1. Generation Technologies in a Carbon-constrained World The Power Conference ‘06 Houston June 29, 2006 Steve Specker President & CEO

2. 2 © 2005 Electric Power Research Institute, Inc. All rights reserved. Objective Provide an objective and factual framework for discussing generation technologies and investment decisions in a carbon-constrained world

3. 3 © 2005 Electric Power Research Institute, Inc. All rights reserved. Framework Overview Levelized cost of electricity –Standard EPRI methodology –2004 costs and $’s Two key uncertainties –Future “cost” of CO 2 –Future price of natural gas Two technology portfolios –2010 time-period –2020 time-period

4. 4 © 2005 Electric Power Research Institute, Inc. All rights reserved. Pulverized Coal in 2010 Time Period 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh PC w/o cap

5. 5 © 2005 Electric Power Research Institute, Inc. All rights reserved. Natural Gas Combined Cycle in 2010 Time Period 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh NGCC@$8 NGCC@$4 NGCC@$6

6. 6 © 2005 Electric Power Research Institute, Inc. All rights reserved. Comparative Costs of 2010 Generating Options 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh NGCC@$6 PC w/o cap $6/mmbtu will be used as floor price for natural gas

7. 7 © 2005 Electric Power Research Institute, Inc. All rights reserved. Integrated Gasification Combined Cycle in 2010 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh PC w/o cap IGCC w/o cap NGCC@$6

8. 8 © 2005 Electric Power Research Institute, Inc. All rights reserved. Wind Generation in 2010 Time Period 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh Wind@42%CF Wind@29%CF Wind@20%CF 110

9. 9 © 2005 Electric Power Research Institute, Inc. All rights reserved. U.S. Wind Plant Capacity Factors, 2004 0 10 20 30 40 50 Sites Ranked by Increasing Capacity Factors Capacity Factor, % Source: EIA; EPRI Program 67 Newsletter, Energy Markets and Generation Response – Update on New Power Plants, September 2005

10. 10 © 2005 Electric Power Research Institute, Inc. All rights reserved. Wind Generation in 2010 Time Period 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh Wind@29%CF 110

11. 11 © 2005 Electric Power Research Institute, Inc. All rights reserved. 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh Wind Nuclear Biomass Non-CO 2 Emitting Technologies in 2010 Time Period

12. 12 © 2005 Electric Power Research Institute, Inc. All rights reserved. Comparative Costs of 2010 Generating Options 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh Wind@29% CF Nuclear PC w/o cap IGCC w/o cap Biomass NGCC@$6

13. 13 © 2005 Electric Power Research Institute, Inc. All rights reserved. What’s Possible in 2020 13 © 2005 Electric Power Research Institute, Inc. All rights reserved.

14. 14 © 2005 Electric Power Research Institute, Inc. All rights reserved. Pulverized Coal w/o Capture 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh PC w/o cap 2020 PC w/o cap 2010

15. 15 © 2005 Electric Power Research Institute, Inc. All rights reserved. IGCC w/o Capture 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh IGCC w/o cap 2010 IGCC, w/o cap 2020

16. 16 © 2005 Electric Power Research Institute, Inc. All rights reserved. PC with capture/transport/storage 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh PC w/o cap 2020 PC w/cap/t/s 2020

17. 17 © 2005 Electric Power Research Institute, Inc. All rights reserved. IGCC with capture/transport/storage 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh IGCC, w/o cap 2020 IGCC w/cap/t/s 2020

18. 18 © 2005 Electric Power Research Institute, Inc. All rights reserved. Comparison of IGCC and PC 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh IGCC, w/o cap 2020 IGCC w/cap/t/s 2020 PC w/cap/t/s 2020 PC w/o cap 2020

19. 19 © 2005 Electric Power Research Institute, Inc. All rights reserved. Comparison of IGCC and PC (2020) 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh IGCC w/o cap IGCC w/cap PC with capture PC w/o cap Cost Gap Reducing Cost of PC CO2 capture is a key technology challenge

20. 20 © 2005 Electric Power Research Institute, Inc. All rights reserved. Natural Gas Combined Cycle 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh NGCC@$6 (2010) NGCC@$6 (2020)

21. 21 © 2005 Electric Power Research Institute, Inc. All rights reserved. Wind Generation 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh Wind@29% CF in 2020 Wind@29% CF in 2010

22. 22 © 2005 Electric Power Research Institute, Inc. All rights reserved. Biomass 30 40 50 60 70 80 90 100 020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh Biomass 2010 10 Biomass 2020

23. 23 © 2005 Electric Power Research Institute, Inc. All rights reserved. Comparative Costs in 2020 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh Nuclear Wind Biomass IGCC w/cap/t/s NGCC@$6 PC w/cap/t/s

24. 24 © 2005 Electric Power Research Institute, Inc. All rights reserved. Comparative Costs in 2010 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh Wind@29% CF Nuclear PC w/o cap IGCC w/o cap Biomass NGCC@$6

25. 25 © 2005 Electric Power Research Institute, Inc. All rights reserved. What’s Possible: Comparative Costs in 2020 30 40 50 60 70 80 90 100 01020304050 Cost of CO 2, $/metric ton Levelized Cost of Electricity, $/MWh Nuclear Wind Biomass IGCC w/cap/t/s NGCC@$6 PC w/cap/t/s An Extraordinary Opportunity to Develop a Low-carbon Portfolio

26. 26 © 2005 Electric Power Research Institute, Inc. All rights reserved. Closing Thoughts Four key uncertainties impacting near-term decisions on new generation: –Future cost of CO 2 –Future price of natural gas –Spent nuclear fuel storage –CO 2 capture and storage Extraordinary opportunity to develop and demonstrate a very low emissions portfolio of generation technologies for operation by 2020. Together…Shaping the Future of Electricity