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Adding to the Fleet

Adding to the Fleet. Ensuring SRP’s Long Term Generation Reliability May Millies, Manager - Power Generation Services. If it’s a Project, When Will It End?. WAIT A MINUTE!. Salt River Project. Federal Subdivision of the State +4400 Employees 956,756 Electric Customers

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Adding to the Fleet

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  1. Adding to the Fleet Ensuring SRP’s Long Term Generation Reliability May Millies, Manager - Power Generation Services

  2. If it’s a Project, When Will It End? WAIT A MINUTE! WUC - SD

  3. Salt River Project • Federal Subdivision of the State • +4400 Employees • 956,756 Electric Customers • Electric Service Area = 2,900 sq. miles • Water Service Area = 375 sq. miles WUC - SD

  4. Salt River Project • Peak Power System (MW) – 7,072 • Resources Available to Service – 8,284 WUC - SD

  5. Back to the regularly scheduled program WUC - SD

  6. What Am I Going to Tell You? • Background • SRPs Generation Profile • What We Bought • How We Transitioned the Plant WUC - SD

  7. What were we thinking? Background WUC - SD

  8. Background • Economy and slow load growth have lead to excess merchant gas capacity in southwest • Opportunity to purchase asset at depressed price • SRP coal resources face challenges/uncertainty • SRP has long-term need for new gas resources WUC - SD

  9. Background - Request for Proposals • Position SRP strategically to take advantage of currently depressed market values for generation assets to: • Hedge against the increased pressure and environmental mandates of Coal generating resources • Provide an economic alternative to future new generation construction • Help establish how much is reasonable for SRP to spend on existing coal generation resource’s life extension WUC - SD

  10. Background - Request for Proposal • Gas Plant RFP Issued September 2011 • 40+ proposals received from seven modern combined cycle gas plants • Best purchase and tolling agreement proposals WUC - SD

  11. Our Generation is Bigger Than Yours! SRP’s Generation Profile WUC - SD

  12. Coal Generation - Baseload • Coronado Generating Station • 785 MWs Units 1 & 2 • Connects directly to SRPs 500kV Transmission System • Navajo Generating Station • 21.7% Ownership • Plant Operator • 2,250 MW Total Plant Output • Springerville – 417 MWs, Unit 4 WUC - SD

  13. Gas Generation • Agua Fria • 626 MWs • Desert Basin • 581 MWs • Kyrene • 410 MWs • Santan • 1,219 MWs WUC - SD

  14. It Wasn’t Shoes! What we bought WUC - SD

  15. Mesquite Asset Purchase • Sempra’s Mesquite plant selected • 2 power block combined cycle generating station • Plant went online 2003 • 580 MW summer/ 625 MW winter capacity per block • Key terms • $371 million purchase price for one block • SRP will operate the entire generating station • 50% ownership of common facilities and water rights • Sempra will purchase back equivalent capacity from SRP for first three to seven years at market prices WUC - SD

  16. Mesquite Strengths • Best economic value in RFP with least performance risk • Premium plant design and well maintained • Option to sell capacity back to Sempra • Sempra strong counterparty as co-owner • Good location – Hassayampa delivery point • Similar configuration to existing SRP GE turbinecombined-cycle plants WUC - SD

  17. Mesquite Plant Wintersburg Rd Palo Verde Generating Station Elliot Rd Mesquite Power Plant WUC - SD

  18. Mesquite Water Property Water well and pipeline easement Elliot Rd Mesquite Power Plant approx 2 mi Solar Plant WUC - SD

  19. SRP-izing the Plant The Transition WUC - SD

  20. The Transition The Goal: A fully functional Power Plant staffed by SRP personnel. WUC - SD

  21. The Transition • Starting Line • What did we need? • Reaching out • Building the team • Finding the LEADERs • Letting them LEAD • What Did It Take? • Weekly meetings • Resolving the Speed Bumps WUC - SD

  22. The Switch Over 11:59 p.m. February 28th SRP assumed ownership of Block 1 and operations of Mesquite Generating Station WUC - SD

  23. Thank you! May Millies Power Generation Services Salt River Project May.Millies@srpnet.com WUC - SD

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