MINUTES OF LINCOLN ELECTRIC SYSTEM ADMINISTRATIVE BOARD

Transcription

1 MINUTES OF LINCOLN ELECTRIC SYSTEM ADMINISTRATIVE BOARD Minutes of regular meeting held at 9:30 a.m., Friday, February 16, 2018, at the offices of Lincoln Electric System, 1040 O Street, Lincoln, Nebraska. Board Members Present: Board Members Absent: LES Staff Present: Others Present: News Media Present: Layne Sup, Leidy Anderson, Tammy Ward, DaNay Kalkowski, Andy Hunzeker, Lucas Sabalka, Vicki Huff Sarah Peetz, Jerry Hudgins Kevin Wailes, Shelley Sahling-Zart, Laura Kapustka, Jason Fortik, Dan Pudenz, Lisa Hale, Trish Owen, Paul Crist, Lacy Stockdale, Jim Rigg, Jennifer Wilson, Kendra Holman, Jonathan Jakub, Shari Tretheway, Lucas Fahrer, Kelley Porter, Scott Benson, Clinton Bruhn, Melissa Palmer, Dan Dixon Marilyn McNabb, Matthew Gregory, Janece Mollhoff, Cody Willnerd, Ken Winston, Jim Johnson None Chair Layne Sup called the meeting to order at approximately Call to Order 9:30 a.m. A safety briefing was provided. He noted that LES conducts its meetings in compliance with the Nebraska Open Meetings Act, and noted that copies of the Act are located near the entrance to the Board room. Chair Sup welcomed new LES Administrative Board member Andy Introduction of Hunzeker. Andy is the Chief Financial Officer at Lincoln New Board Industries. Member Andy Hunzeker Chair Sup asked for approval of the minutes of the meeting of Approval of January 19, DaNay Kalkowski moved their approval. Minutes Vicki Huff seconded the motion. The vote for approval of the minutes was: Aye: Nay: Absent: Sup, Anderson, Ward, Kalkowski, Hunzeker, Sabalka, Huff None Peetz, Hudgins

2 The following individuals presented the Husker Power Plan to the LES Administrative Board: Matthew Gregory, Nebraska Wildlife Federation & Nebraska Farmers Union Marilyn McNabb, Citizens Climate Lobby Ken Winston, Nebraska Interfaith Power & Light Janece Mollhoff, League of Women Voters of Nebraska Comments from Customers The Husker Power Plan was produced to envision an electric grid in Nebraska that relies more heavily on cost-effective wind, solar and energy efficiency. (Exhibit I) The Plan is built around five pillars: 1) managing demand and energy use; 2) increases in renewable energy; 3) use of energy storage and smart grid; 4) use of cogeneration and district energy; and 5) closing the oldest coal plants. Kendra Holman, Supervisor, Enterprise Risk Planning (ERP) Applications, Technology Services, was recognized by the Board for 20 years of service to LES. Introduction and Recognition of Staff Jennifer Wilson, Senior SAP Developer, Technology Services, Enterprise Resource Planning, was recognized by the Board for 20 years of service to LES. Layne Sup, member of the Operations & Power Supply Committee, reported on Committee discussion which included the following: 1) generating unit revenue and cost report; 2) an update regarding NERC Standards Compliance; 3) a physical security update; and 4) an update on the conceptual idea of pre-paying a portion of the energy costs associated with the existing wind PPA s. Vicki Huff, Chair of the Personnel & Organization Committee, reported on Committee discussion which included the following: 1) an update on the outcome of the 2017 wellness program; 2) safety and physical security training completed in 2017; 3) a review of worker s compensation claims and incidents in 2017; and 4) a discussion regarding LES benefit offerings. LES Resolution approves revising employee benefits for 2018 as recommended by the Personnel & Organization Committee to provide the same benefit premium cost shares for both part-time and full-time employees. (Exhibit II) Vicki Huff moved approval of LES Resolution DaNay Kalkowski seconded the motion. The vote to approve LES Resolution was: 2 - Operations & Power Supply Committee Personnel & Organization Committee Approval of Employee Benefits Adjustments LES Resolution

3 Aye: Nay: Absent: Sup, Anderson, Sabalka, Huff None Peetz, Hudgins Ward, Kalkowski, Hunzeker, Vicki Huff, Chair of the Budget & Rates Committee, reported on Committee discussion which included the following: 1) an overview of the Capital Improvement Plan (CIP); 2) 2017 capital budget carryovers; 3) an update on the conceptual idea of pre-paying a portion of the energy costs associated with the existing wind PPA s; 4) an overview of potential new rates; and 5) a fourth quarter 2017 generation revenue and cost report. Tammy Ward, Chair of the Legislation & Governmental Affairs Committee, reported on Committee discussion which included an update on carryover legislation that LES is monitoring and reviewed in detail all new legislation LES is monitoring. Jason Fortik, Vice President, Power Supply, reported on the latest Board meeting of the District Energy Corporation (DEC) which included the following: 1) an update on a tort claim filed by the State of Nebraska; 2) a management report; and 3) a financial report. DEC s next Board meeting is scheduled for April 17, Shelley Sahling-Zart, Vice President & General Counsel, presented the Board with an update on the Nebraska Legislature. (Exhibit II) Sahling-Zart noted LES is monitoring several bills and included more detailed updates on the following: LB 389, LB 494, LB 752, LB 1054 and LB Tuesday, February 20 is the deadline for personal priority bills. The American Public Power Association s (APPA) National Conference is scheduled for June 15-20, 2018, in New Orleans, LA. LES policies require a preauthorization for more than three Board members to attend the conference. Leidy Anderson moved that any Board member wishing to attend the conference be authorized to do so and that any Board member attending be reimbursed for allowable business expenses incurred. Tammy Ward seconded the motion. The vote was: Budget & Rates Committee Legislation & Governmental Affairs Committee District Energy Corporation (DEC) Update State Legislative Report Authorization of Board Attendance at the 2018 APPA National Conf. & Pre-Conference Seminars in New Orleans, LA, June 15-20,

4 Aye: Nay: Sup, Anderson, Ward, Kalkowski, Hunzeker, Sabalka, Huff None Absent: Peetz, Hudgins Clinton Bruhn, Senior Engineer, System Operation and Compliance, reviewed the 2017 system interruption and outage statistics. (Exhibit III) LES had two major event days in 2017 June 16 and August 20. Outages have trended slightly upward since 2013, primarily due to increased construction and aging feeder cable. Bruhn noted customers experienced outages averaging just 57.4 minutes in 2017, excluding major event days, which is below LES goal of 60 minutes. Trees were the leading cause of outages in Scott Benson, Manager, Resource & Transmission Planning, addressed the Board regarding how LES measures up when compared to the Husker Power Plan. (Exhibit IV) The Husker Power Plan is a state-wide energy plan released by the Nebraska Wildlife Federation that promotes a clean energy future built around five pillars: 1) managing demand and energy use; 2) increases in renewable energy; 3) use of energy storage and smart grid; 4) use of cogeneration and district energy; and 5) closing the oldest coal plants. Benson noted LES has made considerable strides in each of the pillars. The Monthly Financial and Power Supply Reports were distributed to the Board and staff was available to answer questions. (Exhibit V) The next regular meeting of the LES Administrative Board is scheduled for Friday, March 16, 2018, at 9:30 a.m. There being no further business before the Board, Layne Sup declared the meeting adjourned at approximately 11:19 a.m Interruption/Outage Report Husker Power Plan How does LES measure up? Monthly Financial and Power Supply Reports Next Meeting Adjournment Tammy Ward, Secretary BY: 4 - S/Lacy Stockdale Lacy Stockdale Assistant Secretary

5 Exhibit I

6 The Husker Power Plan: A New Energy Plan for Nebraska By Sommer Energy, LLC Anna Sommer President Tel anna sommerener.com Applied Economics Clinic Elizabeth A. Stanton, PhD Director and Senior Economist Tel liz.stanton aeclinic.or Tyler Comings Senior Researcher Tel tyler.comings@aeclinic.org ~ SOMMER /- ENERGY, I LC

7 I'" i I. Introduction and Rationale for Report Sommer Energy, LLC and Applied Economics Clinic were asked by the Nebraska Wildlife Federation (NeWF) to produce a plan envisioning an electric grid in Nebraska that relies more heavily on cost-effective wind, solar, and energy efficiency. With the costs of wind and solar at historic lows, NeWF seeks to determine how Nebraska's expanded reliance on renewables, coupled with greater investment in energy efficiency, could reduce the overall cost of electricity in Nebraska as well as change the state's trajectory of carbon dioxide emissions. This report compares two scenarios. Business as Usual (BAU) assumes continued operation of Nebraska's electrical system as it exists today coupled with firm capacity additions, retirements, and refueling of power plants already announced. What we call the "Husker Power Plan"-so named because it can be implemented by acquiring new resources in-state-includes higher levels of wind, solar, and energy efficiency resources than are currently planned. In the Husker Power Plan, by 2023, we add 1,500 MW of wind, 129 MW of solar PV, and reduce peak demand by 296 MW-all relative to BAU. Our analysis confirms that Nebraska can move to a much cleaner electric system by 2023 with no additional cost and indeed there is a high likelihood of lower costs. Figure 1 shows expenditures by cost categories that vary between the Husker Power Plan and the BAU. This is not a full accounting of the cost of operating Nebraska's electrical system, but rather a comparison of the specific costs that are likely to change as wind, solar, and energy efficiency are added in the Husker Power Plan and displace coal and natural gas generation that would otherwise occur under a BAU scenario. Figure 1: Expenditures under the BAU and Husker Power Plan in Selected Cost Categories ($2016) C "' ~ 300 ~ e Husker BAU Husker BAU Coal Natural Gas, Solar Wind (new) New EE 2

8 The Husker Power Plan and the BAU scenario have essentially the same costs in We calculate that Husker Power Plan would be $3.7 million ($2016) cheaper than BAU, a number that we consider to be "in the noise." For reference, we estimate that Nebraska utilities will spend just over $400 million on fuel and other variable operating expenses in 2018 alone. Our cost analysis assumes the high end of the cost range for resources like energy efficiency and solar, which are added in greater quantities in the Husker Power Plan and also does not assume retirement of any existing capacity which would reduce ongoing capital and operating expenditures. As a result, the costs of the Husker Power Plan may be overestimated. II. Modeling Results and Discussion The Husker Power Plan and the BAU scenario are essentially at par in terms of cost in We calculate that Husker Power Plan would be $3.7 million ($2016) cheaper in that year, a number that we consider to be "in the noise." For reference, we estimate that Nebraska utilities will spend just over $400 million on fuel and other variable operating expenses in 2018 alone. Our cost methodology was premised in large part on assessing the current costs of Nebraska's fleet and making adjustments as necessary. Specifically, we assumed that there would be changes in fuel costs in line with the EIA forecasts as described previously, but that maintenance costs such as fixed O&M and non-fuel variable O&M would remain unchanged in "real" terms going forward (i.e. increase at the rate of inflation). While there is relatively little difference in cost between the two plans by the end of our study period, there are significant differences in key cost categories. These include amounts spent on: 1. Coal-related generation, 2. Natural gas-related generation, 3. Wind-related generation, 4. Solar-related generation, 5. And energy efficiency. In our first snapshot year of 2018, the costs of the two plans are largely consistent since they differ only in the Husker Power Plan's slightly elevated rate of energy efficiency expenditures and therefore slightly decreased coal expenditures. However, by 2023, expenditures on coal are significantly changed under the Husker Power Plan and are largely replaced by expenditures on wind and secondarily, energy efficiency. 1 The cost estimates contained in this report are not intended to capture the total cost of the electrical system in Nebraska. For example, "sunk" costs like capital expenditures that have already been incurred for existing generators, but are still being paid off by customers, are not included nor are they generally publicly available. For that reason we focus on cost savings among those categories of costs that can and are likely to change between the BAU and Husker Power Plan scenarios. 3

9 Figure 2: Expenditures under the BAU and Husker Power Plans in Selected Cost Categories I o I r r Husker BAU Husker BAU ; Coal Natural Gas Solar Wind (new),a New EE As shown above, the additions of energy efficiency, wind, and solar in the Husker Power Plan change the performance of existing resources serving Nebraska. Coal and natural gas are relied upon less often in the Husker Power Plan due to additional energy efficiency and renewable energy. Once these cleaner resources are in-place, they cost very little to operate and thus will result in reducing operations of fossil generators. Figure 3 below shows the change in 2023 generation from the Husker Power Plan when compared to BAU. 4

10 Figure 3: Change in 2023 Generation by Resource Type with Husker Plan (GWh) 8,000 6,000 4,000 2,000 2 s e 0 C.g.,., C ~ -2,000 <.:l -4,000-6,000-8,000-10,000 1 Coal Natural Gas Solar Wind By 2023, solar PV produces 249 GWh more in the Husker Power Plan based on an assumed 22 percent capacity factor for new installations. At the same time, the equivalent amount of natural gas generation is reduced. Natural gas steam and combustion turbines in Nebraska are typically called upon during peak times. These units only run 3 percent of the time, historically (see Table 4). If the state has more solar PV on its system, then it will call upon natural gas units even less frequently. Likewise, wind and energy efficiency displace coal generation. Coal is by far the largest source of generation in the state. Some units operate more often than others but on the whole, coal units operate more than half the time that they are available. Nuclear is the next largest source of generation in the state but tends to run for days or weeks at a time. Thus, wind and efficiency will likely displace coal generation on the system. New wind is expected to produce an additional 6,570 GWh, assuming a 50 percent capacity factor for new installations. Energy efficiency reduces coal generation serving Nebraska by 1,852 GWh by Wind generation displaces coal one-for-one. However, because energy efficiency avoids transmission and distribution line losses, one unit of saved energy avoids more than one generated at a coal unit. 2 Emissions under the BAU and Husker Power Plan The total power sector emissions from the Husker Power Plan are under 10 million metric tons by 2023-shown below in Figure 4. This represents a 57 percent reduction in carbon emissions from 2016 to Nearly all of this reduction comes from the displacement of coal with new wind, solar PV, and energy efficiency added in the Husker Plan. 2 We assumed 4.38% line losses based on the four-year average provided by the EIA's "Supply and Disposition of Electricity" report for Nebraska (htt s: av electricit state nebraska in ex. 5

11 C Figure 4: Carbon Dioxide Emissions in Husker Plan ('000 metric tons) 3 25 vi C E: 20 Ill E C ~ 15 1 VI ;;; "' 10 e "' N 0 u C 5.. oi:...,. Ill "' ::, :c Coal ~-Natural Gas Petroleum In sum, the Husker Power Plan outlines a pathway for Nebraska to achieve a significant reduction in carbon dioxide emissions at comparable to lower cost. Ill. Methodology and Assumptions For purposes of this report, we developed an annual time-scale spreadsheet model of Nebraska's electric system that covers all electric load served by Nebraska Public Power District (NPPD), Omaha Public Power District (OPPD), Lincoln Electric System (LES), Grand Island Utilities, Fremont Utilities, Hastings Utilities, Tri-State Generation, and Municipal Energy Agency of Nebraska (MEAN). The boundary of our analysis is the consumption of electricity in Nebraska rather than what is generated within the state's borders. This means that we include generators outside of the state that serve Nebraska ratepayers and, conversely, we exclude the portions of in-state generators that serve ratepayers outside of Nebraska. We included the portions of Laramie River (located in Wyoming) and Walter Scott, Jr. Energy Center (located in Iowa) owned by LES. 4 We also included two out-of-state wind farms that serve Nebraska: Arbuckle Mountain Wind Project and Buckeye Wind Project. We excluded the portions of the Nebraska City plant and Whelan Energy Center that are co-owned by utilities outside of Nebraska. Tri-State does not tie its power plants to specific customers but the purchase of generic capacity and energy to serve Nebraska is accounted for here-as in the Nebraska Power Association (NPA) report emissions from EIA 923 data. 4 See: 6

12 Our study covers the period of 2018 through 2023, with data for the first and last year shown as "snapshots" in this report. We also show actual cost, generation, and other information for as a point of comparison to many of our projections. Certain metrics, like power plant maintenance costs, were projected using historical data from 2012 through Determining Demand and Energy Sales A key constraint that must be satisfied by all Nebraska utilities is the reserve margin requirement. As members of Southwest Power Pool (SPP) Regional Transmission Organization (RTO), utilities in Nebraska must maintain at least a 12 percent reserve margin, that is, capacity resources 12 percent over and above their peak load. Our study relies on the 2017 Nebraska Power Association Load and Capability Report for forecasts of peak load and summer capacity credit assigned to generators that serve Nebraska. It is unclear, though likely, that future energy efficiency savings are embedded in the NPA 2017 peak load forecast. 5 In 2016, Nebraska incrementally saved 0.19 percent of electricity sales. 6 We assume this is already embedded in the BAU, thus there is minimal efficiency savings included in that scenario. The 2017 NPA report showed a 2 percent increase in load for the study period: 7,044 MW in 2016 to 7,200 MW in The Husker Power Plan included a reduction in peak load based on energy efficiency savings beyond business as usual (described below). While energy efficiency measures are intended to reduce everyday usage, they also reduce peak load for the system. We applied a peak reduction factor of kw for every kwh of energy saved in the Husker Power Plan. 7 This leads to a 2 percent reduction in peak load from 2016 to 2023 (7,044 to 6,904 MW) due to incremental energy efficiency described below. As shown in Table 1, by 2023 the Husker Power Plan demand is 296 MW lower than in the BAU. Table 1: Peak Load in BAU and Husker Power Plan (MW) Peak load (MW) BAU Husker Power Plan Difference ,044 7, ,147 7, ,200 6, % change 2016 to % -2% -4% Nebraska Power Association Load and Capability Report 6 ACEEE 2017 Efficiency Scorecard, available at: 7 This ratio is typical of utility-sponsored energy efficiency programs. 7

13 Retail sales in Nebraska are reported to the U.S. Energy Information Administration (EIA) for each utility in the state. 8 Going forward, for the BAU, we assumed that the percentage change in peak load matched the percentage change in projected sales. In the Husker Power Plan, we assume an increasing level of savings through 2023 at which time the total savings from utility efforts would be 2 percent Incremental savings per year. This means that the implementation of new energy efficiency measures in 2023 would save 2 percent of that year's total energy sales. This level has been achieved by several states in the United States already. (Nebraska is currently ranked 44 th in the United States by ACEEE in terms of overall energy efficiency. 9 ) This additional savings ramps up to its full level by This leads to a 4 percent decrease in energy consumption in the Husker Power Plan in 2023 or a total of 1,775 GWh fewer energy sales than in the BAU. Table 2: Energy Sales in BAU and Husker Power Plan (MW) Energy Sales BAU Husker (GWh) Power Difference Plan ,839 29, ,276 30, ,500 28,725-1,775 % change 2016 to % -4% -6% Additional energy efficiency in the Husker Power Plan is assumed to displace coal generation. For every MWh of incremental savings, coal is expected to operate 1.05 MWh less-due to the fact that every MWh of energy efficiency reduces both the need to generate power as well the transmission loss associated with bringing that power to customers. Thus, energy efficiency is a key contributor to carbon emissions reduction in the Husker Power Plan. Resource Costs It does not appear that Nebraska needs to add any new capacity during the study period, which means that both the BAU and the Husker Power Plan would meet SPP's 12 percent reserve margin requirement. Nebraska's utilities currently have a surplus of capacity available over what they need to meet their reserve margin requirements. Because of this, the only supply-side resources we propose to add are wind and solar. Nebraska has so much excess capacity at present that we did not contemplate the addition of resources that would primarily serve capacity or peak supply needs like battery storage. 8 EIA 826, Sales to Ultimate Customers (Megawatt hours) by State by Sector by Provider See: htt s: database.aceee.or state/nebraska 8

14 Our cost and operational assumptions for wind and solar are given in the table below. Table 3: Costs of New Energy Resources 10 Technology Capacity Capital Cost Levelized Factor (2016$) Cost over 20 years (2016$ per MWh) Solar 22% $1,300/kW $51 Wind 50% $1,500/kW $20 Gas CC* 48% $1,000/kW $40-$70 *Note that since we did not include new gas CCs in either scenarios we are simply providing this information for comparison purposes. We assume that energy efficiency has a first-year cost of $0.20 per kwh. First year cost is derived by taking the cost of achieving incremental energy savings in any given year divided by the incremental kwh savings achieved in that year. In our experience, this is on the high end of the range for other utilities. It is entirely possible that Nebraska could acquire energy efficiency at a much lower first year cost. However, since the energy efficiency goal that Nebraska would ultimately achieve under the Husker Power Plan is much higher than its current level of savings we felt it best to estimate costs on the high end of the range. We relied on one of the EIA's 2017 Annual Energy Outlook (AEO) low price forecasts of Henry Hub prices. 11 We chose this instead of the "reference case" forecast because it is more in-line with EIA's most recent short-term energy outlook and natural gas market forwards. 12 Projected annual natural gas prices are shown in Figure The sources for this information are National Renewable Energy Laboratory, Lawrence Berkeley National Laboratory, Lazard ( and NPPD's 2013 Integrated Resource Plan. 11 EIA, 2017 Annual Energy Outlook, "High oil and gas resource technology" case ( 12 EIA Short-Term Energy Outlook (STEO) (htt s: ov outlooks steo ndex.cfm) and NYMEX market futures (For example, see: quotes settlements futures.htmltttrade0ate=12/04/2017) 9

15 Figure 5: EIA Natural Gas Price Forecast ($2016/MMBtu) ~ ::> ai ~ :E 2.5 :E - a. ai 2 ~ ~ N _/" We relied on the EIA's 2017 Annual Energy Outlook (AEO) forecast of regional coal prices. 13 The annual minemouth prices for low sulfur coal coming out of the Powder River Basin are shown below. We added a transportation cost based on an analysis of costs incurred by coal-fired power plants serving Nebraska customers from Transport costs were assumed to range between $7.62 and $11.34 per MWh depending on the power plant in question. Projected annual coal prices, without transport costs, are shown in Figure 6. Figure 6: Coal Price Forecast ($2016/short ton) C.2 30 'C 0 ~ 25 i20 ~ ' N EIA, 2017 Annual Energy Outlook, ( 10

16 Forecasting the Performance ofsupply-side Units The recent performance of existing generation (shown below) is assumed to persist in the future for BAU. Table 4 below shows capacity factors by resource type. This measures how much each type of resource generates relative to their maximum potential. In the Husker Power Plan, generation from coal and natural gas is reduced with the addition of energy efficiency and new renewable resources (described in further detail in the next section). Thus, in the Husker Power Plan, coal and natural gas operate less often than they would in BAU (which draws power only from existing resources). Under both scenarios, the amount of power imported and exported was assumed to be fixed. Table 4: Capacity Factor by Resource Type (%) 14 Resource 2016 Capacity 2023 BAU 2023 Husker Power Factor(%) Capacity Plan Capacity Factor Factor(%) (%) Coal 58% 58% 30% Hydro 71% 71% 71% Natural Gas 3% 3% 1% Nuclear 88% 88% 88% Landfill Gas 56% 56% 56% Biomass (Commercial CHP) 41% 41% 41% Petroleum 0.2% 0.2% 0% Hydrogen 90% 90% Solar 22% 22% Wind (existing) 34% 34% 34% Wind (new) 50% 50% Building the BAU and Husker Power Plan Both the BAU and Husker Power Plan scenarios resulted in surplus capacity, i.e. over and above what is required for planning purposes by the Southwest Power Pool. The BAU scenario had a 16 percent reserve margin in 2023 and the Husker Power Plan 25 percent. Due to peak load reduction and added capacity (discussed later), the Husker Power Plan has 735 MW of capacity surplus compared to 251 MW in the BAU. This means there is 485 MW of incremental surplus in the Husker Power Plan and, therefore, there would be plenty of room for the state to retire some of its aging and/or expensive capacity. 14 EIA 923 data. 11

17 SPP currently requires a "reserve margin" of 12 percent over and above peak load. There does not appear to be any discount for coincidence with the SPP system peak, 15 so we applied this percentage to the Nebraska summer peak without adjustment. To calculate Nebraska's reserve margin, we used the 2017 NPA report's values for summer capacity credit 16 for existing rp.sourcp.s-where available. By 2023, the Husker Power Plan has 153 MW more accredited supply-side capacity than the BAU. The Husker Plan also reduces peak load by 296 MW which reduces the reserve requirement by 332 MW (including a 12 percent reserve margin). Combined with the 153 MW of additional summer capacity, this results in the 485 MW of capacity surplus, relative to the BAU. This assumes no additional retirements of generation in the Husker Power Plan. It is solely based on the capacity credit applied to the new wind and solar resources that are not also built in the BAU. The table below shows the existing resources by fuel type in the state. 15 Other RTOs will apply a "coincidence factor" to a utility's peak demand to account for the fact that the utility's peak demand is unlikely to occur at exactly the same time as the RTO-wide peak demand. 16 Generators' capacity credit is meant to represent how available they are at peak times. Because wind and solar are intermittent and non-dispatchable, only a portion of their installed capacity counts towards Nebraska's summer capacity. For new wind, we assumed that a 5 percent capacity credit is applied in the first three years-based on SPP rules. After three years, wind farms' capacity credit is based on actual performance. We assumed that this credit will be 15 percent, based on the capacity credits assigned to wind farms operating for more than three years-shown in the 2017 NPA report. For solar, we applied a 10 percent capacity credit for the first three years (again, based on SPP rules) and a 15 percent credit in subsequent years. The latter figure is likely conservative, however, unlike with wind, there is no data available on actual capacity credit for solar projects more than three years old. 12

18 Table 5: Existing Capacity (MW) Resource Coal 2016 Capacity (MW) 4,137 Hydro 278 Natural Gas 2,040 Nuclear 1,250 Landfill Gas 11 Biomass (Commercial CHP) Petroleum Solar 7 Wind ,530 Current levels of distributed generation are low. According to the EIA, in 2015 there were zero MW of distributed solar installed in Nebraska. While the actual number is not zero, it is likely negligible when compared with Nebraska's energy system. According to the 2016 NPA report, there are 8.8 MW of distributed wind projects currently in the state. While there are more such projects pending, these should already be included (as "behind the meter") in the forecast of energy demand provided in that report. We did not make any assumptions of additional "behind the meter" generation above what is already planned in the BAU. We also did not address combined heat and power (CHP) since the design and cost of such projects is likely specific to the location or industry to which it applies. In 2014, OPPD announced a goal of pursuing 300 MW of total peak load reduction from both energy efficiency and demand response. We assumed that this goal was already captured in the data reported in the Nebraska Load and Capability report. Similarly, we assumed that NPPD's 600 to 650 MW of irrigation load demand (DR) capability was accounted for in that report. With respect to the need for major new transmission lines to accommodate new renewables, the main guidance on this topic is the LB 1115 study performed by the Brattle Group for the Nebraska Power Review Board in December In that study, the authors concluded that "Based on our review of SPP studies, we find that the existing transmission system in Nebraska, including transmission additions already approved or under construction, will likely allow for the integration of at least 2,000 MW of additional renewable generating resources in Nebraska once the currently approved facilities are placed into service from 2016 to 2018." 17 That additional 2,000 MW was over and above planned renewable additions for the 2016 to 2018 period. Our proposal for the Husker Power Plan falls just short of that 2,000 MW threshold with 1,629 MW of 17 Brattle's report is available at: 13

19 new wind and solar by As per Brattle Group's study, the construction of the "R" transmission line project would be necessary to site these resources in Nebraska. It is worth noting, however, that, to our knowledge Nebraska lacks a comprehensive transmission needs assessment that is based on power flow modeling. Comprehensive modeling of the SPP transmission system would help identify the bp.st locations for the new wind and solar resources contained in the Husker Power Plan. In the BAU and Husker Power Plans, we account for planned retirements and additions in Nebraska, including: Conversion of Sheldon Unit 2 (120 MW) from coal to hydrogen in 2019 Conversion of North Omaha Units 1, 2, and 3 (291 MW) from coal to natural gas in 2016 Conversion of North Omaha Units 4 and 5 (353 MW) from coal to natural gas in 2023 Retirement of Fort Calhoun nuclear station (502 MW) in late In the Husker Power Plan, we are nearly doubling the amount of wind in Nebraska by 2023-an additional 1,500 MW above what is in the BAU. We are also proposing to add 26 MW of new solar every year starting in 2019-leading to 129 MW of cumulative new solar by The current amount of solar in Nebraska is 7 MW. We assume additions of 23 MW in the BAU through Finally, in the Husker Power Plan we assume an additional 1.81 percent, over what Nebraska currently achieves, of utility-sponsored, incremental energy efficiency savings per year by All of these changes-along with planned additions and retirements in the BAU-would leave Nebraska with a large capacity surplus of 741 MW in This means that the Husker Power Plan could include over 700 MW of currently unplanned retirements and remain resourceadequate. IV. Areas for Further Analysis Snapshot, spreadsheet-based analyses like that underlying this report, can be useful to outline big picture differences between competing visions of any electrical system. We do recognize, however, that more detailed analyses at the utility level would be necessary to develop a plan to actually implement the path outlined in the Husker Power Plan. Those analyses would likely require power dispatch models and even power flow models that were not available to us as part of this report. Without access to the detailed, costly, and often proprietary, models used by utilities, our spreadsheet model was a necessary simplification of Nebraska's electric system. Because Nebraska is part of the Southwest Power Pool, its generators are dispatched not just to serve demand within Nebraska, but to serve demand throughout the SPP system. By the same token, other generators outside of Nebraska, but still within SPP, are also serving Nebraskans. Adding resources with low to no marginal costs of operation like energy efficiency, wind, and solar will almost certainly cause coal and natural gas-fired power plants to generate less in SPP, but it is difficult to predict whether those power plants would be located in Nebraska or 18 Capacity from Fort Calhoun was included in 2016 as it was available during that summer peak period. 14

20 elsewhere in SPP without the use of detailed dispatch modeling. Therefore, the carbon dioxide emissions reductions predicted by our spreadsheet model could come not just from Nebraska power plants, but also power plants outside of Nebraska. Similarly, because load in Nebraska is served by all power plants within SPP, the reduction in gas and coal costs that come in the Husker Power Plan from the addition of energy efficiency, wind, and solar, are partially proxies for what would be the changing costs to serve load through SPP. Using Nebraska's owned and contracted generators as stand-ins for these costs is reasonable because Nebraska's power plants are not out of line with the costs of other, similar power plants. Further analysis could also identify cost savings from the Husker Power Plan that could not be captured in our study. As discussed in Section 111, the Husker Power Plan leaves ample room for retirement of existing, more expensive capacity. That capacity almost certainly has a set of ongoing capital expenditures associated with it that are being paid by Nebraskan ratepayers through their utility rates. With retirement, those capital expenditures can be avoided. These types of cost savings were not part of our study because plant-specific capital expenditure schedules are not made public. These types of expenditures could include turbine upgrades, pollution control additions/upgrades, etc. and are highly specific to the power plant in question. Finally, we noted a seasonal pattern of electricity consumption in Nebraska that is unusual. As an example, in Figure 7, the load curve created by summing all hours of the 2015 demand of Nebraska Public Power District's customers shows an extreme peak in the summer time relative to the spring and fall seasons with a smaller, secondary peak occurring in the wintertime. 15

21 Figure 7: 2015 NPPD Demand Curve ~ The summertime peak is likely caused by pumping for irrigation and air conditioning. Thus Nebraska can further reduce its peak demand-and therefore its reserve margin requirementby more aggressively promoting irrigation-related demand response, more energy efficiency, and air conditioning demand response. It was well outside the scope of this study to attempt to quantify the impacts and costs of undertaking these efforts, but smoothing out Nebraska's demand curve would almost certainly reduce system-wide costs because it would eliminate the need to hold on to more expensive generation merely for the purpose of meeting peak load. 19 From FERC Form

22 Husker Power Plan for Electric Utilities Nebraska's electricity comes from power plants that burn coal, gas and oil (fossil fuels); nuclear power plants that generate heat from nuclear fission; and increasingly from renewable sources like wind, solar, landfill gas, and hydroelectric power. Coal, natural gas and oil are not renewable; there is a limited amount of fossil fuels on earth. As we use up the cheapest, most available sources, remaining resources get more and more expensive to find and develop and use greater amounts of energy to extract. Nebraska produces no coal, very little oil and a tiny amount of natural ga{ Nebraska utilities paid $356 million for the cost of mining and delivering coal to power plants in 2014\ and much of that left the state, supporting jobs elsewhere. There is a better way. Nebraska's Clean Energy Future As Nebraska moves away from fossil fuels like coal and gas to generate electricity, there are opportunities to produce most or all of our electricity from in-state sources. The goals of our Husker Power Plan for the electric utility sector are to: Reduce air pollution from power-plants that is killing and sickening Nebraskans. Ensure a sustainable, affordable system for generating our electricity for future generations. Reduce Nebraska's use of out-of-state coal, keeping money and jobs in Nebraska. Reduce pollution produced by Nebraska's utility sector that has been linked to climate change. A clean energy future for Nebraska's electric utility sector could be built around five pillars: Immediate investments to (1) reduce energy use and generating capacity needed and (2) add clean renewable energy as outlined in this plan, then (3) energy storage and smart grid investments, (4) using cogeneration and district energy solutions to make more efficient use of energy, and (5) closing coalfired power plants starting with the oldest and most polluting. Reducing Pollution Our state's heavy reliance on coal to generate electricity has important implications for the air we breathe, the health of our citizens, and for our climate. When fossil fuels like coal and natural gas are burned, they release a mix of sulfur dioxide, nitrous oxides, carbon dioxide, carbon monoxide, mercury and other heavy metals, particulates, and volatile organic compounds into the air. Sulfur dioxide, carbon monoxide, nitrous oxides, and particulates all cause health problems in people, including asthma, respiratory illness, and heart diseasem. Mercury is a neurotoxin that causes health problems in humans and wildlife. There are 142 lakes and streams in Nebraska that now have fish consumption advisories, primarily due to mercury contamination 1 v. Acid rain from sulfur dioxide and nitrous oxides can poison our state's rivers and lakes, and our oceans. 1 Husker Power Plan, Jan. 16, 2018

23 .. lo Carbon dioxide and nitrous oxides from electric utilities are some of the largest sources of greenhouse gases that contribute to climate change. Climate change is already having a negative impact, and if it continues unchecked will likely result in hotter temperatures, more evaporation, and abnormal rainfall and snow patterns in Nebraskav. There is a better way. Our Husker Power Plan would reduce the pollutants that are now sickening and killing Nebraskans, and reduce Nebraska's contribution of greenhouse gases that are causing climate change, by sharply reducing the need to burn fossil fuels like coal that now power our electric utilities. Managing Demand and Energy Use Nebraska is the seventh highest state in energy consumption per person vi, so we have lots of opportunity to reduce our state's energy consumption. Nebraskans spent $10.4 billion in 2014 and $8.2 billion in 2015 purchasing energy. Across America, our current system for delivering energy services is very inefficient. Energy economists say our current energy economy is only 14% efficient; meaning some 86% of the energy used in America is wastedvil_much of that energy is lost to inefficiencies in vehicle engines, light bulbs, motors, appliances, and inefficient buildings, and some of that energy is used to transport coal or gas long distances to where it is used. That wasted energy inflicts a huge burden on our economy, but it also represents a great opportunity to reduce our energy use and cost. The cost of energy efficiency investments needed to reduce energy use is very low. Reports by Nebraska electric utilities and the American Council for an Energy Efficient Economy estimate the costs of energy efficiency at lc to SC per kilowatt hour, and is typically around 2C per kwh, compared to 2C to l0c per kilowatt hour to generate the electricity from existing power plants (and even more from most new power plants)"' 1 i. Investments to replace old inefficient light bulbs, motors and appliances, weatherize buildings, and update space heating, air conditioning and water heating systems can have short paybacks, from a few months to a few years. Changing people's behavior can save energy with little or no investment, and can be inspired by small changes like providing information on bills that show how a customer's energy usage compares with others in their neighborhoodix_ In Nebraska demand for electricity peaks during hot summer months when air conditioners and irrigation pumps are running. At those times, power plants that run on oil or natural gas are called on, providing more expensive power to meet those peak needs. Demand management investments can reduce the need to use that high-cost power, and reduce the need to have expensive generating capacity in place. In 2014, Omaha Public Power District announced a goal to reduce OPPD's expected need for capacity by 300 MW through demand management programs and investments. Some changes reduce both the need for peak capacity and the amount of energy consumed. For example, insulation for homes and buildings reduces energy usage any time there is a need for heating or cooling a building, and also reduces the need for energy during the hottest (or coldest) times of the year when usage peaks. Reports by Nebraska electric utilities and the American Council for an Energy 2 Husker Power Plan, Jan. 16, 2018

24 Efficient Economy say the cost to reduce those peaks typically is much less than the cost to build a new power plant that would otherwise be needed to meet those peaks. Energy efficiency and demand management investments are important parts of our clean energy strategy, because they reduce the inefficient use of energy and allow Nebraska's energy needs to be met with fewer generating resources. Fortunately, studies by Nebraska utilities and efforts by utilities in other states have shown that there are wide-spread opportunities for cost-effective investments in energy efficiency and peak demand management. Electric (and natural gas) utilities often view peak demand management investments differently than energy efficiency investments. By reducing the need for expensive new (or existing) capacity, peak demand management investments reduce costs to the utility, providing a net return to the utility. Ultimately public power utilities pass those savings on to each utility's customers. Energy efficiency programs reduce the need for our public power utilities to generate electricity, so they reduce fuel and other costs to the utility needed to generate electricity. However, they also reduce retail sales to the utility, and the revenue lost is generally more than the reduction in generating costs. Many utilities are reluctant to pursue aggressive energy efficiency programs that would help their customers save money and reduce their energy use, because of the potential loss of retail revenue. To achieve the levels of energy efficiency needed to move Nebraska towards a clean energy future, we think Nebraskans will need to rely on more than just our natural gas utilities and public power electric utilities. We will need to enlist municipalities, counties, civic and non-profit organizations and community leaders, backed by state resources, to organize and lead these efforts. Electric utilities will continue to have an incentive to pursue cost-effective peak demand management investments, and they should be involved in energy efficiency efforts to help the utility obtain maximum peak demand management benefits from the energy efficiency initiatives. Financing can come from sources like Property Assessed Clean Energy financing and the Nebraska Investment Finance Authority. Utilities could help by providing loan repayment options for customers through their utility bill. Public power utilities can also help lead the transition of our transportation system to clean energy, with a commitment to providing needed infrastructure and promoting the use of electric vehicles. That would help reduce air pollution linked to health problems and climate change. With planning, utilities might be able to tap into vehicle batteries when not in use to provide electricity for the grid to meet peak demands in the future. And the cleaner the energy used by utilities to produce electricity, the cleaner the power will be that supplies the electric vehicles. Through our Husker Power Plan, Nebraska would: Put in place comprehensive community-driven energy efficiency strategies, and utilitydriven peak demand management programs designed to ramp up over several years, reaching the ability (by the fifth year of the plan) to deliver 2% annual reduction in electricity (in Megawatt hours, or MWh) and natural gas consumed through energy efficiency measures, and to deliver 1.3% to 2% annual reductions in the peak demand for electric generating capacity needed (in Megawatts, or MW), both measured against current utility projections for the future". At that level, over the coming years our plan would fully offset the slow growth in electricity consumed that is now projected by our utilities. If continued at that 2% annual reduction level in the future, over the next decade the strategies would result in a net reduction ofabout 13% in electricity consumed 3 Husker Power Plan, Jan. 16, 2018

25 annually, and a substantial reduction in the generating capacity needed to meet annual peak demands for power, from current levels. The reduction in energy consumed could result in a savings to Nebraska electric utility customers that could grow to over $400 million annually by year ten of our plan, with a cumulative savings of over $2 billion over those ten years. The reduction in natural gas use from many of the same measures (weatherizing homes and businesses, and upgrading older inefficient furnaces and water heaters) would result in a savings to Nebraska residential and commercial natural gas customers that could grow to over $80 million annually by year ten of our plan. The investments needed in strategies like weatherization of homes, small businesses and other buildings, installation of energy efficient lighting, heating, cooling, motors, and appliances would generate jobs throughout the state. The reduction in generating capacity and energy needed will be offset in part by new load from the transition from gas to electric cars and light trucks. That load would provide additional revenue for electric utilities which would help offset the loss of revenue due to efficiency efforts. Based on assessments by the American Council for an Energy Efficient Economy'\ energy efficiency strategies that would lead to a 2% annual reduction in energy use (MWh) could also produce an annual reduction in peak load demand (MW) of about 1.3% annually. Additional peak demand reduction strategies, such as air conditioner controls, better irrigation scheduling, and interruptible service agreements could supplement those gains to achieve a 2% annual reduction in peak load from current utility projections. Because those strategies tend to be utility-specific and depend in part on industrial customers, the utility consultants reviewing our plan have not attempted to estimate costs and savings of reaching a 2% annual reduction in peak load, but have indicated the energy efficiency strategies assessed should achieve the level of 1.3% annual reduction in peak load. Renewable Energy Nebraska's wind, sun and moving water provide far more energy than we use. The U.S. Department of Energy says over 90% of Nebraska has wind that would produce reasonably good wind energy. The 45% average capacity factor of wind projects in Nebraska is the highest of any state, according to the American Wind Energy Association ". Nebraska ranks 13th in the nation in potential solar energy capacity according to the National Renewable Energy Laboratorl\ and based on available hours of sunlight and cloud cover, the solar PV (Photovoltaic) potential in central and western Nebraska is similar to that in west Texas. Nebraska utilities have long made use of hydroelectric energy, which powered some of the first municipal electric systems in Nebraska and continue to serve us today. Our utilities are now making more and more use of wind, solar, and landfill gas, and with good reason: the cost of wind energy has dropped by 66% over the past six years iv, and prices for utility solar energy power purchase agreements have dropped by 75% over the last seven years v. The technologies continue to improve, so the cost of both wind and solar energy is expected to continue to drop. Wind energy supplies an increasing share of Nebraska's electricity, and could supply much more. Industry sources say recent bids for power purchase agreements from Nebraska wind farms are in the range of 1.5 to 2.0 cents per kwh - as cheap or cheaper than can be generated from Nebraska's fleet of coal and natural gas power plants. Adding substantial new wind energy to Nebraska's electricity mix 4 Husker Power Plan, Jan. 16, 2018

26 would save Nebraska utility customers money, create jobs in rural communities, keep more of our energy dollars in-state, and deliver cleaner, renewable energy for Nebraska. New wind turbines are bigger and more efficient, allowing them to generate power with a capacity factor of 45% or morexvi_ Wind farms cannot guarantee when the wind will blow, so the Southwest Power Pool (SPP) initially gives utilities credit for just 5% of a wind farm's total capacity in meeting a utility's peak demand. With three years of actual operating experience, the SPP will use actual data in calculating that credit. Nebraska industry sources indicate that new wind farms are likely to get credit for 15% of their total capacity in meeting peak demand once they establish a track record. Through our Husker Power Plan, Nebraska would: WIND: Add 1,500 to 1,850 MW of new wind energy over the next 5 years to the 1,520 MW in place or under construction sening Nebraskaxv 11, reaching roughly 3,000 to 3,400 MW of total installed wind capacity serving Nebraska. At that level, by 2023 wind farms would generate around 40% of Nebraska's anticipated MWh usage. At a 15% average accredited capacity, it could also allow recent and new wind farms to replace the equivalent of 500 MW of older coal-fired generating capacity. The proposed level of new wind development is similar to the levels of wind added in recent years in Nebraska, and substantially less than is being added in states like Iowa. We would expect that most new wind farms would be located in Nebraska, but some could be located out of state to provide geographic diversity in wind generation. Nebraska utilities now have joint agreements with out-of-state utilities for fossil fuel generation, and Nebraska utilities could pursue joint wind farm agreements with utilities in other states to take advantage of wind siting diversity and potentially increase the average accredited capacity of the wind fleet. First preference should be given to in-state wind generation, however. Fortunately, much of Nebraska has very strong wind energy potential. There are areas of the state where wind farms would have high impacts on wildlife or other resources - such as the Central Platte Valley, the Niobrara National Scenic River, or near Rainwater Basin wetlands - but there are many parts of Nebraska with very low potential wildlife impact, very good wind, and access to transmission lines. As Nebraska closes surplus coal-fired power plants in the future, even more transmission line capacity would be freed up in the many parts ofthe state where wind is abundant. Nebraska has opportunities and local interest in both smaller community-scale wind farms and larger utility-scale wind farms. Larger wind farms may gain some economics of scale, but smaller communityscale wind farms may be better able to take advantage of local community support and opportunities to connect to the grid in areas with limited excess transmission capacity. Solar energy delivered only a small share of Nebraska's electricity needs in the past, but the price of solar energy has been falling rapidly. In Nebraska, the cost of utility-scale solar projects is now below $2 per wattxvii,_ To date, Nebraska has nearly 25 MW of solar installed, and the largest installations are the City of Kearney/Nebraska Public Power District 5.8 MW solar farm and the Lincoln Electric System solar farm just west of Lincoln, about 5 MW. Many communities already see the benefits of solar energy, and are organizing community solar projects all around the state. Local businesses and residents are signing up to receive power from the 5 Husker Power Plan, Jan. 16, 2018

27 projects. Community solar projects provide opportunities for residents or businesses even if they don't have a good location to mount solar panels. The cost of installed rooftop solar systems, like those on residential homes and small businesses, has also continued to decline. Solar companies report that the installed cost of rooftop solar has fallen to about $3.50/watt, and federal tax credits could reduce that cost to around $2.45/watt. On farms and ranches, solar can be installed even more cheaply on ground-mounted systems. Solar delivers more electricity during the long, hot summer days when electricity demand in Nebraska is highest due to demand from air conditioners and irrigation pumps. The Southwest Power Pool gives Nebraska utilities just 10% capacity credit for utility-scale solar energy that is fed into the grid when initially installed. Solar installations to date, however, have been 'behind the meter', meaning they operate to reduce demand for the utility by providing power for local distribution, not supplying power into the grid. That approach would mean Nebraska utilities could get the full advantage of the impact of new solar facilities in reducing summer peak demand. Through our Husker Power Plan, Nebraska would: SOLAR: Add 129 to 150 MW of utility-scale and community solar over the next 5 years. At that level, by 2023 solar would generate nearly 0.3 million MWh of electricity, about 1 percent of the electricity sold by utilities in Nebraska. As Nebraska moves forward towards our clean energy future, there are other alternatives to explore. Hydroelectric power was one of the first sources of electricity powering Nebraska, and it is still provides 3% of Nebraska's electricity. Building a large new hydroelectric dam would be costly and difficult, and could impact fish and wildlife habitat and downstream municipal water use. However, Central Nebraska Public Power & Irrigation District generates power at hydropower plants with about 63 MW of capacity along its irrigation supply canals, which is currently sold under contract to Kansas City Power & Light. That electricity was once sold to Nebraska Public Power District, and when the contract expires with Kansas City Power & Light, it could once again be sold and used in Nebraska, providing affordable, renewable energy for Nebraskans. Waste to Energy-- Nebraska's two largest landfills (Lancaster County and Douglas County) are already using technologies to capture and use the methane generated by biological processes in the landfills. Those two projects provide about 11 MW of capacity now used by Lincoln Electric System and Omaha Public Power District. However, it appears that no more than about 10 MW more electric generating capacity would be available in the remaining landfills elsewhere in the state. Energy Storage While wind and solar energy supplies can be predicted, they cannot be turned on or off to meet changes in demand. Energy storage strategies can provide a cost-effective means of matching electricity demand with our renewable electricity supply. Pumped hydro storage is already widely used in the United States to store energy. Compressed air is already in use in Alabama, and Nebraska appears to have at least one location where the geologic formation has strong potential to store energy in the form of compressed air, to be released to generate electricity in conjunction with a natural gas turbine when needed. 6 Husker Power Plan, Jan. 16, 2018

28 Utility-scale batteries are in development (and in some cases, production) that can store energy. Batteries have an additional benefit in that they can provide electricity with an immediate response. That is an advantage over, for example, coal and gas steam plants that typically take hours to ramp up to production, or natural gas turbine peaking plants that can take minutes to respond. Over the next ten years, we expect Nebraska utilities to have increasingly affordable options for energy storage that would complement the addition of wind and solar energy, and allow for the closure of older, outdated coal-fired power plants. Those opportunities include: COMPRESSED AIR: NPPD started to investigate a 300 MW Compressed Air Energy Storage facility in southwest Nebraska, but released its option on the site before doing the geologic studies needed to determine if the site would work to store compressed air. The site is an old natural gas dome which is now used to store natural gas. We believe other utilities could be interested in the site. In its 2012 Integrated Resources Plan, NPPD's analysis provided cost estimates that appear competitive with the cost of building a new natural gas power plant. PUMPED HYDRO: There are many examples of pumped hydro energy storage projects in operation or in development. In times of cheap or excess energy, water is pumped up into a reservoir, and when power is needed water is released through a turbine, generating electricity. PUMPED HYDRO: Central Public Power & Irrigation District is studying the potential to use an existing 50 MW hydropower plant at Lake Mcconaughy as a pumped hydro facility. By adding a pump and a pipe, Central could pump water from Lake Ogallala (below Kingsley Dam) back over the dam and into Lake Mcconaughy, releasing the water back through the hydropower plant when needed. Because the dam, reservoirs, and hydro plant are already in place, the project could be a low-cost way to store energy. BATTERY: Utility scale batteries are an increasingly competitive option, and the technology is rapidly improving. GTM Research, which tracks the industry for the Energy Storage Association, expects as much as 1,800 MW of battery storage to come online in the US by 2021, 8 times as much as is now in placexix. There are other ways to store and recover energy. Using energy to separate oxygen from hydrogen in water (H2O) produces hydrogen that can be stored and used in a fuel cell to generate electricity. At least one Omaha bank is using fuel cells as emergency backup power, and the fuel cells have an added advantage of immediate response. While there are a number of options, we focused on the alternatives above (compressed air, pumped hydro, and battery storage) because the technology is already available and in use, and - in the case of battery storage - the cost seems to be falling rapidly. Nebraska utilities should gain additional knowledge of these energy storage opportunities and work towards acquiring substantial energy storage capacity over the coming decades. 7 Husker Power Plan, Jan. 16, 2018

29 Smart Grid Communication and control technology has become cheaper and more readily available, and we see tremendous opportunity for "Smart Grid" applications from the generation/transmission end to the retail end of the system to help manage, reduce and shift energy use and demand to match supplies. As we transition to more Intermittent generation like solar and wind, those Smart Grid technologies will become increasingly valuable. In addition to reducing consumption through energy efficiency and reducing peak demand through demand management (noted above), we see opportunities to better match demand with available supplies to take advantage of Nebraska's abundant wind and solar energy. For example, center pivot irrigation systems generally don't need to run continuously. Using available communication and control technology to schedule irrigation to take best advantage of available wind and solar energy would reduce the cost of delivering the energy needed while still delivering water when needed for crops. Many of our electrical energy needs - from appliances like water heaters, air conditioners, and washer/dryers to chargers for electric vehicles and chillers for commercial cooling -- can be met through flexible scheduling. New smart grid technologies and inexpensive communication and control technology, combined with reliable forecasting of wind speeds and available solar energy can allow utilities to better match flexible load with available energy supplies. Hydrogen HYDROGEN - NPPD is moving ahead in partnership with Monolith Materials to convert one unit of Sheldon Station, a coal-fired power plant near Hallam, to burn hydrogen. The hydrogen would be a byproduct of a new carbon black production facility being built by Monolith next to Sheldon Station. The new facility will use natural gas to produce carbon black, a much cleaner process than is now typically used (producing carbon black from oil). The project is underway, and our plan assumes it will be completed and fully operational by year five of our plan. If the project is successful and Monolith decides to expand or build another production facility, there is the potential to convert the other unit at Sheldon, or one ofthe small coal-fired municipal power plants at Fremont, Grand Island, or Hastings. We did not include conversion of a second unit in our plan because ofthe uncertainties, although it has the potential to convert 100 to 150 MW of coal-fired capacity to hydrogen. Co-generation and District Energy CO-GENERATION refers to projects that make multiple uses of energy. That can be by capturing waste heat from an industrial process to create steam to generate electricity, or using the waste heat from electric generation to provide useful heat. The technology is widely used in other parts of the USA, and provides affordable options to add small chunks of capacity. Nebraska has a number of industrial facilities that could be opportunities for co-generation, including 25 ethanol plants which use heat generated by natural gas (or in one case, coal) to 'cook' the mash and dry the distillers grain, generating quite a bit of waste heat. At least a handful of ethanol plants in other states use cogeneration to capture the waste heat and turn it into electricity. Other potential facilities include the Nucor steel plant near 8 Husker Power Plan, Jan. 16, 2018

30 Norfolk and several food processing plants. In Seattle, waste heat from a Nucor steel plant will be used to generate electricity for Seattle City Light. Nebraska's public power utilities have mostly left the responsibility for financing and installing cogeneration systems to their customers. That may make sense when output from the cogeneration project is all used on-site. Where enough power is generated to put power into the grid, it may make more sense for the utility to have a primary role. Nebraska utilities should be more proactive, helping finance, install and operate the electric generation side of new cogeneration systems, to provide ease and incentives for installation of cogeneration capacity. DISTRICT ENERGY - Lincoln has a district energy system which provides heating and cooling to city and state buildings, and is now expanding to provide service to private companies in Lincoln's Haymarket neighborhood. In Omaha, NRG Energy, a private company, provides energy-efficient district heating and cooling for the downtown area, including Creighton University, Creighton University Medical Center, Woodman Tower, and more than 70% of the public and commercial buildings in downtown Omaha. These systems make more efficient use of energy. CO-GENERATION AND DISTRICT ENERGY-We see substantial opportunities state-wide for new co-generation and new or expanded district energy projects over the next 10 years, and Nebraska utilities and communities need to actively pursue these opportunities. Close the Oldest and Dirtiest Coal-Fired Power Plants Nebraska currently has an excess of generating capacity, over and above that needed to meet our capacity obligations to the Southwest Power Pool. Even after the closure of Fort Calhoun Nuclear Station in 2016, Nebraska had over 800 MW of excess capacity in place, according to the Nebraska Power Association 2016 Load and Capability Report. As we invest in energy efficiency and demand management to reduce energy use and peak demand, and add affordable wind, solar and energy storage, aging coal-fired power plants will no longer be needed to meet our electricity needs. With the rising cost of delivered coal, flat wholesale prices received by utilities for the electricity they generate, and pollution problems from coal-fired power plants, coal-fired power is becoming a growing burden on Nebraska utilities and their customers. Coal and natural gas power plants also present substantial risks for future increases in power prices, since a large proportion of the cost to generate electricity- especially from a gas plant - is in the fuel. In contrast, once wind and solar farms and energy efficiency measures are in place, the fuel cost is zero and the operating cost is very low. Moving more rapidly towards clean energy supplies will give Nebraska utility customers more certainty and stability in their future electricity prices. Starting with the oldest power plants first, Nebraska utilities should begin now to plan, phase out and close coal-fired power plants that are no longer needed. Advance planning would allow time for transition planning to help employees and communities deal with the changes, and reduce potential stranded assets from utility financing used to build the plants. All but a few Nebraska power plants were built before modern pollution control technologies, so they emit many times the levels of harmful pollutants compared to newer power plants. For example, when Omaha Public Power District's Nebraska City 2 power plant opened in 2009, utility officials said it would put out one-tenth the level of key pollutants as the similarly sized Nebraska City 1 unit built 30 years earlier. Unfortunately, Nebraska City 1 is still operating, despite putting out much higher pollution levels. 9 Husker Power Plan, Jan. 16, 2018

31 C The first to close would likely be the oldest, including North Omaha units 1-3 which OPPD already plans to close (to allow units 4-5 to be switched over to natural gas). Sheldon Station unit 1 {1961), Lon Wright in Fremont {1977), Nebraska City 1 (1979), and Gerald Gentleman 1 {1979) are the next oldest coal-fired power plants and could be closed in the future as demand management, renewable energy, and energy storage/smart Grid investments come on line. Over the next 10 years, Nebraska should begin to right-size its fleet of power plants. As that happens Nebraskans would breathe much easier, because those older plants don't have modern pollutioncontrol systems in place, so they spew many times the level of pollutants like mercury, sulfur dioxide, soot and others that cause severe health problems in people than new power plants of any kind. Needed Infrastructure The LB 1115 study of transmission line capacity in Nebraska concluded that, with completion of the high voltage Neligh-Hoskins and R-Project transmission lines, Nebraska would be able to add at least another 2,000 MW of wind farms above what was built or planned at the timexx. Our Husker Power Plan anticipates the addition of 1,500 to 1,850 MW of new wind capacity to serve Nebraska. The Neligh-Hoskins transmission line in northeast Nebraska has been completed, but the R Project is awaiting permits and has not been built. Since the completion of the Brattle report in December, 2014, there have been substantial changes in the Nebraska power industry. The Fort Calhoun nuclear station has been retired, and Omaha Public Power District announced plans to reduce the capacity of its North Omaha power-plant and transition the facility from coal to natural gas. Some of the anticipated new wind farms have been built, and utilities have announced plans to bring on additional wind and solar generation. In 2014, the Southwest Power Pool launched its Integrated Marketplace, which provides for regional dispatching of the power needed for and generated by Nebraska electric utilities. Distributed energy strategies that provide generation and energy storage closer to the load centers where electricity is used are developing rapidly. Given the changing landscape, we believe ongoing studies by Nebraska utilities and the Southwest Power Pool will continue to be required to assess the needs for transmission line upgrades, new construction or other changes needed to meet Nebraska's electricity needs and add new wind. As utilities move forward with new demand management and Smart Grid initiatives, and begin to close outdated coal-fired power plants, additional capacity would be freed up on existing transmission lines. We assume that utility scale solar projects would be built closer to the load they serve, reducing the need for long distance transmission. As Nebraska and other states have increased their use of renewable energy, the Southwest Power Pool (which schedules and dispatches generation resources to match the demand) has responded with strategies to better integrate and plan for renewable resources. The Southwest Power Pool (SPP) has expanded to add utilities in North and South Dakota, expanding the diversity and reach of resources integrated into the SPP system, and the Colorado Public Utilities Commission is considering joining the SPP. Proposed new Federal Energy Regulatory Commission rules could add value to resources that are fast-start and can react quickly to needs on the grid. That could increase the value of instant-reaction resources like batteries, and could increase the value of fast-start resources like compressed air or natural gas turbines over coal-fired or gas fired boilers, which typically take hours to come online. Southwest Power Pool studies say at some point there is likely a need to increase the capacity of the 7 DC ties that connect the Western Grid with the power grid in the central US. Those ties currently only 10 Husker Power Plan, Jan. 16, 2018

32 have 1,310 MW of capacity. The Laramie River Station in Wyoming, which provides electricity to Lincoln Electric System and Tri-State G& T, has one unit that supplies power to the Eastern Interconnection and two units that supply power to the Western Interconnection. We do not believe our Husker Power Plan would substantially change the situation with respect to those DC ties, as our plan doesn't rely on outof-state power imports or large exports of Nebraska power to other states. Transition Impacts Several of Nebraska's coal-fired power-plants operate in relatively smaller communities {including Sutherland, Nebraska City, and Hallam). In the future, retiring these power plants would impact local jobs, payments in lieu of taxes to local governments, and economic activity. We believe these communities and the utility employees deserve both lead time and assistance to make the transition as beneficial as possible. By starting now, rather than waiting until closure is imminent, employees and communities would have a longer and a much smoother transition, with opportunities for employees for early retirement, transition to other jobs at the utility, re-training for jobs in the growing renewable energy sector, and transition to jobs in other employment sectors. Communities would have opportunities to develop new wind and solar projects, create jobs through energy efficiency initiatives, and implement other plans to replace jobs potentially lost. For example, in the case of Sutherland, portions of southwest Nebraska have a combination of high wind and low wildlife impact, and the immediate Sutherland area has high solar energy potential and good transmission line access. As capacity is freed up on the large transmission lines from the closure of outdated coal-fired power plants, new wind and solar farms could provide short-term and long-term jobs in that area as well as other Nebraska rural communities. We recognize that Nebraska utilities now make payments to local governments in lieu of property tax payments, and under our Husker Power Plan those payments would increase or decrease depending on the area. Putting in place a time line for building new wind and solar farms and closing outdated coal power plants would allow for a transition for communities, and could involve specific phase-down in lieu of payment agreements between utilities and communities. We also recognize that we cannot leave Nebraskans behind as we move to a clean energy future. Fortunately, this Husker Power Plan should cost no more overall than a 'business as usual scenario', which should keep electric rates affordable while delivering new jobs and investment across the state. In addition, community-driven energy efficiency programs should find the most fertile areas for energy savings in older and lower-income neighborhoods, helping reduce energy bills in those areas. Nebraska needs a careful strategy that will meet the energy needs of Nebraska's most vulnerable populations, so all Nebraskans will benefit from the cleaner energy, and cleaner air, that results. Nebraska's Clean Energy Future Nebraska boasts a variety of affordable, readily available clean energy options that can transform our electric utility system, provide new jobs and investment, and power Nebraska's economy into a clean 11 Husker Power Plan, Jan. 16, 2018

33 energy future. Since Nebraska is a 100 percent public power state, the benefits of a well-planned transition to clean energy will accrue to all the residents of Nebraska. As we have outlined in this Husker Power Plan, with the right mix of energy efficiency, peak demand management, wind, solar, energy storage and other clean energy options, Nebraska can transition away from dirty fossil fuels like coal, providing enormous health benefits to our residents. We can lock in a clean energy future with electricity that is affordable, prices that are predictable, and energy produced largely within our borders. We can save Nebraska businesses and residents hundreds of millions of dollars every year in energy costsxxi, and the environmental and health benefits would be even larger than the economic benefits. With our Husker Power Plan, we can give ourselves a clean energy future, and leave our children and their children a more efficient and effective economy and a better world. 1 Nebraska produces no coal, and produced trillion Btu's of crude oil in 2015, less than 9% of the 202 trillion Btu's of fuel consumed by Nebraska's transportation sector, measured on a Btu basis. Nebraska produced 477 million cubic feet of natural gas in 2015, about 0.3% of the 162 billion cubic feet of natural gas consumed in Nebraska that year. Our natural gas production has been declining. " Nebraska Energy Office, Coal Expenditures by Sector, Nebraska, , at neo.ne.gov/statshtml/63.html. iii Many studies document the health impacts or pollution rrom coal-fired power plants, including National Research Council, Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use, National Academies Press, iv Nebraska Department of Health and Human Services, as of June, v Wilhite, Dr. Don et al, Climate Change Implications for Nebraska, University of Nebraska Lincoln, September, vi U.S. Department of Energy, Energy Information Administration, Table C13. Energy Consumption Estimates Per Capita by End Use Sector, Ranked by State, 2015, State Profile and Energy Estimates. vif John "Skip" Laitner, The Energy Efficiency Benefits and the Economic Imperative of /CT-Enabled Systems, Springer.com, viii American Council for an Energy Efficiency Economy, How Much Does Energy Efficiency Cost? 2016 Fact Sheet, vu OPower, for example, reports that behavioral demand response programs are saving utilities 3% to 5% off peak demand, claims that have been verified by independent studies. 'The Nebraska Power Association 2017 Load and Capability Report projects a 0.4% future average annu.il growth in capacity needed to meet Nebraska's peak electricity needs. The report does not provide a future projection for growth in total electricity consumed. ' 1 Nadel, Steven, Demand Response Programs Can Reduce Utilities' Peak Demand an Average of 10%, Complementing Savings Fram Energy Efficiency Programs, American Council for an Energy Efficient Economy, February, 2017, /02/demand-response-programs-can-red uce,n Epley, Cole, NextEra's Wind Energy Capacity in Nebraska Will More Than Triple With New Projects, Omaha World Herald, June 15,2017. xiit Nebraska Energy Office, Solar Energy Generation in Nebraska, xiv Hill, Joshua, US Wind Industry Highlights 66% Drop in Costs of Wind Generated Electricity, June 16, 2016, cleantechnica.com/2016/06/16/us-wind-industry-highlights-66-drop-costs-wind-generated-electricity/ xv Timmer, John, Solar Energy Has Plunged in Price, Where Does it Go From Here? arstechnica.com/science/2017/04/whatsnext-for-solar-energy/ xvi A capacity factor of 45% means that over a year a 100 MW wind farm would generate 45% as much wind energy as the wind farm could generate operating at maximum capacity during the year. xvii Currently 1,320 MW of wind generation is in place in Nebraska, 7 MW are under construction, and 200 MW of wind in Oklahoma and Kansas serve Nebraska (Lincoln Electric System). Nicholas Bergan, Turbines Propel Nebraska Past a Wind-Energy Milestone, Lincoln Journal Star, May 3, 2017, reports another 586 MW of wind energy is in various stages of development. xvi ii The proposed 5.8 MW solar facility is projected to cost $11 million, or about $1.90 per watt. xi, Cusick, Daniel, Battery Storage Poised to Expand Rapidly, Scientific American, January 1, "The Brattle Group, Nebraska Renewable Energy Exports: Challenges and Opportunities (LB 1115 Study), December xxi Savings is based on both the savings that Nebraska consumers would see on their electric bills from using energy efficiency programs, and additional savings that would accrue on their natural gas (or propane) bills from the weatherization investments made through those programs. 12 Husker Power Plan, Jan. 16, 2018

34 LES Testimony By Ken Winston Policy and Outreach Director Nebraska Interfaith Power & Light Nebraska Interfaith Power & Light is one of 40 state affiliates of a national coalition of faith leaders working to address climate change. We are nonpartisan and non-sectarian. Climate change is the most important moral issue of the 21 st century, with the potential to impact every, person on the planet. Its impacts will be felt most severely by the earth's poorest citizens, "the least of these" among us. Many faith traditions command us to care for creation and stand up for our most vulnerable brothers and sisters. Many faiths emphasize the importance of wisdom in making decisions that will impact our children and generations to come. Native American traditions talk about the need to consider the impact on seven generations that follow. The entire book of Proverbs is about the importance of wisdom. Faith and science are compatible. Science does not explain the mysteries that are the subjects of faith. Conversely, the creator gave us brains to think and understand about the world we live in. Nebraska, as an agricultural state, is especially vulnerable to the impacts of climate change. Climate scientists project that drought and heat similar to or more extreme than the 2012 drought will become common by the middle of the 21 st Century. We appreciate the fact that LES has officially recognized climate change in its policies. We also greatly appreciate the leadership that LES has demonstrated for the rest of Nebraska in its policies and practices. Now we are asking you to once again take a leadership role in planning to go to 100 % renewable energy. We are not telling you how to do it, just to make a commitment to move in that direction. Why? Marilyn explained the need to address greenhouse gas emissions now.

35 Staff told us that LES needed a mandate in order to take additional actions related to climate change in your generation mix. We suggest there are at least three mandates that compel action: C The first is the moral and ethical imperative which is at the heart of our work. We have an obligation to care for our children, to leave the world a better place for them. At present we are doing the opposite. We also have a mandate to care for the poor and vulnerable among us. The second is the practical imperative. Good planning is at the heart of successful organizations. As a public utility LES needs to have an effective plan to address the needs of its customer owners going forward. Climate change is absolutely going to impact those needs on every level. The third is financial. Efficiency is the lowest cost resource and provides the greatest benefits to all sectors of society. Wind is the lowest cost generation resource and the cost of solar continues to plummet. Storage is becoming more cost effective. What is our role in this? We want to help LES continue to become cleaner and greener. NelPL is planning to hold events with LES staff to help customers become aware of LES's efficiency and solar programs. As part of our mission to care for the poor and vulnerable, we are particularly interested in helping assist low-income customers reduce both their bills and carbon footprints. We support LES's planned multi-family efficiency pilot and would like to see that expanded. Finally, LES's vision is "striving to be the world's best energy company." Striving for 100 % clean energy is consistent with that vision.

36 2/16/18 LES Board Meeting The Husker Power Plan reflects our view that climate change and reduction of greenhouse gas emissions should be taken into account in the LES Board's policy choices. We hope you can adopt a goal to reduce GHG and monitor progress each year One reason we wanted our ideas for the Husker Power Plan to be reviewed by an expert consulting firm is that we wanted to know from them how much the plan would affect GHG emissions. The Husker Power Plan reduces use of coal by replacing it mainly with wind and energy efficiency. As a result, from 2016 to 2023, --we were working on this last year -in those 5 years, the Husker Power Plan would reduce carbon emissions by 58% according to our consultant, the Applied Economics Clinic at Tufts University and Sommer Energy LLC. In December, the City of Lincoln adopted the Lincoln Environmental Action Plan with City Council approval. It sets a goal of reducing citywide per capita GHG emissions by 25% by 2025, compared to the base year of Other cities and utilities are adopting goals like this. * * * How much change is realistic? How fast? To quote one authority, "When it comes to climate change, timing is everything." Two reports last year by well-credentialed experts said to meet the goals of Paris, global emissions need to peak by 2020 and then decline rapidly, taking them to zero shortly after mid century.

37 The Paris Agreement goals were set to avoid tipping points, a cascade of effects from Thawing permafrost releasing more methane Warming oceans absorbing less CO2 Less global sea ice, and less reflection of the sun's energy, more dark water absorbing heat More heat generating more water vapor in the atmosphere. Water is a major GHG. As the 4 th Assessment of the IPCC (International Governmental Panel on Climate Change) said, "Anthropogenic warming could lead to some effects that are abrupt or irreversible." In other words, we could lose the ability to moderate climate change So back to the question about LES: looking only at the factor of climate, one has to conclude the more and the sooner, the better. But obviously there are many factors to balance. * * * By what authority should the LES Board be asking for consideration of climate change? I'd say the same authority that lets you put attention and resources to safety of the people with riskier jobs or to provide adequate care for employees' health and retirement. One difference is that clean energy and energy efficiency take into account people in the future. I think there is responsibility to them as well as current ratepayers and employees. * * * My last point is about public opinion. I don't have polling data for Lincoln only, but a very recent national poll shows about 7 in 10 Americans favor regulating carbon pollution from coal fired power plants. And a second result: a majority in every Congressional District support CO2 limits on coal plants (Dec. 31 NYTimes)

38 Exhibit II

39 L-ES Lincoln Electric System LES RESOLUTION WHEREAS, Lincoln Electric System (LES) Policy No. 301 provides that the LES Administrative Board shall approve all employee benefit program changes, LES is proposing the benefit changes described herein with an effective date of May 1, 2018; WHEREAS, LES currently employs a small number of part-time employees and offers part-time employees a lower benefit premium cost share compared to full-time employees which results in higher premiums for part-time employees; WHEREAS, mirroring benefits for both part-time and full-time employees would better ensure compliance with federal health care regulations; WHEREAS, LES recommends offering part-time employees the same benefit premium cost shares as those offered to full-time employees resulting in lower LES costs associated with system configuration and administrative costs for benefits; WHEREAS, staff thoroughly reviewed the proposed employee benefit changes with the Board Personnel & Organization Committee which recommends approval by the full LES Administrative Board; NOW, THEREFORE, BE IT RESOLVED that the LES Administrative Board approves revising employee benefits for 2018 as recommended to provide the same benefit premium cost shares for both part-time and full-time employees. S/Layne Sup Chair Adopted: February 16, 2018

40 Exhibit III

41 /kf ~b CARRYOVER LEGISLATION IMPACTING LES LEGISLATIVE BILL -LB 67 STATUS OF LEGISLATION Judiciary Committee SUMMARY OF LEGISLATION (Brasch) Requires the original equipment manufacturer of equipment sold or used in the state to make available for purchase by owners and independent repair providers all diagnostic repair tools incorporating the same diagnostic, repair, and remote communications capabilities that such manufacturer makes available to its own repair staff or authorized repair provider. LES POSITION Monitor LB Government, Military & Veterans Affairs Committee General File (Groene) LB 127 Changes public meeting notice requirements for public bodies. Current law provides that a public body must give reasonable advance publicized notice of the time and place of the meeting by a method designated by each public body and recorded in its minutes. LB 127 requires public notice to be published in a newspaper of general circulation in each county within the public body s jurisdiction and recorded in the meeting minutes. This does not represent a significant change for LES, but the bill will be monitored for amendments update: The committee amendment provides that public notice must be published in a newspaper of general circulation and, if available, in a digital advertisement on the newspaper s web site. This would provide an additional requirement for LES. Monitor/Confer with City -LB 173 Judiciary Committee General File (Morfeld) LB 173 adds sexual orientation or gender identity to the litany of bases (age, sex, race, religion, etc.) for which an employer cannot discriminate against. Monitor/Confer with City LB Business & Labor Committee General File (Quick) The bill provides that an employer will reimburse an employee for a second medical opinion if the employee disputes the report of the physician selected by the employer s workers compensation insurer regarding the employee s work readiness and ability to perform required duties. Monitor/Confer with City -LB 232 Revenue Committee (Kolterman) The bill provides that property leased to the state or a governmental subdivision is exempt from property taxes. Monitor/Confer with City LB Revenue Committee (Harr) The bill provides for a tax-exempt weekend for Energy Star rated products that cost less than $1,500 for noncommercial use. Includes dishwasher, clothes washer, clothes dryer, air conditioner, furnace water heater, ceiling fan, fluorescent light bulb, dehumidifier, refrigerator, door, or windows. The weekend would begin on the first Friday in October and continue through the first Sunday after the first Friday in October. Monitor

42 /kf ~b CARRYOVER LEGISLATION IMPACTING LES LEGISLATIVE BILL LB 365 STATUS OF LEGISLATION Government, Military & Veterans Affairs Committee General File SUMMARY OF LEGISLATION (Blood) LB 365 amends the public records statutes to provide that for requests from nonresidents of Nebraska, the public entity may charge the requestor for salary of public employees involved in responding to the request, including the services of an attorney to review the requested public records. These costs may not be charged to a requestor who is a Nebraska resident. LES POSITION Support/Confer with City LB 389 Transportation & Telecommunications Committee (Friesen) LB 389 provides a process for the attachment of small wireless communication devices to the existing poles that are used to provide communications electric service, lighting, traffic control, signage or similar function. Requires electric utilities to allow for small wireless cell attachments unless the applicant does not meet the applicable industry construction standards in the utilities right of way or its building, electrical, or pole attachment codes. If the application is denied, the utility is required to provide specific code provision, standards or regulations which the denial was based. If the application is approved the permit shall remain valid for at least 10 years and automatically be approved for at least 3 five year periods. This is a total of at least 25 years. The application fee may not exceed $250. The annual pole attachment rate shall not exceed the rate formula adopted by the Federal Communications Commission. The bill requires the utility to follow the process of make-ready work to prepare the structures for the small wireless cells including possible replacement of poles. All work must be completed within 60 days after acceptance of the good faith estimate update: The bill is still in committee. A 19-page amendment has been circulated that provides substantially more detail than the original 9-page bill. While it has addressed some concerns, it has raised others. Ultimately this would significantly erode a public entity s authority and management of its right-of-way. LES and the City of Lincoln remain opposed to the bill and the amendment. Oppose/Confer with City LB 392 Natural Resources Committee (Larson) Adopts the Wind Friendly Counties Act. The bill directs the Director of Agriculture to establish a process with criteria and standards to recognize and assist counties wishing to encourage wind development. Monitor February 19,

43 /kf ~b CARRYOVER LEGISLATION IMPACTING LES LEGISLATIVE BILL LB STATUS OF LEGISLATION Government, Military & Veterans Affairs Committee General File SUMMARY OF LEGISLATION (Briese) LB 494 was introduced on behalf of LES to create an additional category of public records that can be lawfully withheld from public disclosure under Nebraska public records laws. The purpose of the exemption is to allow public electric utility systems to protect data, maps, and information regarding critical physical and cyber infrastructure. This is a growing area of concern in many industries, and of particular concern to the utility industry. LES and other utilities also interested in protecting the identity of employees working in positions with key access to these assets or information about them. Utilities happy to provide salary and other information about the positions they hold, but we believe the identity of those employees should not be disclosed for security reasons. LES POSITION Support -LB 503 Business & Labor Committee (Brewer) Prohibits collective-bargaining agreements entered into after the effective date of the act from requiring or allowing the deduction of union dues or assessments from an employee s wages. Monitor LB Natural Resources Committee (Brewer) Provides for a two-year moratorium, beginning January 1, 2018, on any industrial wind development in the Sandhills. The bill also provides that a task force be appointed for the purpose of reviewing and making recommendations regarding siting of wind projects in the Sandhills. Monitor LB Natural Resources Committee (Kolowski) Adopts the Community Solar Energy Economic Development Act which allows community solar projects to apply for grants from the Nebraska Environmental Trust Board to support the projects. Monitor -LB 646 Executive Board (Pansing Brooks, et al.) Requires development of a strategic climate action plan to measure the effects of climate change and develop adaptation and mitigation strategies. Requires the plan to be developed by December 15, Monitor LB Government, Military & Veterans Affairs Committee (Kuehn) Provides that a political subdivision may not use revenue from any tax or fee to employ or contract with a lobbyist. Oppose February 19,

44 2018 NEW LEGISLATION IMPACTING LES LEGISLATIVE BILL STATUS OF LEGISLATION SUMMARY OF LEGISLATION LES POSITION LB 693 Judiciary Committee Hearing February 23, 2018 (Blood) Extensive bill that establishes new criminal offenses regarding the use of unmanned aircraft systems, e.g., drones. The bill includes exceptions for certain uses such as emergency responders and includes an exception for utility use of drones for maintenance and repair activities, but it may not cover all legitimate utility purposes. There are also concerns regarding the enforceability of the bill. The primary objectives of the bill are to prohibit the use of drones near corrections facilities and to prohibit the stalking of individuals or trespassing on private property via drones. Oppose/Confer with the City LB 694 LB 695 Government, Military and Veterans Affairs Committee Hearing February 21, 2018 Judiciary Committee Hearing February 7, 2018 (Blood) Prohibits cities and counties from taxing or regulating distributed ledger technology (bitcoin/block chain). (Blood) Authorizes and defines smart contracts and allows the use of distributed ledger technology (bitcoin/block chain) in the Electronic Notary Public Act. A smart contract is essential one that executes a contract through a distributed ledger technology, such as a bitcoin or block chain transaction. Monitor/Confer with the City Monitor/Confer with the City LB 722 Natural Resources Committee Hearing February 21, 2018 (Wayne) Requires by 7/1/2020 that any public power district whose chartered territory covers more than 50% of all or part of the total number of counties in Nebraska to produce at least 20% of its electric power generation from renewable energy resources. NPPD is the only power district that meets this definition. It is uncertain why Sen. Wayne narrowed the application of this bill. LES already exceeds this threshold. LES has historically opposed renewable portfolio standards. LES goal has been to maintain a diverse and balanced portfolio, both in terms of fuel price and geographic location, to minimize its risk exposure. Oppose LB 723 Natural Resources Committee Hearing February 21, 2018 (Wayne) Current law requires Nebraska electric utilities to provide net metering for customer-owned renewable generation up to 25 kw. LB 723 increases this threshold to 100 kw. LES used to offer net metering up to 100 kw. A few years ago LES revised its program to offer net metering up to 25 kw and a renewable generation rate up to 100 kw. The renewable generation rate allows LES to better recover its fixed costs for these larger installations above 25 kw. LB 723 would require significant changes to LES renewable generation rate that has been in place for a couple of years and under which several customers are participating. Oppose February 19,

45 /kf ~b NEW LEGISLATION IMPACTING LES LEGISLATIVE BILL STATUS OF LEGISLATION SUMMARY OF LEGISLATION LES POSITION LB 729 Judiciary Committee Hearing January 25, 2018 (Wayne) Amends the Political Subdivisions Tort Claims Act to allow claims arising from misrepresentation or deceit. Such claims are precluded in existing law. Senator Wayne has proposed an amendment that would only allow such claims arising out of a failure of the Department of Health and Human Services in adoption cases to warn, notify, or inform of a ward of the State s history as a victim or perpetrator of sexual abuse. With the amendment, LES would have no further interest in the legislation. Monitor/Confer with the City LB 752 Judiciary Committee Hearing February 8, 2018 (Brewer) Amends current law regarding the ability of power districts and municipalities to acquire right-of-way for the construction of overhead or underground lines to provide that such authorization shall not include acquisition of right-of-way on behalf of a third party accessing the infrastructure to sell electric energy. Senator Brewer has been an outspoken opponent of wind projects in the Sandhills as well as NPPD s proposed R-Plan transmission project. It is presumed he is aiming to preclude merchant wind generation as well as third-party wind developments such as the ones from which public power entities are purchasing the output. These third party private developers can take advantage of the federal production tax credit which significantly lowers the cost of wind for public power entities like LES. Oppose LB 763 Judiciary Committee Hearing February 21, 2018 (Harr) Makes it a Class I misdemeanor to knowingly obstruct, impair or hinder a public power district employee in the lawful performance of his or her duty regarding the construction, maintenance or repair of the district s facilities or the provision of service on or near a customer s premises. This was introduced at the request of OPPD. We are working on an amendment to extend the provisions to employees of municipal electric utilities. Support/Request Amendment LB 784 Business and Labor Committee General File (Vargas, McConnell, Wayne) Bars contractors from contracting with the state or a political subdivision if the contractor has unpaid fines due to a violation of the Employee Classification Act until such fines are paid. The duty for complying with this provision is on the contractor and it is an additional item the contractor must address in a compliance affidavit that is already required by law. LES will monitor the bill. Monitor February 19,

46 /kf ~b NEW LEGISLATION IMPACTING LES LEGISLATIVE BILL LB 820 STATUS OF LEGISLATION Natural Resources Committee Hearing January 31, 2018 SUMMARY OF LEGISLATION (Hughes) Introduced on behalf of the Power Review Board (PRB), it amends the new Privately Developed Renewable Energy Generation Facility act (passed a couple of years ago as LB 824) to permit the PRB to fine entities that fail to submit the required certifications at least 30 days prior to commencement of construction. This allows a means of exempting the facilities from the normal PRB approval process instead of the PRB denying them because they are in noncompliance. The bill does not directly impact LES, but will be monitored for its relevance to the industry. LES POSITION Monitor LB 821 Natural Resources Committee Withdrawn (Hughes) Also introduced on behalf of the PRB, this bill provides the PRB with express authority to conduct subsequent assessments after its initial one. The possibility of subsequent assessments is necessitated by the Governor s budget office now requiring state agencies to budget what they have historically spent the preceding several years, apparently regardless of whether there are known or highly anticipated increases. For the past 50 years the PRB has collected its entire appropriation in one annual assessment. If expenditures were higher than usual for the past few years, the PRB would need to conduct a special assessment to collect additional funds (that cannot exceed the PRB s overall appropriation). Support LB 843 Business and Labor Committee Hearing February 12, 2018 (Pansing Brooks) Amends the Wage Payment and Collection Act to provide that employers may not require nondisclosure by an employee of his or her wages as a condition of employment or in any other way coerce, intimidate, or retaliate against an employee for the employee s disclosure of the employee s own wages or discussing another employee s wages which have been disclosed voluntarily. Monitor/Confer with the City LB 850 Government, Military and Veterans Affairs Committee Hearing January 31, 2018 (Linehan) Provides that after 8/1/2018 any political subdivision that issues bonds must disclose the anticipated cost of paying off the bonds. The bill is very brief and vague. It does not specify to whom such disclosure must be made or how the disclosure must be made. When LES issues bonds, a maturity schedule is published in the official statement which is accessible via LES web site. LES will seek further clarification from Sen. Linehan s office, but will oppose the introduced bill due to its vagueness. Oppose February 19,

47 /kf ~b NEW LEGISLATION IMPACTING LES LEGISLATIVE BILL -LB 856 STATUS OF LEGISLATION Transportation and Telecommunications Committee Hearing February 20, 2018 SUMMARY OF LEGISLATION (Morfeld) Adopts the Internet Neutrality Act which would prohibit Internet service providers from degrading the speed of Internet traffic in Nebraska or providing paid prioritization of certain sites. The bill is in response to a recent decision of the Federal Communications Commission to repeal net neutrality rules which reversed a policy put in place in 2015 during President Obama s administration. LES POSITION Monitor -LB 989 LB LB 994 Transportation and Telecommunications Committee Hearing February 13, 2018 Revenue Committee Hearing February 15, 2018 Transportation & Telecommunications Committee Hearing February 5, 2018 (Wishart) Authorizing testing of autonomous vehicles by a city of the primary class. Lincoln is the only city of the primary class. For this reason, LES will monitor the bill. (Friesen) Exempts leases of dark fiber from payment of sales and use taxes. (Friesen) Creates the Rural Broadband Study Task Force to assess the state of rural broadband in Nebraska and make recommendations regarding policies and strategies to accelerate broadband service in rural areas. The 11-member task force would include a representative of the public power industry. Senator Friesen has been very interested in addressing rural broadband gaps to facilitate greater rural economic development. Monitor/Confer with the City Monitor Monitor -LB 997 Government, Military and Veterans Affairs Committee Hearing January 25, 2018 (Murante) Provides that beginning 1/1/2019 a political subdivision may not spend more than 5% of its budget on salaries and benefits for administrative employees. Administrative employee means an employee whose primary responsibilities are supervisory or supportive in nature and includes, but is not limited to, a superintendent, principal, city clerk, city administrator, county clerk, county administrator, or similar position that performs a similar administrative function and any personnel whose position provides support to such positions. It appears that this may have been aimed at school districts, cities, and counties, but the language is broader than that. In addition, some of the language such as any personnel whose position provides support is overly broad and vague. The purpose for limiting these salaries is not clear. At the public hearing, Senator Murante made clear that he intended this to apply to political subdivisions with taxing authority. LES would not be opposed if the bill is amended to reflect his intention. Oppose pending clarifying amendment February 19,

48 /kf ~b NEW LEGISLATION IMPACTING LES LEGISLATIVE BILL LB 1000 STATUS OF LEGISLATION Government, Military and Veterans Affairs Committee Hearing February 1, 2018 SUMMARY OF LEGISLATION (Briese) Amends the Public Facilities Construction and Finance Act to provide that bonds issued by a joint entity be subject to a vote of the electors of each of the joint entity s public agencies prior to issuance. While the bill is not directed at interlocal entities such as the District Energy Corporation and the Nebraska Utility Corporation, we may seek clarification of some vague language in the bill should it advance from committee. LES POSITION Monitor/Confer with the City, County, DEC and NUCorp LB 1014 Business and Labor Committee Hearing February 12, 2018 (Pansing Brooks) Identifies certain existing statutes as the Discriminatory Wage Practices Act and revises provisions prohibiting wage discrimination on the basis of sex. The bill also includes provisions related to employee disclosure of wages that are also included in LB 843. Monitor/Confer with the City LB 1021 Revenue Committee Hearing February 27, 2018 (Schumacher) Repeals several sales and use tax exemptions. While the bill retains the sales and use tax exemption for fuel used in the generation of electricity, manufacturing, grain processing, or refining, it eliminates the exemption for purchases of electricity or fuel when more than 50% is used directly in irrigation. Rather than exempting all fuels used in the generation of electricity, it now specifies certain fuels which includes natural gas and coal. A companion bill, LB 1022, creates the Irrigation Tax Act. While the bill does not impact LES, it will be closely monitored to ensure that no other changes are made that would change or alter the exemption for fuel used in the generation of electricity. Monitor/Confer with the City LB 1023 Revenue Committee Hearing February 27, 2018 (Schumacher) This bill sunsets several tax incentive programs or precludes new applications for some programs, such as the Nebraska Advantage Act which is a key economic development program. There is no direct impact to LES, but the bill will be monitored for amendments or local economic impacts. Monitor/Confer with the City LB 1031 Transportation and Telecommunications Committee Hearing February 13, 2018 (Friesen) amends the One-Call act to provide that excavators on large projects pay all locating costs, including the locate costs of other operators. Large project is defined to mean excavation in a city of the metropolitan, primary (Lincoln), or first class measuring more than a mile in length and taking more than 90 days to complete. It is our understanding that this was introduced on behalf of Black Hills in response to the ALLO project in Lincoln. Monitor/Confer with the City February 19,

49 /kf ~b NEW LEGISLATION IMPACTING LES LEGISLATIVE BILL STATUS OF LEGISLATION SUMMARY OF LEGISLATION LES POSITION LB 1054 Sen. Brewer Priority Bill Natural Resources Committee Hearing February 1, 2018 (Brewer) Provides that if a member of the public files an intervention at the Power Review Board on a generation or transmission project, the PRB must consider the evidence presented by such public as part of the PRB s determination of whether the application will serve the public convenience and necessity. The bill also removes wind from the definition of a privately developed renewable energy facility. Monitor LB 1088 Revenue Committee Hearing February 27, 2018 (Wayne) This bill creates the Remote Seller Sales Tax Collection Act to regulate the collection and payment of sales and use taxes from remote sellers who sell goods or services in Nebraska and whose gross revenues exceed $100,000. The bill also repeals a number of sales and use tax exemptions, including the exemption for energy sources and fuels when more than 50% of the amount purchased is for use directly in the generation of electricity or in processing, manufacturing, refining, the compression of natural gas for retail sale in a vehicle, or by any hospital. This exemption has been in law for decades. Its repeal would be a significant financial impact to LES and ultimately results in double taxation where both the raw material used to produce electricity and the end use energy are both taxed. Oppose LB 1113 Transportation and Telecommunications Committee Hearing February 20, 2018 (Walz, Briese) Amends the dark fiber statutes. It appears that this bill is to allow for public-private partnerships and to also exempt them from Public Service Commission approval of the dark fiber lease price. I m still processing this bill because it seems to allow what is already allowed by statute. Stay tuned for more explanation on Monday. Monitor LB 1128 Government, Military and Veterans Affairs Committee Hearing January 31, 2018 (Wayne) Provides that any entity of local government, including natural resource districts, public power districts, and sanitary and improvement districts, that engage in adjudicative functions not subject to the Administrative Procedure Act, shall not have the authority to spend funds appropriated by the Legislature if the entity conducts a program that is funded in any way by a nongovernmental source, including grants, donations and gifts. This bill raises a number of questions. First, adjudicative functions is not defined. Second, many of these entities do not receive funds appropriated by the Legislature. This may refer to statewide programs that are funded by the Legislature and utilized by government entities. It is unlikely this bill impacts LES in any way, but it will be monitored pending further clarification of the bill s intent. Monitor/Confer with the City February 19,

50 Exhibit IV

51 2017 Interruption/Outage Report Clinton Bruhn February 16, 2018

52 Reliability Statistics Indices ASAI Average Service Availability Index SAIDI System Average Interruption Duration Index CAIDI Customer Average Interruption Duration Index SAIFI System Average Interruption Frequency Index MAIFI Momentary Average Interruption Frequency Index L~S Striving to be t he world's best energy company. 1

53 2017 Major Event Day Statistics Major Event Days Customers # Dates Cause Off 1 June 16, 2017 Straight Line Winds 3,488 2 August 20, 2017 Microburst Storm 17, Minutes MED SAIDI Threshold I I 6/16 8/ T med L--ES Striving to be the world's best energy company. 1

54 Outage Trends ,000 # of Outages , , ',.,,,,,,,,,,,,,,,,, ',, '' -- ' ----,, ,000,,,,,,,,,. Customers , , , Total Interruptions Normal Weather Interruptions Momentary Interruptions Sustained Interruptions Single Cust Outages Customer Count Momentary < 5 min duration L--ES Striving to be the world's best energy company. 1

55 Outage Trends I I I I I I, # of Outages ,,,,,,,, _.,.,,,,,,,,,,.-J I I One-Call Requests ~ ~ Total Interruptions Momentary Interruptions ~ Normal Weather Interruptions Locates Sustained Interruptions Momentary < 5 min duration L--ES Striving to be the world's best energy company. 1

56 Outage Statistics Number of Major Event Days Year Average ASAI (%) SAIDI (Minutes) (LES ND Goal <60) AD ND CAIDI (Minutes) (LES ND Goal <60) AD ND SAIFI (Long Interruptions) MAIFI (Short Interruptions) AD All Days (including Major Event Days) ND Normal Days (excluding Major Event Days) L~S Striving to be t he world's best energy company. 1

57 15 Year Overview of Annual SAIDI Annual SAIDI Minutes I I I I I I I I I Normal Days (Excluding MEDs) All Days (Including MEDs) SAIDI - Normal Weather SAIDI - All Days Minutes Minutes SAIDI Poly. (SAIDI) SAIDI Poly. (SAIDI)

58 12 Year Overview of Annual CAIDI Minutes I Annual CAIDI I I Normal Weather MED Minutes CAIDI - Normal Weather Minutes CAIDI - All Days CAIDI Poly. (CAIDI) CAIDI Linear (CAIDI)

59 Major Outage Causes on the Distribution System Year 2017 Average % of 5 Yr Avg Total Trees % UG Sec Cable Cut % UG Sec Cable Fail % UG Pri Cable Cut % Squirrels % UG Pri Cable/Splice % ***Misc % Lightning % Vehicle Acc % **UG Problems % OH Sec Shorted % *OH Problems % Wind % OH Sec Conn Fail % Arrester Fail % OH Trf Fail/OvrLd % Birds % Other % Fuse % Unknown % OH Pri Conn/Jumper % Meter % TOTAL %

60 250 Top Causes of Outages 200 # of Outages \ \ \ \ \ \ \ \ \ \ --"',,......,...,, " " I \ I \ 1, I \ I ' T I ' I '.\ I,,, I Trees Lightning Squirrels UG Pri Cable/Splice Wind UG Sec Cable Fail L--ES Striving to be the world's best energy company. 1

61 Circuits Ranking - # of Outages Rating SUBSTATION CKT Ckt Cust Cust- Min SAIDI 2016 Rating # of outages 1 57th & Garland ,269 16, th & A ,554 33, th & Gertie ,184 22, th & Pioneers ,718 33, th & Pine Lake ,092 10, SW 27th & F ,460 9, th & A ,698 8, th & A , , st & A , th & Leighton , , L~S Striving to be t he world's best energy company. 1

62 Five circuits with the most outages ~ T i t t r r I - 1" l l, T T-c, f f (,J j ) ' i. r L--ES Striving to be the world's best energy company. 1

63 Circuits Ranking SAIDI Minutes Rating SUBSTATION CKT Ckt Cust Cust- Min SAIDI 2016 Rating # of outages 1 30th & A , , * th & Holdrege , , th & Leighton , , th & Holdrege , , th & Garland , , Waverly , th & Everett ,330 77, nd & N ,444 74, th & Morton , NW 70th & Fairfield , * Circuit has been in top 10 for more than 2 years in a row L~S Striving to be t he world's best energy company. 1

64 ~~, "'., "' "' "' i': "'... ~ \ ~ I ri': ~- :i :i i i ::: t- " ",_ I " " T r r l t- t- I WAVERLY RD t t < t I t- I I MCKELVIE RD I j. FLETCIER AV tf I t -,-i1 Five circuits with the highest SAIDI Impact t-t rti '+ ', I OST ½ t i + I ~ -~ t- r r f 1-f{l' t ADAMS ST _11 VANDORN ST 1 t + + I j l. r: h- OLD CH8'IEY RD t...,, l ~ SALTILLO RD r...c' L YANKEE HILL RD L--ES Striving to be the world's best energy company. 1

65 System Average Interruption Duration Index (SAIDI) LES Goal WV OK MT MS AK KS TN MI NM AR GA IL AL NY SC HI CO PA MD SD WI MN MO RI UT LES 0 - I 50. Nebraska I LES Source: U.S. Energy Information Administration, 2016 Electric power sales, revenue, and energy efficiency Form EIA-861 detailed data files L--ES Striving to be the world's best energy company

66 System Average Interruption Duration Index (SAIDI) 300 SAIDI with MED SAIDI without MED Minutes Minnesota Nebraska Kansas Missouri OPPD Iowa NPPD LES Comments: Source: U.S. Energy Information Administration, 2016 Electric power sales, revenue, and energy efficiency Form EIA-861 detailed data files SAIDI = Total Duration of Customer Sustained Interruptions in a Year / Total Number of Customers Served. L--ES Striving to be the world's best energy company

67 Questions??? L~S Striving to be t he world's best energy company. 1

68 Exhibit V

69 Husker Power Plan How does LES measure up? Scott Benson Manager, Resource & Transmission Planning February 16, 2018 L~S Striving to be t he world's best energy company

70 Husker Power Plan What is it? A state-wide energy plan released by the Nebraska Wildlife Federation that promotes a clean energy future built around five pillars: 1) Managing demand and energy use. 2) Increases in renewable energy. 3) Use of energy storage and smart grid. 4) Use of cogeneration and district energy. 5) Closing the oldest coal plants. When was it released? January 16, 2018 How does LES measure up? LES staff had that very question, so they compared LES current position to the various action items associated with each of the plan s pillars. L~S Striving to be t he world's best energy company

71 Managing Demand and Energy Use Grow energy efficiency strategies over the next 5 years to ultimately deliver 2% annual reduction in electricity (MWh) and natural gas consumed. 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2009 LES Sustainable Energy Program (SEP) Energy Efficiency (% Retail Sales) Since its inception in 2009, the SEP has paid approximately $23M in incentives to help LES customers use energy more efficiently. II Ill % L--ES Striving to be the world's best energy company

72 Managing Demand and Energy Use Grow demand management programs over the next 5 years to ultimately deliver 1.3% to 2% annual reductions in the peak demand for electric generating capacity needed (MW). 3.5% LES SEP Peak Demand Reduction (% Peak) 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Including all demand-side programs under the LES Sustainability Target (SEP, DEC & UNL), 2017 reduction is almost 5% I II Ill % L--ES Striving to be t he world's best energy company

73 Renewable Energy Add 1,500 to 1,850 MW of new wind energy over the next 5 years, allowing wind to generate around 40% of Nebraska s anticipated MWh usage by LES Wind Energy Production (% Retail Sales) 30% 20% 10% 0% L--ES Striving to be the world's best energy company

74 Renewable Energy Add 129 to 150 MW of utility-scale and community solar over the next 5 years, allowing solar to generate about 1% of Nebraska s anticipated MWh usage by LES Community Solar Energy Production (% Retail Sales) 1.00% 0.75% 0.50% Assuming the best solar prices seen to date, LES power costs would increase about $1M per year for every 1% increase (as a percentage of retail sales). 0.25% 0.00% L--ES Striving to be the world's best energy company

75 Energy Storage and Smart Grid Gain additional knowledge of energy storage opportunities and work towards acquiring substantial energy storage capacity over the coming decades. LES recognizes the potential benefits of electrical energy storage, and constantly monitors the application, technology and economics associated with various solutions. In the interim, LES continues to find cost-effective applications for other energy storage technologies. LES makes significant use of thermal energy storage to efficiently serve customer cooling loads and increase summer capacity ratings of local generating units. DEC NU Corp RGS L--ES Striving to be the world's best energy company

76 Energy Storage and Smart Grid Take advantage of the opportunities presented by Smart Grid applications as the technology becomes cheaper and more readily available. LES continually monitors advances in Smart Grid technology and the related costs for potential future implementations, but in the interim continues to find cost-effective solutions to related challenges. Developed business case for Advanced Metering Infrastructure (AMI) project in 2012, but couldn t justify cost of $45M. Automated Meter Reading (AMR) project, completed in 2016, provided many of the same benefits for only $9M. Other examples include installing automated switches on the 35-kV distribution system in 2017 and offering a new bring-your-own-thermostat demand-response program in 2018 that leverages existing customer Wi-Fi capabilities. Courtesy of Trane.com L--ES Striving to be the world's best energy company

77 Cogeneration and District Energy Expand district energy projects over the next 10 years, actively pursuing related activities. 4.0 DEC Customer Area Served (Million Square Feet) L--ES Striving to be the world's best energy company

78 Closing Oldest Coal Plants Right-size Nebraska s fleet of power plants over the next 10 years, paring down older facilities. LES and Nebraska Public Power District agreed to end their Sheldon Station agreement at the end of 2017, under which LES purchased 30% of the plant output, or approximately 65 MW. The plant represented the oldest resource in LES fleet at that time. Courtesy of NPPD.com L--ES Striving to be the world's best energy company

79 Questions? 11

80 Exhibit VI

81 Financial Performance January 2018 L~S Striving to be t he world's best energy company. 1

82 Retail Energy Sales January , , , , , , ,206 ~ -, YTD Status (MWh s) Actual Budget Variance -% Total 299, ,734 1, % I Retail energy sales were above budget due to slightly colder than average weather. MWh s 100,000 80,000 60, ,000-35,042,,_ 38,568 20, ,768 1,836 I I I I Actual Budget Actual Budget Actual Budget Actual Budget Residential Commercial Industrial Street Light Month 134, , , ,206 35,042 38,568 1,768 1,836 YTD less current month Total 134, , , ,206 35,042 38,568 1,768 1,836 Unbilled change allocated to retail revenue classes. L--ES Striving to be the world's best energy company

83 $12,000 $10,000 $11,246 $10,293 Retail & Other Revenue January 2018 (excludes Wholesale Revenue) $9,017 $9,167 YTD Status (Amounts in Thousands) Actual Budget Variance % Retail $22,899 $22,179 $ % Total $24,087 $23,290 $ % Amounts in 000 s $8,000 $6,000 $4,000 $2,439 $2,518 Retail revenues were above budget, primarily for residential customers, due to greater use per customer. Other revenues were above budget due to customer fees and wheeling revenues $2,000 $595 $593 $511 $197 $201 $600 $0 Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Residential Commercial Industrial Street Light Other Revenue CDFUO Month $11,246 $10,293 $9,017 $9,167 $2,439 $2,518 $197 $201 $595 $511 $593 $600 YTD less current month $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total $11,246 $10,293 $9,017 $9,167 $2,439 $2,518 $197 $201 $595 $511 $593 $600 Unbilled change allocated to retail revenue classes. L--ES Striving to be the world's best energy company

84 ~ ~ Administrative & General, Operation & Maintenance and Other Expense January Operating expenses were below budget primarily due to (Excludes Power Cost) YTD Status (Amounts in Thousands) lower than anticipated transmission, consulting and SEP Actual Budget Variance % incentive payments partially offset by higher than Oper Exp less Power Cost $10,553 $11,355 $ % budgeted building maintenance expenses. Total $14,140 $14,657 $ % Amounts in 000 s $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $2,373 $2,896 $3,918 $4,256 $4, ~- - ~~ >----- >----- $4,203 $3, $3,302 > $1,500 $1,000 $500 >----- > >----- >----- $0 I I I I Actual Budget Actual Budget Actual Budget Actual Budget O&M A&G Depreciation Non Operating Expense (Income) Month $2,373 $2,896 $3,918 $4,256 $4,262 $4,203 $3,587 $3,302 YTD less current month $0 $0 $0 $0 $0 $0 $0 $0 Total $2,373 $2,896 $3,918 $4,256 $4,262 $4,203 $3,587 $3,302. L--ES Striving to be the world's best energy company

85 Net Power Cost is below budget due to the following: - $1,674 $5,000 $1,500 - ~--, $1,303 $1,353 $4, r~, > > $1, I I n 1 1 YTD Status (Amounts in Thousands) Wholesale Revenues are below budget due to Net Power Cost Actual Budget Variance % lower sales in the SPP IM. Net Power Cost = Purchased Power Power Cost $11,608 $11,802 $ % Power Cost is below budget due primarily to + Produced Power Wholesale Wholesale Revenue $ 2,977 $ 3,369 $ % lower than expected energy costs from LRS, Revenue SPP, WS3 and wind resources off set by Net Power Cost $ 8,631 $ 8,433 $ % higher than budgeted estimated O&M costs for WS4. Wholesale Revenue Power Cost $2,500 $2,000 $1,000 $500 $0 Amounts in 000 s Amounts in 000 s $7,000 Actual Budget Actual Budget SPP Sales $2,016 Contract Sales Month $1,674 $2,016 $1,303 $1,353 YTD less current month $0 $0 $0 $0 Total $1,674 $2,016 $1,303 $1,353 Wholesale sales revenue separated into SPP sales and contract sales. $6,000 $3,000 $2,000 $0 $506 $601 $5,913 $6,118 $5,189 $5,083 I I I Actual Budget Actual Budget Actual Budget Produced SPP Purchased Non Owned Power (Owned Power Asset Power Purchased Power Asset Power) Month $506 $601 $5,913 $6,118 $5,189 $5,083 YTD less current month $0 $0 $0 $0 $0 $0 Total $506 $601 $5,913 $6,118 $5,189 $5,083 Purchased power separated into SPP purchased power and non-owned asset power. L--ES Striving to be the world's best energy company

86 Change in Net Position (Net Revenue) 2018 $ Budgeted Change in Net Position (Net Revenue) = $5.9 Million $12.0 $7.0 (millions) $2.0 ($3.0) ($8.0) ($13.0) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2018 Actual $ Budget $0.20 $(1.34) $(3.44) $(7.27) $(9.94) $(8.17) $1.56 $8.39 $12.71 $11.37 $6.79 $5.88 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2018 Actual $ Budget $ 0.20 $ (1.54) $ (2.10) $ (3.83) $ (2.67) $ 1.77 $ 9.73 $ 6.83 $ 4.32 $ (1.34) $ (4.58) $ (0.91) L--ES Striving to be the world's best energy company

87 Debt Service Coverage & Fixed Charge Coverage Debt Service Coverage Year end Projection as of December X Budget 2.11X Fixed Charge Coverage Year end Projection as of December X Budget 1.57X Year-end Projection 2.11X X Target Year-end Projection 1.57X X X Benchmark Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec The Debt Service Coverage Ratio measures the ability of current year funds to cover current year debt service on long-term debt obligations. The Fixed Charge Coverage Ratio measures the ability of current year funds to cover current year debt service on longterm debt and capacity payments. L--ES Striving to be the world's best energy company

88 $10,000.0 $9,000.0 SIGNIFICANT CAPITAL PROJECTS- January 2018 $8,000.0 $7,000.0 (Amounts in Thousands) YTD Actuals YTD B d t Variance ~ $2,057.1 $5, $3, % $6, "' 0 C: l:'.l $5,000.0 C: ::, 0 E <t $4,000.0 $3,000.0 $2,000.0 $1,000.0 $0.0 LES Operations Laramie River Station SE Lincoln Duct Reliability UND Rebuilds Installation OH Rebuilds UG Relocations 120th & Alvo UND UND UND New Residential UND Feeders Commercial Residential Padmount Transformers Center Program Program Substation Development Extensions Extension YTD Actuals $71.2 $4.8 $366.3 $204.6 $95.5 $139.7 $121.0 $6.6 $78.6 $63.9 $180.0 $87.2 $177.8 $426.9 YTD Budget $133.3 $490.3 $1,981.4 $474.2 $350.9 $230.2 $208.3 $58.4 $147.4 $138.4 $175.1 $111.8 $100.0 $1, Budget $29,446.1 $17,601.2 $4,356.3 $4,546.1 $4,222.6 $2,876.7 $2,417.6 $2,390.0 $1,762.7 $1,658.0 $2,092.6 $1,341.7 $1,200.0 $14,578.1 Other Projects L--ES Striving to be the world's best energy company

89 Power Supply Division Jason Fortik February 16, 2018 Ver L-ES Striving to be the world's best energy company. les.com I

90 January 2018 Monthly - Actual vs. Budget - Non-owned Asset Power* $6.12 $5.91 Owned Asset Power $5.08 $5.19 Contract Sales** -$1.35 -$1.30 SPP IM Load Purchases SPP IM Market Revenue -$4.58 SPP Other*** Net $8.43 $8.52 -$6 -$4 -$2... Revenues $0 $2 Millions($) $4 $6 $8 Expenses----+ $10 $12 *Non Owned Asset Power does not include SPP IM Purchased **Contract Sales does not include SPP IM Revenue ***SPP Other includes Over Collected Losses and ARR s/tcr 11 Budget Iii Actual 2

91 90 January 2018 Daily Temperature Range 70 :!: 50 QI..c C QI.....c u.. "' = w Ill 30 QI QI... - I': tl.0 QI C...., p I': n ~ r.::: - i r;:::.i ~ 10 f----li---- rt Monthly Low -20 F.. I..,-. ~ Monthly High 54 F C QI "'C ::I ;: C C QI "'C ::I 1u ;: C C QI "'C ::I 1u ;: C C QI "'C ::I 1u ;: C C QI "'C 0 ::I QI..c u.. ::I 0 ::I QI..c u.. ::I 0 ::I QI..c u.. ::I 0 ::I QI..c u.. 1u ::I 0 ::I QI 2 I- s I- 1/'l 1/'l 2 I- s I- 1/'l 1/'l 2 I- s I- 1/'l 1/'l 2 I- s I- 1/'l 1/'l 2 I- s I Da ily Range - Normal Low - Normal High 3

92 January 2018 Loads 700 -~ ~ Actual= 601 MW 600 J Forecasted = 574 MW i o - 4

93 January 2018 Customer Energy Consumption , :c S 200 C, so o Budget 2018 Actual 5

94 -~ WS3 Unit Equivalent Availability , _ L: -_-_-_-_-_-.. -_-_-_-_-_-_-... -_-_-_-_-_-_- -_-_-_-_-_- - -_-_-_-_-_- -_-_-_-_-_-_-... -_-_-_-_-_-_-.. -_-_-_-_-_-_- -_-_- WS4... -_-_-_-_-_- - GGSl GGS2 LRS 1 Rokl C: Rok2 => Rok3 TBGSl TBGS2 TBGS3 TBGS4 LFGTE January 2018 J St % 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Available Limited Scheduled Outage Forced Outage 6

95 January 2018 Resource Energy 16,000 14,000 12,000 10,000.s::. ~ 8,000 ~ 6,000 4,000 2, ~~ ~~~4~~ ~~~4~~ ~~~4~~ ~~~4~~ ~ LRS_l TB_2 lil J_St. GGS_l TB_3 WAPA Peaking ' WS3 BS Iii W ind PPA WWS4 RO<l LFGTE Iii WAPAFirm Iii ROK2 II TB_l ROK3 7

96 January 2018 Peak Load Day , 15, , January ~ ~ 700 Actual = 601 MN Hour GGS_ l GGS_ 2 LRS TB_3.. : TB_4 LFGTE Wind PSA iiiiiiiiiiiiil W ind PPA WAPA Firm WS3 - ROKl WS4 liiiiiiiiiiiiil ROK 2 WAPA Peaking - TB_l T B_2 ROK 3 J_St. Peak Day Load 8

97 January 2018 Energy Offered to SPP IM - Approximate (Fuel Type) Energy Utilized by SPP IM - {Fuel Type) Renewable 22% iii Coal 37% Renewable Coal 56% Oil & Gas 41% Oil & Gas 2% Note: Total percentage may not add up to 100% due to rounding 9