1. Title Page GENERATION SUMMIT 2013 “Power Generation and Public Policy: What Might The Future Hold?” John E. Shelk, EPSA President & CEO Monday, February 25, 2013

2. 2 OVERVIEW  Who does EPSA represent?  What market fundamentals and business trends are key to power sector public policy issues?  What might the future hold for public policy issues that impact the power generation sector? 2

3. 3 Who does EPSA represent? Leading Independent Power Producers CalpineGDF SUEZ Energy N.A. Capital PowerNorthern Star Generation DynegyNRG Energy Edison Mission EnergyTenaska EquiPower ResourcesUS Power Generating Co. 3

4. 4 4 Competitive Supply Affiliates of Major Utility Companies Exelon Corp. PPL Corp. PSEG Power Sempra U.S. Gas & Power Power Marketing BP Energy Co. Shell Energy North America

5. 5 5 Key Characteristics About EPSA Membership  CEO and Senior Executive Driven on Policy Priorities  Nationwide with emphasis on organized wholesale markets  Primary suppliers in key metro areas coast-to-coast  All fuels and technologies to generate electricity  Largest natural gas, nuclear and solar electricity suppliers  Leaders on controlling emissions from coal-fired plants  Largest retail competitive suppliers in addition to wholesale  EPSA works with State and Regional Partner trade groups  EPSA focuses on federal legislation and regulation

6. 6 6 EPSA Strategic Direction 2013 Onward (Summary) Mission: Promote well-functioning, fair, robust and competitive wholesale markets Priorities: Improve wholesale market rules; oppose utility self- build; influence Demand Response policies; promote non-discrimination as to existing/new sources, technologies and fuels Actively Monitor: Retail market issues, technology developments, and environmental matters as to impacts on wholesale markets

7. 7 7 What market fundamentals and business trends are key to power sector public policy issues?  Lowest wholesale prices in organized market history  Low natural gas prices, natural gas often at the margin  Excess power supply in most if not all wholesale markets  Weak demand growth – temporary or structural?  Growth in footprint/customers of organized markets  Significant political intervention in electricity markets  Extensive regulation of all aspects of the power business  The “ribbon cutting syndrome” and “anvils” on the scales

8. 8 8 What might the future hold for key public policy issues? Themes  Electricity is transformational and foundational  Everyone says “all of the above” but what does it mean?  Everyone says “fuel diversity” but what does it mean?  Competitive market forces should work here as elsewhere  For competition to work, must let “markets be markets”  Regulation should produce well-functioning markets  Political pressures in cost-of-service and competitive states

9. 9 9 “Lightning Round on Key Public Policy Issues” Congress: More of the Same Dysfunction?  Climate Change  Clean Energy Standard  Cyber Security  Energy Efficiency  Natural Gas Exports  Senate “advise and consent” on nominations  Congressional oversight

10. 10 Regulation: Where The Action Is and Will Be! EPA  GHG New Source Performance Standards-New Plants  GHG New Source Performance Standards-Existing Plants  Further Action on Mercury and Cross-State Rules  Once Through Cooling (“316(b)” Water Issue)  Coal Ash Combustion Waste  Regulation of “Demand Response” Back Up Generators

11. 11 Regulation: Where The Action Is and Will Be! Federal Energy Regulatory Commission  Capacity Markets and Resource Adequacy Generally  Gas/Electric Coordination  NERC Reliability Standards and Cyber Security  Demand Response Compensation  Market Mitigation (Over-Mitigation)  Order 1000 transmission planning (displace generation?)  Enforcement Actions and Theories on Market Manipulation  FERC and State Actions that Distort Wholesale Markets

12. 12 States as Laboratories of Democracy In Electricity, Too!  Utility Self-Build – Case Study of Virginia  Compare and Contrast – IL/PA/OH versus Michigan  Are we repeating the 1970s/1980s in cost-of-service states?

13. 13 Rumsfeld’s Rules: Watch Out for Unknown, Unknowns! What is the next game changing, disruptive development?  Policies on climate change and renewable energy?  Technological developments bring down costs of solar?  Electric vehicles?  Distributed Generation/Demand Response/Efficiency?  Energy storage?  Greater retail competition?  Key – will still need conventional generation and it must be fairly compensated, whether market-based or cost-of- service, as nature of demands for it may change over time

14. 14 John E. Shelk President & CEO Electric Power Supply Association 1401 New York Ave., NW Suite 1230 Washington, DC 20005 Telephone: (202) 628-8200 Fax: (202) 628-8260 E-mail: jshelk@epsa.orgjshelk@epsa.org Website: www.epsa.orgwww.epsa.org 14