Press Release

April 27, 2009

BC Hydro and Tembec expand bioenergy opportunities in B.C.

SKOOKUMCHUCK – BC Hydro and Tembec today announced they have agreed to the key commercial terms of an electricity purchase agreement that will increase BC Hydro's purchase of clean, firm and cost-effective electricity from Tembec's Skookumchuck pulp mill. These commercial terms have received the necessary approvals of Tembec and BC Hydro.

The contract will enhance the viability of the Skookumchuck facility, which employs 285 people, and provide a long-term economic benefit to the community.

Under the agreement, Tembec will enhance the power plant operation, which will lead to increased generation, enabling the mill to provide additional capacity and to sell more electricity to BC Hydro. As a result, BC Hydro will purchase from Tembec up to 228 gigawatt hours per year of energy – enough to power almost 23,000 homes.

The ten-year contract is an extension and expansion of an existing electricity purchase agreement signed in 1997 and due to expire in 2011. Under the original agreement, BC Hydro has been purchasing up to 123 gigawatt hours of power annually from the Skookumchuck power plant.

"By significantly increasing the amount of clean and cost-effective power we purchase from the Skookumchuck plant, we are taking yet another step on the road to electricity self-sufficiency in British Columbia," said Bev Van Ruyven, BC Hydro Executive Vice President, Customer Care and Conservation.

"The agreement announced today is consistent with the province's clean power production goals and will result in a combination of energy, economic and environmental benefits. This will also allow the Skookumchuck mill to grow its energy business and will contribute to the long term viability of this site," said Jim Lopez, Tembec's President and Chief Executive Officer.

The Skookumchuck power plant uses forest-based biomass, including sawmill residue, logging debris and other residual wood to generate electricity.

Tembec is a leading Canadian forest products company with sales of approximately $2.4 billion and 7,000 employees. It operates 40 market pulp, paper and wood product manufacturing units.