homes on the island. We also made progress on a research and development project for an isolated wind-hydrogen-diesel generation solution in Ramea on the South Coast of Newfoundland. This unique energy project has the potential to significantly reduce Hydro’s reliance on diesel generation and provide clean, renewable energy to isolated customers. Hydro is developing a viable commercial solution which can be deployed to other isolated diesel communities in the province and potentially around the world. Throughout 2007, we continued to strengthen our focus on energy conservation. Working with government, Newfoundland Power, municipalities and other stakeholders, we are developing a coordinated approach for conservation education and awareness. Our energy conservation initiatives implemented in 2007 have the potential to save over one million kilowatt hours of electricity, displace approximately 1,160 barrels of oil burned at the Holyrood plant and cut almost 560 tonnes of greenhouse gas emission. This is in addition to other savings realized from our energy conservation programs initiated in previous years. Hydro is committed to conducting its operations in full compliance with all provincial environmental protection regulations and will continue to work closely with our Shareholder to deliver electricity in a safe, responsible manner to minimize the impact to the environment. Our environmental performance continues to improve; however, there is still room for progress. I am proud of the environmental successes we have achieved in 2007 and grateful to our dedicated team of employees for the positive contribution they have made to help protect our environment. I encourage you to read this year’s report and welcome your feedback. Ed Martin President and CEO Copyright © 2008 NL Hydro, All rights reserved.