is contemplated that the project will have additional land under lease or option in order to facilitate future expansion. 

APCo executed an asset purchase agreement with a local developer (“Kineticor”) to acquire assets related to two adjacent 10 MW wind energy development projects in Saskatchewan and a further 5 MW was developed by APCo independently. All of the individual projects comprising the Morse wind project were selected by SaskPower in accordance with the SaskPower Green Options Partners Program. The two 10 MW projects were awarded in May 2010 and the 5 MW project was awarded in June 2011. The execution of the PPA pursuant to this program is expected to take place concurrently with the execution of the Interconnection Agreement in late March of 2013. The Environmental Impact Assessment was submitted for the project in mid-2012 and as a result the project was deemed “not a development”. This allows the project to proceed towards the construction phase without the requirement for a full Environmental Assessment. The expected date of operation for the projects is in early 2015. 

The total annual energy production for the Morse wind project is estimated to be 93,000 MW-hrs. The capital cost to construct the Morse wind project is currently estimated to be between $65 million and $70 million, inclusive of acquisition costs. The first year PPA rate is set at $101.98 per MW-hr for the first full year of operations, which APCo expects to occur in 2014, with an annual escalation provision of 2% over the expected 20 year term. 

## Quebec Community Wind Projects 

In December 2010, APCo in partnership with Société en Commandite Val-Éo, a community cooperative with a development project located in the Lac Saint-Jean region of Quebec, and in partnership with the community of Saint-Damase were awarded PPAs for the construction of two wind power projects in the Province of Quebec using ENERCON wind turbines. Both projects will represent phase one in the potential development of a larger second phase. 

## 1. Saint-Damase 

Phase one of the Saint-Damase wind project is located in the local municipality of Saint-Damase which is within the regional municipality of la Matapédia. The project proponents include the Municipality of Saint-Damase and APCo. At the request of the turbine manufacturer, the project has recently gone through a turbine model change, changing from the originally proposed 8 wind turbines (E-101) of 3 MW each to 10 wind turbines (E-92) of 2.35 MW each. The annual energy production is estimated at 78,700 MW-hrs with a total installed capacity of 23.5 MW for the first phase. The second phase of the project would entail the development of an additional 106 MW’s. The permitting and the environmental impact assessment are ongoing and the construction of the first project phase is to begin in the fall of 2013. Commercial operations are expected to commence in late 2014. 

APCo’s interest in the project will not be less than 50%. Final funding of the project will be arranged and announced when all required permitting has been met, and all other pre-construction conditions have been satisfied. Preliminary permitting began in early 2011 and community consultations were conducted in July 2011, March 2012 and September 2012. The project’s social acceptance is strong and there will be no requirement for a public hearing under the auspices of the BAPE. The environmental impact assessment for the project has also been submitted and is under review with provincial ministerial approval anticipated for the third quarter of 2013. 

## 2. Val-Éo 

Phase one of the Val-Éo wind project is located in the local municipality of Saint-Gideon de Grandson, which is within the regional municipality of Lac-Saint-Jean-Est. The project proponents include the Val- Éo wind cooperative formed by community based landowners and APCo. The first 24 MW phase of the project is expected to be comprised of eight wind turbines, producing approximately 66,000 MW-hr annually. Construction of the first 24 MW phase of the project is expected to begin in the fall of 2014 with commercial operations commencing in late 2015. The second phase of the project would entail the development of an additional 106 MW’s. 

APCo’s interest in the project is subject to final negotiations with the Val-Éo community cooperative but, in any event, will not be less 25%. Final funding of the project will be arranged and announced when all required permitting has been secured, and all other pre-construction conditions have been satisfied. Preliminary permitting began in early 2011 and studies of flora and fauna and the public consultation process are ongoing. The submission of the environmental impact study to the Minister of Sustainable Development, Environment, Wildlife and Parks is targeted for the second quarter of 2013. 

