Electricity Technology for a Carbon Constrained World

1
The Challenges Opportunities of a
New Energy Era Indiana Energy Association Septemb
er 20, 2007 Indianapolis Jeff SterbaChairman,
President CEO
2
Where We Operate
3
Major Challenges Facing the U.S. Electric
Utility Industry

• Rising Demand
• The Coming Build Cycle
• Rising Costs and Prices
• Climate Change

4
The Coming Build Cycle Electric Utility Asset
Expansion in Next 15 Years
Billion
Source Cambridge Energy Research Associates
5
Rising Costs and Prices System Building Blocks
Are More Expensive
Sample Commodity Cost Increases for PNM
Resources New Mexico Utility 2002-2006
Source PNM
6

• Intensified Commitment to Energy Efficiency
• Regulatory Innovation
• Technology Advancement
• Climate Change Legislation

Opportunities to Move the Industry Forward
7
Climate Change Comparative Costs of New
Generation (2010-2015)
/MWh (2006 )
110
IGCC
Biomass
100
Wind (32.5 CF, no PTC)
90
NGCC (_at_8/mmBtu)
80
NGCC (_at_6/mmBtu)
70
60
Nuclear
PC
50
40
30
0
10
20
30
40
50
Cost of CO2, /metric ton
Source EPRI 2007
8
Climate Change Comparative Costs of New
Generation (2020-2025)
/MWh (2006 )
100
Biomass
NGCC (_at_8/mmBtu)
90
Wind (42 CF, no PTC)
80
70
IGCC w/capture
NGCC (_at_6/mmBtu)
60
50
Nuclear
40
PC w/capture
30
0
10
20
30
40
50
Cost of CO2, /metric ton
Source EPRI 2007
9
Climate Change Technically Feasible Carbon
Reductions for the U.S. Utility Industry
Source EPRI 2007