Great Lakes Hydro Income Fund Reports Strong Second Quarter Results and Increases Distributions

• Power generation in the second quarter exceeded the long-term average in three of the Fund’s four regions. Total power generation of 1,120 GWh was 13 percent higher than the same quarter in 2005.
  
  
• Driven by strong hydrology conditions throughout the Fund’s portfolio, revenue from operations totalled $48.7 million in the second quarter of 2006 compared with $43.3 million a year earlier. For the six-month period, revenue from operations increased to $97.5 million from $83.8 million in 2005.
  
  
• Income before non-cash and special items totalled $25.7 million compared with $22.9 million in the second quarter of 2005. For the six-month period, income before non-cash and special items increased to $51.2 million from $41.7 million a year earlier.
  
  
• Monthly distributions by the Fund will increase from 10.33 cents to 10.42 cents per unit, beginning with the distribution payable September 29, 2006. This reflects the increase in income before non-cash items from the Carmichael Falls acquisition that closed in July 2006. On an annual basis, distributions will increase from $1.24 to $1.25 per unit.

"The strength of Great Lakes Hydro Income Fund lies in our ability to deliver a stable, reliable and consistent return on investment in addition to enhancing the value of the portfolio," said Richard Legault, President and Chief Executive Officer. “By capitalizing on strong hydrology conditions, maintaining strict control over our fixed-cost base and adding to our asset base through the acquisition of Carmichael Falls, we are able to pass on this success to our unitholders in the form of an increase in distributions.”

Distributions

The Fund will increase monthly distributions to unitholders from 10.33 cents per unit to 10.42 cents per unit, effective August 2006. This will result in a total annual distribution in 2006 to unitholders of $60.0 million compared to $58.7 million in 2005. Distributions are payable September 29, 2006 to unitholders of record as at August 31, 2006.

The schedule below sets out cash distribution history for the last six months:

Forward-Looking Statements

This new release may contain forward-looking statements concerning the Great Lakes Hydro Income Fund (“Fund”) business and operations. Forward looking statements can be identified by the use of words, such as “believe”, “well positioned”, “long-term”, “grow”, “expand”, “enhance” or variations of such words and phrases or state that certain actions, events or results “will” be taken, occur or be achieved. Forward looking statements involve assumptions, known and unknown risks, uncertainties and other factors which may cause the actual results or performance to be materially different from any future results or performance expressed or implied by the forward statements. More details relating to risk factors can be found in the Fund’s annual information form in the section entitled Risk Factors.

Examples of such statements include, but are not limited to factors relating to production and the business, financial position, operations and prospects for the Fund. They include (1) the Fund’s level of generation; (2) the Fund’s cost of production; (3) interest rates as they bear on the Fund’s indebtedness; (4) planned capital expenditures; (5) the impact of changes in the Canadian dollar – U.S. dollar on the Fund’s costs and results of operations; (6) the negotiation of collective agreements with its unionized employees; (7) business and economic conditions; (8) the legislation governing air emissions, discharges into water, waste, hazardous materials and workers’ health and safety as well as the impact of future legislation and regulations on expenses, capital expenditures and restrictions on operations; (9) regulatory investigations, claims, lawsuits and other proceedings; and (10) reliance on the guaranteed price for electricity by Brookfield Power Inc. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied in the forward-looking statements contained herein, and as a such, you are cautioned not to place undue reliance on these forward-looking statements.

These forward-looking statements represent our views as of the date of this news release. While the Fund anticipates that subsequent events and developments may cause the Fund’s views to change, the Fund disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the Fund’s views as of any date subsequent to the date of this news release.

Q2 Conference Call

A conference call for investors and media to review the second quarter results for 2006 will be held on July 31, 2006 at 10:00 a.m. (EST). To participate in the conference call, please dial 416-644-3414 or 1-800-796-7558 toll free in North America, at 9:50 a.m. (ET). For those unable to participate in the conference call, a taped rebroadcast will also be available until midnight August 2, 2006. To access this rebroadcast, please call 1-877-289-8525 toll free in North America, and enter the passcode 21195034#.

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About Great Lakes Hydro Income Fund

Great Lakes Hydro Income Fund is a premier Canadian income fund and one of the largest power income funds in North America with 1,015 megawatts of power generating capacity and an average annual production of 3,874 gigawatt hours.

Great Lakes Hydro Income Fund produces electricity exclusively from environmentally friendly hydroelectric resources. The Fund owns, operates and manages 26 high quality hydroelectric generating stations located on eight river systems in four distinct geographic regions across North America: Quebec, Ontario, British Columbia and New England.

Brookfield Power, which comprises the majority of the power operations of Brookfield Asset Management, owns 50.1% of the Fund’s outstanding units. Great Lakes Hydro Income Fund units are traded on the Toronto Stock Exchange under the symbol GLH.UN.