News Releases 

EPCOR Power L.P. announces quarterly distribution and provides update on recent events

Edmonton, Alberta - December 4, 2006 (TSX: EP.UN) - The Board of Directors of EPCOR Power Services Ltd., the general partner of EPCOR Power L.P. (TSX: EP.UN) (the "Partnership"), declared a cash distribution of $0.63 per limited partnership unit for the quarter ending December 31, 2006. The distribution is payable on January 29, 2007 to unitholders of record at the close of business on December 29, 2006. This is the 38th consecutive distribution that has either met or exceeded previous distributions paid by the Partnership since its inception in mid-1997.

The Partnership also announced an update on recent events.

On October 31, 2006, Canada's Minister of Finance proposed tax measures related to publicly traded income trusts and partnerships. In broad terms, these measures, when implemented, would result in the application of a tax to the Partnership similar to that on corporations and would treat a portion of cash distributions received by unitholders similar to taxable dividends for tax purposes. Under these measures, the Partnership would be classified as a specified investment flow-through entity ("SIFT").

As proposed, the tax measures become effective as of January 1, 2011 for the Partnership. If such proposals are enacted, it is estimated that the impact on a taxable and tax deferred investor receiving a $100 distribution in 2011, assuming that, as in 2005, $59 of the distribution income is subject to the proposed tax measures and $41 of the distribution is a return of capital that is not subject to the proposed tax measures, could be as follows:

In connection with the announcement of the proposed tax measures, the Ministry of Finance published a Backgrounder with additional details on the proposed tax measures. Reference is made to the Backgrounder for additional details of the proposed tax measures. The Backgrounder is not legislation and therefore provides only a general description of the proposed tax measures. The Partnership's unitholders should consult their own tax advisors regarding the implications of the proposed tax measures on their investment holdings.

On November 1, 2006, the Partnership announced the close of the acquisition of Primary Energy Ventures ("PEV"). The Partnership had previously disclosed that it expected the permanent financing for the PEV acquisition to consist of an offering of units representing approximately 70 per cent of the purchase price with the remaining 30 per cent financed with debt and the assumption of leases. Since the government's announcement on October 31, 2006, financial markets have not been conducive to the Partnership issuing new limited partnership units to finance the PEV acquisition. Furthermore, until draft legislation is released in respect of the proposed tax measures, it is not clear what restrictions, if any, the Department of Finance may place on new equity or other capital offerings of existing SIFTs. In light of the government announcement, the Partnership is continuing to reconsider its long-term financing alternatives which include alternatives such as increasing leverage and making other changes to its capital structure. As a result, the Partnership's previously announced plan for permanent financing of the PEV acquisition will likely change.

The Partnership plans to delay its permanent financing on the PEV acquisition until 2007 when further clarity on the Department of Finance's proposed tax treatment of SIFTs and further stabilization of relevant financial markets is expected. The Partnership has bridge and extendible credit facilities in place that were used to fund the acquisition of PEV. These four facilities provided by three Canadian banks include U.S. $186 million of the bridge loan expiring in October, 2007 and U.S. $44 million of the bridge loan expiring in October, 2009, while the remainder of the acquisition financing is extendible beyond its current maturity in the fall of 2009.

Changes in assumptions regarding the timing of an equity offering, the amount of debt and equity issued, the equity price and the cost of debt have a significant impact on the potential dilution or accretion of cash available for distributions per unit from the PEV acquisition.

In earlier disclosures including the August 14, 2006 announcement of the pending transaction to acquire PEV, the Partnership had indicated that, "based on current market and operating conditions, the transaction is expected to be accretive to the Partnership's cash available for distribution by approximately CDN $0.06 per unit per annum". (See "Non-GAAP Measures" below). The Partnership has now determined that the forecast accretion from the acquisition of PEV will likely not materialize in 2007 due to a combination of recent changes in: (i) the Partnership's unit pricing due to the government's tax announcement and the financing implications resulting therefrom, (ii) forecasts of specific commodity market prices, (iii) timing of commercial negotiations with customers, and (iv) the Partnership's expectations of the performance of PEV's investment in Primary Energy Recycling Holdings LLC ("PERH").

Integration of the PEV operations by the Partnership has progressed well with all key PEV operational personnel continuing their employment with the organization. PEV's high quality assets, located in attractive power markets, complement the Partnership's existing asset base. The Partnership remains committed to operational excellence at all of its facilities as well as the sustainment of stable cash distributions to its unitholders.

Non-GAAP Measures

Cash available for distributions and cash available for distributions per unit are not defined financial measures according to Canadian generally accepted accounting principles ("GAAP") and do not have standardized meanings prescribed by GAAP. Therefore, these measures may not be comparable to similar measures presented by other enterprises. The Partnership uses cash available for distributions as a performance measure of the Partnership's ability over the long term to fund unitholder distributions.

About EPCOR Power L.P.

Established in 1997, EPCOR Power L.P. is a limited partnership organized under the laws of the Province of Ontario. The Partnership wholly owns and operates a portfolio of 20 power generation assets in Canada and the United States with total net generating capacity of 1,311 megawatts and more than two million pounds per hour of thermal energy. The Partnership also owns a 15.4 per cent interest in PERH. PERH wholly owns four recycled energy assets in the United States with an aggregate generation capacity of 284 megawatts and nearly two million pounds per hour of thermal energy, and holds a 50 per cent interest in a pulverized coal facility. Primary Energy Ventures LLC, a wholly owned subsidiary of the Partnership, manages and operates these facilities for PERH. The Partnership's web-site is http://www.epcorpowerlp.ca/.

Forward-looking Information

Certain information in this news release is forward-looking and related to anticipated financial performance, events and strategies. When used in this context, words such as "will", "anticipate", "believe", "plan", "intend", "target" and "expect" or similar words suggest future outcomes. By their nature, such statements are subject to significant risks, assumptions and uncertainties, which could cause the Partnership's actual results and experience to be materially different than the anticipated results. Such risks, assumptions and uncertainties include, but are not limited to, the ability of the Partnership to successfully integrate and realize the financial benefits of the Primary Energy Ventures LLC acquisition, the ability of the Partnership to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits, estimates respecting the availability and price of energy commodities, plant availability, waste heat availability and water flows, regulatory and government decisions, the renewal and terms of power purchase contracts, competitive factors in the power industry, current and future economic conditions in North America and the performance of contractors and suppliers.

Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements. Except as required by law, the Partnership disclaims any intention and assumes no obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason.

For more information, please contact:

Media inquiries: Michael Gibbs - (780) 412-8877
Shareholder and analyst inquiries: Randy Mah - (780) 412-4297 | toll free - (866) 896-4636