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(GREAT LAKES POWER INC. LOGO)

ANNUAL INFORMATION FORM
May 20, 2003

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TABLE OF CONTENTS

|                                                                                      |  |  |    | 
|------------------------------------------------------------------------------------- |  |  | -- | 
|THE COMPANY                                                                           |  |  | 1  | 
|CORPORATE PROFILE                                                                     |  |  | 1  | 
|SELECTED FINANCIAL AND OPERATING INFORMATION                                          |  |  | 1  | 
|RECENT DEVELOPMENTS                                                                   |  |  | 2  | 
|THE CORPORATIONS POWER BUSINESS                                                      |  |  | 3  | 
|OTHER BUSINESS OPERATIONS                                                             |  |  | 9  | 
|POWER GENERATION OUTLOOK                                                              |  |  | 9  | 
|POWER GENERATING FACILITIES                                                           |  |  | 13 | 
|INVESTMENT ACTIVITIES                                                                 |  |  | 14 | 
|FINANCING ARRANGEMENTS                                                                |  |  | 15 | 
|ENVIRONMENTAL MANAGEMENT                                                              |  |  | 15 | 
|CAPITAL BASE AND DIVIDEND POLICY                                                      |  |  | 17 | 
|MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  |  | 17 | 
|CONSOLIDATED FINANCIAL INFORMATION                                                    |  |  | 18 | 
|QUARTERLY OPERATING RESULTS                                                           |  |  | 19 | 
|DIRECTORS AND OFFICERS                                                                |  |  | 19 | 
|SUBSIDIARIES                                                                          |  |  | 20 | 
|ADDITIONAL INFORMATION                                                                |  |  | 21 | 





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(GREAT LAKES POWER INC. LOGO)

THE COMPANY

Great Lakes Power Inc. was formed on March 2, 2001 by the amalgamation under
the Business Corporations Act(Ontario) of Great Lakes Power Inc. and a
subsidiary of Brascan Corporation (Brascan), pursuant to a going-private
transaction approved by the shareholders of Great Lakes Power Inc. on February
28, 2001. References to the Company or Great Lakes include Great Lakes
Power Inc. and its predecessors and subsidiaries unless otherwise indicated or
unless the context otherwise requires.

Great Lakes is wholly owned, directly and indirectly, by Brascan, a company
operating in the real estate, power generation and financial sectors, with
investments in the resource sector. Brascans common shares are listed on the
Toronto and New York stock exchanges.

The registered and principal office of Great Lakes is BCE Place, 181 Bay
Street, Suite 300, P.O. Box 762, Toronto, Ontario M5J 2T3. Unless otherwise
indicated, the information appearing herein is stated as at December 31, 2002
and all dollar amounts are in Canadian dollars.

CORPORATE PROFILE

The primary business of Great Lakes and its subsidiaries is the development and
management of electricity generating facilities in Canada and the United
States. These operations employed approximately 320 people at April 30, 2003.
Great Lakes also holds a portfolio of financial investments.

Great Lakes is an independent electric power company with operations in Canada
and the United States. The company operates 39 power generating stations with a
combined generating capacity of 1,684 megawatts (MW). Great Lakes is also
involved in power transmission and distribution.

Great Lakes conducts its power generating operations primarily in Ontario,
Quebec and the northeastern United States, with other power operations in
British Columbia and Louisiana. These operations are mainly wholly owned,
either directly or through the Great Lakes Hydro Income Fund (Income Fund),
in which the company owns a 50% interest.

SELECTED FINANCIAL AND OPERATING INFORMATION

The following table sets forth selected financial and operating information
with respect to Great Lakes as at and for the five years ended December 31,
2002:

|                                           |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|------------------------------------------ |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- |  |  | - | ----- |  |  | - | ----- | 
|millions, except per share amounts         |  | 2002 |       | 2001 |  | 2000 |       | 1999 |  | 1998
|                                           |  |      |       |      |  |      |       |      |  |     
|Financial position                         |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|Total assets                               |  | $    | 3,500 |      |  | $    | 2,930 |      |  | $    | 2,642 |  |  | $ | 2,405 |  |  | $ | 2,256 | 
|Debt                                       |  |      | 1,498 |      |  |      | 1,152 |      |  |      | 1,002 |  |  |   | 890   |  |  |   | 816   | 
|Capital base                               |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|Convertible debentures                     |  |      | 248   |      |  |      | 248   |      |  |      | 248   |  |  |   | 248   |  |  |   | 248   | 
|Common shares                              |  |      | 1,126 |      |  |      | 1,051 |      |  |      | 1,001 |  |  |   | 968   |  |  |   | 936   | 
|                                           |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|                                           |  |      | 1,374 |      |  |      | 1,299 |      |  |      | 1,249 |  |  |   | 1,216 |  |  |   | 1,184 | 
|Revenue and net income                     |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|Power revenues                             |  | $    | 340   |      |  | $    | 270   |      |  | $    | 246   |  |  | $ | 188   |  |  | $ | 191   | 
|Net income                                 |  |      | 167   |      |  |      | 131   |      |  |      | 116   |  |  |   | 113   |  |  |   | 104   | 
|Net income per common share (1)            |  | $    | 1.32  |      |  | $    | 1.04  |      |  | $    | 0.92  |  |  | $ | 0.90  |  |  | $ | 0.83  | 
|Dividends per common share                 |  |      | 0.64  |      |  |      | 0.64  |      |  |      | 0.64  |  |  |   | 0.64  |  |  |   | 0.64  | 
|                                           |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|Operating results                          |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|Installed capacity (megawatts) (2, 4)      |  |      | 1,636 |      |  |      | 991   |      |  |      | 905   |  |  |   | 899   |  |  |   | 659   | 
|Electricity generation (gigawatt hours)(3) |  |      | 5,584 |      |  |      | 3,959 |      |  |      | 4,003 |  |  |   | 4,222 |  |  |   | 2,361 | 
|                                           |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 



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|(1) |  | Fully diluted                                                                                                                                                                      
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | At 100%                                                                                                                                                                            
|   
|(3) |  | Reflects proportionate ownership                                                                                                                                                   
|   
|(4) |  | Following the completion of two new hydroelectric generating stations
during April and May 2003, the installed capacity of the Companys generating
stations increased to 1,684 MW.

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Over the past five years, Great Lakes has not incurred any extraordinary income
or expense items, nor has it made any acquisitions requiring full consolidation
of results, other than the following: Hydro-Pontiac Inc. (Pontiac Power),
which was acquired in December 1996; and the Income Fund, in which 40% of the
units were acquired in 1999 and a further 10% in 2000.

Summary information on the Companys power operations as at April 30, 2003 is
shown below:

|                          |                               |  |            |    |            |  |           |    |  |  |             |     | 
|------------------------- | ----------------------------- |  | ---------- | -- | ---------- |  | --------- | -- |  |  | ----------- | --- | 
|                          |                               |  | Generating |    | Generating |  | Installed
|                          |                               |  | Stations   |    | Units      |  | Capacity 
|                          |                               |  |            |    |            |  |          
|                          |                               |  |            |    |            |  |           |    |  |  | (megawatts)
|Ontario                   |                               |  |            |    |            |  |           |    |  |  |             |    
|                          | Great Lakes Power (1)         |  |            | 12 |            |  |           | 21 |  |  |             | 349 | 
|                          | Mississagi Power              |  |            | 4  |            |  |           | 8  |  |  |             | 488 | 
|                          | Valerie Falls Power           |  |            | 1  |            |  |           | 2  |  |  |             | 10  | 
|                          | Lake Superior Power           |  |            | 1  |            |  |           | 3  |  |  |             | 110 | 
|                          |                               |  |            |    |            |  |           |    |  |  |             |     | 
|                          |                               |  | 18         |    |            |  | 34        |    |  |  | 957         |    
|Quebec                    |                               |  |            |    |            |  |           |    |  |  |             |    
|                          | Lièvre River Power            |  |            | 3  |            |  |           | 10 |  |  |             | 238 | 
|                          | Pontiac Power                 |  |            | 2  |            |  |           | 7  |  |  |             | 28  | 
|                          |                               |  |            |    |            |  |           |    |  |  |             |     | 
|                          |                               |  | 5          |    |            |  | 17        |    |  |  | 266         |    
|Northeast  United States |                               |  |            |    |            |  |           |    |  |  |             |    
|                          | Maine Power                   |  |            | 6  |            |  |           | 31 |  |  |             | 126 | 
|                          | New Hampshire Power           |  |            | 6  |            |  |           | 21 |  |  |             | 31  | 
|                          |                               |  |            |    |            |  |           |    |  |  |             |     | 
|                          |                               |  | 12         |    |            |  | 52        |    |  |  | 157         |    
|Other Power Operations    |                               |  |            |    |            |  |           |    |  |  |             |    
|                          | Powell River Energy           |  |            | 2  |            |  |           | 7  |  |  |             | 82  | 
|                          | Pingston Creek (2)            |  |            | 1  |            |  |           | 2  |  |  |             | 30  | 
|                          | Louisiana HydroElectric Power |  |            | 1  |            |  |           | 8  |  |  |             | 192 | 
|                          |                               |  |            |    |            |  |           |    |  |  |             |     | 
|                          |                               |  | 4          |    |            |  | 17        |    |  |  | 304         |    
|                          |                               |  |            |    |            |  |           |    |  |  |             |     | 
|Total                     |                               |  | 39         |    |            |  | 120       |    |  |  | 1,684       |    
|                          |                               |  |            |    |            |  |           |    |  |  |             |     | 



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|(1) |  | Reflects commercial operation of the Robert A. Dunford
Generating Station in April 2003.
|--- |  | ----------------------------------------------------------------------------------------
|   
|(2) |  | Reflects substantial
completion of the Pingston Creek Generating Station in April
2003. 

All the Companys power operations listed above consist of hydroelectric
generating facilities except for the Lake Superior Power cogeneration plant.

RECENT DEVELOPMENTS

The Companys primary emphasis since 1990 has been the development and
expansion of its power generating business. In 1992, the Companys name was
changed from Great Lakes Group Inc. to its present name, Great Lakes Power
Inc., to reflect this business emphasis. The following is a summary of recent
developments since January 1, 2000.

In December 2000, the Companys major shareholder, Brascan, announced a going
private transaction for Great Lakes, which was approved by the Companys
shareholders at a Special Meeting held on February 28, 2001. Pursuant to this
offer, Brascan acquired in February 2001 the outstanding 4.3 million publicly
held common shares of Great Lakes in exchange for approximately $250,000 in
cash and 3.9 million Class A Limited Voting Shares of Brascan. The successor
private company established on March 2, 2001 carries on the affairs of the
Company under the name Great Lakes Power Inc. As a result of this transaction,
the Company is no longer listed on the Toronto Stock Exchange or on any other
public securities market. The Company, however, continues as a reporting issuer
in Canada and the United States since it has issued public debt in the United
States.

In February 2001, the Company acquired, through the Income Fund, a 50% interest
in Powell River Energy in British Columbia, which owns two hydroelectric
stations with an aggregate installed capacity of 82 MW and related transmission
facilities having a total cost of $113 million.

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In December 2001, Great Lakes maintained its 50% interest in the Income Fund
following a public offering of 11,286,000 units of the Income Fund.

In February 2002, the Company acquired, through the Income Fund, a
hydroelectric generating system in northern Maine for US$156.5 million. This
system includes six hydroelectric generating stations with a combined
generating capacity of 126 MW and related transmission facilities.

On May 1, 2002, the electricity market in Ontario opened to competition. As a
result, Great Lakes power purchase agreement with Ontario Power Generation
Inc. (OPG) terminated.

In May 2002, the Income Fund filed a preliminary prospectus for the issue of
14,700,000 units. The Company purchased 50% of the issued units and thereby
maintained its 50% ownership interest in the Income Fund. The other units in
the Income Fund are currently held by the public.

In May 2002, the Company acquired, through the Income Fund, four hydroelectric
generating stations located on the Mississagi River in northern Ontario with a
combined generating capacity of 488 MW from OPG for $340 million.

Also in May 2002, the Company extended its power operations in the northeastern
United States through the purchase of six hydroelectric generating stations in
northern New Hampshire having a combined generating capacity of 31 MW for US$32
million.

In November 2002, the Company increased its ownership in Lake Superior Power
from 50% to 100% by acquiring from its partner, Duke Energy, its 50% interest
for $65 million.

In April 2003, the new Robert A. Dunford generating station in northern Ontario
started commercial operations. This 45 MW $75 million redevelopment project,
which started construction in December 2001, replaces an older 28 MW facility
and is expected to enhance the Companys peak period generating capability in
Ontario.

Also in April 2003, the 30 MW Pingston Creek generating station in British
Columbia was substantially completed. This 30 MW $65 million project was
developed in a 50/50 joint venture with Canadian Hydro Developers Inc. and
commenced commercial operations in May 2003. The completion of this project
increased the Companys total power generating capacity to 1,684 MW.

THE CORPORATIONS POWER BUSINESS

Summary

The Company operates its power business in four business groups: Ontario,
Quebec, Northeast United States and Other Power Operations. The Companys
principal operating units in each business group are described below.

Ontario

Great Lakes Powerincludes a generating business with 12 hydroelectric stations
located on the Magpie, Michipicoten, Montreal and St. Marys Rivers in northern
Ontario, having a combined generating capacity of 349 MW. Great Lakes Power
also includes a separate transmission and distribution business, which has
supplied power to the city of Sault Ste. Marie and the Algoma District for
almost 90 years.

Mississagi Powerincludes four hydroelectric generating stations in northern
Ontario, located on the Mississagi River north and east of Sault Ste. Marie,
with a combined generating capacity of 488 MW. These facilities were acquired
by the Income Fund in May 2002.

Valerie Falls Poweris a 65% owned 10 MW hydroelectric generating station
located on the Seine River in northwestern Ontario.

Lake Superior Poweris a 110 MW natural gas-fired cogeneration station located
in Sault Ste. Marie, Ontario.

Quebec

Lièvre River Powerconsists of three hydroelectric generating stations located
on the Lièvre River in western Quebec with a combined generating capacity of
238 MW. This operation has four transmission interconnections with the Quebec
power grid and two with the Ontario power grid.

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Pontiac Powerincludes two hydroelectric generating stations with a combined
generating capacity of 28 MW, located on the Noire and Coulonge Rivers in
western Quebec. This operation also has a transmission interconnections with
the Ontario power grid.

Northeast United States

Maine Powerconsists of six hydroelectric generating stations having a combined
generating capacity of 126 MW, located on the main and west branches of the
Penobscot River in northern Maine. This operation also has a transmission
interconnection with the New England power grid. These facilities were acquired
by the Income Fund in February 2002.

New Hampshire Powerincludes six hydroelectric generating stations with a
combined capacity of 31 MW, located on the Androscoggin River in northern New
Hampshire. These facilities were acquired by the Income Fund in May 2002.

Other Power Operations

Powell River Energyconsists of two 50% owned hydroelectric generating stations
in southwestern British Columbia, with a combined generating capacity of 82 MW.

Pingston Creekconsists of a 50% owned hydroelectric generating station located
in south central British Columbia, with a generating capacity of 30 MW. This
project commenced commercial operations in May 2003.

Louisiana HydroElectric Powerowns and operates a 192 MW run-of the river
hydroelectric generating station and sediment control facility on a diversion
of the lower Mississippi River in Louisiana. The Company has a 75% residual
interest in this facility.

Great Lakes is also participating in the development of hydroelectric stations
in Brazil. Three stations are now under construction in southern Brazil, and
will have a combined generating capacity of 61 MW. These stations are expected
to be completed in 2003.

Great Lakes is committed to growing its power generation business by expanding
its production base through developing greenfield sites and acquiring existing
power generating assets, and by enhancing its capacity to access interconnected
energy markets in Canada and the United States.

Most of the Companys power businesses are wholly owned, either directly or
through the Great Lakes Hydro Income Fund, an unincorporated open-ended trust
created in 1999 in which the Company owns 50% interest. The Income Funds units
are listed for trading on the Toronto Stock Exchange. The five operations
owned by the Company through the Income Fund are wholly owned Mississagi Power,
Lièvre Power, Maine Power and New Hampshire Power, and 50% owned Powell River
Energy.

A description of each of the Companys principal operating units follows.

Great Lakes Power

Great Lakes hydroelectric generation business and its transmission and
distribution system in northern Ontario, (together Great Lakes Power) are
held through wholly owned Great Lakes Power Limited (GLPL). Great Lakes Power
generates electricity from its 12 wholly owned hydroelectric generating
stations, which are located on the St. Marys, Montreal, Michipicoten and
Magpie Rivers and have a total installed capacity of 349 MW.

Great Lakes Powers 12 generating stations are operated by remote control from
a control centre in Sault Ste. Marie. Substations on each river system are
linked by 449 miles of 115 and 230 kilovolt (kV) transmission lines. The
system is interconnected with the Ontario power grid at Wawa, Ontario, and via
two 230 kV transmission lines at Mississagi, Ontario, 46 miles east of Sault
Ste. Marie. Great Lakes Power supplies electricity to its direct customers
through 1,064 miles of distribution lines. Great Lakes Power employs 137
people.

Up until May 1, 2002, Great Lakes Powers stations generated, on average,
approximately 65% of the power required to meet the historical needs of its
customers. The balance of the electrical power required to serve these
customers was purchased from OPG, formally part of Ontario Hydro. Following the
opening of Ontarios electricity market to competition on May 1, 2002, Great
Lakes Power as a local distributor is required to deliver power within its
service area, which is supplied from Ontarios spot market. St. Marys Paper and
PUC Inc. continue to be bilateral customers of Great Lakes Power. Great Lakes
Power also continues to deliver power to its historical service area through its
distribution division, serving approximately 11,600 customers. Great Lakes
Powers own power generation output can be sold into the spot market in
Ontario, into neighbouring competitive electricity markets or under bilateral
contracts.

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Great Lakes Power has a comprehensive maintenance program to extend the
operating life of its generating facilities and to maintain unit efficiency.
This program includes annual examinations of major items of equipment,
intensive reviews of dams, weirs and spillways every four to five years, and
complete overhauls of generating units as required.

Permitting and preliminary engineering are under way for a $25 million
high-voltage transmission interconnection with utilities in the adjacent US
states of Michigan and Wisconsin. This involves building transmission lines
with a capacity of up to 300 MW at 230 kV linking Ontario and these utilities.
This interconnection would greatly enhance the feasibility of the proposed
Montreal River pumped storage facility and other expansions to the system, and
would provide the physical connections to enable the Company to sell its power
in the United States.

Mississagi Power

On May 17, 2002, the Company acquired, through the Income Fund, four
hydroelectric generating stations on the Mississagi River in northern Ontario
(Mississagi Power) from OPG for $340 million. This system is owned by the
Income Fund through its wholly owned subsidiary, Mississagi Power Trust.

The Mississagi Power system includes four generating stations containing 8
generating units with an aggregate installed capacity of 488 MW, located
approximately 110 kilometres north and east of Sault Ste. Marie. The stations
include Aubrey Falls (162 MW), George W. Rayner (46 MW), the first station
built on the Mississagi River, Wells (239 MW) and Red Rock Falls (41 MW). These
four stations were built by the former Ontario Hydro between 1947 and 1970.
These operations employ 21 people.

Valerie Falls Power

Valerie Falls Power Limited Partnership (Valerie Falls Power) is a limited
partnership formed in 1993 to develop a 10 MW hydroelectric station on the
Seine River at Valerie Falls, three miles north of Atikokan in northwestern
Ontario. Great Lakes holds a 65% controlling interest in the partnership
through GLPL, the general partner. The other 35% interest in Valerie Falls
Power is held by the limited partner, Seine River Power Inc., a company
controlled by a local business partner. Development of the project was carried
out jointly by Great Lakes and its local partner and, since commissioning in
1995, the project has been managed and operated by Great Lakes.

Valerie Falls Power is party to a power sales agreement dated June 1992 with
Ontario Electricity Finance Corporation (OEFC) for the sale of power produced
by the station, which terminates on December 31, 2042. Under the terms of the
agreement, OEFC has agreed to purchase all of the power produced by the plant
for 50 years, according to a fixed-price schedule based, in general, on the
Ontario Consumer Price Index. If the plant fails to produce power for 24
consecutive months, the terms of the agreement allow OEFC to terminate the
agreement upon 60 days written notice.

Lake Superior Power

Lake Superior Power Limited Partnership (Lake Superior Power) is a limited
partnership formed in 1991 to develop and operate a 110 MW natural gas-fired
cogeneration plant in Sault Ste. Marie, Ontario. In 2002, the Company increased
its interest in this partnership from 50% to 100%. The general partner is Lake
Superior Power Inc., which holds a 1% interest in the project. Great Lakes
holds its interests in the general and limited partnerships through GLPL. Lake
Superior Power employs 16 people.

The Lake Superior Power cogeneration plant, which commenced production in 1993.
It uses two aero-derivative natural gas-driven turbines to generate
electricity. Heat generated by the gas turbines is captured by two
heat-recovery steam generators and the high-pressure steam they produce is in
turn used to drive a steam turbine to generate additional electrical energy.
Low-pressure steam is also available for sale to industrial customers. These
operations employ 16 people.

Lake Superior Power has entered into gas supply agreements with each of
Petro-Canada Inc. and Talisman Energy Inc. for the purchase of the natural gas
required to run the cogeneration turbine engines. Each agreement is for a term
of 15 years, which commenced on November 1, 1993, and is extendible on a
year-to-year basis if mutually agreed by the parties. Lake Superior Power has
also entered into 15-year transportation agreements, which commenced on January
1, 1994, with TransCanada Pipelines Limited and Centra Gas Ontario Inc. for the
transportation of natural gas.

Lake Superior Power is party to a 20-year power sales agreement with OEFC
(formerly part of Ontario Hydro), which commenced on April 1, 1994 under which
OEFC has agreed to purchase all of the electric power produced by the
cogeneration plant according to a fixed price schedule, subject to OEFCs
periodic right to require Lake Superior Power to curtail production within
certain limits.

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Low-pressure steam not used to produce electricity is available for sale to
industrial customers. Lake Superior Power is currently able to sell
low-pressure steam to St. Marys Paper under an agreement entered into with St.
Marys Paper in October 1994.

The plant systems, equipment and facilities of Lake Superior Power are all
designed for a 110 MW plant. However, the layout of the plant and site space
have been designed to make it possible to double the plants capacity. This
will be undertaken if and when additional long-term supply contracts can be
arranged.

Lièvre River Power

The Lièvre River Power hydroelectric generation, transmission and distribution
system is located in western Quebec on the Lièvre River system, a tributary of
the Ottawa River. Lièvre River Power was developed by James Maclaren Industries
Inc. (James Maclaren Industries), a subsidiary of Nexfor Inc. (Nexfor), to
service the electricity needs of its pulp and paper operations and other
industrial customers. In 1999, Nexfor sold Lièvre River Power to the Income
Fund, retaining 21% of the units in the Fund, which it sold in May 2000.

Lièvre River Powers production base consists of three generating stations on
the Lièvre River having a combined generating capacity of 238 MW. The 105 MW
Masson station is located in the town of Masson-Angers just north of the Ottawa
River and 18 miles east of the City of Hull. The Masson Station is the
operating centre for the Lièvre River Power system and, since 1998, for the two
Pontiac Power stations. The 38 MW Dufferin station is located in the City of
Buckingham three miles upstream. One generating unit at the Dufferin Station is
scheduled for returbining in 2001. The uppermost station on the river, the 95
MW High Falls plant, is located 24 miles north of the Ottawa River.

Water for these power stations is stored primarily at three reservoirs located
upstream on the Lièvre River and two of its tributaries, which are owned and
operated by the Government of Quebec. The system also includes five substations
and approximately 30 miles of 120 kV transmission lines. These have four
interconnections with the Quebec power grid and two with the Ontario power
grid. During 2000, the power interconnection at Masson, Quebec was upgraded and
expanded from 240 MW to 400 MW.

In 1999, Great Lakes entered into a Power Agency and Guarantee Agreement
(PAGA) with the Income Fund, expiring in 2019, under which Great Lakes
guarantees that the Income Fund will receive the guaranteed price for all
electricity produced and delivered by the Lièvre River Power system, except in
certain limited circumstances. The guaranteed price was initially set at (i)
$37.00 per megawatt hour (MWh) for 1,065,000 MWh of electricity in any given
year, and (ii) $30.00 per MWh for electricity in excess of 1,065,000 MWh in any
given year. Commencing January 1, 2001, the guaranteed price is subject to an
annual adjustment equal to the lesser of 3% or 40% of the increase in the
Consumer Price Index during the previous year. Great Lakes acts as the Income
Funds exclusive agent in respect of sales of electricity and provides sales,
scheduling, dispatching and transmission services.

Under the PAGA, a hydrology reserve credit facility is provided by Great Lakes
to the Income Fund to a maximum amount of $15 million in order to levelize cash
distributions to Income Fund unit holders as a consequence of changes in
hydrology from year to year. The facility is available for a period ending on
the earlier of (i) November 18, 2014, and (ii) the date of the sale of all or
substantially all of the power system. The Income Fund is entitled to draw up
to $5 million per year for such purposes. The facility is unsecured, bears
interest at the prime rate of a Canadian chartered bank plus 2% and is
repayable solely from excess revenues of the Income Fund in years when
electricity generated and delivered by the power system exceeds 1,418 GWh per
annum or upon the sale of all or substantially all of the Lièvre power system.

In 1999, Great Lakes entered into a Management, Operations and Maintenance
Agreement with the Income Fund expiring in 2019, to operate and maintain the
Lièvre River Power system in accordance with prudent business practice and an
approved annual operating plan. In addition, Great Lakes provides the Income
Fund with certain administrative and support services. These services are
provided through Brascan Power Services Inc., a wholly owned subsidiary of
Great Lakes that employs 81 people.

Pontiac Power

Hydro-Pontiac Inc. (Pontiac Power) is a Quebec corporation acquired by Great
Lakes in December 1996. Pontiac Power owns two hydroelectric generating
stations on tributaries of the Ottawa River in western Quebec, with a combined
generating capacity of 28 MW. Great Lakes operates these facilities with a
staff of 7 managed in conjunction with Lièvre River Power.

The 11 MW Waltham station is located on the Noire River and the 17 MW Coulonge
station is located on the Coulonge River.

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Pontiac Power has entered into power contracts with Hydro-Québec for the sale
of power produced by the Waltham and Coulonge Stations. Under these contracts,
Hydro-Québec has agreed to purchase all of the power produced by these stations
at rates, which increase annually according to the increase in the consumer
price index for the preceding year. The contracts have a term of 25 years,
commencing December 1, 1995 for Waltham and December 1, 1994 for Coulonge. Both
contracts include a renewal provision for a further 25 years on completion of
the current contracts in 2019 and 2020, respectively.

Maine Power

On February 1, 2002, the Company acquired, through the Income Fund, an
integrated hydroelectric generating and distribution system located in northern
Maine (Maine Power) from Great Northern Paper Inc. (Great Northern Paper)
for US$156.5 million. This system is owned by the Income Fund through GNE
Trust, a Quebec trust, and GNE LLC, a limited liability Delaware corporation.
Maine Power is operated by Great Lakes Hydro America, a wholly owned subsidiary
of the Income Fund, which employs 19 people.

Maine Powers generating facilities include six hydroelectric stations
containing 31 generating units with an aggregate installed capacity of 126 MW.
The systems watershed has an area of 3,350 square miles. Water storage is
provided from 11 reservoirs with an aggregate storage capacity of 300,000
megawatt hours. The system is interconnected with the New England Power Pool
through a 20 MW transmission line. In November 2002, work commenced on
increasing the capacity of this interconnection to 130 MW through the
construction of a 115 kV transmission line. This project is expected to be
completed in the first half of 2003.

Concurrently with the acquisition of the Maine Power system, Great Lakes,
Brascan Energy Marketing Inc. (BEMI) and Great Northern Paper have entered
into certain agreements, including a twenty-year master power purchase and sale
agreement pursuant to which, except under certain limited circumstances, BEMI
shall purchase from Great Northern Energy all the energy produced by the Maine
Power system at a fixed price of US$35 per megawatt hour, escalating annually
by 20% of the increase in the US Consumer Price Index in the previous year.
Under a guarantee dated January 31, 2002, Great Lakes guarantees BEMIs payment
obligation under the power purchase and sale agreement, in the event that an
event of default pursuant to such agreement occurs; or BEMI ceases to carry on
business.

New Hampshire Power

On May 31, 2002, the Company acquired, through the Income Fund, six
hydroelectric generating stations on the Androscoggin River near the towns of
Berlin/Gorham in northern New Hampshire (New Hampshire Power) with a combined
generating capacity of 31 MW for US$31.5 million. This system is owned by the
Income Fund through its wholly owned subsidiary, Great Lakes Hydro America. New
Hampshire Power is operated in conjunction with Maine Power through Great Lakes
Hydro America.

New Hampshire Powers generating facilities include six stations with 21
generating units which generate approximately 185 GWh of electricity annually.
These generating facilities are all licensed by the US Federal Regulatory
Agency (FERC). All the electricity they produce is being sold by the
Companys power marketing operations.

During the first quarter of 2003, Great Lakes commenced the construction of a
25 MW natural gas-fired cogeneration station in Berlin/Gorham, which will
provide electricity and steam for sale to nearby pulp and paper facilities.
These facilities were acquired by Nexfor Inc., an affiliate of Brascan, a the
time the Company acquired New Hampshire Power.

Powell River Energy

Powell River Energy Inc. (Powell River Energy) is a Canadian corporation
owned 50% by the Income Fund, through its wholly owned subsidiary, the Powell
River Energy Trust, and 50% by Norske Skog Canada Limited (Norske Skog), both
on a fully diluted basis. In February 2001, Powell River Energy acquired from
Norske Skog two hydroelectric generating stations with a combined generating
capacity of 82 MW and related transmission facilities located in city of Powell
River, British Columbia, for a total consideration of $113 million and
assumption of a future income tax liability.

The Powell River Energy facilities were built to provide electricity for the
pulp and paper operations of Norske Skog and its predecessors in the City of
Powell River, which is located on the west coast of the British Columbia
mainland approximately 100 miles north of the city of Vancouver. Its production
base consists of two generating stations containing seven generating units with
a total installed capacity of 82 MW and an average annual generation of 520
GWh.

The Powell River generating station comprises three powerhouses containing five
generating units located in the town of Powell River. The Lois Lake generating
station consists of one powerhouse containing two
units located 10 miles south of the Powell River facilities. Water for these
stations is stored in two large lakes created by the dams of the two
facilities: Powell Lake, which is approximately 26 miles in length; and Lois
Lake, which together with three interconnected lakes is approximately 10 miles
in length. Power from the Lois Lake station is delivered via 12 miles of
transmission lines owned

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by Powell River Energy to a distribution system in Powell River. These
facilities are also interconnected to the British Columbia power grid.

All of the energy generated by Powell River Energy is sold to Norske Skog
pursuant to a 10-year take or pay agreement dated January 31, 2001. Norske
Skog must purchase all the energy delivered on a first priority basis before
purchasing or otherwise receiving any other energy for its mill. Norske Skog is
restricted from selling or using the energy from the power facilities other
than at its mill. Norske Skog pays $34.95 per MWh, increasing annually by an
amount equal to 20% of the increase in the Consumer Price Index for the year.
Powell River Energy may make the electricity generated by the power facilities
available to others if it is not otherwise needed in the ordinary course of the
mills business.

Powell River Energy has also entered into an Operations and Maintenance
Agreement with Brascan Power Services Inc., a wholly owned subsidiary of Great
Lakes, to operate and maintain the Powell River Energy facilities in accordance
with prudent business practice and an approved annual operating plan.

Pingston Creek Power

Pingston Creek Power is a joint venture between the Company and Canadian Hydro
Developers Inc. In 2001, the joint venture commenced construction of the 30 MW
Pingston Creek hydroelectric generating station located near the town of
Revelstoke in south central British Columbia. In August 2002, the Company and
Canadian Hydro Developers Inc. signed a 20-year agreement to sell all of the
power generated by this station to BC Hydro. This station was substantially
completed in April 2003 for a cost of $65 million and commenced commercial
operations in early May 2003.

Louisiana Hydroelectric Power

Catalyst Old River HydroElectric, Limited Partnership (Louisiana HydroElectric
Power or the partnership) is a limited partnership formed to develop and
operate a combined hydroelectric generating station and flood and sediment
control facility on a diversion of the Mississippi River near the Town of
Vidalia (Vidalia), Louisiana, north of Baton Rouge. Great Lakes holds a 75%
residual interest in the partnership through wholly owned Catalyst Vidalia
Corporation and Vidalia Holding, LLC, which hold, respectively, a 50% general
partnership interest and a 25% limited partnership interest in Louisiana
HydroElectric Power. Dominion Capital Inc., which is unrelated to Great Lakes,
holds the remaining 25% limited partnership interest. Louisiana HydroElectric
Power employs 27 people.

After commencing power production in 1990, the facility was sold to
institutional investors in a sale and leaseback transaction for US $633
million. Under the transaction, the partnership retained operational
responsibilities and long-term ownership rights.

The hydroelectric generating station, known as the Sidney A. Murray, Jr.
Generating Station, is located on a man-made channel which diverts water from
the Mississippi River to the Red and Atchafalaya Rivers five miles away. The
station uses the natural difference in elevation between these two river
systems to generate electricity. It contains eight turbines with an installed
capacity of 192 MW, making it one of the largest run-of-the-river stations in
the world. The facility and inflow channel form an integral part of the US Army
Corps of Engineers flood and sediment control system for the lower Mississippi
River.

Substantially all of the power produced by the facility is sold to Entergy
Louisiana, Inc. (Entergy) a wholly owned subsidiary of Entergy Inc., a U.S.
energy company, under a long-term power sales agreement based on a
predetermined price schedule. The remaining power is sold directly to Vidalia
pursuant to a power sales agreement. Both of these agreements have
substantially similar terms, are on a pay if delivered basis and expire on
December 31, 2031. Both agreements have been approved by the Louisiana Public
Service Commission.

The revenues from these sales are expected to exceed the operating costs,
annual capital expenditures and lease principal and interest payments due to
the institutional investors and lenders. Surplus cash flows accrue to the
partners. Under the terms of the sale and leaseback transaction, however,
revenues from the operation of the facility must be deposited in certain trust
accounts for the payment of operation and maintenance costs, lease and royalty
payments and certain other costs. Distributions from these accounts are made
annually to the partners subject to certain requirements to maintain, among
other things, a certain lease coverage ratio and minimum lease reserve
accounts.

The FERC license to operate the facility is held jointly by the partnership and
Vidalia. The transmission lines and the accompanying right-of-way to Entergys
substation are governed by an agreement with Vidalia dated June 28, 1988.
Pursuant to the terms of the agreement, the partnership leases the facility and
the site and has the exclusive right to maintain and operate the facility.
Vidalia has also covenanted not to transfer
any right or interest in the transmission lines to anyone other than the
partnership. The royalties to be paid by the partnership to Vidalia under these

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agreements are based on a percentage of gross power revenues. The percentage
gradually increases from 3.75% in 1990 to 11.6% in 2021. In 2022 and
thereafter, the percentage is 20%.

The partnership has also entered into an agreement with the US Army Corps of
Engineers providing for the flow of water required for the facility. This
agreement expires on December 31, 2031.

OTHER BUSINESS OPERATIONS

Highvale Power

Highvale Power Corporation (Highvale Power) was acquired by Great Lakes in
July 1996. It owns 215,000 hectares of freehold lands and 3,900 hectares of
Crown lease lands in central Alberta, which together contain 540 million tonnes
of recoverable coal reserves. The main holdings are in the Wabamum and Magnolia
coalfields near Wabamum Lake, west of the city of Edmonton, and in the
Pickardville-Morinville coalfield north of Edmonton.

Approximately 115 million tonnes of recoverable coal at the Highvale mine in
the Wabamum coalfield have been leased to TransAlta Utilities Corporation
(TransAlta) under renewable royalty agreements expiring in 2005 and 2021,
respectively. The Highvale mine supplies coal to TransAltas Keephills (766 MW)
and Sundance (1,980 MW) power stations, which together produce approximately
75% of Albertas coal-fired energy. The coal supplied by the Highvale mine is
approximately 30% of the total requirement of these two plants. The coal is
mined under contract to TransAlta by Luscar Ltd. In addition to the coal
reserves committed to TransAlta, Highvale Power has approximately 425 million
tonnes of further reserves.

Highvale Power has entered into two agreements with TransAlta for the sale of
coal in return for royalty payments. The Highvale 1 Agreement, which runs from
1972 to 2005, provides for the sale of coal to a depth of 2,275 feet above sea
level on certain of Highvale Powers lands. Royalty payments are based on
annual coal production plus a predetermined annual purchase payment. The
royalty rate is tied to the highest Alberta Crown royalty rate. This agreement
is renewable in 2005 by mutual agreement. Coal production from the subject
lands is expected to continue to approximately 2012.

The Highvale 2 Agreement, which runs from 1982 to 2021, provides for the sale
of 27.3 million tonnes of coal. Royalty payments are based on annual production
subject to a take-or-pay annual tonnage of 1.6 million tonnes. The royalty rate
is tied to the Alberta Crown coal royalty rate plus an over-royalty rate based
on a factor, which escalates over the life of the lease, adjusted to the rate
of inflation. This agreement is renewable in 2021 by mutual agreement.

Energy Marketing

The Company conducts its energy marketing business through Brascan Energy
Marketing Inc. (BEMI), a wholly owned subsidiary which conducts the Companys
wholesale energy marketing business in Canada and the United States. These
operations also provide valuable market intelligence regarding pricing
dynamics, regulatory systems and market participants, which serves to support
the Companys growth strategy by targeting the most attractive energy markets.
BEMIs operations are staffed in conjunction with Lièvre River Power.

The Companys energy marketing operations sell the portion of the electricity
generated by the Companys power operations, not sold pursuant to long-term
contracts, as well as power purchased wholesale, into the short-term contract
and spot electricity markets.

POWER GENERATION OUTLOOK

Strategic Emphasis and Outlook

The Company will continue to emphasize control over operating and maintenance
costs, explore ways of increasing its customer base and the market for its
hydroelectric power, and examine potential development and redevelopment
projects within its service area. Great Lakes will also continue to work on
developing and operating other projects in North and South America outside its
primary service area where it can apply its considerable experience in the
power generating business. In pursuing such opportunities, Great Lakes will
focus on small and medium-sized hydroelectric power projects, including
projects with water-storage capacity, and gas-fired cogeneration projects.

Based on industry trends, Great Lakes believes it is well positioned for growth
opportunities that could strengthen its power generating operations. Management
believes that these industry trends favour
companies like Great Lakes, which have a good operating history, a low-cost
orientation, development expertise and access to capital.

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Development Opportunities

In 2000, Great Lakes announced a major capital investment program, with the
objective of doubling the earnings from its power operations by 2005. Under
this plan, the Company has already acquired 18 existing hydroelectric stations
and completed two new hydroelectric stations. The Company is exploring further
opportunities to acquire and develop additional hydroelectric generating
capacity in Canada and elsewhere in North and South America.

During 2000, Brascan re-entered the electric energy business in Brazil through
wholly owned Brascan Energética S.A. (BESA). Over 15 sites have been
identified for the potential development of new hydroelectric stations,
primarily stations of 30 MW or less located in southern Brazil. Great Lakes is
providing advisory services and bridge financing to BESA for the development of
these projects. Construction started on two of these projects in the first half
of 2001: the 30 MW Passo do Meio station in the State of Rio Grande do Sul and
the 16 MW Pedrinho project in the State of Paraná. During 2002, construction
started on a third project, the 15 MW Salto Natal station, also in the State of
Paraná. These projects are expected to be completed during 2003.

General Operating Risks

The development of projects of the type that Great Lakes undertakes is complex.
There can be no assurances that Great Lakes will be able to obtain new power
sales agreements, overcome any local opposition to the development of new
projects, obtain the necessary site agreements, ensure fuel supply, or obtain
construction contracts, steam sales agreements, licenses and certifications,
environmental and other permits and financing necessary for the successful
development of these projects.

Operating income from hydroelectric power generation fluctuates mainly in
relation to the availability of water in the Companys river systems. While
changes in the level of precipitation impact the power generation of Great
Lakes individual operations, its interests in hydroelectric stations located
in several different watersheds help it balance the financial impact of these
fluctuations. Risk is also reduced through the existence of long-term power
sale contracts with many of Great Lakes major customers and by insurance
policies that cover fluctuations in precipitation levels below specified
minimum levels.

Changes in the Power Industry

In Canada, over 80% of the electricity generated is provided by large
provincially-owned corporations, such as Hydro-Québec and Ontario Power
Generation Inc., with the remainder being produced by smaller
investor-controlled corporations or by industrial companies. In the late 1970s
and 1980s, provincial governments, which have legislative authority over the
supply of power and utilities, responded to consumer demand for competitive
electricity tariffs by initiating programs and policies aimed at permitting the
purchase of electricity from independent power producers. In the 1990s, ongoing
customer demand for lower prices and the desire to improve global
competitiveness in the United States, Canada and worldwide led to many
initiatives to restructure the electricity industry from a highly regulated
industry controlled by large vertically integrated Crown-owned utilities to one
which should eventually favour increased competition and promote opportunities
for new market participants. Deregulation of the electricity industry is now
under way or being studied in most provinces in Canada, and a number of
jurisdictions in the United States.

Ontario

In 1995, the Ontario Government established the MacDonald Committee on
Competition in Ontarios Electricity Industry to review the then existing
regulatory regime and the role of the public and private sectors. In November
1997, the Ontario Government released its White Paper entitled Direction for
Change  Chartering a Course for Competitive Electricity and Jobs in Ontario.
This document embodied the Ontario Governments restructuring plan to create
competitive wholesale and retail markets for electricity in the year 2000.

The Energy Competition Act, 1998received Royal Assent in 1998 to, among other
things: (i) end Ontario Hydros monopoly in electricity supply and introduce a
competitive market; (ii) broaden the mandate of the Ontario Energy Board to
include regulation of the electricity sector and improve gas sector regulation;
and (iii) reorganize Ontario Hydro into its successor commercial corporations.

The process of restructuring Ontarios electricity industry continued on a
number of fronts during 1999. On April 1, 1999, a significant milestone was
reached when Ontario Hydros five successor companies were established as
follows: Ontario Hydro Services Company Inc. now known as Hydro One Inc.
(HOI); Ontario Power Generation Inc.; Ontario Electricity Financial
Corporation (OEFC); Independent Electricity Market Operator (IMO); and
Electrical Safety Authority.

In this corporate restructuring, HOI received the transmission, distribution
and retail assets and OPG received the electricity generating assets. Both
companies were established with commercial capital structures. OEFC is
responsible for the servicing and retiring of the former Ontario Hydros
provincially guaranteed debt and certain other legacy liabilities. OEFC is also
responsible for the contracts with independent power producers, such as the
Companys

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Valerie Falls Power and Lake Superior Power operations. The IMO has been set up
as a non-profit corporation responsible for ensuring the reliability and
fairness of the electricity market.

Also on April 1, 1999, the Minister of Energy directed the Ontario Energy Board
(OEB) to implement the Market Power Mitigation Agreement through licence
conditions for OPG, the IMO and HOI. Included in this agreement is OPGs
requirement to de-control 4,000 MW of tier two capacity within 42 months of
market opening, which, at OPGs discretion, may include up to 1,000 MW of
hydroelectric capacity. In addition, OPG is required to reduce its effective
control of generating capacity in Ontario to not more than 35% within 10 years.

In late May 2000, the OEB issued its decision approving HOIs transmission cost
allocation and rate design to be in effect from the opening of the market. In
June 2000, the Minister of Energy announced that the opening of Ontarios
electricity market would be delayed from the November 2000 target. In late
April 2001, the Minister of Energy established a new target planning date for
the opening of Ontarios competitive electricity market as May 2002.

Ontarios energy market was opened to full competition as scheduled on May 1,
2002. This milestone required completion of many items of work by the IMO and
OEB, including the finalization of the market rules, confirmation of market
readiness by the IMO and approval of the provincial transmission revenue
allocation to be approved by the OEB, including the allocation to Great Lakes
transmission division. In addition, the treatment of Ontarios independent
power companies, such as Great Lakes, was finalized. Further government actions
were announced in November 2002, including the implementation of a 4.3 cent /
kwh retail cap. However, the price for power that generators, other than OPG,
receive in the wholesale market was not capped.

Changes in the present regulatory system could impact the operating income from
the Companys power operations in Ontario in a number of ways. Increased
competition could reduce power prices in the short term and would enable
customers in the Province to seek alternative suppliers. However, the Company
believes that its low-cost structure, which has enabled it to maintain lower
prices than are generally charged elsewhere in Ontario and neighbouring US
jurisdictions, and its strategically located hydroelectric generating
facilities, which can store water for use during periods when higher on-peak
rates apply, should enable it to remain very competitive. A more open and
competitive environment would also enable the Company to seek additional
customers and, over the long run, justify the expansion of its generating base.

Quebec

In Quebec, the National Assembly assented to Bill 50, an Act Respecting the
Régie de lénergie(the Act), on December 23, 1996. The Act outlines the
roles of the various forms of energy in Quebecs development and the means that
will be used to meet the energy needs of Quebec consumers.

According to the Act, Hydro-Québec possesses exclusive electric power
distribution rights throughout Quebec, excluding those areas that, on May 13,
1997, were served by a distributor operating a municipal or private electric
distribution system. On that date, the Maclaren Power System was operated by
Nexfor as a private electric distribution system and, therefore, Hydro-Québec
does not have exclusive distribution rights within the areas served by the
Maclaren Power System.

In May 1997, Hydro-Québec officially opened its system to wholesale wheeling
as a prerequisite for the granting by the Federal Energy Regulatory Commission
of the United States to Hydro-Québec of a power marketers license to compete
in the northeast United States electricity markets, which it received on
November 12, 1997. As a result of this action, electricity producers in Québec
now have the option to sell electricity outside Quebec and to wheel it
through Hydro-Québecs transmission lines at specified rates.

Advantages of Hydroelectric Generation

The Company believes that the unique nature of hydroelectric generation
provides many advantages over other forms of electricity generation. The
advantages of hydroelectric power include high level of reliability, low
operating costs, operational flexibility to meet ongoing base load electricity
needs and peak demands, minimal environmental impacts, and its reliance on
water, a renewable resource.

Reliability:The equipment involved in producing hydroelectric power has
relatively few moving parts. Since the process does not include combusting
fossil fuels at high temperatures or creating steam, there is minimal wear and
tear on the machinery, which contributes to long life and low maintenance
requirements. Unplanned outage rates for hydroelectric units are among the
lowest in the electricity industry.

Low Operating Costs:Other than water royalties paid to governmental
authorities, hydroelectric facilities do not have any fuel costs, which can be
significant and highly volatile for fossil-fuelled plants. As well, most
hydroelectric plants can be operated remotely by a single person from a
centralized control centre. Combined with the low maintenance and outstanding
reliability of equipment, operating expenses are comparatively low.

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High Operational Flexibility:Hydroelectric plants can adjust quickly to
changes in demand and, depending on the flow of the river and the storage
capacity of the reservoirs, hydroelectric plants can service both the base
power requirements of its customers as well as their peak power requirements.

Low Environmental Impact:Hydroelectric generation produces virtually no
greenhouse gas emissions or any acid rain, which have major impacts on the
environment. Hydroelectric generation minimizes thermal, chemical, radioactive,
water and air pollution as compared to fossil-fuelled and nuclear generated
power. Instead of producing substantial amounts of residual wastes during the
power generation process, hydroelectric generation simply returns the water to
the river.

Safety, Health and the Environment

It is the Companys policy that all of its operating subsidiaries manage their
activities having regard to high standards of safety and the well being of
their employees, and that they demonstrate care for the environment through the
use of recognized sustainable development practices in compliance with all
relevant laws and regulations. Compliance with this policy is achieved through
developing and implementing managed systems that form an integral part of the
daily business activities of all the Companys operating subsidiaries. These
subsidiaries require all employees, contractors, agents and others involved in
their operations to comply with established safety, health and environmental
practices, and provide suitable training to achieve the desired compliance.

Great Lakes continues to act as a mentor in the Ontario Governments Safe
Workplaces, Sound Businessproject and volunteers as a safety ambassador for
the Workplace Safety Insurance Board. These projects involve senior executives
offering advice and information about their organizations health and safety
knowledge, expertise and experience as a resource for other businesses.

Great Lakes has adopted the Environmental Commitment and Responsibility Program
of the Canadian Electricity Association. In December 2000, the environmental
management systems at its northern Ontario and Maclaren Power operations were
registered as compliant with the ISO 14001 Environmental Standard. In March
2001, Great Lakes hydroelectric stations received certification as low impact
renewable electricity sources by Canadas Environmental Choice Program
(ECP), enabling the Company to use the ECPs EcoLogo trademark for
electricity generated from these stations.

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POWER GENERATING FACILITIES

The following table contains selected information on the Companys 39
generating stations as at April 30, 2003:

|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  |  |  |  |  | 
|----------------------------- |  | ------------------------------ |  | -------- | ------- | --------- |  | ---------- | ------- | ----- |  | ------- | ------- | --------- |  | ---------- | ----- |  | -- |  | --- | --------- |  |  |  |  |  | 
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     | Number of
|                              |  |                                |  |          |         | Installed |  |            |         |       |  | Average |         | Operating |  | Generating
|Name of Generating Station    |  | Type                           |  | Capacity |         | Storage   |  | Inflow     |         | Head  |  | Units  
|                              |  |                                |  |          |         |           |  |            |         |       |  |        
|                              |  |                                |  |          |         | (MW)      |  | (cfs days) |         | (cfs) |  | (ft.)   |         |           |  |           
|GREAT LAKES POWER             |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|Francis H. Clergue            |  | Hydroelectric                  |  |          | 52.2    |           |  |            |        |       |  |         | 35,926  |           |  |            | 19    |  |    |  | 3   |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|Scott Falls                   |  | Hydroelectric                  |  |          | 22.5    |           |  |            | 1,130   |       |  |         | 2,436   |           |  |            | 75    |  |    |  | 2   |          
|Robert A. Dunford(2)          |  | Hydroelectric                  |  |          | 45.0    |           |  |            | 559     |       |  |         | 2,402   |           |  |            | 148   |  |    |  | 2   |          
|McPhail                       |  | Hydroelectric                  |  |          | 12.8    |           |  |            | 5,705   |       |  |         | 2,363   |           |  |            | 47    |  |    |  | 2   |          
|Hollingsworth(1)              |  | Hydroelectric                  |  |          | 23.2    |           |  |            | 220,083 |       |  |         | 1,966   |           |  |            | 114   |  |    |  | 1   |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|Andrews                       |  | Hydroelectric                  |  |          | 46.9    |           |  |            | 500     |       |  |         | 1,487   |           |  |            | 185   |  |    |  | 3   |          
|Hogg                          |  | Hydroelectric                  |  |          | 18.5    |           |  |            | 3,145   |       |  |         | 1,477   |           |  |            | 77    |  |    |  | 1   |          
|Gartshore                     |  | Hydroelectric                  |  |          | 23.0    |           |  |            | 12,670  |       |  |         | 1,472   |           |  |            | 114   |  |    |  | 1   |          
|MacKay                        |  | Hydroelectric                  |  |          | 62.0    |           |  |            | 174,597 |       |  |         | 1,461   |           |  |            | 249   |  |    |  | 3   |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|Mission Falls                 |  | Hydroelectric                  |  |          | 15.0    |           |  |            | 35      |       |  |         | 1,058   |           |  |            | 117   |  |    |  | 1   |          
|Harris                        |  | Hydroelectric                  |  |          | 12.5    |           |  |            | 212     |       |  |         | 1,055   |           |  |            | 97    |  |    |  | 1   |          
|Steephill Falls(1)            |  | Hydroelectric                  |  |          | 15.5    |           |  |            | 70,807  |       |  |         | 906     |           |  |            | 136   |  |    |  | 1   |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|MISSISSAGI POWER              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|Red Rock Falls                |  | Hydroelectric                  |  |          | 41.0    |           |  |            | 4,803   |       |  |         | 3,624   |           |  |            | 92    |  |    |  | 2   |          
|Wells                         |  | Hydroelectric                  |  |          | 239.0   |           |  |            | 32,030  |       |  |         | 2,545   |           |  |            | 214   |  |    |  | 2   |          
|George W. Rayner(3)           |  | Hydroelectric                  |  |          | 46.0    |           |  |            |        |       |  |         |        |           |  |            | 214   |  |    |  | 2   |          
|Aubrey Falls                  |  | Hydroelectric                  |  |          | 162.0   |           |  |            | 183,530 |       |  |         | 1,519   |           |  |            | 181   |  |    |  | 2   |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|VALERIE FALLS POWER           |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|Valerie Falls                 |  | Hydroelectric                  |  |          | 10.0    |           |  |            | 127,132 |       |  |         | 1,400   |           |  |            | 67    |  |    |  | 2   |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|LAKE SUPERIOR POWER           |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|Lake Superior Power           |  | Natural gas-fired cogeneration |  |          | 110.0   |           |  |            | n/a     |       |  |         | n/a     |           |  |            | n/a   |  |    |  | 3   |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|LIÈVRE RIVER POWER            |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|Masson                        |  | Hydroelectric                  |  |          | 105.0   |           |  |            |        |       |  |         | 5,779   |           |  |            | 184   |  |    |  | 4   |          
|Dufferin                      |  | Hydroelectric                  |  |          | 38.0    |           |  |            |        |       |  |         | 5,754   |           |  |            | 59    |  |    |  | 2   |          
|High Falls(1)                 |  | Hydroelectric                  |  |          | 95.0    |           |  |            | 544,811 |       |  |         | 5,445   |           |  |            | 180   |  |    |  | 4   |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|PONTIAC POWER                 |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|Waltham                       |  | Hydroelectric                  |  |          | 11.0    |           |  |            | 92,300  |       |  |         | 1,305   |           |  |            | 136   |  |    |  | 5   |          
|Coulonge                      |  | Hydroelectric                  |  |          | 17.0    |           |  |            | 97,000  |       |  |         | 2,590   |           |  |            | 145   |  |    |  | 2   |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|MAINE POWER                   |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|Weldon                        |  | Hydroelectric                  |  |          | 18.1    |           |  |            |        |       |  |         | 6,386   |           |  |            | 39    |  |    |  | 4   |          
|East Millinocket              |  | Hydroelectric                  |  |          | 6.9     |           |  |            |        |       |  |         | 4,149   |           |  |            | 25    |  |    |  | 6   |          
|Dolby                         |  | Hydroelectric                  |  |          | 20.9    |           |  |            |        |       |  |         | 4,149   |           |  |            | 49    |  |    |  | 7   |          
|Millinocket                   |  | Hydroelectric                  |  |          | 36.1    |           |  |            |        |       |  |         | 3,668   |           |  |            | 110   |  |    |  | 8   |          
|North Twin                    |  | Hydroelectric                  |  |          | 7.0     |           |  |            | 196,000 |       |  |         | 3,668   |           |  |            | 28    |  |    |  | 3   |          
|MacKay(1)                     |  | Hydroelectric                  |  |          | 37.5    |           |  |            | 451,000 |       |  |         | 2,793   |           |  |            | 182   |  |    |  | 3   |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|NEW HAMPSHIRE POWER(4)        |  | Hydroelectric                  |  |          | 30.9    |           |  |            | 325,231 |       |  |         | 2,516   |           |  | varies     |       |  | 21 | 
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|POWELL RIVER ENERGY           |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|Powell River                  |  | Hydroelectric                  |  |          | 46.0    |           |  |            | 292,450 |       |  |         | 3,321   |           |  |            | 285   |  |    |  | 5   |          
|Lois Lake                     |  | Hydroelectric                  |  |          | 36.0    |           |  |            | 139,903 |       |  |         | 920     |           |  |            | 440   |  |    |  | 2   |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|PINGSTON CREEK                |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|Pingston Creek(5)             |  | Hydroelectric                  |  |          | 30.0    |           |  |            |        |       |  |         | 284     |           |  |            | 1,827 |  |    |  | 2   |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|LOUISIANA
HYDROELECTRIC POWER |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|Sidney A. Murray, Jr.         |  | Hydroelectric and              |  |          | 192.0   |           |  |            |        |       |  |         | 102,000 |           |  | 6 to 20    |       |  | 8  | 
|                              |  | flood and sediment             |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |          
|                              |  | control                        |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 
|TOTAL                         |  | 39 Stations                    |  |          | 1,684.5 |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  | 120 |          
|                              |  |                                |  |          |         |           |  |            |         |       |  |         |         |           |  |            |       |  |    |  |     |           |  | 



---

|(1) |  | Includes storage on upstream lakes and reservoirs.                                                                          
|--- |  | ----------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Robert A. Dunford G.S. commenced commercial
operations in April 2003.                                                       
|   
|(3) |  | G.W. Rayner G.S. is
currently operated as a backup for Wells G.S.                                                           
|   
|(4) |  | Total New Hampshire Power generating units does not include one generating
unit not currently in operation at Riverside G.S.
|   
|(5) |  | Pingston Creek G.S.
commenced commercial operations in May 2003.                                                            

13



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##### 



Glossary of Terms

|                                                                                                                                                                       |  |                                                                                                                                                                             |  |                                                                                                                                                            
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|Average Inflow:the average water flow
available for power generation measured
in cubic feet per second (cfs).                                                          |  | Installed Capacity:the measure of a power
stations electric generating capacity at
full production, measured in megawatts (MW).                                            |  | Operating Head:the vertical distance that
water drops to the tailrace in order to
generate hydroelectric power, measured in feet.                          
|                                                                                                                                                                       |  |                                                                                                                                                                             |  |                                                                                                                                                            
|Gigawatt Hour:one gigawatt hour equals
one million kilowatt hours. A kilowatt hour
is equivalent to the energy consumed by a
100 watt light bulb burning for 10 hours. |  | Megawatt:one megawatt equals one
thousand kilowatts. A kilowatt is the
electrical energy required to turn on ten
100 watt light bulbs and is equivalent to
1.34 horsepower. |  | Storage:the temporary holding capacity
available to store water for later use in
electricity generation, measured in cubic
feet per second days (cfs days).

INVESTMENT ACTIVITIES

The Company maintains a portfolio of securities, loans receivable and long-term
corporate investments, which are held to generate additional cash flow on a
tax-effective basis. These investments, which are principally in associated
companies, have consistently contributed to Great Lakes earnings and capital
base. In determining whether to participate in an investment, the Companys
management assesses each opportunity against its investment guidelines, which
require investments to earn an acceptable rate of return from dividends or
interest in relation to risk or have the potential for substantial capital
appreciation.

Investment transactions involving companies, which are associated with Great
Lakes, are completed on normal market terms. Such transactions are reviewed by
a committee of independent directors of Great Lakes comprised of individuals
with investment experience.

Investment income from the Companys preferred shareholdings varies only with
the amount invested as the rate of return is fixed. Other investment income is
sensitive to interest rate changes; however, a similar offsetting sensitivity
exists with a portion of the Companys debt.

Securities Portfolio

The Companys securities portfolio is comprised primarily of preferred shares
of associated companies. The book value of the Companys securities portfolio
by business sector at December 31, 2002 compared to the prior year is
summarized below:

|                                   |  |      |     |      |  |   |     | 
|---------------------------------- |  | ---- | --- | ---- |  | - | --- | 
|millions                           |  | 2002 |     | 2001
|                                   |  |      |     |     
|Real estate                        |  | $    | 160 |      |  | $ | 270 | 
|Natural resources                  |  |      | 161 |      |  |   | 152 | 
|Financial services and diversified |  |      | 199 |      |  |   | 214 | 
|Other                              |  |      | 70  |      |  |   | 70  | 
|                                   |  |      |     |      |  |   |     | 
|                                   |  | $    | 590 |      |  | $ | 706 | 
|                                   |  |      |     |      |  |   |     | 

Long-term Investments

The book values of the Companys principal long-term investments at December
31, 2002 compared to the prior year are shown below:

|                              |  |      |     |      |  |   |     | 
|----------------------------- |  | ---- | --- | ---- |  | - | --- | 
|millions                      |  | 2002 |     | 2001
|                              |  |      |     |     
|Brascan Financial Corporation |  | $    | 195 |      |  | $ | 195 | 
|Noranda Inc.                  |  |      | 146 |      |  |   | 146 | 
|Brascan Corporation           |  |      | 112 |      |  |   | 112 | 
|Other investments             |  |      | 106 |      |  |   | 68  | 
|                              |  |      |     |      |  |   |     | 
|                              |  | $    | 559 |      |  | $ | 521 | 
|                              |  |      |     |      |  |   |     | 

Further information on Great Lakes long-term investments is contained in the
Companys Annual Report on page 6. Brascan Financial, Noranda and Brascan have
prepared their own Annual Information Forms and Annual Reports containing
information specific to their operations. Copies of these documents may be
obtained from securities administrators in each province of Canada or from the
Secretary of the Company.

14



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##### 



FINANCING ARRANGEMENTS

The Company finances its operations through bank facilities, a $100 million
commercial paper program, term debt in the form of notes, and loans provided by
Brascan.

The Company has issued US$175 million of 9% Notes maturing August 1, 2004 and
US$200 million of 8.3% Notes maturing March 1, 2005. The Notes are senior
unsecured obligations of the Company. The indenture under which the Notes are
issued contains certain limitations on the Company relating to the issuing of
debt and preferred shares, distributions by and transfers to subsidiaries of
the Company, the incurring of liens on the assets of the Company and its
subsidiaries, certain sale and leaseback transactions by the Company,
transactions with affiliated and related persons, mergers, consolidations and
certain sales of assets by the Company and a change of control of the Company.
The indenture also requires the maintenance by the Company of a minimum
consolidated net worth.

GLPL has issued $316 million of Series 4 and 5 First Mortgage Bonds bearing
interest at 6.57% and 4.58% respectively, which are due on June 16, 2003. The
Series 4 and Series 5 bonds rank equally and are secured by a first, fixed
charge on the fixed assets of the Great Lakes Power operations in northern
Ontario and a floating charge on all other assets of Great Lakes Power,
excluding trade accounts receivable. Efforts are well under way to issue new 20
year mortgage bonds to finance these maturities and additional amounts for
general corporate purposes.

The Income Fund has issued $100 million of First Mortgage Bonds Series 1, 2 and
3 bearing interest at 7.33%, 7.55% and 7.78%, respectively, due April 24, 2005,
April 24, 2010 and April 24, 2015, respectively. These Mortgage Bonds are
secured by charges on all present and future real and personal property of
Great Lakes Power Trust, which is wholly owned by the Income Fund.

Pontiac Power has issued $62 million mortgage loans bearing interest at a
blended rate of 10.52%, amortized monthly to a maturity of December 1, 2020 and
secured by charges on the respective Pontiac Power generating assets.

Valerie Falls has issued $33 million of First Mortgage Bonds bearing interest
at 6.84%, with interest only payments semi-annually for the first 20 years and
blended principal and interest payments for the remaining 20 years to a
maturity of December 20, 2042.

The Companys holds a proportionate share in the $75 million Powell River
Energy first mortgage bond, which bears interest at 6.92%, is due June 2009 and
is secured by a charge on the respective Powell River Energy operating assets.

Lake Superior Power has issued a $19 million mortgage loan bearing interest at
9.41%, amortizing annually to December 29, 2006 and secured by a charge on the
Companys Lake Superior Power cogeneration assets.

Mississagi Power has issued a $151 million mortgage loan bearing interest at
the 30-day Bankers Acceptance rate plus 60 basis points until March 3, 2003 and
80 basis points thereafter. The facility matures on September 4, 2003.

Great Lakes Hydro America has issued a US$113 million mortgage loan bearing
interest at US prime plus 150 basis points which matures on January 30, 2005.

ENVIRONMENTAL MANAGEMENT

Great Lakes is committed to the environmentally responsible management of its
assets. Developments in the last 15 years have all been subjected to full
environmental assessment studies. Public information meetings have been held in
order to identify concerns and appropriate actions were taken to address those
concerns. Projects constructed prior to this period have been fully audited and
mitigation steps have been instituted, where necessary, to bring all plants to
accepted standards. Expenditures on environmental compliance are minimal due to
the nature of the assets held.

Great Lakes has funded fish stocking activities in the Magpie River and has
also worked for many years with local rod and gun clubs to hatch salmon in the
Michipicoten River. At the Lake Superior Power cogeneration plant in Sault Ste.
Marie, monitoring of air, water and noise is part of an ongoing program of
environmental management. At the Sydney A. Murray, Jr. Generating Station in
Louisiana, studies are being funded to ensure the continued existence of the
Pallid Sturgeon. This fish was previously thought to be close to extinction but
has recently been discovered by fishermen in the tailrace area of the plant.

The Company and its operating affiliates continue to monitor environmental
standards and to take a proactive position towards protecting the environment
in all their operations.

15



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##### 



Environmental Regulations

The development of hydroelectric resources and the construction and operation
of power projects are subject to extensive federal, provincial and state laws
and regulations adopted for the protection of the environment. The laws and
regulations applicable to Great Lakes operations primarily involve permits
required for the construction of the projects. These permits often contain
conditions that require the Company to assess and, where possible, mitigate
environmental impacts.

Many of the Companys hydroelectric generating stations were built before
strict environmental laws and regulations came into effect. Since approximately
1980, the Companys development projects have been subject to an environmental
assessment process, which includes public information meetings, full
environmental impact studies and requirements to take appropriate actions taken
to allay public concerns and environmental impacts where possible.

Non-compliance with environmental laws and regulations, or with conditions
contained in environmental permits and approvals, can result in the imposition
of substantial fines or other penalties. In some cases, environmental laws may
also impose clean-up or other remedial obligations, or an obligation to
mitigate environmental impacts from projects. The following federal and
provincial laws are among the more significant Canadian environmental laws that
apply to the Company. Other federal and provincial laws may also apply,
particularly to the development and construction of power projects, and may
impose stricter requirements than those discussed below.

Fisheries Act (Canada)

This Act prohibits the alteration or destruction of fish habitat, and prohibits
the addition of any substance that may be harmful to any water that may be
inhabited by fish. Permits are required for the construction of hydroelectric
projects, which may alter fish habitats. Most recent projects require
mitigation, compensation and monitoring agreements prior to the issuance of a
permit to alter or destroy fish habitat. All the Companys power projects
comply with the Fisheries Actand, where permits were required for the
construction or development of those projects, those permits were obtained. The
Company also believes it is in material compliance with any conditions imposed
by the permits obtained under the Fisheries Act.

Ontario Water Resources Act

The Ontario Water Resources Actis the main provincial statute regulating the
use of water in Ontario. It prohibits the addition of any substance to waters
in the province that may impair the quality of those waters. Permits are
required for the construction of hydroelectric projects, which regulate the
amount of water contained, minimum flows required downstream, and other
matters. The Company believes it is in material compliance with all its permits
under the Ontario Water Resources Act, and with the other requirements of the
Act.

Environmental Protection Act (Ontario)

The Environmental Protection Actprohibits discharges to land, air and water
that could have an adverse effect on the environment. It also imposes a
requirement for a Certificate of Approval for any construction or equipment
that may discharge a contaminant into any part of the environment other than
water. The Company has obtained all such necessary permits under the
Environmental Protection Act, and is in material compliance both with the
Environmental Protection Actand the permits issued under it.

The Environmental Protection Actalso regulates the management and disposal of
waste. The Companys waste generation is not significant, and all wastes are
disposed of in material compliance with the requirements of the Environmental
Protection Act. The Company is not currently subject to any liability of which
it is aware for the disposal of any of its waste.

The use and storage of PCBs, including PCB contaminated oils or transformers
and any PCB wastes, are governed by regulation, both federally and under the
Environmental Protection Act. The Company is in compliance with these
regulations. None of the companys major equipment contains PCBs, and lesser
pieces of equipment, such as rural transformers, are being tested for PCBs and
replaced as part of an ongoing maintenance program. PCB waste, including out of
service equipment, is stored in two designated PCB storage sites, pursuant to
regulation. These sites are subject to regular reporting requirements and
periodic inspection by the Ontario Ministry of the Environment.

Quebec Environmental and Resource Legislation

The Environmental Quality Actgoverns the Quebec approval process for the
construction and operation of power projects. It imposes a requirement for a
Certificate of Authorization to be issued by the Ministry of Environment for
works related to existing dams, new dams, powerplants and power transmission
lines.

The granting of hydraulic and water rights requires a lease from the Government
of Quebec to be approved by a decree issued under the Watercourses Act. In
addition, approval of the plans and specifications for dams, and the use,

16



---



##### 



management and storage of waters for electricity production, also require
approval by decree under the Watercourses Act.

Permits and approvals for power project related activities may also be required
under Quebecs Forest Act, the
Regulation Respecting Wildlife Habitat, the Act Respecting Land in the Public
Domainand the Act Respecting the Protection of Agricultural Land.

The Company believes that its operations in Quebec, conducted through Pontiac
Power, are in material compliance with its permits and all applicable
regulations.

United States Regulatory Matters

Louisiana HydroElectric Power and Great Lakes Hydro America are subject to
United States federal and state regulations. The facilities operating
licenses, provided by FERC, contain conditions: for example, in the case of
Louisiana HydroElectric Power, for quantities of water diversion and water
quality during dredging of the channel for the project, that continue during
the term of the license. The Company is in full compliance with its FERC
license conditions. In addition, the Companys US operations are subject to
regulation under both state and federal law with respect to the quality of
discharges to the sanitary sewer and its oil/water waste collection system.
These operations are in material compliance with its permits and all applicable
regulations.

CAPITAL BASE AND DIVIDEND POLICY

The authorized capital of the Company consists of an unlimited number of Class
A Preferred Shares and an unlimited number of common shares. As at April 30,
2003, there were 101,383,135 common shares issued and outstanding and no Class
A Preferred Shares issued and outstanding.

During 2001, the Articles of the Company were amended to delete from its
authorized capital the Class B Preferred Shares and the Class A Redeemable
Preferred Shares.

Dividends on the Companys common shares are paid quarterly in February, May,
August and November of each year. The quarterly dividend was increased to its
current level of $0.16 per share in 1996. Special dividends are periodically
considered and paid from retained earnings in excess of the Companys needs.

There exist, in certain circumstances, direct restrictions on the ability of
the Company to pay dividends as well as indirect restrictions, insofar as there
are restrictions on its subsidiaries in making distributions to the Company.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Managements Discussion and Analysis of Financial Condition and Results of
Operations for the year ended or as at December 31, 2002 are included in the
Companys Annual Report at pages 3 to 8 and are incorporated herein by
reference.

17



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##### 



CONSOLIDATED FINANCIAL INFORMATION

The following tables set forth the Companys consolidated balance sheets and
income statements as at and for the three years ended December 31, 2002:

Consolidated Balance Sheets

|                            |                               |      |       |       |  |      |       |       |  |   |       |       | 
|--------------------------- | ----------------------------- | ---- | ----- | ----- |  | ---- | ----- | ----- |  | - | ----- | ----- | 
|millions                    |                               | 2002 |       | 2001  |  | 2000
|                            |                               |      |       |       |  |     
|Assets                      |                               |      |       |       |  |      |       |       |  |   |       |      
|                            | Cash and securities           |      | $     | 600   |  |      | $     | 716   |  |   | $     | 667   | 
|                            | Accounts receivable and other |      |       | 186   |  |      |       | 336   |  |   |       | 242   | 
|                            | Long-term investments         |      |       | 559   |  |      |       | 521   |  |   |       | 536   | 
|                            | Power generating assets       |      |       | 2,155 |  |      |       | 1,357 |  |   |       | 1,197 | 
|                            |                               |      |       |       |  |      |       |       |  |   |       |       | 
|                            |                               | $    | 3,500 |       |  | $    | 2,930 |       |  | $ | 2,642 |      
|                            |                               |      |       |       |  |      |       |       |  |   |       |       | 
|Liabilities                 |                               |      |       |       |  |      |       |       |  |   |       |      
|                            | Accounts payable              |      | $     | 158   |  |      | $     | 92    |  |   | $     | 83    | 
|                            | Property specific borrowings  |      |       | 905   |  |      |       | 556   |  |   |       | 443   | 
|                            | Corporate term debentures     |      |       | 593   |  |      |       | 596   |  |   |       | 559   | 
|                            |                               |      |       |       |  |      |       |       |  |   |       |       | 
|                            |                               |      | 1,656 |       |  |      | 1,244 |       |  |   | 1,085 |      
|Future income tax liability |                               |      | 120   |       |  |      | 116   |       |  |   | 104   |      
|Non-controlling interests   |                               |      | 350   |       |  |      | 271   |       |  |   | 204   |      
|Capital base                |                               |      | 1,374 |       |  |      | 1,299 |       |  |   | 1,249 |      
|                            |                               |      |       |       |  |      |       |       |  |   |       |       | 
|                            |                               | $    | 3,500 |       |  | $    | 2,930 |       |  | $ | 2,642 |      
|                            |                               |      |       |       |  |      |       |       |  |   |       |       | 

Consolidated Income Statements

|                                   |                                     |      |     |      |  |      |     |      |  |  |     |      | 
|---------------------------------- | ----------------------------------- | ---- | --- | ---- |  | ---- | --- | ---- |  |  | --- | ---- | 
|millions, except per share amounts |                                     | 2002 |     | 2001 |  | 2000
|                                   |                                     |      |     |      |  |     
|Income                             |                                     |      |     |      |  |      |     |      |  |  |     |     
|                                   | Power revenue                       |      | $   | 340  |  |      | $   | 270  |  |  | $   | 246  | 
|                                   | Power purchases                     |      |     | 14   |  |      |     | 55   |  |  |     | 53   | 
|                                   | Net power revenue                   |      |     | 326  |  |      |     | 215  |  |  |     | 193  | 
|                                   |                                     |      |     |      |  |      |     |      |  |  |     |      | 
|                                   | Investment and other income         |      |     | 92   |  |      |     | 105  |  |  |     | 114  | 
|                                   |                                     |      |     |      |  |      |     |      |  |  |     |      | 
|                                   |                                     |      | 418 |      |  |      | 320 |      |  |  | 307 |     
|                                   |                                     |      |     |      |  |      |     |      |  |  |     |      | 
|Expense                            |                                     |      |     |      |  |      |     |      |  |  |     |     
|                                   | Interest                            |      |     | 90   |  |      |     | 82   |  |  |     | 83   | 
|                                   | Operating and maintenance           |      |     | 60   |  |      |     | 37   |  |  |     | 32   | 
|                                   | Fuel purchases                      |      |     | 18   |  |      |     | 21   |  |  |     | 16   | 
|                                   | Depreciation                        |      |     | 40   |  |      |     | 27   |  |  |     | 25   | 
|                                   | Non-controlling interests           |      |     | 18   |  |      |     | 12   |  |  |     | 15   | 
|                                   | Income and other taxes              |      |     | 25   |  |      |     | 10   |  |  |     | 20   | 
|                                   |                                     |      |     |      |  |      |     |      |  |  |     |      | 
|                                   |                                     |      | 251 |      |  |      | 189 |      |  |  | 191 |     
|                                   |                                     |      |     |      |  |      |     |      |  |  |     |      | 
|                                   | Net income                          |      | $   | 167  |  |      | $   | 131  |  |  | $   | 116  | 
|                                   |                                     |      |     |      |  |      |     |      |  |  |     |      | 
|                                   | Diluted net income per common share |      | $   | 1.32 |  |      | $   | 1.04 |  |  | $   | 0.92 | 
|                                   |                                     |      |     |      |  |      |     |      |  |  |     |      | 

18



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##### 



QUARTERLY OPERATING RESULTS

|                                               |  |         |      |          |  |         |       |         |  |         |       |          |  |         |       |         |  |   |      |  |  |   |       |  |  |   |      |  |  |   |       | 
|---------------------------------------------- |  | ------- | ---- | -------- |  | ------- | ----- | ------- |  | ------- | ----- | -------- |  | ------- | ----- | ------- |  | - | ---- |  |  | - | ----- |  |  | - | ---- |  |  | - | ----- | 
|                                               |  | 2002    |      | 2001    
|                                               |  |         |      |         
|millions, except per share amounts (unaudited) |  | Dec. 31 |      | Sept. 30 |  | June 30 |       | Mar. 31 |  | Dec. 31 |       | Sept. 30 |  | June 30 |       | Mar. 31
|                                               |  |         |      |          |  |         |       |         |  |         |       |          |  |         |       |        
|Gross revenues                                 |  | $       | 99.9 |          |  | $       | 107.5 |         |  | $       | 120.2 |          |  | $       | 113.1 |         |  | $ | 82.0 |  |  | $ | 101.6 |  |  | $ | 92.2 |  |  | $ | 117.0 | 
|Net income                                     |  |         | 29.1 |          |  |         | 42.8  |         |  |         | 52.9  |          |  |         | 42.3  |         |  |   | 24.8 |  |  |   | 37.9  |  |  |   | 37.8 |  |  |   | 30.4  | 
|Diluted net income
per common share            |  | $       | 0.23 |          |  | $       | 0.34  |         |  | $       | 0.41  |          |  | $       | 0.34  |         |  | $ | 0.20 |  |  | $ | 0.30  |  |  | $ | 0.30 |  |  | $ | 0.24  | 

In the three months ended March 31, 2003, the Company earned net income of
$33.2 million, compared to $42.3 million in the first quarter of 2002.

DIRECTORS AND OFFICERS

Each director holds office until the next annual meeting of shareholders of the
Company or until a successor is appointed. As a result of the going-private
transaction completed on March 2, 2001, none of the directors or officers owns
any securities of the Company. Particulars relating to each director are
disclosed in the Companys Annual Filing of Reporting Issuer dated March 31,
2003 on pages 2 and 3 and are included herein by reference.

Officers of the Company

The names and municipalities of residence of the officers of the Company, the
offices currently held by them and their other principal occupations are as
follows:

|                                         |  |                                                   |  |                                                                                    
|---------------------------------------- |  | ------------------------------------------------- |  | -----------------------------------------------------------------------------------
|Name and Municipal Residence             |  | Office                                            |  | Other Principal Occupation                                                         
|                                         |  |                                                   |  |                                                                                    
|Edward C. Kress
Toronto, Ontario         |  | Chairman                                          |  | Chairman, Power
Operations
Brascan Corporation                                     
|                                         |  |                                                   |  |                                                                                    
|Harry A. Goldgut
Vaughan, Ontario        |  | Co-Chairman and Chief Executive Officer           |  |                                                                                    
|                                         |  |                                                   |  |                                                                                    
|Richard Legault,
Gatineau, Quebec        |  | President and Chief Operating Officer             |  | President and Chief
Executive Officer
Great Lakes Hydro Income Fund                
|                                         |  |                                                   |  |                                                                                    
|Colin L. Clark
Sault Ste. Marie, Ontario |  | Senior Vice-President, Generation                 |  | President and Chief
Executive Officer,
Great Lakes Power Limited                   
|                                         |  |                                                   |  |                                                                                    
|Laurent Cusson
Gatineau, Quebec          |  | Senior Vice-President, Marketing                  |  | Executive
Vice-President, Marketing
Brascan Energy Marketing Inc.                  
|                                         |  |                                                   |  |                                                                                    
|Robert Desbois
Cornwall, Ontario         |  | Senior Vice-President, Energy Portfolio           |  | Senior
Vice-President, Energy Portfolio
Brascan Energy Marketing Inc.              
|                                         |  |                                                   |  |                                                                                    
|Alan V. Dean
Toronto, Ontario            |  | Senior Vice-President
and Secretary               |  | Senior
Vice-President, Corporate Affairs
and Secretary, Brascan Corporation        
|                                         |  |                                                   |  |                                                                                    
|Donald Tremblay
Masson, Quebec           |  | Senior Vice-President
and Chief Financial Officer |  | Executive Vice-President and
Chief Financial Officer, Brascan Energy Marketing Inc.
|                                         |  |                                                   |  |                                                                                    
|Michel Beaudin
Hull, Quebec              |  | Vice-President and Controller                     |  | Vice-President,
Controller

Brascan Energy Marketing Inc.                          
|                                         |  |                                                   |  |                                                                                    
|Sachin G. Shah
Vaughan, Ontario          |  | Vice-President, Finance                           |  | Assistant
Treasurer,
Brascan Corporation                                           

All of the officers listed above have held their current positions in the
Company for the past five years except as follows. Prior to February 2002, Mr.
Goldgut was President and Chief Operating Officer of the Company, a position he
was appointed to in October 1998. Prior to February 2002, Mr. Legault was
Executive Vice-President of the Company,

19



---



##### 



a position he was appointed to in April 2001, prior to which he was
Vice-President, Power Markets. Mr. Legault is also President of Brascan Energy
Marketing Inc. (BEMI), a position he was appointed to in November 1999.

Prior to February 2002, Mr. Clark was Vice-President, Power Development of the
Company, a position he was appointed to in April 2000. Mr. Clark is also
President and Chief Executive Officer of GLPL, a position he was appointed to
in April 2002. Prior to February 2002, Mr. Cusson was and continues to be
Executive Vice-President, Marketing for BEMI, a position he was appointed to in
November 1999.

Prior to February 2003, Mr. Desbois was Vice-President, Energy Portfolio for
BEMI, a position he was appointed to in March 2000, prior to which he was
employed by Tractabel.

Prior to April 2002, Mr. Tremblay was and continues to be Executive
Vice-President and Chief Financial Officer for BEMI, a position he was
appointed to in January 2002, prior to which he was Vice-President, Finance and
Administration for BEMI.

Prior to February 2003, Mr. Beaudin was Group Controller and Director of
Finance for BEMI, a position he was appointed to in May 2001, prior to which he
was employed by Versatel. Mr. Shah was appointed to his current positions in
April 2003, prior to which he was Manager, Corporate Finance for Great Lakes, a
position he was appointed to in June 2002, prior to which he was employed by
Ernest & Young, LLP.

SUBSIDIARIES

The following is a list of active subsidiaries of Great Lakes indicating the
jurisdiction of incorporation and the percentage of voting securities owned, or
over which control or direction is exercised, by the Company:

|                              |                                               |                                    |                                                       |                                          |                  |                  |     |                  |     |                      |  | 
|----------------------------- | --------------------------------------------- | ---------------------------------- | ----------------------------------------------------- | ---------------------------------------- | ---------------- | ---------------- | --- | ---------------- | --- | -------------------- |  | 
|                              |                                               |                                    |                                                       |                                          |                  |                  |     |                  |     | Percentage of Voting
|                              |                                               |                                    |                                                       |                                          |                  | Jurisdiction of  |     | Securities Owned
|Name of Subsidiary            |                                               | Incorporation                      |                                                       | or Controlled                           
|                              |                                               |                                    |                                                       |                                         
|Great Lakes Power Limited     |                                               | Ontario                            |                                                       |                                          | 100              |                 
|                              | BrasPower Equities Inc.                       |                                    | Quebec                                                |                                          |                  | 100              |    
|                              | First Toronto Equities Inc.                   |                                    | Ontario                                               |                                          |                  | 100              |    
|                              |                                               | The Catalyst Group, Inc.           |                                                       | Louisiana                                |                  |                  | 100 | (1)             
|                              |                                               |                                    | Catalyst Old River Hydroelectric, Limited Partnership |                                          | Louisiana        |                  |     | 75               | (1)
|                              | Lake Superior Power Inc.                      |                                    | Ontario                                               |                                          |                  | 100              |    
|                              |                                               | Lake Superior, Limited Partnership |                                                       | Ontario                                  |                  |                  | 100 |                 
|                              | Valerie Falls Power, Limited Partnership      |                                    | Ontario                                               |                                          |                  | 65               |    
|Great Lakes Hydro Income Fund |                                               | Quebec                             |                                                       |                                          | 50               |                 
|                              | Great Lakes Power Trust                       |                                    | Quebec                                                |                                          |                  | 100              |    
|                              |                                               | GNE Trust                          |                                                       | Quebec                                   |                  |                  | 100 |                 
|                              |                                               |                                    | GNE, Limited Partnership                              |                                          | Ontario          |                  |     | 100              |    
|                              |                                               |                                    |                                                       | Great Lakes Hydro America                |                  | Delaware         |     |                  | 100 |                     
|                              |                                               | Powell River Energy Trust          |                                                       | Quebec                                   |                  |                  | 100 |                 
|                              |                                               |                                    | Powell River Energy Inc.                              |                                          | British Columbia |                  |     | 50               |    
|                              |                                               |                                    |                                                       | Powell River Energy, Limited Partnership |                  | British Columbia |     |                  | 100 |                     
|                              |                                               | Mississagi Power Trust             |                                                       | Quebec                                   |                  |                  | 100 |                 
|                              |                                               |                                    | Mississagi Property Inc.                              |                                          | Ontario          |                  |     | 100              |    
|Highvale Power Corporation    |                                               | Alberta                            |                                                       |                                          | 100              |                 
|Hydro-Pontiac Inc.            |                                               | Quebec                             |                                                       |                                          | 100              |                 
|                              | Coulonge Power & Company, Limited Partnership |                                    | Quebec                                                |                                          |                  | 100              |    
|                              | Waltham Power & Company, Limited Partnership  |                                    | Quebec                                                |                                          |                  | 100              |    
|Brascan Energy Marketing Inc. |                                               | Ontario                            |                                                       |                                          | 100              |                 
|Brascan Power Services Inc.   |                                               | Ontario                            |                                                       |                                          | 100              |                 



---

|(1) |  | Non-voting interests.
|--- |  | ---------------------

In addition, the Company beneficially owns, or exercises control or direction
over 83% of the non-voting securities of First Toronto Equities Inc.

20



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##### 



ADDITIONAL INFORMATION

Additional information, including details of directors and officers
remuneration and indebtedness to the Company, together with principal holders
of the Companys securities and interests of insiders in material transactions,
where applicable, is contained in the Companys Annual Filing of Reporting
Issuer dated March 31, 2003.

Other financial information about the Company is also contained in the
Companys audited comparative consolidated financial statements for the fiscal
year 2002, provided at pages 9 to 19 in the Companys 2002 Annual Financial
Report.

The Company will provide to any person or company upon request to the Corporate
Secretary of the Company:



|(a) |  | when the securities of the Company are in the course of a distribution
pursuant to a short form prospectus or a preliminary short form prospectus,
which has been filed in respect of a distribution of its securities:
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (i)   |  | a copy of the Companys latest Annual Information Form, together with
a copy of any document, or the pertinent pages of any document,
incorporated therein by reference;                                                                                                                                                                                                                         
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | a copy of the comparative consolidated financial statements of the
Company for the Companys most recently completed financial year, together
with the report of the auditor thereon, Managements Discussions and
Analysis of Financial Condition and Results of Operations, and a copy of
any interim financial statements of the Company issued subsequent to the
annual financial statements;
|
| | (iii) |  | a copy of the Companys Annual Filing of Reporting Issuer; and                                                                                                                                                                                                                                                                                                                                   
|
| | (iv)  |  | a copy of any other document or report which is incorporated by

reference into a preliminary short form prospectus or a short form
prospectus; or                                                                                                                                                                                                                                               



|(b) |  | at any other time, a copy of any other document referred to in paragraphs
(a)(i), (ii) and (iii) above, provided that the Company may require the payment
of a reasonable charge from any person or company who is not a security holder
of the Company.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

21