MARC 2009 WallStreet: Drop, Stock, & Barrel

1. MARC 2009WallStreet: Drop, Stock, & Barrel Ben Sung Luminus Management

2. Investor Base • Equity • Generalist • Sector focused • Retail • Debt • Investment grade • High yield

3. Utilities and Power Subsector • Public • Regulated Utilities • Integrated Utilities • Unregulated Merchant Generators • “Private” GenCos • Private

4. Difficult Environment • Competition for investment capital • Alternatives – Capital structure and/or sectors • Cash – Investors’ need for liquidity • Regulatory framework • Political/legislative uncertainty • Potential pressure to artificially offset cost of CO2, renewables and general economic hardship for customers • Environmental legislation • Ratings agency pressures • Potential for downgrade - debt • Potential for dilution – equity • Perception that agencies are more sensitive to regulatory structure • Economy • Lower load growth or load decline expectations • Customers’ inability to pay • Partially offset by traditional characteristics of utilities • Stability/predictability • Securities backed by hard assets

5. Recent Utility Investments • $54 billion debt during latest 12 months vs $29 billion 1H08 • $5.4 billion equity during latest 12 months vs $2.5 billion 1H08

6. Baa Spreads (1/1/08-Today) 1H08 Latest 12 Months

7. UTY Price (1/1/08-Today) 1H08 Latest 12 Months

8. Future Concerns for Cost of Capital • Inflation • Increasing inflation is concern as opposed to absolute level of inflation • Increased risk from stimulus • Dividend tax cut sunset • Uncertainty post sunset 2010 • Impact on equity cost of capital likely earlier than actual sunset • Partially offset by low treasury rates

9. Evaluation Criteria for a Regulatory Jurisdiction • Stability • Earnings – trackers, decoupling, passthroughs • Regulation – commissioner and staff turnover, consistency • Communication • Staff and commission • Investors and regulators • Interested parties

10. Regulatory Rankings 1 = Most attractive for investors 9 = Least attractive for investors Source: RRA

11. Conclusion • Capital is available for utility investments – key is determining cost • Utilities are attractive investments – but need to maintain predictability/stability

12. Appendix

13. Recent Utility Debt Financings Source: SNL

14. Recent Utility Debt Financings Source: SNL

15. Recent Utility Debt Financings Source: SNL

16. Recent Utility Debt Financings Source: SNL

17. Recent Equity Issuances Source: SNL