The Future of Electric Power In Utah

January 12, 2010

Utah Constitution confers upon municipalities the “exclusive” responsibility to furnish public services to their residents

Municipalities have the authority to:– provide their own power service, or– provide a franchise agreement for someone else

to provide the service

Municipal Power

UAMPS Overview

UAMPS is an energy services interlocal entity that provides electric energy services on a nonprofit basis to its members

UAMPS’ flexible organizational structure allows development, financing and operation of projects for generation, transmission and power supply management

Project-based organization with 15 separate projects Members elect to participate in Projects based on

their individual needs

52 Members Eight States

– Arizona– California– Idaho– Oregon– Nevada– New Mexico– Utah– Wyoming

UAMPS Membership

UAMPS Projects

Resource Projects– Coal

Hunter Project San Juan Project IPP Project

– Hydro CRSP Project

– Wind Firm Power Supply Project Horse Butte Wind

– Natural Gas Payson Project Natural Gas Project (procurement of long-term gas)

– Other Pool Project Resource Project (investigation of supply-side and demand-side alternatives)

UAMPS Projects (cont.)

Transmission Projects– Craig-Mona Project (345 kV)– Central-St. George Project (345/138/69 kV)

Service Projects– Government and Public Affairs Project– Member Services Project

UAMPS Resource Typewith Horse Butte Wind

Coal42%

Natural Gas11%

Wind5%

Hydro13%

Purchases29%

UAMPS has the ability to:

Provide an analysis of power supply options Plan, construct and manage generation Construct, acquire and manage transmission Negotiate Power Purchase Agreements

– Draft Request for Proposals (“RFP”) – Evaluate RFP response

Shape power supply (buy/sell and schedule) to meet load requirements

Provide marketing services (buy/sell hourly) Provide transmission services

Resource Development Philosophy

Provide a reliable, cost-effective electric power supply portfolio– Minimize impacts on rates to members– Minimize portfolio integration costs– Maintain system reliability– Ensure flexibility– Ensure short and long-term needs are met– Maintain diversity in resource mix

Resource Development Philosophy (cont)

UAMPS categorizes load requirement into three characteristics:

– Base – Intermediate– Peaking

Current Resource Investigation

Supply-side – Wind – Geothermal– Solar – Nuclear– Natural Gas– Coal – Power purchase contracts

Demand-side – Carbon footprint template– Energy Efficiency Programs– Net metering

Resource Evaluation

Financial Operational Reliability Environmental Flexibility Short-Term and Long-Term Diversity

Development Factors

Site suitability (soil, seismic, etc.) Water availability (quantity and quality) Fuel availability and transportation Transmission Air quality Public opinion and controversies

Regulation

A lot of “unknowns”– Congressional action re: GHG

Cap & Trade ($) Carbon Tax(es) $

– Implementation schedule and transition period of legislation

– Regulations (Environmental Protection Agency)– National Renewable Portfolio Standards requirements

Resource Lead Times

Typical Planning Horizon ~ 20+ Years Acquisition and procurement of resource

– Coal 10 years– Nuclear 15 years– Natural Gas 5 years– Wind 3 years– Solar 5 years– Efficiency 1 year

Resource Costs

Coal 5 cents per kWh Uncertainty

Nuclear 9 cents per kWh Technical Natural Gas 6.5 cents per kWh Volatility Hydro 6 cents per kWh Small Wind 7 cents per kWh Location Solar 15 cents per kWh Expensive Efficiency 1 cent per kWh Must Do

Challenges

Renewable Resources– Only part of the answer– Additional fossil fuel energy is needed

Global Climate Change– Impositions of regulation enhance the complexity

to build new generation