THINGS TO PONDER“STRATEGICALLY”G&T Update – Western Farmers Electric Cooperative

OAEC MR/PR Fall Meeting (2015)

THE ONE THING YOU CAN BANK ON …

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LOAD GROWTH

3 360 MW of Capacity via PPA

THE SPP “EVOLUTION”Regional Transmission Development

Aggregate Study process being streamlined.

Integrated Marketplace (IM) SPP since March 1, 2014 functionally controls the entire transmission footprint.

SPP consolidated from 15 balancing authorities to one SPP balancing authority. Administers tools for efficient / open use of transmission and generation resources.

WFEC receives an allocation of Auction Revenue Rights (ARR) based on its load and resources. ARR’s can be converted to Transmission Congestion Rights (TCRs) which provide a financial hedge for transmission congestion.

March 1, 2014 the IM opened WFEC bids in sufficient capacity and energy to meet the next day load. SPP selects most efficient generation to meet the next day load + reserves for the entire region. SPP tells WFEC which of its units will generate for the next day and will pay WFEC for this energy. WFEC purchases from the IM all of its energy needs for the next day.

SPP establishes an unsecured credit limit for each market participant. WFEC provides a letter of credit to participate in the ARR process.

In coordination with WFEC staff and Board policies, ACES, acting as WFEC’s agent, interfaces with SPP and performs the daily activities to meet WFEC energy needs.

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THE BABY IS GROWING … Current Footprint

370,000 square miles of territory

More than 15 million people

627 generating plants

4,103 substations

48,537 miles transmission:

⁻ 69 kV – 12,569 miles

⁻115 kV – 10,239 miles

⁻138 kV – 9,691 miles

⁻161 kV – 5,049 miles

⁻230 kV – 3,889 miles

⁻345 kV – 7,401 miles

⁻500 kV – 93 miles

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WHAT’S ON THE HORIZON? … NEW HURDLES TO COVER

6XYZ Committee Month, Day, Year

FERC 1000

The Clean Power Plan

Capital Credits

HOW DOES ALL OF THIS EFFECT THE MEMBER?

Impacts rates

Unbundling

Impacts retail rates

Impacts LM Programs

Billing Determinates

C&I Consumers

Drives renewables

Creates new competitors

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OLD (R-15 B) VS. NEW UNBUNDLED (R-16)Bundled

Demand $8.20/kW

Energy

winter $0.00336

shoulder $0.00486

summer $0.00636

Fuel $0.034

Surcharge $0.0018

Unbundled - proposed

Generation $5.85/kW

based on 3yr 3cp avg.

Transmission $3.30/kW

Distribution $1.55/kW

based on 12 month CP avg.

Energy $0.00541

Fuel $0.03053

Proposed implementation – January 2017 8

PEAK LOAD 2014 (MW)

August 22 1511

July 26 1500

August 23 1495

So Far 2015 (MW)

August 7 1599

August 8 1573

July 24 1531

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Our dilemma … Winter Peak of 2015 Summer Peak of 2015 1684 MW 1599 MW (with 100 MW LM)

On the horizon … SPP has expressed their desire for our cost to be driven off of our CP with SPP peak rather than our own peak.

LARGE POWER ACCOUNTS Transition continues

Large portion have contract expiration Dec. 2016~200MW of ~325MW - ~60%

All will be transitioned by the end of 2017

Average increase to the C&I consumer … 7.5%

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RENEWABLES EXPLOSION …Adding 20+ MW of Community Solar to the WFEC Portfolio

5 multiple MW stations totaling 18 MW

13 co-op participants in approximately 5 MW

Why?

To learn the ropes

To deal with the “Clean Power Plan”

Adds diversity to our portfolio & some capacity

To deal with new competitors that pose a threat!

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ENERGY EFFICIENCY … WEATHERING THE STORM!

WFEC increasing their incentives for GEO in 2016

Why – Everybody Wins

WFEC increasing Tier II rebate $200/T for Q4 2015

WFEC $650/T + Co-op $225 = $875/T

New approach to Energy Efficiency

Strategic Relationships providing measured results

Geo Energy Services

Energy Pioneer Solutions

LED USA

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QUESTIONS

13XYZ Committee Month, Day, Year