1. Investing Our Energy In You Traverse City Light & Power Electric Generation TCL&P Study Session December 1, 2009

2. Investing Our Energy In You Electric Supply Economics Electric Generation prices are based on a supply and demand and commodity pricing concepts. Electric energy cannot be stored. It must be used as it is produced. All electric utilities must annually forecast their loads on an hourly basis (8760 projections) to MISO. All electric utilities must have enough dedicated generation, including a 15% reserve margin, to cover their peak electric demand.

3. Investing Our Energy In You Regional Available Electric Generation Increasing Price Baseload Intermediate Peaking Generation available on the day ahead of market (MISO - Mich, Wisc, Ind, Ill, Ohio) on an hourly basis. Utilities reserve some intermediate generation for their own native load and offer, on a short term basis, to other generation deficient utilities. The lowest cost baseload generation is reserved by the owning utility to serve their own native load. Excess may be offered to the market on short term contracts. Conclusion To achieve the best pricing cost and stability, utilities should either own generation or acquire long term baseload power purchase agreements.

4. Investing Our Energy In You 99% fossil fuel based

5. Investing Our Energy In You Natural Gas Coal

6. Investing Our Energy In You

7. TCL&P Electric Energy Supply Considerations Acquire long term base load electric generation to replace current contract set to expire on 12/31/2010 Prepare L&P for pending Federal Legislation Cap & Trade – Tax on fossil fuel based generation Copenhagen CO 2 reduction for global warming - 17% by 2020 - 30% by 2025 - 42% by 2030 - 83% by 2050 Continue Traverse City to be a leader in “green energy” production Diversify TCL&P electric generation assets -Wind-Wood fueled biomass -Natural Gas -Landfill gas-Energy Conservation -Solar-Coal

8. Investing Our Energy In You TCL&P Electric Energy Supply Considerations (Cont.) Provide local generation for improved reliability Reduce dependency on foreign oil Continue to provide competitively priced electricity to all customer classes Create increased opportunity for economic development through competitively priced electricity Create local construction jobs Create long term employment Develop Combine Heat & Power concepts for improved generation efficiencies Reduce exposure to expenses associated with transmission system Local generation reduces L&P carbon footprint

9. Investing Our Energy In You TCL&P Electric Energy Supply Plan Development Citizen Input L&P Public Forums – Sept 2008 Strategic Planning – Open Meeting January 2009 COFAC Public Comment at L&P Board Meetings L&P Capital Plan Presentation at open L&P Board Meetings L&P/City Commission Study Session to discuss planned generation acquisition L&P Capital Plan Presentation/Approval by City Commission L&P Customer Survey – 67.7% support for local biomass generation

10. Investing Our Energy In You TCL&P Electric Energy Supply Plan Development (Cont.) Other Stakeholder Input Sierra Club Representatives Michigan Land Use Institute SEEDS Grand Traverse Band of Ottawa & Chippewa Indians Re-Power America Grand Vision Energy Committee TCAPS Northwestern Michigan College Letters of Support U.S. Senator Levin U.S. Senator Stabenow U.S. Representative Camp

11. Investing Our Energy In You Stakeholder Expectations - Summary Reliable electricity Reasonable and consistent prices A focus on renewable generation A diversified electric generation portfolio A focus for local generation - Supports local economy - Provides for some generation security

12. Investing Our Energy In You Vision Statement The Vision of TCL&P is to enhance the local quality of life by securing our energy future. Mission Statement TCL&P is a customer focused utility that provides reliable and competitively priced energy services that benefit the community.

13. Investing Our Energy In You 2. Achieve 30% of our electric power requirements through renewable energy resources by 2020, as financially responsible. Achieve PA295 RPS requirements (KF/ER) 2012 – 2% 2013 – 5% 2014 – 9% 2015 – 10% Develop 10MW of installed wind generation by 1/1/14 (KF/ER) Develop 30 MW of installed biomass generation by 12/31/19 (KF/ER) 10MW – 2015 10MW – 2017 10MW – 2019 Develop 2MW of installed solar generation by 1/1/14 (DZ/JC/ER)

14. Investing Our Energy In You 6. Establish TCL&P as a leader in sustainable energy strategies. Implement the PA295 EO plan by 1/1/10 (JC) Implement feed in tariff and net metering processes by 6/1/10 (JC/TA) Install solar panels on Hastings Street Service Center by 6/1/10 (DZ) (Pending an engineering evaluation)

15. Investing Our Energy In You 8. Acquire diversified electric generation assets, including local generation. Install biomass, solar and wind generation by 12/31/19 (staff) Acquire local renewable generation sites per following schedule: (KF/ER) 1 st site – 1/10 2 nd site – 1/11 3 rd site – 1/13 4 th site – 1/15

16. Investing Our Energy In You 99% fossil fuel based

17. Investing Our Energy In You 64% fossil fuel based

18. Investing Our Energy In You 59% fossil fuel based