Navigating Energy Infrastructure Financing Challenges: Florida Policies & Trends

1. Challenges of Financing EnergyInfrastructure Development:Current Regulatory Policies and Trends Nathan A. Skop, Esq. Commissioner Florida Public Service Commission

2. Disclaimer The views and opinions presented herein are strictly those of the presenter and have not been reviewed, endorsed, or approved by the Florida Public Service Commission.

3. Overview • Florida Energy Policy • Leading the Nuclear Renaissance • Near Term Challenges • Financing Energy Infrastructure under Adverse Market Conditions • Favorable Cost Recovery • Key Takeaways

4. Florida Energy Policy • Leadership of Governor Charlie Crist • Executive Orders • Comprehensive Energy Policy Legislation (HB 7135) • Promotes Clean Energy Options • Strong Emphasis on Renewable and Alternative Energy Sources

5. Leading the Nuclear Renaissance • Florida PSC granted need determination for four new nuclear generating units. • Represented the first regulatory approval action within the United States in over 30 years. • Florida PSC granted need determination for uprates associated with five existing nuclear reactors.

6. Near Term Challenges • Threat of Global Recession • Unprecedented Market Decline and Volatility • Restricted Access to Credit • Ability to Raise Capital • Market Capitalization in Relation to Required Infrastructure Investment • Inability of Consumers to Absorb Rate Hikes

7. Financing Energy Infrastructure in a Tight Credit Market • Strong Balance Sheet • Stable Regulatory Environment • Favorable Cost Recovery Provisions • Stranded Cost Avoidance • Risk Adverse and Fiscally Disciplined Management Team

8. Favorable Cost Recovery Provisions • Nuclear • Transmission • Renewable Energy • Other Clauses

9. Nuclear Cost Recovery • Florida law provides for favorable cost recovery pursuant to section 366.93, Fla. Stat. • Florida law provides for recovery of prudently incurred costs irrespective of plant completion. • Pre-construction costs can be expensed. • Frontloading of costs on case-by-case basis would provide substantial cost savings. • Nuclear cost recovery will be an exercise in risk management for utilities.

10. Transmission Cost Recovery • Comprehensive Energy Policy Legislation (HB 7135) • Florida law provides for favorable cost recovery for nuclear related transmission pursuant to section 366.93, Fla. Stat. • Expedited Siting Review for New Transmission • Florida Electric Transmission Line Siting Act (ss. 403.52 - 403.5365, Fla. Stat.) • Constraint to Large Baseload Generation

11. Key Takeaways • Significant Energy Infrastructure Build Cycle Underway in Florida • Stable Regulatory Environment • Favorable Cost Recovery Provisions • Florida Investor Owned Utilities (IOUs) are Well Managed and Capitalized • Well Positioned to Obtain Financing under Difficult Market Conditions • Will Further Market Decline Impact New Nuclear Construction?

12. References • U.S. Gives Nuclear Power a Second Look, NPR Morning Edition, March 28, 2008. http://www.npr.org/templates/story/story.php?storyId=89169837 “Simply put, nuclear power is a strategic investment for the state of Florida and our national security - to reduce our dependence on foreign oil and to protect our environment”. (Commissioner Nathan A. Skop)

13. Questions