[0] KMS Power Issues First Quarter Financial Results.

Business Editors

VANCOUVER, BRITISH COLUMBIA--(BUSINESS WIRE)--May 26, 2000

KMS Power(TSE:KMS.UN.) KMS Energy, Inc., in its capacity as operating Manager of the KMS Power Income Fund (the "Fund"), is pleased to disclose financial results of the Fund for the 3 month period ended March 31, 2000.

Operating Results

Total revenues for the period amounted to $5,084,000 CDN. Operating and other expenses were approximately $4,323,000 CDN, resulting in a net margin of 15.0 percent. Net earnings for the 3-month period were $761,000 CDN. On a comparative basis in relation to the 3-month period ended March 31, 1999, revenue increased by 43.7 percent and operating and other expenses by 53.0 percent, these variances largely reflecting the impact of the addition of KMS Crossroads to the operating assets of the Fund. The net margin for the 3-month period ended March 31, 1999 was 20.2 percent.

The comparative decline in the net margin has been offset, in that after adjustment for the non-cash portion of management fees, depreciation, amortization, allowance for leases and subsidies, provision for the KMS Sinking Fund, and interest on the equity portion of convertible debentures, total distributable cash amounted to $1,833,000 CDN for the first quarter of 2000, or $0.255 per trust unit. This compares to $0.254 per trust unit for the three months ended March 31, 1999.

Current Developments

Key activities in the quarter ended March 31, 2000, include ongoing construction in connection with the "Expansion 2000" program at KMS Peel. To facilitate this, KMS Peel acquired credit facilities from Bank One (Canada), which extended construction financing of approximately $23.9 million CDN, and operating credit lines of $8.0 million CDN.

As at March 31, 2000, borrowings under the construction credit facility amounted to approximately $13.1 million. Various elements of the Expansion 2000 program are progressively being implemented, with project completion currently scheduled for the fourth quarter of FY 2000. Additionally, the Fund executed its Y2K preparedness program at the end of the 1999 calendar year. No significant problems were subsequently discovered during the first quarter of 2000.

The Outlook

The performance of the Fund to date has been reliable and consistent, while on-going construction activities, and the integration of the Crossroads power facility, are laying new foundations for future expansion. Upon complete integration of the fifth processing line at KMS Peel, and other components of the Expansion 2000 program, significant growth is expected to be achieved in the revenues of the Fund, and in its scale of operation.

KMS Power is an open-ended trust, operating independent power projects in Canada and the United States. Prior news releases and/or general information can be accessed through the KMS web site (www.kms-energy.com); by contacting KMS Energy, Inc. at 1-888-959-2600; or through Michael O'Connor, Director, Investor Relations of the KMS Power Income Fund, at 888-705-3377.