1. Graham Generation and the Market – The Facts October 8, 2008

2. Graham Vitals  Graham 1 –in service 1960 –225 MW capability –Full Load Average Heat Rate = 10.55  Graham 2 –in service 1969 –375 MW capability –Full Load Average Heat Rate = 10.35 Graham plant is not a low heat rate – high capacity factor facility

3. Capacity Factors for 12 months ended Sept. 2008  Graham (West)8.6%  Lake Hubbard (North)9.4%  North Zone Fleet6.1% Graham plant is a similar technology to Lake Hubbard. Neither plant is a high capacity factor facility, since they aren’t competitive with new CCGTs

4. West - North Congestion: May through Sept 2008  West – North congestion occurred during 8.9% of the intervals during this period  Wind production during W-N congestion intervals was: –Max – 4,480 MW –Avg – 3,323 MW –Min – 1,148 MW  The 90th percentile of wind production during W-N congestion intervals (i.e. wind production exceeded this value 90% of the time) was 2,454 MW. West to North CSC congestion wasn’t that prevalent during the summer and when it occurred, quite a bit of wind production was occurring.

5. Graham in West Zone: May through Sept 2008  How correlated is W-N congestion associated with high wind and material amounts of Graham output? –Conservatively using 90 th percentile wind of 2,454 MW –How often were either of these units >> min when BES below 9.5 mmBtu/MWh? Graham #1 –LSL = 46 MW –% of intervals > 70 MW = 0.1% Graham #2 –LSL = 37 MW –% of intervals > 60 MW = 0.9% Graham plant very rarely runs above min when: W-N congestion, high wind, and low BES prices. Regulation deployments explain most of this.

6. North Zone and Wind: May through Sept 2008  How correlated is W-N congestion associated with high wind and NZ MCPE above 9.5 mmBtu/MWh? –This should be a proxy for concerns raised by FPL Energy  How often was wind >= 2,454 MW & MCPE >= 9.5 mmBtu/MWh –Only 1.5% of the intervals The market conditions where Graham being deployed for BES during high wind and W-N congestion are negligible in both the West and North zone

7. Average MCPE at $74,000,000 OOME Down Payments …  131 hours above 9.5 mmBtu/MWh  517 MW back down of Graham 1 and 2 131 hours * 517 MW = 67,727 MWh 9.5 mmBtu/MWh * $7/mmBtu + $74,000,000/ 67,727 MWh = $1159.12/MWh In past 12 months, BES prices were greater than or equal to $650.72/MWh concurrently with W-N congestion only 6 hours Historical data doesn’t seem to support the assertion of $74,000,000 of OOME