Colorado Springs UtilitiesDrew A. Rankin, General Manager Energy Supply

Agenda

Where We Have BeenOur History - Citizen-Owned Utility

Where We AreAchieving a Critical Balance

Looking AheadA Vision for TomorrowPilot Scrubber Project

Where We’ve Been

1905: Manitou - Hydro

1925: Drake - Coal 1980: Nixon Coal

1953: Birdsall – Oil/natural gas 1925: Ruxton - Hydro

1900 1910 1920 1930 1940 1950 1960 19701980

1924: Citizens vote for municipal utility

Where We’ve Been

1997: Tesla Hydro

2003: Front Range – Natural Gas 1989: Begin WAPA Hydro

2010: Cascade Hydro

1980 1990 2000 2010

2005: Manitou Hydro Expansion

2011: USAFA Solar

Current Electric Power SourcesCapacity Energy Output

Total: 1,095 MW summer Record peak: 863 MWAugust 2007

Doing the Right ThingDemonstrate

Corporate ResponsibilityRelationships

Community CommitmentCustomer ServiceCommunication

Environmental Stewardship

Plan and Execute for the Future

ReliabilitySafety

Reliability and QualityRegulatory

Maintain Financial Stability

RatesBond Ratings

Fixed Cost CoverageDays of CashDebt Ratio

Customer Cost/Value

Critical Balance

Customer Satisfaction Drivers

JD Power & Associates, 2010. Residential

Looking Forward – Our Questions

What is our unique fingerprint as a community with respect to the environment?

How do we bring together all the diverse stakeholder views and draw out the best ideas in service of a common goal?

What does success look like for Colorado Springs with electric energy in 2020?

Given the challenges we are facing, what portfolio mix best positions us for that success?

A Vision for TomorrowA Starting Place

Draft Vision:

By 2020, Colorado Springs Utilities will provide20% of its total electric energy through renewable sources, reduce average customer use by 10% and maintain a 20% regional cost advantage.

A Vision for Tomorrow Renewable Facilities

Hydroelectric ManitouRuxtonTeslaWAPA Cascade Total local generation (35.4 MW)WAPA (121 MW)

SolarCustomer Rebates* Net meteringAir Force Academy - 2011(5.2 MW)

Woody Biomass – 2012(20 MW)

20 MW

*2005-2010, 119 projects, 661 kW

A Vision for Tomorrow 20% Renewables Potential

Sludge to Energy

Concentrated Solar

Geothermal

Municipal Waste

High-Tech Wind

Solar

A Vision for Tomorrow Energy Reduction– Reduce Customer Use by 10%Price optionsIncentives and rebatesSmart Grid applicationsDemand responseRegulatory

Appliance standards Building codes

Load controlNew technologies

Annual residential use per customer in Kwh

A Vision for TomorrowExisting Cost Advantage

PSCo Mountain View Black Hills Energy

Colorado Springs Utilities

June 2010 Monthly Power Cost – Residential - 600 kWh

Currently 21% lower than average of the other three electric utilities

A Vision for TomorrowConclusionsColorado Springs Utilities has offered

value to citizens for over 85 years:Local ownershipReliable electricityCompetitive costCompliance and beyond with

environmental standardsWe have a unique opportunity to

address the energy challenges ahead in a way that positions our community to thrive

We must maintain the critical balance.

A Vision for TomorrowConclusionsA diverse portfolio continues

to offer the best blueprint for tomorrow

An energy vision can bring us together and be a rallying point for future success

Collaboration and innovation are key to meeting the challenges of tomorrow

We must move forward together as a community, region, and industry to build the future now

Pilot Scrubber Project

Using a Public-Private PartnershipDesign, Test, and Implement a Solution to

Present and Future Power Generation Technology Emission Challenges in

Maintaining Low Cost, Reliable, and Higher Quality Environmental Performance.

Serendipity – DOD Meets CSU Neumann Systems Group

Colorado Springs BasedDOD Research and Development Contractor

NeuStreamNSG Subsidiary to Help Solve Emission ChallengeCross Application of Proprietary Technology

CSU Presentation and Assessment“Too Good To Be True” Lab Test and PropositionEngage Slip Stream Testing

Three (3) Phases – 0.13 MWe – 2.0 MWe – 20 MWe

NeuStreamTM Modular Architecture2 MW Scrubber 60 MW System

20.7 FT

28 FT18 FT

PUMP

HOUSE

WATER

TREATMENT

SYSTEM

SORBENTSTORAGETANK

SORBENT FEEDPLENUM

HEX

FLUE GAS FLOW

SORBENT FLOW

SORBENT FLOW

121in

40in

FLUE GAS IN

CLEAN FLUEGAS OUT

TOP

JET PACKZONE

56 in

FRONT

FLUE GAS FLOW

15in

DEMISTER

SIDE

FLUEGAS FLOW

2 MWScrubberx 10x 3

DEMISTER

SORBENT SPRAY

Half the Size – Half the Cost – Superior Performance

30% Design Study ResultsOperational Performance

Financial Performance

Present Value Savings

Reduction from Conventional

Drake Unit 6 73,000,000$ 49%

Drake Unit 7 74,000,000$ 36%Total 147,000,000$ 43%

Equitable Comparison to Previous Study

Parameter NeuStream TM Conventional Relative Comparison% SO2 Removal > 90% - Up to 97% 90% SuperiorMercury Removal > 90% Impacts Current SuperiorParasitic Power 1x 2x SuperiorWater Usage 1x 2x SuperiorSaleable By Products Yes No SuperiorIncrease in Visible Plume Frequency 1% 2% Superior

Critical Parameter Equitable Comparison to Previous Study

Current Status and Next StepsContinuing 20 MW Pilot Stress Testing

>90% Removal97% Availability

Draft EPC Contract Drake 6 and Drake 7 97% Removal Design

EPRI Independent Assessment Report – November 1

Execute EPC ContractContinue Testing for NOx and CO2Market DevelopmentFundamentally Improve Emissions