InvenergyBeech Ridge Wind Farm

Update

West Virginia Wind Working Group – September 18, 2007

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Invenergy

Invenergy Wind - Corporate

Overview Developer, owner and operator of large-scale wind power

generation projects in North America and Europe.

One of the ‘top 5’ wind energy developers in North America based on projects over built the last two years.

More than $1.5 billion in wind energy projects (over 1,000 MW) in operation and late stage construction.

Secured 1,300 MW of wind turbines from GE for 2007 & 2008 build program in the U.S.

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Beech Ridge Wind Farm

Northwestern Greenbrier County

Proposed 186 MW facility

124 GE 1.5 turbines (77 meter rotors)

Key landowner: MeadWestvaco

Target Schedule PSC Siting Certificate: August 2006 Start Construction: April 2007 Start Operations: December 2007

Expected Output: 570,000,000 kwh/yr

Economic Impacts $300,000,000 investment 200+ construction jobs 15-20 permanent jobs $400,000 /yr property taxes $200,000 / yr B&O taxes

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Beech Ridge Opposition

Anti-Wind MCRE CRW

Tourism The Greenbrier & Sporting Club Greenbrier Co. CVB

Elected Officials US Rep. Mollohan WV Senator Guills WV Delegate Canterbury WV Delegate Campbell Lewisburg Mayor Manchester

Numerous Local Citizen Organizations Greenbrier River Watershed Association Williamsburg VFW Williamsburg Ruritan etc…

Grassroots 2,000+ letters of opposition

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Beech Ridge Supporters

Labor (ACT)

Industry WV MFA WV Forestry Association

Environmentalists Sierra Club Coal River Mountain Watch

Local Government Rainelle, Rupert, Quinwood,

Richwood Greenbrier Co. Commissioners

Grassroots 700+ letters of support

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January 2007 PSC Order Key Finding: Granted Certificate for all 124 turbines 18 Pre-Construction Conditions, including

Compliance with USFWS, DNR, SHPO Decommissioning Minimum property tax guaranty Compliance hearing and affirmative PSC confirmation

11 Post-Construction Conditions, including 3 years of bird and bat studies

Technical Advisory Committee Mortality Monitoring Adaptive Management Testing

Minimal lighting No aerial herbicide spraying

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2005 November – Submitted Application

2006 April – Public Hearings (Fairlea) May – Evidentiary Hearings August – PSC Order

2007 January – Final PSC Order (Reconsideration Denied) February – Supreme Court Appeal April – Supreme Court Agrees to Hear Appeals Summer – Supreme Court Briefs Fall – Supreme Court Hearing Winter – Supreme Court Decision

WV PSC Permitting Timeline

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Appelees: Alicia and Jeffrey Eisenbeiss Mountain Communities for Responsible Energy

Appelants Public Service Commisssion of West Virginia Beech Ridge Energy LLC WV State Building and Construction Trades Council, AFL-CIO

Amicus Curiae MeadWestvaco Corporation Tom Vance Appalachian Power Company Utility, Telecommunications, and Energy Coalition of West Virginia West Virginia Oil and Gas Association West Virginia American Water Company

WV Supreme Court Appeal

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Potential Appeal Outcomes

Application Dismissed Beech Ridge reapplies

Order Remanded to PSC New PSC Order Eligible for reconsideration and appeal

Order Upheld Pre-Construction Compliance Eligible for reconsideration and appeal

InvenergyS.B. 441 –Implications for Wind

Energy

West Virginia Wind Working Group – September 18, 2007

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Senate Bill 441: Background

May 2001 Legislation B&O Taxes

Set “capacity factor” for wind at 5% Property Taxes

In West Virginia, pollution control equipment is taxed at salvage value – 5% of appraised value.

Classified wind turbines and towers as pollution control equipment.

Resulted in most of a wind project being valued at “salvage value”

2006 Sessions Governor’s Tax Modernization Project

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Business & Occupation Taxes

Applies to Industries Regulated by PSC Based on nameplate capacity Base rate of $22.78 per kilowatt Note: $20.70 rate for coal plants using

desulfurization technology Adjusted by legislated “capacity factor”

Fuel Old CF New CF Coal 40% 40% Wind 5% 12% Peaker 5% 5%

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Governor’s Original B&O Tax Proposal

Raise B&O Taxable Capacity Factor for wind (and only wind) to 20% Four times the effective B&O tax burden $170,000 in additional taxes per 100 MW Would have resulted in wind paying

50% more per MWh produced than coal-fired electricity and

300% more per MWh than gas-peaker fired electricity.

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B&O Taxes under Senate Bill 441

Coal-Fired Plant Wind Plant (Old System) Wind Plant (SB 441)Nameplate Capacity (KW) 100,000 100,000 100,000 Taxable Capacity Factor 40% 5.0% 12.0%Taxable Capacity (KW) 40,000 5,000 12,000

Base B&O Tax Rate* 20.70$ 22.78$ 22.78$ B&O Tax 828,000$ 113,900$ 273,360$ Tax Credits 414,500$ 57,450$ 137,180$

Net Tax Due 413,500$ 56,450$ 136,180$

Efficiency (%) 90% 30% 30%Annual Output (kWh) 788,400,000 262,800,000 262,800,000Tax / kWh 0.0005$ 0.0002$ 0.0005$ Tax / MWh 0.52$ 0.21$ 0.52$

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B&O Taxes under Senate Bill 441

B & O Tax Comparison

$0.52

$0.21

$0.52

$- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60

Coal-Fired Plant

Wind Plant (Old System)

Wind Plant (SB 441)

B & O Tax / MWh

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Property Tax (Old System) Pollution Control /Salvage Value

(as % of Capital Cost) Coal = 33% Wind = 85%

Appraised Value (as % of Capital Cost) Coal = 69% Wind = 19%

Assessed Value (60% of Appraised Value) Coal = 41% Wind = 12%

Property Tax Burden (per MWh generated) Coal = $1.96 Wind = $1.65

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Governor’s Property Tax Proposal

Eliminate classification of wind turbines as pollution control equipment Raises property tax burden to more than

five times then current payments Increases annual property tax burden

approximately $2,000,000 per 100 MW (20-year average)

Results in wind paying 50% more than coal per dollar of capital cost 400% of what coal pays per MWh produced

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Gov’s Proposal Would Have Made WV Uncompetitive with Neighboring States

Average Annual Property Taxes for Mid-Atlantic States with Operating or Permitted Wind Farms

(based on a typical 150 MW wind plant)

$0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000

MD

PA

TN

WV (current)

WV (Governor's Proposal)

Sta

te

Average Annual Taxes ($)

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Property Taxes Under S.B. 441 Capped percentage of wind facility

assigned salvage value at 79% Impact varies depending on percent of

facility costs originally eligible for salvage valuation

Should result in wind paying more property taxes per MWh than coal

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Property Taxes Under S.B. 441Hypothetical Cap Salvage @ 79%

Coal-Fired Plant Wind Plant (Old System) Wind Plant (SB 441)

% Pollution 33% 85% 79%% Non-Pollution 67% 15% 21%

Reduced Value 5% 5% 5%Appraised Value 69% 19% 25%Assessed Value - 60% 41% 12% 15%

Fair Market Value 300,000,000$ 300,000,000$ 300,000,000$ Pollution Abatement 99,000,000$ 255,000,000$ 237,000,000$ Non-Pollution 201,000,000$ 45,000,000$ 63,000,000$

Appraised Value 205,950,000$ 57,750,000$ 74,850,000$ Assessed Value - 60% 123,570,000$ 34,650,000$ 44,910,000$

Tax @ 2.25%* 2,780,325$ 779,625$ 1,010,475$

Capacity (MW) 180 180 180Efficiency (MWh / year) 90% 30% 30%Annual Output (MWh) 1,419,120 473,040 473,040Tax / MWh 1.96$ 1.65$ 2.14$ % of Previous Tax Burden 119% 100% 130%* Hypothetical tax rate, actual rates will vary by County

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Property Taxes Under S.B. 441

Property Tax Comparison

$1.96

$1.65

$2.14

$- $0.50 $1.00 $1.50 $2.00 $2.50

Coal-Fired Plant

Wind Plant (Old System)

Wind Plant (SB 441)

Tax Burden Per MWh Generated