“The first quarter of 2009 was an exciting one for Canadian Hydro as we began to reap the benefit of the completion of Melancthon II in 2008 and continued to successfully execute on our strategic plan,” said John Keating, chief executive officer of Canadian Hydro. “Along with the completion of Melancthon II in late 2008, the imminent completion of Wolfe Island will more than double the size of Canadian Hydro. Combined with the anticipated benefits from the programs aimed at increasing efficiency currently underway at GPEC and Le Nordais, we are continuing to benefit from our unique and proven strategy of design, build, and operate. This has allowed us to continue to grow our Company at a significant rate despite the global economic turmoil of the past year.”

Canadian Hydro is focused on Building a Sustainable Future. We are a developer, owner and operator of 20 EcoPower Centres totalling net 496 MW of capacity in operation and have an additional 383 MW in or nearing construction and 1,525 MW of prospects under development. Our renewable generation portfolio is diversified across three technologies (water, wind and biomass) in the provinces of British Columbia, Alberta, Ontario, and Quebec. This portfolio is unique in Canada as all facilities are certified, or slated for certification, under Environment Canada’s EcoLogoM Program.

Executive Summary

Approached completion of our Wolfe Island Wind Project (Wolfe Island), which is anticipated to achieve commercial operations by June 30, 2009, on time and on budget, and will increase our net installed capacity by 40% to 694 MW;

Progressed well on the planned programs under way at our Grande Prairie EcoPower Centre (GPEC) and Centre EcoPower Le Nordais (Le Nordais) with the goal of improving operations by the end of 2009; and

In Alberta, continued to work on permitting the 100 MW Dunvegan Hydroelectric Prospect (Dunvegan).

Revenue and EBITDA, including per share amounts, improved in the first quarter of 2009 over the same period in the prior year due to:

The addition of phase II of the Melancthon EcoPower Centre (Melancthon) completed in November 2008; and

Improved generation and operating results at GPEC as a result of the work program initiated in late 2008.

Cash flow and net earnings, including per share amounts, were lower in the first quarter of 2009 over the same period in the prior year due to:

Lower gross margins (70% vs. 74%) as a result of:

Unseasonably low winds in Ontario and increased Hydro One line outages resulting in lower than normal generation at Melancthon. Generation in April 2009 was 29% above the long-term average;

Lower water levels and increased maintenance at our BC hydroelectric EcoPower® Centres; and

Continued planned work to improve performance at Le Nordais and GPEC; and

Increased interest expense as a result of the Melancthon II construction facility being charged to earnings rather than project costs, as a result of the project being completed in November 2008.

Revenue in Q1 2009 increased 21% over the prior year due to the following factors:

The addition of Melancthon II in November 2008;

Improved hydroelectric generation in Ontario due to higher water flows than Q1 2008; and

Improved generation at GPEC as a result of the work program currently underway;

Offset partially by:

Lower generation at our BC hydroelectric EcoPower® Centres due to lower water levels and increased downtime for planned maintenance;

The inclusion in Q1 2008 of a one-time metering adjustment at our Akolkolex Hydroelectric EcoPower Centre (Akolkolex) of 21,011 MWh, which benefited generation in Q1 2008;

Lower generation at Melancthon as a result of unseasonably low wind conditions and an increased number of Hydro One line outages. No additional line outages are planned by Hydro One in 2009;

Lower generation at our Alberta wind EcoPower Centres due to lower wind levels than Q1 2008; and

Lower generation at Le Nordais due to the work program currently underway, which is expected to be completed by year end.

Generation decreased from Q4 2008 as a result of lower wind generation in Ontario and lower hydroelectric generation in British Columbia. At Akolkolex, we completed significant required planned maintenance and capital upgrades including the installation of new runners, which were required as part of the normal life cycle of the facility. As a result of these repairs, Akolkolex had minimal generation for the quarter. Akolkolex is back on-line as of May 7, 2009, in advance of spring freshet, the highest generating period in the year.

Operating Expenses

Operating expenses increased 35% in Q1 2009 compared to Q1 2008, mainly due to the following factors:

The addition of Melancthon II;

Work at Le Nordais and GPEC in order to optimize performance and improve the availability of the EcoPower Centres; and

Increased planned maintenance expenditures at our BC hydroelectric EcoPower® Centres.

On a $/MWh basis, operating expenses increased in Q1 2009 primarily as a result of the above factors.

Gross Margins

Gross margins, as a percentage of revenue, decreased in Q1 2009 to 70% from 74% in Q1 2008 due primarily to the increase in operating expenses described above. This decrease was also impacted by the lower than normal generation at Melancthon during the quarter, as many of our operating costs are fixed and do not have a directly proportional relationship with generation.

The increase in net interest expense on credit facilities in 2009 was due to higher outstanding corporate debt, which increased a result of the achievement of commercial operations (COD) of Melancthon II. Prior to COD, interest was capitalized to the project.

On a $/MWh basis, net interest expense increased in 2009 as a result of the increase in corporate debt and lower than expected generation.

Credit facilities (including current portion) drawn as at March 31, 2009 were $841,408,000 compared to $835,796,000 as at December 31, 2008. The increase was a result of increased draws on our construction facilities, less the usual repayments on certain credit facilities.

Amortization Expense

Amortization expense increased 52% in Q1 2009 from Q1 2008, due to the addition of Melancthon II. On a $/MWh basis, amortization expense increased for the 3 month period as a result of lower than expected generation at Melancthon.

Wind EcoPower® Centres are amortized on a straight-line basis over a 30 year period, except Le Nordais and Taylor, which are amortized over 26 years and 15 years, respectively, and our biomass and hydroelectric EcoPower Centres are amortized on a straight-line basis over a 40 year period.

Administration Expense

Gross administration expense increased 91% in Q1 2009 from Q1 2008.Over the past year, we have become a much larger company and are on the verge of doubling our installed capacity. As a result, administration expenses and staff numbers have increased as well.

On a $/MWh basis, net administration expense increased for the 3 month period due to the reasons explained above. Additionally, capitalized administration costs associated with construction-in-progress and prospect development costs increased in association with our increased construction and development activity.

Stock Compensation Expense

Stock compensation expense decreased 7% in Q1 2009 from Q1 2008 due to a lower fair value per option as a result of a lower share price, which impacts the calculation of the fair value per option.