Governor’s Conference on Energy

Federal/State/Local Role in Permitting & Regulating Energy

Projects

October 16, 2013

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Indianapolis Power & Light Company (IPL)

• IPL supplies electricity to about 470,000 customers

• An Investor Owned Utility whose parent is the AES Corporation

• Most of IPL’s energy comes from the combustion of coal

• Available wind and solar generation about 7%

Monument Circle

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AES – The Power of Being Global

• The AES Corporation has– A widely

diversified generation mix

– Generating capacity > 40,000 MW

– In 27 countries on five continents

– $17 billion annual revenues

– A global force of more than 27,000 people

Natural Gas 37%

Coal 34%

Renewables24%

Oil, Diesel 5%

AES Generation Mix

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Significant spending at IPL on Environmentally Related Regulations and Considerations

• $600 million Spent in the Past 10 Years For Clean Coal Controls – NOx, SOx, PM reduction

• Additional ~$500 million being invested to comply with Mercury and Air Toxics Standards (“MATS”) at IPL’s largest coal units.

• ~600 MW of small coal units being shut down– 200 MW to be refueled with natural gas – 650 MW to be replaced with new gas fired combined

cycle project – ~$600 million of additional investment

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Some thoughts based on 25 years of developing power projects

• Electricity is a great and essential product• No perfect way to generate electricity

– What’s best or better changes over time (fuel prices, technology advances, environmental considerations, etc.)

– Diversification is important

• New power plant capacity will almost certainly be overwhelmingly be gas fired combined or simple cycle power projects for the next decade or longer

• Mercury and Air Toxic Standards (“MATS”) and other requirements are driving the retirement of a huge amount of coal fired capacity– Development of new gas fired combined cycle projects will continue to

steadily accelerate

• Developing a power project is a wildly challenging, multi-year, expensive and risky proposition. Most project efforts don’t succeed.

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Some thoughts based on 25 years of developing power projects

• Counties and states can scarcely do better than to attract a new gas fired combined cycle power project– Long term, high paying jobs; Long term, reliable property taxes; Economic

development (construction jobs, support services, downstream benefits)

• Local: Don’t let the vocal minority rule the county (or state or federal process)

• Local/State: Differences in regulations, reception and taxation can meaningfully influence where a developer expends resources to develop a power project

• State/Federal: New rules and regulations can result in huge costs to comply – Ultimately the utility customer will have to pay– Be mindful of the cost/benefit balance

• Local/State/Federal: – Definitive time line to decision– Consistent and sensible rules and regulations

Charlie Falter

(240) 381-7777

charlie.falter@aes.com

Governor’s Conference on Energy

Federal/State/Local Role in Permitting & Regulating Energy Projects