Corporate Governance Guidelines

Horizon Holdings Inc. is incorporated under the Ontario Business Corporations Act and throughout 2008 was subject to a Shareholder Agreement between its shareholders, Hamilton Utilities Corporation and St. Catharines Hydro Inc. This shareholder agreement requires that the Board of Directors observe the standards of corporate governance which apply to publicly traded corporations, to the extent that it is reasonably practical to do so. Although Horizon Holdings Inc. is not a public corporation, the Corporation recognizes the role of good governance in a successful business enterprise and has provided voluntary disclosure on its corporate governance practices.

Horizon Holdings Inc. operates two businesses, Horizon Utilities Corporation and Horizon Energy Solutions Inc. As Horizon Holdings Inc. is a holding company, Horizon Utilities is the most significant business operating within the umbrella of companies. As such, Horizon Utilities has three constituted Committees of its Board while accountability and responsibility of Committee oversight in Horizon Holdings Inc. is the responsibility to the full Board or Directors.

Responsibilities of the Board of Directors

The Canadian Securities Administrators ("CSA") have published comprehensive guidelines for effective corporate governance. The guidelines cover a broad spectrum of good governance practices and elaborate specifically on a number of major areas where Boards should explicitly assume stewardship:

• Development of corporate governance principles and guidelines
• The integrity of senior management and throughout the organization
• Strategic planning process and approval of a strategic plan
• Risk assessment
• Integrity of internal controls and management information systems
• Succession planning and management performance
• Employee and Public Safety
• Communications policy

The Board of Directors of Horizon Holdings Inc. has assumed stewardship with respect to the areas identified by the CSA and fulfills such stewardship responsibilities directly. The Board has established written mandates for itself and has adopted a comprehensive statement of Governance Guidelines. The Board has also developed roles and responsibilities for the Chair of the Board and the Chief Executive Officer.

The Board of Directors of Horizon Utilities Corporation has also assumed stewardship with respect to the areas identified by the CSA and fulfills such stewardship responsibilities directly and with supporting oversight by its Committees. In addition to the Board having established written mandates for itself and each of its Committees it has adopted a comprehensive statement of Governance Guidelines. The Board has also developed roles and responsibilities for the Chair, and for each Committee Chair and the Chief Executive Officer.

The CSA also provides guidelines with respect to the composition of the Board of Directors, including that the majority of Directors should be independent. The Board of Directors of Horizon Holdings Inc. consists of five directors all of whom are presently independent as defined by the CSA. The Board of Directors of Horizon Utilities Corporation, Horizon Holdings' operating business consists of ten directors all of whom are also presently independent. The Chair of the Board is an independent Director, as are the Chairs of all Horizon Utilities' Board Committees. The independent members of each Board meet without management being in attendance as part of each board meeting.

Board composition also meets the requirements of the Ontario Energy Board's Affiliate Relationships Code (ARC) that at least one-third of directors are independent from a distribution company's non-regulated affiliates. The ARC regulates the contractual arrangements between related parties.

All new Directors receive a comprehensive orientation with respect to the role of the Board, the business of the Corporation and the legislative and regulatory environment affecting the electricity sector. Horizon Holdings Inc. and each of its affiliate Boards have adopted a code of business conduct, including a conflict of interest policy. The Board undertakes an annual assessment of the Board and each Committee.

Annually, the Board requests and receives an independence letter from its auditors and by letter dated February, 2009, KPMG LLP , have confirmed that they are objective with respect to the Corporation within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario.

The Strategic and Financial Plans for the Corporations are approved and monitored directly by their respective Board of Directors.

Horizon Utilities Corporation Board Committees

There are three committees of the Board with respective oversight mandates as follows:

• Audit and Risk Management Committee: risk management, internal control, financial information, and annual audit; as well as the information systems activities of Horizon Utilities Corporation.
• Human Resources and Corporate Governance Committee: succession planning, management objective setting and performance, compensation, and communications policy activities of the Corporation. This committee also covers all governance issues including an annual performance review of the Board and its committees.
• Nominating Committee (not a standing Committee of the Board this Committee is reconstituted annually as required): evaluation of Board composition and nomination to shareholders of prospective Directors of the Board as may be required.

Mandate of Management

The Board approves the mandate of the Chief Executive Officer and annual corporate objectives consistent with the recommendations of the CSA.

The permitted business activities of the Corporation are outlined in its Shareholder Agreement. The mandate of the Chief Executive Officer and annual corporate objectives are consistent with the Shareholder Agreement. The authority limits of the Chief Executive Officer, as delegated by the Board, have been formally documented and executed by the Board.

In addition, the Board of Directors annually reviews the Chief Executive Officer's objectives, evaluates the Chief Executive Officer's performance, makes recommendations on the appointment of executive management and monitors the succession planning process.