AES Trans-Elect Presentation to WIA Board & State Transmission Authorities

1. AES Trans-ElectPresentation toWIA Board &State Transmission Authorities Independent Transmission Development in Independent Transmission Development in Support of State Transmission Authorities July 1-2, 2008

2. Mission Statement Trans-Elect, with the support of AES, is committed to expanding America’s electric transmission grid in the furtherance of public policy, increased reliability, and access to remote resources. As an independent transmission owner, Trans-Elect promotes the regulatory objectives of open, non-discriminatory access to the nation’s electricity system, while providing cost-effective, reliable service and electric grid expansion.

3. Introduction to AES Trans-Elect • AES TE – The Partnership Company • Path 15 with Western Area Power Administration and PG&E • Wyoming Colorado Intertie with Wyoming Infrastructure Authority • High Plains Express with 9 public and private stakeholders • TE – Financed over $1 billion in transmission projects • TE – Owned and/or Operated nearly 13,000 miles of high voltage transmission

4. Trans-Elect Development Company LLC • The nation’s 1st independent transmission company • 2002: Acquired METC (Michigan) and an interest in AltaLink (Alberta) • 2004: Developed Path 15 in California • 2005: Wyoming-Colorado Intertie Public/Private Partnership • Wyoming Infrastructure Authority & Western Area Power Authority • 2006: Partnership with AES to develop/acquire transmission • 2007: High Plains Express Project: WY-CO-NM-AZ • Current Projects: • Wyoming-Colorado Intertie • High Plains Express • Other unannounced projects focused on renewable development • Active in public policy development: WREZ, CREZ, WGA • Offices in Bethesda, Chicago, and Denver • www.trans-elect.com

5. Path 15 Project Summary Malin Captain Oregon Jack California Round Mountain Olinda Table Mountain DC AC INTERTIE COTP INTERTIE Lake Tahoe San Francisco Tracy Tesla Los Banos Path 15 Gates Midway Vincent • Public-private partnership with Western (DOE), PG&E, and Trans-Elect • 83-mile, 500-kV line to eliminate a long-standing transmission constraint between N-S California • Total development cost $250 M for a new 500-kV transmission line and substations • FERC approved ROE 13.5% and CAISO is sole customer • Construction started in September 2003 with commercial operation December 2004 • Trans-Elect’s share of project costs of $194 million were under budget

6. Michigan Electric Transmission Company • Purchase price - $288 million May 1, 2002 • Assets - 5,400 miles of transmission lines in Michigan • Investors - Trans-Elect as general partner with equity investment from GE Capital. Debt raised by Deutsche Bank and CIBC • Seller’s rationale - Strengthen balance sheet and use sale to focus strategy

7. AltaLink Summary • Purchase price - $570 million (C$860 million) on April 29, 2002 • Assets - 7,200 miles of transmission lines in Alberta, Canada • Investors – Trans-Elect and SNC-Lavalin as 50/50 general partners with equity investments from Ontario Teacher’s Pension Plan Board and Macquarie Bank • Seller’s rationale - Become a pure generating company (previously divested distribution assets)

8. Trans-Elect’s Partner: AES Corporate Overview 28 countries on 5 continents 121 generation plants • 13 utilities Alternative Energy leader 30,000 people worldwide 25 years of project development experience Diverse technologies and fuel mix Entrepreneurial learning culture

9. AES 2006 Financials Revenues Net cash from operating activities Gross margin $12.6 billion $3.6 billion $2.4 billion

10. Broad global footprint Broad Global Footprint The capacity to serve 100 million people • 28 countries • 5 continents 116 generation plants 13 distribution businesses 42,000 MW installed generation capacity annual distribution sales of over 73,000 GWh

11. DC Ties (all ~ 200 MW except ERCOT-E @ 600 MW) Interconnection Boundary

12. Transmission Authorities fill Gaps in RTO Coverage

13. WECC Transmission Projects Under Development Juan de Fuca Cable Northern Lights BPA transmission Montana Alberta Tie Line Southern Crossing Mountain States Canada –Northwest - California (CNC) Project PacifiCorp Energy Gateway Hemingway to Boardman TransWest Express Project West Coast Cable White Pine-Midpoint Wyoming-Colorado Intertie Project Harry Allen- Robinson Summit En-ti (Ely-Harry Allen) Miracle Mile-Ault High Plain Express Central California Clean Energy Transmission Project Eastern Plains Tehachapi Project Colorado-New Mexico Interconnection Project Lake Elsinore Advanced PSP Navajo Transmission Project Segment 1 Green Path Project IV-San Felipe Indian Hills - Upland SunZia Palo Verde–Devers II Sunrise Powerlink Palo Verde – North Gila II Project

14. Wyoming Transmission Projects Including Two Public/Private Partnerships involving Trans-Elect (courtesy of the Wyoming Infrastructure Authority)

15. Wyoming-Colorado Intertie (WCI) Project • Recommended by RMATS • TOT3 Constraint • 6 Lines w/ 1,600 MW Capacity • Public/Private Partnership • Wyoming Infrastructure Authority, Trans-Elect & WAPA • Feasibility Studies Complete • Phase 1 WECC path rating • Open Season Process • July 31 Auction Date • ~2013 on-line date WIND 75 miles 230 kV 425 MW 180 miles 345 kV 850 MW New Lines Under Development Existing Lines

16. WCI Bidding Concept Capacity Available 850 MW 9th Round 8th Round 7th Round BID PRICES ($/KW-MO) 6th Round 5th Round 4nd Round 3nd Round 2nd Round 1st Round FIRM TRANSMISSION CAPACITY (MW)

17. PR for WCI

18. High Plains Express MOU involving 6 utilities, 3State agencies & Trans-Elect Co-Managers: Xcel & Trans-Elect Feasibility study completed Stage 2 Feasibility Underway Major renewable component 3,500MW – 500 kV AC $5 billion 1,300 miles across favorable terrain from Wyoming to Arizona Improved reliability in Eastern WECC Benefits to participating states, including consumers WCI (TE/WIA/WAPA) EPTP (Tri-State/Xcel/WAPA) NM Wind Collector (PNM) SunZia WIND WIND WIND WIND WIND SOLAR WIND WIND SOLAR SOLAR

19. Transmission – A Snapshot • After years of under-investment, there’s a resurgence in interest in transmission expansion, driven by... • Replacement of aged infrastructure/improved reliability • Accessing remote resources, especially renewables • Availability of low-cost money • Impediments • Absence/inconsistent public policy & regional planning • Utility/regulatory focus on serving native load • Cost allocation & recovery uncertainties • Long permitting timelines & complications

20. Solutions for Regional Transmission Expansion • Public Policy • National: siting/routing, financial incentives, open access protocols • Regional & State: multi-state cooperation, transmission authorities • Professional Transmission Development • Independent transmission’s exclusive focus on transmission development • Commitments needed to build transmission • Traditional Model: Utilities to own and/or contract for capacity • Emerging Model: Renewable developers, transmission authorities, and customer beneficiaries • Facilitated by supportive public policy & regionalized power markets

21. Perfect Storm • Change in Fundamentals • Rapid inflation in energy prices • Carbon-constrained energy economy • Price-competitive renewables • Utilities have few incentives for expanding transmission • Change/Chaos = Opportunity • Transmission authorities are uniquely positioned to effect change • Multi-state cooperation in non-RTO areas • Western REZ process • Take the lead in facilitating transmission expansion • Supported by independent transmission developers & public policy

22. Shared Risk for Transmission Development • State Transmission Authorities • Focused on renewables • Bonding & eminent domain authority • Seeding transmission development • Business Model • State Authorities: political support • Trans-Elect: lead development efforts • Shared funding and risks, with funds repaid (with uplift) upon project financing • Opportunities • Short-Term: generator leads & collector systems • Longer-Term: trunk lines & regional lines