Contract Plant Operators:

1
Contract Plant Operators

• Stepping stone to new nuclear investment
• in a liberalized electric energy market

2
A Nuclear Renaissance must attract significant
new investment

• The dilemma of
• rate regulation
• (Income ROI x NBV)
• Guaranteed declining income and earnings
• Operating cost risk comes to dominate over income
• Owner/Investor interest in exit strategies

• The facts
• of liberalization
• (Income Rev Exp)
• No guaranteed income or earnings
• Income and earnings growth based on operating
  performance and market competition
• Owner/investor interest in industry improvement
  strategies

3
Status of State Electric Industry
Restructuring-- as of August 2002 --
4
U.S. commercial nuclear power plants
NMC operated
Nuclear plants with new owners
Nuclear plants
5
NMC History and motivation

• 1998 Liberalization is coming, We need a better
  way to run our nuclear plant
• 1999 Creation of NMC, LLC, a new business
  platform
• 2000 Contract for operating services and transfer
  of operating authority
• 2001 Transfer of non-union employees and adding a
  new customer and member
• 2002 Transfer of union employees from IPL

6
Alliant Energy
Alliant Energy Nuclear - 20
Interstate Power Light - 70
WPS Nuclear - 20
WEC Nuclear - 20
Other owners 30
NSP Nuclear - 20
Operating Agreement
Consumers Energy - 20
Nuclear Asset DAEC
NMC, LLC
7
NMC Formation and Implementation Issues

• Legal approvals state and US SEC
• License transfer US NRC
• Financial standing
• Combining employees
• New company infrastructure

8
What does NMC provide us?

• A credible model for improving and sustaining
  nuclear plant performance
• A mechanism that recognizes the real world of
  current complex owner/operator relationships
• Positioning for plant sales pending
  liberalization
• A known commodity for new investors and the
  Nuclear Renaissance

9
Conclusion

• NMC positions us to act quickly and effectively
• when liberalization opportunities present
  themselves
• A well conceived contract operator
• can do the same for you