Power Plant BI POWER GENERATION Evolution of Plant Ownership From Regulated Era Regulated Utility Monopolies To “Partially” Deregulated Era Independent Power Producers (IPP) Unregulated “Arms” of Utilities

NERC develops and enforces reliability standards; monitors the bulk power system; assesses future adequacy Power Plant BI

Advent of ISOs and RTOs (Independent System Operator) (Regional Transmission Operator) A federally regulated regional organization which coordinates, controls and monitors the operation of the electric power system. A cts as a marketplace Monitors reliability of the system Coordinates supply of power Power Plant BI

Currently Eight ISOs and RTOs California ISO (CAISO) Electric Reliability Council of Texas (ERCOT) ISO New England (ISO-NE) Midwest Independent Transmission System Operator (MISO) New York ISO (NYISO) PJM Interconnection (PJM) Southwest Power Pool (SPP) Florida Reliability Coordinating Council (FRCC)

Power Plant BI GeneratorsTransmission/ Distribution Consumers Wholesale Brokers Retail Brokers ISO Overview

Power Plant BI Generation Plant Sales Contracted Power Purchase Agreements (PPA) Fixed pricing over term Merchant No long term contract Market price based sales

Power Purchase Agreements Pricing Components Capacity ($/MW) Energy ($/MWh) - Tolling, Efficiency Variable O&M ($/MWh) Start Charge ($/start) Other Terms/Conditions Availability (Bonus/Penalty) Power Plant BI

Merchant Plants Market Pricing Components Day Ahead Ancillary Balancing (15 min.) Spinning Reserve (Actual) Day Ahead Balancing

Power Plant BI Generation “Stack” Nuclear Coal Combined Cycle Peaker Time of Day Demand (MW)

Power Plant BI IF PPA BI claim is fairly straightforward Develop model to predict sales Test against operating history BUT IF MERCHANT More difficult Examine how does Assured sell his power Is there history?

Power Plant BI Expected Claim Process “But for” Case (model) - Actual Case (supported by financial documentation) Claim But sometimes….. “But for” Case (model) - Actual Case (model, to identify pricing) Claim

Power Plant BI If the model must be utilized for both: “But For” and “Actual” cases Then the claim can be developed as a “differential” product within the model [ “Normal” Capacity - Loss Period Capacity ] x Actual Price ($/MWh) = Claim Single Model Ensures Consistency of Logic

Power Plant BI Business Interruption Claim Analysis Gather Assumptions - performance data Develop Generating Logic Model Differential Results with Independent Data

Power Plant BI BI Claim Analysis - Assumptions Plant Performance Fuel In & Power Out = Heat Rate (Efficiency) Variable O&M costs Note: Care must be taken on “partial” outages to examine incremental plant performance data.

Power Plant BI ConfigurationPower Out (MW) Fuel In (MMBtu/hr) Heat Rate (Btu/kWh) Base Load w/o one GT Claim Basis Simplified Example

BI Claim Analysis - Generating Logic DAY AHEAD IF : (Fuel Price x HR) + Vari. O&M < Power Price THEN: Plant unit would run BALANCING IF: Capacity is available AND (Fuel Price x HR) + Vari. O&M < Power Price THEN: Additional energy would be generated Power Plant BI

BI Claim Analysis - Example Results

Power Plant BI BI Claim Analysis - Example Results cont

Power Plant BI SUMMARY Must be aware of type of market Analysis can be complex Look for incremental capacity loss Verify fuel and power prices Verify plant performance assumption Apply applicable logic

Power Plant BI