2011 Governor’s Conference on Energy and the Environment LG&E and KU Carbon Capture and Storage Project September 27, /27/2011

LG&E and KU CCS Project Background LG&E and KU Agreement with Department for Energy Development and Independence (DEDI), September 2010 Define a Project to Capture and Store CO 2 from Coal Combustion Significant Funding from DEDI with LG&E and KU Cost Share Phase I Work to be Completed by June 30, 2011 Components of the Project Definition Capture Technology Geology for Storage CO 2 Source and Site Constraints Project Development Team EPRI – Identify Promising Technology KBR – Technology Selection and Process Engineering KGS – Geological Evaluation LG&E and KU – Project Management and Siting 9/27/20112

LG&E and KU CCS Technology Selection Process Key Capture Technology Selection Criteria Potential for Significant Cost Reduction Vs. Current State of the Art Technology Not Currently Scheduled for a DOE Funded Demonstration EPRI Identified 13 Potential Capture Technology Developers ADA * Jupiter Oxygen * 3H * Aker * MTRU of Texas Akermin * RTIU of Wyoming CAER * SiemensBabcock Thermo Babcock & Wilcox * * Provided Information Requested in EPRI Questionnaire 9/27/20113

LG&E and KU CCS Technology Selection Process 7 of 13 Technology Vendors Responded to EPRI Questionnaire Technology Screening Workshop in Early February of 2011 Ranked Technologies Based on Predetermined Scoring Matrix Short-listed 5 Vendors for Further Evaluation Short-listed Technology Vendor Presentations in Late February of 2011 Selection of 3H in March of /27/20114

3H Background Small Research Driven Company Located in Lexington Kentucky Self Concentrating Amine Process DOE, EPRI, LG&E and KU are providing Funding for Bench Scale Work Through 1 st Q 2014 (Independent from this DEDI/LG&E and KU CCS project) Potential for Technology to be Ready for 50 MW Demonstration by 2016 Additional Funding Required to be Ready for Demonstration 9/27/20115

Potential LG&E and KU Generation Sites 9/27/ E. W. Brown Plant Green River Plant Ghent Plant Mill Creek Plant Trimble County Plant KU LG&E

KGS Geological Evaluation of Sites KU LG&E

LG&E and KU CCS Site Selection Selected Brown as Preferred Demonstration Site Best Geological Storage Potential Avoids Interstate Legal Issues New High Efficiency FGD for SO 2 Removal New NOx Control Under Construction Sufficient Area Available for Demonstration Plant Sufficient Process Cooling Water Available 9/27/20118

LG&E and KU Project Conclusions Full Funding Commitments Required in Early 2013 to Complete Construction in 2016 Estimated 50 MW Project Capital Cost with 20% Contingency Approximately $140 Million or $2,800/KW Approximately 2X the Cost to Construct Trimble 2 Estimated Annual Operating Cost (excluding cost of replacement power) Over $10 Million or Over $30/Ton Captured To Proceed, the Project Requires Sufficient 3 rd Party Funding 9/27/20119