News Release

Macquarie Power & Infrastructure Income Fund Announces Continuing Strong Results in Third Quarter

  • Portfolio performing in line with expectations
  • Conservative financial position
  • Capacity for continuing growth

TORONTO, ONTARIO (November 11, 2008) – Macquarie Power & Infrastructure Income Fund (TSX: MPT.UN; MPT.DB – “MPT” or the “Fund”), which invests in essential infrastructure assets, today reported results for the third quarter ended September 30, 2008.

The Fund’s Management’s Discussion and Analysis and unaudited financial statements are available on the Fund’s website at www.macquarie.com/mpt and on SEDAR at www.sedar.com.

“The Fund’s portfolio is continuing to deliver strong performance, which reflects the stability of infrastructure assets throughout the economic cycle,” said Mr. Gregory Smith, President and Chief Executive Officer of the Fund. “We continued to benefit from higher power rates at our Cardinal facility and strong availability across our power generation businesses. In addition, Leisureworld continued to achieve predictable results. Importantly, the Fund has a solid financial position and no refinancing requirements in either 2008 or 2009. As we head into the seasonally strong performing fourth quarter, we are on track to achieve our 2008 payout ratio guidance of approximately 100%, which provides for the stability of distributions.”

Financial Performance
Revenue for the quarter was $31.5 million compared with $30.4 million in the third quarter of 2007. The increase primarily reflected improved wind speed and availability at Erie Shores Wind Farm (“Erie Shores”), increased water flows at the hydro power facilities and higher power prices at the Cardinal facility (“Cardinal”) attributable to the continuing impact of electricity rate increases under Cardinal’s Power Purchase Agreement (“PPA”). These growth drivers were partially offset by lower production at Cardinal as the facility increased gas mitigation to capitalize on a favourable spot market price for gas.

The Fund’s distributable cash1 was $9.8 million ($0.197 per unit) compared with $9.0 million ($0.180 per unit) in 2007, reflecting stable growth in revenue and lower administrative expenses partially offset by higher gas transportation costs at Cardinal. The increase in gas transportation costs was mitigated by the curtailment of Cardinal’s production in order to sell gas at a favourable spot market price. Declared distributions to unitholders were $13.1 million ($0.262 per unit) compared with $12.9 million ($0.257 per unit) in 2007, representing a payout ratio of 133% (Q3 2007 – 143%) for the quarter. For the nine-month period ended September 30, 2008, the Fund achieved a payout ratio of 105% (2007 – 106%). This payout ratio reflects the increase in distributions to unitholders in 2008 of $0.02 per unit on an annualized basis.

Income from operations2 for the Fund was $4.1 million for the quarter compared with $4.4 million for the same period last year, reflecting a $1.2-million increase in operating costs, which was primarily due to higher gas transportation costs at Cardinal, and the impact of higher depreciation, which is a non-cash expense, than in the same period last year. These factors were offset by higher revenue during the quarter as well as lower administrative expenses than in the same period last year, primarily due to higher legal and transaction costs last year related to the acquisition of Clean Power Income Fund (“CPIF”).

Financial Position
As at September 30, 2008, the Fund had positive working capital of $52.3 million and cash on hand and short-term investments of $53.2 million, including fully funded general, major maintenance and capital expenditure reserve accounts in the aggregate amount of $17.0 million. The Fund is conservatively leveraged, with a debt to capitalization ratio of 42.8%.

Operational Performance
Total power production for the quarter was 479,348 MWh compared with 475,586 MWh in the same period last year.

Cardinal produced 297,301 MWh of electricity (Q3 2007 – 306,448 MWh). Cardinal achieved availability of 100%, which reflected zero outages (Q3 2007 – 17.9 hours). Cardinal curtailed production for 448 hours (Q3 2007 – nil) to capitalize on the favourable spot market price for gas, resulting in a capacity factor of 95.4% (Q3 2007 – 97.2%).

Erie Shores performed in line with expectations, producing 34,679 MWh (Q3 2007 – 28,002 MWh) of power, reflecting strong winds during the period. The facility achieved an overall availability of 94.8% (Q3 2007 – 91.3%) and a capacity factor of 16.0% (Q3 2007 – 12.8%).

The Fund’s hydro power facilities achieved a 1.3% increase in production to 36,680 MWh (Q3 2007 – 36,200 MWh). All of the hydro power facilities experienced increased water flows, which was partially offset by a decrease in production at the Wawatay facility, where 276.7 outage hours (Q3 2007 – nil) were required for annual electrical and civil inspections as well as maintenance work, and by lower production at the Hluey Lakes facility due to an outage of 60 hours (Q3 2007 – 1 hour) required for repair work. Overall, the hydro power facilities had a weighted average availability of 93.6% (Q3 2007 – 95.1%) for the quarter and a capacity factor of 46.8% (Q2 2007 – 45.9%).

The Whitecourt biomass facility (“Whitecourt”) operated at 100% availability (Q3 2007 – 96.8%) and achieved a capacity factor of 99.8% (Q3 2007 – 96.5%). Total production at Whitecourt was 53,301 MWh (Q3 2007 – 49,921 MWh).

The Chapais biomass facility (“Chapais”), in which the Fund holds a minority preferred equity and debt interest, experienced availability of 96.5% (Q3 2007 – 98.4%). Production at Chapais was 57,387 MWh (Q3 2007 – 55,015 MWh) as the facility was operated at an increased capacity factor to achieve the maximum annual production target provided for in the facility’s PPA for each 12-month period ended November 30. Should the facility exceed this maximum production amount, the PPA rate paid on any excess production is significantly reduced.

Therefore, the facility is operated throughout the year so that the total production for each 12- month period ending November 30 approximates the maximum provision in the PPA.

The Fund owns an indirect 45% equity interest in Leisureworld Senior Care LP (“Leisureworld”), which the Fund accounts for as an equity investment. During the quarter, Leisureworld achieved a 43.2% increase in revenue and a 3.9% increase in income from operations over the same period last year, reflecting the contribution of the seven homes acquired earlier this year, improved occupancy and greater use of private accommodation across its portfolio, and increased government funding. Average total occupancy for the quarter was 98.7% (Q3 2007 – 98.4%). The average occupancy of private rooms was 93.3% (Q3 2007 – 87.3%).

Outlook
“Our performance in the third quarter clearly demonstrates the stability of our underlying assets,” said Mr. Smith. “Moreover, we have more than $100 million available in cash and acquisition facilities to pursue prudent growth opportunities that will enhance the long-term value of the Fund for our unitholders. Investors can be confident that the Fund has a solid business with a positive outlook for the balance of 2008 and 2009.”

Cardinal will continue to benefit from higher electricity prices under its PPA, which provides for higher power rates during the months of October to March. Moreover, the facility can generate more electricity during the winter months when the gas turbine attains its peak output as a result of lower ambient temperatures. Higher electricity rates will be offset by higher gas transportation costs. Cardinal is continuing to work with its peers through the Association of Power Producers of Ontario to communicate its views on the impact of higher gas transportation costs and to reinforce the need for toll stabilization. It is currently expected that transportation tolls in 2009 will be consistent with or below the average 2008 rate. Erie Shores is performing in line with the Fund’s forecast and is expected to deliver annual production of approximately 245,600 MWh, subject to wind speed and density, which are typically greatest during the fall and winter months. Plant availability of 97% is guaranteed by GE, the turbine supplier, and Erie Shores is entitled to direct revenue reimbursement if that threshold is not met.

At the hydro power facilities, water flows are typically strongest during the spring and autumn months. The impact of fluctuating water flows on revenue is mitigated by the geographic diversification of the hydro assets across the Arctic, Atlantic and Pacific watersheds.

Additionally, the PPAs at Wawatay and Dryden facilities provide for higher electricity rates during the months of October to March. The hydro power facilities are expected to generate long-term average production of 166,360 MWh per year, which represents actual historical production at each of the plants. This long-term average includes the impact of outages required for mechanical and electrical inspections at the plants, which are typically scheduled for seasonally low periods.

Whitecourt continues to operate reliably, reflecting the stability of its fuel supply and strong maintenance program. Production in the fourth quarter of the year is expected to be consistent with the facility’s historical performance.

Leisureworld continues to advance the regulatory process for the acquisition of the Good Samaritan Seniors Complex with the Ontario Ministry of Health and Long-Term Care.

Leisureworld continues to focuses on providing a high quality of care, accommodation and services, which contributes to the continuing high occupancy across its 26 long-term care homes. In addition, a growing number of residents are choosing private accommodation, for which Leisureworld receives a regulated premium.

Guidance for Payout Ratio
For fiscal 2008, the Fund expects to achieve a payout ratio of approximately 100%.

Management expects the return of capital portion to be approximately 60% for the 2008 fiscal year, based on current operations and barring any significant external shocks.

Conference Call and Webcast
Management of the Fund will hold a conference call (with accompanying slides) to discuss third quarter results on Wednesday, November 12, 2008 at 8:30 a.m. ET. The conference call will be accessible via webcast through the Fund’s website at www.macquarie.com/mpt and by telephone at 416-641-6139 (Canada) or 1-866-542-4262 (North America). A replay of the call will be available until November 26, 2008 by dialling 416-695-5800 or 1-800-408-3053 and entering the passcode 3272978.

Investor Day
The Fund will hold its annual Investor Day on November 20, 2008 in Toronto. For further information and to register, please email us at mpt@macquarie.com or call 416-607-5166.

Distribution Reinvestment Plan (DRIP)
Eligible unitholders may elect to participate in the Fund’s Distribution Reinvestment Plan. For more information about the DRIP, please visit the Fund’s website at www.macquarie.com/mpt.

About the Fund
Macquarie Power & Infrastructure Income Fund invests in essential infrastructure assets in North America with an emphasis on power infrastructure. MPT’s strategy is to acquire and actively manage a diverse, high quality portfolio of infrastructure assets to improve their financial performance and provide growing and sustainable distributions to unitholders. MPT’s portfolio includes investments in gas cogeneration, wind, hydro and biomass power generating facilities, representing approximately 350 MW of installed capacity, and a 45% interest in Leisureworld Senior Care LP, a leading provider of long-term care, or social infrastructure, in Ontario. MPT is managed by a wholly-owned subsidiary of Macquarie Group Limited. Please visit www.macquarie.com/mpt for additional information.

1 Distributable cash is defined as cash flows from operating activities after removing changes in working capital and reflecting the impacts of releases from maintenance reserves, allocations to major maintenance and capital expenditure reserves, non-discretionary payments and receipts, and distributions from Leisureworld.

2 Income from operations refers to income before net interest, foreign exchange, share of income (losses) from long-term investments, unrealized gains (losses) on swap contracts and on embedded derivatives in gas purchase contracts, gain on sale of capital assets, and taxes.

Forward-looking Statements
Certain statements in this news release may constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from any future results expressed or implied by such forward-looking statements. Forward-looking statements use such words as “may”, “will”, “anticipate”, “believe”, “expect”, “plan” and other similar terminology. These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to: including risks associated with: the operational performance of the Fund’s assets; power purchase agreements; fuel costs, supply and transportation; default under credit agreements; regulatory regime and permits; land tenure and related rights; government regulation and funding; acquisition-related risks for Leisureworld; LTC home ownership and operation; minority ownership interest in Leisureworld; reliance on key personnel; default under Leisureworld’s long-term debt and credit facility; labour relations and cost; the variability of distributions; unitholder liability; dependence on Macquarie Power Management Ltd. (“MPML” or the “Manager”), the Manager of the Fund, and potential conflicts of interest; insurance; and risks related to the environmental, health and safety regimes within which the Fund’s assets operate. The risks and uncertainties described above are not exhaustive and other events and risk factors including risk factors disclosed in MPT’s filings with Canadian securities regulatory authorities could cause actual results to differ materially from the results discussed in the forward-looking statements.

The forward-looking statements contained in this news release are presented for the purpose of assisting the Fund’s unitholders and the investment community in understanding the Fund’s financial position, strategic priorities and objectives as at and for the periods ended on the dates presented and may not be appropriate for other purposes. The forward-looking statements are based upon information currently available and what the Fund currently believes are reasonable assumptions. These assumptions include that the business and economic conditions affecting the Fund’s operations will continue substantially in their current state, including, with respect to industry conditions, general levels of economic activity, regulations, weather, taxes and interest rates and that there will be no unplanned material changes to the Fund’s facilities, equipment and contractual arrangements. However, the Fund cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release, and the Fund and MPML do not undertake to update any forward-looking information that may be made from time to time by or on its behalf, except as required under applicable securities legislation. The Fund cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made.

Non-GAAP Financial Measures
"Income from operations" and "distributable cash" do not have any standardized meaning under Canadian Generally Accepted Accounting Principles. Management believes they are useful measures of performance as they provide investors with indications of income from operations and the amount of cash available for distribution to unitholders. The Fund's method of calculating "income from operations" and "distributable cash" may not be comparable to other similarly named calculations.

For further information, please contact:

Harry Atterton
Vice President & Chief Financial Officer
Tel: (416) 607 5198
Email: harry.atterton@macquarie.com

Aaron Boles
Vice President, Communications and Investor Relations
Tel: (416) 649 1325
Email: aboles@capstoneinfra.com