Governor’s Conference on Energy Federal/State/Local Role in Permitting & Regulating Energy Projects October 16, 2013

2 Indianapolis Power & Light Company (IPL) IPL supplies electricity to about 470,000 customers An Investor Owned Utility whose parent is the AES Corporation Most of IPL’s energy comes from the combustion of coal Available wind and solar generation about 7% Monument Circle

3 AES – The Power of Being Global The AES Corporation has – A widely diversified generation mix – Generating capacity > 40,000 MW – In 27 countries on five continents – $17 billion annual revenues – A global force of more than 27,000 people AES Generation Mix

4 Significant spending at IPL on Environmentally Related Regulations and Considerations $600 million Spent in the Past 10 Years For Clean Coal Controls – NOx, SOx, PM reduction Additional ~$500 million being invested to comply with Mercury and Air Toxics Standards (“MATS”) at IPL’s largest coal units. ~600 MW of small coal units being shut down – 200 MW to be refueled with natural gas – 650 MW to be replaced with new gas fired combined cycle project – ~$600 million of additional investment

5 Some thoughts based on 25 years of developing power projects Electricity is a great and essential product No perfect way to generate electricity – What’s best or better changes over time (fuel prices, technology advances, environmental considerations, etc.) – Diversification is important New power plant capacity will almost certainly be overwhelmingly be gas fired combined or simple cycle power projects for the next decade or longer Mercury and Air Toxic Standards (“MATS”) and other requirements are driving the retirement of a huge amount of coal fired capacity – Development of new gas fired combined cycle projects will continue to steadily accelerate Developing a power project is a wildly challenging, multi-year, expensive and risky proposition. Most project efforts don’t succeed.

6 Some thoughts based on 25 years of developing power projects Counties and states can scarcely do better than to attract a new gas fired combined cycle power project – Long term, high paying jobs; Long term, reliable property taxes; Economic development (construction jobs, support services, downstream benefits) Local: Don’t let the vocal minority rule the county (or state or federal process) Local/State: Differences in regulations, reception and taxation can meaningfully influence where a developer expends resources to develop a power project State/Federal: New rules and regulations can result in huge costs to comply – Ultimately the utility customer will have to pay – Be mindful of the cost/benefit balance Local/State/Federal: – Definitive time line to decision – Consistent and sensible rules and regulations

Charlie Falter (240) Governor’s Conference on Energy Federal/State/Local Role in Permitting & Regulating Energy Projects