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N P P D I n v o lv e m e n t in

Wind En e r gy

N eb ra s k a i s U n i q u e – It is the O n ly A l l P u b l i c Power Stat e • Only state in the nation served entirely by public power utilities • Public Power’s role: - P  rovide affordable, reliable electricity to Nebraskans - E  lectric rates in Nebraska are among the lowest in the nation - Public Power’s focus is on customers, not stockholders - L  ocal control provides customers a choice in decision-making

N eb ra s k a P o w e r A s s o c iat ion ( NPA) • Formed in 1980 to address industry-wide concerns and interests • Represents all segments of power industry in Nebraska - Municipalities - Public Power Districts - Rural Electric Cooperatives

Wh o i s NP PD ? • Largest electric utility in the state in terms of gross revenue, kilowatthour sales, and geographic area served - Revenue - $863.4 million in 2009 - 19.5 billion kilowatt-hours sold in 2009 -C  hartered territory currently includes 91 of Nebraska’s 93 counties -P  rimarily a wholesale power supplier to other Nebraska public power districts, rural electric cooperatives and municipalities

N PP D G e n er at i on R e s ources • Diverse portfolio: -3  ,319 megawatts of generation capacity -E  nergy sources include coal, nuclear, hydro, wind, natural gas, along with purchases from other utilities

NPP D Inv o lv e m e n t i n W i nd to Dat e •N  PPD supports development of wind-powered generation in Nebraska •B  oard strategic goal: 10 percent renewables by 2020, for a total of approximately 450-500 megawatts of installed capacity •P  articipated in development and passage of LB 1048, the comprehensive wind for export bill •C  urrently owns or contracts for 140 megawatts of wind from two operating wind farms, with Power Purchase Agreements for an additional 120 megawatts to be constructed •E  mbarked on path to wind development in 1998 with two turbines at Springview •C  onstructed a 60-megawatt wind facility at Ainsworth in 2005 •D  ue to factors such as private developers’ ability to utilize Federal Production Tax Credits (PTCs), and other tax advantages not available to public power utilities, NPPD has chosen to add renewables by partnering with private developers •N  PPD has chosen a Request for Proposal (RFP) procurement process to achieve lowest cost renewable energy for its customers, resulting in the issuance of three RFPs through 2010 •S  electing wind sites where major transmission line additions or upgrades are not needed

REQUEST FO R P R O P O SALS • As part of the first RFP, NPPD selected two sites: -8  0-megawatt Elkhorn Ridge Wind Farm located near Bloomfield (operational in March 2009) -4  0-megawatt Crofton Hills Wind Farm near Crofton (expected to be in operation by the end of 2011) • A second RFP was issued and NPPD was able to select two projects: -8  0-megawatt Laredo Ridge Wind Farm at Petersburg (planned to be in operation by the end of 2010) -8  0-megawatt Broken Bow Wind Farm. Power purchase agreement is currently under negotiation •N  PPD issued third RFP on April 8, 2010, for proposals varying in size from 50 megawatts to 300 megawatts: -3  4 proposals received, 19 for the Madison County Site and 15 on other proposed sites. - A total of 21 developers offered proposals -T  he responses document Nebraska’s tremendous wind resource -N  PPD management is reviewing all options considering the short term rate impact of adding additional wind at this time

CHALLE NG ES I N WI N D D EVELOPME NT • State currently has surplus generating capacity with large amounts of surplus energy • No guaranteed market for export of energy - For example: •N  ortheast states have indicated they do not want wind power from the Midwest •S  tates immediately adjacent to Nebraska are developing their own wind-powered generation portfolios • No state incentives available • Federal incentives for public power very small •M  ajor transmission line additions will be required, especially to export wind generation to major U.S. load centers

key i s s u e s to c ons i d e r • Is there a long-term market for the energy at a profitable price? • Who will pay the cost of any needed transmission line facilities – in-state and out-of-state? -P  rivate developers are required to pay for transmission facilities needed for export

tr a n s m i s s i on p l a nni ng/ i nte rconn e c t i on p r o c e ss • Two levels -1  15 kV and above – generally required to support wind farms 40 MW or greater - 69 kV and below – for smaller wind farms ­ • In Nebraska, transmission infrastructure of 115 kV and above is owned by NPPD, Omaha Public Power District (OPPD), Lincoln Electric System (LES), Western Area Power Administration, Tri-State Generation and Transmission Association, and Missouri Basin Power Project -N  PPD, OPPD, and LES are all members of the Southwest Power Pool (SPP) • Interconnection to 115 kV line and above requires generation interconnection study request to SPP (defined on website): - I nterconnection study is required to determine costs of transmission line expansion and other factors associated with interconnection -S  PP also requires the customer to submit a transmission service request to determine if firm transmission is available to move generation to the purchasing party

-W  hen all studies are complete, the wind developer, transmission owner, and SPP will execute an agreement which specifies all of the interconnection requirements, including cost responsibilities, construction schedules, ownership, and operating standards - Studies take several months to complete • Interconnection to 69 kV line and below: - Request goes to owner of facilities, such as NPPD, and rural electric utilities -R  equires system impact study to determine what facility additions are needed to allow for interconnection from the wind farm to the 69 kV system - I f power flows into 115 kV system owned by SPP members, then a separate interconnection study is required by SPP

F UTU RE DEVELO P MEN T • Nebraska has great wind potential • Nebraska ranks third in wind energy potential among the 50 states •L  B 1048 has removed many of the barriers for developers that are interested in building wind generation projects for export •H  owever, export of wind energy is limited by the market and the ability to get that power to market (transmission lines). Within the SPP there is a process in place to address the needed transmission expansion, so long as the developer is willing to pay for the transmission expansion. Significant challenges exist to build transmission from the wind rich Midwest to the major load centers in the U.S.

ECO NO MIC D EVELO P MEN T OPPORT UNITIES •N  ebraska offers significant advantages to manufacturers of wind energy products and related industries •B  enefits to firms selecting a Nebraska location to serve the nation’s rapidly expanding wind energy industry include: - Easy access to major wind energy sites -E  asy access to supply or support wind energy equipment manufacturers throughout the Midwest - Skilled workforce supported by high quality worker training programs - Low-cost, reliable, and abundant electric power - Business friendly environment - Location assistance

NPP D’s co m m i t m e n t • NPPD supports development of wind powered generation for domestic use or for export • NPPD will pursue a goal of 10 percent renewables by 2020 • NPPD will continue to assist wind manufacturers interested in pursuing a Nebraska location • NPPD will work to ensure Nebraskans see benefits and ratepayers are not adversely affected

P.O. Box 499 1414 15th Street Columbus, NE 68601-0499 402.564.8561

G135280 08/17/10

Nebraska Public Power District Wind Booklet