Mid-West Electric Consumers Association Board Meeting Mark A. Gabriel Administrator

Facing Challenges Facing challenges together Working together to find common solutions to common problems Adding value

Germany Spent $140 billion on renewables Funding via customer surcharge on electric bills: $280/year per family Offshore Wind: $30 million per structure

Intermittent & Behind-the Meter Generation

Decreased Hydro Production Regulatory Environment

Changing Markets

EPA Proposed Section 111(d) Which plants? When? Choices?

Leveraging Investments Western and customers have invested in advanced technology for years. This is not new. A recognition of what we are already doing Question is how to make the most of our investments

State of Western’s Assets 1 9

Initial Asset Management Results Initial focus – t-lines, breakers, line segments No “smoking gun” Concerned about age of equipment Data analytics will be critical

Physical Security Risk Assessments Western has started assessing facilities to meet NERC CIP-014 requirements We will perform All Hazard-Physical Security Risk Assessments at 65 locations (including identified critical locations) CY – 75 assessments CY 2015 The Assessments are a combination of compliance (Dept. of Energy/Western Policy) and risk based findings – This allows us to make risk based decisions at each site that are cost effective to implement Western is also working with subject matter experts with the Dept. of Energy on Project Power Surge – Project Power surge was established to create a standardized approach for assessing threats, vulnerabilities, consequences and mitigation options for the electricity sector

Organizational Change Management An approach to transitioning individuals, teams, and organizations to a desired future state. – Knowing the Why, What, Who, When and How – Understand that people transition through change at different speeds Western’s Kick-off was Aug 25, 2014 – Trained Senior Management and more than 30 Change Agents in Leading Change and Managing Organizational Transitions – Western leadership to be trained Oct 20-24, 2014

Budget Formulation Process Changes Revise the Budget Formulation schedule Implement a comprehensive, 360-budget internal review by Senior Leadership Provide opportunities for strategic input during the process Administrator’s Strategic Guidance distributed at the beginning of the process 5 iterative reviews by senior leadership throughout the 9-month formulation process Final holistic review by senior leadership

Milestones – Next Ten-Year Capital Investment Plan (TYCIP) Revision

Western Enterprise Risks Cyber security risk Failure of critical asset Inability to maintain sustainable funding Natural disaster Physical security breach Reduced power system operating capability Severe safety incident

Our Commitments