Invenergy Beech Ridge Wind Farm Update West Virginia Wind Working Group – September 18, 2007

Invenergy 2 Invenergy Wind - Corporate Overview Developer, owner and operator of large-scale wind power generation projects in North America and Europe. One of the ‘top 5’ wind energy developers in North America based on projects over built the last two years. More than $1.5 billion in wind energy projects (over 1,000 MW) in operation and late stage construction. Secured 1,300 MW of wind turbines from GE for 2007 & 2008 build program in the U.S.

Invenergy 3 Beech Ridge Wind Farm  Northwestern Greenbrier County  Proposed 186 MW facility  124 GE 1.5 turbines (77 meter rotors)  Key landowner: MeadWestvaco  Target Schedule PSC Siting Certificate: August 2006 Start Construction: April 2007 Start Operations: December 2007  Expected Output: 570,000,000 kwh/yr  Economic Impacts $300,000,000 investment 200+ construction jobs permanent jobs $400,000 /yr property taxes $200,000 / yr B&O taxes

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5 Beech Ridge Opposition  Anti-Wind MCRE CRW  Tourism The Greenbrier & Sporting Club Greenbrier Co. CVB  Elected Officials US Rep. Mollohan WV Senator Guills WV Delegate Canterbury WV Delegate Campbell Lewisburg Mayor Manchester  Numerous Local Citizen Organizations Greenbrier River Watershed Association Williamsburg VFW Williamsburg Ruritan etc…  Grassroots 2,000+ letters of opposition

Invenergy 6 Beech Ridge Supporters  Labor (ACT)  Industry WV MFA WV Forestry Association  Environmentalists Sierra Club Coal River Mountain Watch  Local Government Rainelle, Rupert, Quinwood, Richwood Greenbrier Co. Commissioners  Grassroots 700+ letters of support

Invenergy 7 January 2007 PSC Order  Key Finding: Granted Certificate for all 124 turbines  18 Pre-Construction Conditions, including Compliance with USFWS, DNR, SHPO Decommissioning Minimum property tax guaranty Compliance hearing and affirmative PSC confirmation  11 Post-Construction Conditions, including 3 years of bird and bat studies  Technical Advisory Committee  Mortality Monitoring  Adaptive Management Testing Minimal lighting No aerial herbicide spraying

Invenergy 8  2005 November – Submitted Application  2006 April – Public Hearings (Fairlea) May – Evidentiary Hearings August – PSC Order  2007 January – Final PSC Order (Reconsideration Denied) February – Supreme Court Appeal April – Supreme Court Agrees to Hear Appeals Summer – Supreme Court Briefs Fall – Supreme Court Hearing Winter – Supreme Court Decision WV PSC Permitting Timeline

Invenergy 9  Appelees: Alicia and Jeffrey Eisenbeiss Mountain Communities for Responsible Energy  Appelants Public Service Commisssion of West Virginia Beech Ridge Energy LLC WV State Building and Construction Trades Council, AFL-CIO  Amicus Curiae MeadWestvaco Corporation Tom Vance Appalachian Power Company Utility, Telecommunications, and Energy Coalition of West Virginia West Virginia Oil and Gas Association West Virginia American Water Company WV Supreme Court Appeal

Invenergy 10 Potential Appeal Outcomes  Application Dismissed Beech Ridge reapplies  Order Remanded to PSC New PSC Order Eligible for reconsideration and appeal  Order Upheld Pre-Construction Compliance Eligible for reconsideration and appeal

Invenergy S.B. 441 –Implications for Wind Energy West Virginia Wind Working Group – September 18, 2007

Invenergy 12 Senate Bill 441: Background  May 2001 Legislation B&O Taxes  Set “capacity factor” for wind at 5% Property Taxes  In West Virginia, pollution control equipment is taxed at salvage value – 5% of appraised value.  Classified wind turbines and towers as pollution control equipment.  Resulted in most of a wind project being valued at “salvage value”  2006 Sessions  Governor’s Tax Modernization Project

Invenergy 13 Business & Occupation Taxes  Applies to Industries Regulated by PSC  Based on nameplate capacity  Base rate of $22.78 per kilowatt  Note: $20.70 rate for coal plants using desulfurization technology  Adjusted by legislated “capacity factor” FuelOld CFNew CF Coal 40%40% Wind 5%12% Peaker5%5%

Invenergy 14 Governor’s Original B&O Tax Proposal  Raise B&O Taxable Capacity Factor for wind (and only wind) to 20% Four times the effective B&O tax burden $170,000 in additional taxes per 100 MW Would have resulted in wind paying  50% more per MWh produced than coal-fired electricity and  300% more per MWh than gas-peaker fired electricity.

Invenergy 15 B&O Taxes under Senate Bill 441

Invenergy 16 B&O Taxes under Senate Bill 441

Invenergy 17 Property Tax (Old System)  Pollution Control /Salvage Value (as % of Capital Cost) Coal = 33% Wind = 85%  Appraised Value (as % of Capital Cost) Coal = 69% Wind = 19%  Assessed Value (60% of Appraised Value) Coal = 41% Wind = 12%  Property Tax Burden (per MWh generated) Coal = $1.96 Wind = $1.65

Invenergy 18 Governor’s Property Tax Proposal  Eliminate classification of wind turbines as pollution control equipment Raises property tax burden to more than five times then current payments Increases annual property tax burden approximately $2,000,000 per 100 MW (20-year average) Results in wind paying  50% more than coal per dollar of capital cost  400% of what coal pays per MWh produced

Invenergy 19 Gov’s Proposal Would Have Made WV Uncompetitive with Neighboring States

Invenergy 20 Property Taxes Under S.B. 441  Capped percentage of wind facility assigned salvage value at 79%  Impact varies depending on percent of facility costs originally eligible for salvage valuation  Should result in wind paying more property taxes per MWh than coal

Invenergy 21 Property Taxes Under S.B. 441

Invenergy 22 Property Taxes Under S.B. 441