Joint Ownership

1
Joint Ownership

• Raj Rao, President
• Indiana Municipal Power Agency
• APPA Joint Action Workshop
• January 10, 2006

2
Joint Ownership

• Existing Ownership
• Gibson 5
• Coal-fired Generation (625 MW)
• 24.55 Ownership (156 MW)
• Trimble County Unit 1
• Coal-fired Generation (528 MW)
• 12.88 Ownership (68 MW)

3
Joint Ownership

• Benefits
• Economies of Scale
• Experienced Operator
• Tax Exempt Financing

4
Joint Ownership

• Cons
• Majority Owner and Operator Makes the Decisions
• Limited Control
• Accounting issues on allocations

5
Joint Ownership

• Proposed Projects
• Trimble County Unit 2
• Coal-fired
• 750 MW
• IMPA (12.88)
• IMEA (12.12)
• LGE (75)
• Commercial in 2010

6
Joint Ownership

• Proposed Projects
• Prairie State Generation
• Coal-fired
• 1,650 MW
• Mine Mouth
• Coal Reserves
• Ownership of Coal Mine

7
Environmental Performance
Prairie States emissions will be one-fifth the
U.S. coal plant average
4.37
1.08
0.97
0.75
0.37
0.39
0.30
0.26
0.182
0.16
0.12
0.07
2003 estimated. Source Environmental
Protection Agency (EPA) National Air Pollutant
Emission Trends EIA Annual Review 2002 (October
2003).
8
Joint Ownership

• Prairie State Generation
• Peabody Coal Company
• Investor Owned Utility
• CCS (Illinois) (GT)
• Wolverine (Michigan) (GT)
• IMPA (Indiana)
• KMPA (Kentucky)
• MJMEUC (Missouri)
• NIMPA (Illinois)
• WPPI (Wisconsin)

9
Joint Ownership

• Prairie State Generation
• 60 Public Power (Muni REMC)
• 40 IOU and Merchant

10
Joint Ownership

• Due diligence investigation of design
• Relationships with other partners and with lead
  partner
• Rights to future additions of generation

11
Development Period

• Development period costs
• EPC contract negotiation
• Pricing changes between participation and
  development phases
• Methods to monitor progress of project
• Proactive approach to public relations

12
Development Period

• Environmental permitting hurdles
• Recordkeeping from day one
• Cancellation penalties
• Protection of confidential information
• Insurance decision (Contractor or owner provided)

13
Construction And Ongoing Operations

• Level of representation and monitoring during
  construction
• Backup power supply plans for the non-firm
  resource
• Capital and OM budget monitoring, invoice review
  and audits

14
Construction And Ongoing Operations

• Emission allowances allocation and air quality
  systems performance
• Capital cost exposure due to changing
  environmental regulations
• AG cost increase exposure and control