1. Annual Energy Outlook 2010 Electric Power NPC Presentation October 14, 2010

2. 2 Electricity Market Module Electricity Load and Demand Submodule

3. 3 AEO2010 Electric Power New Technology Assumptions

4. 4 Changing Environmental Rules Clean Air Mercury Rule (CAMR) vacated on February 8, 2008 –EPA is currently developing an alternative mercury control policy –Many States are continuing to pursue their own mercury reduction requirements and AEO2010 represents those that have “firm” rules and/or regulations Clean Air Interstate Rule (CAIR) (NO x and SO 2 ) vacated on July 11, 2008, reinstated December 23, 2008 –As a result, it was not represented in the original AEO2009 reference case, but was included in the Updated Reference Case released in April 2009 and in AEO2010 State/Regional Greenhouse Gas Regulations 3 regional groups working towards rules –Regional Greenhouse Gas Initiative (RGGI) –Western Climate Initiative (WCI) –Midwest Greenhouse Gas Accord RGGI is the only one that has progressed far enough that the States are issuing implementing laws/rules/regulations and it is represented in the AEO2010

5. 5 Updated State RPS Programs Region201520252035 ECAR3.0%5.7% ERCOT5.0% MAAC10.1%15.4% MAIN6.7%15.3% MAPP8.5%11.1% NY18.3% NE9.6%13.8% FL0.0% SERC0.9%1.9% SPP1.9%3.8% NWP7.3%13.7% RA4.2%6.9% CA18.7%20.0%

6. 6 American Recovery and Reinvestment Act Renewables – PTC extension and loan guarantee program – PTC extended to 2012 for wind and 2013 for others, biomass elects 30% ITC in place of PTC – Loan guarantee modeled through lowering cost of capital by 2 percentage points for eligible technologies online by 2015 Smart Grid funding – Assumed line losses would fall slightly through 2025 – Assumed up to 3 percent of peak demand could be reduced / shifted to off-peak hours

7. 7 Growth in electricity use continues to slow 3-year rolling average percent growth Projections History Period Annual Growth 1950s 9.8 1960s 7.3 1970s 4.7 1980s 2.9 1990s 2.4 2000-2008 0.9 2008-2035 1.0 Structural Change in Economy - Higher prices - Standards - Improved efficiency Source: Annual Energy Outlook 2010

8. 8 Natural gas and renewables account for the majority of capacity additions from 2008 to 2035 Coal 312 (31%) Natural gas 338 (33%) Hydropower* 99 (10%) Nuclear 101 (10%) Other renewables 40 (4%) Other 119 (12%) * Includes pumped storage Coal 31 (12%) Natural gas 116 (46%) Hydropower* 1 (0.4%) Nuclear 8 (3%) Other renewables 92 (37%) Other 2 (1%) 2008 capacityCapacity additions 2008 to 2035 1,008 gigawatts 250 gigawatts Source: Annual Energy Outlook 2010

9. 9 Renewables gain electricity market share; coal share declines billion kilowatthours and percent shares Natural gas Renewable ProjectionsHistory Nuclear Oil and other Coal 48.5 43.8 21.4 20.8 19.617.1 9.1 17.0 1.4 1.5 Source: Annual Energy Outlook 2010

10. 10 Nonhydropower renewable sources meet 41% of total electricity generation growth from 2008 to 2035 billion kilowatthours Wind ProjectionsHistory Solar Biomass Geothermal Waste Source: Annual Energy Outlook 2010

11. Real and Nominal Electricity Prices 11 Real 2008 Cents per Kwh Nominal Cents per Kwh Source: Annual Energy Outlook 2010