April 20, 2011

Denver, Colorado

CREZ Transmission Project Update

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Why You Should Just Enjoy Dinner

Shary-who?

Sugarland?

“Aren’t you a co-op?”

What exactly have you done?

Prior to last July:

Sharyland Utilities was the smallest Investor Owned Utility in

North America

Peak load of 22 MW

15 miles of 138kV line

Aren’t you the guys who traded silver?

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Why Maybe it’s Worth Listening (a little)

Hunt has been around the energy business since 1934 Hunt Oil founded in 1934; operations have spanned 6 continents; 2 LNG plants

Hunt Refining founded in 1946

Hunt Power founded in 1998

Sharyland Utilities was the first Start-up T&D utility since Reedy Creek was formed in the late 1960s Received CCN in June 1999, energized grid in Feb 2000

First commercial-sized HVDC interconnection along the US-Mexico border PUCT CCN filing in Nov 2003, granted in April 2005

CFE approval sought in early 2005, granted in Dec

Energized in Oct 2007, just over 5 years from inception

We acquired CapRock Energy in July 2010 305-mile 138kV transmission loop and approximately 12,000 miles of distribution

Expanded Sharyland Utilities to 29 counties in Texas

We are the “REIT” guys

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We are wrong a lot; we just adjust faster

What has gone wrong for us in electricity?

Texas De-Reg bill ironically killed our business model

Effectively prohibited the creation of another “Sharyland Utilities”

We had hoped to replicate model across ERCOT

Timing

Economic downturn post-9/11 slowed development in our service territory

What has gone right in electricity?

Focus on reliability

Focus on stakeholders

No surprises for policymakers and regulators

We’ll talk to anyone anytime anywhere

Industry structure is sound and encourages investment

Hunt’s Approach to Risk

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Respect the heritage

Know who you are and are not

Realize we are standing on the shoulders of those who came before us

Understand the model

Focus on customers (reliability, customer care)

Control costs

Maintain extensive dialogue with stakeholders

Avoid conflicts of interest

Earn a regulated return

Adhere to core values

Excellence – strive to be first in every metric

Teamwork – work together with customers and stakeholders

Respect for Individual – respect inherent worth of employees and customers

Innovation – build 21st century grid using new technologies and management techniques

Humility – We are entrusted with managing our portion of the grid. We will approach all stakeholders with respect, openness, and our awareness of our obligation to provide customers with the best service possible

Our Core Beliefs

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Sharyland Utilities’ Presence in Texas

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CREZ: The Long and Winding Road

2006 2007 2008 2009

Aug 2, 2005:

SB 20 signed into law

Designated renewable energy zones

Established “need”; eliminated

transmission “chicken and egg”

on building out to wind farms

Nov 6, 2007:

PUCT ruled on

CREZ areas

Feb 15, 2007:

CREZ nominations

due

Apr 2, 2008:

ERCOT files Study

For four scenarios

May 15, 2009:

TSP selected

by PUCT

May 13, 2008:

TSP qualifications

2010

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Competitive Renewable Energy Zones

CREZ Development

Areas of concentrated

wind energy

Some wind better than

others

Diversity of wind quality

(timing compared to need)

Grouped according to

electricity generation

capability (4000 MW)

Interest to Developers

Not all areas of wind were

selected

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Panhandle Loop Proposal

From idea on November 30, 2006 to filing on February 15, 2007

Partners were Occidental, Celanese, Airtricity, Babcock & Brown

Problem: multi-fuel, not wind-only

Sharyland Utilities filed a proposal with the PUC of Texas in February 2007 to build an 800-mile 345kV electric transmission loop in the Panhandle of Texas (cost $1.5 billion)

Open access, and could enable more than $10 billion in potential generation projects

The Loop coupled the environmental benefits of wind with the constant power availability provided by coal and natural gas, which resulted in a more efficient and cost-effective system

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Capacity of New CREZ Wind by Scenario (MW)

Wind Zone Scen 1 Scen 2 Scen 3 Scen 4

Panhandle A 1,422 3,191 4,960 6,660

Panhandle B 1,067 2,393 3,720 0

McCamey 829 1,859 2,890 3,190

Central 1,358 3,047 4,735 5,615

Central West 474 1,063 1,651 2,051

Total* 12,053 18,456 24,859 24,419

* Assumes 6,903 MW of existing wind capacity

CREZ Transmission Plan

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Sharyland Utilities’ Portion of Proposed Settlement

Filed September 12, 2008

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Facilities Designated to Sharyland Utilities

Designated four collection stations and five line segments

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Routing Alternatives Considered

White Deer Station

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Routes at the end of March 2011

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The Sharyland Team

Office Established in Amarillo

Sherry Kunka – Manager of Community & Regulatory Affairs

Owner’s Engineer (Design)

Black & Veatch - Denver

Environmental & Routing

PBS&J – Austin

Surveying & Mapping

SAM, Inc. – Austin

Land / ROW Acquisition

Coates Field Services – Amarillo / Oklahoma City

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Ongoing Activity

Sharyland will continue to process interconnection requests from wind developers.

Work will continue on finalizing designs for towers, substations, and communication and control systems.

An Operations Center will be established in the Amarillo area.

Additional Sharyland project personnel will be re-located to Amarillo mid-2011.

Delivery of construction materials to begin mid-2011.

Estimated Construction Timetable

Hereford to White Deer – mid-2011 start date.

Silverton to Cottonwood – third quarter 2011 start date.

Hereford to Nazareth/Nazareth to Silverton – third quarter 2011 to first quarter 2012 start date.

White Deer to Silverton – Second quarter 2012 start date.

Substation construction – third quarter 2011 (site clearing will begin earlier).

A Look Ahead

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Responding to landowner inquiries along proposed routes related to

survey permissions and activities as they begin surveying the routes

Continuing correspondence with State, County and City officials in the

areas impacted by the routes to keep them informed about the project’s

progress

Updated the Sharyland website with revised route information as the

CCNs are approved

Conducted meetings with landowners affected by the approved routes

Continue to represent Sharyland at community events in the Panhandle

and South Plains

Public Affairs & Stakeholder Management

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Hundreds of millions of dollars in new infrastructure investment in region

Increased tax base for counties and schools

New jobs related to construction and support services

Wind Farms

Manufacturing

Operation

Maintenance

Sub-contracting opportunities for local resources

Right-Of-Way Agents

Community support services (housing, restaurants, emergency

services)

Project Benefits to Texas Panhandle & South Plains

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EIAA & GIAA

Two new innovative investment vehicles that will bring in new capital in both the electricity and gas transmission and distribution service sectors Formed as privately-held Real Estate Investment Trusts (REITs)

REITS will be investors in property companies that own eligible assets

Electric Infrastructure Alliance of America (EIAA) Created to develop and acquire electricity transmission and

distribution assets

First of its kind in electricity sector

Gas Infrastructure Alliance of America (GIAA) Created to develop and acquire natural gas transmission

and distribution assets Includes storage and LDCs

Alternative to Master Limited Partnerships (MLPs)

Initial equity commitment of $2.1 billion for EIAA & GIAA: Hunt Power - $322.5 million

Marubeni Corporation - $500 million

John Hancock Life Insurance - $450 million

TIAA-CREF - $450 million

OPTrust Private Markets Group – $400 million

Managed by an affiliate of Hunt

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Electricity Trans Alliance

LP

Transmission and Distribution

Company LLC

Sharyland DTS, LLC

(Property Partnership)

Sharyland Utilities

100%

Member

Member

Electricity Trans Alliance

LLC

GPLP

Sharyland Projects, LLC

(Project Finance Sub)

SDTS FERC

(FERC Sub)

SU FERC

(FERC Sub)

Lease

Hunt EIAA, LLC

Transmission and Distribution Company LLC

Sharyland DTS, LLC

(Property Partnership)

Sharyland Utilities

100%

Member

Member

Electric Infrastructure

Alliance of America, LLC

John Hancock

Sharyland Projects, LLC

(Project Finance Sub)

SDTS FERC

(FERC Sub)

SU FERC

(FERC Sub)

Lease

Periodic Rent

Managed by:

Energy Infrastructure Alliance

of America, LLC

Hunt Employees

Electric Infrastructure

Alliance of America, LP

OPTrust TIAA-CREFMarubeni

EIAA Structure

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How does a REIT work?

Historically used for traditional real property holdings that produce rental income

apartment buildings

shopping centers

office space

hospitals

REIT owns the property

Rental income is paid by operator of property to REIT

To qualify, REIT must meet certain qualifications:

Income Test – 75% must be rents from real estate assets

Asset Test – 75% of assets must be real estate assets

100 or more shareholders

90% of taxable income must be distributed to investors on an annual basis

If qualification rules are not met, REIT is taxed as a regular corporation

REIT receives a deduction for dividends paid

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Regulatory Approval

June 2007 - Private Letter Ruling from Internal Revenue Service Approved definition of real property to include electric transmission and

distribution assets

July 2008 – Public Utility Commission of Texas Docket No. 35287 Signed order approving restructuring of Sharyland Utilities assets into

Lessor/Lessee structure

March 2009 – Private Letter Ruling from Internal Revenue Service Approved definition of real property to include natural gas storage and delivery

systems

June 2010 – Federal Energy Regulatory Commission Docket No. EC10-53 Signed order approving acquisition of NewCorp Resources Electric Cooperative,

Inc. (“NewCorp”)

July 2010 – Public Utility Commission of Texas Docket No. 37990 Signed order approving acquisition of Cap Rock Energy Corporation (“Cap Rock

Energy”) Assets moved into Lessor/Lessee structure

Employees and operations transferred to Sharyland Utilities, L.P.

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Sharyland Utilities’ Existence: Threatening or Beneficial?

Underserved markets

In need of investment and innovation

Stakeholder support required

Challenge drives innovation that benefits all, including incumbents

Established Player(s) New Entrant(s)

Microsoft Google, Facebook

Disney Pixar

Cable TV Satellite

“Big Oil” Chesapeake, EOG

AT&T Verizon

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