Delivering value - that is the collective mission of the Hydro Ottawa Group of Companies and all of its employees. Value in the service we provide to our customers, value to the community in which we work, and ultimately, value to our shareholder.

Pierre Richard, Q.C. Chair, Board of Directors Hydro Ottawa Holding Inc. and Hydro Ottawa Limited	Rosemarie T. Leclair President and Chief Executive Officer Hydro Ottawa Holding Inc.

More than any other factor, it is this focus on providing value to all of our stakeholders that has enabled Hydro Ottawa to deliver solid results for several consecutive years, and once again in 2007.

The company achieved superior financial performance in 2007 with a consolidated net income of $27.291 million. This resulted in the declaration and payment of a dividend of $16.375 million to the City of Ottawa in April 2008, exceeding forecasts by more than $2 million. In total, Hydro Ottawa has paid more than $40 million in dividends and increased its shareholder value by nearly $50 million in the past three years.

As part of our focus on delivering long-term value to our shareholder, a decision was made in 2007 to sell Telecom Ottawa in order to focus on Hydro Ottawa’s core business areas of electricity distribution, generation and related services. Telecom Ottawa has achieved outstanding performance in recent years, making the company an attractive investment for others in the sector. As such, we were able to achieve a healthy return on our investments in the City’s broadband infrastructure, while strengthening our focus on lower risk business areas that will continue to enhance our ability to deliver stable, reliable long-term returns.

No less important is the value we provide to our customers. Hydro Ottawa Limited has consistently maintained one of the most reliable electricity distribution networks in Ontario, ensuring safe and reliable electricity service to our 287,000 customers, while keeping our rates low. Over the past three years, the average Hydro Ottawa customer has experienced only one outage every 17 months, and enjoyed uninterrupted electricity service 99.988 percent of the time, excluding outages due to a loss of supply from the provincial grid – a record that compares favourably not just in Ontario, but across the country. We invested $41 million in system reliability in 2007 to ensure this industry-leading record continues.

At the same time, Ontario Energy Board comparisons have consistently shown that Hydro Ottawa is one of the most efficient electricity distributors in the province, with operating, maintenance and administration costs much lower than the provincial average on a per customer basis.

As a company that provides essential services, we know that timely information and effective customer service are as important to our customers as a reliable electricity supply. In 2007, we increased our communication with customers about planned work in their neighbourhoods, and about outages when they do occur. We also increased our focus on resolving customer issues the first time they call us, making Hydro Ottawa one of a very few utilities across the country with a systematic focus on first call resolution.

These efforts are delivering results. A 2007 J.D. Power & Associates study of residential customer satisfaction ranked Hydro Ottawa second nationally among medium-sized utilities, and second among all utilities in Ontario.

Finally, as a community asset, the Hydro Ottawa Group of Companies is focused on delivering value to our community, as a responsible and engaged corporate citizen. One way we are doing that is by helping our community to achieve its environmental objectives. In 2007, Energy Ottawa helped its customers to achieve 5.6 gigawatt hours of energy savings, and reduce their greenhouse gas emissions by 5,000 tonnes, including a 2,200 tonne reduction from projects undertaken on City of Ottawa facilities – the equivalent of taking more than 430 cars off our city’s streets. Meanwhile, Hydro Ottawa’s Conservation and Demand Management initiatives have achieved 75.2 million kilowatt hours in savings over the past three years, and the Trail Road Landfill Gas to Energy plant, which began production in January 2007, is turning millions of tonnes of previously wasted landfill gas into clean, renewable energy.

From environmental stewardship, helping our customers cut their energy consumption, to social responsibility, helping families to meet their energy needs through the Winter Warmth Fund; from record employee contributions to the United Way, to corporate matching funds that helped provide a healthy breakfast to 8,000 students through the Ottawa School Breakfast Program; from increasing our green energy generation capacity by 35 percent, to presentations in schools that taught nearly 20,000 elementary students about electricity safety and conservation last year, Hydro Ottawa is delivering value to its community, and contributing to Ottawa’s quality of life.

This commitment to delivering value led to Hydro Ottawa being recognized with a number of awards in 2007. We were particularly honoured to have our performance acknowledged recently by our peers in the electricity industry, when Hydro Ottawa Limited was recognized as one of the best-run utilities in the province, winning the Electricity Distributors Association’s prestigious Local Distribution Company Performance Excellence Award, which recognizes excellence in five categories – Occupational Health and Safety, Operational Excellence, Financial Operations, Conservation and Demand Management, and Contribution to the Community.

Each of these achievements is rooted in a single-minded focus on delivering value to our stakeholders. While our operating environment has continuously evolved since our company was formed more than seven years ago, our focus remained the same.

We feel confident in saying that this is the focus not only of the Board and the executive management, but collectively of the nearly 600 employees whose daily efforts have led to several consecutive years of strong financial and operational performance for the Hydro Ottawa Group of Companies.

Working closely with our shareholder, we are developing a strategic plan for the Hydro Ottawa Group of Companies that will ensure this trend of solid performance and value creation continues in the coming years. While the future will bring many opportunities, we will continue to have one single purpose – delivering value, for our shareholder, our customers, and the community we serve.

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