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2012 Summer Reliability
Presentation May 29, 2012
2
Presentation team
• Ken Zagzebski, President and CEO • Kelly Huntington, SVP, CFO • Joe Bentley, SVP, Customer Operations • Kevin Crawford, SVP, Power Supply
3
Overview
• Putting safety first
• Planning for environmental compliance
• Ensuring resource adequacy
• Preparing for the future
4
Putting safety first
5
IPL’s OSHA recordable rate trending downward, but our target
is zero
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2007 2008 2009 2010 2011
To
tal
Reco
rdab
le I
nju
ry a
nd
Ill
ness C
ase R
ate
IPL EEI
IPL
EEI
Peers
No
t Y
et
Avail
ab
le
IPL EEI
IPL EEI
IPL EEI
Lower is better
6
Focus on contractor safety
• IPL partners with contractors who put safety first
• At a minimum, must comply with IPL and AES Safety Standards
• Pre-qualification through the Metropolitan Coalition for Construction Safety (MICCS) certification program
7
Planning for environmental
compliance
8
New EPA rules will drive price increases
Risk State of RulemakingExpected
Compliance Date
Key Issues
Utility Mercury and Air Toxic Standards (MATS)
• Final rule issued April 2012 April 1, 2015 • Stringent mercury, PM limits
• Install controls on large units
Cross-State Air Pollution Rule (CSAPR) • CAIR remains in effect until new rule January 1, 2014 • Further NOx and SOx reductions
• Further pressure on small units
Ash • EPA proposed rule: 6/2010 • Final Rule: post-2012 election
December 1, 2017 • Possible hazardous waste designation• Upgrade / close ponds & landfills
Cooling Tower Intake (316b) • Final rule scheduled for July 2012 January 1, 2016 • Reduce impact on fish
• Install cooling towers or upgrade intakes
Greenhouse Gas (GHG) • Cap & Trade • Proposed New Source Performance Standards
TBD • Cap & Trade - indefinite delay• NSPS - proposed for new units only
9
Utility MATS has the most significant impact on the industry
• Requirements — New emission limits for mercury, acid gases — Compliance averaging allowed on a per plant basis — Install continuous emission monitors for particulate
matter (PM), hydrochloric gas (HCL), and mercury
• Challenges — Compliance timelines are extremely aggressive — New emission limits
10
Utility MATS control equipment
Rule will require most coal plants to upgrade existing controls and/or install additional controls
Control Equipment Purpose Cost / unit
Activated Carbon Injection Mercury Capture $ 3M - $ 5M Dry Sorbent Injection SO3 & Mercury Control $ 6M - $ 10M
Baghouse Retrofit Particulate Matter and Mercury $125M - $175M
Electrostatic Precipitator Replacement
Particulate Matter and Mercury $ 60M - $100M
Continuous Emission Monitoring Systems (CEMS)
Compliance Demonstration $ 6M - $ 10M
Cost/unit values are provided for perspective only and may or may not be indicative of the actual cost. Costs are indicative for a 500 MW unit. It is difficult to establish a standard cost range for retrofitting environmental controls. Actual costs will be dependent on the specific configuration at each site and may fall substantially outside of this range.
11
Utility MATS requires controls on IPL’s base load generation
• Environmental control equipment needs to be installed on our base load units
• Currently finalizing plans based on the final rule
• Petition to be filed this summer
12
Utility MATS will likely force small unit retirements
• Likely retirement of ten generating units by 2016
• Issuing RFP for replacement capacity this summer – Gas price/
availability attractive
$-
$2
$4
$6
$8
$10
$12
$14
$16
Jan-
04
Jul-0
4 Ja
n-05
Ju
l-05
Jan-
06
Jul-0
6 Ja
n-07
Ju
l-07
Jan-
08
Jul-0
8 Ja
n-09
Ju
l-09
Jan-
10
Jul-1
0 Ja
n-11
Ju
l-11
Jan-
12
Jul-1
2 Ja
n-13
Ju
l-13
Jan-
14
Jul-1
4
$/M
MB
TU
Natural Gas Price Summary
13
Impact of the EPA Utility MATS rule
$0
$20
$40
$60
$80
$100
$120
2011 2012 2013 2014 2015 2016 2017 2018
1,0
00
kW
h r
esi
den
tial cu
sto
mer
bil
l Indiana IOU average
IPL
EPA required environmental controls and resource additions
For Illustrative purposes Only includes impact of Utility MATS and replacement generation
14
Ensuring resource adequacy
15
IPL is prepared to meet the MISO summer requirements
2982 17 2965 45 2920
111 3037
2500
2600
2700
2800
2900
3000
3100
Projected Peak w/o
2012 Energy Efficiency
(EE)
2012 EE Projected Peak after EE
Demand Response
(DR)
Net Peak for Planning
Reserves for 3.79%
Planning Reserve Margin
IPL Generation
Plus Purchases
Resources Obligation 3031 MW (3.79% PRMUCAP)
IPL
Gene
ratio
n
2887
Purc
hase
s
16
HARDING STREET GEORGETOWN
PETERSBURG
EAGLE VALLEY 1565
883
296
142
Petersburg
Harding Street
Eagle Valley
Georgetown
% of nameplate capacity
2887 UCAP MW
The fleet continues to be primarily coal- fired generation
Coal 73%
Gas 13%
Oil 6%
Wind PPA 8%
17
DSM will play an important role in resource adequacy
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
2,200,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
MW
H r
ed
uce
d
Cumulative MWH reduced
Incremental MWH reduced
18
Preparing for the future
19
Helping customers manage their electric bills
• CoolCents®
• Home Energy Inspector
• Renewable Energy Incentive Program
• Refrigerator Recycling Program
IPL has the second-lowest residential bill among the 20 largest cities in the U.S. with investor owned utilities.
20
Finding better ways to serve our customers
• Expanded self-service options online
• Online outage reporting
• Daily energy consumption tool coming in Q3
IPL is in the top quartile of Midwest utilities for customer satisfaction according to J.D. Power and Associates surveys.
21
Providing innovative options for customers
• IPL offers renewable incentives
• First IOU in Indiana to offer: – Net metering rate – Feed-in tariff (Rate REP) – Green Power program
• IPL is preparing the way for Electric Vehicle adoption
22
Utilizing technology to improve system reliability
• Minimizing the impact of
service interruptions with midpoint reclosers
• Providing fault location information to reduce outage duration
• Reducing outage durations with new distribution relays
IPL is in the top decile for SAIDI in the United States based on the most recent IEEE survey.
23
Input
Other OMS
OMS
IVARA
EMPAC
GIS
3rd Party Workforce
Asset History
Capital Review
Committee
Output
Book of Work
Work Prioritization Determine:
• Work prioritization • Resource management • Program replacements • Maintenance Strategy
• RCM Program • Periodic • Break / fix
Inspection Information
Asset Specific
Knowledge
Field and Engineering Input
Product Manufacturers
Simulation Tools
Industry Information
Safety and Reliability
Expectations
Service Level Expectations
Capital Review
Committee
Challenge Process Risk / Cost of
Failure (Non- financial & Financial)
Alternative Solutions
Work Performance Expectations
Non- Financial Information
Asset Management
Team
Managing assets to optimize life cycle performance
PI
Others
Accountability for execution of the work
Criteria
24
Planning for a transitioning workforce
• Focusing on more structured knowledge transfer
• Reviewing succession plans
• Attracting new talent – Taking steps to ensure IPL is a
preferred employer – Supporting community
involvement
25
The IPL mission
Improving lives by providing safe, reliable and affordable energy solutions in the communities we serve.
26
Appendix
Environmental regulatory challenges: 2012 and beyond
Air
Climate
Water
Land & Natural
Resources
Waste & Chemical
Management
Coal Ash
PCBs in Electrical
Equipment
HazMat Transport
Transmission Siting and Permitting
Avian Protection
Endangered Species
Vegetation Management
316(b)
Effluent Guidelines Limitations
Waters of the United States
NPDES Pesticide Permits
NSPS- New & Modified
Sources
NSPS-Existing Sources
BACT Permitting
International Negotiations
Utility MACT
Interstate Transport
(CAIR/CSAPR)
Regional Haze/Visibility
Multiple NAAQS
New Source Review (NSR)
Waterbody- Specific
Standards
28
Smart Grid project status
• Funded in part through Smart Grid Investment Grant (SGIG) from DOE
• 3 areas: Metering, Customer Systems, and Distribution Automation
• $48.9 million total project
• $15 million of $20 million grant received as of April 30, 2012
• In month 26 of 36 per the schedule with 75% of the work complete