Federal Issues Update Joe Nipper Senior Vice President

Federal Issues Update Joe Nipper Senior Vice President, Government Relations American Public Power Association at the Municipal Electric Power Association of Virginia May 22, 2009

Overview • • About APPA Stimulus disbursement Climate Change New energy legislation EPA activities FERC activities Wholesale electricity markets Other issues

About APPA • Established in 1940 • Representing 2, 000+ municipally owned electric systems • Our mission: help our members provide reliable, environmentally responsible electric service at an affordable price

Diverse Membership

Powerful Resources • Staff of 65 Professionals – Engineers – Statisticians – Legislative & regulatory experts – Legal counsel – Educational program specialists – Economists – Environmentalists – Customer Service Specialists – Communicators

Powerful Benefits APPA is a powerful investment • Powerful representation in Washington • Powerful networks • Powerful information • Powerful programs

Stimulus Disbursement • APPA tracking info on funding availability, application process; timelines, etc. and will post on newly established “stimulus” page on our website • APPA has also developed summary of provisions applicable to public power and municipalities; also posted on the website

Stimulus Disbursement • Examples of stimulus opportunities include: – $1. 6 Billion in “New” CREBs – $3. 2 Billion for Qualified Energy Conservation Bonds – $3. 2 Billion for Energy Efficiency and Conservation Block Grants of which $2. 8 Billion distributed directory to cities and countries – $4. 4. Billion for smart grid deployment; requires 50% match

Climate Change Senate • Chairwoman Boxer (D-CA) developing new EPW Committee cap and trade bill for release this fall; “less complex” than last year’s bill • Chairman Bingaman (D-NM) will continue to play a key role with the Energy Committee • Majority Leader Reid (D-NV) has indicated preference for combined legislation addressing climate, renewable electricity standard, and energy • Reid recently said consideration of climate legislation may not occur until early next year.

Climate Change House • Waxman/Markey bill includes cap and trade climate regime and energy provisions; major issues still being negotiated • Includes direct allocations of allowances to electric LDC’s based on EEI proposal – 50/50/50 • Includes Boucher proposal for accelerating CCS R&D • Performance standards for new and existing coal plants • No cost cap; cost mitigation includes offsets, banking/borrowing, strategic allowance reserve

New Energy Legislation Senate Topics being marked up in the Energy Committee now; floor consideration this summer: • Transmission policy – EHV overlay; enhanced federal siting authority; planning; cost allocation • Renewable electricity standard • Energy efficiency for buildings, lighting • DOE loan guarantees (fix existing program) • FERC authority over gas derivatives • Cyber Security

New Energy Legislation Transmission Policy “Discussion Draft” • Joint Bingaman/ Murkowski proposal • Enhanced “backstop” siting authority for FERC; no power of eminent domain • Bottom up planning process from regions/subregions coordinated by FERC resulting in interconnection wide plan • Requires FERC to issue rule for cost allocation • Generally supported by APPA • Several remaining concerns

New Energy Legislation House • RES – 20%by 2025; 15% renewables, 5% efficiency – Applies to those selling 4 Million MWH annually at retail – Hydro, new nuclear and new CCS out of the baseline • • • Transmission – planning only Various energy efficiency proposals Plug-in hybrids Smart grid – Energy Star, etc. NSPS for coal plants

EPA Activities • EPA has issued a proposal “endangerment funding” that sets the stage for regulation of CO 2 under the Clean Air Act • The threat of EPA action puts additional pressure on Congress to move climate legislation

FERC Activities • Jon Wellinghoff named permanent chair • Joe Keliher position now vacant; will be a Democratic appointment • Just issued policy statement on Smart Grid • FERC seeks full authority to site transmission

RTO/ISO-Run Markets • Under the Electric Market Reform Initiative, APPA released Competitive Market Plan. – Sent to Congress, FERC, other policymakers, media, RTOs, market participants – Encouraging initial reaction from FERC and others; opposition from the usual suspects – Plans for wider distribution and discussion through spring and summer • Growing interest in our proposal, particularly at state level • Campaign for Fair Electric Rates (CFER) website updated, www. fairelectricrates. net, and additional Hill conferences planned

Other Issues • Rail/transportation • Community broadband • Tax issues