1 NEDPower Mount Storm Wind Farm Project Update 10/20/2009

2 Grant County, West Virginia. Mt. Storm Coal-Fired Station Site Location 264 MW on 8000 Acres of Leased Property Wind project site is approximately 2 miles east of Dominion’s Mt. Storm coal-fired facility  Maximum Turbine Height – 388 ft  Turbine Blades – 127 ft long & 262 ft diameter rotor  Cut-in/Cut-out Speed – 4 m/s (9 mph) / 25 m/s (56 mph) Project Location

3 Project Data LocationGrant County, West Virginia StatusOPERATING Facility OwnersDominion (50%) / Shell (50%) Total Capacity264 Megawatts Number of turbines132 Maximum Output per Turbine2 Megawatts Commercial Operation DateDecember 2008 Total Capital Cost:$530 million Turbine SupplierGamesa (Model G80-2.0) Source of Turbine ManufacturingU.S. and Spain Land Area Covered~8,000 acres (12 miles of ridgeline) Regional Transmission OperatorPJM Interconnection

4 Completed Wind Turbine Turbine Dimensions: Rotor Diameter: 262 ft Tower Height: 256 ft Total Height to Blade Tip: 388 ft Distance from Bottom of Blade Tip Arc to Ground: 125 ft 125 ft 388 ft 262 ft 256 ft Turbine Dimensions

5 Project Benefits Taxes Over 25 Years Payments to Land Owners:$17.45 million (35 land owners) Property Taxes:$14.23 million (county) State Taxes:$ 6.87 million B&O Taxes:$ 3.79 million Schools:$ 1.74 million Construction provided over $30 million in revenues for local companies Jobs – reached 300 during construction and one dozen full time for operation Each 2 megawatt turbine provides enough electricity for 500 homes Entire project will provide power for 66,000 homes Excellent working relationship with local elected officials

6 Project Timeline Discussions Initiated with Land Owners & County2001 WV CPCN Site Certificate Application Submitted2002 WV CPCN Site Certificate Approved2003 Pre-Construction Conditions Completed2006 Construction Started2006 Construction Completed2008 Project Financing 2008

7 What is Project Finance? Financing of long-term infrastructure Relies on external debt and contributed equity Loans are secured by the project assets Relies on project cash flow for repayment Lenders evaluate project risk Special Purpose Entity (SPE) used to hold project assets Loan is made to SPE Lenders include – Banks, Insurance Companies, Private Equity Firms, ect.

8 Why Project Finance? Limit Recourse to Project - Possible non-recourse and off-balance sheet treatment Have multiple project owners - 50/50 partnership or other options Lever the project - Increase debt and returns

Dominion’s Investment in Equity Method Accounting Projects (2008 & 2007) 9

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Project Financing Process Determine if construction financing and term financing will be required, and the target loan period Develop cash flow model for the project with desired debt size and anticipated financial results Develop a Project Information Memorandum to market the project Hire borrower’s counsel/attorney Solicit interest with banks and sign confidentiality agreements Hire an independent engineer who is a recognized leader in the field and have the banks’ trust Sign off on lender’s selected counsel/attorney Negotiate high-level project economics / perform market analysis / “stress-test” the economic model Acquire credit committee approval from candidates for lead arranger banks Select 1 to 3 lead arrangers for project financing Negotiate and sign engagement letter and term sheet with selected lead arrangers Negotiate financing agreement and other ancillary documents Proceed with syndication (lead arrangers sell down their hold amounts) Acquire credit committee approval from bank syndicate Independent engineer, insurance agent, and other consultants sign off Finalize debt size using latest project data approved by the independent engineer, banks, borrower, and sponsors Acquire consents / opinions from contract counterparties Close the transaction 11

Project Financing – Debt Service Coverage Ratio Debt Service Coverage Ratio (DSCR) DSCR = Funds from Operations Debt Payment in the same period Banks want to stress test the project cash flows to have debt repayment certainty Is used to size the debt Usually a six-month or annual test during operation of the facility and entire term of the loan Is the project generating cash flows sufficient to repay debt? Usually requires dual test: –DSCR is usually 1.0 to 1.2 for P95/P99 stress test –DSCR is usually 1.2 to 1.5 for P50 stress After closing and during operation of the project, if DSCR requirements are not met, the banks will require the sponsor(s) to inject cash to meet DSCR tests 12

Project Financing – Important Negotiating Points As the borrower, you want to achieve: Balance between high debt size and low risk of debt repayment occurrences Terms that allow flexibility if market disruptions occur Hiring the best attorney money can buy – it is worth it Paying the lowest possible bank fees due at closing (but still market price) Lowest debt-service-coverage-ratio for debt sizing and equity injection thresholds Non-recourse treatment to sponsor(s) Use of more probable revenue projections (use P90 or P95 rather than P99 projections) Finding a bank group that wants the project & sponsor(s) to succeed Finding a bank group that has experience financing the technology/locations Increase in returns to the sponsors compared to no financing 13

14 Thank You Questions? NedPower Mount Storm Wind Farm