EPC Contracting in a Demand Driven Market The

EPC Contracting in a Demand Driven Market (The Trimble County 2 Contracting Experience) January 18, 2007

Trimble County 2 (TC 2) Key Features • Net Capacity 760 MW • Net Heat Rate 8, 662 Btu/Kwh • Scheduled COD June, 2010 • Air Quality Control Train: SCR, Dry Electrostatic Precipitator (ESP), Bag House, Wet Scrubber and Wet ESP • Awarded a $125 Million ITC by the IRS for meeting 2005 EPAct Section 48 A Standards for Efficiency and Emissions — One of two PC based projects to receive awards 2

Key Steps in EPC Contracting Today • Discuss Multiple Bidding Concepts with All Interested Parties — Engineers / Constructors / OEM’s / Owners Engineers — Other Utilities or Generators / Financers / Partners / Legal Advisers Discover Current Practice in the Industry — Risk Allocation Vs. Price — Bidding and Construction Time Lines Develop a Plan that Meets the Owners and Bidders Needs — Seek Commitments to Participate from Qualified Bidders — Follow the Plan 3

TC 2 Used a Two Stage Open Book Selection Process • EPC Contractor Selected in Competitive Bid with Key Equipment Allowance • Open Book Bidding and Selection of Key Equipment by Owner — Boiler / Steam Turbine / AQCS — Owner Approval of Additional Major Equipment Items Defined Equitable Adjustment Process for Changes in Key Equipment — Final Evaluated Price Vs Allowance — Installation and BOP Impacts — Book Closes when Equitable Adjustment Process is Complete 4

Key Benefits and Risks of the TC 2 Process • Owner Benefits — Freedom to Select EPC and Key Equipment — May Lower EPC Price Premium Owner Risks — Price Uncertainty Until Book Closes Contractor Benefits — Lower Cost to Prepare Initial Bid — Selection Based on Contractor Merits Mutual Benefits and Risks — Well Understood Scope and Price — Potential for Contentious Equitable Adjustment Process 5