1. The Shadow of the Clean Power Plan Wyoming Energy Summit Cheyenne, WY Matt Larson Wilkinson Barker Knauer, LLP May 19, 2016

2. The Final Clean Power Plan Architecture 32% CO 2 emission reduction by 2030 Building Block 1 Regionally derived HRI – Eastern Interconnection: 4.3%, Western Interconnection: 2.1%, Texas Interconnection : 2.3% Building Block 2 Assumes 75% capacity factor based upon summer net output Building Block 3 Shelves the regional RPS and now based on modeled level of potential renewables

3. 3 Swings as between proposed rule and final rule Source: Sidley Austin LLP

4. Key Questions “Emissions standard” plan or “state measures” plan? Trading? Rate-based? (ERCs) Mass-based? (Allowances) 4

5. Courts - State of Play February 9, 2016: SCOTUS stays implementation of Clean Power Plan. Stay is for duration of D.C. Circuit and SCOTUS review. A first  SCOTUS has not granted a stay of any federal regulation while under lower-court review. May 16, 2016: D.C. Circuit reschedules oral argument Now September 27, 2016 en banc Skips the panel and oral argument that was set for June 2, 2016 Another first? 5

6. Actions during the Stay 6 Source: E&E Power Plan Hub State agency action State legislative action Regulated entity action

7. State Agency Action - Washington Failure of Carbon Pollution Accountability Act led to rulemaking The Washington Department of Ecology initiated rulemaking for Clean Air Rule, then withdrew rules Initial rules allowed for unilateral linkage with carbon markets in California (AB 32), RGGI, Quebec, and select offset protocols – but … 7 Source: RGGI Statement, 1/26/16

8. State Agency Action - Washington The Washington Department of Ecology updated the rule 8 Source: WA Department of Ecology, 4/27/16 Per state legislation, one unit will be shut down in 2020 and other in 2025 (1,340 MW)

9. State Agency Action - Washington Compliance options will include EE or process improvements, trading of emission reduction units, emission reduction projects, and perhaps external carbon markets 9 Source: WA Department of Ecology, 4/27/16

10. State Legislative Action Two distinct flavors of legislative action seen thus far in Oregon and Illinois Similar conceptual template De facto resource plans with a primary objective: Oregon  coal free Illinois  preserve nuclear power 10

11. State Legislative Action - Oregon Senate Bill 1547 – signed into law March 8, 2016 Affects Pacific Power and Portland General Electric Will eliminate reliance on coal-fired resources by 2035 Boardman Generating Station in OR will close by end of 2020 PGE will be out of Colstrip Generating Station in MT (20% share in units 3 and 4) by 2035 11

12. State Legislative Action - Oregon Meanwhile …. Plus EE, transportation electrification, community solar Next generation of fuel-switching legislation 12 Calendar YearsPrior RPS (%)RPS Under SB 1547 (%) 2011 through 201455 2015 through 201915 2020 through 202420 2025 through 20292527 2030 through 20342535 2035 through 20392545 2040 and later2550

13. State Legislative Action - Illinois The Next Generation Energy Plan Zero Emission Standard Solar rebates and $140 million in funding $1 billion in low income energy assistance (EE and solar development funds) Doubling EE 13

14. State Legislative Action - Illinois What is a Zero Emission Standard? Directed at Exelon nukes with decades of useful life remaining Clinton Power Station (1069 MW) Quad Cities Generation Station (1871 MW) Look at revenues and operating costs Provide “make whole payments” Estimated at 25 cents per month per customer bill 14

15. Regulated Entity Action New wind projects New nuclear projects Nuclear closures 15

16. Regulated Entity Action – Wind XI MidAmerican Energy proposal to develop 2 GW of wind $3.6 billion – largest economic development project in Iowa history Wind would supply 85% of Iowa retail customer needs 16

17. Regulated Entity Action – Wind XI Driven by: PTC extension and stepdown CPP overlay MISO market issues 17

18. Regulated Entity Action – Dominion Nuclear North Anna 3 1,470 MW Long history – filed for NRC license in 2007 Included in every IRP since 2008 Cost subject to debate VA is one of states moving towards rate- based compliance 18

19. Regulated Entity Action – Nuclear Closures 19

20. Regulated Entity Action – Entergy Nuclear Closures Closure of Vermont Yankee in 2014(604 MW) Pending closure of Pilgrim in 2019 (685 MW) NEI’s take on Vermont Yankee closure: “The company’s operating revenues … were squeezed by a combination of sagging electricity demand, low energy prices and restructured markets that undervalue nuclear energy's contributions. 20

21. Regulated Entity Action – Entergy Nuclear Closures Pilgrim represents 84% of carbon free generation in MA 2 million metric tons is annual delta in carbon emissions from closure and gas as replacement capacity 2015 saw a 5% increase in carbon emissions in New England Illustrates the conflict between RGGI and ISO RGGI mandates carbon emission reduction Markets forcing out carbon free generation Scramble for Canadian hydropower 21

22. Closing Point – Next Gen Environmental Litigation Arizona Public Service closing coal at Ocotillo Power Plant and building 510 MW of gas-fired generation ADEQ issued air permit in March Sierra Club filed petition challenging permit in April Crux of argument is opposition to emissions limits that allow for idling Battery storage should replace idling and use of batteries should be reflected in permit limits 22

23. QUESTIONS Matt Larson Wilkinson Barker Knauer, LLP 1755 Blake Street Suite 470 Denver, CO 80202 Phone 303.626.2350 23