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THE POTOMAC EDISON COMPANY dba ALLEGHENY POWER REQUEST FOR PROPOSALS FOR ENERGY AND CAPACITY RESOURCES PRE-BID INFORMAT

2. Welcome. Bob ReepingGeneral Manager, Electric SupplyHelen TaylorSpecialist, Electric SupplyRFP CoordinatorGene Meehan

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THE POTOMAC EDISON COMPANY dba ALLEGHENY POWER REQUEST FOR PROPOSALS FOR ENERGY AND CAPACITY RESOURCES PRE-BID INFORMAT

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    1. THE POTOMAC EDISON COMPANY (dba ALLEGHENY POWER) REQUEST FOR PROPOSALS FOR ENERGY AND CAPACITY RESOURCES PRE-BID INFORMATIONAL WEBINAR April 29, 2009

    2. 2 Like to welcome everyone to the webinar today For AP your hosts for today’s meeting will be Helen Taylor and Bob Reeping Also joining us for today’s call are Gene Meehan and Kurt Strunk from NERA. NERA has been retained to serve as the technical consultant for the long term RFP along with the Company’s integrated resource plan.Like to welcome everyone to the webinar today For AP your hosts for today’s meeting will be Helen Taylor and Bob Reeping Also joining us for today’s call are Gene Meehan and Kurt Strunk from NERA. NERA has been retained to serve as the technical consultant for the long term RFP along with the Company’s integrated resource plan.

    3. 3 NOTES The GoToWebinar attendee interface is made up of two parts. The Viewer Window is where attendees see the presenter’s screen. The Viewer Window can be resized by clicking and dragging the lower right corner. The Control Panel is where attendees can interact with organizers. Click 1 and 2: Clicking the arrows on the Grab Tab opens and closes the Control Panel. Click 3: Audio pane provides audio information. If the organizer has given attendees a choice, there are two options. Attendees joined via VoIP (Use Mic & Speakers) need speakers to hear and a microphone to speak if unmuted. Click 4 and 5: Attendees joined via telephone must punch in their Audio Pin on their telephone keypad so that organizers can unmute them if desired. Click 6: Attendees can communicate with organizers through the Questions box. This is also where answers and broadcast messages are received. Click 7: Clicking the hand icon on the Grab Tab raises and lowers attendee’s hand. Click 8: In the View menu, uncheck “Auto-Hide the Control Panel” if attendees want their Control Panel to remain open. NOTES The GoToWebinar attendee interface is made up of two parts. The Viewer Window is where attendees see the presenter’s screen. The Viewer Window can be resized by clicking and dragging the lower right corner. The Control Panel is where attendees can interact with organizers. Click 1 and 2: Clicking the arrows on the Grab Tab opens and closes the Control Panel. Click 3: Audio pane provides audio information. If the organizer has given attendees a choice, there are two options. Attendees joined via VoIP (Use Mic & Speakers) need speakers to hear and a microphone to speak if unmuted. Click 4 and 5: Attendees joined via telephone must punch in their Audio Pin on their telephone keypad so that organizers can unmute them if desired. Click 6: Attendees can communicate with organizers through the Questions box. This is also where answers and broadcast messages are received. Click 7: Clicking the hand icon on the Grab Tab raises and lowers attendee’s hand. Click 8: In the View menu, uncheck “Auto-Hide the Control Panel” if attendees want their Control Panel to remain open.

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    5. 5 Background The purpose of this RFP is to solicit proposals to provide PE’s customers with reliable resource(s) (supply or demand side) at the lowest reasonable cost to fulfill its capacity and energy needs consistent with the Company’s resource planning requirements for its Virginia service territory The Company is soliciting proposals from bidders for any combination of resources up to 600 megawatts (“MW”) available on or after July 1, 2011, for any combination of resource terms

    6. 6 Background This RFP is an integral part of the Company’s evaluation of its long term resource planning requirements in accordance with the State Corporation Commission of Virginia’s (“SCC”) guidelines which requires the Company to file an integrated resource plan (“IRP”) by September 1, 2009, for supply-side and demand-side resources including a five-year action plan on how the results of the IRP will be implemented

    7. 7 Potomac Edison Potomac Edison is a Virginia public service company providing electric service to approximately 102,000 customers located in fourteen northwestern Virginia counties along the Shenandoah Valley The jurisdiction has nearly equal winter and summer peak demands and a monthly average load factor of 70% on sales of over 3.3 million MWh annually The Company has agreements in place for full requirements service through June 30, 2011

    8. 8 The Product PE is seeking proposals for up to 600 MW of firm capacity of cost effective and reliable supply-side or demand-side resources for delivery starting on or after July 1, 2011 PE will accept proposals for any MW amount but requests bidders to not submit bids for supply-side resources of less than 25MW and for demand-side resources of less than 5MW The proposals can be for any varying term PE encourages bidder creativity to allow the Company to optimize the benefits from the solicitation by combining proposals with different products or other characteristics to provide its Virginia customers with reliable resource(s) at the lowest reasonable cost Delivery must be to the PJM system with preference to projects which provide service within the Allegheny Power PJM Transmission Zone

    9. 9 Supply-Side Resources Supply-side resources are defined as any generation resource with any type of fuel source that provides unit contingent or firm capacity and associated energy Technologies may include but are not limited to nuclear, pulverized coal, clean coal, circulating fluidized bed, wood, combined cycle, integrated gasification combined cycle, and combustion turbine, as well as renewable energy resources such as those derived from sunlight, wind, falling water, sustainable biomass, energy from waste, municipal solid waste, wave motion, tides and geothermal power

    10. 10 Supply-Side Resources PE will accept supply-side proposals for evaluation including but not limited to: Power purchase agreements including full requirements agreements, Purchase of an entire existing facility, Purchase of a portion of an existing facility that would be jointly owned, or Purchase of a proposed facility to be developed by the bidder and then transferred. Each proposal should list any applicable anticipated or known contingencies

    11. 11 Demand-Side Resources Demand-side resources are defined as those programs that influence the amount and timing of electricity use Such programs are to be designed to influence consumer use of electricity through direct load control, interruptible load, conservation and energy efficiency

    12. 12 Demand-Side Resources Demand-side proposals for evaluation must clearly identify the costs and benefits of the proposal that promote the demand-side management activity Each demand-side proposal must identify: The type of demand reduction being proposed (e.g., system demand reduction due to reducing premise load consumption, system demand reduction due to the use of behind-the-meter generation, etc.), and Current status of the proposed resource (e.g., does the resource capability exist today, or is it a planned resource that does not currently exist) Each proposal should list any applicable anticipated or known contingencies

    13. 13 RFP Schedule

    14. 14 RFP - Supplier Eligibility Criteria Submittal of the Expression of Interest Form Execution of the Confidentiality Agreement Submittal of Credit Application & related financial information For supplier or financial guarantor Unsecured credit requires a rating of unsecured senior long-term debt by S&P, Moody’s or Fitch Submittal of PJM qualification and FERC authorization (PPA & DR) Qualified market buyer and seller in good standing with PJM FERC authorization to make sales of energy, capacity and ancillary services at market based rates For bidder’s offering new facilities, information demonstrating that the bidder and its consultants and contractors have recently successfully completed the development, commissioning, and operation of at least one generation project with characteristics similar to the proposed project is encouraged

    15. 15 RFP - Evaluation of Bids NERA has been retained by PE as the technical consultant for the RFP and will be performing the bid evaluations Evaluations will be performed using a regional market model as well as a portfolio model applicable to PE Evaluations will consider net present value and uncertainty analyses

    16. 16 RFP - Evaluation of Bids The objective of the analysis is to identify in an equitable manner those resources whose portfolio combination provides the lowest reasonable cost while minimizing risk for PE’s VA customers Consistent with the IRP guidelines issued by the SCC: metrics including the levelized bus bar cost and present value of annual revenue requirements will be calculated evaluations will consider these metrics as well as fuel price uncertainty, environmental uncertainties, load uncertainty, rate impacts, and reliability

    17. 17 RFP Website All materials associated with the RFP can be found on the Company’s website at www.alleghenypower.com/rfp, and choose the link Virginia Capacity and Energy Resources RFP RFP and exhibits SCC Orders Q&A forum Customer load data RFP coordinator contact information

    18. 18 Questions

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