NewGen Strategies and Solutions, LLC

Transcription

1 NewGen Strategies and Solutions, LLC Thoughtful Decision Making for Uncertain Times Appraisal Services

2 Company Overview NewGen Strategies and Solutions, LLC is a management and economic consulting firm specializing in serving the utility industry and market. We provide financial, due diligence, valuation, strategy, expert witness, stakeholder and sustainability consulting services to public clients across the country. Our expertise includes litigation support in state and federal regulatory proceedings, utility business and financial planning and sustainability strategy for electric, solid waste, water, wastewater and natural gas utilities. NewGen was created by consultants who are dedicated to our client s mission and recognized as experts in our respective fields of service. Our assistance to clients is provided with a keen insight to the growing role of stakeholders, resource availability, cost of providing utility services and economic conditions, ensuring an integrated approach to utility operations and services. We apply our expertise to deliver high impact solutions through our diverse and integrated market perspective; resulting in effective decision-making and implementation. Appraisal and Valuation Services NewGen s appraisal and valuation team has broad experience across the power and utility business spectrums, including expertise in generation assets of all kinds, electric transmission and distribution, water, wastewater, solid waste, gas and oil assets. NewGen s appraisal and valuation consulting practice provides comprehensive valuation services and expertise in the following areas: Appraisal Services Our reports comply with the Uniform Standards of Professional Appraisal Practice (USPAP) Our appraisals consider the three generally accepted approaches to value: Cost Approach, Income Approach, and Market Approach NewGen employs two of the approximately 30 Accredited Senior Appraisers accredited by the American Society of Appraisers with a public utilities designation Valuation Consulting Our appraisers have a wealth of experience assisting in the transaction process with valuation assistance including: Fairness opinions Valuation for financing Depreciation studies Litigation Support Expert witness testimony before courts and regulatory bodies across the country Our comprehensive analyses support litigation efforts at trial Our reputation for objectivity and unbiased conclusions provides credibility at trial

3 NewGen Services Appraisal and Valuation NewGen s team consists of appraisal professionals certified by the American Society of Appraisers. We regularly value utility property in support of buy/sell transactions, financial transactions, insurance assessments, and property tax valuations. Contract Negotiations and Support We provide assistance in development and negotiation of wholesale water and wastewater contracts recognizing the unique contractual relationships with a number of legal advisors, working closely with them to develop contracts which protect our client s interests while recognizing regulatory precedent. Cost of Service and Rate Design NewGen has vast retail and wholesale cost of service and rate design experience, including alternative rates to meet emerging customer demands and market trends. Several of our consultants routinely provide expert cost of service testimony before state utility commissions representing municipal utilities, cities, or larger IOU customers. Depreciation Studies With over 30 years of experience performing depreciation studies for public and consumer owned utilities, the NewGen team understands the effects of physical, functional, and economic obsolescence on plant lives and timely recovery of capital investment. Feasibility Studies NewGen leverages our financial, appraisal, stakeholder, and regulatory expertise on each feasibility study we perform thus providing a more comprehensive review that ensures broader stakeholder support as a project or asset related initiative proceeds. Financial Planning NewGen provides financial planning, modeling, and advisory services and tools to reduce risks, evaluate alternatives, ensure stable financial performance, and optimize available financial mechanisms. Litigation NewGen works intimately with our clients and legal counsels through the litigation process to make certain our clients positions are clearly communicated and understood. We ensure our clients a reliable, qualified, and defensible approach. Municipal Franchise NewGen has extensive experience assisting municipal clients in negotiating utility franchise fee agreements, conducting studies to determine utility compliance with franchise terms, and identifying direct and indirect costs incurred by clients due to utility operations within right of way. Pole Attachment Fees NewGen develops pole attachment rates and negotiates agreements on behalf of municipalities and consumer-owned electric utilities. We can calculate pole attachment rates using alternative methods, such as the FCC and APPA methods. NewGen works closely with our clients to assure pole costs are allocated in a fair and equitable manner between the electric utility and cable and telecommunications providers. Power Supply and Integrated Resource Planning The NewGen team includes highly experienced individuals well versed in wholesale power marketing, power supply planning, and power procurement. We regularly incorporate renewable energy, distributed energy, and a variety of demand side management options into our analyses Revenue Bond Financing NewGen supports due diligence and financial planning efforts surrounding the issuance of Utility Revenue Bonds for water, wastewater, solid waste, electric, telecommunications and natural gas utilities. Our team works closely with cities, attorneys, underwriters and rating agencies to provide an independent assessment of project or system viability. Strategic Planning Using a proven and flexible strategic planning process that taps into knowledge at all levels in the organization, NewGen consultants conduct research and assessments using a variety of tools, expertly facilitated planning sessions, and develop a prioritized, actionable, and metrics-driven plan. Stakeholder Engagement The NewGen approach encompasses both external and internal stakeholder change management based on an underlying belief that the soft stuff is really the hard stuff. Efforts have resulted in a high degree of customer alignment, with and support for, utility strategic directions. Sustainability NewGen s sustainability services provide an integrated strategy and plan to optimize our client s infrastructure and business decision making by integrating proper consideration for natural resources, energy, water, and waste. Transmission Planning NewGen consultants perform technical analyses pertaining to generation interconnection and transmission service requests. These technical analyses include system impact/facilities studies that evaluate power flow, short circuit, and stability system impacts to determine upgrades required to provide service.

4 Key Team Members Nancy Hughes, ASA, CDP - Director Ms. Nancy Hughes has worked in the public utility industry since 1977 specializing in utility rates and regulation, valuation and depreciation. She has testified as an expert witness on these issues before federal and state regulatory commissions, city councils, and courts of law. Ms. Hughes is an Accredited Senior Appraiser of utility property and has performed appraisal studies and providing oversight to determine the value of a wide range of utility property including electric, natural gas, water, wastewater, telecommunications, and solid waste property. She is also a Certified Depreciation Professional (CDP) of the Society of Depreciation Professionals. Mike Lane, ASA - Director Mr. Michael Lane has 25 years of experience in the power and public utility industry, specializing in appraisal and valuation as well as utility rates and regulation. Mr. Lane has performed numerous generation asset appraisals for utilities, independent power producers and financial institutions. Mr. Lane is an Accredited Senior Appraiser of utility property. Grant Rabon, ASA - Sr. Consultant Mr. Grant Rabon has 8+ years of experience as a project manager for electric, water, wastewater, and solid waste utility engagements. He is certified by the American Society of Appraisers in utility property valuation. Mr. Rabon has performed or managed more than 25 cost of service and rate design studies. Jack Stowe - Director and President - Water Practice Mr. Jack Stowe has over 40 years of professional consulting experience and is a recognized expert in water, wastewater, natural gas, and electric rate matters, having testified numerous times as an expert witness before rate regulatory agencies, as well as federal and state courts, on rate-making matters. Joe Mancinelli - Director and General Manager, President - Energy Practice Mr. Joe Mancinelli is the General Manager and President of the Energy Practice at NewGen and has more than 25 years of cost of service and rate design experience for electric, water, wastewater, and natural gas utilities. He works closely with public utility commissions, utility boards, city councils and end-users with respect to the strategy and fundamentals of cost of service and rate design. Mr. Mancinelli is an expert in utility cost of service, including allocating costs for multi service utilities and methodologies adopted by APPA and NARUC. Dave Yanke - Director Mr. Dave Yanke has 21 years of financial consulting insight regarding public sector water, wastewater, and solid waste industries. His experience includes the conduct of operational reviews, system valuations, feasibility and privatization analyses, and cost of service and rate design studies for water, wastewater and solid waste utilities. Having effectively guided numerous repeat clients through a wide variety of operational and financial challenges, Mr. Yanke serves as a trusted advisor in an ever-changing marketplace. Chris Ekrut - Director Mr. Chris Ekrut has over 10 years of experience providing rate-making consulting services, with the majority of his experience centered in the water and wastewater industry. Mr. Ekrut has provided litigation support and expert witness testimony development before other rate regulatory agencies. He has also conducted a number of wholesale and retail water and wastewater rate studies, developed water/wastewater rate models, storm water fee models, and assisted in the negotiation and/or litigation involving wholesale water contracts. Mr. Ekrut also specializes in the development of Utility Business Plans.

5 Appraisal Projects Electric Transmission and Distribution City of Boulder, Colorado - Asset Valuation NewGen is currently developing a preliminary informal estimate of the value of electric distribution facilities the City of Boulder (the City) may acquire from Xcel Energy. The City is evaluating the feasibility of acquiring and operating the facilities as a municipal utility. Initially, NewGen will develop a preliminary estimate of the value of the electric facilities to assist the City in its decision making process. If the City proceeds with acquisition, NewGen will provide an independent appraisal of the electric facilities. City of Kanab, Utah Appraisal and Sale of Municipal Electric System NewGen staff performed an independent appraisal of the Kanab City Electric System, which served approximately 1,400 customers in southern Utah. The electric system was particularly affected by the California energy crisis in the early 2000 s and took on a substantial amount of debt to cover financial losses. The City of Kanab (the City) used the results of the appraisal to negotiate a purchase price with Garkane Energy, a neighboring electric cooperative, that met the City s objective to retire the debt on its books. Although a rate surcharge was applied to customer bills in Kanab to recover a portion of the system s cost, customers in Kanab saw an overall decrease in electric rates. Lafayette Utilities System/Lafayette, Louisiana Appraisal of Electric Distribution Facilities NewGen staff performed an independent appraisal and provided expert testimony on behalf of Lafayette Utilities System (LUS) regarding the just compensation due Entergy Gulf States Utilities in connection with the expropriation of electric distribution facilities serving approximately 453 customers located in 16 parcels of land that were annexed by the City of Lafayette. The trial court decision adopted the appraisal and opinion of fair market value testified to by NewGen staff. Dayton Power and Light Company/Dayton, Ohio Electric Transmission and Distribution System Appraisal NewGen staff performed an independent appraisal study to determine the fair market value of the electric transmission and distribution system located at Wright-Patterson Air Force Base that DP&L purchased from the United States Department of Defense. South San Joaquin Irrigation District, California Value of Electric Distribution System NewGen is providing appraisal services to South San Joaquin Irrigation District (SSJID) to determine the fair market value of electrical distribution facilities that SSJID wants to acquire from Pacific Gas and Electric Company (PG&E) in order to provide retail electric service to customers within SSJID s service territory. The SSJID service territory covers approximately 112 square miles and includes the cities of Escalon, Manteca, and Ripon, and portions of unincorporated San Joaquin County. Trinity Public Utilities District, California Appraisal of Douglas-Hayfork 60-kV Transmission Line NewGen staff performed an independent appraisal for Trinity Public Utilities District (the District) to determine the fair market value of Pacific Gas & Electric Company s (PG&E) Douglas Hayfork 60-kV electric transmission line, which the District sought to acquire from PG&E. The appraisal also included an estimate of severance costs. The opinion of fair market value was based on the cost and income approaches, taking into account the effect of rate regulation and the process by which utility owners are compensated by the California Independent System Operator (CAISO). PG&E declined the District s offer to purchase the transmission line; consequently, the District brought an eminent domain action to condemn the line. Following confidential negotiations, the District and PG&E reached a settlement agreement for the District to acquire the transmission line.

6 Appraisal Projects Renewable Energy Washita County, Oklahoma - Cowboy Wind Energy NewGen was retained as an expert witness by the counsel for the Board of County ers of Washita County, Oklahoma to assist in the development of an appraisal of the Cowboy Wind Energy Assets as part of a property tax dispute. NewGen developed income and cost indicators of value that were utilized by the county in the appraisal of the assets. Onondaga Resource Recovery Authority - Waste Recovery Facility Appraisal NewGen was retained by Onondaga Resource Recovery Authority (OCRRA) to complete an appraisal of the 39.5 MW OCRRA solid waste to energy facility in support of its ongoing negotiations with the plant operator, Covanta. NewGen conducted a site visit, and developed an appraisal of the facilities that included the income, cost, and market approaches to value. Southern California Public Power Authority - Tieton Hydroelectric Project The Tieton Hydroelectric Project, located in central Washington, is a qualified generator of renewable energy credits and production tax credits, and is certified by the California Energy as eligible for California s renewable portfolio standard (RPS). The Southern California Public Power Authority (SCPPA) sought to purchase the project to help support RPS requirements. NewGen performed an independent appraisal to determine the project s fair market value. The facilities appraised included a 13.6-MW hydroelectric generating plant, a substation (13.8/115 kv), and a 22 mile 115-kV transmission line that interconnects the hydroelectric generating plant to the PacifiCorp electric system. Based on the outcome of the independent appraisal, NewGen staff assisted SCPPA in negotiating the purchase price, which resulted in successful acquisition of the project in Conventional Generation Golden Valley Electric Association, Alaska - Appraisal of Healy Unit 2 Generating Project NewGen was retained by Golden Valley Electric Association (GVEA) to perform an appraisal study to determine the fair market value of the Healy Unit 2 coal fired electric generating project in support of GVEA s acquisition of the assets. Nuclear Innovation North America, LLC - South Texas Project Electric Generating Station The South Texas Project (STP) Electric Generating Station is one of the newest and largest nuclear power facilities in the nation. The STP s two units produce 2,700 MW of carbonfree electricity-providing clean energy to two million Texas homes. In anticipation of the proposed addition of two new reactor units, the developer retained NewGen staff to perform an appraisal study to determine the fair market value of existing common facilities that would be required to operate the proposed addition. Included were a 7,000 acre cooling reservoir and associated equipment, a nuclear training facility, maintenance buildings and structures, a warehouse and security functions, water treatment systems, and roadways/parking lots. NewGen staff also determined the fair market value of participation rights associated with the expansion. While the common facilities and participation rights belong to the existing facility owners, Nuclear Innovation North America would have the rights, or an option, to purchase them. In both cases, fair market value was estimated using the income approach. Key Equipment Finance Corporation - Springerville Power Station NewGen staff performed an appraisal of the common facilities associated with the coal-fired generation plant at the Springerville Power Station in Arizona. Our staff developed a replacement cost new less depreciation (RCNLD) value estimate of the common facilities to support a sale/lease back transaction for Key Equipment Finance Corporation. Results of the analysis were used for internal decision-making regarding the transaction. Staff also appraised the common facilities at Springerville Power Station for lease negotiations in 2005, 2017, and 2021 to determine the fair market value of these assets.

7 Appraisal Projects Conventional Generation (cont.) Greer, Herz and Adams, LLP, Texas - Comanche Peak Appraisal and Litigation Support NewGen was retained by Greer, Herz and Adams, LLP (GHA) on behalf of Somervell County Appraisal District (SCAD) to complete an appraisal of the Comanche Peak Nuclear Generating Station (Comanche Peak) for Ad Valorem tax purposes in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) and the Texas Property Tax Code. In addition to the appraisal, NewGen staff provided expert witness testimony before the 18th District Court Judge John Neill at the Somervell County Court House. NewGen completed the appraisal utilizing the three generally accepted valuation approaches, Cost, Income and Market, to determine the Fair Market Value (FMV) of Comanche Peak. NewGen s opinion to the FMV of Comanche Peak was based on information provided by GHA, other information generally available to NewGen, and studies and analyses undertaken by NewGen. Comanche Peak is a two unit, pressurized water reactor plant located on a peninsula on Squaw Valley Reservoir in Somervell County, Texas near Glen Rose, Texas. Water / Wastewater City of Blue Mound, Texas - Water Utility Appraisal The City of Blue Mound (the City) is in a dispute with the investor-owned water utility that serves the community and has elected to pursue condemnation and municipalization. The City contracted NewGen staff to conduct a condition assessment and appraisal study. The study provided the City with a range of acquisition values and an estimation of the value of the system assets. NewGen staff also provided oral testimony to the County in support of the appraisal. The City is seeking to negotiate a purchase price within the range of values developed in the appraisal study. City of Claremont, California - Water System Appraisal and Feasibility Analysis NewGen performed an appraisal to estimate the fair market value of the Claremont Water System, which the City of Claremont wants to acquire from Golden State Water Company and operate as a municipal water utility. The Claremont Water System serves approximately 11,065 customers, most of which are residential customers. NewGen also performed analyses examining the effect of different purchase scenarios on customer rates for the new municipal utility. City of Indianapolis, Indiana - Water and Wastewater Utilities Financial Analysis, Procurement and Appraisal NewGen staff, serving as Project Manager, developed a 15 year pro forma and managed an appraisal of the $2 billion water and wastewater system for the City of Indianapolis (the City). Staff assisted the City in considering monetization alternatives, including long-term concession, asset sale, regionalization, and creation of new public entities. The evaluation process has included a 20-year discounted cash flow model and fair market value appraisal of the systems; a request for Expressions of Interest to solicit marketplace ideas for more operational synergy and capital program execution; and an evaluation of alternatives and determining an optimum path forward. St. Tammany Parish, Louisiana - Water and Wastewater System Appraisal NewGen staff performed an independent appraisal study to determine the fair market value of Southeastern Louisiana Water and Sewer Company (SELA), with approximately 8,200 water and 6,500 sewer customers, which the Parish sought to acquire. The appraisal considered all three approaches to valuation, but relied on the cost and income indicators of value to determine the fair market value of the system. The market approach was not relied upon due to the lack of comparable utility sales transactions. NewGen staff supported the Parish in purchase negotiations with SELA. The acquisition of SELA was completed in February 2010 for a purchase price of $36 million, based on the results of the appraisal. NewGen staff also worked on the Consulting Engineer s Report for the sale of $41.4 million in utility revenue bonds which were used to acquire the SELA system. City of Westfield, Indiana - Water and Wastewater Utilities Appraisal NewGen staff conducted a condition assessment and appraisal study. The study provided the City of Westfield (the City) with a range of acquisition values and an estimation of the value of the system assets. The City was able to negotiate a purchase price that was within the range of values developed in the appraisal study and NewGen provided oral and written testimony to the Indiana Utility Regulatory in support of the appraisal.

8 Appraisal Projects Solid Waste City of El Paso, Texas - Landfill Valuation NewGen staff members were retained by the City of El Paso (City) to perform two valuation studies, one for each of the City s two owned and operated landfills. The two landfills are the McCombs Municipal Solid Waste Landfill (McCombs) and the Clint Municipal Solid Waste Landfill (Clint). The purpose of the valuation studies was to estimate the potential value of the earnings stream of the landfills (utilizing the Income Value Approach) beginning with Fiscal Year (FY) Members of NewGen provided an estimate of the potential earnings stream that could be generated by the landfills assuming two different scenarios: City owned and operated versus privately owned and operated. Members of NewGen examined the capital and operating costs associated with operating the landfills under these two scenarios. Finally, members of NewGen provided a forecast of the projected earnings stream that would be realized by the landfills under the two ownership scenarios, assuming a series of stated assumptions. City of Houston, Texas - Solid Waste Transfer Station Valuation The Solid Waste Management Department of the City of Houston (City) provides solid waste services to the citizens of Houston through the collection, disposal, and recycling of discarded material. The Solid Waste Management Department is responsible for residential and some small commercial solid waste collection services as well as solid waste disposal at three City-owned transfer stations, among other responsibilities. The disposal assets (i.e., transfer stations) are currently housed and funded within the City s General Fund and, as a result, are totally paid for through property taxes. The City retained the assistance of NewGen staff to evaluate the potential establishment of a solid waste disposal enterprise fund. Under this approach, the City-owned disposal assets would be transferred to the enterprise fund and all future capital needs associated with the transfer stations would be funded within the enterprise fund through fees assessed on waste disposed at the transfer stations. To establish an accurate value for the City s records, NewGen members conducted a valuation of the three transfer stations and provided the rationale and merits of utilizing an enterprise fund, as well as a description of the strategy by which the City could establish an enterprise fund for specific solid waste services. Oil and Gas CitiPower, LLC, Whitley County, Kentucky - Appraisal of Gas Distribution Assets NewGen staff was retained to appraise the gas distribution assets owned and operated by CitiPower, LLC (CitiPower), a privately owned gas utility located in McCreary County, Kentucky. CitiPower wanted to sell its distribution assets in order to focus on research and exploration. To assist with this focus, our project team estimated the value of the system to prepare for its sale. Specifically, we provided a discounted cash flow analysis. From CitiPower s inventory of the system, a replacement cost was developed. The resulting appraisal was used by CitiPower for internal decision making, relative to the sale of its gas distribution assets. Our project team delivered a complete appraisal report of all distribution, transportation, and storage related assets that included the income, cost and market approaches. Governor s Office for Local Development, Kentucky - Appraisal of Gas Distribution Assets NewGen staff was recently selected to provide appraisal services to the Kentucky Governor s Office for Local Development (GOLD). These services are related to the appraisal of several gas distribution utilities throughout the state of Kentucky and the Gas System Restoration and Development Project (GSRP). Services within the valuation included stock/business valuation and an opinion of the value of the loan portfolio for each of the utilities. NewGen staff initially met with representatives from GOLD and GSRP to discuss a project approach and to finalize work schedules and plans. We then completed analyses of companies comparable in size and estimated the value for each of the utilities in the GSRP. Finally, we reviewed documents associated with the utilities to assess the fair market value, conducted on-site visits of the facilities, and prepared a complete appraisal report.

9 Appraisal Projects Oil and Gas (cont.) MassDevelopment Finance Agency, Massachusetts - Appraisal of Gas, Electric, and Water Distribution Assets The site of an army fort closed down for over a decade, the land, buildings and associated utilities of Devens, Massachusetts, were turned over to Devens Utilities for development. The combined gas, electric and water distribution assets were owned and operated by Devens Utilities, a division of MassDevelopment Finance Agency (MDFA). Once these assets were formed, MDFA sought NewGen staff expertise to indicate if it was in the best interest of the agency to sell its utility assets, or to raise cash in order to finalize the development. The value and cash flows of the gas, electric and water distribution assets were used to analyze the most beneficial decision for MDFA. Our complete appraisal report which included the income, cost and market approaches to value, was used internally by MDFA to aid in decisions regarding the sale of the assets. North Slope Borough/Barrow, Alaska - Value of Trans Alaska Pipeline System NewGen staff prepared appraisals and testified in property tax cases before the State Assessment Review Board (SARB) in Alaska on behalf of the North Slope Borough, North Star Borough (Fairbanks), and the City of Valdez regarding the economic value of the Trans-Alaska Pipeline System (TAPS). In the development of the appraisals, NewGen staff relied on expert reports regarding pipeline construction costs, oil exploration and development on the Alaska North Slope and TAPS minimum throughput levels. Testimony by NewGen staff before the SARB addressed appropriate methodologies to use in assessing the value of TAPS for property tax purposes and concluded that the Replacement Cost New Less Depreciation (RCNLD) method is the most appropriate method for assessing the economic value of TAPS. The State Department of Revenue also supported use of the RCNLD method, as opposed to the tariffed income approach which had been used to assess values in previous years and was favored by the TAPS owners. In a significant decision in 2005, the SARB approved the use of the RCNLD methodology, which was affirmed in a 2011 ruling by the Alaska Superior Court.

10 RESUMES Economics Strategy Stakeholders Sustainability

11 Michael Lane, ASA Director, Energy Practice Mr. Lane is a Director within NewGen Strategies & Solutions, LLC, bringing 25 years of experience in providing financial, technical, and management services to various industries. He has served as a Project Manager for a range of financial studies for water, wastewater, electric and gas utilities across the country. This includes cost of service and rate design projects, financial planning, feasibility studies, and valuation studies. He is a certified Accredited Senior Appraiser (ASA) by the American Society of Appraisers, specializing in Public Utilities Appraisals; this designation is held by less than 30 professionals nationwide. Mr. Lane has provided oral testimony in a civil court of law regarding the appraisal of electric plant property for property tax appraisals. EDUCATION M.B.A., Finance & Bachelor, Business Administration, Belmont University, Jack Massey Graduate School of Business A.S., Nuclear Engineering Technology, Thomas Edison State College PROFESSIONAL AFFILIATIONS Accredited Senior Appraiser by the American Society of Appraisers: Public Utilities EXPERIENCE Appraisals Mr. Lane has extensive experience performing appraisals of client assets, including the following: Power Generation Assets RB International Finance (biodiesel) Confidential Client (co-generation) AES Appraisal (biomass) AMP (hydroelectric) Greater Detroit Resource Recovery Agency Connell Finance (hydro - dam) (biomass) Confidential Clients (nuclear) Nex Bank (biomass) International Power America (power plant portfolio) CPS (nuclear) Tenaska (co-generation) GE Energy Financial Services (biomass) Northern Virginia Electric Co-Op (misc. generation) International Power America (Colletto Creek coalfired plant) Banc of America (coal generation) ADA CoGen GE Capital (co-generation) KBC Bank ADA CoGen Key Equipment( coal generation) Mass Municipal Wholesale Electric Co (CT- Smurfit-Stone Container (co-generation) generation) Credit Agricole Investment Bank (combined-cycle) Southeastern Public Service Authority (Waste heat Bank of America Leasing (gas gathering) Recovery) Economics Strategy Stakeholders Sustainability

12 Michael Lane, ASA Director, Energy Practice Wheelabrator (waste heat recovery generator) Williams Power Company (Simply Cycle generator) Yards Creek (generation) Mesirow Financial (generation liquidation) Transmission and Distribution Assets City of Concord, NC (electric distribution) Middle Tennessee Electric Membership Co-oP (electric distribution) Northern Virginia Electric Co-Op (electric distribution) Renewable Assets Waste of Nantucket (biomass plant) Nex Bank (Big Valley Power biomass plant) Capstar Capital Partners (geo-thermal plants) Macquaries Securities (landfill) The Harrisburg Authority (mass burn generation) Plasco Energy (solid waste generation) NCMPA (nuclear plant) CSOLAR (photovoltaic solar generation) CSOLAR South (photovoltaic solar generation) Water and Wastewater Assets Greater Quachita Water Company (wastewater portfolio) Ferrate Treatment Technologies (wastewater treatment) Blue Mound Water & Sewer, TX (water and sewer) City of Westfield, IN (water and wastewater system) Citizens Energy (Indianapolis water and wastewater) Indianapolis Water, IN (water and wastewater) Oil and Gas Assets Ky. Gov's Office for Local Development (gas distribution) American Midstream Partners, LP (Chatom plant) General Electric (co-generation plant) Greer, Herz and Adams, LLP (Comanche Peak Nuclear Generating Station) South Kentucky Rural Electric CC (electric distribution) Confidential Client (transmission and distribution) CSOLAR West (photovoltaic solar generation) Monroe County Landfill (waste-to-energy) Granite Reliable Power, LLC (wind farm) Southern Cal Public Power Auth (wind farm) Duke-Fowler Wind Farm (wind farm) Glacier Wind I (wind farm) Naturener (Glacier Wind I wind farm) Naturener (Glacier Wind II wind farm) Brownsville Public Utility Board, TX (water distribution) Kill Devil Hills, NC (waster distribution) Louisville Water Company, KY (water transmission pipeline and treatment) BCIM (water and wastewater) Falls Church, VA (water and wastewater) Currituck County (wastewater) American Midstream Partners, LP (Burns Point plant) Marlin Midstream,LLC (natural gas extraction and transportation) Thoughtful Decision Making for Uncertain Times 2

13 Michael Lane, ASA Director, Energy Practice Price Waterhouse Coopers (natural gas extraction and transportation) Carerra (natural gas transportation and storage) Tierra Pipeline GP, LLC (natural gas pipeline transportation) Tierra Pipeline GP, LLC (pipeline refined petroleum products) Power Generation Appraisal Confidential Client In today s competitive marketplace, cooperatives are faced with evaluating their power supply arrangements with generating and wholesale suppliers in order to remain competitive themselves. A confidential client had begun to examine the competitiveness of its purchasing arrangement with the Generation and Transmission ( G&T ) cooperative of which it is a member. As the client had identified the need to determine the value of its equity interest in the G&T s generating assets, Mr. Lane was asked to conduct a valuation. Mr. Lane reviewed contracts and documents associated with the generating assets in order to assess their value impact, and to help define parameters likely to affect the overall value. The results of this valuation supported the client in negotiations with the G&T relating to its wholesale power contract, including any potential separation agreement reached by the parties. Capstone Advisory Group / Boston Generating, LLC, Massachusetts Mr. Lane was retained by Boston Generating, LLC to perform an appraisal study to determine the fair market value of four electric generating facilities owned by subsidiaries and affiliates of Boston Generating and by a special purpose entity of the lenders. The appraisal included four facilities in Massachusetts, and was conducted to comply with Financial Accounting Standards Board ( FASB ) Rule No. 141 reporting requirements. This included valuing tangible and intangible benefits associated with the Boston Generating projects. Mr. Lane conducted an inspection of the facilities in connection with the appraisal. As the studies and analyses also required an evaluation with respect to the fair market value of the Boston Generating projects, our appraisal team relied on generally accepted valuation methods and procedures. Power Generation Appraisal Coal / Natural Gas Fired Golden Valley Electric Association, Alaska Mr. Lane performed an appraisal study to determine the fair market value of the Healy Unit 2 coal fired electric generating project in support of Golden Valley Electric Association s acquisition of the assets. Key Equipment Finance Corporation, Arizona Mr. Lane performed an appraisal of the common facilities associated with the coal-fired generation plant at the Springerville Power Station in Arizona. Mr. Lane developed a replacement cost new less depreciation value estimate of the common facilities to support a sale/lease-back transaction for Key Equipment Finance Corporation. Results of the analysis were used for internal decision-making regarding the transaction. Mr. Lane also appraised the common facilities at Springerville Power Station for lease negotiations at various dates to estimate the fair market value of these assets at certain milestone dates. Bank of America Leasing As Bank of America Leasing s ( BOA ) existing sale-leaseback arrangement was scheduled to expire, Mr. Lane s assistance was requested regarding negotiations surrounding the renewal/termination of the sale lease-back agreement of the Scherer 2 coal-fired plant. Mr. Lane was able to provide a fair market value of the facility, including projected fair market rental payments, in order to allow BOA to enter into negotiations regarding an extension of the lease or sale of the assets. 3 Thoughtful Decision Making for Uncertain Times

14 Michael Lane, ASA Director, Energy Practice Mr. Lane researched the technical profile of the facility, conducted a market simulation, and calculated net cash flow projections, analyzing the gross revenue and operating expenses of Scherer 2, assuming output from the facility is sold into the open market. In addition to the income approach, Mr. Lane also estimated the value of the facility based on cost and market approaches. Philip Morris Capital Corporation Mr. Lane determined the fair market value of six 65-MW natural gas-fired combustion turbine generating facilities owned by Philip Morris and operated and maintained by Luminant Power. The facilities appraised consisted of the actual generating unites and associated step up transformers. Each facility was comprised of GE combustion-type turbines with associated electric generators. Mr. Lane determined that the income approach to valuation was the best indicator of value for the property. To determine potential revenue from sale of electricity form the facilities, Mr. Lane estimated the market price for power and energy that will exist within the region in which the facilities sell power and energy. Market pricing methodology takes an integrated approach to modeling the power market. A variety of market drivers, including generation resources, environmental factors, fuel prices, transmission constraints, new generation resource characteristics, regulatory considerations, and market economics are all taken into consideration. The value of the facilities was determined from the discounted net cash flow that could be supported by the earnings stream. Power Generation Appraisal Nuclear Somervell County Appraisal District, Texas Mr. Lane was retained by Greer, Herz and Adams, LLP (GHA) on behalf of Somervell County Appraisal District (SCAD) to complete an appraisal of the Comanche Peak Nuclear Generating Station (Comanche Peak) for Ad Valorem tax purposes in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) and the Texas Property Tax Code. In addition to the appraisal, Mr. Lane provided expert witness testimony before the 18th District Court Judge John Neill at the Somervell County Court House. NewGen completed the appraisal utilizing the three generally accepted valuation approaches, Cost, Income and Market, to determine the Fair Market Value (FMV) of Comanche Peak. Mr. Lane s opinion to the FMV of Comanche Peak was based on information provided by GHA, other information generally available to NewGen, and studies and analyses undertaken by NewGen. Nuclear Innovation North America, Texas The South Texas Project (STP) Electric Generating Station is one of the newest and largest nuclear power facilities in the nation. The STP s two units produce 2,700 megawatts of carbon-free electricity providing clean energy to two million Texas homes. In anticipation of the proposed addition of two new reactor units, the developer retained Mr. Lane to perform an appraisal study to determine the fair market value of existing facilities (common facilities) that would be required to operate the proposed addition. Included were a 7,000-acre cooling reservoir and associated equipment, a nuclear training facility, maintenance buildings and structures, a warehouse and security functions, water treatment systems, and roadways/parking lots. Mr. Lane also determined fair market value of participation rights associated with the expansion. While the common facilities and participation rights belong to the existing facility owners, NINA would have the rights, or option, to purchase them. In both cases, fair market value was estimated using the income approach. Nuclear Innovations North America, LLC, Texas Mr. Lane provided appraisal services to support the expansion of a nuclear facility in Bay City, Texas, to include two new units using advanced boiler water reactor. He determined fair market value of common facilities expected to be shared between the new and existing units at the facility. Mr. Lane s team also provided a regional power market assessment services in support of project development. While all three generally accepted approaches to valuation (cost, income, and market) and their degree of applicability in estimating the value of the assets were considered, Thoughtful Decision Making for Uncertain Times 4

15 Michael Lane, ASA Director, Energy Practice the fair market value of the common facilities was determined using an allocation methodology from the original and replacement cost analysis of the existing facilities. Power Generation Appraisal Biomass AES Corporation, California Mr. Lane performed an appraisal of the biomass-fired generating plant, located in Delano, California to estimate the fair market value and set the stage for the facility to re-qualify for Production Tax Credits after it was sold and deemed a capital-upgrade facility. The financial and technical experts on Mr. Lane s team worked closely with one another to determine upgrade costs based on plant condition. Working with an in-plant specialist enhanced the credibility to the condition assessment and enhanced the integrity of the appraisal value presented to potential buyers. Smurfit-Stone Container, South Carolina Smurfit-Stone Container needed to determine the estimated fair market value of its 72 MW cogenerations facilities located in Florence, South Carolina. Mr. Lane s thorough analysis assisted Smurfit-Stone Container in deciding whether to purchase the facilities at fair market value, extend its current lease of the facilities at the fair market value rental rate, or extend its lease at a mutually agreed-upon rate. Mr. Lane began the process by reviewing documents to assess the fair market value, while incorporating additional information obtained from previous work efforts. After the initial analysis, Mr. Lane performed an inspection of the facility to supplement the data received. He then interviewed staff responsible for plant management to gain insight on future plans, procedures and programs. Following, the fair market value and fair market rental value of the facility were estimated. The appraisal report included a review of the facility, the methodology incorporated to arrive at his findings, and a summary outlining his opinion of the fair market value of the facility, the remaining useful life, and the fair market rental value of the facility. Wheelabrator Technologies, Inc., Maine Project Manager. Mr. Lane performed a limited appraisal of the Wheelabrator Sherman Energy Company s biomass generating facility located in Sherman, Maine. The limited appraisal is being conducted by a team of professionals with extensive national experience in public utility and power plant appraisals and who are uniquely expert in biomass power. This project team applied the Uniform Standards of Professional Appraisal Practice (USPAP), analyzed facility documentation, and developed the value of the facilities under the Income Approach using the discounted cash flow method. Our staff also developed an opinion as to the value of the facilities to a willing buyer in an arm's length transaction, based on the analyses completed as a part of the Limited Appraisal. Power Generation Appraisal Renewable NaturEner USA, LLC, California Mr. Lane performed an appraisal and estimate fair market value of the Glacier Wind I generating asset located in Glacier and Toole counties, Montana. The asset was designed as a wind energy plant eligible to receive production tax credits and consists of turbines with a total capacity of megawatts. Mr. Lane considered all three generallyaccepted approaches to valuation (cost, income, and market) and degree of applicability of each in estimating the asset values. The income approach was found to be most suitable. After estimating the fair market value, Mr. Lane allocated that value to the facility based on a replacement cost estimate. The client used the appraisal results to determine a potential purchase price and to support negotiations with the prospective purchaser. Capstar Partners Capital, LLC, Oregon In early 2006, Capstar Partners Capital, LLC ( Capstar ) and other select energy companies combined a portfolio of wind generation assets to be sold on the open market. As part of the transaction, Capstar required an appraisal of the wind power facilities collectively known as Aeolus Wind Power I Facilities. Mr. Lane assembled a team of 5 Thoughtful Decision Making for Uncertain Times

16 Michael Lane, ASA Director, Energy Practice professionals with national experience in public utility and power plant appraisals that provided the expertise needed by Capstar. The team visited the facilities and reviewed associated documents to assess the fair market value, and then developed indicators of value. Mr. Lane additionally prepared an estimate of the facilities replacement cost, which included calculation of the facilities depreciation based on the age and estimated useful life remaining. From this analysis, an appraisal report was provided, documenting the basis for the estimate of the fair market value of the facilities, including a description of the facilities, the methodology used, and information supporting the opinion of the fair market value. Granite Reliable Power, LLC, New Hampshire Mr. Lane performed an appraisal of the Granite Reliable Project in Coos County, New Hampshire. The team estimated the fair market value of the project assets, which include 33 Vestas-American Wind Technology, Inc. Model V wind turbine generators, each capable of producing 3.0 megawatts of electricity. The results of the appraisal were used by the client to support the purchase of an equity interest in the project and to support the requirements established by the U.S. Department of Energy under the Section 1705 Loan Guarantee Program. CSOLAR Development, LLC, California Mr. Lane estimated the Fair Market Value of the photovoltaic facility sites, Imperial Solar Energy Center South (130- MW) and Imperial Solar Energy Center West (160-MW) in Southern California utilizing the income and cost approaches. Data used for the valuation estimate was based on pro forma cash flow projections. At the time of the estimate, the facilities were under development and were eligible to receive investment tax credits. During the length of the study report, Purchase Power Agreements where in place for each facility. The appraisal results were used by the client to secure a federal loan guarantee for each facility. Power Generation Appraisal Geothermal Ormat Nevada, Inc., Southern California Mr. Lane performed an appraisal of the North Brawley geothermal facility located in Southern California. The facility consists of a geothermal power generation cycle in which energy is extracted from a high-temperature geothermal resource (i.e., bring) and converted into electricity through an Ormat Energy Converter system. Mr. Lane estimated the fair market value of the facility using the income approach because the project was supported by a long-term Purchase Power Agreement and, therefore, was eligible for production tax credit. The results of the study were used to facilitate a potential sale of the facility. Power Generation Appraisal Waste-to-Energy Wheelabrator Environmental Systems, Inc., Maryland Mr. Lane conducted an appraisal study to estimate the Fair Market Value (FMV) and Fair Market Rental Value of the Wheelabrator Baltimore waste-to-energy facility. The Facility provides dependable, environmentally safe disposal of municipal solid waste for the City and County of Baltimore, Maryland, while generating clean electricity for sale to the local utility. This 60-MW solid waste-fueled steam plant processes up to 2,250-tons-per-day of municipal solid waste. While the facility was financed using a sale/lease-back agreement, recently set to expire, Wheelabrator maintained the right to purchase the plant at either an agreed-upon residual value or a FMV, or to renew the lease at a Fair Market Rental Value. Mr. Lane s appraisal provided a credible recommendation on which Wheelabrator based its decision to renew the lease under Fair Market Rental Value. Thoughtful Decision Making for Uncertain Times 6

17 The Harrisburg Authority Michael Lane, ASA Director, Energy Practice Mr. Lane performed an appraisal to estimate the fair market value of the Harrisburg Material and Energy Recovery Facility in Harrisburg, Pennsylvania. The facility is an 800-ton-per-day mass burn waste-to-energy plant with a gross electrical generating capacity of 24-MW. Mr. Lane and his team conducted a condition assessment, which uncovered operations and maintenance (O&M) shortcomings, and applied the income approach to estimate the value of the facility. The fair market value of the facility was noted to be extremely sensitive to the amount of tipping fee revenue as well as the price paid for the electricity generated. Mr. Lane recommended that any future sale of the facility needs to include certain guarantees related to minimum waste flows and tipping fees, primarily to offset the O&M deficiencies identified in the condition assessment. Greater Detroit Resource Recovery Authority Mr. Lane performed an appraisal study to estimate the fair market value of a Waste-to-Energy System located in Detroit, Michigan. The asset is a 68 megawatt, 3,000-ton-per-day refuse-derived fuel steam plant. The fair market value was estimated using the income approach. Mr. Lane s team confirmed that the best use of the facility is to process municipal solid waste and produce and provide steam and electricity for sale to the open market. A sensitivity analysis warned that the fair market value is vulnerable to both the amount of the steam produced and price paid for the steam. Transmission Asset Appraisal Philip Morris Capital Corporation, New Mexico Mr. Lane performed an independent appraisal to estimate the fair market value of electrical transmission assets. Assets included a 216-mile, 345-kV transmission line; a 345-kV substation, a switching station, and a high voltage direct current, all operated by Public Service Company of New Mexico. Indicators of value were developed based on the cost and income approaches. The client used the estimate in discussions relative to possible sale of the assets. Distribution Asset Appraisal MassDevelopment Finance Agency, Massachusetts The site of an Army fort closed down over a decade, the land, buildings and associated utilities of Devens, Massachusetts, were turned over to Devens Utilities for development. The combined gas, electric, and water distribution assets were owned and operated by Devens Utilities, a division of MassDevelopment Finance Agency (MDFA). Once these assets were formed, MDFA sought Mr. Lane s expertise to indicate if it was in the best interest of the agency to sell its utility assets, or to raise cash in order to finalize the development. The value and cash flows of the gas, electric, and water distribution assets were used to analyze the most beneficial decision for MDFA. The completed appraisal report which included the income, cost, and market approaches to value was used internally by MDFA to aid in decisions regarding the sale of the assets. Distribution Asset Appraisal Electric South Kentucky Rural Electric Cooperative Mr. Lane conducted an appraisal of the electrical distribution system owned by the South Kentucky Rural Electric Cooperative (RECC). RECC needed to determine if there was sufficient capacity to support a potential acquisition that would bring 3,500 new customers online. Mr. Lane and his team reviewed the distribution system and performed a condition assessment of its assets. The team documented substation locations, distribution circuit routing, anticipated load growth capacity, and overall age and condition of each facility. Upon completion of the appraisal, Mr. Lane prepared a report detailing the findings and presented the conclusions and recommendations to 7 Thoughtful Decision Making for Uncertain Times

18 Michael Lane, ASA Director, Energy Practice RECC. The findings were instrumental in supporting the successful acquisition of the Monticello Electric Plant Board by RECC. Town of Belleair, Florida As the Town of Bellair sought to acquire electric distribution assets of Progress Energy Florida, Mr. Lane provided an appraisal of the local electric distribution system. Under the terms of its franchise agreement with Progress Energy, Bellair had the option to purchase the asset at fair market value to be determined by an arbitration panel appointed by the parties. Mr. Lane s work included a complete system inventory, appraisal, and a condition assessment. A complete appraisal report was prepared in accordance with the Uniform Standards of Professional Appraisal Practice along with an analysis of the estimated severance costs associated with the proposed acquisition. The appraisal report was presented to and defended before an arbitration board convened to determine the fair market value and ultimate acquisition cost of the facility. Distribution Asset Appraisal Gas CitiPower, LLC, Kentucky Mr. Lane appraised the gas distribution assets owned and operated by CitiPower, LLC, a privately owned gas utility located in McCreary County, Kentucky. CitiPower wanted to sell its distribution assets in order to focus on research and exploration. To assist with this focus, Mr. Lane estimated the value of the system to prepare for its sale. Specifically, Mr. Lane provided a discounted cash flow analysis. From CitiPower s inventory of the system, a replacement cost was developed. The resulting appraisal was used by CitiPower for internal decision making, relative to the sale of this gas distribution assets. Mr. Lane s team delivered a complete appraisal report of all distribution, transportation, and storage related assets that included the income, cost, and market approaches. Governor s Office for Local Development, Kentucky Mr. Lane provided services to Kentucky Governor s Office for Local Development (GOLD) related to the appraisal of several gas distribution utilities throughout the state of Kentucky and Gas System Restoration and Development Project (GSRP). Services within the valuation included stock/business valuation and an opinion of the value of the loan portfolio for each of the utilities. Mr. Lane and his project team met with representatives from GOLD and GSRP to discuss a project approach and to finalize work schedules and plans. Analyses of companies comparable in size was then completed, and estimated the value for each of the utilities in the GSRP. Mr. Lane reviewed documents associated with the utilities to assess the fair market value, conducted on-site visits of the facilities, and prepared a complete appraisal report. Water and Wastewater Utility Appraisal Onondaga Resource Recover Authority Mr. Lane prepared an appraisal of the 39.5-MW Onondaga Resource Recovery Authority solid waste to energy facility in support of its ongoing negotiations with the plant operator, Covanta. He conducted a site visit and developed an appraisal of the facilities that included the income, cost, and market approaches to value. City of Blue Mound, Texas The City of Blue Mound (City) is in a dispute with the investor-owned water utility that serves the community and has elected to pursue municipalization. In support of the City, Mr. Lane conducted a condition assessment and appraisal study. The study provided the City with a range of acquisition values and an estimation of the value of the system assets. Mr. Lane also provided oral testimony to the County in support of the appraisal. The City is seeking to negotiate a purchase price within the range of values developed in the appraisal study. Thoughtful Decision Making for Uncertain Times 8

19 City of Westfield, Indiana Michael Lane, ASA Director, Energy Practice Mr. Lane conducted a condition assessment and appraisal study providing the City of Westfield (the City) with a range of acquisition values and an estimation of the value of system assets. City of Indianapolis, Indiana Project Manager, Mr. Lane developed a 15-year pro forma and managed an appraisal of the $2 billion water and wastewater system for the City of Indianapolis (City). He and his team assisted the City in considering monetization alternatives, including long-term concession, asset sale, regionalization, and creation of new public entities. The evaluation process has included a 20-year discounted cash flow model and fair market value appraisal of the systems; a request for Expressions of Interest to solicit marketplace ideas for more operational synergy and capital program execution; and an evaluation of alternatives and determining an optimum path forward. City of Fort Wayne, Indiana In 2014, Mr. Lane performed an appraisal to estimate the Fair Market Values of Aqua Indiana s North and Southwest Systems. The City of Fort Wayne (City) acquired Aqua Indiana s North System in 2008 following eminent domain proceedings in the County Superior Court. The City sought to acquire the Southwest System. The appraisal for the North System was adjusted for inflation. The appraisals were prepared in accordance with the Uniform Standards of Professional Appraisal Practice as promulgated by the Appraisal Standards Board of the Appraisal Foundation. Citizens Energy Group, Indiana In 2015, Citizens Energy Group (Citizens) was looking to purchase the Westfield Water and Wastewater systems (Systems) from the City of Westfield, Indiana (City). Mr. Lane prepared an appraisal of the Fair Market Value (FMV) of the Systems. The appraisals were conducted in accordance with the Uniform Standards of Professional Appraisal Practice adopted by the Appraisal Standards Board and the American Society of Appraisers using the Cost Approach and Income Approach. As a result of this appraisal, Citizens moved forward with the purchase and Mr. Lane will provide a report summarizing the Purchase Price allocation price paid by Citizens to the City. Valuation Analysis Odin, Feldman, Pittleman P.C., Virginia Project Manager. Mr. Lane provided valuation assistance and related expert witness testimony litigation for their client, Upper Occoquan Sewer Authority (Authority) of Washington D.C. In providing these services, Mr. Lane performed a valuation of contracted upgrades to the facility. His expertise was instrumental in the success of the Authority s litigation, as we successfully provided a qualified and objective analysis of the value of upgrades. The amount adjudicated in court was consistent with our team s value conclusion. Alcoa Power Generating, Inc., Pennsylvania During the early 1900 s, America s first hydro-electric dam became the property of Alcoa, along with several other hydro-electric projects in Tennessee and North Carolina. Together, these assets comprise a major portion of the power portfolio owned by Alcoa Power Generating, Inc. ( APGI ). In 2003, APGI s assets in Graham County, North Carolina, were appraised by a Graham County property assessor. APGI disputed the valuation, but lost its appeal before the tax commission. As a result, our staff was retained to provide consulting services to help APGI devise a strategy to deal with issues relating to a possible increase in the assessed value of its generating assets in Tennessee. Mr. Lane provided valuation consulting and negotiation support, assisting APGI in negotiating a reasonable value. Mr. Lane s assistance aided in a successful conclusion of APGI s Tennessee tax negotiations. American Midstream Assets, Southeastern United States Mr. Lane performed an allocation of purchase price study for 12 natural gas assets acquired by American Midstream Partners. A detailed review of documentation related to the operating condition of each asset and the purchase transaction was performed. Mr. Lane determined that the pro forma financial model prepared by the client to 9 Thoughtful Decision Making for Uncertain Times

20 Michael Lane, ASA Director, Energy Practice evaluate the potential financial performance of the assets and to estimate a purchase price sufficed to serve as the study basis. Mr. Lane applied two valuation methodologies. The income approach estimated the contribution of each asset to total net free cash flow and results were used to allocate the purchase price among the 12 entities. The cost approach estimated the portion of the purchase price to be allocated to tangible asset value. NewGen s proprietary depreciated replacement tool was used to calculate the Replacement Cost New Less Depreciation (RCNLD) of each entity, which served as the basis for the estimation. Mr. Lane compared the two values revealing that the allocated portion of the purchase price for each entity was substantially less than the corresponding RCNLD, indicating absence of intangible asset value. With further evaluation, Mr. Lane confirmed this which supported the notion that because the assets were purchased for a price nearly equal to but not more than the pro forma purchase price, the client did not pay any amount above and beyond its perception of value. Financial Analysis Louisville Water Company, Kentucky Mr. Lane developed a life-cycle cost comparison of two water supply alternatives proposed for the Kentucky Water Supply Project. The first alternative was to construct and operate a new intake at Pool 3 of Kentucky River, a 25 mgd water treatment plant, and a 30-mile, 42-inch transmission pipeline. The second was to construct and operate a 40-mile, 42-inch pipeline from Louisville including the wholesale water rate charged by the Louisville Water Company. A discounted cash flow model was used to analyze the alternatives. Municipalization Feasibility Analysis City of Geneva, Ohio Mr. Lane conducted a feasibility analysis an appraisal regarding the possible municipalization of the Consumers Ohio Water Company (COWC) assets within the City of Geneva, in order to support eh City s purchase of the water system from COWC. The analysis included estimating annual operating results of the proposed water system over the 20-year study period, under a set of reasonable assumptions regarding such factors as the purchase price of the system, start-up costs, water rates, customer growth, and operation and maintenance expenses, among others. A subsequent appraisal of the COWC assets in support of the City s municipalization efforts, applying the income, cost and market approaches to value was performed. In 2004, the City successfully purchased the water district assets from COWC, where both negotiations and the eventual purchase of the utility were based on Mr. Lane s appraisal. City of Spearfish, South Dakota Mr. Lane prepared a feasibility analysis for the City of Spearfish (City) regarding the possible purchase of electric assets within the City limits owned by Black Hills Corporation (Black Hills). Mr. Lane prepared a 10-year projection of electric utility revenues, expenses, and retail rate impacts under which electrical assets are owned and operated by the City. He also provided a financial analysis based on a status quo alternative, where Black Hills would continue to own and operate the electric assets. City of Wagner, South Dakota In 2013, Mr. Lane prepared an updated feasibility analysis for the City of Wagner (City) regarding the possible acquisition of the electric distribution facilities of NorthWestern Energy (NWE) that serve the retail customers in the City. This acquisition would be for purposes of establishing a municipally owned and operated electric utility. Mr. Thoughtful Decision Making for Uncertain Times 10

21 Michael Lane, ASA Director, Energy Practice Lane prepared a 10-year economic analysis to provide the City with information to determine the feasibility of the acquisition. Financial Planning Services CPS Energy, Texas Mr. Lane developed a comprehensive financial decision making tool with CPS Energy staff. The tool is designed to project CPS Energy financial performance over a 25 year period. The tool is designed to run multiple scenarios representing various business plans in real-time and is integrated with CPS Energy budgeting, cost of service, and generation planning models as well as other financial and operating inputs. A visual dashboard and other reporting mechanisms have been developed to optimize debt, rate, and capital funding options while calculating key financial performance and reporting metrics. Financial Planning & Budgeting Model Mr. Lane has facilitated workshops with various utilities for the development of a financial planning and budgeting tool. As a result of the financial planning process, the utilities were delivered a dynamic, fully integrated financial and budgeting tool allowing finance staff to instantaneously run multiple scenarios, including capital scenario analyses. This Excel based tool includes embedded help and updating capabilities and is compatible with NewGen s rate modeling and cost of service tools. The utilities use this financial decision making tool enterprise wide for budgeting and financial planning purposes every day. He has provided financial planning and budgeting tools to the following utilities: Keys Energy Services, FL City of Biloxi, MS Georgetown Municipal Water and Sewer Service, KY Water and Wastewater Rate & Cost of Service Georgetown Municipal Water and Sewer Service, Kentucky Mr. Lane has been providing consulting services to Georgetown Municipal Water and Sewer Service in Georgetown, Kentucky since Consulting services have the development of financial models, development of line extension policies, valuation services, financial feasibility studies and numerous cost of service and rate design projects. City of Mt. Sterling, Kentucky Mr. Lane developed a financial forecasting and cost of service / rate models for the City s Water and Wastewater Utilities. The cost of service study was presented as a filing before the Kentucky Public Service in support of rate changes to Mt. Sterling s wholesale water customers. Privatization Feasibility Analysis Southeast Public Service Authority of Virginia Due to rising costs of facility development and operation, the Client decided to evaluate methods to increase efficiency and reduce the cost of providing solid waste management services. Mr. Lane conducted a competitive procurement of private disposal services and prepare the necessary contracts and proposal documents to implement privatized waste disposal. He developed a draft operating contract identifying specific requirements for environmental liabilities, risk allocation, payment, and service levels for the private sector. Mr. Lane and his team conducted a detailed economic analysis comparing privatization with continued use of the Client s landfill. The analysis indicated that continued use of the existing landfill was the lowest cost option. Although this conclusion was challenged by several bidders, Mr. Lane s analysis and conclusions were confirmed. 11 Thoughtful Decision Making for Uncertain Times

22 Nancy Heller Hughes Director Ms. Hughes has worked in the public utility industry since 1977 specializing in utility rates and regulation, depreciation, and valuation. She has testified as an expert witness on these issues before federal and state regulatory commissions, city councils and courts of law. Ms. Hughes is an Accredited Senior Appraiser of utility property and has performed appraisal studies to determine the value of a wide range of utility property including electric, natural gas, water, wastewater, telecommunications and solid waste property. These studies have been performed in connection with the sale and acquisition of property, eminent domain cases, property tax issues, fixed asset inventory development and utility rate cases. In addition, Ms. Hughes is a recognized expert on depreciation issues and has performed and critically evaluated depreciation studies for utilities across the U.S. She has also evaluated the appropriateness of decommissioning cost estimates and funding methodologies for nuclear and non-nuclear generating units. Ms. Hughes is a Certified Depreciation Professional (CDP) designated by the Society of Depreciation Professionals. Ms. Hughes worked for R. W. Beck, Inc. from 1982 through 2012 and was an owner of the firm when it was acquired by SAIC in In 2012, Ms. Hughes joined NewGen Strategies and Solutions, LLC as a founding member. Education B.A. in Business and Statistics, University of Chicago M.B.A. in Finance and Accounting, University of Chicago Registration/Certifications Accredited Senior Appraiser (ASA), Public Utility Discipline, American Society of Appraisers Certified Depreciation Professional (CDP), Society of Depreciation Professionals Experience Appraisal Studies Appraisal Review Reports of Wansley, Scherer and Spruce Generating Stations Exelon Corporation Appraisal of Electric Substation and Transmission Line Tap Facilities Public Service Company of New Mexico Appraisal of Electric Distribution System Facilities South San Joaquin Irrigation District, California Appraisal of Water System City of Claremont, California Appraisal of Transmission and Distribution System at Wright-Patterson Air Force Base Dayton Power & Light Appraisal of Linden Wind Energy Project Southern California Public Power Authority Appraisal of Tieton Hydroelectric Project Southern California Public Power Authority Appraisal of Southeastern Louisiana Water & Sewer Co. St. Tammany Parish, Louisiana Economics Strategy Stakeholders Sustainability