In Saskatchewan, we've always recognized the power of wind. Before rural electrification, windmills were found in farmyards across the province. Today, we've come full circle. Advanced engineering and technology are allowing SaskPower to benefit on a grand scale from one of earth's oldest forms of energy. Positioned in the hills approximately 25 kilometres southeast of Swift Current, the new 150-megawatt Centennial Wind Power Facility is currently Canada's largest operating wind facility. With 83 turbines, it can produce enough electricity to serve about 64,000 Saskatchewan homes. In Saskatchewan's centennial year, this $272-million investment in renewable energy is a fitting tribute to the ingenuity of our pioneers.

Highlights

• Canada's largest operating wind facility — the 150-megawatt Centennial Wind Power Facility — begins producing electricity.
• SaskPower receives the province's first-ever Association of Professional Engineers and Geoscientists Environmental Excellence Award for its commitment to developing wind energy.
• Major feasibility study announced on world's first near-zero emissions pulverized coal plant.
• Research begins on viability of new polygeneration facility.
• An international mercury capture project continues at Poplar River Power Station.
• Poplar River Power Station Unit #2 upgrade underway, leading to increased efficiency and reduced particulate emissions.
• A three-year major overhaul is concluded at Nipawin Hydroelectric Station, a major source of renewable energy.
• A turbine and generator refurbishment is completed at Shand Power Station.
• A power purchase agreement for a 5-megawatt heat recovery project is signed with Alliance Pipeline as part of Phase I of the Environmentally Preferred Power Program.
• Proposals totaling a potential 241 megawatts are submitted to Phase II of the Environmentally Preferred Power Program.
• An Energy Performance Contracting service alliance is renewed with Honeywell for an additional five years.
• A province-wide power savings campaign focuses on helping customers use appliances more efficiently.
• SaskPower Shand Greenhouse marks Saskatchewan's centennial by growing and distributing approximately 81,000 Western red lilies.
• The Organic Lands Database tracks landowners who have chosen not to have herbicides used on power line rights-of-way near their properties.
• The Corporation's Environmental Management System is re-registered under the demanding ISO 14001 standard.
• SaskPower's Environmental Policy undergoes its annual review and is enhanced.
• The Corporation and its employees support a number of education-oriented environmental initiatives, including the Destination Conservation Saskatchewan program and the Energy and Our Environment school presentation.

President's message

In late 2005, Canada hosted the United Nations Climate Change Conference, the largest such meeting since the historic Kyoto Climate Conference in 1997. At this most recent gathering, a five-year program was established to identify impacts and measures to adapt to climate change. Even though Canada's level of commitment to the Kyoto Protocol remains uncertain at this time, we do know that tightened regulations emerging from these types of discussions are part of the new environmental landscape.

As a result, when people ask me what challenges lie ahead for SaskPower, I find it easy to respond. One of our most visible tasks is to continue preparing to deal with our aging infrastructure while balancing the need to respond to emerging environmental requirements. This is especially true as it relates to climate change.

The scope and uncertainty surrounding this area is new terrain for much of the current generation of SaskPower employees. Yet my colleagues talk about our future supply of electricity with an air of excitement. Instead of viewing the planning, engineering, building and upgrading of facilities as onerous, they view this assignment as a once-in-a-lifetime opportunity. They see it as a chance to place our company at the leading edge of technology that can help reduce the environmental impact associated with the production of electricity.

Of course, in looking at the replacement or refurbishment of virtually our entire generating fleet over the next 25-30 years, our quest for environmental excellence must be balanced with the other core commitments we make to customers in our mission statement: reliability, safety and affordability. These have been key requirements when considering additions to our Green Power Portfolio (GPP) — which is designed to meet Saskatchewan's new electricity needs until 2010 through the use of environmentally friendly sources that do not create new greenhouse gas emissions. Recent additions have demonstrated that simultaneously meeting the demanding criteria of the GPP and our corporate mission is possible.

This year, SaskPower became a leader in Canada. When SaskPower International's 150-megawatt Centennial Wind Power Facility began feeding electricity into our grid, it became the largest operating wind facility in the country. Soon, clean coal technology may make us a leader in the world. The Corporation will have to choose its next large-scale generating facility in the next 12-18 months, and we have announced major research on a near-zero emissions coal plant that could be built in southern Saskatchewan. In addition to an extensive investigation into polygeneration, SaskPower will also be taking a close look at a variety of other solutions that include demand side management, hydroelectricity, other renewables, cogeneration, purchased power, imports and nuclear power.

It takes a special culture to effectively respond to the prospect of major change with innovation and enthusiasm. A major source of ongoing guidance for employees and those who work on behalf of SaskPower remains our corporate Environmental Policy. Each year, in accordance with our Environmental Management System, it is reviewed and submitted for approval by the Corporation's Executive; Environment, Occupational Health and Safety Committee of the Board of Directors; and the Board of Directors. As a result of the assessment in 2005, the language of the policy has been streamlined to better reflect updated corporate balanced scorecard indicators that support the strategic direction of promoting environmental stewardship.

This type of regular review and action is important not only for SaskPower, but also for all of our stakeholders. It contributes to the type of accountability and transparency that can help employees, customers, partners and regulatory agencies collectively reduce our impact on the environment we share.

As the coming months and years unfold, I invite you to join us in striving to create an environmental legacy of which we can all be proud.

Pat Youzwa
President and Chief Executive Officer

Our performance & policy

Engaging in two-way dialogue with our customers and community reflects a key corporate value at SaskPower - displaying openness in everything we do. The Corporation consults with a wide variety of stakeholders on a diverse range of environmental issues.

SaskPower reports on environmental activities in such a way that our efforts can be judged against past performance, and also compared on an equal footing with efforts of corporations in other jurisdictions.

• We report annually to our customers, shareholder and stakeholders through this Environment Report.
• We file an annual Environmental Commitment and Responsibility Program report with the CEA.
• We participate in the compilation of the Saskatchewan State of the Environment Report.
• We report annual greenhouse gas emissions to Statistics Canada.
• We report corporate environmental expenditures to Statistics Canada.

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