The Future of Electric Power In Utah January 12, 2010

Utah Constitution confers upon municipalities the “exclusive” responsibility to furnish public services to their residents Municipalities have the authority to: – provide their own power service, or – provide a franchise agreement for someone else to provide the service Municipal Power

UAMPS Overview UAMPS is an energy services interlocal entity that provides electric energy services on a nonprofit basis to its members UAMPS’ flexible organizational structure allows development, financing and operation of projects for generation, transmission and power supply management Project-based organization with 15 separate projects Members elect to participate in Projects based on their individual needs

52 Members Eight States – Arizona – California – Idaho – Oregon – Nevada – New Mexico – Utah – Wyoming UAMPS Membership

UAMPS Projects Resource Projects – Coal Hunter Project San Juan Project IPP Project – Hydro CRSP Project – Wind Firm Power Supply Project Horse Butte Wind – Natural Gas Payson Project Natural Gas Project (procurement of long-term gas) – Other Pool Project Resource Project (investigation of supply-side and demand-side alternatives)

UAMPS Projects (cont.) Transmission Projects – Craig-Mona Project (345 kV) – Central-St. George Project (345/138/69 kV) Service Projects – Government and Public Affairs Project – Member Services Project

UAMPS has the ability to: Provide an analysis of power supply options Plan, construct and manage generation Construct, acquire and manage transmission Negotiate Power Purchase Agreements – Draft Request for Proposals (“RFP”) – Evaluate RFP response Shape power supply (buy/sell and schedule) to meet load requirements Provide marketing services (buy/sell hourly) Provide transmission services

Resource Development Philosophy Provide a reliable, cost-effective electric power supply portfolio – Minimize impacts on rates to members – Minimize portfolio integration costs – Maintain system reliability – Ensure flexibility – Ensure short and long-term needs are met – Maintain diversity in resource mix

Resource Development Philosophy (cont) UAMPS categorizes load requirement into three characteristics: – Base – Intermediate – Peaking

Current Resource Investigation Supply-side – Wind – Geothermal – Solar – Nuclear – Natural Gas – Coal – Power purchase contracts Demand-side – Carbon footprint template – Energy Efficiency Programs – Net metering

Resource Evaluation Financial Operational Reliability Environmental Flexibility Short-Term and Long-Term Diversity

Development Factors Site suitability (soil, seismic, etc.) Water availability (quantity and quality) Fuel availability and transportation Transmission Air quality Public opinion and controversies

Regulation A lot of “unknowns” – Congressional action re: GHG  Cap & Trade ($)  Carbon Tax(es) $ – Implementation schedule and transition period of legislation – Regulations (Environmental Protection Agency) – National Renewable Portfolio Standards requirements

Resource Lead Times Typical Planning Horizon ~ 20+ Years Acquisition and procurement of resource – Coal10 years – Nuclear15 years – Natural Gas 5 years – Wind 3 years – Solar 5 years – Efficiency 1 year

Resource Costs Coal5 cents per kWh Uncertainty Nuclear9 cents per kWhTechnical Natural Gas6.5 cents per kWhVolatility Hydro6 cents per kWhSmall Wind7 cents per kWhLocation Solar15 cents per kWhExpensive Efficiency1 cent per kWhMust Do

Challenges Renewable Resources – Only part of the answer – Additional fossil fuel energy is needed Global Climate Change – Impositions of regulation enhance the complexity to build new generation