FYI - Can you help Ron sort through these issues. With OPPD's cooperation, we can easily overcome these issues and make May 02 in-service for 150 MW of rented diesel generation installed at OPPD distribution substations.
---------------------- Forwarded by Kevin M Presto/HOU/ECT on 05/02/2001 03:23 PM ---------------------------

Ron Tapscott
05/02/2001 02:48 PM
To: Kevin M Presto/HOU/ECT@ECT
cc: Ben Jacoby/HOU/ECT@ECT
Subject:

Kevin,

A month ago you asked me to investigate a possible physical solution for the OPPD position. This was subsequently put on hold as a result of other discussions mid-market was pursuing with OPPD (I believe a buyout for years 1 and 2 of the contract). Around April 19 (just before my trip to Japan for negotiations with MHI on the 501F purchase) you indicated that discussions with OPPD had stalled and you wanted me to continue investigating a physical option. Based on our continued review, here are are a couple of items you need to be aware of --

Regulatory approvals are onerous in Nebraska. Example -- Under an Opinion Letter issued by the Nebraska Attorney General, a private electrical power generator can construct a plant in Nebraska but cannot provide power to a public power's existing customer unless the Nebraska Power Review Board grants an exception (only to the public power's in Nebraska). It is my understanding that this has never been granted to date (no precedent). Pre-construction approval will still be required from the Nebraska Power Review Board (even if these parameters are met).
Currently, we have one site with land rights (owned by NNG). The other sites would require easements (if we decided to build on 3 sites per discussion in the next bullet).
Emission thresholds (minor source) limits a block of recip engine gen sets on diesel fuel to 12 MW. The limit goes to about 50 MW with this equipment on natural gas (only 50 psig needed). Therefore, if this equipment were used at Omaha, we would need to develop at least three sites to get to 150 MW.
According to those who are investigating these types of solutions suggest that availability of the equipment based on the configuration noted above will be difficult (if not impossible) to acquire by the 2002 timeframe.

I have contacted OPPD and they are willing to assist us in this effort but want to know more details. I initially intended to address this position with one site but as you can see this will be next to impossible given the above discussion. Do you want me to continue pursuing this initiative?

Your input would be appreciated. Thanks, Ron.