407 etr

Update on the conflict between 407 Etr and the Ontario Liberal Government

(1) Tolling Dispute:

TORONTO, July 10, 2004 - 407 ETR today announced that an independent arbitrator’s decision has confirmed that the company is not required to submit a Change Request, nor obtain any other Government approval, in order to change tolls or fees.

The decision is the result of the agreement of both parties on an expedited arbitration by a retired Ontario judge. In his ruling, the arbitrator stated that the company’s February 1 toll increase was in compliance with the contracts with the Province and he therefore ruled that the company was not in default of the contracts.

The Province had alleged that the company did not have the right to increase tolls without first obtaining the government’s approval. Specifically, the Government suggested that the company had to file a Change Request in order to increase tolls and was in default for not doing so earlier this year.

407 ETR disagreed with the government’s position, pointing out that the contract signed between the Company and the Government in 1999 did not contain such terms and conditions. The dispute went to arbitration in mid-June after amicable negotiation and mediation did not resolve the issue.

“We are pleased with the independent arbitrator’s decision,” said Enrique Díaz-Rato, President and Chief Executive Officer of 407 ETR. “All along, our position has been that we are acting in compliance with the contract.”

In another matter, 407 ETR announced that it had recently filed a judicial application seeking to enforce a settlement agreement made with the Province to bring a resolution to disputes regarding annual audited traffic reports for 2001 and 2002.

(2) Plate Denial

TORONTO, July 23, 2004 - 407 ETR announced today that it commenced an application in the Ontario Superior Court of Justice seeking a judicial order requiring the Ontario Registrar of Motor Vehicles to enforce legislation by denying vehicle permits of customers with overdue accounts.

“We have tried to resolve this issue amicably, but we are left with no other choice but to take this action,” said Enrique Díaz-Rato, President and Chief Executive Officer of 407 ETR.

Currently, no vehicles are prevented from using the open-access highway, even if a customer’s account is significantly overdue. However, the Highway 407 Act enables the company to require the Registrar to deny the plate renewal of people who do not pay their bill.

An extensive customer appeal process and external independent auditing of the company’s plate denial procedures are required by law, with which the company is complying. To date, however, the Registrar has failed to perform his legal duty to begin denying plates, leading the company to commence the judicial application.

“The vast majority of our customers pay their bills and will not be affected by plate denial,” Díaz-Rato said. “Unfortunately, there is a small group of people who use the highway, but don’t pay.”

In a related matter, 407 ETR announced that it delivered a notice of discriminatory action to the Government for the Province’s failure to comply with its legal obligation to deny plates.

(3) Base Year (for calculation purposes

407 ETR also announced today that it has invoked the dispute resolution procedures in the Tolling, Congestion Relief and Expansion Agreement to resolve a dispute over the achievement of 2002 as “Base Year”. Base Year is the calendar year during which traffic thresholds are established. Future traffic volumes are measured against those thresholds to determine if any congestion payments apply.

After achieving the conditions necessary to declare Base Year, in January 2002 407 ETR notified the Government that 2002 was Base Year. More than two years later, the Province has indicated that it disputes 2002 as Base Year. Discussions have not yet led to a resolution of this issue