March 24, 2016 Kentucky Municipal Energy Agency Consideration of Renewables

Proposed Topics for Discussion 2 Consideration of Renewables - March 24, 2016 Board Meeting 1.Options to Consider  Programs  Technologies 2.Consideration Process 3.Proposed Resolution

Renewable Options to Consider - Technologies 3 Consideration of Renewables - March 24, 2016 Board Meeting WindSolarBiomass Power Purchases (PPAs) Projects Hydro More broadly, renewables include: Geothermal Electric, Solar Thermal Electric, Solar Photovoltaics, Wind (All), Hydroelectric, Biomass (including generators fueled with Wood and Agricultural By-Product, Landfill Gas and Anaerobic Digestion)

Renewable Options to Consider - Programs 4 Consideration of Renewables - March 24, 2016 Board Meeting Projects by KyMEA For Members  Approach to acquisition 1.PPA 2.Project development  Drivers 1.Financing by KyMEA, not Members 2.Economies of scale in project planning, development, operation  Potential approaches to cost recovery 1.Sale of entitlements to Member’s and their customers 2.Surcharges to Participating Members 3.Costs embedded in AR Rates (if project is part of portfolio for all AR Members) Member Projects - Owned or PPAs  Development of Agreement to Purchase Power from Members’ renewables assets 1.Price 2.Term  Role of KyMEA 1.Planning 2.PPA contract negotiation 3.Project development assistance  Approaches to recovery of any costs incurred by KyMEA 1.Charges to Participating Members as incurred 2.Surcharges to Participating Members as power is delivered 3.Costs embedded in AR Rates

Renewable Options to Consider - Implementation 5 Consideration of Renewables - March 24, 2016 Board Meeting Power Purchases (PPAs)Projects

Suggested Process for the KyMEA’s Consideration of Renewables – 5 Step Option Survey Phase 6 Consideration of Renewables - March 24, 2016 Board Meeting 1. Community and Member Input Process 2. Develop Planning Level Info for Basic Alternatives 3. Develop Examples of Key Program Options 4. Member Review and Feedback to KyMEA 5. Board Decides on Direction and Related Policy Implement  Costs 1.Capital 2.Operating  Other Key Implementation Considerations  Address questions on Slide 3  Limited number (2 or 3) of basic Option  Member consideration and review  Planning  Proposal to Customers  RFPs  Contracts  Siting  Project development  Options  Customer interest  Member options Process will draw on examples of technologies and approaches used by other joint action agencies and municipals.

Substance of Proposed Resolution establishing KyMEA’s Commitment to Consider Renewable Alternatives 7 Consideration of Renewables - March 24, 2016 Board Meeting The KyMEA Board resolves that: 1.Early during fiscal year 2016/2017, KyMEA will commence an effort to identify and consider alternatives for implementing Renewable Energy Resource options as early as May 2019 (the “Option Survey Phase”). 2.The Option Survey Phase of the consideration process will identify: a.Renewable resource options that can be practically implemented as soon as 2019; b.Generic planning level estimates of the development and annual costs of such options and the practical implementation considerations related thereto; c.KyMEA’s and the Members’ appropriate roles in implementing initial Renewable Energy Resource alternatives identified; and d.Interest among KyMEA’s Members and the communities they serve, including willingness to bear additional costs of Renewable Energy Resources as compared to conventional resource options. 3.The amounts to be included in KyMEA’s FY 2016/2017 budget related to consideration and potentially implementation of Renewable Energy Resources is expected to be in the following ranges: a.$30,000 to $60,000 to complete the Option Survey Phase b.$25,000 to $75,000 as a placeholder for further consideration of a particular option(s) and initial implementation efforts within the fiscal year.