Long-Term Planning Presented by: APP Site Visit Don Untch Lead Long Range Asset Planner APP Site Visit October 30 – November 4, 2006

Strategic Tactical LONG-TERM PLANNING or Fossil & Hydro Generation (F&HG) long-term planning can be either: Strategic or Tactical

LONG-TERM PLANNING FLOW HIGH LEVEL OVERVIEW

STRATEGIC PLANNING F&HG Ten Year Strategic Plan: Develops an Asset Management Philosophy Lays the Foundation for a Working Plan that will Evolve with the Changes Associated with Our Industry Is Comprehensive, Giving Consideration to all Known Factors and Variables Incorporates a Environmental Compliance Plan Helps Improve Fleet Operational Performance Considers Yearly Fleet Expenditures Addresses Demographic Concerns with a Workforce Plan Suggests a Potential Fleet Portfolio

STRATEGIC PLAN CONTENTS Summary of Fleet Historical Trends Performance Trends Energy Value and Contribution Equivalent Availability EFOR (Equivalent Forced Outage Rate) Maintenance and Forced Outage Summary Capital and O&M Spending Trends Workforce Plan (Demographics) Future Major Operating Liabilities Environmental Compliance Strategy Long Term Fleet Portfolio

STRATEGIC PLANNING PROCESS EXAMPLE WORKFORCE PLAN PRIMARY GOALS SECONDARY GOALS INITIATIVES LABOR RELATIONS ISSUES DETERMINE OPERATIONAL ROLE OF THE PLANT DETERMINE OPTIMAL STAFFING LEVELS FOR THE PLANTS Review Results from Financial Models & Strategic Long Term Plan Determine Role of Shared Resources Review “Outsourcing” Review Layoff Allowance Consider Strike Impact on Staffing Benchmark Against Other Plants & Utilities “Outsourcing” Layoff & Recall Contract Provisions Layoff Allowance Policy Transferring Employees Between Plants

STRATEGIC PLAN – PROGRESSION Follow-up Meetings with the Various Organizations to Continue Development of Strategic Long Term Plan Fuel Procurement & Fuel Logistics Human Resources Information Technology Market Operations Corporate Communications Environmental Regulatory Services

LONG TERM “TACTICAL” PLANNING F&HG Ten Year Tactical Plan: Focuses on Details Focuses on Action Incorporated into an Executable Schedule or Timeline Focuses on Implementation Focuses on Results Tightly Integrated with the Annual Budget Process Turns Strategy into Reality

TACTICAL PLAN – TYPICAL YEARLY MEETING DISCUSSIONS TOPICS Unit Role Environmental Compliance Market & Commercial Operation Objectives & Shortfalls Fuel Procurement & Handling Financial & Budget External Benchmarking Data Unit Value Assessment Study (if Applicable) Equipment Liabilities by Engineering Discipline Engineering Facility Health Report Health Reports from Previous Business Plans Equipment “GAP” Program (Expectation Shortfalls) Engineering Input & Comments Long Term Planned Outage Frequency and Scheduling

TACTICAL PLAN – OUTPUT & RESULTS Long Term Planned Outage Schedule for each Unit Long Term Turbine, Generator, Boiler Feed Pump & Transformer Inspection Schedule with Spare Part Flow Basis for Input into: Financial Analysis Budgeting Systems Business Planning Process Long Term Plan Unit Long Term Liability Grid Sheet Summary Assigned Action Item List Meeting Minutes

TACTICAL PLAN – LONG TERM PLANNED OUTAGE SUMMARY - EXAMPLE

TACTICAL PLAN – LONG TERM MAJOR EQUIPMENT REPAIR SCHEDULE - EXAMPLE

TACTICAL PLAN – GOING FORWARD Improve Long Term Plan Information Exchange All Fragmented & Pertinent Information Located in One Place Information is Very Accessible to Multiple Users Comprehensive Plan Used to Facilitate the Decision Making Process

Appendix

SIMPLIFIED LONG TERM FLOW PROCESS

TACTICAL PLAN – LONG TERM SPARE PART FLOW - EXAMPLE

TACTICAL PLAN – LIABILITY SUMMARY EXAMPLE FOR 2006 Liability Codes Defined Next Slide

TACTICAL PLAN – LIABILITY CODES