1. WFEC and Its Rural Electric Cooperative Members Solar Power October 16, 2015 Fall PR-MR & Marketing Meeting

2. Three Approaches to Solar Power To provide initial solar capability (1) to its Members and (2) the Members to their end-use consumers. Utility Scale Project: PPA for 25 mW in New Mexico Medium Scale Projects: 3 to 5 MW sites, tie into low voltage side of existing substations integrated into WFEC power supply Small Scale Projects: 50 - 250 kW sites, located at or near offices/headquarters of distribution cooperatives for maximum visibility

3. Utility Scale – PPA WFEC will not own, operate or maintain the solar generation facility. WFEC will purchase all the output from a 25 mW facility located north of Clovis, New Mexico, developed, owned and maintained by a third party. Almost 200 acres of photo-voltaic panels. Planned COD end of 2016.

4. Medium Scale Projects Medium Scale Projects, developed, owned, operated and maintained by WFEC located in best sun resource areas of Oklahoma. Specific projects and locations, 3 to 5 MW in size, have been identified: to be located “behind the wholesale meter”; to be connected on the low voltage side of existing substations; to be integrated into the WFEC resource mix for the benefit of all Members. Five substations have been identified as planned locations for these 3 to 5 MW solar projects: Cyril (5mW), Pine Ridge (3mW), Hinton (3mW), Tuttle (4mW), Altus (3mW) for total of 18 mW. Included in WFEC Generation Portfolio. All members receive benefit/cost. Planned COD late 2016.

5. 2.5 mW project approximately 18 acres of photo-voltaic panels

6. Small Scale “Community” Projects Distribution Cooperative sites have been identified as potential locations for 50 - 250 kW solar projects. Specific to load and placement and for the account of sponsoring Member Cooperative. VOLUNTARY: If desired by Members to have a solar facility in their territory visible to membership. WFEC will sell to Member Cooperative who may in turn sell to retail consumers. Make participation in renewable solar projects available to end use consumer through the Distribution Cooperative. Individual end use consumer subscriptions offered by the Cooperative to purchase solar energy (% of facility output). Provide an affordable renewable resource option for cooperative members that mitigates the risks of member installed rooftop solar. Provide a visible facility that encourages member participation and demonstrates commitment to renewable resource generation. Planned COD late 2016.

7. Small Scale “Community” Solar Project 150 kW approximately.75 to 1 acre

8. Who is Participating Canadian Valley EC Choctaw EC Cimarron EC Cotton EC East Central Oklahoma EC Harmon EC Kiamichi EC Northwestern EC Oklahoma EC Red River Valley REA Rural EC Southeastern EC Southwest Rural EC Total ~ 2,750 kW

9. Community Project - Considerations Considered direct financing as a normal capital project Cost recovery based on asset life and interest rate WFEC is not able to utilize the 30% Federal Tax Credit CoBank Lease Finance 10 year lease, 25 year asset life Allows CoBank, as owner for federal tax purposes, to receive the Federal Tax Credits by utilizing a two party structure based on traditional ag-lease agreement ( typically used for mobile equipment) WFEC may purchase from lessor as a capital asset at the end of lease term Lowers cost to members due to reduction of total capital cost from the 30% tax credit

10. Community Project - Considerations Distribution Cooperative supply the land (1 to 2 acres) Must enter into: a ground lease with WFEC a consent to assign the ground lease Mortgagee and Landlord Waiver WFEC will be forwarding this set of documents to participating members next week.

11. Community Project - Considerations The cost of the Community solar project will be for the account of the participating member cooperative WFEC will sell all the output of the Community solar project to the member cooperative for the life of the project 7 Cents per kWh for all energy output fixed for 20 years After 20 years assess remaining life and cost for remaining term

12. * Slightly Different Result with Unbundled Wholesale Rate

13. HOW DOES THE DISTRIBUTION COOPERATIVE OFFER THE SOLAR ENERGY AS A “COMMUNITY SOLAR PROJECT” TO ITS END-USE MEMBER CONSUMERS?

14. From Guernsey Implement a Subscription Program Customer subscribes to panel(s) or share of total facility Credit is provided for solar energy produced at a specified rate Based on the price of wholesale solar energy from WFEC Plus: Any marketing and administrative costs Less: Reduction in wholesale energy, fuel and capacity costs associated with energy produced Less: Benefit of subscription payment Rate credit based on benefit provided by solar energy Existing rate billing for distribution service is not affected Customer sees a rate credit as separate item on the bill

15. Option 1 Provide Solar Energy as Optional Rate Based on the price of wholesale solar energy from WFEC Plus: Any marketing and administrative costs Less: Reduction in wholesale energy, fuel and capacity costs associated with energy produced Plus: Applicable retail rate component to cover the distribution wires costs Offered in blocks of energy up to an amount no greater than the customer’s lowest monthly kWh consumption

16. Option 1 - Optional Rate Sample

17. Option 2 Implement a Subscription Program Customer subscribes to panel(s) or share of total facility Credit is provided for solar energy produced at a specified rate Based on the price of wholesale solar energy from WFEC Plus: Any marketing and administrative costs Less: Reduction in wholesale energy, fuel and capacity costs associated with energy produced Less: Benefit of subscription payment Rate credit based on benefit provided by solar energy Existing rate billing for distribution service is not affected Customer sees a rate credit as separate item on the bill

18. Option 2 – Subscription and Credit Sample

19. Guernsey’s Conclusions Community Solar program provides an overall benefit with or without a member participation program Either the Optional Solar Rate or the Solar Rate Credit are effective for use in a member participation program For consistency of application statewide, a uniform member participation methodology utilized by all distribution members is recommended Personal Preference – Option 2 Subscription and Credit

20. DISCUSSION! QUESTIONS?