EPCOR Power Equity Ltd. and EPCOR Power L.P.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- exemption granted from the continuous disclosure, certification, insider reporting, audit committee and corporate governance requirements. Issuer meets the conditions of section 13.4 of NI 51-102, except the issuer proposes to issue convertible preferred shares that are convertible into other preferred shares of the issuer.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Requirements.

National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings.

National Instrument 52-110 Audit Committees.

National Instrument 58-101 Disclosure of Corporate Governance Practices.

National Instrument 55-102 System for Electronic Disclosure by Insiders.

National Instrument 44-101 Short Form Prospectus Distributions

Citation: EPCOR Power Equity Ltd., EPCOR Power Equity L.P., Re, 2009 ABASC 492

October 9, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

EPCOR POWER EQUITY LTD. (the Issuer) AND

EPCOR POWER L.P.

(the Partnership and together with the Issuer,

the Filers)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) granting the Issuer or its insiders, as the case may be, relief from the following:

(a) the continuous disclosure requirements contained in the Legislation, including requirements under National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), as amended from time to time (the Continuous Disclosure Requirements);

(b) the certification requirements contained in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109), as amended from time to time (the Certification Requirements);

(c) the insider reporting requirements contained in the Legislation and the requirement to file an insider profile and insider reports under National Instrument 55-102 System for Electronic Disclosure by Insiders (NI 55-102), as amended from time to time, in respect of insiders of the Issuer (the Insider Reporting Requirements);

(d) the requirements of the Legislation relating to audit committees, including, without limitation, National Instrument 52-110 Audit Committees (NI 52-110), as amended from time to time (the Audit Committee Requirements);

(e) the corporate governance disclosure requirements contained in National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101), as amended from time to time (the Corporate Governance Requirements); and

(f) the requirement in Section 2.4 of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101), as amended from time to time, that preferred shares be non-convertible in order for the Issuer to be qualified to file a short form prospectus in respect of a distribution of such shares (the Short Form Prospectus Eligibility Requirement).

The Decision Maker has received an application from the Filers for a decision under the Legislation that the application for this decision and this decision (collectively, the Confidential Material) be kept confidential pursuant to Section 5.4 of National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions (NP 11-203), as amended from time to time until the earlier of: (i) the date on which the Issuer is issued a receipt for the preliminary short form prospectus in respect of the distribution of the Series 2 Shares; (ii) the date that the Issuer advises the Decision Makers that there is no longer any need for the Confidential Material to remain confidential; and (iii) the date that is 90 days after the date of this decision (the Request for Confidentiality).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application,

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Newfoundland & Labrador, Prince Edward Island, Yukon Territory, Northwest Territories and Nunavut, and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meanings if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filers:

The Issuer

1. The Issuer was incorporated under the laws of the Province of Alberta on June 26, 1998.

2. The head office and principal place of business of the Issuer is located in Edmonton, Alberta.

3. The Issuer is a reporting issuer, or the equivalent, in each of the Jurisdictions, and to its knowledge is not in default of any requirements under the Legislation.

4. The Issuer operates as a holding company and indirectly holds all of the Partnership's business and power generation and other assets in the United States.

5. The authorized share capital of the Issuer currently consists of an unlimited number of Class A common shares (the Common Shares) and an unlimited number of cumulative redeemable preferred shares (the Preferred Shares), issuable in series, of which up to 5,750,000 Cumulative Redeemable Preferred Shares, Series 1 (the Series 1 Shares) have been authorized for issuance. As of September 18, 2009, there were a number of Common Shares outstanding and 5,000,000 Series 1 Shares outstanding.

6. The only voting securities of the Issuer are the Common Shares, all of which are beneficially owned by the Partnership.

7. The Preferred Shares may at any time and from time to time be issued in one or more series having such rights, restrictions and privileges determined by the directors of the Issuer. Subject to any rights which may be attached to a series of Preferred Shares and applicable law, the holders of Preferred Shares shall not be entitled to vote at any meeting of shareholders of the Issuer.

8. The Partnership has provided a full and unconditional guarantee of the payments to be made by the Issuer, as stipulated in the terms of the Series 1 Shares, which results in the holders of such securities being entitled to receive payment from the Partnership within 15 days of any failure by the Issuer to make a payment, as contemplated by paragraph (d) of the definition of "designated credit support security" in NI 51-102.

9. The Issuer has not issued any securities, and does not have any securities outstanding, other than the Series 1 Shares, which are "designated credit support securities" (as defined in NI 51-102), the Common Shares, which were issued to and are held by the Partnership as "parent credit supporter" (as defined in NI 51-102), and other securities described in Section 13.4(2)(c)(ii), (iii) and (iv) of NI 51-102.

10. The Issuer is a "credit support issuer" (as defined in NI 51-102) and currently satisfies the requirements of NI 51-102 by relying on Section 13.4(2) of NI 51-102, and subject to that Section has filed all documents it is required to file under NI 51-102.

11. The Issuer has relied on Section 13.4(2) to satisfy the requirements of NI 51-102 and as such, has also relied on Section 8.5 of NI 52-109 in respect of the Certification Requirements, Section 1.2(g) of NI 52-110 in respect of the Audit Committee Requirements and Section 1.3(d) of NI 58-101 in respect of the Corporate Governance Requirements, insiders of the Issuer have relied on Section 13.4(3) of NI 51-102 in respect of the Insider Reporting Requirements, and, in connection with the issuance of the Series 1 Shares, the Issuer relied on Section 2.4 of NI 44-101 in respect of the Short Form Prospectus Eligibility Requirement.

12. The Issuer is proposing to amend its articles to create two new series of Preferred Shares, being Cumulative Rate Reset Preferred Shares, Series 2 (the Series 2 Shares) and Cumulative Floating Rate Preferred Shares, Series 3 (the Series 3 Shares).

13. The Partnership will provide a full and unconditional guarantee of the payments to be made by the Issuer, as stipulated in the terms of the Series 2 Shares and the Series 3 Shares, which will result in the holders of such securities being entitled to receive payment from the Partnership within 15 days of any failure by the Issuer to make a payment, as contemplated by paragraph (d) of the definition of "designated credit support security" in NI 51-102.

14. The Series 2 Shares will be convertible, in certain circumstances at the option of the holder or the Issuer, into an equal number of Series 3 Shares, therefore, the Series 2 Shares will not be "designated credit support securities" (as defined in NI 51-102).

15. The Series 3 Shares will be convertible, in certain circumstances at the option of the holder or the Issuer, into an equal number of Series 2 Shares, therefore, the Series 3 Shares will not be "designated credit support securities" (as defined in NI 51-102).

16. The Issuer is proposing to distribute the Series 2 Shares to the public pursuant to a short form prospectus filed in each of the Jurisdictions. The short form prospectus will be prepared pursuant to the short form procedures contained in NI 44-101 and will comply with the requirements set out in Form 44-101F1, including Item 12 of Form 44-101F1.

17. An application will be made to list the Series 2 Shares and the Series 3 Shares on the TSX.

18. The Issuer may also, subject to market conditions, desire to issue other series of Preferred Shares that, but for the fact they would be convertible to other series of Preferred Shares, would satisfy the definition of "designated credit support securities" in NI 51-102.

The Partnership

19. The Partnership is a limited partnership organized under the laws of the Province of Ontario pursuant to a limited partnership agreement (the Partnership Agreement) made as of March 27, 1997 as amended and restated June 6, 1997 and as amended September 29, 1998, March 26, 2004 and April 29, 2004 and as amended and restated August 31, 2005 and July 1, 2009, among EPCOR Power Services Ltd., as general partner, the initial limited partner and each person who is admitted to the Partnership as a limited partner.

20. The head office and principal place of business of the Partnership is located in Edmonton, Alberta.

21. The Partnership is a reporting issuer, or the equivalent, in each of the Jurisdictions, and to its knowledge is not in default of any requirements under the Legislation.

22. The Partnership carries on activities that are directly or indirectly related to the energy supply industry and holds investments in other entities which are primarily engaged in such industry.

23. The Partnership is a "parent credit supporter" (as defined in NI 51-102) of the Issuer and has filed all documents it is required to file under NI 51-102.

24. The Partnership is qualified to file a prospectus in the form of a short form prospectus pursuant to Section 2.2 of NI 44-101, as it satisfies paragraphs (a), (b), (c), (d) and (e) of that Section.

25. The limited partnership units of the Partnership (the Units) trade on the TSX under the symbol "EP.UN". As at September 18, 2009, the Partnership had 53,897,279 Units outstanding.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.

Relief from the Continuous Disclosure Requirements

The decision of the Decision Makers under the Legislation is that relief from the Continuous Disclosure Requirements is granted, provided that:

(a) the Issuer continues to satisfy all the conditions set forth in subsection 13.4(2) of NI 51-102, other than paragraph 13.4(2)(c); and

(b) the Issuer does not issue any securities, and does not have any securities outstanding, other than:

(i) designated credit support securities (as such term is defined in NI 51-102);

(ii) securities issued to and held by the Partnership or an affiliate of the Partnership;

(iii) debt securities issued to and held by banks, loan corporations, loan and investment corporations, savings companies, trust corporations, treasury branches or credit unions, financial services cooperatives, insurance companies or other financial institutions;

(iv) securities issued under the exemptions from the registration requirement and prospectus requirement in Section 2.35 of National Instrument 45-106 Prospectus and Registration Exemptions;

(v) Series 2 Shares and Series 3 Shares; and

(vi) other series of Preferred Shares that, but for the fact they are convertible to other series of Preferred Shares (the Resulting Preferred Shares), are designated credit support securities (as such term is defined in NI 51-102) provided that the Resulting Preferred Shares are securities in respect of which the Partnership will provide a full and unconditional guarantee of the payments to be made by the Issuer, as stipulated in the terms of such shares, which will result in the holders of such securities being entitled to receive payment from the Partnership within 15 days of any failure by the Issuer to make a payment.

Relief from the Certification Requirements

The further decision of the Decision Makers under the Legislation is that relief from the Certification Requirements is granted, provided that the Issuer continues to satisfy the conditions of the relief from the Continuous Disclosure Requirements, above.

Relief from the Audit Committee Requirements

The further decision of the Decision Makers under the Legislation is that relief from the Audit Committee Requirements is granted, provided that the Issuer continues to satisfy the conditions of the relief from the Continuous Disclosure Requirements, above.

Relief from the Corporate Governance Requirements

The further decision of the Decision Makers under the Legislation is that relief from the Corporate Governance Requirements is granted, provided that:

(a) the Issuer continues to satisfy the conditions of Section 1.3(d)(ii) of NI 58-101; and

(b) the Issuer does not have equity securities trading on a marketplace (as defined in NI 58-101), other than (i) non-convertible, non-participating preferred securities, (ii) Series 2 Shares, (iii) Series 3 Shares, or (iv) other series of Preferred Shares that, but for the fact they are convertible to other series of Preferred Shares, are designated credit support securities (as defined in NI 51-102).

Relief from the Insider Reporting Requirements

The further decision of the Decision Makers under the Legislation is that relief from the Insider Reporting Requirements is granted, provided that:

(a) the Issuer continues to satisfy all the conditions set forth in subsection 13.4(2)(a) and (b) of NI 51-102;

(b) the Issuer does not issue any securities, and does not have any securities outstanding, other than:

(i) designated credit support securities (as such term is defined in NI 51-102);

(ii) securities issued to and held by the Partnership or an affiliate of the Partnership;

(iii) debt securities issued to and held by banks, loan corporations, loan and investment corporations, savings companies, trust corporations, treasury branches or credit unions, financial services cooperatives, insurance companies or other financial institutions;

(iv) securities issued under the exemptions from the registration requirement and prospectus requirement in Section 2.35 of National Instrument 45-106 Prospectus and Registration Exemptions;

(v) Series 2 Shares and Series 3 Shares; and

(vi) other series of Preferred Shares that, but for the fact they are convertible to other series of Preferred Shares, are designated credit support securities (as such term is defined in NI 51-102);

(c) if the insider is not the Partnership, the insider does not receive, in the ordinary course, information as to material facts or material changes concerning the Issuer before the material facts or material changes are generally disclosed, and (ii) the insider is not an insider of the Partnership in any capacity other than by virtue of being an insider of the Issuer; and

(d) if the insider is the Partnership, the Partnership does not beneficially own any designated credit support securities of the Issuer.

Relief from the Short Form Prospectus Eligibility Requirement

The further decision of the Decision Makers under the Legislation is that relief from the Short Form Prospectus Eligibility Requirement in respect of the distribution of the Series 2 Shares, and other series of Preferred Shares that, but for the fact they are convertible to other series of Preferred Shares, are designated credit support securities (as such term is defined in NI 51-102), is granted, provided that the Issuer satisfies all of the conditions in section 2.4 of NI 44-101, except for the requirement that the Series 2 Shares, or other series of Preferred Shares that, but for the fact they are convertible to other series of Preferred Shares, are designated credit support securities (as such term is defined in NI 51-102), as the case may be, be non-convertible.

Request for Confidentiality

The further decision of the Decision Makers under the Legislation is that the Request for Confidentiality is granted until the earlier of: (i) the date on which the Issuer is issued a receipt for the preliminary short form prospectus in respect of the distribution of the Series 2 Shares; (ii) the date that the Issuer advises the Decision Makers that there is no longer any need for the Confidential Material to remain confidential; and (iii) the date that is 90 days after the date of this decision.

"Blaine Young"
Associate Director, Corporate Finance