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(ANNUAL INFORMATION FORM)




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TABLE OF CONTENTS THE COMPANY
    
    
    1CORPORATE PROFILE
    
    
    1SELECTED FINANCIAL AND OPERATING INFORMATION
    
    
    1RECENT DEVELOPMENTS
    
    
    2THE CORPORATIONS POWER BUSINESS
    
    
    3OTHER BUSINESS OPERATIONS
    
    
    9POWER GENERATION OUTLOOK
    
    
    9INVESTMENT ACTIVITIES
    
    
    13FINANCING ARRANGEMENTS
    
    
    14ENVIRONMENTAL MANAGEMENT
    
    
    15CAPITAL BASE AND DIVIDEND POLICY
    
    
    16MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    16CONSOLIDATED FINANCIAL INFORMATION
    
    
    17QUARTERLY OPERATING RESULTS
    
    
    18DIRECTORS AND OFFICERS
    
    
    18PRINCIPAL SHAREHOLDERS
    
    
    19SUBSIDIARIES
    
    
    20ADDITIONAL INFORMATION
    
    
    21
 ANNUAL INFORMATION FORM




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(GREAT LAKES POWER 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 asset management 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, 2003
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
and Brazil. These operations employed approximately 350 people at April 30,
2004. 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. As at April 30, 2004 the company operated 48 power generating
stations with a combined generating capacity of 1,827 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, Louisiana and Brazil. 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,
2003: millions, except per share amounts
    
    2003
    
    2002
    
    2001
    
    2000
    
    1999Financial positionTotal assets
    
    $
    3,580
    
    
    $
    3,500
    
    
    $
    2,930
    
    
    $
    2,642
    
    
    $
    2,405Debt
    
    
    1,603
    
    
    
    1,498
    
    
    
    1,152
    
    
    
    1,002
    
    
    
    890Capital baseConvertible debentures
    
    
    248
    
    
    
    248
    
    
    
    248
    
    
    
    248
    
    
    
    248Common shares
    
    
    1,134
    
    
    
    1,126
    
    
    
    1,051
    
    
    
    1,001
    
    
    
    9681,382
    
    
    
    1,374
    
    
    
    1,299
    
    
    
    1,249
    
    
    
    1,216Revenue and net incomeNet income
    
    $
    97
    
    
    $
    167
    
    
    $
    131
    
    
    $
    116
    
    
    $
    113Diluted net income per common share
    
    $
    0.77
    
    
    $
    1.32
    
    
    $
    1.04
    
    
    $
    0.92
    
    
    $
    0.90Dividends per common share
    
    
    0.64
    
    
    
    0.64
    
    
    
    0.64
    
    
    
    0.64
    
    
    
    0.64Operating resultsInstalled capacity (megawatts) (1)
    
    
    1,761
    
    
    
    1,636
    
    
    
    991
    
    
    
    905
    
    
    
    899Electricity generation (gigawatt hours) (2)
    
    
    6,279
    
    
    
    5,584
    
    
    
    3,959
    
    
    
    4,003
    
    
    
    4,222
   (1)
    
    At 100%(2)
    
    Reflects proportionate ownership. GREAT LAKES POWER INC.
    
    1




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Summary information on the Companys power operations as at April 30, 2004 is
shown below: GeneratingStations
    
    Generating Units
    
    InstalledCapacity(megawatts)OntarioGreat Lakes Power
    
    
    12
    
    
    
    21
    
    
    
    349Lake Superior Power
    
    
    1
    
    
    
    3
    
    
    
    110Mississagi Power
    
    
    4
    
    
    
    8
    
    
    
    488Valerie Falls Power
    
    
    1
    
    
    
    2
    
    
    
    1018
    
    
    
    34
    
    
    
    957QuebecLièvre River Power
    
    
    3
    
    
    
    10
    
    
    
    238Pontiac Power
    
    
    2
    
    
    
    7
    
    
    
    285
    
    
    
    17
    
    
    
    266Northeast  United StatesMaine Power
    
    
    7
    
    
    
    32
    
    
    
    130New Hampshire Power
    
    
    8
    
    
    
    25
    
    
    
    44White Mountain Energy
    
    
    1
    
    
    
    1
    
    
    
    2516
    
    
    
    58
    
    
    
    199Other Power OperationsLouisiana HydroElectric Power (Louisiana)
    
    
    1
    
    
    
    8
    
    
    
    192Pingston Power (British Columbia)
    
    
    1
    
    
    
    2
    
    
    
    30Powell River Energy (British Columbia)
    
    
    2
    
    
    
    7
    
    
    
    82Brazil
    
    
    5
    
    
    
    12
    
    
    
    1019
    
    
    
    29
    
    
    
    405Total
    
    
    48
    
    
    
    138
    
    
    
    1,827
 All the Companys power operations listed above consist of hydroelectric
generating facilities except for the Lake Superior Power and White Mountain
Energy cogeneration plants. 
 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
developments since January 1, 2001. On February 28, 2001, the shareholders of the Companys predecessor, Great
Lakes Power Inc., approved at a Special Meeting a going private transaction
proposed by that companys principal shareholder Brascan. Pursuant to this
offer, Brascan acquired in February 2001 the outstanding 4.3 million publicly
held common shares of Great Lakes Power Inc. 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. 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. 2
    
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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 Ontario Power generation (OPG)
for $346 million. Also in May 2002, the Company acquired through the Income Fund six
hydroelectric generating stations in northern New Hampshire having a combined
generating capacity of 31 MW for US$33 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 $67 million. On December 20, 2002, the Company purchased 100 additional units in the Income
Fund. As a result, the Company now owns approximately 50.1% of the Trust Units
of the Income Fund. 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 27 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. In May 2003, Great Lakes acquired an additional 35% in Valerie Falls Limited
Partnership, through the purchase of 100% of Seine River Power Inc., the
limited partner. In May 2003, the Company completed the expansion of the power interconnection
between its Maine Power system and the New England power grid through the
construction of a new 24 mile, 115 kilovolt transmission line at a cost of
US$17 million. This expansion increased the capacity of the interconnection
from 20 MW to 130 MW. In 2003, the Company initiated the approval process for the construction of a
new 9 MW hydroelectric station at its Cedar Falls dam on the Lièvre River in
Quebec. Approval of this $24 million project was obtained in 2003 for expected
completion in 2005. In June 2003, the Company completed a $384 million 6.6% senior bond issue due
June 16, 2023, secured by certain of its hydroelectric generating and
transmission assets in northern Ontario. In July 2003, the Company issued a
further $115 million 7.8% subordinated bonds secured by these assets. In 2003, the Company completed development of three hydroelectric generating
stations in southern Brazil, with a combined generating capacity of 60 MW. In November 2003, the Company completed a $175 million, 6.9% private placement
bond issue. The bonds are secured by the Mississagi Power assets in northern
Ontario. Also in November 2003, the Company acquired through the Income Fund three
hydroelectric stations in New Hampshire and Maine with a combined generating
capacity of 16.5 MW for approximately US$28 million. This acquisition increased
the Companys total generating power capacity to 1,761 MW. In January 2004, the Company acquired, through its Brazilian affiliate, Brascan
Energética, two hydroelectric stations in Brazil with a combined capacity of 40
MW, for US$28 million (80 million Reais). In the first quarter of 2004, the Company completed the construction on a US$32
million 25 MW natural gas-fired cogeneration in New Hampshire. The electricity
and steam produced by this facility will be provided to the pulp and paper
facilities in Berlin/Gorham owned by Nexfor Inc., an affiliate of Brascan,
under a 10-year tolling agreement. 
 THE CORPORATIONS POWER BUSINESS Summary 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. GREAT LAKES POWER INC.
    
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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 50.1% interest. The Income Funds
units are listed for trading on the Toronto Stock Exchange. The Company operates its power business in four geographic regions: 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 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. 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 seven hydroelectric generating stations having a
combined generating capacity of 130 MW in northern Maine, six located on the
main and west branches of the Penobscot River and one on the Moose River. This
operation also has a transmission interconnection with the New England power
grid. These facilities were acquired by the Income Fund in February 2002 and
November 2003. New Hampshire Powerincludes eight hydroelectric generating stations with a
combined capacity of 44 MW, located on the Androscoggin River in northern New
Hampshire. These facilities were acquired by the Income Fund in May 2002 and
November 2003. White Mountain Energyconsists of a 25 MW natural gas-fired cogeneration
located in Berlin/Gorham. 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 also owns five hydroelectric stations in Brazil, which have a
combined generating capacity of 101 MW. A description of each of the Companys principal operating units follows. Great Lakes Power The Companys 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 4
    
    ANNUAL INFORMATION FORM




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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 140 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 continued 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. 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. Mississagi Power 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. Pursuant to a 20 year Master Power Purchase and Sale Agreement ending on
December 31, 2022, all power generated by the Mississagi Power System will be
sold to Brascan Energy Marketing (BEMI), a wholly-owned subsidiary of GLPI,
at a price of $57.50/MWh, escalated annually by 20% of the increase in the
Consumer Price Index of the previous year. Great Lakes guarantees BEMIs
payment obligation under the agreement. A hydrology reserve facility is provided by Great Lakes to Mississagi Power
through the Income Fund to a maximum amount of $10 million in order to level
the cash distributions to unitholders as a consequence of changes in hydrology
from year to year. The facility is available for a period ending on the earlier
of (i) May 17, 2022, (ii) the date of the sale of all or substantially all of
the Mississagi Power System, and (iii) a change of control of MPT. MPT is
entitled to draw up to $3 million per contract per year for such purposes. 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. Seine River Power Inc., a wholly-owned subsidiary of GLPI since May
2003, is the limited partner and holds a 35% interest in the partnership. Great
Lakes owns the remaining 65% limited partnership interest directly. 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. a wholly owned subsidiary of the Company. Lake Superior
Power employs 15 people. The Lake Superior Power cogeneration plant, 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. 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. The terms of the agreements
are for 15 and 16 years, expire on January 1, 2009 and November 1, 2008
respectively, and are extendible on a year-to-year basis if mutually agreed by
the parties. Lake Superior Power has also entered into transportation
agreements with TransCanada Pipelines Limited and Union Gas Limited Inc. for
the transportation of natural gas. GREAT LAKES POWER INC.
    
    5




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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. Low-pressure steam not used to produce electricity is available for sale to
industrial customers. Lake Superior Power currently sells low-pressure steam to
St. Marys Paper under an agreement entered into with St. Marys Paper in October
1994. 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. 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. Lièvre
River Power employs 35 people. 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 Lièvre River Power through the Income Fund to a maximum amount of $15
million in order to levelize cash distributions to Income Fund unitholders 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 average levels or upon the sale of all or substantially all of
the Lièvre power system. 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 3. The 11 MW Waltham station is located on the Noire River and the 17 MW Coulonge
station is located on the Coulonge River. 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. 6
    
    ANNUAL INFORMATION FORM




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Maine and New Hampshire Power Maine Powers generating facilities include seven hydroelectric stations
containing 32 generating units with an aggregate installed capacity of 130 MW.
The system is interconnected with the New England Power Pool through a 130, 115
kV transmission line. New Hampshire Powers generating facilities include eight stations with 25
generating units which generate approximately 263 GWh of electricity annually.
These generating facilities are all licensed by the US Federal Regulatory
Agency (FERC). Pursuant to 20 year power purchase agreements between GLHA and BEMI ending in
2022 and 2023 respectively, all power generated by GLHA at the Maine, New
Hampshire and Pontook Power Systems will be sold to BEMI at a price of
US$36/MWh, escalated annually by 20% of the increase in the US Consumer Price
Index of the previous year. 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.
BEMI then sells all power generated by the Maine and New Hampshire Power
systems to affiliates of the Company under long-term contracts of a duration of
12 and 10 years respectively. GLHA, a wholly owned subsidiary of the Income Fund owns and operates Maine and
New Hampshire Power systems and employs 31 people. White Mountain Energy During the first quarter of 2004, Great Lakes completed 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
owned by Nexfor Inc., an affiliate of Brascan under a 10 year tolling
agreement. 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 and seven generating units
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 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. The average annual generation is 522 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 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. Great Lakes guarantees to Powell River Energy the obligation
under the power purchase agreement. Pingston 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 at a cost of $65 million. 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 commenced commercial operations in May 2003. GREAT LAKES POWER INC.
    
    7




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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. Louisiana HydroElectric Power employs 25 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. Under the terms of the sale and leaseback transaction, 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 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. Brascan Energetica Brascan Energetica S.A. (BESA) conducts the companys power operations is
located in Brazil. In 2003, BESA completed the construction of 3 hydroelectric
power plants with combined installed capacity of 61 MW. In 2004, BESA also
acquired 2 existing hydroelectric power plants with a combined capacity of 40
MW. The power plants are operated from a central control room in Curitiba in the
state of Paraná, South of Brazil. The plants are on different river systems:
two are in the state of Parana and one is in the state of Rio Grande do Sul,
all in Southern Brazil. The two other plants are located in the state of Minas
Gerais in the Southeast of Brazil. Each of the plants has power purchase
agreements with end-use customers or local distribution companies for most of
the annual power generation produced by the plants. BESA is a member of the Electrical Energy Wholesale Market Services Manager
(called MAE) and of the Electrical Physical System National Operator (called
ONS). Since the hydrology could fluctuate from one season to another and also
by region, these regulatory and power grid managing organizations are assuring
to their members a pre-determined amount of MW per power plant (called annual
assured energy). The annual assured energy level usually represents 95 % of the
long term average of the river system. It allows power producers to meet the
contracted volume of energy under their customer power purchase agreements. The
above mentioned organizations are equilibrating the daily generation of each
power plant with the power load required in the country, considering the
specific fluctuations in hydrology conditions prevailing on each river systems. 8
    
    ANNUAL INFORMATION FORM




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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. 
 POWER GENERATION OUTLOOK Strategic Emphasis and Outlook Since the beginning of 2002, Great Lakes has increased generating capacity
through the acquisition of existing hydroelectric generating facilities in
Ontario, Maine and New Hampshire and the completion of new hydroelectric
generating stations in Ontario and British Columbia. Together these initiatives
increase our power generation base to over 1,800 MW. This expansion positions
the Company to diversify and strengthen operations in 2004 and beyond. The Company continues to explore further acquisition opportunities in the North
American power generation industry. Our preference is for long-life
hydroelectric generating facilities with water storage reservoirs. We will also
consider developing wind power projects or acquiring thermal generating
stations, with a knowledgeable partner where appropriate. Our guidelines of
investment are as follow: (i) invest in areas where we possess a competitive
advantage and never bet the Company on any one acquisition; (ii) acquire assets
on a value basis; (iii) build sustainable cash flows to provide certainty,
reduce risk and lower the cost of capital; (iv) recognize that superior return
involves hard work and often requires contrarian thinking. We are measuring our success over the long-term by total return on capital and
are seeking profitability rather than growth because size doesnt necessarily
add value. We are prepared to sacrifice short-term profit to achieve long-term
growth and encourage taking calculated risk. The Company has the following strategic priorities: (i) increase and strengthen
cash flow from the generation business and position the Company to market power
in open access, competitive markets; (ii) expand its production base through
the acquisition of existing generating assets (iii) develop greenfield sites
and expand existing transmission network in Ontario. 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 GREAT LAKES POWER INC.
    
    9




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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 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. On April 1, 1999, 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. (OPG); 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. 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. Ontarios energy market was opened 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. In
addition, the treatment of Ontarios independent power companies, such as
Brascan Power, was finalized. A change in the implementation of Ontarios new regime occurred on December 9,
2002, with the passing of the Electricity Pricing, Conservation and Supply Act,
2002which, together with the regulations made pursuant thereto:  
    
    Caps the commodity price for electricity payable by low-volume
consumers (those who consume less than 250,000 kWh of energy per year)
and certain designated electricity to consumers (such as schools and
hospitals) at 4.3 cents/kWh. On November 25, 2003, the Ontario Liberal
government proposed new legislation which would raise the cap to 4.7
cents/kWh for the first 750 kWh and 5.5 cents/kWh for usage above 750
kilowatt hours;
    
    Requires distributors or transmitters seeking increases in
regulated distribution and transmission rates before May 1, 2006 to
obtain approval of the Minister of Energy before submitting
applications for such increases to OEB; and
    
    Provides certain tax incentives to generators that expand or build
electricity generating facilities that generate electricity from
alternative or renewable sources of energy. The Electricity Pricing, Conservation and Supply Act, 2002does not impact the
wholesale market and the bid and offer process for generators that is currently
settled by the IMO. Additionally, on July 3, 2003, the Ontario government announced a plan to
implement a Green Power Standard designed to encourage the development of
renewable energy in Ontario. The plan intends to require Ontarios electricity
system to secure an additional one per cent of its current electricity needs
from renewable sources in each of eight years, starting in 2006. Quebec In Québec, 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 Québecs development and the means that
will be used to meet the energy needs of Québec consumers. According to the Act, Hydro-Québec possesses exclusive electric power
distribution rights throughout Québec, excluding those areas that, on May 13,
1997, were served by a distributor operating a municipal or private electric
distribution system. 10
    
    ANNUAL INFORMATION FORM




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On May 13, 1997, the Lièvre River Power System was operated by Nexfor as a
private electric distribution system. Hydro-Québec therefore does not have
exclusive distribution rights within the areas served by the Lièvre River 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 Québec 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. 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. Risk Factors 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 GREAT LAKES POWER INC.
    
    11




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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. Hydrology The revenues generated by the power systems are proportional to the amount of
electricity generated. The amount of electricity generated by the power systems
is dependent upon available water flows. Accordingly, revenues and cash flows
will be significantly affected by low and high water flows in the watersheds.
There can be no assurance that the long-term historical water availability will
remain unchanged or that no material hydrologic event will impact the
hydrologic conditions that exist within the watershed. Annual deviations from
the long-term annual average can be significant. Equipment Failure There is a risk of equipment failure due to wear and tear, latent defect,
design error or operator error, among other things, which could adversely
affect revenues and cash flows. Although the power systems have operated in
accordance with expectations, there can be no assurance that they will continue
to do so. Nevertheless, this risk is substantially mitigated by the proven
nature of hydroelectric technology, the design of the plants, the power
systems capital programs, adherence to prudent maintenance programs,
comprehensive insurance and significant operational flexibility as a result of
having generating units which can operate independently. Foreign Exchange The prices paid for energy produced by US operations are denominated in US
dollars and, therefore, results may be affected by the fluctuations of the
Canadian/U.S. dollar exchange rate over time. The US operations operating
expenses and financing costs incurred are denominated in US dollars, thus
providing a natural hedge. In addition, the Company may manage the risk
associated with foreign exchange rates fluctuation by entering, from time to
time, into forward foreign exchange contracts and engaging in other hedging
strategies. To the extent that the Company engages in risk management
activities related to foreign exchange rates, it will then be subject to credit
risks associated with the counterparties with which it contracts. 12
    
    ANNUAL INFORMATION FORM




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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, 2003 compared to the prior year is
summarized below: Millions
    
    2003
    
    2002Real estate
    
    $
    151
    
    
    $
    160Natural resources
    
    
    126
    
    
    
    161Financial services and diversified
    
    
    242
    
    
    
    199Other
    
    
    25
    
    
    
    70$
    544
    
    
    $
    590
 Long-term Investments The book values of the Companys principal long-term investments at December
31, 2003 compared to the prior year are shown below: Millions
    
    2003
    
    2002Brascan Financial Corporation
    
    $
    195
    
    
    $
    195Noranda Inc.
    
    
    146
    
    
    
    146Other investments
    
    
    103
    
    
    
    218$
    444
    
    
    $
    559
 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. GREAT LAKES POWER INC.
    
    13




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FINANCING ARRANGEMENTS The Company finances its operations through project specific financing 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. The $384 million First Mortgage Bonds Series 1 and the $115 subordinated First
Mortgage Bonds bear interest at the rate of 6.60% and 7.80% respectively, are
due on June 16, 2023 and are secured by a charge on all present and future real
property of the electricity power generating assets of Great Lakes Power. These
bonds replaced the $316 million First Mortgage Bonds Series 4 and 5 bearing
interest at respective rates of 6.57% and 4.58%, which matured June 16, 2003. The US$136 million Great Lakes Hydro America (GLHA) mortgage loan with an
affiliate bears interest at US prime plus 150 basis points and matures on
January 29, 2005. The loan is secured by a charge on all present and future
real and personal property of GLHA and its subsidiaries. GLHA is a wholly
owned subsidiary of Great Lakes Power Trust. The Company has established a US$100 million loan facility with Brascan, its
principal shareholder, which can be drawn down at any time, bearing interest at
the prime rate and secured by the Companys residual interest in Louisiana
HydroElectric Power. At either partys option, the facility may be drawn down
and converted into a fixed-rate financing at 9.75% repayable in 2015. 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 outstanding $61 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 outstanding $32 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 holds a proportionate share in the $75 million Powell River Energy
first mortgage bond, which bears interest at 6.4%, is due July 2009 and is
secured by a charge on the respective Powell River Energy operating assets. Lake Superior Power has outstanding a $13 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 $175 million mortgage loan bearing interest at
6.92% and mature on November 27, 2020. The bonds are secured by a charge on
all present and future real and personal property of Mississagi Power Trust. Lièvre River Power has available a credit facility comprised of a $25 million
line of credit and a $25 million term loan for general corporate purposes which
can be drawn upon in Canadian or US dollars and is bearing interest based on
Canadian prime rate, US base rate or LIBOR plus a margin. Standby fees of 20
basis points are charged on the undrawn credit facility. If not renewed, the
credit facility will be due on the earlier of [i] the date on which issued
Series 1 First mortgage bonds are due or redeemed, and [ii] November 18, 2004.
The credit facility ranks pari passu with Lièvre River Power first mortgage
bonds and is secured by a first ranking lien on all GLPTs assets. A credit facility in the
amount of $2.5 million is also available to Powell
River Energy by way of advances in Canadian dollars of (i) prime rate loans
(ii) bankers acceptance (BAs) loans and (iii) letters of credit. Standy
fees of 17.5 basis points are charged on the undrawn credit facility. If not
renewed, the credit facility will be due on December 18, 2004. At December 31, 2003, the Income Fund had drawn $ 21 million on the two credit
facilities in the form of BAs. Great Lakes also has access to a $100 million bank facility. No amount was
drawn on this facility as at December 31, 2003. 14
    
    ANNUAL INFORMATION FORM




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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. 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. 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, GREAT LAKES POWER INC.
    
    15




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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,
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,
2004, 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, 2003 are included in the
Companys Annual Report at pages 3 to 8 and are incorporated herein by
reference. 16
    
    ANNUAL INFORMATION FORM




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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, 2003: Consolidated Balance Sheets Millions
    
    2003
    
    2002
    
    2001AssetsCash and securities
    
    $
    575
    
    
    $
    600
    
    
    $
    716Accounts receivable and other
    
    
    422
    
    
    
    186
    
    
    
    336Long-term investments
    
    
    444
    
    
    
    559
    
    
    
    521Power generating assets
    
    
    2,139
    
    
    
    2,155
    
    
    
    1,357$
    3,580
    
    
    $
    3,500
    
    
    $
    2,930LiabilitiesAccounts payable
    
    $
    114
    
    
    $
    158
    
    
    $
    92Property specific borrowings
    
    
    1,116
    
    
    
    905
    
    
    
    556Corporate term debentures
    
    
    487
    
    
    
    593
    
    
    
    5961,717
    
    
    
    1,656
    
    
    
    1,244Future income tax liability
    
    
    152
    
    
    
    120
    
    
    
    116Non-controllng interests
    
    
    329
    
    
    
    350
    
    
    
    271Capital base
    
    
    1,382
    
    
    
    1,374
    
    
    
    1,299$
    3,580
    
    
    $
    3,500
    
    
    $
    2,930
 Consolidated Income Statements millions, except per share amounts
    
    2003
    
    2002
    
    2001Total revenues
    
    $
    448
    
    
    $
    340
    
    
    $
    270Net operating incomePower generation
    
    
    241
    
    
    
    247
    
    
    
    157Investment and other income
    
    
    80
    
    
    
    92
    
    
    
    105321
    
    
    
    339
    
    
    
    262ExpenseInterest expense
    
    
    93
    
    
    
    90
    
    
    
    82Depreciation
    
    
    55
    
    
    
    40
    
    
    
    27Non-controlling interests
    
    
    22
    
    
    
    18
    
    
    
    12Administrative costs
    
    
    23
    
    
    
    15
    
    
    
    Non-cash taxes and other
    
    
    31
    
    
    
    9
    
    
    
    10224
    
    
    
    172
    
    
    
    131Net income
    
    $
    97
    
    
    $
    167
    
    
    $
    131Diluted net income per common share
    
    $
    0.77
    
    
    $
    1.32
    
    
    $
    1.04
 GREAT LAKES POWER INC.
    
    17




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QUARTERLY OPERATING RESULTS millions, except
    
    2003
    
    2002per share amounts(unaudited)
    
    Dec. 31
    
    Sept. 30
    
    June 30
    
    Mar. 31
    
    Dec. 31
    
    Sept. 30
    
    June 30
    
    Mar. 31Power revenues
    
    $
    147
    
    
    $
    119
    
    
    $
    99
    
    
    $
    83
    
    
    $
    100
    
    
    $
    108
    
    
    $
    117
    
    
    $
    107Net income
    
    
    14
    
    
    
    24
    
    
    
    26
    
    
    
    33
    
    
    
    29
    
    
    
    43
    
    
    
    53
    
    
    
    42Diluted net income per common share
    
    $
    0.11
    
    
    $
    0.21
    
    
    $
    0.21
    
    
    $
    0.26
    
    
    $
    0.23
    
    
    $
    0.34
    
    
    $
    0.41
    
    
    $
    0.34
 In the three months ended March 31, 2004, the Company earned net income of $52
million, compared to $33 million in the first quarter of 2003. 
 DIRECTORS AND OFFICERS Directors of the Company 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. The following table sets out the names of the
ten directors of the Corporation as at April 30, 2004, along with all major
positions and offices in the Corporation or its major affiliates held be each
of them, their principal occupation or employment and the year in which they
were first elected as a director of the Corporation or a predecessor company. Name and
    
    Office and Principal
    
    Year BecameMunicipal Residence
    
    Occupation
    
    Director(b)Alex G. Balogh(a),
Oakville, Ontario
    
    Chairman of the Board and Director of
Falconbridge Limited, a natural
resources company
    
    
    1998Jack L. Cockwell,
Toronto, Ontario
    
    Group Chairman and Director of
Brascan Corporation, an asset
management company
    
    
    1980Ronald J. Daniels,
Toronto, Ontario
    
    Dean, Faculty of Law
University of Toronto
    
    
    2000Richard Drouin(a), O.C., Q.C.
Montreal, Quebec
    
    Chairman, Abitibi  Consolidated Inc.
    
    
    2004Robert A. Dunford,
Aurora, Ontario
    
    Corporate Director
    
    
    1980Harry A. Goldgut,
Vaughan, Ontario
    
    Co-Chairman and Chief Executive
Officer of the Corporation
    
    
    1997J. Bruce Flatt,
Toronto, Ontario
    
    President and Chief Executive Officer
of Brascan Corporation
    
    
    2003Edward C. Kress,
Toronto, Ontario
    
    Chairman of the Corporation
    
    
    1991O. Allan Kupcis,
Toronto, Ontario
    
    Chairman, Canadian Nuclear Association
    
    
    2004Sidney A. Lindsay(a),
Toronto, Ontario
    
    President of Lindsay Consultants, a
financial consulting firm
    
    
    1991
   (a)
    
    Member of the Audit Committee(b)
    
    Indicates year first elected as a director of the Corporation or a
predecessor company All of  the persons named in the preceding table were re-appointed members of the board of directors of the Corporation on June 30, 2003, except for
Messrs. R. Drouin and A. Kupcis, who were appointed to the board on 18
    
    ANNUAL INFORMATION FORM




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February 19, 2004. Mr. Drouin is Chairman of Abitibi  Consolidated Inc. and
serves on a number of other corporate and community boards. He served as
Chairman and CEO of Hydro-Quebec from 1988 to 1995. Mr. Kupcis is Chairman of
the Canadian Nuclear Association and serves on a number of other corporate and
community boards. He served as President and CEO of Ontario Hydro from 1995 to
1997. 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 andMunicipal Residence
    
    OfficeEdward C. Kress
    
    ChairmanToronto, OntarioHarry A. Goldgut
    
    Co-Chairman and Chief Executive OfficerVaughan, OntarioRichard Legault,
    
    President and Chief Operating OfficerGatineau, QuebecColin L. Clark
    
    Executive Vice-President, Development and Chief Technical OfficerOttawa, OntarioLaurent Cusson
    
    Senior Vice-President, Western OperationsGatineau, QuebecAlan V. Dean
    
    Senior Vice-President and SecretaryToronto, OntarioDonald Tremblay
    
    Senior Vice-President and Chief Financial OfficerGatineau, QuebecGilles Larocque
    
    Vice-President, Corporate FinanceGatineau, Quebec
 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. Prior to
February 2002, Mr. Legault was Executive Vice-President of the Company, a
position he was appointed to in April 2001, prior to which he was
Vice-President, Power Markets. Prior to February 2004, Mr. Clark was Senior
Vice-President, Generation and Vice-President, Power Development of the
Company, positions he was appointed to in February 2002 and April 2000,
respectively. Prior to February 2004, Mr. Cusson was Senior Vice-President
Marketing a position he was appointed to in February 2002, prior to which he
was Executive Vice-President Marketing for BEMI. 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
August 2003, Mr. Larocque was employed by Papier Masson Ltd. 
 PRINCIPAL SHAREHOLDERS As of April 30, 2004, the Corporation had outstanding 101,383,135 fully paid
and non-assessable Common Shares. Each holder of Common Shares, at a meeting
of the Shareholders, is entitled to one vote for each Share. To the knowledge of the directors and officers of the Corporation, the only
persons who or corporations which beneficially own, directly or indirectly, or
exercise control or direction over Common Shares carrying more than 10% of the
voting rights attached to shares of the Corporation are Brascan Corporation,
which owns 84,383,135 Common Shares, and GLP NT Corporation (GLP NT), which
owns 17,000,000 Common Shares. These holdings represent approximately 83.2% and
16.8%, respectively of the Corporations Common Shares. Brascan is an asset management company, which operates in the real estate,
power generation and funds management sectors. Brascans Class A Limited Voting
Shares are listed on the Toronto and New York stock exchanges. GLP NT is an
investment holding company whose major asset is its indirect shareholding in
the GREAT LAKES POWER INC.
    
    19




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##### 



Corporation. Its Class A non-voting retractable shares are listed on the
Toronto Stock Exchange. The Corporation is advised that Brascan and its
affiliates own 74.5% of the Class A non-voting retractable shares of GLP NT. 
 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 VotingJurisdiction of
    
    Securities OwnedName of Subsidiary
    
    Incorporation
    
    or ControlledBrascan Energy Marketing Inc.
    
    Ontario
    
    
    100Brascan Power Services Inc.
    
    Ontario
    
    
    100First Toronto Equities Inc.
    
    Ontario
    
    
    100Catalyst Old River Hydroelectric, Limited Partnership
    
    Louisiana
    
    
    75
    (1)Great Lakes Hydro Income Fund
    
    Quebec
    
    
    50Great Lakes Power Trust
    
    Quebec
    
    
    100GNE Trust
    
    Quebec
    
    
    100Great Lakes Hydro America
    
    Delaware
    
    
    100Powell River Energy Trust
    
    Quebec
    
    
    100Mississagi Power Trust
    
    Quebec
    
    
    100Great Lakes Power Limited
    
    Ontario
    
    
    100Highvale Power Corporation
    
    Alberta
    
    
    100Hydro-Pontiac Inc.
    
    Quebec
    
    
    100Lake Superior Power Inc.
    
    Ontario
    
    
    100Pingston Creek Joint Venture
    
    British Columbia
    
    
    50Seine River Power Inc.
    
    Ontario
    
    
    100Valerie Falls Power, Limited Partnership
    
    Ontario
    
    
    100
   (1)
    
    Non-voting interests. 20
    
    ANNUAL INFORMATION FORM




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ADDITIONAL INFORMATION Other financial information about the Company is also contained in the
Companys audited comparative consolidated financial statements for the fiscal
year 2003, provided at pages 9 to 20 in the Companys 2003 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. GREAT LAKES POWER INC.
    
    21