News Release

Macquarie Power & Infrastructure Income Fund Announces Second Quarter Results

  • Expect to maintain stable distributions to unitholders in 2009
  • Conservatively leveraged with flexibility to pursue growth

TORONTO, ONTARIO (August 5, 2009) – Macquarie Power & Infrastructure Income Fund (TSX: MPT.UN; MPT.DB – “MPT” or the “Fund”), which owns and operates essential infrastructure assets, today reported unaudited results for the second quarter ended June 30, 2009. The 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.

“Power production in the second quarter was lower primarily due to maintenance outages at our Cardinal and Whitecourt facilities and lower than expected water flows at our Wawatay hydro power facility, which were partially offset by a strong wind resource at Erie Shores. Leisureworld’s performance was consistent, reflecting stable occupancy across its homes, increased government funding and growth in the accommodation rate of premium private rooms,” said Michael Bernstein, the Fund’s President and Chief Executive Officer. “An important achievement during the quarter was the establishment of a new credit facility, which has largely eliminated refinancing risk for the Fund until 2012 while maintaining our flexibility to pursue small to mid-sized growth opportunities that meet our investment and return criteria.”

For 2009, the Fund currently anticipates maintaining distributions to unitholders of $1.05 per unit, barring any significant events or growth initiatives. Based on management’s current operational outlook for the balance of the year, the Fund expects distributions to unitholders in 2009 to slightly exceed 100% of the Fund’s distributable cash.1 The Fund’s general reserve account ensures the Fund’s ability to support distributions to unitholders in 2009, if required. Management is currently developing a strategy to address the impact of taxation in 2011 and expects to provide guidance on the Fund’s future structure and distribution profile before the end of 2009.

Second Quarter Financial Performance
Revenue for the quarter was $32.6 million compared with $34.9 million in the second quarter of 2008. The decrease reflected lower power production, primarily attributable to maintenance activities at the Cardinal gas cogeneration (“Cardinal”) and Whitecourt biomass (“Whitecourt”) facilities as well as to lower water flows at the Wawatay hydro power facility (“Wawatay”). These factors were partially offset by a higher average wind speed at Erie Shores Wind Farm (“Erie Shores”).

The Fund’s distributable cash was $10.2 million ($0.205 per unit) compared with $11.2 million ($0.224 per unit) in 2008. Declared distributions to unitholders were $13.1 million ($0.262 per unit), representing a payout ratio of 128%, which reflected lower cash flow as a result of the factors noted above as well as higher net interest expense, which was partially offset by lower administrative expenses. Declared distributions to unitholders in the second quarter of 2008 were also $13.1 million ($0.262 per unit), representing a payout ratio of 117%. The payout ratio for the first six months of 2009 was 104% compared with 95% in the same period last year. Maintenance costs at each of the Fund’s power generation facilities are fully funded through the Fund’s major maintenance reserve account and do not affect the determination of distributable cash.

Macquarie Power & Infrastructure Income Fund is not an authorised deposit taking institution for the purposes of the Banking Act (Cth) 1959 and Macquarie Power & Infrastructure Income Fund’s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Power & Infrastructure Income Fund.

Income from operations2 for the Fund was $1.3 million compared with $3.2 million in the second quarter of 2008. This variance reflected a combination of lower revenue and higher operating expenses due to increased maintenance costs at Cardinal and Whitecourt. These factors were partially offset by lower administrative expenses, which primarily reflected lower business development costs.

Financial Position
As at June 30, 2009, the Fund had positive working capital of $10.5 million and cash on hand of $16.2 million, of which $5.0 million was not designated for general, major maintenance and capital expenditure reserve accounts. The Fund is conservatively leveraged relative to the low risk profile and long life of its assets, with a debt to capital ratio of 45.1%.

Second Quarter Operational Highlights
Total power production was 458,511 MWh compared with 490,684 MWh in the second quarter of 2008, a decrease of approximately 6.6%.

Cardinal produced 264,729 MWh of electricity (Q2 2008 – 285,727 MWh), reflecting 307 hours of outage (Q2 2008 – 180) that primarily related to the hot gas path maintenance inspection that was conducted in April. In addition, the Ontario Electricity Financial Corporation (“OEFC”), Cardinal’s electricity purchaser, requested that Cardinal curtail production for 318 hours (Q2 2008 – 56) during the quarter. During curtailment, the facility continues to produce electricity but at less than capacity. For the quarter, Cardinal achieved an availability of 85.7% (Q2 2008 – 91.6%) and a capacity factor of 82.9% (Q2 2008 – 89.1%).

Erie Shores produced 55,487 MWh (Q2 2008 – 53,976 MWh) of electricity, reflecting a higher average wind speed during the quarter. The facility achieved an overall availability of 97.0% (Q2 2008 – 96.5%) and a capacity factor of 25.7% (Q2 2008 – 24.9%).

The Fund’s hydro power facilities produced 55,004 MWh (Q2 2008 – 59,411 MWh) of electricity, primarily as a result of lower than expected water flows at Wawatay due to colder temperatures and less precipitation than in the same period last year. The lower production also reflected 229 hours of outage (Q2 2008 – 102), primarily at the Hluey Lakes hydro facility for repairs and maintenance. The hydro power facilities achieved a weighted average availability of 99.0% (Q2 2008 – 98.8%) and a capacity factor of 70.6% (Q2 2008 – 76.5%).

Whitecourt produced 34,372 MWh of electricity (Q2 2008 – 38,941 MWh), primarily reflecting 731 hours of outage (Q2 2008 – 548) during the quarter for repairs and maintenance to address the higher than normal vibration of the turbine, which was identified in the fourth quarter of 2008. As a result, the facility operated at an availability of 66.5% (Q2 2008 – 74.9%) and achieved a capacity factor of 66.3% (Q2 2008 – 74.5%).

The Chapais biomass facility (“Chapais”), in which the Fund holds a minority preferred equity and debt interest, produced 48,919 MWh (Q2 2008 – 52,629 MWh) of electricity. The facility experienced availability of 87.8% (Q2 2008 – 90.9%), reflecting 266 hours of outage (Q2 2008 – 202), and achieved a capacity factor of 80.0% (Q2 2008 – 86.1%).

The Fund owns an indirect 45% equity interest in Leisureworld Senior Care LP (“Leisureworld”), which the Fund accounts for as an equity investment. In the second quarter, Leisureworld achieved a 6.7% increase in revenue, reflecting increases in private accommodation and government funding rates. Average total occupancy in the second quarter was 98.0% (Q2 2008 – 98.1%). The average occupancy of private rooms was 94.7% (Q2 2008 – 92.2%).

Outlook
“A key initiative for management in 2009 is to develop a strategy that addresses the impact of taxation in 2011 while maximizing value for unitholders. We expect to provide guidance on our future structure and distribution profile before the end of 2009,” said Mr. Bernstein. “At the same time, we are continuing to evaluate a number of growth opportunities to increase the size and scale of our portfolio, particularly in the renewable power sector and in new categories of infrastructure such as roads, hospitals and schools, including through publicprivate partnerships. We are committed to building MPT into Canada’s leading public infrastructure investment vehicle and to delivering a compelling yield and attractive total return to our unitholders.”

In 2009, Cardinal is expected to generate lower revenue than in 2008, which primarily reflects the hot gas path inspection that required 13 days of outage in April. While Cardinal will continue to experience higher gas transportation costs, the confirmed 2009 rate of $1.19/GJ is below the average 2008 level. As a result of these factors, cash flow from Cardinal will be slightly lower on a year-over-year basis.

Erie Shores is expected to generate slightly less electricity than the estimated average annual production of 249,800 MWh, reflecting generally lower wind speed and density in 2009 to date. Erie Shores’ production is subject to wind speed and density, which are typically strongest during the fall and winter months.

The hydro power facilities are expected to generate less electricity than the average long-term annual production of 166,360 MWh, which reflects the unusually poor hydrological conditions in 2009 to date. Production at the hydro power facilities is subject to water flows, which are typically strongest during the spring and fall months. Initiatives planned at the hydro power facilities during the third quarter of 2009, a seasonally low period, include the replacement of the turbine at the Wainwright power station, one of three stations that form the 3MW Dryden hydro power facility, which will require a 90-day outage at Wainwright commencing in September. A key efficiency improvement is the automation of the storage and release of water in the lake that serves the Sechelt facility, which will enable the facility to remotely control water flows, and, accordingly, maximize production.

Whitecourt completed its planned spring outage on July 18, 2009, requiring a total of 48 days, or 1,147 hours, to repair the turbine vibration instead of the 24 days originally anticipated. The extended outage allowed for additional preventive maintenance and enhancements to be undertaken on the generator and balance of plant, thereby extending the useful life of various components and incrementally improving the facility’s efficiency. The extended outage also eliminated the need for the previously scheduled four-day maintenance outage in the fall of 2009. Management currently expects that the turbine will operate reliably until the next scheduled major maintenance inspection, which occurs every seven years. Whitecourt is expected to achieve an availability of approximately 80% to 83% in 2009 (2008 - 88.4%) and to return to its five-year average availability of approximately 95% in 2010.

In addition, Whitecourt continues to work closely with the Millar Western Group of Companies (“Millar Western”), which supplies a majority of the facility’s wood waste fuel, to ensure a continuing stable and adequate supply of wood waste. Under the terms of Whitecourt’s supply contract with Millar Western, in the event that Millar Western does not supply the minimum required quantity of wood waste it must pay Whitecourt’s cost to source replacement fuel, subject to certain exceptions. Whitecourt currently expects to have an adequate and stable supply of wood waste through 2009.

Leisureworld is continuing to focus on enhancing the quality of care and accommodation for residents, which contributes to the continuing high occupancy of its homes. In addition, Leisureworld is continuing to attract a growing number of residents to private accommodation, for which Leisureworld receives a regulated premium. The Fund currently anticipates that Leisureworld’s distribution policy will be maintained for fiscal 2009.

In July, the Ministry of Health and Long-Term Care (“MOHLTC”) advised Ontario’s long-term care (“LTC”) operators that an additional $43 million in one-time funding will be provided in the 2009-2010 fiscal year (retroactive to April 1, 2009) under the Other Accommodation portion of the accommodation funding envelope. This funding is expected to represent approximately $1.55 per resident per day in additional funding to Ontario’s LTC homes, including Leisureworld. Further details on the funding are expected by the end of the summer.

Conference Call and Webcast
Management of the Fund will hold a conference call (with accompanying slides) to discuss second quarter results on Thursday, August 6, 2009 at 8:30 a.m. ET. The conference call will be accessible via webcast through the Fund’s website with accompanying slides 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 August 20, 2009 by dialling 416- 695-5800 or 1-800-408-3053 and entering the passcode 8136626.

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 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. When used in the this news release, such statements use such words as “may”, “will”, “expect”, “believe”, “plan” and other similar terminology. 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. The forwardlooking statements contained in this news release are based on information currently available and what the Fund currently believes are reasonable assumptions, including the material assumptions for each of the Fund’s assets set out in the Fund’s 2008 Annual Report under the headings “Outlook” on pages 23 to 24, as updated in subsequently filed quarterly Financial Reports of the Fund. 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, except as required by law, the Fund does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The Fund cautions readers not to place undue reliance on any forward-looking statements contained in this news release. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

The forward-looking information contained in this news release is presented for the purposes of assisting investors and analysts in understanding the Fund’s financial position and our stated priorities and objectives may not be appropriate for other purposes. The Fund cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. 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, 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; the ability to complete future acquisitions; 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., 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 Fund’s filings with Canadian securities regulatory authorities, could cause actual results to differ materially from the results discussed in the forward-looking statements.

Non-GAAP Financial Measures
"Income from operations" and "distributable cash" do not have any standardized meaning under Canadian GAAP. 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:


Michael Smerdon
Vice President and Chief Financial Officer
Tel: (416) 607 5167
Email:
michael.smerdon@macquarie.com

Michael Smerdon
Vice President and Chief Financial Officer
Tel: (416) 607 5167
Email:
michael.smerdon@macquarie.com