Melissa Seymour Midwest Market Structure Iberdrola Renewables June 7, 2010 Mid-America Regulatory Conference Kansas City, MO Integrating Renewables on the Grid: Meeting the Challenge of the Midwest's Energy Future Elk River Wind Power Project, Kansas

Iberdrola Renewables: A Leader in Execution … with excellent growth prospects A collection of exceptional assets… #2 developer in the U.S. with nearly 3.6 GWs (1,311 MWs of wind started up in 2009) 851 employees in 28 U.S. states, DC, and Canada 851 employees in 28 U.S. states, DC, and Canada 621 MW of CCGT & peaking capacity on the strategic CA-OR border 155 BCF of owned & contracted natural gas storage positioned for a volatile future U.S. represents 1/3 of earnings 24.5 GWs of wind development pipeline is in the U.S. US Renewables Corporate Support Wind Power Gas 3,600+ MW 521 MW CCGT 100 MW peaking 155 BCF Owned & Contracted Updated Feb. 23, 2010

Mid-Continent Wind Assets Updated March 1, 2010 Operating wind projects MID-CONTINENT REGION MinnDakota 150 MW Owned Flying Cloud 43.5 MW Owned Elk River 150 MW Owned Moraine 51 MW Owned Trimont 101 MW Owned Winnebago 20 MW Owned Providence Heights 72 MW Owned Top of Iowa II 80 MW Owned Moraine II 49.5 MW Owned Elm Creek 99 MW Owned Buffalo Ridge 50.4 MW Owned Farmers City 146 MW Owned Penascal 202 MW Owned Barton Chapel 120 MW Owned Barton 160 MW Owned Rugby MW Owned Streator Cayuga Ridge 300 MW Owned

U.S. Markets for Renewable Energy: Those states ~= 50% of US KWh (map shows population density) States with circles: RPS high KWh use high electricity price 28 states with mandatory RPS requirements Source of maps: UCS, US Census

Connecting Renewables to Loads The best wind resources in the U.S. are located in areas where the grid is the weakest Source of maps: NREL, Platts

Wind Integration Solutions High Cost Low Cost Source: UWIG Low Wind Penetration Level High Wind Penetration Level Markets Additional Flexible Generation Wind Curtailment Storage Accessing Intra-hour flexibility Price Responsive Load Demand Response Dynamic Scheduling Simple Cycle GT Combined Cycle GT In Range of 1-2% Pumped Storage Batteries Flywheels SMES CAES Capacitors PHEV Accurate Forecasting Real time forecasting Centralized Forecasting Integrating wind is a cost issue, not a reliability issue

Mid-Continent Market Attributes for Optimal Wind Integration FavorableAreas for Improvement Large balancing areasIncenting and utilizing accurate wind forecasts Robust regional interconnections (MISO and SPP) Construction of transmission infrastructure to link remote resources to loads Access to intra-hour flexibilityEnsuring low-cost integration solutions are implemented Flexible transmission service Robust regional transmission planning processes

Summary The Mid-Continent has many favorable market attributes for cost-effectively integrating renewables Successful wind integration in the Mid-Continent will require transmission expansion - transmission costs are a small fraction of the total costs of the power system Incenting accurate forecasting and incorporating forecasting in system operations will significantly reduce the uncertainty about future wind output Need to continue to develop market rules, processes, incentives, and products that ensure that low-cost wind integration solutions are developed prior to implementing higher costs solutions 8

Big Horn Wind Power Project, Washington Questions? Melissa Seymour