ENERGY CENTER State Utility Forecasting Group (SUFG)

Indiana Energy Landscape

presented to WIndiana 2008 June 17-18, 2008

presented by David Nderitu / Doug Gotham State Utility Forecasting Group ENERGY CENTER State Utility Forecasting Group (SUFG)

Outline

• Characteristics of ’s existing generation • Emissions • Consumers • Prices • Summary NOTE: All data from Energy Information Administration unless otherwise noted ENERGY CENTER State Utility Forecasting Group (SUFG) Fuel Sources for Electric Power in 2005

• Indiana numbers do United Indiana States not include out-of- Coal 50 % 96 % state generators that Nuclear 20 % 0 % serve Indiana Natural Gas 15 % 3 % customers Petroleum 6 % 0 % – Cook (nuclear) in Renewables 8 % 0.4 % Michigan – Madison (natural gas) in Ohio – Trimble County (coal) in Kentucky ENERGY CENTER State Utility Forecasting Group (SUFG)

In 2006….

• Indiana produced 3.2 % of the electricity generated in the U.S. • Indiana produced 6.2 % of the electricity generated from coal in the U.S. • Indiana produced 0.3 % of the electricity generated from natural gas in the U.S. ENERGY CENTER State Utility Forecasting Group (SUFG) Coal-fired Generating Capacity by Decade Installed

7000 # of units MW 6000 1940s 1 45 5000 1950s 20 1847 4000 1960s 12 2275 MW 3000 1970s 17 6938 2000 1980s 9 5736 1000 1990s 2 289

0

1940s 1950s 1960s 1970s 1980s 1990s ENERGY CENTER State Utility Forecasting Group (SUFG)

Projected Resource Requirements

40000 SUFG Required 35000 Resources

30000

25000

20000 MW Existing Resources 15000

10000 Projected Demand w ith 15 Percent Reserve Margin 5000

0

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 2025 Year

Source: Indiana Electricity Projections: The 2007 Forecast, State Utility Forecasting Group ENERGY CENTER State Utility Forecasting Group (SUFG)

Coal Developments

• IMPA share of Prairie State (IL), Trimble County (KY), and Thoroughbred (KY) • integrated coal gasification unit at Edwardsport • Proposed syngas facility ENERGY CENTER State Utility Forecasting Group (SUFG)

Natural Gas Developments

• Hoosier Energy – Wabash Valley Power proposed purchase of Holland combined cycle facility (IL) • NIPSCO proposed purchase of Sugar Creek combined cycle facility (IN) ENERGY CENTER State Utility Forecasting Group (SUFG)

Wind Developments

• Benton County – Duke Energy and – Indiana Michigan • Hoosier Wind Farm – Indianapolis Power & Light • NIPSCO pending purchases (IA and MN) ENERGY CENTER State Utility Forecasting Group (SUFG) Summary of Generation Characteristics • Indiana is heavily reliant on coal for electricity generation – But becoming slightly less so • The existing fleet has been in place for 20 to 50 years • New resources will be needed in the near future ENERGY CENTER State Utility Forecasting Group (SUFG)

2006 CO2 Emissions (metric tons) 300,000,000

TX 250,000,000

200,000,000

150,000,000 OH IN IL 100,000,000 KY MI

50,000,000

0 ENERGY CENTER State Utility Forecasting Group (SUFG)

2006 NOx emissions (metric tons)

300,000

TX 250,000 OH

IN 200,000

KY 150,000 IL MI

100,000

50,000

0 ENERGY CENTER State Utility Forecasting Group (SUFG)

2006 SO2 emissions (metric tons) 1,000,000 OH

900,000

800,000 IN

700,000

600,000

500,000

KY 400,000 ILMI 300,000

200,000

100,000

0 ENERGY CENTER State Utility Forecasting Group (SUFG) Emissions Trends for Indiana Electricity Industry (normalized to 1990 values) 1.4

1.2

1

0.8 Generation 0.6 CO2 SO2 0.4 NOX 0.2

0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 ENERGY CENTER State Utility Forecasting Group (SUFG) Emissions • Indiana ranks in the top 5 in emissions

of CO2, SO2, and NOx – Reliance on coal – Large industrial sector • Emissions levels have decreased

substantially for SO2 and NOx (and CO2 has grown slower than sales) • Uncertainty over future rules

– Mercury, CO2 ENERGY CENTER State Utility Forecasting Group (SUFG) 2006 Residential Electricity Sales (MWh) 140,000,000 TX

120,000,000

100,000,000

80,000,000

60,000,000 OH IL

40,000,000 IN MI KY

20,000,000

0 ENERGY CENTER State Utility Forecasting Group (SUFG) 2006 Commercial Electricity Sales (MWh) 140,000,000

CA 120,000,000

100,000,000

80,000,000

60,000,000 IL OH MI 40,000,000

IN KY 20,000,000

0 ENERGY CENTER State Utility Forecasting Group (SUFG) 2006 Industrial Electricity Sales (MWh) 120,000,000

TX

100,000,000

80,000,000

60,000,000 OH IN IL KY 40,000,000 MI

20,000,000

0 ENERGY CENTER State Utility Forecasting Group (SUFG) 2006 Total Electricity Sales (MWh) 400,000,000

350,000,000 TX

300,000,000

250,000,000

200,000,000

OH 150,000,000 IL

IN MI 100,000,000 KY

50,000,000

0 ENERGY CENTER State Utility Forecasting Group (SUFG)

Indiana Electricity Consumers

• Indiana has a large industrial base • Indiana’s industries tend to be electric intensive – Steel – Aluminum – Chemicals – Transportation equipment ENERGY CENTER State Utility Forecasting Group (SUFG) Indiana Real Electricity Prices (Investor-owned utilities, 2005 cents/kWh)

12

10

8

6

4

2

0

1989 1980 1981 1982 1983 1984 1985 1986 1987 1988 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Source: Indiana Electricity Projections: The 2007 Forecast, State Utility Forecasting Group ENERGY CENTER State Utility Forecasting Group (SUFG) 2006 All Sector Electricity Retail Price (cents/kWh) 25 IN 6.46 - rank #10 20

15

10 U.S. average 8.90

5

-

IL

IA

ID IN RI HI

MI

FL

NJ

AL LA

WI

VA PA

AZ TX

VT

UT TN CT

KY KS AK

NY

NE SD SC AR NV DE CA

NC ND DC NH

MT

OK GA

OR CO OH MS ME MA

MN NM MD

WA

MO

WV WY ENERGY CENTER State Utility Forecasting Group (SUFG)

Summary

• Coal is the dominant fuel for electricity generation • The industrial sector is very significant • Emissions are relatively high but falling • Prices are relatively low but rising