Renewable RFP Process Update

September 26, 2007

Renewable RFP Process Update

September 26, 2007

2

BackgroundBackground

Renewable RFP issued – February 2007

Responses received – April 2007

Responses reduced to short-list – July 2007

Due diligence – July/August

Contract negotiations – August/September

Renewable RFP issued – February 2007

Responses received – April 2007

Responses reduced to short-list – July 2007

Due diligence – July/August

Contract negotiations – August/September

3

Responses to RFPResponses to RFP

23 Projects proposed by 17 developers Two projects from outside Kansas

All responses were wind energy projects

Per MWh prices ranged from ~$35 - $70

Proposals were for both ownership and PPA’s

23 Projects proposed by 17 developers Two projects from outside Kansas

All responses were wind energy projects

Per MWh prices ranged from ~$35 - $70

Proposals were for both ownership and PPA’s

4

Review TeamReview Team

Greg Greenwood, Team Leader

Westar Energy employees from the following areas: Generation resource planning Environmental Finance Transmission Legal Regulatory

HDR Engineering

Black & Veatch

Les Evans, KEPCO, VP Power Supply

Alan Pollom, The Nature Conservancy

Greg Greenwood, Team Leader

Westar Energy employees from the following areas: Generation resource planning Environmental Finance Transmission Legal Regulatory

HDR Engineering

Black & Veatch

Les Evans, KEPCO, VP Power Supply

Alan Pollom, The Nature Conservancy

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Evaluation Criteria to Make Short-ListEvaluation Criteria to Make Short-List

Public/Community Acceptance

Environmental Compatibility/Acceptance

Credit Risk

Levelized Cost -Revenue Requirements (PPA or Ownership)

Transmission Upgrade Costs

Wind Turbine Equipment Evaluation

Developer Experience

Public/Community Acceptance

Environmental Compatibility/Acceptance

Credit Risk

Levelized Cost -Revenue Requirements (PPA or Ownership)

Transmission Upgrade Costs

Wind Turbine Equipment Evaluation

Developer Experience

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Short-list ProcessShort-list Process

Seven projects remained after initial screening process

Short-list project developers invited to half-day due diligence sessions in Topeka

Refined selection criteria used to reduce short-list to 500 MW’s to begin negotiations

Seven projects remained after initial screening process

Short-list project developers invited to half-day due diligence sessions in Topeka

Refined selection criteria used to reduce short-list to 500 MW’s to begin negotiations

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Evaluation Criteria - Short-List to NegotiationsEvaluation Criteria - Short-List to Negotiations

Environmental Analysis/ Public Acceptance 5%

Production Tax Credit Certainty 5%

Credit Risk 5%

Levelized Cost -Revenue Requirements (PPA or Ownership) 35%

Transmission Costs 15%

Developer Construction Experience 10%

Wind Turbine Equipment Evaluation 15%

Developer Interview 10%

Environmental Analysis/ Public Acceptance 5%

Production Tax Credit Certainty 5%

Credit Risk 5%

Levelized Cost -Revenue Requirements (PPA or Ownership) 35%

Transmission Costs 15%

Developer Construction Experience 10%

Wind Turbine Equipment Evaluation 15%

Developer Interview 10%

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Selection ProcessSelection Process

Absolute project score did not always determine projects selected due to:

Transmission constraints

Wind diversity goals

Excess turbine diversity

Other

Absolute project score did not always determine projects selected due to:

Transmission constraints

Wind diversity goals

Excess turbine diversity

Other

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Ownership vs. PPAOwnership vs. PPA

Our analysis showed little cost difference to customers

Ultimate answer to economics question can’t be known today

Our conclusion - - Diversity of ownership reduces risk for Westar and its customers

Targeting ~50% ownership, 50% PPA’s in 500 MW portfolio

Our analysis showed little cost difference to customers

Ultimate answer to economics question can’t be known today

Our conclusion - - Diversity of ownership reduces risk for Westar and its customers

Targeting ~50% ownership, 50% PPA’s in 500 MW portfolio

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Contract NegotiationsContract Negotiations

Negotiating with four developers currently for 500MW of Wind

Contracts near completion - - But not complete

Filing for predetermination of rate treatment planned no later than October 1st

KCC decision requested by yearend

Negotiating with four developers currently for 500MW of Wind

Contracts near completion - - But not complete

Filing for predetermination of rate treatment planned no later than October 1st

KCC decision requested by yearend

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Wind RFP HighlightsWind RFP Highlights

Cost per MWh (levelized) ranged from $35 - $70 Selected 500 MW portfolio – low $40’s/MWh Costs exclude dispatch inefficiency and assumes

PTC’s are extended

300MW’s of wind energy currently scheduled to be online in 2008

Public announcement of specific projects expected soon

Cost per MWh (levelized) ranged from $35 - $70 Selected 500 MW portfolio – low $40’s/MWh Costs exclude dispatch inefficiency and assumes

PTC’s are extended

300MW’s of wind energy currently scheduled to be online in 2008

Public announcement of specific projects expected soon