Eagle Crest Energy CompanyFebruary 2011

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New Hydro: Making it Happen

• Background on the Eagle Mountain Pumped Storage Project

• Need for Eagle Mountain

• Licensing & Development Schedule

• Beyond Licensing – The Valley of Death

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Eagle Mountain Pumped Storage is:

• We are utilizing an economically depleted iron mine that was closed in the 1980’s.

• By utilizing two existing mine pits, we are developing a 1300 MW pumped storage facility providing utility-scale electricity storage to southern California designed to store in excess of 23,000 megawatt-hours (18 hours of peak storage)

• Eagle Mountain represents a unique opportunity critical to California’s electric infrastructure as the State is committed to 33% renewable energy by 2020

• Built with proven technology

• Adjacent to a major southern California transmission corridor

• A source of carbon footprint reduction for southern California

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Lower Reservoir

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Upper Reservoir

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Eagle Mountain

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Eagle Mountain Project Benefits

• Environmentally friendly, closed loop system reclaims brownfield mine site to help integrate intermittent renewable energy

• Location in a depleted surface mine reclaims impacted land

• No existing aquatic habitat ► no fish

• Remote non-populated location ► no recreation

• Stabilizes electric grid by providing system peaking capacity and transmission system regulating benefits

• According to multiple state and federal agencies, utility scale energy storage is essential for successful integration of intermittent wind and solar renewable power generation and for maintaining reliable transmission grid operations

THE NEED FOR EAGLE MOUNTAIN

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Storage Makes Renewables Reliable

• Renewables generate much of their power when it is not needed

• As much as 70% of wind power is generated off-peak (nights & weekends)

• 28% of solar generated off-peak (weekends)

• Weekday solar generation does not match peak demand

• Solar and wind resources cannot be ordered online when demand requires

• Eagle Mountain is able to store low-cost, off-peak energy (including renewables if available) and generate on-peak energy to meet demand when it is required by the grid

• Eagle Mountain can provide electric capacity, peaking electricity and critical ancillary services including Black Start, Voltage Regulation, and Spinning Reserve

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Wind Generation is Intermittent

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Cal ISO Example of Ramping Challenge at 20% RPS

LICENSING STATUS & DEVELOPMENT SCHEDULE

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Environmental Licensing

• Project is currently in the final stages of environmental permitting processes at both the state and federal level:

• The Federal Energy Regulatory Commission Draft Environmental Impact Statement was released for public comment in December 2010.

• The State Water Resources Control Board is the lead agency for the state environmental review under the California Environmental Quality Act and the draft Environmental Impact Report was released for public comment in July 2010 .

• Eagle Crest has been working with key state and federal agencies for several years in understanding key concerns and developing solutions and alternatives to environmental issues.

• Water quality Certification is expected in May 2011

• Federal Hydro License is expected in mid-2011

BEYOND LICENSING – THE VALLEY OF DEATH

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Beyond Licensing –The Valley of Death

• Interconnection Agreement • Interconnection application filed in January 2010• Expensive proposition • Application withdrawn in late 2010 and will be refiled in March 2011

• Contract Storage Agreement• Markets differ across the country• Need to evaluate the ancillary benefits of pumped storage• Work with utilities and PUC on rate recovery• Key is putting together reasonable cost argument• System modeling is critical but process is complex and data is not

generally available to developers

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Beyond Licensing – The Valley of Death

• Cost• Need for an accurate cost estimate for contract storage agreement• Design needs to go beyond conceptual stage• Need for an extensive geotechnical program to firm cost estimate

• Resolve Landfill Legal Issues USBLM ROW Permit

• Key Requirement is Development Plan• How best to sequence events and contain costs• Detailed design in late 2011 and 2012• Construction to begin as early as 2013• Commercial operation – as early as 2017, depending on availability of

transmission

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New Hydro: Making it Happen

HOW CAN WE MAKE IT HAPPEN – BETTER?

• Governmental low cost loan after license issuance to financing conditioned on milestone achievements

• Value ancillary services and allocate benefits accordingly

• Improve transmission line interconnection process

• Sustain high level coordination after licensing among agencies and FERC

THANK YOU