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Nebraska Municipal Power Pool (NMPP)

Municipal Energy Agency of Nebraska (MEAN)

City of Boulder, ColoradoJanuary 27, 2011

Kevin Gaden

Director of Wholesale Electric Operations

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NMPP Energy

NMPP Energy is a nonprofit, member-owned organization providing electricity, natural gas and utility related services to nearly 200 member communities across seven Midwestern and mountain states. NMPP Energy promotes the benefits of joint action and local utility control among its member communities. NMPP Energy consists of four entities:

– Nebraska Municipal Power Pool (NMPP)Utility-related services

– Municipal Energy Agency of Nebraska (MEAN)Wholesale electric supply

– National Public Gas Agency (NPGA®)Wholesale natural gas supply

– Public Alliance for Community Energy (ACE)Retail natural gas choice

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MEAN

Formed in 1981 under provisions of the Municipal Cooperative Financing Act and is a political subdivision of the State of Nebraska

Provides wholesale power supply to public entities throughout the region via the Electrical Resources Pooling Agreement (ERPA)

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MEAN’s Primary Mission

To provide long-term, reliable and economical power supply resources and utility-related services to MEAN member communities

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Advocacy

MEAN membership and active involvement in outside organizations

American Public Power Association (APPA) Utility Wind Integration Group (UWIG) Western Area Power Administration (WAPA) Colorado Association of Municipal Utilities (CAMU) Solar Electric Power Association (SEPA) Western Electricity Coordinating Council (WECC) Transmission Access Power Study Group (TAPS) Western States Power Corp (WSPC) Rocky Mountain Generation Coop (RMGC) suspended Rocky Mountain Reserve Group (RMRG) Southwest Power Pool (SPP) Midwest Independent Transmission System Operator (MISO) State and federal legislation

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= Member Generators

= Baseload resources

= Future resource (WEC 2)

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SOUTH DAKOTA

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BLANK SLIDE

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MEAN is a leader in Nebraska public power renewables.

Built the first wind farm in Nebraska MEAN Wind Project at Kimball (Kimball, NE in 2002)

MEAN owns, participates in, and purchases 43.5 MW nameplate capacity

Largest proportion of renewable energy (both in terms of system capacity and energy) among all Nebraska utilities

There are currently no State or Federal mandates applicable to MEAN, however Aspen, CO (Service Schedule M Participant) was the winner

of the 2008 Wind Power Pioneer Award, given annually by the US Department of Energy

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Transmission

MEAN is transmission dependent Utilize 8 different transmission systems to serve

member loads1. NPPD2. OPPD3. Tri-State G&T4. Western - Rocky Mountain Region5. Western - Salt Lake6. Xcel Energy – Colorado7. Black Hills Power & Light8. MidAmerican Energy

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Macro issues to consider in municipalizing an electric utility

Acquisition issues Costs (state regulated) Service area (state regulated) Finance

Bond ratings Official statements

Business plans Governance

City council City council over Board of Utilities

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Macro issues to consider in municipalizing an electric utility

Autonomous Board of Utilities How is governing body selected

– Elected vs. appointed

Power Supply There are applications for all types of resources

But there are limits

Can’t store electricity Must produce and deliver simultaneously

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Operational Issues

Power Supply Types of Resources

Natural gas Coal Nuclear Renewables Hydro Demand Side Management

Types of Power Suppliers Investor owned – PSCO Rural cooperative G & T – TSGT

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Operational Issues

Municipal Joint Action MEAN Platt River

Independent Power Suppliers Calpine Southwest Generation

Municipal Self Supply Colorado Springs Lincoln, NE Electric System

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Operational Issues

Length of Supply Agreements Short-term (1-5 years) Medium-term (5-20 years) Long-term (20 years or more) Each has pros and cons

Distribution System (115kV & below) Ring Bus is like expressway System sectionalizing

Improve reliability Reduce outage times

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Operational Issues

Distribution substations Loading too high/too low

Distribution feeders Overhead vs. underground

Service drops to customers Metering

Smart metering Changing technologies

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Operational Issues

Transmission Issues: (115 kV & up) Who will transmission supplier be?

Xcel TSGT WAPA

Who will maintain equipment Specialized trade Specialized equipment

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Other Operational Issues

Staffing Where will they come from

– Might need 200+ employees

Utility management structure Utilities management experienced at what

– Generation– Transmission– Distribution– Business management– All or some of the above

Safety How will staff maintain safe system How will you comply with NERC standards

– Growing issue Mutual aid

– Who will help in a storm» Snow / wind / tornado / ice

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Finance

How will utility cash flow? Bad debts / write-offs Payment lag timing Bond reserves Debt service coverage Bond ratings affect cost of debt Rating agency relationships Asset management

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Finance

Office Operations Metering tied to billing system Implement new billing, business management system Service disconnect policies Customer service obligations

Where does utility obligation for infrastructure end and then begin for customer

– Consistent with Xcel?

Office and maintenance shop locations Where How many Hours of operations

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Summary of Issues

Operational Issues (safety and reliability) Power Supply Transmission Acquisition Issues Long-term Operational Issues Business Management Issues Finance

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Summary of Discussion

The power business is a very complex business. People depend on you 24/7

Most take it for granted until it fails

Business is getting more complex Customers Colorado PUC FERC NERC Financial community State laws on carbon

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Who can help?

Initially Consultants – CAMU Lawyers Other municipals

Specialized contractors Acquisition team Finance experts Power suppliers Trade associations

APPA CAMU NMPP Energy

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This is a very significant effort to undertake. Some of your customers will not help. Power suppliers can’t do it all.

Most supply is bid to meet RFP standards

Others will quietly hurt your efforts.

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Questions?

Kevin Gaden

kgaden@nmppenergy.org

www.nmppenergy.org