Navajo Generating StationOwners Initial Proposal

Long Term Emissions Control PlanJanuary 21, 2011

Plant Overview• Three units placed

in service 1974 to 1976

• 750 MW each unit• 2250 MW total• 500 KV switchyard

and transmission• Located on Navajo

reservation• Coal from nearby

Kayenta mine

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Ownership

Entity

Percent Ownership

(%)

Capacity Ownership

(MW)

1 USBR 24.3 546.6

2 SRP 21.7 488.3

3 LADWP 21.2 477.0

4 APS 14.0 315.0

5 NV Energy 11.3 254.3

6 TEP 7.5 168.8

Total 100.0 2250.03

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Navajo & Hopi Annual Economic Benefits (Plant and Mine)

• Navajo Nation• Royalties, Permits, Leases, Etc. $ 41M• Wages, Scholarships, Donations $ 96M

Total $137M

• Hopi Tribe • Royalties, Scholarships, Etc. $12.2M

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Employment

• NGS • 540 full-time employees

− 81% Native American

• Several hundred part-time employees during major maintenance

− Approximately 90% Native American

• Kayenta Mine• 415 full-time employees

− 90% Native American

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Objectives

• Ensure the continued long-term safe, reliable and economical operation of the Navajo Generating Station

• Comply with all environmental requirements

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EPA Rulings Expected

Key Challenges

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Co-Tenancy ExpiresLADWP Withdraws

Lease Expires323 Grants Expire

Coal Contract ExpiresTransmission Contracts Expire

LADWP Seeks Withdrawal

Environmental

Critical Agreements

Ownership

Equipment Installation

Requirement Expected

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Water Service Contract Expires

Environmental • Existing environmental controls

– Electrostatic precipitators (ESP’s) to control fly ash

– SO2 scrubbers (wet) installed in the nineties

– Low NOx Burners being installed now• Units 2 & 3 complete; Unit 1 in 2011

• Environmental controls have significantly reduced emissions– ESP’s capture 99% of fly ash emissions

– SO2 emissions reduced by 90%

– NOx emissions will be reduced by 40%

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Proposal• Complete the voluntary installation of Low NOx

Burners with Separated Over Fire Air by Dec. 2011– NOx reduction of 12,618 tons/year– $45 million

• Establish a “Visibility Improvements” Fund– NGS to contribute $3 million per year– Illustrative Uses

• Non-Fire forest management• Revegetation of high dust areas• Soil stabilization of dirt roads• Electric or natural gas buses

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Proposal (Continued)• Install Technology to reduce annual average

NOx emissions to 0.08 lb/MMBtu– Unit 3 by 12/31/2027– Unit 2 by 12/31/2028– Unit 1 by 12/31/2029

• Maintain a plant wide annual average NOx emission rate of not more than 0.08 lb/MMBtu starting in 2030

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Back-up Slides