G&T Update – Western Farmers Electric Cooperative OAEC MR/PR Fall Meeting (2015)

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3 360 MW of Capacity via PPA

Regional Transmission Development  Aggregate Study process being streamlined. Integrated Marketplace (IM)  SPP since March 1, 2014 functionally controls the entire transmission footprint.  SPP consolidated from 15 balancing authorities to one SPP balancing authority.  Administers tools for efficient / open use of transmission and generation resources.  WFEC receives an allocation of Auction Revenue Rights (ARR) based on its load and resources. ARR’s can be converted to Transmission Congestion Rights (TCRs) which provide a financial hedge for transmission congestion.  March 1, 2014 the IM opened  WFEC bids in sufficient capacity and energy to meet the next day load.  SPP selects most efficient generation to meet the next day load + reserves for the entire region.  SPP tells WFEC which of its units will generate for the next day and will pay WFEC for this energy.  WFEC purchases from the IM all of its energy needs for the next day.  SPP establishes an unsecured credit limit for each market participant. WFEC provides a letter of credit to participate in the ARR process.  In coordination with WFEC staff and Board policies, ACES, acting as WFEC’s agent, interfaces with SPP and performs the daily activities to meet WFEC energy needs. 4

 Current Footprint  370,000 square miles of territory  More than 15 million people  627 generating plants  4,103 substations  48,537 miles transmission: ⁻ 69 kV – 12,569 miles ⁻115 kV – 10,239 miles ⁻138 kV – 9,691 miles ⁻161 kV – 5,049 miles ⁻230 kV – 3,889 miles ⁻345 kV – 7,401 miles ⁻500 kV – 93 miles 5

6XYZ Committee Month, Day, Year  FERC 1000  The Clean Power Plan  Capital Credits

 Impacts rates Unbundling Impacts retail rates Impacts LM Programs Billing Determinates C&I Consumers  Drives renewables  Creates new competitors 7

Bundled  Demand $8.20/kW  Energy winter $ shoulder $ summer $  Fuel $0.034  Surcharge $ Unbundled - proposed  Generation $5.85/kW based on 3yr 3cp avg.  Transmission $3.30/kW  Distribution $1.55/kW based on 12 month CP avg.  Energy $  Fuel $ Proposed implementation – January

2014 (MW) August July August So Far 2015 (MW) August August July Our dilemma … Winter Peak of 2015 Summer Peak of MW 1599 MW (with 100 MW LM) On the horizon … SPP has expressed their desire for our cost to be driven off of our CP with SPP peak rather than our own peak.

 Transition continues  Large portion have contract expiration Dec ~200MW of ~325MW - ~60%  All will be transitioned by the end of 2017  Average increase to the C&I consumer … 7.5% 10

Adding 20+ MW of Community Solar to the WFEC Portfolio 5 multiple MW stations totaling 18 MW 13 co-op participants in approximately 5 MW Why? To learn the ropes To deal with the “Clean Power Plan” Adds diversity to our portfolio & some capacity To deal with new competitors that pose a threat! 11

WFEC increasing their incentives for GEO in 2016 Why – Everybody Wins WFEC increasing Tier II rebate $200/T for Q WFEC $650/T + Co-op $225 = $875/T New approach to Energy Efficiency Strategic Relationships providing measured results Geo Energy Services Energy Pioneer Solutions LED USA 12

13XYZ Committee Month, Day, Year