Renewable Energy Production Incentive (REPI) CREBs & REPI Workshop February 9, 2006 Crystal Gateway Marriott, Arlington VA

Outline Background –What is the REPI program? –Who is eligible? –How does REPI work? –What is a Qualifying Facility? –What types of technologies qualify? –REPI Timeline Energy Policy Act 2005 –Enhancements –Rulemaking Overview –Appropriation Summary REPI Facts and Figures –Number of Annual Applications from Qualified Facilities –What to expect in the future from REPI –Payout Example –FAQ’s –Points of Contact

Goal of Presentation To provide an overview of the REPI program, explain who and what technologies qualify, and to provide the audience a realistic outlook on what to expect in the future.

What is REPI? The Renewable Energy Production Incentive (REPI) is part of an integrated strategy to promote increases in the generation and utilization of electricity from renewable energy sources and to further the advances of renewable energy technologies. Legislation REPI was initiated under Section 1212 of the Energy Policy Act of Section 202 of the Energy Policy Act of 2005 reauthorized the program until 2016.

Who is eligible? A not-for-profit electric cooperative, a public utility described in section 115 of the Internal Revenue Code of 1986 [26 USCS § 115], a State, Commonwealth, territory, or possession of the United States, or the District of Columbia, or a political subdivision thereof, an Indian tribal government or subdivision thereof, or a Native Corporation (as defined in section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602)),

How does REPI Work? REPI provides financial incentive payments for electricity produced and sold by new qualifying renewable energy generation facilities. Qualifying facilities are eligible for annual incentive payments of 1.5 cents per kilowatt-hour (1993 dollars and indexed for inflation) for the first ten year period of their operation, subject to the availability of annual appropriations in each Federal fiscal year of operation.

What is a qualified facility? A facility that generates electric energy for sale in, or affecting, interstate commerce using solar, wind, biomass, landfill gas, livestock methane, ocean (including tidal, wave, current, and thermal), or geothermal energy, except that— (1) the burning of municipal solid waste shall not be treated as using biomass energy; and (2) geothermal energy shall not include energy produced from a dry steam geothermal reservoir which has— (A) no mobile liquid in its natural state; (B) steam quality of 95 percent water; and (C) an enthalpy for the total produced fluid greater than or equal to 1200 Btu/lb (British thermal units per pound). EPAct Section 202 (b) Qualified Renewable Energy Facility

What types of technologies qualify? 60% of Appropriation Pays: Wind, Solar, Ocean (including tidal, wave, current and thermal) geothermal, or closed-loop (dedicated energy crops) biomass technologies 40% of Appropriation Pays Open-loop biomass such as landfill methane, biomass digester gas, and plant waste material EPAct 2005 Section 202 (a) – Incentive Payments

REPI Timeline – Key Dates October to December Application Open Season Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Implicit Price Deflator – Published New Application Review Letters Sent Make Payments

EPAct Overview of Enhancements 1)Allocation of available funds 2)Incorporation of additional ownership categories 3)Extension of the eligibility window and program termination date 4)Expansion of applicable renewable energy technologies

REPI Rulemaking Process Stakeholder outreach DOE drafts an interim rule Public comment period DOE incorporates public comments Federal Register Website

Qualified Facilities – Annual Application Approx $ 3 m Approx $ 2 m

Net Annual Production vs Reimbursed kWh

FY02 – FY06 Appropriation Summary Fiscal YearEERE Budget Request ($million) Congressional Appropriation ($million) * * Does not include congressional rescission

What to expect in the future…. Example: Assume FY06 appropriation of $5 million 60% or $3 million will pay wind, solar, ocean, closed-loop biomass 40% or $2 million will pay for open-loop biomass, landfill gas etc. wind, solar, ocean, closed-loop biomass Total Demand in FY04 - $ 4.8 million Total Demand in FY05 - $7.1 million Minus $3 million is paid on a pro rata basis Equals Shortfall between $1.8 & $4.1 million open-loop biomass, landfill gas etc Total Demand in FY04 - $ 58 million Total Demand in FY05 - $ 43 million Minus $2 million is paid on a pro rata basis Equals Shortfall between $56 & $41 million

60% Tier Total – 57 qualified facilities –Solar light = 40% –Wind = 60% 40% Tier Total– 35 qualified facilities –Landfill methane – 72% –Biomass – 11% –Fuel Cell – 17% Wind 60% Solar 40% Fuel Cell 17% Biomass 11% Landfill 72% For Production Year 2004

FY2005 Payout (FY2004 Production)

10/01/03 FY2004 8/05 10/01/05 FY /01/04 FY2005 Hiatus years when REPI was expired EPAct 2005 Reauthorizes REPI Key Question Since REPI expired in September 2003 for new applicants and the reauthorization occurred in August 2005, are new facilities begun in the interim qualified for payment ? Response: There are two “YES” answers

10/01/03 FY2004 8/05 10/01/05 FY /01/04 FY2005 Hiatus years when REPI was expired Existing facilities (no change) EPAct 2005 reauthorizes REPI IF YOU ARE A NEW QUALIFYING FACILITY and:: -- if your facility started between 10/01/2003 and 9/30/2004, your date of first use Will be 10/01/2004 which is the first day of fiscal year DOE will pay for fiscal year 2005 production with fiscal year 2006 appropriations. New qualifying facility

10/01/03 FY /05 10/01/05 FY /01/04 FY 2005 Hiatus years when REPI was expired Existing facilities (no change) EPAct 2005 reauthorizes REPI IF YOU ARE A NEW QUALIFYING FACILITY and: -- if your facility started between 10/01/2004 and 09/30/2005, your date of first use will be the actual date the qualifying facility went online. Since this date falls within fiscal ear 2005, DOE will pay fiscal year 2005 energy production with fiscal year 2006 appropriation. New qualifying facility

More FAQ’s Will the interim rulemaking impede the FY2006 payouts? When will the REPI Interim Rule be in the Federal Register? How is a pro rata payment calculated? Can a facility receive both tax credit and REPI? Will the 60/40 payout reduce the incentive payment for a Tier 1 project?

Contact Information For Policy and Appropriation questions contact: Dan Beckley 1000 Independence Ave, SW Washington, DC For REPI implementation - facility qualifications, applications, and payment questions contact: Christine Carter 1617 Cole Boulevard Golden, Colorado REPI Website