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Capital Financing for Energy – Related Projects

Capital Financing for Energy – Related Projects. George Williams, SVP and Chief Operating Officer El Paso Electric Company. May 20, 2010. El Paso Electric Overview. Customers Served: 372,080 Size of Service Area (Texas/New Mexico) 10,000 Sq. Miles. Energy Mix

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Capital Financing for Energy – Related Projects

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  1. Capital Financing for Energy – Related Projects George Williams, SVP and Chief Operating Officer El Paso Electric Company May 20, 2010

  2. El Paso Electric Overview Customers Served: 372,080 Size of Service Area (Texas/New Mexico) 10,000 Sq. Miles Energy Mix Nuclear Fuel ….... 633 MW……..45% Coal ………………104 MW …...…7% Purchased Power …....................26% Natural Gas ...........905 MW …...22% Wind & Solar………1.5 MW

  3. El Paso Electric’s Carbon Footprint EE 0.31 National average 0.67 • 2008 Source: El Paso Electric’s (“EE”) carbon footprint rate was calculated from information based in its 2008 10K filing and from eGRID – a source of environmental data for U.S. electric power plants that is issued by the Environmental Protection Agency. The national average rate was obtained from the Carbon Monitoring for Action website (www.carma.org).

  4. Electric Utility Business Models • Regulated Business Model • Core Business Extensions - Merchant Generation - Merchant Transmission

  5. Capital Investment Considerations Capital investment and analysis assumptions include: • Cost of Debt (Interest Rate) • Amortization Schedule • Recourse vs. Non-Recourse Debt • Capital Structure • Cost of Equity • Leasing or Other Specialized Structures (although limited) • Purchase Power Agreements (PPAs) in lieu of generation and technology risk

  6. Renewable Generation Limitations • Firm Capacity (wind does not always blow and sun does not always shine) • Cost (and recovery) • Technology • Economical Transmission Interconnections • Economical Storage (i.e., batteries)

  7. PPA Considerations • History of Technology (performance) where risk is also shifted to Seller • Risk technology transference • Performance and reputation of Seller • Cost (and recovery) • Availability of facility • Structure if special purpose entity utilized

  8. Business Model • Core Business - Regulated - Merchant Transmission and Generation • Technology Challenges • Reasonable Returns

  9. Capital Financing for Energy – Related Business: Profit Business Model George Williams, SVP and Chief Operating Officer El Paso Electric Company May 20, 2010

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