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October 16, 2013

Governor’s Conference on Energy Federal/State/Local Role in Permitting & Regulating Energy Projects. October 16, 2013. Indianapolis Power & Light Company (IPL). IPL supplies electricity to about 470,000 customers An Investor Owned Utility whose parent is the AES Corporation

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October 16, 2013

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  1. Governor’s Conference on EnergyFederal/State/Local Role in Permitting & Regulating Energy Projects October 16, 2013

  2. Indianapolis Power & Light Company (IPL) • IPL supplies electricity to about 470,000 customers • An Investor Owned Utility whose parent is the AES Corporation • Most of IPL’s energy comes from the combustion of coal • Available wind and solar generation about 7% Monument Circle

  3. AES – The Power of Being Global • The AES Corporation has • A widely diversified generation mix • Generating capacity > 40,000 MW • In 27 countries on five continents • $17 billion annual revenues • A global force of more than 27,000 people AES Generation Mix

  4. Significant spending at IPL on Environmentally Related Regulations and Considerations • $600 million Spent in the Past 10 Years For Clean Coal Controls – NOx, SOx, PM reduction • Additional ~$500 million being invested to comply with Mercury and Air Toxics Standards (“MATS”) at IPL’s largest coal units. • ~600 MW of small coal units being shut down • 200 MW to be refueled with natural gas • 650 MW to be replaced with new gas fired combined cycle project • ~$600 million of additional investment

  5. Some thoughts based on 25 years of developing power projects • Electricity is a great and essential product • No perfect way to generate electricity • What’s best or better changes over time (fuel prices, technology advances, environmental considerations, etc.) • Diversification is important • New power plant capacity will almost certainly be overwhelmingly be gas fired combined or simple cycle power projects for the next decade or longer • Mercury and Air Toxic Standards (“MATS”) and other requirements are driving the retirement of a huge amount of coal fired capacity • Development of new gas fired combined cycle projects will continue to steadily accelerate • Developing a power project is a wildly challenging, multi-year, expensive and risky proposition. Most project efforts don’t succeed.

  6. Some thoughts based on 25 years of developing power projects • Counties and states can scarcely do better than to attract a new gas fired combined cycle power project • Long term, high paying jobs; Long term, reliable property taxes; Economic development (construction jobs, support services, downstream benefits) • Local: Don’t let the vocal minority rule the county (or state or federal process) • Local/State: Differences in regulations, reception and taxation can meaningfully influence where a developer expends resources to develop a power project • State/Federal: New rules and regulations can result in huge costs to comply • Ultimately the utility customer will have to pay • Be mindful of the cost/benefit balance • Local/State/Federal: • Definitive time line to decision • Consistent and sensible rules and regulations

  7. Governor’s Conference on EnergyFederal/State/Local Role in Permitting & Regulating Energy Projects Charlie Falter (240) 381-7777 charlie.falter@aes.com

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