Federal Issues Update Joe Nipper Senior Vice President, Government Relations American Public Power Association at the Municipal Electric Power Association of Virginia May 22, 2009

Overview About APPA Stimulus disbursement Climate Change New energy legislation EPA activities FERC activities Wholesale electricity markets Other issues

About APPA Established in 1940 Representing 2,000+ municipally owned electric systems Our mission: help our members provide reliable, environmentally responsible electric service at an affordable price APPA represents a very diverse membership, including 97 out of the top 100 largest public power systems in the nation. Approximately 50% of our members have less than 5,000 meters. 3

Diverse Membership

Powerful Resources Staff of 65 Professionals Engineers Statisticians Legislative & regulatory experts Legal counsel Educational program specialists Economists Environmentalists Customer Service Specialists Communicators

Powerful Benefits APPA is a powerful investment Powerful representation in Washington Powerful networks Powerful information Powerful programs Membership in APPA is an investment in your community and your utility. Powerful Representation - APPA is your voice in Washington APPA members reside in virtually every Congressional District APPA’s Govt Relations team is well-respected in Washington APPA participates on a wide range of coalitions that advance our Members’ interests Powerful Networks - List Servers, Conferences and Workshops 21 list servers; over 3,000 unique users; and 600 utilities participate Conferences and workshops on functional areas within utilities, including operations, customer service, finance and accounting, legal, economic development, broadband, new generation, and more. Powerful Information - Periodicals and Publications, APPAnet.org APPAnet.org is a great resource for industry information and analysis (white papers, statistical reports, benchmarking studies, etc.) The widely-acclaimed Public Power Magazine has been in print for more than 65 years APPA’s Public Power Weekly newsletter is a respected resource for timely, in-depth issues Impacting public power Powerful programs – member-driven programs and services like DEED and RP3, which are designed to improve utility operations and services

Stimulus Disbursement APPA tracking info on funding availability, application process; timelines, etc. and will post on newly established “stimulus” page on our website APPA has also developed summary of provisions applicable to public power and municipalities; also posted on the website

Stimulus Disbursement Examples of stimulus opportunities include: $1.6 Billion in “New” CREBs $3.2 Billion for Qualified Energy Conservation Bonds $3.2 Billion for Energy Efficiency and Conservation Block Grants of which $2.8 Billion distributed directory to cities and countries $4.4. Billion for smart grid deployment; requires 50% match

Climate Change Senate Chairwoman Boxer (D-CA) developing new EPW Committee cap and trade bill for release this fall; “less complex” than last year’s bill Chairman Bingaman (D-NM) will continue to play a key role with the Energy Committee Majority Leader Reid (D-NV) has indicated preference for combined legislation addressing climate, renewable electricity standard, and energy Reid recently said consideration of climate legislation may not occur until early next year.

Climate Change House Waxman/Markey bill includes cap and trade climate regime and energy provisions; major issues still being negotiated Includes direct allocations of allowances to electric LDC’s based on EEI proposal – 50/50/50 Includes Boucher proposal for accelerating CCS R&D Performance standards for new and existing coal plants No cost cap; cost mitigation includes offsets, banking/borrowing, strategic allowance reserve

New Energy Legislation Senate Topics being marked up in the Energy Committee now; floor consideration this summer: Transmission policy – EHV overlay; enhanced federal siting authority; planning; cost allocation Renewable electricity standard Energy efficiency for buildings, lighting DOE loan guarantees (fix existing program) FERC authority over gas derivatives Cyber Security

New Energy Legislation Transmission Policy “Discussion Draft” Joint Bingaman/ Murkowski proposal Enhanced “backstop” siting authority for FERC; no power of eminent domain Bottom up planning process from regions/subregions coordinated by FERC resulting in interconnection wide plan Requires FERC to issue rule for cost allocation Generally supported by APPA Several remaining concerns

New Energy Legislation House RES – 20%by 2025; 15% renewables, 5% efficiency Applies to those selling 4 Million MWH annually at retail Hydro, new nuclear and new CCS out of the baseline Transmission – planning only Various energy efficiency proposals Plug-in hybrids Smart grid – Energy Star, etc. NSPS for coal plants

EPA Activities EPA has issued a proposal “endangerment funding” that sets the stage for regulation of CO2 under the Clean Air Act The threat of EPA action puts additional pressure on Congress to move climate legislation

FERC Activities Jon Wellinghoff named permanent chair Joe Keliher position now vacant; will be a Democratic appointment Just issued policy statement on Smart Grid FERC seeks full authority to site transmission

RTO/ISO-Run Markets Under the Electric Market Reform Initiative, APPA released Competitive Market Plan. Sent to Congress, FERC, other policymakers, media, RTOs, market participants Encouraging initial reaction from FERC and others; opposition from the usual suspects Plans for wider distribution and discussion through spring and summer Growing interest in our proposal, particularly at state level Campaign for Fair Electric Rates (CFER) website updated, www.fairelectricrates.net, and additional Hill conferences planned

Other Issues Rail/transportation Community broadband Tax issues