Appalachian Power Update Ron Jefferson, Manager External Affairs, Appalachian Power May 26, 2016

Appalachian Power Operates in three states serving approximately 957,000 customers (VA - 526,000). ~6,400 MW of directly-owned generation

Rate Stability Virginia Residential Rates 11.56 ₵/kWh 11.23 ₵/kWh February 2015 - 4% decrease in rates Residential rate 11.23 cent - below National Average 13.3kwh / East Coast Average 15.2kwh / RGGI States Average 16.9kwh Industrial rate 6.55 cent - National Average 8.2 / East Coast Average / 9.7 Stable Rates 2010 2016

Generation Coal Amos Plant Mountaineer Plant 3 units / 2,930 MW Closing 4 plants with 1,735 MWs of lost capacity 2 plants in Virginia / 2 in West Virginia Converting Clinch River plant to natural gas 2 coal plants remaining - both located in WV Amos 2 units are 800 MW each / 1 unit 1,300 MW Mountaineer 1 unit 1,300 MW 1 unit / 1,305 MW Mountaineer Plant 4

Generation Gas Virginia Clinch River / 2 units / 484 MW West Virginia Ceredo / 6 units / 450 MW Ohio Dresden / 1 units / 555 MW 3 natural gas plants Complete Clinch River gas conversion in 2016 Dresden is a combined cycle plant Clinch River and Ceredo are peaker plants Clinch River Plant 5

Generation Pump Storage / Hydro Virginia Smith Mountain / 5 units / 615 MW Leesville / 2 units / 5 MW Claytor / 4 units / 15 MW Byllesby / 4 units / 4 MW Buck / 3 units / 3 MW Niagara / 2 units / 1 MW West Virginia Winfield / 3 units / 9 MW London / 3 units / 7 MW Marmet / 3 units / 6 MW 1 Pump Storage 8 Hydro 665 MW total Smith Mountain Dam 6

Generation Purchase Power Agreements PPAs Wind Beech Ridge (WV) 100.5 MW Fowler Ridge (IN) 100 MW Camp Grove (IL) 75 MW Grand Ridge (IL) 100.5 MW Hydro Summersville (WV) 48 MW 4 wind contracts totaling 375 MWs 1 hydro totaling 48 MWs 7

2016 APCo Nameplate Capacity Mix Integrated Resource Plan 2016 APCo Nameplate Capacity Mix

2030 APCo Nameplate Capacity Mix Integrated Resource Plan 2030 APCo Nameplate Capacity Mix Wind production tax credit PTC $22 per MWh Solar investment tax credit ITC 30% 2016 = 10 MW of Utility Scale Solar and 150 MW of Wind June 1, 2020 PJM new capacity rules takes effect 418 MW by 2020.

Integrated Resource Plan 2016 APCo Energy Mix

Integrated Resource Plan 2030 APCo Energy Mix

Clean Power Plan ~30% Reduction in CO2 (2005-2015) CO2 Reductions Have Occurred ~30% Reduction in CO2 (2005-2015)

Clean Power Plan Emission Reductions Are Not Uniform Emissions have increased in AR & LA Majority of reductions occurred prior to 2012 EPA CPP baseline in OH & WV Coal use has since been eliminated in KY & VA 6 6

Transmission Virginia Projects Four major transmission projects started construction in 2014 Jackson ferry / clover dale (improvement of west to east flow of capacity) Total budget for those projects is over $450 million Total amount of investment in Virginia for transmission projects already started = $450 million Cloverdale Station Expansion 765KV and 500kV Yards