1. 1 Nebraska Municipal Power Pool (NMPP) Municipal Energy Agency of Nebraska (MEAN) City of Boulder, Colorado January 27, 2011 Kevin Gaden Director of Wholesale Electric Operations

2. 2 NMPP Energy NMPP Energy is a nonprofit, member-owned organization providing electricity, natural gas and utility related services to nearly 200 member communities across seven Midwestern and mountain states. NMPP Energy promotes the benefits of joint action and local utility control among its member communities. NMPP Energy consists of four entities: – Nebraska Municipal Power Pool (NMPP) Utility-related services – Municipal Energy Agency of Nebraska (MEAN) Wholesale electric supply – National Public Gas Agency (NPGA®) Wholesale natural gas supply – Public Alliance for Community Energy (ACE) Retail natural gas choice

3. 3 MEAN Formed in 1981 under provisions of the Municipal Cooperative Financing Act and is a political subdivision of the State of Nebraska Provides wholesale power supply to public entities throughout the region via the Electrical Resources Pooling Agreement (ERPA)

4. 4 MEAN’s Primary Mission To provide long-term, reliable and economical power supply resources and utility-related services to MEAN member communities

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6. 6 Advocacy MEAN membership and active involvement in outside organizations  American Public Power Association (APPA)  Utility Wind Integration Group (UWIG)  Western Area Power Administration (WAPA)  Colorado Association of Municipal Utilities (CAMU)  Solar Electric Power Association (SEPA)  Western Electricity Coordinating Council (WECC)  Transmission Access Power Study Group (TAPS)  Western States Power Corp (WSPC)  Rocky Mountain Generation Coop (RMGC) suspended  Rocky Mountain Reserve Group (RMRG)  Southwest Power Pool (SPP)  Midwest Independent Transmission System Operator (MISO)  State and federal legislation

7. 7 = Member Generators = Baseload resources = Future resource (WEC 2)... SOUTH DAKOTA

8. 8 BLANK SLIDE

9. 9 MEAN is a leader in Nebraska public power renewables. Built the first wind farm in Nebraska MEAN Wind Project at Kimball (Kimball, NE in 2002) MEAN owns, participates in, and purchases 43.5 MW nameplate capacity Largest proportion of renewable energy (both in terms of system capacity and energy) among all Nebraska utilities There are currently no State or Federal mandates applicable to MEAN, however  Aspen, CO (Service Schedule M Participant) was the winner of the 2008 Wind Power Pioneer Award, given annually by the US Department of Energy

10. 10 Transmission MEAN is transmission dependent  Utilize 8 different transmission systems to serve member loads 1. NPPD 2. OPPD 3. Tri-State G&T 4. Western - Rocky Mountain Region 5. Western - Salt Lake 6. Xcel Energy – Colorado 7. Black Hills Power & Light 8. MidAmerican Energy

12. 12 Macro issues to consider in municipalizing an electric utility Acquisition issues  Costs (state regulated)  Service area (state regulated)  Finance  Bond ratings  Official statements  Business plans  Governance  City council  City council over Board of Utilities

13. 13 Macro issues to consider in municipalizing an electric utility  Autonomous Board of Utilities  How is governing body selected – Elected vs. appointed Power Supply  There are applications for all types of resources  But there are limits  Can’t store electricity  Must produce and deliver simultaneously

14. 14 Operational Issues Power Supply  Types of Resources  Natural gas  Coal  Nuclear  Renewables  Hydro  Demand Side Management  Types of Power Suppliers  Investor owned – PSCO  Rural cooperative G & T – TSGT

15. 15 Operational Issues  Municipal Joint Action  MEAN  Platt River  Independent Power Suppliers  Calpine  Southwest Generation  Municipal Self Supply  Colorado Springs  Lincoln, NE Electric System

16. 16 Operational Issues Length of Supply Agreements  Short-term (1-5 years)  Medium-term (5-20 years)  Long-term (20 years or more)  Each has pros and cons Distribution System (115kV & below)  Ring Bus is like expressway  System sectionalizing  Improve reliability  Reduce outage times

17. 17 Operational Issues  Distribution substations  Loading too high/too low  Distribution feeders  Overhead vs. underground  Service drops to customers  Metering  Smart metering  Changing technologies

18. 18 Operational Issues Transmission Issues: (115 kV & up)  Who will transmission supplier be?  Xcel  TSGT  WAPA  Who will maintain equipment  Specialized trade  Specialized equipment

19. 19 Other Operational Issues  Staffing  Where will they come from – Might need 200+ employees  Utility management structure  Utilities management experienced at what – Generation – Transmission – Distribution – Business management – All or some of the above  Safety  How will staff maintain safe system  How will you comply with NERC standards – Growing issue  Mutual aid – Who will help in a storm » Snow / wind / tornado / ice

20. 20 Finance How will utility cash flow?  Bad debts / write-offs  Payment lag timing  Bond reserves  Debt service coverage  Bond ratings affect cost of debt  Rating agency relationships  Asset management

21. 21 Finance Office Operations  Metering tied to billing system  Implement new billing, business management system  Service disconnect policies  Customer service obligations  Where does utility obligation for infrastructure end and then begin for customer – Consistent with Xcel?  Office and maintenance shop locations  Where  How many  Hours of operations

22. 22 Summary of Issues Operational Issues (safety and reliability) Power Supply Transmission Acquisition Issues Long-term Operational Issues Business Management Issues Finance

23. 23 Summary of Discussion The power business is a very complex business. People depend on you 24/7  Most take it for granted until it fails Business is getting more complex  Customers  Colorado PUC  FERC  NERC  Financial community  State laws on carbon

24. 24 Who can help? Initially  Consultants – CAMU  Lawyers  Other municipals Specialized contractors  Acquisition team  Finance experts  Power suppliers  Trade associations  APPA  CAMU  NMPP Energy

25. 25 This is a very significant effort to undertake. Some of your customers will not help. Power suppliers can’t do it all.  Most supply is bid to meet RFP standards Others will quietly hurt your efforts.

26. 26 Questions? Kevin Gaden kgaden@nmppenergy.org www.nmppenergy.org