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Renewable RFP Process Update September 26, 2007

Renewable RFP Process Update September 26, 2007. Background. Renewable RFP issued – February 2007 Responses received – April 2007 Responses reduced to short-list – July 2007 Due diligence – July/August Contract negotiations – August/September. Responses to RFP.

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Renewable RFP Process Update September 26, 2007

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  1. Renewable RFP Process Update September 26, 2007

  2. Background • Renewable RFP issued – February 2007 • Responses received – April 2007 • Responses reduced to short-list – July 2007 • Due diligence – July/August • Contract negotiations – August/September

  3. Responses to RFP • 23 Projects proposed by 17 developers • Two projects from outside Kansas • All responses were wind energy projects • Per MWh prices ranged from ~$35 - $70 • Proposals were for both ownership and PPA’s

  4. Review Team • Greg Greenwood, Team Leader • Westar Energy employees from the following areas: • Generation resource planning • Environmental • Finance • Transmission • Legal • Regulatory • HDR Engineering • Black & Veatch • Les Evans, KEPCO, VP Power Supply • Alan Pollom, The Nature Conservancy

  5. Evaluation Criteria to Make Short-List • Public/Community Acceptance • Environmental Compatibility/Acceptance • Credit Risk • Levelized Cost -Revenue Requirements (PPA or Ownership) • Transmission Upgrade Costs • Wind Turbine Equipment Evaluation • Developer Experience

  6. Short-list Process • Seven projects remained after initial screening process • Short-list project developers invited to half-day due diligence sessions in Topeka • Refined selection criteria used to reduce short-list to 500 MW’s to begin negotiations

  7. Evaluation Criteria - Short-List to Negotiations • Environmental Analysis/ Public Acceptance 5% • Production Tax Credit Certainty 5% • Credit Risk 5% • Levelized Cost -Revenue Requirements (PPA or Ownership) 35% • Transmission Costs 15% • Developer Construction Experience 10% • Wind Turbine Equipment Evaluation 15% • Developer Interview 10%

  8. Selection Process • Absolute project score did not always determine projects selected due to: • Transmission constraints • Wind diversity goals • Excess turbine diversity • Other

  9. Ownership vs. PPA • Our analysis showed little cost difference to customers • Ultimate answer to economics question can’t be known today • Our conclusion - - Diversity of ownership reduces risk for Westar and its customers • Targeting ~50% ownership, 50% PPA’s in 500 MW portfolio

  10. Contract Negotiations • Negotiating with four developers currently for 500MW of Wind • Contracts near completion - - But not complete • Filing for predetermination of rate treatment planned no later than October 1st • KCC decision requested by yearend

  11. Wind RFP Highlights • Cost per MWh (levelized) ranged from $35 - $70 • Selected 500 MW portfolio – low $40’s/MWh • Costs exclude dispatch inefficiency and assumes PTC’s are extended • 300MW’s of wind energy currently scheduled to be online in 2008 • Public announcement of specific projects expected soon

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