FutureGen Project Update Presentation to Washington Coal Club

1. FutureGenProjectUpdatePresentation to Washington Coal Club Mike Mudd, CEO April 11, 2007

2. Outline • Energy Trends • Energy Technology • Role in a Climate Change Strategy • Coal-fueled Power and Sequestration • FutureGen • Concept • Partners • Federal Role • Technology • Progress • Summary

3. Energy and economic growth are inextricably intertwined More People Living Longer and Better Lives GDP +149% Indexed to 1974 (100) Electricity Use +111% Per Capita Income +80% Coal Use +77% 1974 72 1980 73.9 1985 74.7 1990 75.1 1995 75.7 2000 76.7 2004 77.6 Life Expectancy Source: Energy Information Administration Annual Energy Review 2005; U.S. Department of Commerce, Bureau of Economic Analysis.

4. Coal has been – and will continue to be a critical part of USA’s energy supply Billion kWhs Energy Information Administration, Annual Energy Outlook 2007

5. Global energy system projected to grow at an extraordinary pace • A growing global energy system • Sustained economic growth • By 2025, world primary energy consumption increases 60% • Fossil fuels account for 85% of the increase • Developing world accounts for two thirds of the increase in global coal use • Ever-increasing CO2 concentrations in the atmosphere World primary energy consumption Business As Usual Case Renew Nuc Biomass Coal Gas Oil

6. Serious climate strategies require major advances in technology • Overwhelming evidence that: • The scale of the global energy system is immense and growing • Energy conversation is an incredibly important tool, which society must use, but it is well-proven that it is physically impossible to “conserve” our way to a complete solution • Fossil fuels are affordable, abundant, and, on a global basis, will be used • Advanced technology can substantially reduce the cost of managing CO2 emissions • None of the commonly discussed technologies--renewables, biomass, nuclear, fossil with sequestration, or others can address the challenge alone. Alloptions are required at a megascale • RD&D are required to reduce the cost and improve the performance of new technologies • The next ten years is a critical window in which to prove advanced technologies

7. Coal-fueled power coupled with sequestration offers great promise • Carbon capture and sequestration recognized as a key part of the solution • 2005 IPCC technical report concluded it is highly probably that, on a global basis, there are adequate geologic formations to store centuries worth of CO2 • Leading environmental groups have been strongly supportive of the technology • National Energy Policy Commission recommended large-scale demonstrations • However, it must be proven: • at a commercial-scale • in multiple places around the globe • immediately

8. FutureGen Right Technology at the Right Time • World’s first, near-zero emission coal-fueled power plant • More than one million tons of CO2 captured and sequestered annually in a deep saline geologic formation • “Living laboratory” to test and validate cutting-edge power, sequestration, and monitoring technologies • Global public-private partnership • Stakeholder involvement

9. FutureGenRight Partners • Industry • Twelve leading companies with operations on six continents • Investing $250M* in project with no expectation of financial return • Governments • United States, China, India, South Korea, and Japan • Uniquely positioned to build global acceptance of near-zero emission coal technology *1Q 2004$

10. FutureGenImportance of the Government Role • Public benefit project • Could help fundamentally transform the global energy system and address the public’s climate change concerns • Will lay the technical foundation for monitoring CO2 sequestration, its long term effects, and permanency • Industry’s participation is on a non-profit basis • Research on a first-of-a-kind technology • No IGCC plants currently with carbon capture and sequestration in the world. • Widely recognized that governments have an important cost-sharing role in pre-competitive research • Global applicability of the technology is critical • Governments are uniquely positioned to build international partnerships that will strengthen acceptance of near-zero emission coal technology

11. FutureGen Technology Advances IGCC Technology • Designed to gasify eastern and western U.S. coals, and test other coals, which expands the global applicability of environmentally-friendly IGCC technology • Advances gasification, hydrogen turbine, and other clean-coal technologies • Integrates CO2 capture at a commercially-relevant scale into a IGCC power plant • Addresses power plant operation with CO2 capture, transport, and sequestration integration

12. FutureGen Technology Advances Sequestration Technology • Focused on deep geologic formations which are globally available • Extensive modeling and monitoring program planned to verify the safety and permanence of CO2 storage 11,000 Gigatons of potentially available CO2storage capacity

13. FutureGen ProgressFast Tracked Schedule • DOE and the Alliance have met every major milestone over the past 14 months. • Project is on-schedule for a 2012 on-line date

14. 12 Sites in 7 States Proposed 4 Sites in 2 States on Candidate List Candidate Sites FutureGenSite Selection

15. FutureGen ProgressSite Selection • First-of-a-kind siting methodology developed • Can be extended to future commercial near-zero emission power plant projects around the world • Final site to be selected by September Mattoon, IL Tuscola, IL Brazos, TX Odessa, TX

16. FutureGen ProgressConceptual Design • Multiple alternative power plant design options evaluated • Facility concept that is fuel-flexible developed • Conceptual engineering designs and costs estimates on three power plant configurations prepared • Engineering Construction Manager on board • Open competition to purchase major equipment currently being developed

17. FutureGen ProgressEnvironmental Impact Statement • Three volume, 2200-page analysis of the potential environmental impacts • Summary • Volume I – Introduction, Alternatives, Summary of Conclusions • Volume II – Affected environment and environmental consequences at each site • Draft EIS concludes no significant adverse impacts • Public hearings and comment during April May FutureGen Draft Environmental Impact Statement March 2007

18. Alloys, Steel, Concrete, Heavy Wall, Refinery Work, etc. • Engineers, Suppliers, Fabrication Shop Space, Specialty Trades • China, International Suppliers FutureGen ProgressIndependent Cost Estimate Definition #2: Scope Growth • Would include project mission expansion, and additional project complexity, or additional equipment. • Discretionary decision; could be justified if something of value is added to the project and only if funding is available by both the Alliance and the DOE. • Alliance/DOE have control over scope growth. Definition #1: Inflation • Inflation reflects the normal up-and-down fluctuations in materials, labor, and services over time. • Controlled by market forces (supply/demand), not the Alliance or DOE • Power plant inflation has been greater than general inflation.

19. Alloys, Steel, Concrete, Heavy Wall, Refinery Work, etc. • Engineers, Suppliers, Fabrication Shop Space, Specialty Trades • China, International Suppliers FutureGen ProgressIndependent Cost Estimate Definition #2: Scope Growth • Would include project mission expansion, and additional project complexity, or additional equipment. • Discretionary decision; could be justified if something of value is added to the project and only if funding is available by both the Alliance and the DOE. • Alliance/DOE have control over scope growth. Definition #1: Inflation • Inflation reflects the normal up-and-down fluctuations in materials, labor, and services over time. • Controlled by market forces (supply/demand), not the Alliance or DOE • Power plant inflation has been greater than general inflation. Plant Construction Costs Escalating

20. Scope Growth (1Q 2004$) -- Zero Inflation Multiplier -- 1.56 FutureGen ProgressProject Cost DOE 2004 Estimate Alliance 2006 Estimate Project Cost (1Q 2004$) $950M $954M Project Cost (future-year dollars thru 2017) $1,484M DOE/FG Cost Share % 74/26 74/26 $900/$250 $1,100/$384 DOE/FG Cost Share $M

21. FutureGenSummary • Supports atechnology-based climate change strategy • Mitigates the financial risks of carbon dioxide emissions • Validates the cost and performance of an integrated near-zero emission coal-fueled power plant • Advances IGCC technology • Advances carbon capture, sequestration, and hydrogen-production technologies • Sets groundwork for CO2 sequestration siting and licensing • Creates the technical basis to retain coal in U.S. and global energy mix with a long-term goal of zero emissions. • Enables the public and private sector to share the cost and risk of advanced technology demonstration. • Platform for emerging technology demonstration.

22. Contact Information: Michael J. Mudd Chief Executive Officer FutureGen Alliance mjmudd@aep.com (614) 716-1585 www.FutureGenAlliance.org