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PRECORP NEWS

Beginning with the January 2013 CEO Straight Talk I have been updating you on PRECorp’s activities and how they align with our Strategy Map. In January I talked about the overall layout of the Strategy Map and we included the entire map with the article.

mike easley, CEO

Our Mission and Vision is at the top of the Strategy Map. Both the mission and vision (see above) provide high level guidelines for how we do business. At the bottom of the Strategy Map are PRECorp’s Principles and Values (see below). These principles and values support and reinforce everything that PRECorp does. Just as the values and principles form the foundation for our Strategy Map, our principles and values are the foundation for how and why we do business. In last month’s article I talked about our Objective to Achieve Excellence in our core business and I described an enhanced focus on system maintenance. This program should reduce our outages and directly improve our quality of service.

CEO Straight Talk

Over the years I have talked about the benefits of growth in sales and how growth has helped us to maintain rates lower than we would otherwise have were it not for that growth. Over the past several years we have seen that growth trend reverse and have seen our sales decline by roughly 3.5% each year. Just as growth tends to help a system the opposite is true when sales decline. This decline has not been unexpected and we have done a good job in preparing for the downturn. This year we are expecting a $4 million shortfall in revenues due to these declining sales. We have anticipated this shortfall, and have set aside funds from previous years to help with this shortfall. We are in the middle of doing a rate study to help us better understand how to adjust for these lost sales. I believe the majority of this revenue shortfall will be picked up by the class that has declined the most over the past few years, but I think all classes will see some upward pressure on rates. continued on page 3

“These principles and values support and reinforce everything that PRECorp does. Just as the values and principles form the foundation for our Strategy Map, our principles and values are the foundation for how and why we do business.”


CEO Straight Talk

PRECORP NEWS

“We have resources and plans in place to be prepared to take advantage of opportunities.” continued from page 2. There are some positive things on the horizon. We continue to believe that we may see some load growth related to a rare earth elements mining project in the Sundance area. We have also seen some increases in pipeline related loads and some oil drilling as well.

“There are some positive things on the horizon.”

These extractive industries have historically represented well over 75% of our total sales and they continue to provide a benefit to our bottom line and contribute to our competitive rate structure. We understand that these projects have local impacts. We rely upon the various regulatory agencies and the permitting processes to play out before we provide power in order to meet our Obligation to Serve as defined by the Wyoming Public Service Commission.

We have also seen interesting trends in CBM development. We have seen a 20% decline in sales to the CBM sector over the past several years. Many of the wells are now being plugged and abandoned and we are beginning to develop plans to remove electrical infrastructure that is no longer used or useful. I have recently visited with a company called Luca Technologies. This company has been working on a way to treat CBM wells by stimulating the existing microscopic organisms that originally created the methane

gas. Go to www.lucatechnologies.com for more information. This seems to be a very interesting technology and one that could stabilize, or perhaps someday, reverse the decline in sales we have been seeing in the CBM sector. It would be extremely beneficial if this technology could become commercially viable before the removal of existing infrastructure begins. PRECorp’s Strategic Themes and related Objectives are supportive of this endeavor and we have resources and plans currently in place to help us be prepared to take advantage of this or other similar opportunities. Engaging our members so that we can have sustainable growth and realize operational excellence is at the heart of our Strategy. Last month I sent letters to our Congressional Delegation expressing interest in and support for the commercialization and deployment of Luca Technologies well treatment process. PRECorp supports the efforts currently underway to determine whether it is possible to continue to utilize the CBM resources and related infrastructure in an economical and environmentally sound manner. Next month I will give you more information on this and it may be something that we need your engagement in as well. If you have thoughts or perspective that could be helpful to me as I work on this issue, I would appreciate hearing from you.

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