bowline 3 and lovett generation projects

Response tonew yoRK eneRGy hIGhwayRequest foR InfoRmatIonBY GENON ENERGY, INC.

MAY 30, 2012

WWW.GENONBOWLINE.COM

Contents

Introduction

Required Information Respondent Information

Project Description – Bowline 3 Generation Project

Project Justification

Financial

Permit/Approval Process

Other Considerations if Applicable

Additional Information Property

Projected In-Service Date and Project Schedule

Interconnection

Technical

Construction

Operational

Socio-Economic

Financial

Environmental

Project Contract / Request for Proposal (RFP) Status

Public Outreach and Stakeholder Engagement

Appendix Appendix A: Bowline site--current aerial overview photo

Appendix B: Bowline 3 Construction Site – Current Aerial Photo

Appendix C: Conceptual Layout of Bowline 3

Appendix D: Conceptual Bowline 3 – Facility Profile

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www.GEnOnBOwLInE.COm

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Introduction GenOn Energy, Inc. (“GenOn”) through one of its indirect subsidiaries is pleased to participate in the State of new York’s Energy Highway Request for Information (“RFI”). GenOn intends to offer attractive solutions to new York’s energy challenges. Our proposal focuses on developing a clean generating power project at our existing GenOn Bowline Station, a brownfield site in Haverstraw, new York. In addition to our proposal for the Bowline site, we are eager to work with new York to also develop a project at our GenOn Lovett location, a developable brownfield site in Stony Point, new York.

Each of these sites is located near existing interconnection infrastructure and is ideal for serving the energy needs of the downstate and Lower Hudson Valley regions. Both Bow-line and Lovett present unique opportunities to deliver safe, affordable, and reliable energy for new York State. we are willing to tailor our projects to meet the needs of the State and look forward to engaging in a partnership that will serve the interests of the State with our projects.

Required Information Respondent InfoRmatIon

GenOn Energy, Inc. (nYSE: GEn) is one of the largest competitive generators of wholesaleelectricity in the United States, with power generation facilities located in key regions ofthe country and a generation portfolio of approximately 23,700 megawatts. GenOn hasapproximately 3,400 employees and is headquartered in Houston, Texas.

GenOn’s portfolio of power generation facilities consists of 47 stations in 12 U.S. states and includes baseload, intermediate and peaking units using coal, natural gas and oil to generate electricity. The company has owned and operated electric generation facilities in the state of new York since 1999. Currently, GenOn owns and operates the Bowline generation facility in Haverstraw, new York, which consists of two natural gas/oil units with a combined nominal capacity of 1,139 mw and owns the Lovett site located in Stony Point, new York.

maintaining a strong organizational focus on safety and the environment is a core value at GenOn. The company is committed to a fleetwide "Zero Incident Culture” and strives to ensure that appropriate resources and training are provided at all levels of the enter-prise in order to consistently achieve industry-leading safety performance. GenOn uses a comprehensive environmental management system, integrating environmental considerations into business operations and strategy. The company fosters a culture of continuous improvement, always driving for better, more effective, more efficient environmental performance.

GenOn possesses significant experience and capabilities in the development of new powergeneration stations. Since the late 1990s, GenOn has successfully developed over 12,000megawatts of natural gas-fired simple cycle and combined cycle power generation facilitiesthroughout the United States. GenOn’s development capabilities are comprehensive and include permitting, engineering, procurement and construction (EPC) management, project financing, and plant operations. The company also has extensive experience with


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a wide range of power generation technologies (e.g., GE, Siemens, mitsubishi, and Alstom) and both wet and dry cooling equipment. GenOn has successfully developed power plants on greenfield sites as well as redeveloped existing brownfield sites to host new generation assets.

A recent example of GenOn’s brownfield development experience is the marsh LandingGenerating Station located just outside of San Francisco, California. This 760 megawattpeaking facility is being built near GenOn’s existing Contra Costa generating units, whichare scheduled for retirement in 2013. This brownfield development project was specificallydesigned to maximize the use of existing site infrastructure such as natural gas pipelines and electric transmission lines, enabling the state of California to preserve greenfield sites for other development needs or as open space.

marsh Landing's output is fully contracted to California utility Pacific Gas and ElectricCompany (PG&E) under a long-term tolling agreement. The project benefited from a veryefficient development and permitting schedule, with less than 2 1/2 years from the initial permit application to the start of construction. This highly successful project included full permitting as well as contracting for procurement of power island equipment and full-wrap, fixed-price EPC services. The estimated cost of the marsh Landing project is approxi-mately $700 million. Funding for the project consisted of a combination of GenOn equity and a bank debt facility arranged by GenOn.

Questions or requests for additional information regarding this Energy Highway RFI response document may be addressed to:

mr. Gary Kubik

Vice President northeast GenOn Energy, Inc.

President GenOn Bowline, LLC

140 Samsondale Avenuewest Haverstraw, new York 10993

(832) [email protected]

pRoject descRIptIon – BowlIne 3 GeneRatIon pRoject

GenOn is pleased to submit for consideration as part of new York’s Energy Highway initia-tive our proposal for "Clean Gen on the Hudson" – – the Bowline 3 generation project.

Upon the finalization of commercial arrangements with the State, and the construction that would follow, Bowline 3 will be a highly efficient, clean, 2 x 1 combined cycle gas turbine (CCGT) electric generating station in the town of Haverstraw, new York (Rockland County, nYISO Zone G). The capacity of this new facility will be approximately 775 mw (ISO). Bowline 3 is a brownfield development project that will be built adjacent to existing Bowline Units 1 and 2 on approximately 25 acres of previously-cleared land.


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The Bowline 3 CCGT will use efficient combustion turbine technology and will have state- of-the-art emissions control equipment. The primary fuel for Bowline 3 will be natural gas. If desired, Bowline 3 could utilize ultra-low sulfur #2 diesel fuel as a backup fuel source. natural gas will be delivered to Bowline 3 via an existing 4.2 miles of 24-inch diameter natural gas pipeline lateral, which connects directly to the millennium pipeline. The pipe-line lateral is capable of delivering 12,000 mmBtus of natural gas per hour to Bowline, which is more than sufficient to support operation of the planned new unit.

Bowline 3 will use a state-of-the-art Air Cooled Condenser (ACC) unit to handle the cooling portion of its steam cycle. Air cooling will reduce overall plant water requirements by approximately 95% when compared to traditional wet cooling. Bowline 3 will not require intake structures on, nor require water from, the Hudson River. Consumptive water used by Bowline 3 will be obtained via available local supplies.

Safe and affordable electricity generated by the Bowline 3 facility will be delivered to the grid via a 345 kV transmission line. This new line, approximately 7 miles in length, will com-mence at the existing Bowline switchyard and will be constructed on land or easements owned by GenOn as well as utility rights-of-way owned by Orange & Rockland (O&R). The line will connect to the bulk electric grid at O&R’s Ladentown substation located in the town of Ramapo, nY.

A key attribute of Bowline 3 is its emphasis on brownfield development. The project willrepower the current Bowline facility through the extensive reuse of existing and unutilizedassets, including:

• A previously-cleared, shovel-ready site immediately adjacent to the existing • Bowline generation units;

• A 24-inch natural gas pipeline lateral;

• A river terminal facility for delivery of ultra-low sulfur diesel #2 fuel oil to the facility viamarine barge (if a dual fuel option is desired);

• A fuel oil storage tank for on-site storage of up to 140,000 barrels of ultra-low sulfurdiesel #2 fuel oil (if a dual fuel option is desired);

• Land and easements owned by GenOn as well as existing utility rights-of-way fortransmission interconnection;

• NOx and VOC emissions reduction credits (ERCs) in GenOn’s current inventory tosupport the operation of the new Bowline 3 facility plus a pending application for Pm 2.5 ERCs to complete the portfolio of ERCs required for the issuance of an air permit for the Bowline 3 project.

The actual project schedule and estimated in-service date for Bowline 3 will be driven by the Governor's Energy Highway process. GenOn is confident that Bowline 3 can be online within 3 ½ years of receipt of final regulatory and contractual approvals. GenOn recognizes an opportunity for public-private collaboration to secure the future of this project.


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GenOn will procure state-of-the-art combustion turbines, heat recovery steam generators, steam turbine, air cooled condenser, and balance-of-plant equipment for the construction of Bowline 3. These technologies are widely available in the marketplace and have strong, well-documented performance track records. GenOn will seek to utilize qualified providers of equipment, materials and services located in the new York State region where possible and practical.

pRoject justIfIcatIon

Bowline 3 addresses key objectives and goals of the new York Energy Highway initiative asenumerated in the RFI.

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OBJECTIVE: Reduce constraints on the flow of electricity to, and within, the downstatearea; and expand the diversity of power generation sources supplying downstate. Assure that long-term reliability of the electric system is maintained in the face of major system uncertainties.

Downstate new York, and the Lower Hudson Valley in particular, faces the possibilityof significant near-term retirements of generating capacity due to weak market conditions and pending environmental regulations. These retirements threaten to jeopar-dize electric grid reliability in this critically important region of new York's bulk elec-trical system. Bowline 3, as an efficient CCGT facility capable of operating at a high capacity factor, will provide the replacement voltage support and power necessary to deliver safe and affordable grid reliability in the Lower Hudson Valley region. maintain-ing voltage levels in the Lower Hudson Valley is critical to optimizing new York’s ability to transfer energy efficiently to, and within, the downstate region, which is the largest driver of the statewide economy. OBJECTIVE: Encourage development of utility-scale renewable generation resourcesthroughout the State.

As new York adds more renewable generation, the intermittent nature of these powerresources will create challenges for system operators seeking to maintain a constantbalance between load and generation. In this instance, the burden of maintainingsystem reliability will fall increasingly on the flexible operation of well-located thermalgeneration units. Bowline 3, as a state-of-the-art CCGT unit, will provide operationalflexibility and load-following capability that will contribute to safe and affordable gridreliability and facilitate the transfer of renewable energy to the downstate region. Thiscapability will be especially critical if high capacity factor, baseload generation unitscurrently serving the downstate region are removed from the generation mix.

OBJECTIVE: Increase efficiency of power generation, especially in densely populated urban areas.

As a CCGT unit with an ISO heat rate of approximately 6,800 mmBtu/kwh and de-signed to burn low-cost natural gas, Bowline 3 will be much more efficient and envi-ronmentally friendly than the older, less efficient gas/oil boiler units, which constitute


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a large proportion of the downstate generation fleet. Bowline 3’s streamlined permit-ting status and high capacity factor operation will allow for the displacement or later re-powering of older, less efficient units, including those located in densely populated urban areas, and result in lower overall emission levels in new York. moreover, as a brownfield development project, Bowline 3 will be an efficient and cost-effective alter-native to the development of new sites and requisite interconnections in congested urban and suburban areas as well as to the long-distance delivery of energy over already-congested transmission lines.

OBJECTIVE: Create jobs and opportunities for new Yorkers.

Bowline 3 is expected to create 700 skilled construction jobs and approximately 25high-quality, permanent jobs for personnel to operate the plant once it is completed.The project will also support hundreds of local jobs among vendors and suppliers.In addition, Bowline 3 will play an integral role in securing safe and affordable gridreliability for the region, spurring additional job creation and economic development.

OBJECTIVE: Contribute to an environmentally sustainable future for new York State.

Bowline 3 will be outfitted with state-of-the-art technology designed to protectenvironmental quality for Haverstraw, the region and the Hudson River. The integration of air cooling technology will eliminate any environmental impact on the Hudson River and reduce overall plant water requirements by approximately 95% when compared to traditional wet cooling. In addition, highly-efficient, clean, state-of-the-art combus-tion turbine generation technology will be minimally impactful on local air quality.Brownfield development projects such as Bowline 3, by definition, minimize impactson the environment and the surrounding community.

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fInancIal

GenOn intends to fund Bowline 3 with a combination of equity and long-term project financing debt. Given this, the commercial arrangements must allow for the project to be financeable. To construct Bowline 3, GenOn will procure state-of-the-art technologies and EPC services from leading manufacturers and providers. Equipment and services of this type are long lead time items and must be ordered well in advance of breaking ground. Having developed and constructed over 12,000 mw of gas-fired power plants in the United States, GenOn is very experienced in managing the price and schedule risks typically associated with complex infrastructure construction projects.

peRmIt/appRoval pRocessGenOn has made significant progress in its permitting effort for Bowline 3 and is actively carrying forward efforts to reflect design enhancements that will improve the environmen-tal qualities of the project. These enhancements include improved turbine technology and converting from wet cooling to dry cooling. Because Bowline 3 has progressed favor-ably with the State and because the proposed changes benefit the environment, GenOn believes Bowline 3 will not face material permitting uncertainties and can quickly satisfy State permitting requirements.


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Substantive local permitting provisions will be addressed with the Article X Certificate. Finally, GenOn will pursue required federal permits, if any.

otheR consIdeRatIons If applIcaBle

nYISO Transmission Queue: GenOn has recently submitted to new York Independent System Operator (nYISO) an application to connect Bowline 3 to the new York transmis-sion grid. we are concerned that the many uncertainties currently facing new York's elec-trical system (e.g., pending generator retirements and proposed upgrades to the nYISO transmission system) may complicate nYISO’s ability to evaluate the impact of intercon- necting new generation projects. GenOn is requesting close and careful coordination between Governor Cuomo's Energy Highway Task Force and nYISO in order to ensure that the potential transmission system impacts of high-potential projects currently in the transmission queue are able to be evaluated in a timely fashion.

new Generation at Lovett Site: The information in this RFI response addresses the potential for new generation at GenOn’s existing Bowline site. In addition, GenOn is evaluating sev-eral options for the addition of new generation at the GenOn Lovett site. The Lovett site is on the Hudson River in Stony Point, new York approximately 5 miles north of Bowline. For-merly the site of coal and natural gas generation units, Lovett is now a completely cleared brownfield site consisting of approximately 58 developable acres. The site is located on the high demand side of major new York transmission constraints and is close to major natural gas pipelines and electric transmission lines. Overall, Lovett is a highly attractive location for the construction of new generating units, and GenOn is evaluating which of several new generation configurations (e.g., combined cycle or peaking units) it will seek to permit at Lovett. GenOn welcomes the opportunity to discuss with new York officials the type of new generation at Lovett that will best fit the needs of the Energy Highway initiative.

Recommended Evaluation Criteria: In order to provide maximum benefit to new York energy consumers, we recommend that the State of new York, when evaluating projects for inclusion in the Energy Highway initiative, give priority consideration to projects that demonstrate the following characteristics:

Emphasis on brownfield development – Projects that use existing power generation sites, gas and electric transmission infrastructure and rights-of-way, emissions credits, and fuel supply and storage infrastructure will enable the state of new York to achieve the goals of the Energy Highway initiative in a manner that is cost-effective, low risk, and minimally impactful on local communities and the environment.

High executability – The new York Energy Highway initiative seeks to identify projects that can provide reliable power to the state's consumers for the next half-century. Assuch, new York should prioritize projects that:

Rely on proven, widely available technologies;

Are backed by financially-sound and committed sponsors with a proven trackrecord of permitting, constructing, financing, owning, and operating similarprojects; and

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Provide certainty of execution that result from the presence of existing siteinfrastructure, the availability of gas and electric interconnections, and abeneficial location within the transmission system.

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Capable developers, operators and owners – A key goal of the Energy Highway initia-tive is to maximize the role of private investment in developing new energy infrastruc-ture in new York. In general, new York should seek to partner with private companies that possess strong balance sheets, have excellent reputations within the banking community, and are willing to and capable of making financial commitments to the projects that they propose for inclusion in the Energy Highway initiative.

Additional Information

pRopeRty

The site on which Bowline 3 will be constructed is part of the existing Bowline generationfacility and is owned by a wholly-owned, indirect subsidiary of GenOn Energy, Inc.

In general, the Bowline 3 site is ideally suited for large-scale construction and efficient operations that minimize the facility’s impact on neighboring communities given the following site characteristics:

The Bowline 3 site has already been cleared, which will allow for the immediate commencement of foundation and other construction-related work;

marine barges carrying heavy equipment have easy access to the site given Bowline 3’s direct frontage on the Hudson River;

The plant’s existing bulkhead dock on Bowline Pond (which opens directly to the Hudson River) allows for safe, efficient unloading of heavy equipment delivered to the site via marine barge;

Bowline 3 is located within 1 mile of csX rail siding, which provides an additional means of delivering other equipment to the site;

Fuel is supplied to the site by an existing, fully permitted, 24 inch natural gas pipeline on property either owned by GenOn or part of existing utility rights of ways or ease-ments granted to GenOn; and

Power from the site can be delivered to the electrical grid via a 345 kV transmissioninterconnect to be constructed on property either owned by GenOn or part of existing utility rights of ways or easements granted to GenOn.

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pRojected In-seRvIce date and pRoject schedule

The actual project schedule and estimated in-service date for Bowline 3 will be driven bythe time frame of the Energy Highway process and achieving all regulatory and contractualapprovals. The indicative schedule below is based on GenOn’s recent development experi-ence with new generating units of similar size and technology as Bowline 3. The scheduledemonstrates that all required steps to reaching commercial operation of Bowline 3, including project financing, will be achieved within 3 1/2 years of final regulatory and contractual approvals.

InteRconnectIon

Connecting the highly efficient Bowline 3 to the electrical grid at a location that is on the high-demand, high-price side of major new York transmission system constraints (e.g., the East-west and UPnY-SEnY interfaces) will provide economic benefits to new York consumers and will mitigate reliability impacts that may result from generator retirements in downstate new York in general and in the Lower Hudson Valley in particular. GenOn also believes that connecting to the grid downstream of major points of constraint will minimize overall system upgrade costs required to make Bowline 3’s energy and capacity deliverable to the bulk electric system.

technIcal

As is customary for high-value projects of this nature, GenOn will seek comprehensive war-ranties for two years or more on all equipment, materials, and workmanship utilized during the construction process. The anticipated design life of CCGT facilities such as Bowline 3 is at least 30 years.

constRuctIon

GenOn development projects typically provide attractive opportunities for local manufac-turers, assemblers, construction firms, and workers. GenOn will seek to utilize qualified providers of equipment, materials, and services located in the new York State region where possible and practical.

To facilitate the financing of a project such as Bowline 3, GenOn typically seeks to executea full-wrap, fixed-price, date-certain, turnkey EPC contract with an experienced, nation-ally recognized firm. This type of contract benefits project owners and lenders because it provides an attractive combination of cost efficiency, schedule certainty, and performance guarantees.


BowlIne 3–IndIcatIve schedule

Regulatory/contractual approvals

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months 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

financing

finalize engineering & order equipment

construction

testing and commissioning

commercial operations

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Having owned and operated electric generation facilities in new York since 1999, GenOn isvery familiar with issues related to the local availability of labor, materials, and installationequipment. In general, we anticipate that the Bowline 3 project will be built utilizing a skilled unionized workforce in a manner similar to other construction projects that GenOn is currently executing in other parts of the country. Depending on market conditions at the time construction commences, we believe that skilled, unionized labor will be available in sufficient quantities, either locally or from neighboring regions, to execute the project in a cost-effective and timely manner. GenOn historically has enjoyed good relations with building and construction trades groups. The ongoing construction of the company’s marsh Landing plant in California, for example, has benefited substantially from the highly-productive, quality-focused efforts of numerous building and construction trades groups working on the project.

opeRatIonalGenOn has significant experience with the ownership and operation of power generationfacilities that contain explicit guarantees related to project availability and performance.Although GenOn is not yet aware of the exact structure that new York will offer in support of Energy Highway projects, it is our expectation that such structures will require Bowline 3 to operate at a high level of availability and performance.

GenOn has a strong, company-wide commitment to safety. we promote a safe and health-ful work environment, communicate safety issues, use safe work practices and provide ongoing safety training for our employees. For both construction projects and plant opera-tions, GenOn maintains a comprehensive safety program and manual that together set a high standard for safety. In addition, we require that all our contractors commit to a set of safety procedures that are at least as rigorous and comprehensive as our own.

Bowline 3 will also maintain a comprehensive plan for addressing emergency situations. Inaddition, we expect to contract with local entities to provide emergency response services to the plant.

socIo-economIcThe construction and operation of major infrastructure projects such as Bowline 3 typi-cally provide a variety of economic benefits to the communities in which they are located. These benefits typically include the provision of well-paying jobs, tax revenue, and other forms of associated community benefits and economic development.

Although construction plans remain to be finalized, projects of similar size and type as Bowline 3 are capable of creating up to 700 skilled construction jobs during the plant construction period and up to 25 high-quality, permanent jobs for personnel to operate the plant once it is completed. In addition, Bowline 3 will support hundreds of other local jobs among vendors and suppliers.

As is typical for projects of this type, GenOn will seek to negotiate a PILOT (Payment in Lieu of Taxes) agreement that will represent a long-term source of revenue for the town govern-ment and the local school district. Besides assisting the local community by maintaining a stable tax base, a PILOT agreement is required to stabilize the project’s long-term operat-ing costs, which in turn is a prerequisite for GenOn to arrange a debt financing package for the project.


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As part of the Bowline 3 project, GenOn will seek to continue its past track record of beingan active and engaged community partner. Bowline Generation Station employees cur-rently volunteer time and provide financial support to several community causes in Rock-land County. These meaningful contributions will continue to benefit local organizations whose work advances and/or promotes health, welfare, education, economic develop-ment, or other important public interests within the local community.

As a brownfield development project, Bowline 3 will minimize impacts in areas typically of concern to the local community, particularly when compared to projects utilizing green-field sites. while we continue to investigate the impact of the proposed project, at this time GenOn does not believe that adding a third generation unit to the existing Bowline facility will have negative implications; rather, the facility will be a boon to the economic develop-ment of the area and the facility will contribute to revitalization and continued improve-ments in the community - the goals of a smart growth policy.

fInancIal

Please see the response provided under the financial heading in the "Required Information"section of this document.

envIRonmental

Brownfield development projects such as Bowline 3, by definition, minimize impacts on the environment and the surrounding community.

From an air emissions standpoint, the highly-efficient, clean, state-of-the-art combus-tion turbine generation technology that will be utilized by Bowline 3 will provide important environmental benefits to the surrounding region and the state of new York. Given Bowline 3’s high efficiency, GenOn anticipates that the plant will be dispatched ahead of older, less efficient, less clean generation units in the downstate region. This displacement of higher emissions units will constitute a net benefit to the region’s air quality. Bowline 3's CO2 per-formance will also exceed that of units it will displace.

Bowline 3 will also benefit new York’s water resources. For example, we anticipate thatBowline 3 will displace the operation of once-through-cooled units in downstate new York.Adding to Bowline 3’s beneficial impact on water resources is the fact that the unit’s use of dry cooling will not require cooling water discharges and therefore will not produce aquatic ecology impacts to the Hudson River from such discharges.

when the Bowline 3 site was cleared and prepared for construction, a small federal wetland (which was identified as part of the U.S. Army Corps of Engineers approval) was relocated. Beyond this, GenOn expects that any additional ecological impacts will be mini-mal given that the site is essentially “shovel-ready.” GenOn does not anticipate that the project will require any significant additional mitigation measures.

pRoject contRact / Request foR pRoposal (Rfp) statusThe Bowline 3 project has not been submitted to any new York State agency or authority inresponse to a request for proposals (RFP).


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puBlIc outReach and staKeholdeR enGaGementGenOn seeks to be an active and engaged partner in all of the communities across the United States where we own and operate generation assets or seek to execute develop-ment projects. As an essential component of the Bowline 3 project, GenOn will seek to identify key stakeholder groups and affected individuals. The company will also seek to de-velop a comprehensive public outreach and information program designed to ensure that stakeholders understand the important benefits that the project will provide to the state of new York and to the surrounding community. This program will provide ample opportuni-ties for members of the public to ask questions and discuss concerns that they may have about the project.


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Appendix


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appendix a: Bowline site--current aerial overview photo


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appendix B: Bowline 3 Construction Site – Current Aerial Photo


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appendix c: Conceptual Layout of Bowline 3


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appendix d: Conceptual Bowline 3 – Facility Profile


bowline 3 and lovett generation projects

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