MONTREAL, Oct. 23, 2003 -- "We must pursue hydroelectric development with determination and show discipline in managing our regulated transmission and distribution operations," said André Caillé, Hydro-Québec's President and Chief Executive Officer, in an address to members of the Board of Trade of Metropolitan Montreal. "Our dominant theme for this Strategic Plan will be investments of $3.5 billion a year until 2020," he added.

With the growth in electricity markets, Hydro-Québec Production will continue developing its generating capability, with particular emphasis on Québec's own hydroelectric potential. Over the Strategic Plan 2004-2008 period, the division plans to add 10 TWh to its annual generating capability.

Hydro-Québec TransEnergie, the transmission division, intends to maintain system reliability in compliance with the requirements of power industry regulatory authorities and be proactive in improving the management of its system. The division will also complete its program for reinforcing the transmission system in order to ensure greater security of supply.

Hydro-Québec Distribution aims to achieve a fair and reasonable rate of return in a regulated environment. The division plans to target industrial sectors that offer value added for Québec by maximizing the spinoffs in terms of jobs and investments per megawatt of contract power.

The division's profitability and enhancements in the quality of customer service make it necessary to increase electricity rates, which will continue to be among the lowest in North America.

Furthermore, in keeping with its commitment, the division will propose amendments to the residential rate that will benefit customers with low levels of consumption, so as to minimize the impact on low- income customers.

"In the context of a rate adjustment, Hydro-Québec has committed itself to freezing its operating expenses in 2004, 2005 and 2006, keeping them at their budgeted 2003 level," Caillé emphasized.

Hydro-Québec's Strategic Plan 2004-2008 has been submitted to the Québec government for approval. It will be subject to review by a parliamentary commission of the National Assembly within 90 days following the date on which it was tabled with the Minister of Natural Resources.