CCU UPDATE INTEGRATED RESOURCE PLAN MAY 17 2016

CCU UPDATE INTEGRATED RESOURCE PLAN MAY 17, 2016

Presentation Outline • • • Overview GPA Integrated Resource Plan Key Assumptions Comparative Analysis of CC Units Rate Impact GPA Implementation Plan – 2016 Integrated Resource Plan – Procurement Strategy – Financing Options – EPA Compliance Plan

Overview • Renewable Portfolio Standards Public Law 29 -62 (2008) - 5% by 2015; 10% by 2020; 15% by 2030; 25% by 2035 • 2008 IRP – No additional capacity requirements • US Clean Air Act & Clean Water Act (2010) – Environmental Compliance for EGU MATS and RICE MACT – 316 B Restricts Sea Water Cooling for New Permitted Units • FY 2013 IRP Issued • FY 2014 IRP Update – Procure 120 MW (Retire Cab 1&2); Option for Additional 60 MW (Retire Cab 3&4, if economical) • Loss of Cabras 3&4 (August 2015 Property Loss) • PUC Order – Docket 15 -05

2016 Integrated Resource Plan • Procure up to 180 MW combined cycle units – Obtain Engineering, Procurement and Construction Management (EPCM) contract to assist with Procurement Development & act as Owner’s Engineer – IPP Model with GPA Financing • Retire Cabras 1, 2, 3, &4 • Convert MEC 8&9 to ULSD under IPP recapitalization model

Key Assumptions • Load Forecast - Recognizing the Impact from Net Metering & Demand Side Management (DSM), Base Case • Fuel Forecast – Includes ULSD and natural gas • Life Extension Capital Costs, Fuel Conversion and EGU MATS Compliance for Cabras 1&2 • Fuel Conversion & Rice MACT compliance Costs for MEC 8&9 (Independently Determined by BWSC/TRC) • EGU MATS / RICE MACT and National Ambient Air Quality Standards (NAAQS) Compliance Options (required) for all Baseload units (Evaluated by TRC) • Assumptions for New & Existing Resources CIP & O&M Costs (Independently Determined by LEIDOS) • Peak Demand of 270 MW by 2025 • Compliance with USEPA Regulations by December 2021

Resources Considered • New Resources (Simple Cycle CT, Combined Cycle Medium Speed Diesel) – Various Sized Options of New Resources – Various Quantities of Options of New Resources – Various Types (Simple Cycle CT, Combined Cycle Medium Speed Diesel) • Existing Resources – Retention of Cabras 1&2 Units – Retention of MEC 8&9 Units

Comparative Analysis of CC Units

Rate Impact (High Capital Case)

Debt Service Coverage Ratio (High Capital Case)

GPA Implementation Plan 2016 Integrated Resource Plan Procurement Strategy Financing Options EPA Compliance Plan

2016 Integrated Resource Plan • Procure up to 180 MW combined cycle units dual fired for ULSD & Natural Gas – Obtain Engineering, Procurement and Construction Management (EPCM) contract to assist with Procurement Development & act as Owner’s Engineer – Independent Power Producer (IPP) Model with GPA Financing • Retire Cabras 1, 2, 3, &4 • Convert MEC 8&9 to ULSD / Natural Gas under IPP recapitalization model

Procurement Strategy • Contract EPCM as GPA Owner’s Engineer – Develop Procurement Documents for IPP Bid and Contract that will Optimize GPA’s total system costs – Considers the following but not limited to: • Various Capacities and Technologies • New Generation and Supporting Infrastructure Capital Costs • New Generation Variable and Fixed Operating & Maintenance Costs • Heat Rate • System Dynamic Response Capabilities • Peak Load Carrying Capacity (PLCC) • Reserve Margin

Procurement Strategy (continued) Reliability / Loss of Load Expectation (LOLE) GPA Finance and Lease Equipment to IPP Performance Based Contract with Penalties and Bonuses 30 Year Term Responsible for Labor, O&M, CIP, Insurance, Regulatory Compliance (Excludes Fuel Supply) • Issue New Bonds • • • – 30 Years – Take Advantage of Current Low Interest Rate • Restructure Prior Debt for Levelized Annual Debt Service • Refund Prior Bond • Minimize Rate Impact (after 2026) – Assist in IPP Bid Evaluation and Contracting – Oversee Design and Construction

USEPA Compliance Schedule