NPPD INvolvemeNt IN

Wind Energy

Nebraska is UNiqUe – it is the ONly all PUblic POwer state • Only state in the nation served entirely by public power utilities

• Public Power’s role:

- Provide affordable, reliable electricity to Nebraskans

- Electric rates in Nebraska are among the lowest in the nation

- Public Power’s focus is on customers, not stockholders

- Local control provides customers a choice in

decision-making

Nebraska POwer assOciatiON (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

whO is NPPD? • Largest electric utility in the state in terms of gross revenue, kilowatt-

hour sales, and geographic area served

- Revenue - $863.4 million in 2009

- 19.5 billion kilowatt-hours sold in 2009

- Chartered territory currently includes 91 of Nebraska’s

93 counties

- Primarily a wholesale power supplier to other Nebraska public

power districts, rural electric cooperatives and municipalities

NPPD GeNeratiON resOUrces • Diverse portfolio:

- 3,319 megawatts of generation capacity

- Energy sources include coal, nuclear, hydro, wind, natural gas,

along with purchases from other utilities

NPPD iNvOlvemeNt iN wiND tO Date • NPPD supports development of wind-powered generation

in Nebraska

• Board strategic goal: 10 percent renewables by 2020, for a total of

approximately 450-500 megawatts of installed capacity

• Participated in development and passage of LB 1048, the comprehensive

wind for export bill

• Currently 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

• Embarked on path to wind development in 1998 with two turbines

at Springview

• Constructed a 60-megawatt wind facility at Ainsworth in 2005

• Due 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

• NPPD 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

• Selecting wind sites where major transmission line additions or upgrades

are not needed

reqUest FOr PrOPOsals • As part of the first RFP, NPPD selected two sites:

- 80-megawatt Elkhorn Ridge Wind Farm located near Bloomfield

(operational in March 2009)

- 40-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:

- 80-megawatt Laredo Ridge Wind Farm at Petersburg (planned to be in

operation by the end of 2010)

- 80-megawatt Broken Bow Wind Farm. Power purchase agreement is

currently under negotiation

• NPPD issued third RFP on April 8, 2010, for proposals varying in size

from 50 megawatts to 300 megawatts:

- 34 proposals received, 19 for the Madison County Site and 15 on other

proposed sites.

- A total of 21 developers offered proposals

- The responses document Nebraska’s tremendous wind resource

- NPPD management is reviewing all options considering the short term

rate impact of adding additional wind at this time

challeNGes iN wiND DevelOPmeNt • State currently has surplus generating capacity with large amounts of

surplus energy

• No guaranteed market for export of energy

- For example:

• Northeast states have indicated they do not want wind power from

the Midwest

• States immediately adjacent to Nebraska are developing their own

wind-powered generation portfolios

• No state incentives available

• Federal incentives for public power very small

• Major transmission line additions will be required, especially to export

wind generation to major U.S. load centers

key issUes tO cONsiDer • 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?

- Private developers are required to pay for transmission facilities

needed for export

traNsmissiON PlaNNiNG/iNtercONNectiON PrOcess • Two levels

- 115 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

- NPPD, 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 www.spp.org

website):

- Interconnection study is required to determine costs of transmission

line expansion and other factors associated with interconnection

- SPP also requires the customer to submit a transmission service request

to determine if firm transmission is available to move generation to the

purchasing party

- When 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

- Requires system impact study to determine what facility additions

are needed to allow for interconnection from the wind farm to the

69 kV system

- If power flows into 115 kV system owned by SPP members, then a

separate interconnection study is required by SPP

FUtUre DevelOPmeNt

• Nebraska has great wind potential

• Nebraska ranks third in wind energy potential among the 50 states

• LB 1048 has removed many of the barriers for developers that are

interested in building wind generation projects for export

• However, 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.

ecONOmic DevelOPmeNt OPPOrtUNities

• Nebraska offers significant advantages to manufacturers of wind energy

products and related industries

• Benefits to firms selecting a Nebraska location to serve the nation’s

rapidly expanding wind energy industry include:

- Easy access to major wind energy sites

- Easy 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

P.O. box 4991414 15th streetcolumbus, Ne 68601-0499402.564.8561 www.nppd.com

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NPPD’s cOmmitmeNt• 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