1. presented by The Coal Rush Revisited: R. W. Beck, Inc. IPED COAL POWER CONFERENCE January 18-19, 2007 St. Petersburg, FL Nicholas P. Guarriello An Economic Overview of the Continued Interest in the Power Industrys Old Stand-By

2. Coal Today Total 2005 Generating Capacity 988,000 MW 32% Coal* 10% Nuclear 41% Gas 13% Renewables 4% Oil Total 2005 Generating Capacity 988,000 MW 32% Coal* 10% Nuclear 41% Gas 13% Renewables 4% Oil * More than 50% of electricity consumed Coal (32%) Natural Gas (41%) Renewables (13%) Nuclear (10%) Oil (4%) Source: Energy Information Administration

3. The Aging Coal Fleet 0% 25% 50% 75% 100% >50 Years Old >40 Years Old >30 Years Old >20 Years Old >10 Years Old Source: Energy Information Administration 98% 88% 71% 52% 29%

4. Coals Future Generating Capacity Additions 2005-2025 Total: 246,000 MW 42% Coal (102,000 MW) 47% Natural Gas 9% Renewables 2% Nuclear Generating Capacity Additions 2005-2025 Total: 246,000 MW 42% Coal (102,000 MW) 47% Natural Gas 9% Renewables 2% Nuclear Coal (42%) Natural Gas (47%) Renewables (9%) Nuclear (2%) Source: Energy Information Administration

5. Energy Needs Retail Electricity Sales by Sector 1970 – 2025 (billion kilowatt hours) HistoryProjections Source: Energy Information Administration Average Annual Percent Growth Rate 2004-2025: Commercial 2.2 Residential1.6 Industrial1.0 Total1.6 0 0 500 1,000 1,500 2,000 2,500 1970 2005 2025 Electric Sales (TWh) Commercial Residential Industrial

6. Coals Drivers High Natural Gas Costs Security Abundant Made in the USA 2005 EPACT High Natural Gas Costs Security Abundant Made in the USA 2005 EPACT Conclusion: Coal will remain 50% of the energy mix

7. Low Cost Electricity From Coal Over 50% of the Electricity Comes from Coal Source: Energy Information Administration NH12.53¢22% RI11.97¢ 0% CT12.06¢14% NJ10.89¢16% MA12.18¢23% VT10.95¢ 0% DE 7.76¢54% MD 8.13¢56% ¢ = average retail price per kilowatt hour for 2005 % = percent of total generation from coal for 2000 5.01-6.13 6.30-6.72 6.85-7.54 7.64-10.89 10.95-18.33 8.76¢ 31% 6.72¢ 64% 5.92¢ 94% 5.87¢ 10% 5.87¢ 69% 5.16¢ 96% 7.64¢ 78% 6.34¢ 9% 6.55¢ 75% 7.51¢ 88% 9.02¢ 51% 11.63¢ 1% 5.92¢ 94% 6.60¢ 44% 9.14¢ 39% 6.69¢ 85% 6.61¢ 65% 6.85¢ 61% 6.13¢ 85% 6.95¢ 47% 7.79¢ 42% 7.48¢ 70% 6.30¢ 50% 8.03¢ 26% 7.23¢ 61% 5.88¢ 94% 7.08¢ 92% 10.57¢ 3% 13.95¢ 17% 7.54¢ 44% 6.46¢ 56% 7.43¢ 63% 6.72¢ 40% 5.01¢ 92% 6.64¢ 50% 8.27¢ 56% 5.15¢ 98% 7.19¢ 58% 6.31¢ 60% 5.12¢ 0% 11.72¢ 8% 18.33¢ 15%

8. Fuel Prices to Electricity Generators Source: Energy Information Administration * Includes average cost of transportation 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 1995 2000 2004 2010 2015 2020 2025 Natural Gas Coal Nuclear Projection Actual 2004 $/MMBtu*

9. 10.00 20.00 30.00 40.00 50.00 60.00 70.00 Coal CC IGCC 2005$/MWh 20.49 30.25 42.76 13.01 17.03 39.36 Fixed Cost Variable Cost Levelized Cost for New Power Plants in 2012 Based on projected capital costs reported by EIA increased by 20% and fuel prices and O&M costs reported by EIA 55.78 50.75 56.39 Source: R. W. Beck, Inc.

10. 10.00 20.00 30.00 40.00 50.00 60.00 70.00 Coal CC IGCC 2005$/MWh 20.49 30.25 42.76 13.01 17.03 39.36 Fixed Cost Variable Cost 59.22 57.14 62.10 Potential CO 2 Costs 6.40 5.71 3.44 Based on projected capital costs reported by EIA increased by 20% and fuel prices and O&M costs reported by EIA * Cost of CO 2 emissions at $7 per ton in 2010 – Source: National Commission on Energy Policy Levelized Cost for New Power Plants in 2012 Including the Cost of CO 2 Emissions* Source: R. W. Beck, Inc.

11. Risk Profile Reflects Fuel Price Volatility 20 40 60 80 100 120 140 160 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Coal Unit Range Combined Cycle Range Total Power Costs ($/MWh) Combined Cycle Mean Coal Unit Mean 49.41 60.41 70.22 106.50 Source: R. W. Beck, Inc.

12. Risk Profile Reflects Fuel Price and Emissions Volatility 20 40 60 80 100 120 140 160 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total Power Costs ($/MWh) Combined Cycle Mean Coal Unit Mean 49.41 60.36 86.34 115.19 Coal Unit Range Combined Cycle Range Source: R. W. Beck, Inc.

13. U.S. Production vs. Consumption Source: Energy Information Administration Note: Natural gas statistics excludes natural gas plant liquids. 25% 50% 75% 100% 125% 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2004 Prod. Btu (% of Cons. Btu) Coal Petroleum Natural Gas

14. Total U.S. Coal Consumption for Power and U.S. Criteria Emissions, 1970-2001 100 1970 50 150 200 250 Coal Consumption Criteria Emissions 1970 Level Equals 100 Source: Energy Information Administration 2003

15. Global Fossil Fuels Outlook 85% of incremental energy from fossil fuels Carbon emissions to grow by 60% India, China will account for 67% of the total increase in coal use worldwide 85% of incremental energy from fossil fuels Carbon emissions to grow by 60% India, China will account for 67% of the total increase in coal use worldwide

16. Coal Challenges Transmission Transportation Technology Emissions

17. Co-op Industry IOU Municipal Other Co-op Industry IOU Municipal Other Currently Proposed, Planned & Under Construction Coal Units Source: Global Energy Decisions CFB IGCC PC CFB IGCC PC New Entrants - Type Unit Type

18. Co-op Municipal Co-op Municipal Currently Proposed, Planned & Under Construction Coal Units by Municipals/Cooperatives Source: Global Energy Decisions CFB PC CFB PC New Entrants - Type Unit Type

19. Questions Nicholas P. Guarriello R. W. Beck, Inc. nguarriello@rwbeck.com (407) 422-4911 IPED COAL POWER CONFERENCE