Sierra Pacific Resources 2006 Analyst Meeting on Nov. 03. 2006 / 11:00AM

FINAL TRANSCRIPT

SRP - Sierra Pacific Resources 2006 Analyst Meeting

Event Date/Time: Nov. 03. 2006 / 11:00AM ET

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CORPORATE PARTICIPANTS Britta Carlson Sierra Pacific Resources - Manager IR Walt Higgins Sierra Pacific Resources - Chairman, President, CEO Michael Yackira Sierra Pacific Resources - Corporate EVP, CFO Roberto Denis Sierra Pacific Resources - SVP Energy Supply Mario Villar Sierra Pacific Resources - Director Resource Planning and Analysis Tom Fair Sierra Pacific Resources - Executive for Renewable Energy Hezy Ram ORMAT Technologies Inc. - EVP of Business Development Jeff Ceccarelli Sierra Pacific Power - SVP for Service Delivery and Operation, President Bill Rogers Sierra Pacific Resources - Corporate Treasurer Carolyn Barbash Nevada Power - Transmission Executive Mike Smart Nevada Power - Technical Services & Support Executive Herb Goforth Nevada Power - Director - Technical Services & Support Kevin Sullivan Echelon Resorts - SVP and Chief Administrative Officer

CONFERENCE CALL PARTICIPANTS Dan Eggers Credit Suisse First Boston - Analyst

PRESENTATION Britta Carlson - Sierra Pacific Resources - Manager IR Good morning everyone. I am Britta Carlson. I'm the Manager of Investor Relations. All of you in the audience know me well. You call me all the time, and I want to thank you. I thoroughly enjoy your questions. And I hope that I'm able to give you the information that you need. I do want to welcome you today to Sierra Pacific Resources 2006 Analyst Meeting. We are very pleased that you could join us here in Las Vegas. It is my hometown. And at the beginning of the EEI Conference, it's a great time to bring you all in. You get an extra weekend in town. And I hope you enjoy the festivities that Las Vegas has to offer.

I want to remind you that today's event is being webcast live for those who could not attend in person. We will also maintain an archive of that webcast on our company website for approximately 60 days. And you all know that -- the address, but I'll give it to you again, it's www.sierrapacificresources.com. Also due to the nature of a live webcast, I do ask that during the

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© 2006 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Nov. 03. 2006 / 11:00AM, SRP - Sierra Pacific Resources 2006 Analyst Meeting question-and-answer session, you raise your hand and wait for one of the portable, wireless mics so that we can hear your question. We will also be integrating questions from those of you listening in on the webcast, so you're welcome to type in your questions and we will integrate those into the Q&A session.

My goal for today was really to give you an opportunity to better understand the strategic initiatives and operations that drive the earnings of Sierra Pacific Resources. We have assembled of group of speakers that are here to discuss the long-term growth in our state and how our utility subsidiaries will meet that growth. You will have an opportunity to ask questions after each speaker. This event is intended to give you a better understanding of the company and also to meet our operating officers that work hard every day to meet the demand of a growing service territory, which you see around you. In addition to our officers, you will hear from our renewable -- one of our Renewable Energy partners [audio skip] a large customer that is changing the landscape here on the Las Vegas strip.

We will begin our meeting today with a corporate overview of Sierra Pacific Resources followed by presentations from our Generation division, one of our Renewable Energy providers, our Service Delivery and Operations group that does include Transmission and Distribution, one of our large customers and finally, our Treasurer will discuss financing activities.

Right now, I would like to introduce our Chairman, Mr. Walt Higgins.

Walt Higgins - Sierra Pacific Resources - Chairman, President, CEO Thank you Britta, and welcome to our combined in -- live and webcast Analyst Meeting. We appreciate your interest and continuing support of the company. We look forward to giving you some what we hope will be enlightening presentations today about the operations and the strategies and our execution on those strategies in the company. We have a line-up of very capable people. I'm actually going to take a moment at the beginning and allow each of the Sierra Pacific people that are here to stand up so you can see who they are, because during the breaks and intervening time, there may be a particular person you'd like to seek out and ask a question relative to something that's of unique interest to you. So I want to identify those people in case you do have such a question.

I'm going to start in the back of the room with [Ray Raffla], our Internal Auditor, Chief Internal Auditor. Ray's motto is "Trust and Verify", and we appreciate his good work, Ray Raffla, Chief Internal Auditor. I have good eyes, but may not be good enough to catch everybody. Any Sierra Pacific people in the back over here on the left? All right.

Coming forward, [Ruth Erbanki], is our Director of Compliance. She is the S-Ox queen of the company. Sitting right in front of her is Carolyn Barbash, Transmission Executive. Right behind Carolyn, Constanza Ashford, our Director of Budget. Coming forward, Mike Smart, Regional Executive for Service and Delivery Operations in Northern Nevada, Jeff Ceccarelli, Senior Vice President Service and Delivery for all of our territory, Tom Fair, Renewables Executive, Mario Villar, who is our Resource Planning Director, Roberto Denis, Director of -- Senior Vice President Energy Supply, Paul Kaleta, Senior Vice President and General Counsel, Corporate Secretary, Compliance Officer, keep going, Mary Simmons, Vice President of External Affairs for Northern Nevada. Mary's the native of Ely, which is where we're building the new power plant, so Mary's got her hands full right now, Pat Shalmy, Senior Vice President External Affairs, Jack Leone, Corporate Communications Executive, Britta Carlson, who we're very proud of, does a great job putting things like this together. Thank you, Britta.

On the front row over here, Buck Rogers, Bill Rogers, our Corporate Treasurer, John Brown, our Corporate Controller, two rows back, Joe Orfano, our Assistant Treasurer, Director of Treasury and Finance Operations, Steve Wood, Senior Vice President, Chief Administrative Officer, a little further back, [Mike Corono], Director of Regulatory Affairs, the person -- oh, Kelly Langley, Manager of Shareholder Services, standing over by the door. If you own stock on a individual basis, Kelly's the person you talk to, and [Kimberly Tate], who makes all of this happen day in and day out, things like this, and helps the Treasury and Finance organizations. Kimberly, raise your hand. In particular, if you have any problems related to the logistics of this meeting, please see Kimberly.

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All right, did I miss anybody in the room? Michael, I'll introduce in a few minutes. Anybody else from Sierra? Okay, let's go ahead and get started. It's amazing. It worked.

This is a little rundown. It's in your books, what you're going to see today. Michael and I will give you a brief overview. Then, we'll run through a -- is Herb Goforth in the room? Okay, a series of reports on different strategic initiatives, strategic executions, and we'll conclude with a Q&A session, but we will have time at the end of each segment for you to ask questions that are on your mind at that moment. And, I'll remind you again, and each speaker will remind you, please do speak into the microphone.

Britta did not read this, and I won't read it. But, I do commend to you and for those of you on the webcast, there are statements that we may make today that are based on our best judgement. They may include some forward-looking comments. And, I urge you to read this document and be aware of that. Thank you, Britta.

Probably creating somewhere. Can you hear me in the back? Okay.

Here is a little layout that shows you the corporate structure as of today. Clearly, with the announcement that we made yesterday, the Tuscarora gas pipeline interest that we hold jointly with TransCanada will begin to move out and should, as Michael announced, close by the end of the year. And although there are some smaller, essentially non-operating subsidiaries, the bulk of the company's focus and resources is in the utilities, data about which is listed below the names of the respective utilities, over 1.1 million, fast approaching 1.2 million customers. That is better, thank you, a service territory that comprises nearly all of Nevada, probably 95%, 96% of Nevada's people including some 100,000 Californians, comprising about 45,000 customers in Northern Nevada. That actually sounds a lot worse. All right. I think I'm back on this. That sounds better to me, how about you all. The pain has subsided. Sorry.

We've talked a bit this morning already about some of the data that's on this slide, the amount of generation that we have, now owned generation above 4,000 megawatts, and remind you that the non-coincident peak of the two utilities, based on the peaks that, this year, were about -- is about 7,500 megawatts, and we have 4,000 -- just over 4,000 megawatts of capacity. And note the next line, that Nevada Power's compound average growth rate in customers is about 5%; Sierra Pacific's, 2.6%; overall company, about 4.-something percent; $8 billion almost in assets; $3.2 billion or so in revenues and earnings as listed there.

I might add, and you'll hear a lot more about our construction program, if the ultimate build-out of the Ely Energy Center is the 2,500 megawatts that we have originally announced, two 750 pulverized coal supercritical units, followed when the technology's there by two 500-megawatt IGCC units, the load growth in Nevada would almost exactly consume the entirety of those units when they're built, such that in 2015, if the only thing we did was build the entire Ely Energy Center, we would still have about a 2,500 or 3,000-megawatt deficit compared to peak. Now, it is a bit of apples-and-oranges, as Roberto will explain later, because coal plants aren't there necessarily just to serve peak. But the fact is our growth is quite robust, in the vicinity of 250 megawatts per year, and that means that we have a lot of need for new power plants.

I'm going to just remind you on the next page of the vision, mission, values, et cetera, of the company. We like to say we want to be the best darned utility we can possibly be, and why, and our goal -- excuse, our mission, the thing that guides us every day is, if we say if we're going to do something, we are going to do it. We'd like to think we've delivered on that commitment to you, our investors. That is the watch word for our people as they go about doing their jobs serving customers every day.

And then, we have set forth a series of five corporate goals, around which we plan all of our individual performance goals, around which we set all of our corporate strategies, the things that we have determined are the things that we need to do in order to be successful in this state. And there is a great deal of thought that's been put into this. We didn't say the perfect energy supply. We didn't say the cheapest energy supply, as one example that we're going to talk about, we said the right energy supply, the energy supply that Nevada wants that's consistent with its desire to diversify its portfolio, consistent with its desire to have protection from volatility, consistent with its desire to be less reliant on power markets and less dependent on what happens, for example, in adjacent states.

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That translates to us to be the right energy supply, not just the cheapest energy supply. And the same kinds of things could be said about each and every one of these goals and how they fit quite elegantly into the idea of what we're trying to accomplish and how we go about doing that. And I think by the end of the day, you will have heard a lot of things that will cause you to see how each of the things that our people are executing on and talking to you about fit within the context of this corporate goal structure.

The growth in Nevada is shown here on the chart that's in front of you. You can see compound average growth rate, 3.8% projected in our integrated resource plan through 2014. That is a little bit slower than what we've actually been experiencing. Nevada Power continues to be the fastest growing investor-owned electric utility. It has been for the past 19 years, and we can see every sign. And you'll see some of that and hear some of that today when one of our distinguished speakers talks about the growth in Southern Nevada. And, this appears to be something that is going to happen. And, we need to be quite prepared for it.

Also note that by 2014, the utility company in Nevada with a relatively small California presence, because that's a relatively slow-growing part of our territory since there are so many growth restrictions around Lake Tahoe, that we will be about 1.5 million electric customers, which would put us, I think, well within the top 25 and moving higher in the ranks of utilities in the United States.

And here, just to show you one of the big drivers in Southern Nevada, is a little chart that sort of lays out how some of these major projects are going to come one. And you can see, for example, Echelon, which you're going to hear directly about from the executive at Boyd Gaming in charge of that project, or City Center, which is the largest private construction project undertaken anywhere in the world right now, Encore at Wynn, and you're going to hear from Steve Wynn Monday morning. He's the opening speaker at the conference. I think you'll find that very interesting, and on and on and on. So the underlying driver for growth in Southern Nevada is growing it appears, based on what's happening on the strip, at 5.7% compound annual growth rate. And, we obviously need to be prepared for that, and we are making those preparations.

Let me then turn the microphone over to our Executive Vice President and Chief Financial Officer, Michael Yackira, who will take us through the next part of this and introduce the first set of panels.

Michael Yackira - Sierra Pacific Resources - Corporate EVP, CFO Thanks, Walt. And for those of you who are on our webcast and weren't on our earnings call, welcome to our Analyst Meeting. I think you'll find it to be very informative and not the typical Analyst Meeting, because our focus is going to be on our operations rather than the financial issues that you know about as far as this company is concerned.

Starting on Page 12 of the handout that you have, these are our key financial strategies, continuing strong earnings growth. You can see that year-over-year with this company, certainly over the past several years. And, with the investment and generation rate base, we expect our earnings growth will continue. Our financial condition has improved. That certainly has been shown by recent rating agency action and other investment activity that we've had, financing activity that Bill Rogers will be discussing later on today, and positive regulatory decisions. Support of our regulator is utmost in our minds. We know that we can't accomplish our strategy without firm regulatory support, and we're certainly hoping that regulatory support is shown with the pending Ely Energy Center and other elements of the IRP. And we're hoping to see that in the next couple of weeks.

All of this is geared toward two major goals for the company, financially. One is to become investment grade for our senior secured data at the utilities; and secondly to restore our dividend subsequent to that. And we are on pace to continue to strive toward those two major goals for the company.

Page 13, growing earnings, again reiteration here, but the growing earnings come as a result of huge top line growth. Nobody is growing faster than we are in terms of revenue growth. And the investment profile of the company in terms of Generation,

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Transmission and Distribution, relative to others in this industry is certainly far faster than others. And that certainly will add to our earnings growth.

Improved financial metrics, a lot has changed over the past couple of years regarding our credit profile, our capital structure, our credit metrics, significant refinancings that we have accomplished over the past couple of years. Bill Rogers joined us in June of 2005, and he's been very busy in the capital market as most of you. And, all of the things that we have done have looked toward reaching that goal of investment grade as a first step to getting back to our dividend restoration.

Financial performance, for those of you who are sitting here, I needn't go over this. But, for those of you who were not on the conference call this morning, we announced net income including the reversal of the $180 million disallowance from the 2002 case that was decided by the Supreme Court in the summertime, $222 million of net income compared to $61 million from the prior-year third quarter and nine months. And, the $61 million was driven by or lowered by the costs from the convertible issuance that we took back into the company through the conversion process. And that was about $60 million of costs we recorded in the third quarter of 2005.

The margin continues to improve, both at Nevada Power and Sierra Pacific Power, about 4% for Nevada Power and 3.5% for Sierra. And, customer growth continues strong, 5% for the 12 months ended September at Nevada Power, and close to 3% for Sierra.

The next slide, Page 15, is showing deferred energy filings and other filings for Nevada Power Company. We've had the good fortune this year of having reached settlements on all of our deferred energy cases that were filed in Nevada without having to go to hearing or any form of litigation on the matters. And we did it while at the same time, not raising our rates for our customers. We were able to substitute old, deferred energy rates that hadn't been in place for several years, that were fully collected for the start of amortization of our current deferred energy balance, thereby allowing us to fully recover, while at the same time, not increase our rates for our customers.

Our general rate case filing, we'll be making for Nevada Power in the middle of November. That is required to be filed this year, and it's the first time that we've filed one for Nevada Power since 2003. We will be then filing every two years for Nevada Power. And Sierra Pacific, we'll be filing a general rate case in 2007. We have our annual deferred energy filing, which is again, a requirement of -- by statute. And that filing will be made for Nevada Power by the middle of January of next year.

Sierra Pacific Power, the same is true here, settlement of our deferred energy case as well as a higher going forward-based tariff energy rate. And the same was true also with not having to raise rates for our customers by substituting an old, deferred energy balance that was fully collected for the start of the amortization of the new deferred energy balance.

Natural gas, we also stipulated an agreement there and have full recovery of those deferred energy costs. We had a conclusion of our general rate case that had been filed in November of 2005 concluded earlier this year. While we did have a reduction in our revenue requirements of about net $5.5 million between the electric company and the LDC, we got a higher ROE for both parts of that business. And certainly, that was a good outcome as well as the start of some amortizations of regulatory assets that had been on the balance sheet for several years. So, we believe that that was a good outcome. Our annual deferred energy filing for Sierra Pacific is to be made at the beginning of next month.

This chart on Page 17 shows the expected dates of the various filings that I have talked about. I think it'll be a good reference point for you in terms of anticipating what our expected filing dates are for all the things that are coming up between now and a year from now. And, you see that Sierra Pacific Power has its integrated resource plan triennial filing, which is due the middle of July, but you'll also remember that as part of the Nevada Power integrated resource plan, we filed an amendment to our Sierra Pacific Power plan and asked for approval of the Ely Energy Center and a portion of that, if approved by the Commission, would be attributable to Sierra Pacific Power as well.

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It says "Break" next, but I don't think we need one. Do we? If not, let me introduce Roberto Denis and the panel that he is going to be introducing. Roberto is our Senior Vice President of Energy Supply. He has been with the company since August of 2003. He is a terrific person personally and professionally. I've had the good fortune of knowing Roberto for 17 years and worked with him most of that time, and I'd like to bring him up and his panel to talk about issues with respect to Generation. Thanks.

Roberto Denis - Sierra Pacific Resources - SVP Energy Supply Thank you, Michael. As you can tell from your agenda, there's supposed to be three panelists here. David Sims, who is the Director of Project Development for the Ely Center was called away to undertake some activities related to that project up in Ely. So, I will be making his presentation, and hope to do it justice.

The first -- right after the slide and the Break slide in your -- I believe it's Page 19 on your book -- yes, it's Page 19. It shows a map of the State of Nevada with all of the generating facilities that we currently have, either planned, under construction or in operation. If you had seen this map a year ago, it would have looked substantially different than it does today. A lot of the power facilities that are shown here are -- would not be there. And, this speaks to the tremendous activity that we've had in expanding the Generation fleet of this company.

Since about 2003, the company undertook the strategy to own more of its own generation and reduce the dependence on the wholesale markets, which had proven to be extremely volatile prior to that timeframe. In short, the company was very much short in heat rate. In terms of trading, we were short were heat rate. We didn't have the ability to make our own megawatts. Therefore, we were not only dependent on the vagaries of the fuels market and the volatility associated with fuels market, which in this Southwest region is primarily driven at the margin by natural gas, but we were also exposed to the volatile markets as a result of scarcity of conversion capacity.

So since 2003 in the Nevada power system, particularly just this last year, we doubled our capacity, our ability to generate megawatts. We doubled our capacity from approximately 1,500, 1,600 megawatts to just slightly over 3,000 megawatts. At the same time, as in the Sierra Pacific Power, which is through the -- in the north of the map, you will see that there's a Tracy Power Plant Expansion. That's the 514-megawatt, combined cycle facility, which is currently under construction. Turbine -- the concrete's been placed. The turbine has been placed, and we expect it to be in service by March of 2008. And, that's approximately 500 megawatts on top of an existing capacity of about 1,000 megawatts. So there, we're expanding the capacity, essentially by a third, almost closing the entire short position that we have in generation at the Sierra Power System.

So we have made great strides in delivering on the strategy that was set forth starting in the 2003 timeframe -- significant achievement. It wouldn't have happened without the support of the state and the state regulatory commission, which pretty much has supported and been a regulatory partner in allowing us to achieve this vision of becoming more independent for the State of Nevada.

I will cover some of the Ely Energy comments that I had at the beginning during the presentation that I'm going to take up for David Sims. But without any more delay, let me introduce the panelists that we have today. We have Mario Villar, who is the Director of Resource Planning and Analysis. And he does all the planning for both companies. And he will give you an overview of where we are today, what the plans are and where we're going with regards to -- in the future with regards to our need for facilities. And, we have Tom Fair, who is the executive heading our Renewables efforts, not only in the acquisition, but also in the development and renewable resources for our company. And as I said, David Sims, I will cover his presentation. David is responsible for the development of the Ely Energy Center. So without any more delay, Mario, I believe you're first.

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Mario Villar - Sierra Pacific Resources - Director Resource Planning and Analysis Thank you, Roberto. Good morning. As Roberto said, I am going to give you an overview of our two operating companies, where we've been and where we're going, particularly with respect to our recent RFP filing, where does that place us relevant to where we've been in the past. Oops, a little too far. Okay.

Some of this has been covered a little bit before, but Sierra Pacific utilities serve approximately 90-some % of the electric demand in the state. Nevada Power Company, in particular, continues to experience strong growth with forecasts of population growth in the 4.6% range over the next five years, and sales growth over 3.5% over the same period. As Walt mentioned, demand growth continues to be strong in the state with over 200 megawatts of growth projected for Nevada Power and slightly over 30 megawatts, 30 to 40 megawatts for Sierra Pacific. So in total, we're talking 250 megawatts combined for the two utilities.

You will be hearing a specific example of this strong growth and the type of growth that we are experiencing, particularly down here in the Southern Nevada area from Mr. Kevin Sullivan, of Boyd Gaming, Echelon Place later on in the presentations. In 2005, the combined demand of the companies was approximately 7,300 megawatts, slightly higher this year. Of that, Nevada Power had approximately 5,600 megawatts, somewhat under that, Sierra Pacific, about 1,700 and some megawatts.

We are highly dependent on wholesale markets. In 2005, we were purchasing over 60% of our energy needs. In 2006, we're projected to reverse that to Nevada Power with the addition of the new generating additions that Roberto discussed before, so we're expected to generate approximately 60% of our own energy needs for Nevada Power. As also mentioned, we're highly dependent on natural gas. That's -- that is the predominant fuel for both our internal generation and for market purchases.

Energy supply strategy, Roberto mentioned that in 2003, the company adopted a series of strategic steps to do three things, improve reliability supply, reduce volatility and increase price stability for our customers. The company's plans were to reduce a heavy reliance on volatile wholesale markets by increasing the amount of company-owned generation and by entering into long-term contracts to reduce volatility. We also, in the short term, wanted to reduce volatility by contracting ahead and by investing in high efficiency, combined cycle generation, 30% more efficient than the market until we could take longer-term steps and incorporate those into the plan.

Those steps that you will see later in the IRP are to increase our fuel diversity for the long term through both an increased emphasis on renewable and conversation and by adding coal options to our generation fleet. Also as part of our energy supply planning process, which is the way that we cover our capacity in the shorter term, we obtained commission approval for a competitive procurement process for our open position and approval for a gas hedging strategy to minimize our exposure to the market.

How have we executed on that strategy? We built the 1,200 megawatt Lenzie Generating Station ahead of time and under budget, and that made it eligible for an enhanced ROE as authorized by the Commission. We acquired a 75% interest in the Silverhawk facility earlier this year with Southern Nevada Water Authority owning the remaining 25%. We completed a combustion turbine at our Harry Allen site. And, these facilities are currently providing energy to our customers and lowering costs as compared to what we would have had to pay in the market.

As Roberto also mentioned, in 2005, we obtained approval for and this year commence construction on the 514 megawatt Tracy combined cycle station near Reno. In the meantime, we have met our short-term needs, in other words, covered our open position through the Commission-approved energy supply planning strategies that I discussed. In spite of all these efforts, we still need more capacity.

This next slide is a depiction of our needs in the 2007 to 2015 timeframe with the upper line being the projected load plus our reserves, the blue being the existing generation that we have after the additions of the facilities we've just mentioned and the existing power purchases. The yellow line is our projections for meeting our renewable portfolio standard that Mr. Fair will discuss later. And as you can see, we have a significant gap. And, that's a gap that we have to bridge. In 2007, we have roughly

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1,800 megawatts left at Nevada Power Company and a little over 300 megawatts at Sierra Pacific. We basically have a need for load -- to meet for load growth and provide for the particularly high peaks that we have in the Southern Nevada area.

From an energy perspective, where are we at? Our current projected mix for 2008 that's after the Tracy facility is completed is shown here. As you can see, the -- on a combined basis, our coal facilities are projected to provide approximately 21% of our energy. But, the important one is, we're highly dependent on gas for a significant portion of our needs. The combined effects of our own internal generation and the purchased power, which as Roberto said on the -- it's on the margin in the region, make us highly dependent on gas, increase in -- increasing unless we do something about it, over 70% of our needs in this timeframe.

So, where are we and what do we need to do? We've added 1,700 megawatts and NPC, and we're adding 500 megawatts at Sierra. But, we've experienced some recent retirements and shutdowns. We lost the Clark -- three Clark facilities for 175 megawatts. The Mohave coal plant was closed. That was -- our portion of that, it was approximately 200 megawatts. And like I mentioned before, we still have a significant open position remaining at both NPC, particularly, in spite of all the generating additions that we've made. We're still highly dependent on gas, and the continued high growth in the companies' areas demand that we increase generation.

So, what do we need? We need more generation. We need fuel diversification. We need facilities that give us operating flexibility to meet these needle peaks that we experience in the Southern Nevada area, and we need projects that will meet the Renewable portfolio standard.

How do we achieve that? We've developed a plan to achieve a more balanced portfolio through a combination of new generation additions, transmission projects that will be covered later and increased commitments to renewable and conversation. The Nevada Power plan, integrated resource plan, was filed in July of this year along with a -- an amendment to the Sierra 2004 IRP. The elements of the -- major elements of the plan are an addition of combustion turbines at the Clark Generating Station, 600 megawatts by 2009 and the Ely Energy Center, you'll be hearing more in detail later. We allocated approximately 600 megawatts from each unit to Nevada Power and 150 of -- to Sierra Pacific. Those allocations are not cast in stone and most likely when we file with the Commission for approval of the additional expenditures associated with Ely, those numbers may change.

On the Transmission side, the Ely Energy Center acts as an anchor for the transmission line that will join the two utilities for the first time and will allow the additional development and renewable resources in the Eastern Nevada area and the transfer of renewables between the two companies, geothermal in the north coming south, and solar in the south to be transferred north. As you'll be hearing from Tom Fair, we plan to solicit, develop and invest in renewable energy projects in a very aggressive program to meet our Renewable portfolio standard. And, we're significantly increasing our energy efficiency and conservation programs with an incremental 255 megawatts roughly, expected by 2011.

If we implement a plan here's what our position will look like from a demand perspective. As you can see, in 2008 and 9, we start closing the open position with the additional Clark peakers, and then in 2012 and 13 is when you see the Ely Energy Center. The reason why you don't see Ely until 2012 is because this is the summer peak, and Ely is -- the first unit at Ely is forecasted to come on line at the end of 2011. In spite of all that, you can still see that we have a significant open position remaining. We're barely keeping up with load with the addition of these units. So, we still have additional opportunities to fill that gap. We will be filling that in the interim through either the NP supply planning process or any additional IRP amendments, integrated resource plan amendments that we may file between now and the next timeframe.

By the way, out of the open position that we have for both Nevada Power and Sierra Pacific, we've already initiated the process to close the open position for 2007 and have acquired some of that capacity. And I think yesterday, we received some results of responses to an RFP that we issued that may allow us to close our capacity some more.

From an energy position, here's where we are when the plan is implemented. We have reduced our dependence on natural gas and market purchases from approximately 70% that you saw in, I believe it was about four slides before to about 34%, a

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© 2006 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Nov. 03. 2006 / 11:00AM, SRP - Sierra Pacific Resources 2006 Analyst Meeting significant reduction. Similarly, we have increased the percentage of coal from about 21% to about 46% for the combined systems. And, the renewable generation has increased to 20% from what we had before.

In summary, we have a growing company, a -- we have developed a strategy. We have executed on that strategy in the short term by adding generation at Lenzie, Silverhawk and Harry Allen. And, we have a long-term plan that we have presented to the Commission a plan that significantly diversifies our fuel sources and reduces our exposure to volatile markets. Roberto?

Roberto Denis - Sierra Pacific Resources - SVP Energy Supply I think Tom is up next. I guess I could say I'm David Sims, but I'm not. I'm just taking his place. But first let me, before I get into talking about the Ely Energy Center and some of the details and where we're at on that, let me just say that this is a significant undertaking for the company, just as Walt mentioned before. It is the largest energy project to be developed in this state since the Hoover Dam. In recognition of that, we have assembled a team, an experienced team of personnel to help us execute successfully on this project. That team not only consists of acquired expertise, but contractors and tapping into the existing significant base of knowledge that we have in the company.

As Walt mentioned, Mary Simmons, Vice President of Regulatory Affairs in -- for Sierra Power Company is a native of the area as well as many others that are in the company. This is our state, and we're very knowledgeable of it, its needs, and plan to deliver on that. Internally, it's not the only Generation group that is working on this. You will see that from our service delivery and operations, our Transmission are a key component of this project to help us bring the power to the market, and we're working extensively with them also.

Project overview, this project was announced in January of this year, and as we announced it, and has been mentioned it consists of two distinct phases. The first phase consists of a single transmission line interconnecting the two systems to be able to move the power around, which will for the first time, interconnect directly Sierra Power Company and Nevada Power Company and the first two 750 megawatt, supercritical, clean coal units. In recognition of emerging technologies and trying to marry that up with our specific need to diversify quickly our resource mix, we said that, yes, we do need additional megawatts, but we will consider and look towards emerging technologies such as the integrated coal gasification technology, which we would expect to be commercially reliable and viable by the time that we need to make a commitment to proceed with that Phase 2 in the future.

That second phase will likely -- not likely, would require an expansion of the transmission system, bringing a second line into the Las Vegas Valley area. The cost with -- on the first phase of the project, which is the first transmission line, 240-mile transmission line, 250-mile transmission line and the first two units is -- we have said it's $3.7 billion. Here, the slide says $3.8 billion due to rounding of some of the numbers, and the -- it rounds up. But as you can see, it's a significant undertaking with regards to the scope.

Let me get into some of the project siting decision points and why we are in Ely. A coal unit, a coal project in Eastern -- Central Eastern Nevada has been discussed for over 20 years. There was a -- in the early 80s, mid 80s, late 80s, there was a number of projects, particularly spearheaded by the Los Angeles Department of Water and Power, which they ultimately decided to proceed with the Intermountain Power Project as opposed to this project, so the Ely site, the White Pine County site was not pursued at the time. We are back, and we have identified in our 2003 resource plan or a subsequent study as a result of the 2003 resource plan, where we were encouraged by the Commission to pursue additional coal facilities, that Steptoe Valley in White Pine County just north of the city of Ely was the best place to site a new Greenfield coal facility in the state.

White Pine County is a economically distressed county in the state. It is very much in need of industrial development and tax base, and I would say that the entire county and the city of Ely really embraced this project as something that they want to see happen and bring jobs and progress -- economic development to the county. The county had reserve over a period of time, sufficient water for the development.

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As you know, water -- if you step outside, you will see that this is the desert. Water is a precious resource and a scarce resource that is needed and where the priority of use should be for people and not power plants necessarily. But, water has been reserved for this development for municipal use by the county for quite some time. And even though sufficient water is possibly available to have a wet-cooled facility, we have chosen to be in harmony with the environment and the requirements of this state to proceed with a plant design that uses very little water. It will be what we call hybrid cooled. It is air-cooled condensers with some water-cooled augmentation only during the peak heat of the summer so that we do not lose capacity from the unit. So we have chosen to do that.

There's local rail access, and that's another reason for the siting. There's a old railroad right-of-way and track, the Nevada Northern Railroad, which ties into the Union Pacific Railroad north of the site, about 100 miles north of the site. And, it will be able to bring local -- will bring into the local area, part of River Basin Coal, which is part of the design of the facility. One of the key components or key benefits in siting this facility also midway between our two utilities is it will facilitate, it will anchor the transmission line development.

And, why is that important? Well, it's important for a number of reasons, electrically, to intertie the two companies together to be able to have greater reliability and exchanges of powers between the two. But as Walt mentioned earlier in his discussion during the Analyst Call -- the Earnings Call, there's a potentially substantial amount of renewables in the state, which have no outlet. They have no way of tapping into an electrical line to be able to get some of that power for use by consumers. And the -- particularly, there's potentially a lot of wind energy. And, Tom will talk about that.

There started to be potential -- large potential for wind energy in this area that could tap into the line. We have reserved a substantial or a portion, about 300 megawatts of transmission capacity on this line to be able to move renewables. In addition, in the north part of the state, there is substantial geothermal potential for development, more than Sierra Power Company could us itself, so this provides a vehicle of getting some of that geothermal energy into the southern part of the state. So sharing the resources, sharing this facility, sharing the transmission line between the two utilities makes a lot of strategic sense. It makes a lot of sense for the development of alternative energy sources that could help us diversify the energy mix. And, the last point is that this location is near the highway, near population centers, near established communities that people would have to live in when they work at this facility.

Phase One, I've somewhat described this already. I'll just touch up on, why supercritical? I know many of you follow utilities, and you've seen that there is a movement towards supercritical facilities in the United States. Supercritical units have been around for a number of years, American Electric Power in my memory, is one of the first few in the country that developed them back in the 60s and 70s. During the 90s, there was a lull of this development in the United States, because the whole industry went to the natural gas side of the generation. And, most of the development in supercritical units has been overseas. And, quite a few number in Asia and Europe, supercritical units, it is not a new technology. It is a tried, true and proven technology.

But the benefit it has is, because of the elevated temperatures and pressures it is more efficient than a conventional coal unit. And, that is important because of the environment. Since it is more efficient means that there's less fuel coming in for the same power energy coming out. And, less fuel coming in means less impact on the environment. So, the rule of thumb is, because of the efficiency improvement is that for every 1% improvement in efficiency results about in a 3% reduction in emissions per megawatt hour. This plant will have close to a 39%, 40% efficiency rate while a sub-critical unit is likely going to be somewhere in the 34%, 35% range. So, you can see that we could have a significant potentially up to 15% reduction on the impact of emissions by going to this technology. And, it is designed to burn -- will be designed to burn a range of Powder River Basin coal, which is the most abundant, low sulfur coal available in the United States. So, we will have a ready supply for quite a number of years.

Where are we with regards to the permitting? This picture on this slide shows a 150-foot tower, 50-meter tower, 160-foot tower, where we have installed all the air monitoring equipment, has a Doppler radar that measures the wind direction up to about 1,500 feet. It is necessary information that we need to have in order to accurately assess the impacts that we may have in some

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© 2006 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Nov. 03. 2006 / 11:00AM, SRP - Sierra Pacific Resources 2006 Analyst Meeting of the surrounding valleys and the surrounding areas. We will submit the permit on November 15. This is the fall of 2008. We are on track submitting it within two weeks of today. And, we expect a permit issuance in January of 2008.

With regards to the land use, many of you here may not know the small fact that 85% to 90% of the land in this state is owned by the federal government and managed by the Bureau of Land Management. So, the available land for the construction of this facility is in the hands of the Bureau of Land Management. We have requested between 2,500 and 3,000 acres and acre site from the -- plus the rightaways associated with the transmission lines, water lines, et cetera from the BLM. We submitted that application in the early part of the summer in June. The -- there's two sites. There's a preferred a site and an alternate site, because when you go through the permitting, you have to give the agency, the BLM, the alternatives. The preferred site is just 15 miles north of the city of Ely.

We are conducting the biological and cultural studies assessments in the area to be able to file and proceed with and environmental impact statement. And, we will have a draft EIS filed, available in November of 2007. And then comes in the summer of 2008, which is in the late summer, what is called the Record of Decision. That is subsequent to us getting the air permit. That's when the government, the BLM, will grant us the land rights to be able then to proceed with the construction. And, that is essentially the last hurdle that we have in order to be able to proceed with construction. With that -- at that point in time and all the proceeding permits, we will proceed to construction.

A key element, which will be discussed later by a subsequent panel, is the transmission line. I've already touched on this a 250-mile transmission line, it increases reliability. This map shows you where that -- where the Ely Energy Center is. It ties into our existing transmission system that takes power up into the Sierra Power Company. And then, the dash line coming down to the Las Vegas Valley is the new 250-mile transmission line.

Key milestones, discussed earlier in the presentations by others, a key milestone is going to be -- the first one is the PUCN approval, the Public Utilities Commission approval of our preferred plan that we filed and held hearings during the early part of September, or late part of September I should say. That decision is supposed to come around November 15th. That's the 135 statutory days. As Michael mentioned before, we had a good presentation. We had a lot of dialog with interveners and others, and I walked away very positive with regards to the quality and the content of our presentation and very optimistic with regards to the decision by the commission.

We will, subsequent to the -- getting the approval from the Commission, we asked the Commission to approve our plan, which is to proceed with the -- or to approve the Ely Energy Center along with all the other projects, transmission and other generation projects that were in there. But within the regulation, inside the -- in that filing, we also have to file what's called a three-year action plan. That takes us up to the next integrated resource plan. In that three-year action plan, we asked the Commission to allow us to spend $300 million and to proceed with a lot of the commitments that are necessary in order to keep the schedule, ordering equipment, acquiring right-of-ways, making expenditures on permits, et cetera.

And, the commitment we made to the Commission is, before we go past those $300 million, we would come back to them and make a filing, which we expect that is going to be a hearing sometime in the second quarter of 2008 and tell them now more specifically with detailed engineering and detailed estimates, potential of estimates at that time, we hope bids from manufacturers and builders and AEP, architect engineers, exactly what our estimate is at that point in time. It will cost, based on conditions then, and ask at that time for subsequent approval to go ahead with the rest of the expenditures.

So, we will begin on this first phase of approval within this three-year action plan of what we've asked, we will begin the major procurement of equipment in June of next year. The air permit, as I mentioned, will be awarded in January of 2008. That is our current target. We will file those amendments to the IRP after we get the air permit, first quarter, have hearings in the second quarter, and that will take us then -- at that point in time, it'll take us to the second step of the approval of the funds and expenditures. BLM Record of Decision in the summer 2008 and we are currently projecting and have schedules, very solid reasonable schedules that we will have the first unit in operation by December of 2011.

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With that, that concludes this presentation and we'll take questions after Tom Fair's presentation. Tom?

Tom Fair - Sierra Pacific Resources - Executive for Renewable Energy Thank you, Roberto, and good morning. It's a pleasure to be here this morning to talk to you about my favorite subject, which is increasing renewable energy supplies in Nevada. That's my job. Just to introduce this topic a little bit to you, there's a really strong political, regulatory and public support for renewable energy in Nevada, I guess you could call it a public policy consensus. And as Walt indicated, we're totally on board with that. Nevada has a very aggressive portfolio standard, but by the same token it has abundant resources, indigenous renewable resources to support renewables development in this State.

We see it as a business opportunity and the magnitude of it is that we estimate that over $2 billion will spent between now and 2015 to expand renewable energy supplies in Nevada. Our Public Utilities Commission is in full support of our involvement as an investor in renewable energy systems and therefore we intend to participate in the renewables market as an investor and not just as a power purchaser. And we've put together an organization for that purpose comprised of people who have been there and done that in California, Oregon, Washington, Texas and other states. So we're not really new to this business and we're going to make it happen.

Portfolio standard requires 20% of our energy supplies be renewable by 2015. That's an aggressive standard, the chart on the right shows the stair step of this standard beginning at 6%, where we currently stand as a requirement, stepping up to 9 to 12 to 15 to 18 and all the way 20% by 2015. Those bars on the right represent the various components of the standard. It's measured in kilowatt hour sales. There's a solar set-aside, which you see is the yellow piece on those bars, 5% of the total standard by 2015 would be 1% of our total supplies would be solar. The blue portion represents demand-side management or energy efficiency, which can make up up to one-quarter of the 20% required. And the green portion of the bar is the non-solar part of the renewable portfolio, which would be wind, geothermal, biomass and other things. When you take that kind of a stair-step standard and multiply it times our kilowatt hour sales growth, it represents a significant amount of new renewable energy that will need to be added to our mix.

Our strategy is to become an owner, developer and major advocate for renewable energy and energy efficiency in our supply mix. The way in which we're going to execute the strategy is to invest in renewable supplies, accelerate procurement and ramp up energy efficiency, demand-side management.

Our current supply picture, shown on this slide which shows a number of black circles and other symbols in the map that represent the existing renewable facilities, which are for the most part in Nevada, most of them are geothermal and we have a biomass plant and some small hydros there as well. In the southern part of the State we have some new large solar facilities under development. And all together I would say we have a significant history of working with renewable developers on renewable energy going back about 20 years, so we're not new to this.

The resources that Nevada has are abundant in the north, particularly geothermal and wind which I'll show you in a few minutes, and solar is very abundant in the south because of your cloudy days. The current status of things is that we are seeing a lot of geothermal development occurring in Northern Nevada, as I mentioned, and we have a 500 kV transmission tie that's planned, which has already been addressed by other speakers as a key element of our strategy to allow us to fully develop renewable energy wherever it is in Nevada.

Our near-term plans indicate that we're going to be adding about 170% to our current supplies of renewable energy by 2010. The gray portion on the bar chart represents 2005 supply, existing facilities which were shown on the preceding map, the yellow portion represents the new solar facilities being added, orange are some geothermal plants under construction and the green on the right represents facilities planned and under contract today to add further renewables to our supply mix. We also intend to add wind energy to the mix in the next few years.

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With respect to geothermal resources, Nevada has an abundant supply and this map shows you the number of project sites where there is some development activity taking place. The solid red boxes represent active projects that are operating. Nevada currently has 15 plants in operation totaling 274 megawatts and more on the way. Nevada ranks second only to California in terms of geothermal resource potential. And as I mentioned, we have a long history of over 20 years of geothermal exploration, characterization and development. We're very fortunate to have a well established geothermal industry in Nevada with companies like ORMAT, an industry leader in geothermal energy that is very active and involved in Nevada's resource development. As was mentioned earlier, geothermal resources compete well with conventional supplies and is firm not intermittent resource. We really like the geothermal resources in our mix.

With respect to solar energy, Nevada has an excellent resource, particularly Southern Nevada. You can see from this map the reddish areas represent the strength of solar resources throughout the southwest. So the solar bread basket if you will of the United States is Southern Nevada, Southern California, Arizona and a portion of New Mexico, so we have a good resource. We have a large solar facility presently under construction, 64 megawatts, maybe the largest facility of that type under construction anywhere, and we have some other large projects on the drawing boards. Of course solar technologies are not ready to compete with other renewables strictly on an economic basis, but the technologies are improving and making strides.

Wind resources in Nevada are not comparable to what you might see in the Great Plains, but we believe they're adequate to support good projects. Obviously wind has to compete with geothermal in terms of price to be a part of our mix, it's intermittent and there are some siting issues in Nevada, rough terrain, Federal land ownership, the military is very active in Nevada with Nellis and Fallon Naval Air Station. Low flying aircraft obviously are not compatible with wind turbines, but we have a number of wind proposals that we're looking at right now and we believe we're going to be adding wind to our mix. And as was said earlier, there is a substantial resource in the Eastern Nevada area near Ely that we'll be tapping into.

In summary, we're going to be spending over $2 billion to quadruple our renewable supplies by 2015. There is a consensus around renewable energy, our customers want it, politicians want it, our regulators want it and we want it. So investing in renewable facilities is a key element of our strategy, we believe it's an opportunity to enhance our earnings, enhance our reputation and our standing with our customers. Thank you.

Walt Higgins - Sierra Pacific Resources - Chairman, President, CEO Thank you, Tom. I believe this is the time to take some questions from the panel, so Rita?

QUESTIONS AND ANSWERS Unidentified Audience Member With regard to demand-side management, what would be the focus there going forward on how to accomplish that?

Unidentified Company Representative That's not my particular area, but I'll take a shot at it. There's a number of programs the company has and as part of the IRP we filed for approval of an expansion of those programs. Some of those programs are designed to reduce peak, others are designed to produce conservation energy savings. There is a combination of programs associated with that, some related to air conditioning load management, some related to energy efficiency in homes et cetera, and if you're interested we can get you a copy of what we actually filed showing the various programs that we've requested approval for. And we're escalating those programs from now until then. Those programs also contribute to Tom's being able to meet the renewable portfolio standard. We're allowed to increase our participation in our portion of DSM and DSM can contribute up to one-quarter is it? One-quarter of the RPS Standard.

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Unidentified Audience Member Yes that's why I brought it up, I'm wondering if it's one of the most cost effective ways to get there. And I'm just wondering on the surface, even though it's not your area, do you think it's more complicated with the Las Vegas market to facilitate demand-side management, given that people could care less what they do in their hotel rooms and things like that than it is maybe in California?

Unidentified Company Representative There's two different markets, you have the wholesales and we do have specific programs to address commercial buildings and we also have programs directed towards the residential market. The peak is generally driven by the residential market so a lot of those programs are designed to try to mitigate the effect of that peak on the system.

Unidentified Audience Member Okay.

Unidentified Company Representative Yes?

Unidentified Audience Member Could you give us more information on the solar project in Southern Nevada? For example, the technology, the cost, the expected annual production from the 64 megawatts capacity?

Tom Fair - Sierra Pacific Resources - Executive for Renewable Energy Yes I'd be happy to do that. We're buying the output from that project, we don't own it. But it's a 64 megawatt solar/thermal project, uses solar trough technology, which is a well established technology actually. And it's well under construction, due to be completed in the spring of '07. It's pretty far along and as was mentioned earlier, you might be able to see it from the highway if you go to Hoover Damn later this afternoon. It's an amazing facility frankly, I was there just a few days ago and they've been able to modularize everything and it's going very smoothly.

So that's a technology that's proven, the solar troughs actually direct energy toward tube running linearly along these troughs and that solar energy then heats up a heat transfer fluid that circulates through the plant and goes to a heat exchanger which produces steam which drives a steam turbine. So this is something that's been done before, but this is the largest project of this type undertaken in the last 15 years I believe. So it's kind of a breakthrough in that regard and a lot of thinking's gone into this project in terms of the technology for each and every component to fine tune what can be done and improve the economics. The project is going to cost I think between 250 and $280 million, it's a large scale undertaking.

Unidentified Audience Member And the expected production from this solar project?

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Tom Fair - Sierra Pacific Resources - Executive for Renewable Energy Roughly 130,000 megawatt hours a year.

Unidentified Audience Member And who's building it?

Tom Fair - Sierra Pacific Resources - Executive for Renewable Energy Solargenics and, as was mentioned earlier there, affiliated with [Axiona], which is a Spanish company, a large Spanish company.

Unidentified Audience Member Okay thank you.

Roberto Denis - Sierra Pacific Resources - SVP Energy Supply So originally it was Duke Solar I believe, and then it was sold to Solargenics and then they partnered up with Axiona. As Tom mentioned, and as Walt mentioned before, as you head out to the damn you will see there's a half a square mile of mirrors out there in the desert right now, so you won't miss it.

Walt Higgins - Sierra Pacific Resources - Chairman, President, CEO Next question please?

Unidentified Audience Member Could you say more about the adequacy of water for generation and how that affects your expansion plans and if you have any comments on how this might be affecting other States in the west? Also wondering, on the super critical coal generation, does that use less water as well, or the same amount or more?

Unidentified Company Representative No with regards to the water requirements, you know the condensing portion of the cycle is what needs the water to condense the steam that is produced with the fuel back to water so that then it can be reheated and made into steam again. Air cooled condensing technology is available today. In fact the picture that I showed before of the Lenzie facility and the Silverhawk facility, those facilities are 100% air cooled. The only water they use is for process water. The reason for, however, using some water associated with it is because during the heat of the summer the ambient temperature is such that we do not get the cool down efficiency that you would get with water, a water-cooled system. So you augment it with water.

This is some of the same issues that geothermal facilities have that are just purely cooled with air. There's a slight drop off in the capacity during the summer because of the higher ambient temperature. As I mentioned, we could build this facility 100% air cooled, but we have determined that with a small amount of water, approximately 5 to 6,000 acre feet of water, which is the typical way you measure the water here, you could actually get more efficiency and get 5% more peak capacity out of this facility during the summer period.

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Availability of the water, as I mentioned, there's 25,000 acre feet of water in White Pine County that has been assigned for municipal water use, but that's not the only water available. There is substantial additional water that's available in private hands at reasonable cost that could be acquired if necessarily. But even though, as I mentioned, that source is available, we're trying to minimize the use of it because the higher value use of that water ultimately will be either for agriculture or people use.

Unidentified Audience Member What is the sensitivity in Nevada to mercury abatement?

Unidentified Company Representative I think not only in Nevada but throughout the United States there is sensitivity to mercury and the release of mercury into the environment. The EPA have new rules that they promulgated on mercury emissions, the State is implementing, has implemented their version of the rules. But let me give you an example, our existing coal facilities will meet those requirements because we already substantially scrub the output of the facilities in excess of the requirement then basically sequester that mercury. We will not have under new rules to make any substantial improvements in any of our facilities until Phase II of those rules, which I believe is 2016. This facility that we are putting in -- again, because of the concern for the environment, that we will be putting in White Pine County although we could have a dry scrubber and meet the ACT requirements we've chosen that we will go to a wet scrubber so that we can further remove not only sulfur dioxide, but some of the mercury in the streams, in anticipation that some day in the future there may be even more stringent regulations and it's easier to do it up front than to do it later.

Unidentified Company Representative Let me just continue to address the -- one of the other sources of mercury here in the State that is a substantial source of emissions is the mining industry. And these rules also do apply to that so there is overall sensitivity on the impact of mercury, not only in power production but in all uses, other industrial purposes or processes.

Unidentified Audience Member On page 45 you talk about adding 5 to 10 new geothermal plants to the portfolio and then on page 46 you give us a map of available sites. How many, if you fully utilize the source in the State, how many plants could you add over time? And how many megawatts is that sort of per plant?

Tom Fair - Sierra Pacific Resources - Executive for Renewable Energy Yes I think over time there's a very, very large potential, but finding the resource and bringing it on in a reasonable fashion dictates that you're not going to get there over night, it's going to take a number of years to get there. For example you have to drill wells and you may not always find the resource you're looking for. So there are bits and starts in the process that are inherent in that, but there is a very large potential. And I think the next speaker, Hezy Ram from ORMAT, will probably be addressing. So we believe Nevada has an abundant resource, we haven't found all of it yet, but I'm sure over the years ahead we will find more and more and we ought to bring quite a bit of that resource on line at a reasonable cost.

Unidentified Audience Member How big is the average plant?

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Tom Fair - Sierra Pacific Resources - Executive for Renewable Energy An average plant might be 20 to 30 megawatts, but it's running virtually all the time so it's producing quite a bit of energy for that amount of megawatts.

Unidentified Audience Member But these open boxes here represent places where you think there is potential?

Tom Fair - Sierra Pacific Resources - Executive for Renewable Energy That's right, and where experts think there's potential. That map is produced by a company known as Geothermics, which is probably the leading consulting firm in the geothermal world and I believe they're probably as correct as anybody could be about what's out there.

Unidentified Audience Member And if all of these boxes were actually sites where you could build plants, you would exceed the ten --?

Tom Fair - Sierra Pacific Resources - Executive for Renewable Energy I wouldn't guarantee that because when you get into projects you find sometimes that there are fatal flaws that can arise for environmental reasons, permitting and otherwise, so you know you can't really say that everything that's a potential will actually be developed. But I think it's clear that there is substantial potential.

Unidentified Audience Member Thank you.

Unidentified Audience Member Just to follow-up a little more, what types of projects would you invest in as a company in the renewable area? And any kind of dollar figure and time frame you might put on that? Did you have something in the IRP on that?

Tom Fair - Sierra Pacific Resources - Executive for Renewable Energy We've talked about investing in projects. We have not identified in the IRP specific projects at this time. But we're talking to a number of developers in the wind industry and the geothermal industries about the possibility of joint development. We would like to partner with those that have a proven track record and get the job done, and that's our plan. So we've had discussions on wind, on geothermal and actually on some other things and I think that in the next year or two you'll see some activity of that sort come forward. So I can't tell you more than that at this point.

Unidentified Audience Member Is wind more likely than geothermal to be one that you would jointly invest in?

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Tom Fair - Sierra Pacific Resources - Executive for Renewable Energy I wouldn't say it's more likely, but it certainly is a strong possibility that we'll be co-developing wind projects in the near future.

Unidentified Audience Member Okay thanks.

Unidentified Company Representative Again I want to say something just real quick before you ask your question, for those of you on the web, listening in on the webcast, you can type in a question and we will answer it. And now I'd like to turn it over to Dan Eggers.

Dan Eggers - Credit Suisse First Boston - Analyst Considering the escalation in cost for new construction we've seen over the last year or two years and the fact that the Ely project is already be a year sale and three year sale by the time you go to the commission for final approval, how much room is there in that $3.8 billion for cost inflation? And realistically is that number going to have to be revised upward meaningfully as we get closer to the date?

Roberto Denis - Sierra Pacific Resources - SVP Energy Supply Well in recognition that there is a potential for a cost to be different, that is the reason why we've taken the two-step process of going to the Commission. We thought that it was too much to ask the Commission to approve all $3.7 billion of expenditures at this juncture that we're at. So that's why we're going through to gain the approval and to gain the confidence is that we have essentially a two-step process that we will be able to confirm to them what that price is. It is no secret to anybody that the costs of material, costs of labor have been in an up cycle recently. We've taken a lot of that into account in our original estimate that we have put forth, which is essentially $2,000 a kilowatt once you extract the cost of that transmission line.

We have secured services of architects engineers, owners-engineers, we have benchmarked against other facilities that are currently under construction and we feel that it is a reasonable estimate. But until the day that we get firm quotes for the equipment, the engineering services and lock down those contracts and are able to put away a substantial portion of the risk associated with ultimate price we won't know that. We're confident we can do it for that price, but again we are cautious in how we're proceeding so we don't have blinders on and not realize that there may be some changes to those estimates. So we're being very deliberate in going forward.

Dan Eggers - Credit Suisse First Boston - Analyst So the price is higher than what would been say 2006 present day prices to build a plant? If you were to sign the contracts today it would be less than $3.8 billion or $3.7 billion?

Roberto Denis - Sierra Pacific Resources - SVP Energy Supply Well you wouldn't sign to begin with, you wouldn't sign full contracts today because there are some procurement that goes along in the process. But for example, as I mentioned, the major pieces of equipment where the majority of the bulk of the cost is, is in the boiler and the major rolling equipment. And we expect that we will issue those equipment contracts and lock that down, as I put in the presentation, second quarter of next year.

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Dan Eggers - Credit Suisse First Boston - Analyst Okay thank you.

Unidentified Audience Member Can you talk a little bit about any competing development proposals in the State? And what in your mind gives Sierra Pacific maybe some competitive advantage in the development process?

Roberto Denis - Sierra Pacific Resources - SVP Energy Supply I'm sorry, could you repeat the question? I didn't catch it.

Unidentified Audience Member Can you discuss some of the other competing development proposals in the State that might be competing with the Ely Center? And then what gives Sierra Pacific competitive advantage over some of the others?

Roberto Denis - Sierra Pacific Resources - SVP Energy Supply Well first off I don't think that there's any competing other projects. We have set forth and put forth with the Commission what we thought is in the best interest of the State and the consumers. There are a couple other projects that have been proposed for coal development in the State, and quite frankly we welcome that those projects do proceed on their own and come to fruition. It will bring more low-cost power into the wholesale marketplace that we will be able to rely on to fill some of our existing short positions that you saw in Mario Villar's presentation. But we had and have had discussions and the substance of those discussions I'm limited from being able to discuss fully, but we did have discussions with two other coal developers in the State and, after substantial lengthy discussions, we could not make things work. We decided that we could not wait any longer to bring the diversity in fuel to this State that was needed and proceeded on this project. And we fully discussed that with our Commission and their decision will also entertain that information that we provided to them on that basis.

Roberto Denis - Sierra Pacific Resources - SVP Energy Supply We need to wrap up, one more question?

Unidentified Company Representative [inaudible question - microphone inaccessible]

Roberto Denis - Sierra Pacific Resources - SVP Energy Supply Are we going to take a break at this point?

Unidentified Company Representative [inaudible question - microphone inaccessible]

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Roberto Denis - Sierra Pacific Resources - SVP Energy Supply Okay. So if you will hold the rest of the questions, I will be here to answer any more questions on the side.

Unidentified Company Representative [inaudible question - microphone inaccessible]

PRESENTATION Unidentified Company Representative Next on the agenda, thank you panel. I'm pleased to introduce our next presenter, our first guest speaker today, Mr. Hezy Ram. Hezy is Executive Vice President of Business Development for ORMAT Technologies, he has been with the company for 28 years. ORMAT Technologies is the global arm of ORMAT Group, which has their web address of www.ormat.com, and ORMAT Technologies is accountable for the M&A and Greenfield development of independent power producers in the United States. Prior to 2004 Hezy was Vice President of Business Development for ORMAT Industries located in Israel. During this period he was responsible for the acquisition and the operation of a municipal utility which provided power and district heating to a city with over half a million customers. I'm pleased to introduce Hezy, he is one of our great renewable energy suppliers. Without ORMAT we wouldn't be able to meet some of the renewable portfolio standards today, it's a great partner and I'm pleased to introduce Hezy Ram.

Hezy Ram - ORMAT Technologies Inc. - EVP of Business Development I'm very pleased and honored to be here today and thank you very much, Walt and Michael, for inviting me for this great event, really very informative very [educational]. My presentation frankly, was supposed to focus on the benefit of geothermal. actually it was the glorification of the geothermal industry as part of the renewable energy, but Walt and Tom Fair and everybody else at the Sierra panel did such a great job that I think I don't think I need to repeat whatever they said, you all know it's a great thing. So maybe what I should do, I'll give you the perspective of the developer because, as you saw in the last slide that Tom Fair put up, it said we all want renewable and for me renewable is mostly geothermal. We all want renewable, the regulators want renewable, the customers want renewable, the utility wants renewable, but finally somebody has to put this project in place for everybody to enjoy.

This is a picture of what we call the rechargeable [debt] plant or sometimes we call it the Galena 1 project. This is next to Reno, Nevada, the city you see there is Reno so you see how close we are to the city. This is the latest project that we put together in a complex which is called the Steamboat complex. This complex has the first facility that we put over 20 years ago. As Tom and Roberto mentioned, it was called at that time Steamboat 1 and then was 1a and then was 2 and 3 and Steamboat Hills and finally we have this project is Galena 1. By the end of this year we're going to have Galena 2 and we've signed the contract for Galena 3, so any questions that we'll hear about is there any development potential to geothermal, we can demonstrate to you that this is the case.

This is an air cooled plan, about 24 megawatts, two identical facilities. You can see it's an air cooled system, there's emission coming of it, we don't contaminate the soil, the ground, we don't use water, it's air cooled system, it's pretty quiet when you go around it and it provides electricity 24 hours a day. With this plant and with some other plants, which as I told you are under construction, this complex itself is going to provide 100, a little bit over 100 megawatts of stable geothermal power to Sierra Pacific Power. And just for demonstration -- to demonstrate what it means for us, our company is locate in Reno so I talk more about residential and less sensitive to hotel rooms and this kind of stuff. I've got residential customers more on my mind because

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© 2006 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Nov. 03. 2006 / 11:00AM, SRP - Sierra Pacific Resources 2006 Analyst Meeting we have less hotel rooms and casinos over there in Reno. One hundred megawatts is equivalent to the demand associated with about 100,000 customers, 100,000 households, and that pretty much is what we have in the cities of Reno and Sparks together about 350,000 people.

So one can make a calculation, one can assume that the power that comes from this complex, not only from this facility but from all the others, can provide basically all the residential demand of the cities of Reno and Sparks so it does make a difference. We sell this power to Sierra Pacific Power under long-term contract, 20 25 year contract, with prices that are pretty much fixed. some of them do escalate with inflation, CPI, this kind of stuff. So if you go to those residents in Northern Nevada and tell them, "Look I've got a deal for you, I've got clean energy," when you know the price is not going to change on top of the inflation for the next 20 years, I think everybody will recognize that's a great proposition. And that's the beauty of the geothermal industry.

Let's move on. This is the disclaimer that we have. We are also a public company as you know, so we have to go through it. Here is a couple of facts about geothermal. On the right hand side what you see is geothermal worldwide but I won't focus on that too much, we are an international company so we have operations also in other places, the Philippines, Central America et cetera. But if you go to the left side you see that you have plenty of geothermal resources in Nevada. Strangely California is the leader in the United States and actually California is number one as a State, number one utilization of geothermal energy, about 2,000 megawatts are being generated in California, a geyser in Salton City and other places. And currently geothermal provides about 5% of all the demand in the State of California, which you know is the fifth or sixth largest economy in the world.

Strangely enough in Nevada I also did a calculation that Nevada now has, between Sierra Pacific and Nevada Power, you have about 4,000 megawatts of capacity and geothermal is about 200 megawatts. So it's again the same ratio of about 5% of the demand which is owned by the Sierra utilities is provided by geothermal, so it does make a difference. What is also very interesting is the fact that Nevada today is the State in the nation has more projects under development in construction than any other State. There are a few projects being developed in California, one or two are being developed in Idaho, one or two in Utah, but in Nevada at any given time I think there are like five or six projects and more to come, as I'll show you in a moment.

And I think part of it is because we have the resource, part of it is because we have the RPS, the Renewable Portfolio Standards, but I cannot belittle the role that the utility is player. No question in my mind is that this is the most, friendly utility to developers in the renewable energy, especially in our area which is the geothermal. So I think there is no question in my mind that the reason why you see so much activity in geothermal in the State of Nevada is because the utility has the right attitude and they are keenly interested in developing this resource more and more. So that should not be forgotten.

This is potential in numbers. I think one of the questions was what kind of potential we have. These are basically identified resources and identified projects under development. As Tom Fair suggested before, there are currently -- and again I am staying only with geothermal, there are currently about 15 projects which are operating in Nevada providing closer to 300 megawatts. Some of the power goes out to Edison, Southern California has one project we sell to, Edison, everybody else sells to Sierra Pacific. There are 24 projects which are really in various stages of development. Some of them are on drawing board and some of them on the other extreme like our projects are under construction, ready to be commissioned this year or next year or the following year. So there are 24 projects and they would bring the power that can come from geothermal projects in Nevada from the 270 megawatts to about 740 megawatts. And this takes into account of, again following what Tom suggested, that out of those 24 projects we know about today, maybe half or one-third of them will never come to fruition because of reasons associated with permitting, resource issues or developer.

One more comment maybe I should make here is that geothermal contrary to wind, which is kind of our competitor in most of the RFPs that we go for, geothermal does have a relatively high entry level. The entry to geothermal is quite high. The threshold is high. You need to risk money before you start to see things going, you need to be well capitalized, you have to understand and try to understand what's going out below the ground. That's why a geothermal project typically will take two or three years to be completed and on the other hand wind projects can be done probably in less than a year because everything is done above ground and you get equipment and just install it. You don't have to do exploration and this kind of stuff. On the other hand, once you have the geothermal project up and running, the economy is probably about the same, even though geothermal

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The other thing about geothermal, and I think this is another point which will come about as utilities are starting to focus more and more on the quality of the power they are getting, the geothermal, as Walt said, has the features of fossil fuel power plant. It can be dispatchable to a certain extent, you don't want to play with the geothermal wells but there are ways around it. And it can provide also ancillary services, which are very important, exceedingly important for the utilities in this day and age, especially for the deregulation issues et cetera. We can provide [valve] support to the grid, we can provide frequency control, we can be monitored from a remote and we can even provide steaming reserve to a certain extent and voltage control, this kind of stuff. Those things are very important and they are given when you are doing a coal fired power plant or combined cycle power plant. But geothermal is renewable energy, its resource is probably uniquely positioned to provide those kind of features and I think they're going to be more and more important as the electric grid is getting more demand for these kind of services.

This is a little bit kind of a summary from our company. We are the independent power producer, IPP. What we do, we go out and we look for leasers, prospector to stake, and we sign leases with the private owners with the government, the BLM or the State in some places. We do the exploration, we find the resource and if the resource is there we build a power plant and we sign proper agreements with the utilities and we sell the electricity to them on a long-term basis. Basically we take all the risk at the initial development stage and later on we take all the risk through the operating stage. If things don't go well, our pricing with the utility sticks, there is nobody that we can go to and ask for an increase in price because our expenses are higher than expected and all this kind of stuff. But we do have support in that respect and some of the bullet points that you see here are the support that we get which are the RPS and the PTC that was applicable for geothermal the last two years. And if you look worldwide, you have the Kyoto carbon tax and the rest of the incentives outside the United States.

Two more words about ORMAT, I won't bother you too much about it, if you are interested you can go to our website. As I said we are a New York Stock Exchange company. But just to show that, even though you're taking those kind of risks, you can run a business which is successful and is profitable. In our case we also have our own technology which we call the binary technology, which is very applicable to medium temperature geothermal resources, low temperature geothermal resources and we sell our equipment also to other developers. The Pacific Corp is now building for their own geothermal project so they already made the leap to investing to renewable energy themselves and geothermal energy. And we are supplying them the equipment, it's a 12 13 megawatt facilities that we are building for them and there are other developers in Idaho and other places who are using our equipment. But the majority of our revenues and earnings come from being an IPP.

These are a couple of things that we talked about that were discussed before which is what are the drivers for geothermal energy, I won't belabor on that too much. We operate in those three States that you see down here, in Nevada, in California and in Hawaii, and in all those three States currently we have operating facilities. We have development projects in other States, but not yet operating. Fortunately for us all those States have aggressive RPS programs and that's quite helpful in moving ahead with our development.

This is an example of our organic growth, which is not by acquisition but by developing what we call Greenfields. We pretty much started by acquiring existing geothermal projects who had pretty much exhausted what was available. And what we have been concentrating on for the past couple of years is what we call Greenfield projects, which is when you start from really with a Greenfield and you develop it all the way to commercial operation. So you can see that right now we are in the range of a little bit over 100 megawatts and we expect in the next couple of years to be -- this is only in Nevada, to own and operate almost 200 megawatts of geothermal projects.

The way that we secure our ability to more projects in the future, like any other developer should do, is to basically secure the leases. There is a lot of real estate associated with geothermal, you want to secure the leases so we buy or lease leases all over the place, and this is our basically reserve for future development. And now we have enough leases to go through the next round of RSPs, which probably will be toward 2009 2010.

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This is a picture, Walt talked about the fact that the best wind is in North Dakota and he is worried about that, the best capacity sector of winds is in North Dakota. But we have other technologies that also work in North Dakota which is also considerably renewable, actually it's considered renewable in the State of Nevada and some other States, about ten of the States in the nation and this is what we call recover LG generation. The geothermal, as you saw in the map, is limited, is resource related, right now we have the potential to develop geothermal only in the western part of the United States. We took the same technology we developed for geothermal and we deployed it into the industrial sector and there is a lot of potential there to use this clean kind of renewable equivalent its called technology.

Here's an example, you have a compressor or a station along interstate gas pipelines. A lot of those compressor stations are being fired by or operated by what we call open cycle gas turbine. Which means that the efficiency of the turbine is like 30%, 70% of the heat goes up in the air in the form of exhaust gases, with our technology. And that's an example from a northern border pipeline which is in North Dakota. We capture the heat and we use the same technology that we use in the geothermal industry to convert it to additional electricity and we sell the extra power, which is basically without any additional fuel consumption, to the utilities. This in this case is the largest coop in the US which is Basin Electric who is buying this power for the next 20 years. And we're looking for more opportunities even in Nevada to do the same.

Just a few indications to show you that a renewable energy company can be profitable and can be a real company, quite a few are still in the early stages that don't show this kind of performance. We will have our earnings call next week so all we have is the first six months, today we are a little behind you. You know we are a bigger company so it takes us some more time to get there. But you can see there is nice growth both in the revenues and the -- let's move on to see the EBITDA. That's okay, that's not a problem, I just wanted to give a sense of it. I'm not trying to market OMAT technologies here, that's not the forum. But on the other hand, if you're interested, talk to me.

So just to sum it up, what I would like to submit to you is that I think that Sierra Pacific is really fortunate with the fact that it is located in Nevada and it's got access to this tremendous resource which is renewable energy, mostly geothermal from our point of view. And I think that this symbiosis is going to work very well both for the developers, people like us, for Sierra and for its customers. And in that respect I want to congratulate the utility of initiating this Ely Energy Center. The coal fired plant is very important I think in order to make sure that the utility doesn't go into difficulties like we had during the California Energy debacle. But the fact that we will be able to ship a couple of hundred megawatts of geothermal power from the north down to Vegas where it's really needed, I think it's very important for the future development of this industry in this State.

Thank you very much. If anybody has any questions I'll be happy to see if I can.

QUESTIONS AND ANSWERS Unidentified Company Representative Any questions for Hezy?

Unidentified Audience Member I was wondering about the geothermal plants, what is a typical life for them? I mean when you build it, is it going to be there forever? Or does maybe the reservoir gradually deteriorate and there's any loss of capacity over time? How does that work?

Hezy Ram - ORMAT Technologies Inc. - EVP of Business Development That's a very good question. I think that it's very important to manage it properly. If you answer it properly the answer is running pretty much all the time and you have some examples. We have the geysers in California that has been in operation since the

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60s and it's still running and producing about 100 megawatts. You have Wairakei in New Zealand which is the 50s and still up and running. You have even the Lardello which is the first project that was developed in Italy in 1904 which is still up and running. Our experience shows that once a project goes through the first about six months it stabilizes and then it can continue like that for many years. As I said, we have in the same project that we have here, the same complex that we showed you the picture, we have projects that we installed in '84 '85 and those projects are still up and running. Actually the first project in geothermal project I know that we did in Nevada is in a place which is called [Robaska], which is kind of rural Nevada, and this post is still up and running 20 some years later without deterioration.

You make still sometimes a little bit of cooling the geothermal resources, especially those kind of temperatures may cool over time, but there are ways to mitigate this and again, once you go through the first six months of stabilization, usually the resource is holding up quite nicely.

Unidentified Audience Member And is there maybe a gradual ramp up of CapEx or spending to help maintain that? You don't have to do anything extra to keep that level, it sort of stays?

Hezy Ram - ORMAT Technologies Inc. - EVP of Business Development We don't pay for fuel, we don't have any cost for fuel, but we do have to spend money on O&M and CapEx and on -- the power plant is really not a problem our equipment marvelously. There is no overhauls. You don't need anything like that. On the field side sometimes you need to go back to clean a well because you need to clean it, work over it, whatever the case is, but it's all budgeted and we have enough experience now -- I think we have like 200 geothermal wells under control, so we have enough experience how to deal with those issues.

Unidentified Audience Member Just real quickly, maybe you mentioned this, but what percent of your wells do you own yourself? And what kind of hit rate do you get in drilling? What's the risk there? Just a little bit has to do with whether you would partner in ownership with somebody like Sierra or whether you like to own them yourself?

Hezy Ram - ORMAT Technologies Inc. - EVP of Business Development We like to own our self. Our preferred business model is to be the owner and operation, developer our own operation, that's our model. For example, we don't take any construction loans because we know that when you develop a project there are always some issues and it's too complicated to deal with banks and lenders in that respect. So we build our projects, we commission them, we make sure they work and only then will we finance them. But we like to be the owner and operator. We are talking to Sierra, if there are ways to work together I'll be happy to do it. I don't think that Sierra will, and I don't think that Sierra should take any drilling risk, I don't think this is something that they should be in this kind of business. But one can think about a partnership whereby we do the project and Sierra does the power line, which is something that they really know how to do, that's something that can work out for us. But we like to do, in all our projects we are alone, 100% owners, but we have one project that we inherited when we were a partner with Constellation Energy and believe me I'm knocking on their doors every quarter to try to sell me their half. They say we are great partners they don't want to sell.

Unidentified Audience Member Thanks.

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Hezy Ram - ORMAT Technologies Inc. - EVP of Business Development Thank you.

Unidentified Company Representative Okay we're going to take a 15 minute break. Be back please at 25 minutes to 11, thanks. And thank you very much, Hezy, that was great.

[Break]

PRESENTATION Walt Higgins - Sierra Pacific Resources - Chairman, President, CEO Okay, back to speak about -- introduce kind of the other half, the ying and the yang of what a utility does. You have to make it and then you have to distribute it and sell it. And we are as result of the robust growth in Nevada the beneficiaries of excellent opportunities and challenges to build the necessary transmission, distribution, and customer service infrastructure to serve the [110,000] or 20,000 new Nevadans that we have every year.

To put that in perspective last year we hooked up about almost 60,000 new electric customers. That's a lot of new electric customers and that's a good challenge for us and Jeff and his team and he's going to introduce them. We'll talk about that but also to put that in perspective my friend Dave Ratcliffe and I were talking one day and he asked me about our growth and he's the CEO of the Southern Company a noted large and fairly rapidly growing utility in another part of the country and he commented when I told him that we would hook up 60,000 customers that that was about what the entire Southern Company would hook up that year as well. And that just helps to show both the challenge and the opportunity that Jeff and his team have to build the necessary infrastructure, get the customers hooked up, do so in a way that's very satisfactory to them and it's my pleasure to introduce our Senior Vice President for Service Delivery and Operation and the President of Sierra Pacific Power, Jeff Ceccarelli.

Jeff Ceccarelli - Sierra Pacific Power - SVP for Service Delivery and Operation, President Thank you Walt. I mentioned to Michael that the most risk he'll have today is turning his operations team loose up here with financial analysts in the audience so we'll see if we can mitigate that risk somewhat and allow Michael to sleep tonight. I'm fortunate to have a couple of members of my team, three members of my team with me here today and we are going to talk about as Walt had mentioned the big challenge of meeting the growth requirements that we've got both the north and south of state.

We've got it broken into a couple of parts. The first part and our executive responsible for transmission Carolyn Barbash will to talking about our transmission investments over the last few years and our plans, significant plans, for transmission investment going forward. Then Mike Smart who is our executive responsible for operations in the northern part of the state including our Tahoe service territory. I'm going to talk about some of the challenges that we face with the infrastructure and the reliability requirements on a day-to-day basis.

And then finally Herb Goforth who is our executive responsible for our technical services component and really does the planning and on-the-ground work that's required to provide service to the customers and we've got some interesting challenges there that we'll be talking about. Approximately 2,000 of the 3,000 employees in our company are engaged in the service, delivery, and operations part of the business. And that's really everything from the field services person to the customer service rep

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The two utilities Sierra Pacific and Nevada Power Company are different in many ways and some of my panelist and my team are going to talk about those differences. But really you're got significant geographic differences between the two utilities and you can see those from the slide that's represented here.

On the north, of course, Sierra Pacific Power has an enormous service territory, a 50,000 square mile service territory that's not very dense. Really you've only got three or four population centers and so we have a lot of transmission, a low density population of about 375,000 customers and we also in northern Nevada are responsible for the natural gas business in and around the Truckee Meadows which is really the Reno and Sparks area. It's quite the opposite down here in southern Nevada where we have a very compact and dense service territory, about one-tenth the size of northern Nevada, about 5,000 square miles.

I kid our guys down here that they can see the boundaries of the service territory from the top of our building and that's almost a truth with the exception of our service that we provide down in [Lachlan]. But it's very dense and it's growing very, very fast. To give you just a couple of anecdotes about the growth I think you might find interesting. We are growing at about 2.3 to 3% in our electric business in northern Nevada. We're probably growing about 3.5 to 4% in our natural gas business and down here as Walt mentioned in southern Nevada we're growing somewhere in the realm of about 5% or plus 5%.

And that translates into some real-world challenges for us. The growth is not always -- it's not always in concentric circles coming up from the center of the urban areas. In fact Kevin Sullivan is going to talk to us about a project that we're supporting where you're going to bring a major point load down to the area near the Strip. In fact Herb's presentation will talk about the some-1,000 megawatts of demand that we expect to see in the area of about half a mile from the strip over the next four to five years.

But interesting enough we talk a lot about the growth in southern Nevada, the big customers in southern Nevada but many of you may not know that the biggest electric customers in the State of Nevada are not the casinos. They're not the growth that we're experiencing down here and it's not even the 6 and $7 billion projects that are going to be coming on line. It's actually in the northeast corner of the state up near a little place called Elko where we have some significant gold mine operations. You may have heard of companies like Newmont and Barrick and they are incredibly large users of electricity, in the neighborhood of 150 to 200 megawatts per customer out there. And that's for the grinding and processing of the gold.

In fact if the northeast corner of the State of Nevada were a country it would be the third largest gold producer in the world. So an awful lot of gold comes out of the northeast part of the state and that may be something that goes unnoticed in some ways. But our guys do a terrific job of serving that customer as well.

Again, the uniqueness of not only meeting the demands on the residential side but on the commercial side have to do with a lot of mega projects that you may have heard coming on board. Kevin will be talking about one, Project City Center, multi-billion dollar projects with unique characteristics that make them a unique challenge for us.

Just some anecdotes about the growth though I thought you'd find interesting. Walt talked about our hook-ups and right now we have our field service personnel are working 6/10, 60 hours a week, and during the course of that 60-hour week they're hooking up a customer, a new customer every three minutes consistently over the course of the whole year.

The feeder cable that we use down here in the south is a cable called a million cable -- it's just a size. It's about a one-inch conductor inside a lot of insulation. And through the first nine months of this year we have installed 750 miles of million cable just in this service territory down here. We're flowing about $10 million a month of stock items through our warehouses, which is a pretty astounding statistic for a utility. So growth is our challenge, transmission and distribution. We have to take the good work that Roberto's guys have done in generating it and deliver it to our customers and so Carolyn is going to talk about the first facet of that which is our transmission business, so Carolyn Barbash.

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Carolyn Barbash - Nevada Power - Transmission Executive Good morning. Like Jeff said I'm going to share with you today some of the transmission projects we've been involved in constructing over the last few years as well as some of the projects we have planned for the future. There's a perception out there that vertically integrated utilities are under-investing in the transmission grid and I think you'll see here as I go through some of these projects that's definitely not the case here in Nevada with our companies. We're building projects to keep up with the rapid load growth of our retail customer base as well as to meet our obligations under our federal regulations to build new transmission facilities for wholesale customers that want to inter-connect a generator or take transmission service as long as those customers either agree to pay for the cost of those facilities or to take and pay for transmission service that would provide the revenue recovery for the cost of those facilities.

The group of people that I work with at the companies have responsibility for operating the grid on a 24/7 real-time basis. And also for planning for the future needs so there's definitely an incentive of that group of people to build the right, most effective, reliable project because we've got to live with it later when we're operating it in the real-time.

The first transmission projects -- oops, I went back -- the first transmission project I wanted to share with you is something that we're going to complete the first quarter of this year. It's called the Centennial Project. This project was designed to inter-connect over 3,000 megawatts of new generation in the El Dorado or in the [Moafa] Valley of Nevada and deliver it to the Las Vegas Valley or onto the El Dorado Valley.

You can see here we've inter-connected about 3,000 megawatts of new generation up there. This is in the [Moafa] Valley area. This project consisted of an expansion of this Perry Island substation right here about six miles of line over to our Crystal substation, about 30 miles of 500 kV line over to our Northwest substation and first quarter 2007 we'll be completing approximately 60 miles of 500 kV down to our Mead substation.

This project when it's completed is projected to cost a total of 310 million. Up in northeastern Nevada in 2004 we completed the Falcon Gonder transmission project. This project consisted of about 180 miles of 345 kV line from the Carlin Trend area in northeastern Nevada over to our Ely substation over here. It cost about $100 million. This project increased northern Nevada's ability to import power by about 250 megawatts and it also allows generation that might spike later in Nevada to be exported as well. And it also increased our company's ability to access power over from the Utah area, the interconnection over here.

Back in 1998 in northern Nevada Sierra Pacific completed 167 miles of 345 kV lines consistently of a line from Reno over to near the Oregon border. This project at the time increased Sierra Pacific's ability to purchase power from the market and in particular Northwest Hydro by 300 megawatts which was at the time a doubling of our ability to import power.

At that same time, that was about the time Nevada Power and Sierra Pacific were merging. I don't have a slide on this one by Nevada Power was completing the Crystal transmission expansion. That project increased Nevada Power's access to the markets by about 950 megawatts and also gave an additional point of delivery where they could accept some of the Navaho generation that we own into the system.

Now this project, the East Valley master plan is something that we just proposed to the Nevada Commission and the resource plan that you've been hearing about. This project will enable Nevada Power to bring in about 2,000 megawatts of new resources from the north including the Ely Energy Center, renewables and things like that. It consists of a couple of taps on Harry Allen and Mead line that we're completing first quarter of 2007 that went over as part of the Centennial Project and a new transformer in northwest Las Vegas. The total -- the total cost of that project is expected to be about $250 million.

Another project that we recently proposed in the resource plan is the north Las Vegas master plan. This is going to accommodate some significant load growth that we expect to see in northwest Las Vegas through the 2012 timeframe. Total projected cost

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The EMMA transmission project is a project where some of the facilities have already been approved in the last resource plan that Sierra Pacific Power filed and they'll be requesting some more of these facilities in this upcoming resource plan that we'll be filing in July of 2007. The goal of this project is to be able to get some of the resources located to the east of our load centers. Our load centers are mostly Reno, the ones that growing the most rapidly, Reno, Carson City and Truckee to be able to deliver those and then also to provide some load growth support for the Carson Valley area. Total cost of this project is expected to $80 million.

And then the project that Roberto was talking about earlier and Mario is the Eastern Nevada Transmission Inter-Tie. This is 250 miles of 500 kV line that will interconnect Sierra Pacific and Nevada Power for the first time. The scope of this project is a new 500 kV substation near Ely, Nevada and that 250 miles of transmission line down to an expanded substation in southern Nevada. In Northern Nevada near Ely we will fold this 500 kV line into this 345 line that we just completed in 2004 in order to bring some of that energy into northern Nevada and also interconnect down to southern Nevada.

The projected cost of this project is $570 million expected to be in service by 2011 pending approval at the PUCN. We hope that this project will spur on some wind development in eastern Nevada, enable the utilities to share some renewable resources between northern Nevada and southern Nevada and help us reach our goal of diversifying our energy supply and getting more control over cost of energy.

So to sum it up over the last eight year Sierra Pacific and Nevada Power have invested $785 million in the bulk transmission grid. Over the next eight years we plan to complete and start construction of $1.3 million. So essentially we're on the same pace that we were on for the last eight years and the next eight years with the addition of the incremental cost of the interconnection between the two utilities. So for a total of $2.1 billion either completed since 1998, under construction or proposed to 2014. Thank you.

Jeff Ceccarelli - Sierra Pacific Power - SVP for Service Delivery and Operation, President Thank you, Carolyn. I did notice that Buck had his calculator going as Carolyn was rolling through those big numbers. And he had this funny look on his face so maybe he hadn't seen some of these yet. Next up we've got Mike Smart who is our executive responsible for our operations in the northern Nevada. He talked about some of the interesting T&D challenges that we've got and in particular around reliability. Mike?

Mike Smart - Nevada Power - Technical Services & Support Executive Thank you, Jeff. I'm one of the many folks that take care of our T&D assets once they're built and I was asked to speak to you about those challenges that we have to deliver our product, challenges that we face day to day. You know what it takes to bring the energy that's being generated by Roberto's group or off the inter-ties through the lines, through substations, through more lines, through more substations and eventually getting distributed to either your house or your residence.

Jeff touched on our service territory. Combined both utilities have 54,500 square miles. Our transmission and our distribution lines in total are 23,734 miles. Jeff was talking about 750 miles that were installed just as distribution cable so far this year. But in total Sierra Pacific and Nevada Power have 23,734 miles. We have 365 substations and if you looked at all of them and how they are built and how they're designed over the many, many years we cover every alternating current voltage class from 2.4 kV all the way up to and including 500 kV. We don't miss a class. We have it all.

With all this electrical apparatus that's spread out over all that service territory comes exposure. Exposure comes in many forms. The terrain that we're in -- earlier we talked about the desert down in this area we're about 1,500 to 2,000 feet above sea level.

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Some of our apparatus up in northern Nevada goes up and over the Sierras and also up over Ely and some of the mountain ranges over there.

We have stuff up there about 9,000 feet. We go through forests. There's the Humboldt forest, the Lahontan, the Toiyabe and the Tahoe forest and with those forests there's terrain. And the terrain and the vegetation that we have to deal with all the time. Our service territory is urban. We have suburban. We also have rural. We go into the densely populated high electrical load areas of our system and we also have some areas of our system that you can go for miles and miles and miles and not have a customer at. The weather, the weather is another interesting thing we have. Down here as you know there's high heat, 118 degrees, 120 degrees in the summertime.

And in some areas of our service territory in the winter the other extreme recorded temperatures down about -16. We have wind. We have some of our facilities that are exposed to wind. There's been record winds in the Sierras that have registered about 167 miles an hour and our stuff has to be able to stand up and withstand that.

In some cases it doesn't but for the most part it does. I always think the civil engineers kind of over-designed some of that stuff but -- right on. Snow there's another factor as far as the weather goes. Some of our stuff has been buried in the snow. Some snowfalls up in the [Powell] area can go as deep -- there's a record snowfall there of 22 feet. So sometimes a little hard to find your stuff when things are going bad.

Also weather-related is lightening, lightening and rain. Lightening can strike our facilities, burn holes, trip out substations and such as that and that all contributes to affecting our reliability. We also have other things that happen. People driving vehicles, we seem to have an issue that we have drunk power poles that seem to jump out in front of people driving and that's kind of been an issue for us.

In fact right here, not that this poor gentlemen was drunk, but there's a semi that actually -- just a couple of years ago in Reno that was driving along highway 80 and actually got between some barriers and hit a pillar and the truck exploded. But we had a 120 kV cable that was on the bridge abutment that ended up getting burned up from that accident, and there's some of our stuff that we have to try to find in the winter -- that's a pole that was down. I believe that was two years ago.

We have animals. Animals seem to have a tendency of getting into our gear. There we go again with the different things we get exposed to. We've had birds cause outages. We've had squirrels, we've had raccoons, we've had snakes -- we've even had an instance where a frog tripped out one of our major customers in Reno -- it's was the MPM Grand which now I believe it's called the Sierra, High Sierra Resort. 17 megawatts of load got tripped out by a frog who somehow got his way into a control cabinet and tripped out a recloser that caused the Outage.

Here's another little funny story about animals. Years ago John Ascuaga's Nugget was building a new tower in northern Nevada. And with that tower came the requirement for a substation to be built over, adjacent to his property. And John Ascuaga used to have an elephant or an elephant act that every night they would march these elephants down from the elephant barn down along an alley way over into the showroom they would do the act and at the end of the act they would march them back over to the elephant barn. And I was over in operations at the time and I got a chance to take a look at and review some engineering designs for a substation that was going to be built for this.

Well back then I was working for a Vice President that when we had an outage that was animal or bird-related he wanted evidence because he thought maybe we were just using excuses. He wanted evidence that this was actually caused by an animal so if it was a dead bird we had to bag up the bird and we had to ship it over to his office over at the general office building in Reno. If it was the frog I remember putting the frog in a little baggie and getting it up to him because he wanted to make sure it was.

So when the engineering sent this design over for this substation which was adjacent to where Bertha, was the elephant's name, was going to march back and forth every day my notes on the design said, "Oh, I can just see this now. Bertha is going to have

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© 2006 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Nov. 03. 2006 / 11:00AM, SRP - Sierra Pacific Resources 2006 Analyst Meeting a heart attack, fall over through the fence, into the switch gear and cause an outage to the Nugget," and I can just see the Vice President that I was working for at the time wanting evidence. So I was going to packing this 8,000 pound elephant up the service elevator into the general office building to show this gentlemen I was working for that, "See there it is right there. There's your evidence."

We also have other things that happen to us. People dig into our stuff all the time. We have 1-800-DIG phone numbers that are free of charge for people to go out and we will go out and locate our facilities for them so they don't dig our stuff up. We have vandalism. Lately vandalism has been very interesting to us where people have actually gotten bold enough to go and break into our substations and crack open switch gear and literally rip out some of our facilities. Some of this stuff is energized -- pretty gutsy.

And then we have our own normal equipment failure because of fatigue and age and such as that. We have a unit right there that had a little bit of a problem. So this is the kind of stuff that happens to us. Now how do we look at this stuff?

All the utilities report their reliability statistics and there's about -- I believe there's 76 of them that report them to the Edison -- or excuse me, the EEI. And they use a standard definition for tracking their reliability. I'm not going to go into these in detail because it would make your head hurt but they look at the frequency of the outages, how many outages do you have. When you do have them how long are they, how long do they last? How many momentaries? Sometimes you've seen those where the lights go out briefly and they come right back on again. But some of them tarry. And then our service availability which -- that's the ASAI -- which is pretty much an easy way of thinking about is there's 8,760 hours in a year. The goal of that number would be 100% that you would have available energy for your use, 100% or 8,760. So as we have outages that number rose and it gets lower and lower drifting away from 100%.

But the most common -- the most common statistics that are used are the SAIFI and the CAIDI, one involving frequency, how many times do we have these outages and the CAIDI which involves duration, when you have one how long did it last. Currently there's 35 states that are required by their regulatory agencies to report their reliability statistics. Both states that we're in, California and Nevada, require us to report our statistics. Nevada recently has added another little dimension to how we report to them or performance and it has to do with a customer survey that we take with our customers and two specific questions in there ask the customers how would you rate the company on providing reliable electric service and that's rated from 1 to 10. And another question that's asked how would you rate the company on restoring your electric service and we have to turn those in yearly to the Commission?

How do we compare to others? Taking a look at this what I did is I pulled the latest available annual report which unfortunately is 2004. The EEI 2005 report ought to be coming out real soon here. But I took Nevada Power and Sierra Pacific statistics and I looked at all the different metrics that we look at and stacked it up and then depending upon what quartile EEI was showing all the other utilities and I kind of analyzed that. Overall Nevada Power is a top, first quartile, very solidly top quartile. Sierra for the most part is a second quartile. We're better than half of our other utilities but not quite as good as Nevada Power.

This is a little simpler slide, a little less busy and you can see directly that I put the quartile ratings right on here. I would note in 2004 if you see Sierra Pacific was drifting down a bit -- we had a pretty harsh winter back in 2004, a winter that the newspapers in northern Nevada were calling the storm of the century. We had about 3.5 weeks that we got pounded on pretty hard with snow and it rained and high winds.

I didn't show it on the slide here, though, but I wanted to get back on those quality of service questions. And I took a look at our last four quarters of those survey responses and both companies, both in the residential sector and the commercial sector, were ranging on a scale from one to ten generally favorable with 82 to 85% of those folks saying that we have pretty good service and respond timely to their outages.

How are we year to date? This is this year's data currently up through September. If you ignore for a moment the large blue, the large blue is kind of a catch-all, a lot of little things, All Other they're calling it. But if you want to look at like on Nevada

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Power's pie chart the top three outages that Nevada Power has been experiencing this year have been primary cable failures. We have the vehicle issue again with people hitting our stuff and then we have some pole failures caused by either fires, lightening strikes, such as that, or some structures down.

Sierra Pacific, a little bit different. The top three causes in Sierra Pacific are snow unloading, trees, and lightening strikes. Obviously both companies are responding to these reactively. When something happens we go out and fix it right away. But also proactively we've been responding to this data and we're heightened our efforts in our maintenance programs specifically in cable replacement and cable injection which is a method that you can actually inject some dielectric fluid inside the insulation of the cable and prolong its life and literally renew the cable. And also at Sierra's case we have a very aggressive vegetation management program trimming trees, cleaning things out of our rights of way and that's also going to lead to an enhanced reliability.

I hope the presentation was informative to you. Just telling you a little bit of stuff when things go wrong what do we do about it and what kind of stuff that we get exposed to. Thank you.

Jeff Ceccarelli - Sierra Pacific Power - SVP for Service Delivery and Operation, President Thanks, Mike. As you can see we had a lot of diversity in our service territory. In fact it's even possible on a certain day, it's happened to us a few times, where inside our service territory we can have the highest recorded temperature in the continental United States and the lowest recorded temperature in the continental United States all within Sierra service territory. It makes it a challenge for us and Mike relayed that well.

Our last presenter, Herb Goforth, is going to talk about the challenges of serving the incredible growth we're experiencing here in southern Nevada and some of the unique projects that are on the table for us. So, Herb Goforth.

Herb Goforth - Nevada Power - Director - Technical Services & Support Good morning everyone. I have a short presentation for you that describes the transmission and distribution infrastructure that the company will be constructing to hook up and satisfy the load service requirements of its many new customers. I'm going to start with just a chart showing historical and projected meter stats in each of the company's two service territories and just give you a sampling of some power -- planned system improvements which include sub-transmission lines, distribution substations, distribution lines that our utilities will construct to bring service to new strip resort properties and master plan communities that are being developed in the outlying areas of the Las Vegas Valley and the Reno-Sparks area.

I also wanted to just briefly describe in more general terms our plans for expanding and improving our distribution systems and spend just a few minutes talking about ways in which we're going to confront our new service delivery challenges and what T&D capital spending projections look like for the next few years.

Now thanks to a healthy economy, continued growth and the strong housing market here in Nevada meter sets by each of our utilities as Walt said average 55,000 to 60,000 per year each of the last three years as shown here on this slide. We believe that new home sales in both our service territories will slow after a real record run by homebuilders but our meter sets in 2007 will remain quite strong and decrease in most maybe 5% from out outlook for 2006.

This slide shows actual and projected transformer additions in distribution substations by Nevada Power over the 2001 to 2009 timeframe. At this time Nevada Power company has approximately 170 substations in its system. Each of these transformer have the capacity to serve 3,000 to 5,000 residential customers, satisfy their peak demand requirements and requires a capital investment that ranges from in the low end maybe $0.5 million and on the high end maybe $900,000. Of interest is the 23 transformers to be commissioned in 2008. These transformers will provide the company with approximately 700 megawatts of additional load carrying capacity and the ability to accommodate some very sizable load additions in approximately 20 distribution substations.

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The load growth as you imagine isn't uniform across the service territory. It tends to be very concentrated necessitating the construction of new feeders, the installation of new transformer. The construction of new substations.

The amount of new infrastructure that Nevada Power must construct to serve the resort load in the strip corridor maybe half a mile each side of the Las Vegas has really never been greater than it is now. Load additions within the corridor are projected to exceed 1,000 megawatts over the next five- to ten-year timeframe and require the company to construct a structure that's estimated to cost in excess of $400 million. The company recently developed service plans for City Center which you heard about earlier. It's a $7 billion mixed-use resort by MGM Mirage. It's some property situated between Monte Carlo and the Bellagio. Also development plans for Echelon Place which is a $4 billion resort that Kevin Sullivan, the CAO of Echelon Resorts is going to describe to you here in just a few minutes.

And then we have some other large resort properties including Fountainebleau and Project W which really have a peak demand. It's comparable to a small vibrant community that you'd find anywhere in the US. Re-development of the properties in the downtown area of Las Vegas is also going to require a considerable amount of new infrastructure including four or five new high capacity substations that will serve a great number of unusually large buildings such as the World Market Center and high res condominium towers that are planned for construction in the area. And then let's comment that loads in the downtown area load densities average 0.5 to 1 megawatt per acre so just remarkable load density requiring a tremendous amount of electrical capacity brought into a relatively small geographical area.

Just about the -- on the Strip you'll find load densities of 1 megawatt to 2 megawatt. That's among the most dense loads -- load densities you'd find anywhere in the US.

Although home sales in Las Vegas have declined from the record numbers that were recorded last year the housing industry is still very -- very healthy. Construction within these master plan communities is going to continue at a pretty brisk pace. West Henderson area over in the southwest corner of the Las Vegas Valley we have a firm, a focus group, that is developing a master-planned community named Inspirada. It will occupy some 1,900 acres and provide homes for 14,000 families. And then over in the northwest side of the valley this same group is developing this Kyle Canyon Getaway project. It's another master-planned community. It will cover some 1,700 acres and provide homes for approximately 15,000 families.

The new service delivery challenges that the utility is going to need to successfully confront in the immediate future is we've got to cost-effectively serve the real high density loads that are arising from vertical construction. Population centers are growing vertically as well as outwardly and that's really raising the load densities. We've got to find land for new substations. It's got to be located near these major load centers. The land near but not on the Las Vegas Strip is going for 12 million to $16 million per acre. It's very scarce and it's a very congested area.

Our new high capacity 200 megawatt substation is near the Strip will be incredibly compact designed to fit on a half-acre site. Some might end up in high rise parking structures near resort properties. Acquiring permits to build the overhead lines in the populated areas continues to be a very big challenge for the utility. That's probably going to lead to the construction of the more expensive underground transmission line facilities which typically are seven to ten times more expensive than the overhead facility. And then another big challenge is just routing of the lines, siting of the substations. As Jeff talked about the load isn't growing in concentric circles. The in-fill work is very challenging for us. That pretty much concludes my presentation. I think we're ready for any questions.

Jeff Ceccarelli - Sierra Pacific Power - SVP for Service Delivery and Operation, President Thank you. Before we invite Kevin up here to talk about his project are there any questions for my team on the transmission distribution? Yes?

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Unidentified Audience Member Thanks Britta. Jeff, I was wondering you guys put together these slides that shows how the different transmission projects that you're going to be working on over the next coming eight years, I was wondering if you could just review sort of for us the online dates and how we should think about the spending associated with those projects, the lead time? Do we spend the cost of those projects over a course of two years or how should we be sort of visualizing CapEx spend program for those projects? Thanks.

Jeff Ceccarelli - Sierra Pacific Power - SVP for Service Delivery and Operation, President Sure I'll let Carolyn cover the specifics on the projects but in general the timelines for some of these major, and I'll use the inner title we're talking about associated with Ely the permitting timeframe on these typically can be three years plus and then a construction timeline I estimate for 200 miles to be in the 24-month timeframe. That's just rough.

But that gives you a sense of the long lead time in front of these projects for the permitting aspect and again somebody mentioned that 85 to 90% of the land in the state is owned by the federal government, the BLM, so we go through a pretty exhaustive process getting the permits done. But I'll let Carolyn talk about the individual timelines on those projects and the spending patterns.

Carolyn Barbash - Nevada Power - Transmission Executive I think the first project that I went over that is currently being proposed is the East Valley master plan and the in-service date for those range from 2010 to 2014 as there's three different components to that plan. The northwest Vegas master plan has in-service dates from 2007 to 2012 and again that's staged to accommodate load growth as it occurs and as we install new substations to accommodate that growth. The EMMA facilities some are already -- are going to be in place in 2008 and then there will be additional facilities ranging out into the 2012 timeframe. And of course the eastern Nevada transmission inter-tie is planned to be in service in 2011.

Jeff Ceccarelli - Sierra Pacific Power - SVP for Service Delivery and Operation, President Thank you, Carolyn. Any other questions for us? I see one here.

Unidentified Audience Member Yes I have two quick ones, first understanding that most of the transmission is under state regulation is there any opportunity for FERC-regulated assets to be built, any incented returns given some of what's gone on in the East where we've got companies getting 12.5% ROEs on an incented basis?

Jeff Ceccarelli - Sierra Pacific Power - SVP for Service Delivery and Operation, President Yes we just some documents relating that to us last week and Carolyn I'll let you talk about the incentive component at the FERC level.

Carolyn Barbash - Nevada Power - Transmission Executive Well currently our transmission rate base is allocated about 75% to Nevada retail customers and we have approximately 25% allocated to FERC customers. And we are reviewing the incentives that will be available under the new FERC incentive for future transmission projects to see how we can take advantage of those.

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Unidentified Audience Member This might be appropriate for [Michael Macura] but just trying to think in terms of financing we've seen ITC which is an independent transmission company able to lever pretty substantially the investment in transmission because it is such a stable cash flow return business and may not require 50:50 debt/equity financing. So if there's an opportunity to invest $1.3 billion can it be done with some less equity component?

Unidentified Company Representative Well we're aware of ITC and other transmission [Inaudible question - microphone inaccessible].

Jeff Ceccarelli - Sierra Pacific Power - SVP for Service Delivery and Operation, President Gentlemen the question was on transmission financing structures and should we take a look at ITC. Suffice it to say we are taking a look at it. We get pitched at it. We want to understand it better and how it might fit within the State of Nevada and for our customers but we're not aggressively pursuing those structures at this time.

Unidentified Audience Member And actually it's just more on the one areas and towers is there any constraints in terms of materials and are there any issues with outsourcing this work to others or is a lot of this going to be done in house?

Jeff Ceccarelli - Sierra Pacific Power - SVP for Service Delivery and Operation, President With respect to the construction of transmission facilities, yes it's my estimate -- well first of all there's our continuing issues around the prices of materials. I think that was part of your question, steel. We're experiencing it in the part of our business that I mentioned we're stringing an awful lot of cable and aluminum prices and coppers have gone through the roof over the last 18 months. So clearly there is an escalating component on the material particularly the metals side. We are not equipped to really build -- actually do the construction, transmission facilities of this size and nature. And I would expect that the majority of this would be contracted out.

We have really good relationships because we have been doing so much transmission work over the last four to five years with a large group of contractors and we don't anticipate any problem in that regard. Yes sir?

Unidentified Audience Member One I thing I've been hearing about lately is some of these new high tech transmission cables that are greater capacity than maybe the traditional ones. I was wondering what you guys -- you're using some of the new fangled stuff that's out there now or you're just kind of using the old traditional things and what would the impact be maybe on the capacity of having the lines?

Jeff Ceccarelli - Sierra Pacific Power - SVP for Service Delivery and Operation, President Okay here's the deal. I'm going to punt this question over to Herb but you might have opened a can of worms that you might not want to have opened. I'm just going to give you that warning right now because this is guy is all over this high tech stuff. So we're going to get the stopwatch going right now but he will give you a very thorough answer on this.

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Herb Goforth - Nevada Power - Director - Technical Services & Support Before Jeff takes the microphone away from me I would tell you that we are making use of some of these higher technology cables, aerial cables and underground cables. We installed on the Nevada Power Company system cables that have a tremendous overload rating, ACSS cable and it can operate at greatly elevated temperatures. At night you can even see the conductor glowing. You could operate it -- it would not damage it or [handle it], cause it to sag into objects beneath it. The downside is under those extremely high load conditions there are losses but it works very, very well to address a particular contingency that might result in extremely high loading on one particular line. You could just reconductor that line with this special conductor and not have to build another line.

And we've also installed here in the city in the south end some underground 230 kV cable, solid dielectric cable. The same type of insulation used for the hundreds of miles of -- the 750 miles of 12 kV cable. It's cross-linked polyethylene or ethylene-propylene rubber. But that incredible overload capabilities, great technology. So we'll be using those technologies to expand our transmission system. We haven't yet experienced or experimented with some of the very, very leading edge composite conductor technologies because they're really -- really cost prohibitive right now.

Jeff Ceccarelli - Sierra Pacific Power - SVP for Service Delivery and Operation, President There you go -- there you go. Any other questions? Herb did you -- I think Herb pretty much put a stopper in Steph with that one. Okay well if there are no further questions I first of all just want to thank my team. This is a terrific group and they do a very, very good job dealing with the incredible challenges we have around growth and in an incredibly diverse service territory. I want to thank them today. So thanks guys.

I now have the pleasure of introducing one of our big customers and partner who's going to talk about a really incredible project whose name is Mr. Kevin Sullivan. Kevin is a Senior Vice President and Chief Administrative Officer for Echelon Resorts. Echelon Resorts is a wholly-owned subsidiary of Boyd Gaming which develop Echelon Place a world-class destination on the Las Vegas Strip. This is one of the projects we were referring to. It's expected to open in early 2010. Kevin most recently held the same position at Borgata Hotel, Casino and Spa in Atlantic City. Kevin joined Boyd Gaming in April '97 as Vice President of Planning and his responsibility included implementation of the company's strategic plan and assisting with management development and financial strategies. Kevin came to Boyd Gaming from the Freemont Street Experience where he served as the Chief Financial Officer through the construction, pre-opening and preliminary operational phases from '93 to '97. At PriMerit Bank in Las Vegas he served as the Executive Vice President and CFO from '92 to '93 and served at First Interstate Bank also as Executive Vice President and Chief Financial Officer from '87 to '92. With that I'd like to introduce Kevin Sullivan.

Kevin Sullivan - Echelon Resorts - SVP and Chief Administrative Officer Jeff, thank you very much and I want to thank Walt and Michael for the invitation to speak today to all of you. And thank God I don't have to learn about ACSS cable and high capacity gas turbines with a 30% efficiency factor. I have my energy partner to worry about those things. I'm here to talk about Echelon Place a little bit which is one of the new customers that the earlier presentations referenced. It's about a mile north of here on Las Vegas Boulevard -- let's see the laser, right there. And I'd like to portray it as the second largest privately funded new construction project going on in the United States at the present time.

That's a pretty good statistic. I hate to say second because there is a larger one here in the United States that's larger and number one privately financed construction project going in in the United States and coincidentally that's a mile south of here. That's called City Center.

But it's at the site of the Stardust and we hit the national news two days ago with the closure of the Stardust which we closed to make way for Echelon Place. And the hotel that had started there, the Stardust, was the largest when it opened in 1958 and after 48 years of pretty good operations we just closed it two days ago. Fortunately I was named to be the closing general

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© 2006 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Nov. 03. 2006 / 11:00AM, SRP - Sierra Pacific Resources 2006 Analyst Meeting manager also. I've been doing that for about a month when one of our other hotel properties needed the current general manager. So I had a fun and interesting assignment of closing that down. And then, of course, I'm on the Echelon team.

And just a little factoid if any of you have seen the movie 'Casino' that is the history of the Stardust. It's about 80% true. All the characters, Robert De Niro, Sharon Stone, Joe Pesci, real-life characters. That is the story of the Stardust. And I've been working in the last few weeks and movie characters, "Ace" Rothstein that's really Lefty Rosenthal, Robert De Niro, I've been working his office and some of my colleagues showed me his secret escape hatch which is kind of interesting. It's a false wall and it looks like a little laundry chute and if he ever wanted to he was going to escape and go down there. And a bullet-proof desk that you could hide in. So little interesting tidbits.

It's a different day and age now and hopefully they won't come gunning for the Echelon Place executives. But anyway we have very good access all around us, and just as an electricity customer I applaud the challenges faced by Nevada Power in having to bring in a whole bunch of megawatts -- in our case for just us about 55 megawatts back into the middle of the Strip down very busy streets where normally it's brought out of town, of course.

And our site we're selling them one of those little half-acre pieces of land so they can put a compact GIS substation. And we like that because then instead of us paying for cables to go several miles to other substations we're paying for cables to go about 10 feet. So it's good for them and good for us.

Echelon Place currently is on a 63-acre site and hopefully by the end of the first quarter we'll close another 24 acres immediately north of us where the old [Restrepo] site was as part of a sales of one of our assets called the Barbary Coast to Harrah's and in exchange they got us 24 acres. That helped increase the value of land on the strip because that four acres was traded for 24 and the price per acre that they paid just shot way up.

Echelon Place is a master-planned, very dense project and total cost is $4 billion. My own company, Boyd Gaming, which is developing the site on the 63 acres -- the other 24 will be for expansion in future years -- will put in about 2.9 billion and other partners will invest the difference. We'll have 5,300 guest rooms and suites, five hotel brands will be on the property, two with the Echelon name in it. Also, and I'll go through this on future slides, the Delano, Mondrian, existing brands, and also the Shangri-La we're bringing into town.

Echelon Place will have a substantial meeting and convention space, 130,000 square feet of gaming space, a very large retail promenade roughly the size of the original Forum shops, about 350,000 square feet, the largest theater in town at 4,000 seats and then what is most cases normally a very large theater at 1,500, or smaller theater at 1,500 seats.

Four unique spas associated with the major hotels on the site, 8,000 parking spaces for guests and employees. Well laid out and one of our major emphasis because the gaming and the entertainment and the retail will be convention space and conventions are a very big and growing part of our industry and we're going to use that as being one of the ways that we distinguish ourselves amongst our worthy competition.

The Shangri-La Hotel will be a small hotel that we'll own but managed by the Shangri-La people from China. It will have 353 guest rooms and suites and some very high-end amenities. The Delano Las Vegas will be co-owned between us and Morgan's Hotel Group and managed by Morgan's Hotel Group. There's an existing Delano brand in Miami that many of you are I'm sure acquainted with. And it will have 600 rooms and suites and also a very wonderful spa.

The Mondrian is the second Morgan's Hotel Group on our site. There's an existing Mondrian in West Hollywood, California, again I think very familiar to many of you in this room that we'll co-own. That will have 1,000 rooms.

This is our Echelon development team. Our construction management firm is Tishman Construction, BLT Architects out of Philadelphia is the major architect firm. We have Dougall Design which has done work here in Las Vegas for the interior designs

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© 2006 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Nov. 03. 2006 / 11:00AM, SRP - Sierra Pacific Resources 2006 Analyst Meeting for most of the major properties here in town and then Sceno Plus for our theater design and other very important large companies. Out of $4 billion we're bringing in several -- several firms to help in the endeavor.

We're ten months into a 19-month design schedule. As I said we closed the Stardust just two days ago. We're preparing for liquidation of the Stardust assets. We'll be having an auction at www.stardustlv.com for all of you. It will be held from the 17th to the 22nd of this month. Approximately two months after that or so -- it takes that much, I'm sorry, several months after that we'll implode the building. It takes many months to take the furniture, fixtures and equipment out and then to prepare the tower and the other low rises for implosion.

To top off in the fourth quarter of 2008 and completion mid-2010. We have long viewed and sat down immediately at the very early stages with Nevada Power to figure this all out together. And again we did not want to learn about the cables that were discussed today, the high capacity gas turbine and we quickly met Herb Goforth who, as you know, just addressed us and have viewed Nevada Power as our energy partner. They have sat down with us and our engineers. We have been working together, working on an agreement. We're going to go up a class to be a high-volume customer. We're going to own the transformer in their substation and get a discount on the electricity. And they're worrying about how to bring all this to our site and we're so glad to sell them the land so that we run literally -- our cable's ten feet to tie into the substation. It's good for them because they'll have another 150 megawatts to sell to other customers and also that will hopefully be available for our expansion and then 50, 55 megawatts for us.

We're very close to our agreement. Our connected loads 55 mega -- that's -- I think that's wrong. Our connected loads are 110 megawatts, I believe. Our peak load's 55 megawatts. We have a very good, constant load in the casino industry. Basically all the slot machines are on all the time. Thankfully.

It's interesting, when I was at Borgata trying to figure life safety systems -- what do we keep on with our emergency power generation and all that, so we have of course, life safety first. But of course, we keep only one restaurant open and boy, all the slot machines are connected. They're on the emergency --. You would too. That's a good thing. I'm still amazed how we harvest the bottom of the slot machine or this case, more these days, the bill validaters. And every morning, lots of money. And I hope you all contribute to us when you come back in 2010.

And this is quite a large increase from where we are today at 8 megawatts and 8 megawatts of just regular load going all the way up to a peak load and -- of 55 megawatts. So, that's a substantial increase right in the middle of town that they'll have to bring in all that extra power. And again, we're only the second-biggest project going on.

Thank you all very much for your time and hearing me. Questions, oh sure.

QUESTIONS AND ANSWERS Britta Carlson - Sierra Pacific Resources - Manager IR Does anyone have questions? And also, for those of you in the audience, these slides are available on our website so just so that you know that. Rob?

Unidentified Audience Member Yesterday, while I was waiting 45 minutes for a cab at the airport, I was thinking about all this growth is going on in this city and obviously Nevada Powers doing a lot of work to make sure they're able to keep up with the growth. But I was wondering what else is happening? How are you working with the other people in the infrastructure for the city to make sure that they're all able to keep up so that you are actually able to open this up and use the power so that Nevada Power can sell it to you?

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Kevin Sullivan - Echelon Resorts - SVP and Chief Administrative Officer We've been working with all sorts of transportation authorities and we've identified the cab line as being just a horrific problem. It happens for many reasons, especially at show time. None of the cabs want to go to the airport. They'd rather take people from -- at show time in the later evening around 7:00, get good tips. And often they'll take some of the customers to the strip clubs where they're handed tips by the doorman of the strip clubs rather than wait in line at the airport for them to come through. We're working on that very specific issue.

The strip is undergoing a long-term master plan. We're co-operating with that. For example, we're dedicating all of Las Vegas Boulevard, about 50 lineal feet more than we have today. So there'll be right hand turn lanes, a very big [Port Cachere]. It's accommodating a potential center line -- center lane, special, high capacity bus service to bring strip capacity up and down.

There is discussion -- we're not really involved in it, in the monorail, because we're kind of on the side away from it but --. And there's also discussion with the State on widening the freeway and having special off ramps to -- especially for the size and scope of our project, to get from the airport all the way up to us in a speedy way.

They're completely re-doing, for example, also within a year, the rental car at McCarran Airport. All the rental cars will be moved south of there to a master lot. And they'll have a continual bus service there so none of the individual rental car agencies, as you see them today. are going to be there. It's a major problem on transportation.

Electricity, we're working of course, with them. There are other major components that affect not just the strip, but our employees and how they get to work and how their serviced, going forward. We have -- when we closed, about 1,500 employees and we're trying to place them and I think we've done a very good job of placing a great number of them at other Boyd Gaming properties.

We have about 12 here in town but when we open, we're going to have 8,000 employees and I'm not sure but I think our peak construction will have about 5,000 construction people on our site and we're trying to do it in such a way that we're cycling right after the city center project. Roughly as the trades come off of there they'll hopefully come on to our project. We're doing that in a co-operative way, an intelligent way, to manage that type of thing. The issues that you speak of -- I'm going on, are not only just for getting us open but also how we staff and run the operation, so that we don't bottleneck ourselves out of business.

Unidentified Audience Member [inaudible question - microphone inaccessible]

Kevin Sullivan - Echelon Resorts - SVP and Chief Administrative Officer Water is a huge issue here in the valley and we are obviously talking to the water officials, understanding what the issues are. Allocations run out in -- I don't know-- 15, 20 years and given the size and scope of our project, we're working on those very real issues. That is again, one of those bottlenecks.

We are in the high dessert here and since I've been only working on the Borgata project for seven years and have now come back, I'm shocked at all the changes. You cannot have a lawn anymore in this town. You have to have these low-flow irrigation -- and I won't say rock gardens, but they're very well designed now here in town. None of the lawns that I saw when I left seven years ago are, for example, currently allowed and they're great incentives by the water authority to rip out. Several of the golf courses have figured out ways of pulling back about 33-40% of their fairways and roughs, if you will, to go to a different type of low-water landscaping which is great help to us. Great, great help.

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Unidentified Audience Member I know this question has been asked for decades, but what gives you and other large developers comfort that the demand will be there for such big ticket projects and tied to that, coming from the Borgata, which was a catalyst for Atlantic City, they're just starting to get their act together, I know it's a different dimension, but longer term, does Las Vegas need to keep their eye on Atlantic City because they clearly now are heading toward a more Las Vegas-like experience?

Kevin Sullivan - Echelon Resorts - SVP and Chief Administrative Officer Well I -- one of our favorite presentations that we do in other meetings, I think we've done it perhaps at an analyst meeting, is to pull out a magazine cover, and it's a very good cover. The headline on this particular magazine cover is "Is Las Vegas, is the boom ending, is it over-extended, is it over-built?" And then we've -- and you can almost tell from the picture, but then we flash up in big letters, the date which is in 1958. Talk

The Las Vegas growth has been extending for many years. It's an important part of rebirth, to keep re-inventing yourselves. My company's claim to try to capitalize that and still bring in new customers, which is very important, and not just cannibalize what's there, is in our case is to concentrate for a good large part, on the convention business which we believe is under served. Growth in this valley has been growing on regular visitation for 4%. Convention growth is 10% and that's been pretty good -- sustained. We're going to have a good percentage of our attention on that.

You also saw the number of brands we put there. We put four major hotel brands there, each with a different emphasis. One that is a far eastern brand, one that capitalizes the Echelon on the Boyd Gaming existing base of customers and then a business-friendly brand and a family-friendly brand, I'm referring now to Mondrian and Delano, that have a whole different data base of customers. To try to bring them into our fold and provide a different kind of experience. It's something that we've studied and we're going to work on and we think the growth is sustainable if you do a very good job at it.

Entertainment is also very important. We're going to offer -- we can't announce yet, the types of entertainment that we're going to offer, but we believe people will come here continuing for more of the entertainment and then the retail experience. I could go on about retail and how much that's grown in town. It's sort of under the radar, entertainment also. Gaming is now, where it used to be 80%, is now coming way down.

Now, in response to your point about Atlantic City. Atlantic City is truly a very different market, it has a very different demographic. The number-one lesson I learned when I moved there was, we sat down, we we're going to build a 2,000 room hotel, and using Las Vegas standards, we we're going to put in, I think, six check-in desks because the average stay here is 4-5 days. And then quickly we figured out-- oops, that's wrong. The average stay there is one day for the hotel guests. Nobody stays two nights there. They go there, they gamble, they go back home. It's a different type of experience that is going to slowly evolve to more of a retail, more of an entertainment, but true, it's a very high density gaming. Here is a much more of a resort entertainment. And the type of product that we're offering is more of a resort feeling, then we're going to offer a very good gaming and entertainment product geared to someone that's staying there hours, usually no more than one day.

Unidentified Audience Member Thank you.

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PRESENTATION Michael Yackira - Sierra Pacific Resources - Corporate EVP, CFO Fascinating projects. I've always wondered why there isn't a hotel called Jimi Hendrix so you could have the Jimi Hendrix Experience. Thank you.

Thanks very much Kevin. By the way, there's little chocolates that we're giving out. I've got a quality control check of those, they're really, really good so you'll enjoy those.

My final presenter today, before we go to Q&A and have lunch, is Bill Rogers. Bill is our Corporate Treasurer and as I said before, he's been very active since he joined our company in June of 2005. He's going to be talking about our financing activities.

Bill Rogers - Sierra Pacific Resources - Corporate Treasurer Thank you Michael. Okay, well first thing, Kevin I like the cash flow out of those slot machines and I like the timing in which you collect it. I'm just going to share with you, a variety of pages indicating with you -- to you, how we intend to think about financing the capital expenditures ahead of our companies over the next several years. I won't provide any projections with respect to time and schedule but I want to give you a sense of what we've been doing to lay the foundation to strengthen the capital of our companies.

First, with respect to our financial objectives, Walt, Michael and others have touched on this, our first objective is to return the senior secured debt of the utilities to investment-grade credit quality. They are currently rated BA1 by Moody's, BB+ by Standard & Poor's and BBB- by Fitch.

Our next objective is to restore the dividend and the timing of that will follow the restoration of the utilities to investment-grade credit quality. Second component is liquidity. We want to maintain sufficient liquidity to meet our external financings and our seasonal needs at the company, as well as maturities in any given year. Our credit facilities at Nevada Power and Sierra Pacific Power are there to provide for seasonal liquidity. They are not a source of permanent capital. So unlike other companies that may use their credit facilities and their access to the commercial paper market as a source of long-term debt and permanent capital, that's not the way we view it at our company. We will preserve that liquidity.

And the last objective is to prepare for the capital formation requirements of Ely Energy Center. I think it's fair to say that we will be active in the debt and equity markets in the years to come, raising that capital. And we will do it in a balanced way. And one way to think about it is, you look at our Form 10-K for year-end 2006, you'll be able to back-end how we financed a $1 billion of capital expenditures. I think what you'll see in there, is a majority of that cash used for that financing, was in fact from retained cash flows at our companies and you'll be able to plug the other numbers from the $280 million equity offering we had, as well as the net change in debt. We will be working to reduce re-financing risk and take that off the table so that in the high external financing years which is the same years as the capital expenditures, we're not subject to a nuance as the market for re-financing, as well as new money, and I already mentioned liquidity.

Year-to-date we have been busy. I briefly touched on the common share offering in August of this year. It was a total of $280 million in proceeds to our company, of which we immediately contributed $200 million to Nevada Power to bolster its capital strength, the remaining $80 million remains at the holding company awaiting re-deployment.

When we think about re-deploying our capital there are only three options. Reduced EBIT to the holding company, make a capital contribution to Nevada Power or make a capital contribution to Sierra Pacific Power.

At Sierra Pacific Power this year we've increased the credit facility by $100 million to $350 million. There are currently no borrowings under that facility. So, all but the letter of credit usage of $8 million remains available to us. In addition we've

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© 2006 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Nov. 03. 2006 / 11:00AM, SRP - Sierra Pacific Resources 2006 Analyst Meeting redeemed the preferred stock and re-financed tax-exempt debt of $268 million -- we're about to do that, and the net debt increase, if you consider the preferred to be debt as well, at Sierra Pacific Power, is approximately $20 million.

At Nevada Power we've also increased their credit facility by $100 million, for now a total facility of $600 million. You'll see in our Form 10-Q disclosure, there are no direct borrowings under that credit facility. We are using that for letters of credit of approximately $55 million. We have re-financed almost $700 million of debt, and that includes the high coupon trust preferred securities. In re-financing certain tax-exempt debt and to some extent, taxable debt, we've been able to discharge our first mortgage bond. At Nevada Power, and now the senior secured debt is all pari passu in its general and refunding mortgage bonds.

Year-to-date the net increase in debt is approximately $135 million. You have to net out certain fees, expenses, as well as repayment of debt since the September 30th cut-off date for the balance sheet. But that $135 million is inclusive of what we paid for Silverhawk which is approximately $210 million.

We've made good progress with respect to our credit quality, as rated by our three rating agencies. Moody's upgraded our corporate family rating from B1 to BA3. They kept the ratings on the general and refunding mortgage bonds the same at BA1. Fitch upgraded our entire family of debt, and most importantly, moving the rating on our general and refunding mortgage bonds from BB+ to BBB-. Upon making the move they did revise their outlook from positive to stable. And in Standard and Poor's also increased the ratings of debt across the board.

Most importantly, again, the general and refunding mortgage bonds were increased from BB to BB+. But along with that they recognized our reduced business risk as a result of our strengthening balance sheet, our improving relationships with our regulators, as well as improving the certainty of our cash flow they moved the business risk profile from 6 to 5. And subsequent to their move they also revised their outlook from positive to stable.

Here are our current credit ratings. Sierra Pacific Resources, their debt is unsecured, approximately $660 million. Nevada Power Company does have both senior secured debt to general and refunding mortgage bonds and a senior unsecured-debt, which is in their tax-exempt liability structure.

Sierra Pacific Power currently has first mortgage bonds as well as general and refunding mortgage bonds. But you may have seen in various press releases, as well as in our Form 10Q, we've put out redemption notices on $268 million of first mortgage bonds, which are all tax-exempt. Once those are redeemed then we will move forward and discharge that first mortgage bond and all of it that at Sierra Pacific Power will be secured through the general and refunding bonds.

These next three charts just shows the progression and the improvement in our balance sheet by company. This first one is the consolidated entity. Sierra Pacific Resources, our common equity from year-end 2004 through September 30th, '06, has moved to 38% of the total capital structure. Concurrent with that our debt has moved from 73% to 62%.

At Nevada Power Company, a similar progress, over this one year and nine month period where the common equity has been bolstered from 39% to 47%. Common equity, as you'll see in our Form 10Q, now stands at $2 billion, $167 million and debt has been reduced from 61% of the capital structure to 53%.

Nevada -- Sierra Pacific Power, rather, is our third entity. That common equity has improved somewhat, from 40% a year in '04 to 42% at the end of the most recent quarter. We currently have $771 million of common equity on our balance sheet there. We did take out the high cost preferred securities earlier this year so there's no preferred anywhere in our system of companies and the debt level is largely unchanged. At Sierra Pacific Power there's $1.072 billion of debt at the end of the quarter.

We continue to strengthen all liquidity position. Liquidity's important to us. We need to prepare for nuances in the commodity markets, and we recognize we have some healthy capital expenditure programs, so we preserve our liquidity to meet those needs. We had over $1 billion of liquidity between the revolving credits and cash on hand at all three companies at the end of

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© 2006 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Nov. 03. 2006 / 11:00AM, SRP - Sierra Pacific Resources 2006 Analyst Meeting the quarter, and equally important, our covenant limitations allowed us to use all this liquidity, if fact by the most constrictive covenant limitations, we could have borrowed $2.2 billion at the end of third quarter.

There are many reasons that our liquidity has been improving, but it includes an improvement in our credit quality, as well as the work we are doing across our company to manage our cash and work with various counter-parties. And here is one example that what we're depositing for energy on a pre-payment basis, at year-end 2004 we had $55 million, on deposit at quarter-end September 30th, only $14 million and this is but one example. But it's important to us in our fuel and purchase power area, and I think if you spend some time and talk to Roberto's team as well as Jeff's team, they're very hard in the way they negotiate with contractors and we preserve that cash for ourselves.

Mortgage bond capacity is another element the way we think about our capital structure. This is over and above the revolving credits which are secured by general and refunding mortgage bonds. $600 million and $350 million respectively at Nevada Power and Sierra Pacific Power, so how much do we have beyond that.

This slide is dated as of last week. When you read the Form-10Q you'll find that in both companies the mortgage bonds capacity increased, and that's important to us because as we raise capital in the debt markets, it is likely to be general and refunding mortgage bonds and it's another sources of cushion for our company.

I've mentioned managing refinancing risk as part of our strategy as respect to how we think about planning for the capital formation needs of Ely Energy Center and the other components and then create a resource plan, that this chart is just meant to provide a visual with respect to our refinancing needs or our maturities are limited. They are not at the holding company. Our first maturity at the holding company is $99 million in 2012. There's only one maturity over the next five years and three months at Nevada Power. That's $350 million and there's only one maturity as Sierra Pacific Power and that's $320 million in 2008.

We continue to take a look at ways to dampen the risk associated with that and get ahead in the markets as we've shared with the financial community and the banking community. We don't mind some negative cost of carry, in order to make sure that we're not captive to the markets, whether they be the debt or the equity markets, as reforming capital to execute against our integrated resource plans. I think that's it. Questions?

QUESTIONS AND ANSWERS Britta Carlson - Sierra Pacific Resources - Manager IR Questions from the audience? Okay, Walt is going to give some closing remarks.

PRESENTATION Walt Higgins - Sierra Pacific Resources - Chairman, President, CEO I'd like to re-iterate my thanks to the presenters, all of them prepared well and who looked forward to meeting and talking to you and answering your questions today, thank you presenters. They are the team, by and large, that runs the company and makes the decisions each day about what needs to be done to benefit customers acquire power, build power plants and so forth. And we're very proud of them and the work that they do and they're very proud of what they do and they'd be happy to stick around and share with you, on an individual basis, questions that you may have about any aspect of our operation.

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I'd like to make two comments before I summarize. One is, Kevin, are you still here? I guess Kevin left but Kevin is a fine example, and he eluded to this, the fact that Nevada as a state and Las Vegas, not particularly, and I'll explain why in a minute, is constantly re-inventing itself and finding something new and bigger and better to build.

If you came to Las Vegas in the early sixties as I did, it's not the place today that it was then, and it's been through several re-inventions, and you'll have the privilege on Monday morning at the conference, of hearing one of the chief inventors, Steve [Wynn], talk about that very thing.

And Las Vegas constantly goes through a re-inventing process, and the truth is, northern Nevada has been through a serious re-inventing process as the advent of Indian gaming in Las Vegas as a destination, caused it to see itself differently and become more of a manufacturing distribution, destination playground, as opposed to destination gaming. And that's going on in Nevada all the time and it's important for us to do it and we do. We're a very different company today. You could see that reflected in Kevin Sullivan's remarks. You could see that reflected in Hezy Ram's remarks. We continue to re-invent ourselves just as Nevada and our various important cities and customers do.

Secondly, one more comment about water. Water is a darned important commodity everywhere, but it's particularly important and needs to be dealt with properly in the dessert. Both of our major service area centers, Reno and Las Vegas, have water challenges. One of the amazing things about both of them is the fine work that's been done through the years, first by us when we ran the water company in Reno, and now by the entity that does, and by the water entity in southern Nevada, to re-invent the way we use and think about and acquire water. And while there's always a concern particularly exacerbated by the current drought in the Colorado River drainage, the creativity of the people that do the water things, has constantly invented new ways to produce the water, or the water capacity that's necessary to support the growth.

So, as I look at all the things going on, both in northern and southern Nevada, and think about what the water purveyors are doing to acquire new sources farther north, somewhat along the lines of where we're going with our Ely Energy Center. To do things with the other states that use the Colorado River water, namely Arizona, Colorado and California, with long- term goals of perhaps substituting water for some of the other downstream users for water that we might take out of the Colorado River and provide them water other ways.

And as a result, because there is vastly more water in the Colorado River than just needed to serve Las Vegas needs, the question is allocating that water. And by substituting other water from other places, in the very long run and finding new resources, Las Vegas should have, as well as Reno should have, adequate water to meet that need for the growing business and residential community. While we all worry about it, we also have very thoughtfully prepared strategic plans and we work very well with the water purveyors in both places to make sure they are enabled to do what they do and that we, because we need water to do what we do or enable to do what we do.

Let me with that, move to this last slide, just to wrap things up. You're looking at the fastest-growing company in the US. You're looking at a company that by every measure, is improving it's performance, that has stronger credit, that has strategies in place that are being supported by the state, that's reducing it's risk, both financial and operating risk, and is improving it's relationships with regulators, customers and community. And you've seen evidence of that in the comments today and in the metrics that you see increasing our financial and operating performance, reducing our financial risk, financing well, and regularly, in order to have the capital necessary in order to serve that very, very rapid growth in a more secure, less volatile way for our customers.

Are there any other questions for today? And if not, I'm going to invite Britta up, who will both give you the word about lunch and about the tour. Thank you very much for coming.

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Britta Carlson - Sierra Pacific Resources - Manager IR Thank you Walt. And thank you everyone who is attending here in person, and also on the webcast. We can conclude the webcast at this time. Thank you.

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