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UTILITY COMMITTEE AGENDA August 10, 2009 - 5:00 P.M. - Council Chambers - City Hall - City of Dover Public comments are welcomed on any item and will be permitted at appropriate times. When possible, please notify the City Clerk (736-7008 or e-m ail at Tm cdowell@dover.de.us) should you wish to be recognized. AGENDA ADDITIONS/DELETIONS 1. Green Energy Fund Grants - Reduction in Matching Funds 2. Update on Federal Energy Stimulus Funds 3. PACE/NAES Monthly Report (June) 4. Adjournment by 5:55 P.M. /tm S:\ClerksOffice\PACKETS\2009\Committee\UTILITY\08-10-2009\08-10-2009 UTILITY.wpd THE AGENDA ITEMS AS LISTED MAY NOT BE CONSIDERED IN SEQUENCE. THIS AGENDA IS SUBJECT TO CHANGE TO INCLUDE THE ADDITION OR THE DELETION OF ITEMS, INCLUDING EXECUTIVE SESSIONS.

ACTION FORM PROCEEDING: Utility Committee AGENDA ITEM NO.: DEPARTMENT OF ORIGIN: Public Utilities – Electric DATE SUBMITTED: 7-29-09 PREPARED BY: Ron Lunt, Public Utilities Director SUBJECT: Green Energy Fund Program – Reduction in Matching Funds REFERENCE: N/A RELATED PROJECT: N/A APPROVALS: City Manager EXHIBITS: Green Energy Program Grant Fact Sheet and Fund Summary EXPENDITURE REQUIRED: N/A AMOUNT BUDGETED: N/A FUNDING SOURCE (Dept./Page in CIP & Budget): TIME TABLE: Effective upon Council Approval. RECOMMENDED ACTION: Staff recommends adopting the “NEW POLICY” changes outlined in the two tables below for the Photovoltaic and Wind Green Energy Fund Program. BACKGROUND AND ANALYSIS The State of Delaware adopted The Delaware Energy Act which includes a Green Energy Fund Program whereby electric customers of the City of Dover contribute funds to the program to financially support the installation of renewable energy resources and promote the use of energy efficiency technologies. This program is administered by the Delaware Municipal Electric Corporation (DEMEC) for the municipal providers in the state, including the City of Dover. Within this Green Energy Fund Program there are Grant limits (percentage of payment and total payment) for the installation of qualifying technologies. Staff is suggesting that the City of Dover modify the percentage of the grant payment and the total grant limits be modified to ensure that funds are available for the most potential Grant requesting parties for the Photovoltaic and Wind systems. This financial pressure is confirmed through the attached Fund Summary with shows that the program has a negative balance which may cause extended waiting lists unless we proactively address this issue. Since Dover ratepayers’ average monthly contribution to the fund is approximately $10,000 it is not inconceivable that a waiting list could occur very quickly, which most other utilities have already experienced (the State and DEC applicants are both experiencing approximately 2 year waits). It is noteworthy that, effective May 1, 2009, the State of Delaware changed their percentage of contribution to 25%, Delaware Electric Cooperative changed theirs to 33.33% effective February 1, 2009, and DEMEC changed all other municipal providers, except Dover, to 33.1/3% effective June 24, 2009. This suggested change is due to two (2) new developments. First, the customers now have a Federal Tax Credit available to them that could provide approximately 30% of the cost directly to them through this tax credit. Secondly, a change to the Net Metering Policy mandates that the customers retain excess generated kilowatt-hours (kWh) and require that the City of Dover pay the customer for these excess kWh at the end of the calendar year at the appropriate rate. This change will financially encourage customers to install larger systems than they require for their own use and could put further pressure on our limited funds. These are the suggested changes to the City of Dover Green Energy Fund Program for both the Photovoltaic and Wind Grants: 1. Non-Residential Green Energy Program EXISTING POLICY NEW POLICY Contribution Percentage Grant Limit Contribution Percentage Grant Limit 50% $30,000 25% $15,000 2. Residential Green Energy Program EXISTING POLICY NEW POLICY Contribution Percentage Grant Limit Contribution Percentage Grant Limit 50% $15,000 25% $7,500

FUND SUMMARY Total Collected $ 391,730.28 State Admin Fee Paid $ 1,905.00 Grants Paid $ 215,582.50 Grants/Fees Reserved $ 153,125.00 Energy Depot Paid $ 16,290.65 Efficiency Programs Paid $ 14,052.53 Demand Side Paid $ - *Funds Available $ (9,225.40) * Once DEMEC receives June 2009 Energy Deposit this should be close to zero. GRANTS PAID Grant Amount Date Grant Paid Applicant Address Type Paid 9/21/2007 Laura Drew Kelly 109 Stuart Drive, Dover, DE 19901 Geo - Res $ 3,000.00 12/5/2007 Domingo Reye 129 Beth Place, Dover, DE 19901 Solar - Res $ 12,762.50 4/16/2008 Lakeland Commercial Group 1695 South State Street Geo - Comm $ 10,800.00 6/19/2008 & 08/25/2008 L.D. Shank - Triad Farms 999 Longpoint Rd, Dover, DE 19901 Solar - Comm $ 30,000.00 10/6/2008 City of Dover Administration Building Solar - Comm $ 40,820.00 10/21/2008 Robert & Cynthia Hartman 35 Lotus St, Dover, DE 19901 Geo HP- Res $ 1,800.00 10/21/2008 Robert Varipapa 101 Stuart Drive, Dover, DE 19901 Geo HP- Res $ 2,400.00 2/27/2009 David Jump 263 S. Shore Drive Solar - Res $ 15,000.00 2/27/2009 Jakob Seren 915 Buck Drive, Dover, DE 19901 Solar - Res $ 15,000.00 2/27/2009 William Sweet 2403 S. State Street, Dover, DE 19901 Solar - Res $ 15,000.00 3/31/2009 LD Shank - Triad Farms 999 Longpoint Rd, Dover, DE 19901 Solar WH-Comm $ 3,000.00 3/31/2009 Warren & Joan Seaver 3619 Bayside Dr, Dover, DE 19901 Geo HP- Res $ 3,000.00 4/22/2009 William Sweet 2403 S. State St., Dover, DE 19901 Solar HW $ 3,000.00 4/28/2009 State of DE/DNREC - DE National 818 Kitts Hummock Rd, Dover, DE 19901 Solar - Comm $ 30,000.00 4/29/2009 Delaware Primary Care, LLC 810 New Burton Rd St 3, Dover, 19904 Solar - Comm $ 30,000.00 Total $ 215,582.50

PENDING APPLICATIONS Grant Date Reserved Applicant Address Type Reservation 3/12/2009 D.Brian Beckman 53 Pleasanton Drive, Dover, DE 19901 Geo HP- Res $ 2,000.00 3/20/2009 City of Dover Library Geo HP $ 60,000.00 4/13/2009 NCALL 363 Salisbury Road, Dover 19904 Solar - Comm $ 30,000.00 5/1/2009 James Grilli 2017 Highland Ave, Dover, 19901 Geo HP- Res $ 1,800.00 5/11/2009 LSKC Dover, LLC 105 Mont Banc Blvd., Dover, 19904 Solar - Comm $ 29,925.00 5/11/2009 Mark F. Boller 80 Sipple, Dover, 19901 Geo HP- Res $ 3,000.00 7/27/2009 John Welgan 222 N. State Street, Dover, 19901 Solar - Res $ 15,000.00 7/27/2009 Dewey J. Barich 5470 Bayside Drive, Dover, 19901 Geo HP- Res $ 2,400.00 Payable/Committed Fees $ 9,000.00 $ 153,125.00 ENERGY DEPOT FEES 3/3/2008 Start-up Fees $5,872.50 4/15/2008 Start-up Fees $1,957.50 4/15/2008 Mar, Apr, May 2008 $1,692.13 7/22/2008 June, July, Aug 2008 $1,692.13 10/10/2008 Sept, Oct, Nov 2008 $1,692.13 1/2/2009 Dec 08, Jan, Feb 2009 $1,692.13 4/3/2008 Mar, Apr, May 2009 $1,692.13 Total Paid $16,290.65 ENERGY EFFICIENCY CAMPAIGNS/EDUCATION PROGRAMS 1,500 CFL Campaign & 10/21/2008 Educational Literature $5,012.29 12/11/2008 Reimbursement for Green $3,459.12 3/31/2009 Thermal Imager for Home Audits $5,581.12 Total $14,052.53

City of Dover June Monthly Report Energy and Operations Management July 16, 2009 This Report was produced by Pace Global Asset Management, LLC (“Pace Global”) and is meant to be read as a whole and in conjunction with this disclaimer. Any use of this Report other than as a whole and in conjunction with this disclaimer is forbidden. Any use of this Report outside of its stated purpose without the prior written consent of Pace Global is forbidden. Except for its stated purpose, this Report may not be copied or distributed in whole or in part without Pace Global’s prior written consent. This Report and the information and statements herein are based in whole or in part on information obtained from various sources as of June, 2009. While Pace Global believes such information to be accurate, it makes no assurances, endorsements or warranties express or implied, as to the validity, accuracy or completeness of any such information, any conclusions based thereon, or any methods disclosed in this Report. Pace Global assumes no responsibility for the results of any actions and inactions taken on the basis of this Report. By a party using, acting or relying on this Report, such party consents and agrees that Pace Global, its employees, directors, officers, contractors, advisors, members, affiliates, successors and agents shall have no liability with respect to such use, actions, inactions, or reliance. This Report does contain some forward-looking opinions. Certain unanticipated factors could cause actual results to differ from the opinions contained herein. Forward-looking opinions are based on historical and/or current information that relate to future operations, strategies, financial results or other developments. Some of the unanticipated factors, among others, that could cause the actual results to differ include regulatory developments, technological changes, competitive conditions, new products, general economic conditions, changes in tax laws, adequacy of reserves, credit and other risks associated with City of Dover and/or other third parties, significant changes in interest rates and fluctuations in foreign currency exchange rates. Further, certain statements, findings and conclusions in this Report are based on Pace Global’s interpretations of various contracts. Interpretations of these contracts by legal counsel or a jurisdictional body could differ. over 25 Website: www.paceglobal.com Washington New York Houston Columbia San Diego London Moscow Mexico City

TABLE OF CONTENTS 1.0 - Executive Summary.....................................................................................................................2 2.0 - Budget Report..............................................................................................................................6 2.1 – Variance Report ..................................................................................................................6 2.2 – Variance Analysis...............................................................................................................8 3.0 – Energy Management...................................................................................................................9 3.1 - Purchased Power .................................................................................................................9 3.2 - Generation Management ...................................................................................................12 3.3 - Emissions and Allowance Management............................................................................19 4.0 – Operations Management..........................................................................................................21 Appendices..........................................................................................................................................36 I. PJM Invoice Breakdown....................................................................................................36 II. Load, All In Energy and all in cost of service table ..........................................................37 III. Glossary ........................................................................................................................38 1 Dover Monthly PGAM Report June 2009 - Final

1.0 - EXECUTIVE SUMMARY All In Unit Energy Cost - Actual v Budget Generation MWh's: Actual v Budget Actual Load vs Budget Load 12,500 $96 100,000 $94 10,000 75,000 $92 $90 7,500 MWh MWh 50,000 $ /M W h $88 5,000 $86 25,000 $84 2,500 $82 0 $80 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Budget Gen Actual Gen Budget Actual Budget ($/MWh) Actual ($/MWh) Budget WA Actual WA Purchased Power Management Wholesale load for the month of June was 63,881 MWhs versus a three year historic weather normalized load of 72,496 MWhs. Hedged transactions accounted for 66,400 MWhs or 104% of this volume (92% of forecasted load) at a cost of $5.2 million. Spot Market purchases resulted in a PJM credit of $6 thousand ($74 thousand charge in the Day Ahead market and a $80 thousand credit in the real time market). Other PJM related charges accounted for an additional $1.3 million cost, inclusive of all load related fees. June All-In Energy Unit Cost, excluding capacity obligations and credits was $0.54/MWh favorable compared to the budget for June 2009 of $88.32/MWh. For the end of the fiscal year, Dover achieved All-In Energy Unit Cost of $0.30/MWh favorable to budget; based on all actual 12 months costs. Generation and Asset Management For the month of June McKee Run and Van Sant units were not dispatched by PJM. PJM market continues to experience low LMPs thereby displacing the need to require supports from peaking generations. Given typical historical dispatch patterns for the month the budget also did not project any generation. All Dover units, however, was able to fully demonstrate summer PJM capacity ratings. Emissions and Allowance Management Dover engaged in no allowance transactions during the month of June, and no units dispatched. All unit operated for testing purposes, and the appropriate allowance deduction are noted in the table above. Total net revenue through March 31st from allowance sales for the 2008-09 fiscal year is $165,470, accounting for Broker’s fees. Given current dispatch expectations, the market value of the 2007-2009 Dover allowance inventory is approximately $510 thousand at the time of this report. If sold, Dover would realize 2 Dover Monthly PGAM Report June 2009 - Final

approximately $676 thousand in revenue for the year. This would result in a $756 thousand unfavorable variance. Compliance emissions allowance values continue to remain well below the cost of emissions controls, but some hope exists for a return of market value next year. The SO2 allowance market remains supportive of prices in the $60-$-75/ton range, with the most recent closing price at $73/ton. The steady decline of annual NOx allowance values continued from approximately $1200/ton down to $1060/ton over the past month. Seasonal NOx allowance value also continued declining, moving from $250/ton down to $200/ton in limited trading. Hopes for a return of regulatory certainty in the emissions markets have been slightly buoyed buy the recent actions on the Senate Committee on Environment and Public Works. At a subcommittee meeting, EPA indicated that it planned to issue a draft of the new Clean Air Interstate Rule (CAIR) in early 2010. The intended structure of the rule has yet to be set, but EPA Administrator McCarthy noted that emission trading was still being considered for inclusion as part of the rule. Sen. Voinovich and Sen. Inhofe also unveiled plans for legislation to require any CAIR replacement rule to include emissions trading, though there is no predominant view as to the support for this legislation. In spite of these longer-term hopes, uncertainty and market fundamentals continue to dampen allowance values. Uncertainty remains as to the exact structure of the future compliance emissions markets, and as noted in the May monthly report, estimates are that the CAIR rulemaking could take up to two years. Additionally, coal consumption in the U.S. power industry is projected to be down five percent this year. This reduced consumption, combined with lower natural gas prices and a relatively mild summer, suggests that SO2 emissions will be lower this year, and generators already are in a strong allowance position give that 2008 emissions were nearly two million tons less than the statutory cap. Pace continues to closely monitor the NOx and SO2 markets and will provide Dover with assessments of allowance allocations, liquidity, and value as information becomes available. RGGI market prices are at $3.32/ton. Though maintaining prices between $3.00 and $4.00, the RGGI market has seen a lot of movement in its early stages, so no clear long-term price signals are yet evident. Based on projected generation and emissions Dover is projected to have an excess of 70,000 allowances through 2013 with a market value at current prices of $245,000. Pace will continue to monitor the RGGI market and will advise Dover regarding allowance sales if the market alters. 3 Dover Monthly PGAM Report June 2009 - Final

EMISSIONS & ALLOWANCE SUMMARY Allowance Allowance Emissions Emissions Allowances Allowances Allowance Vintage Allocation Month YTD Sold Month Sold YTD Balance SO2 – 2007 2723 0 98 0 2076 549 1 SO2 – 2008 2723 0 32 0 0 2,691 SO2 – 2009 2723 0 1 0 0 2722 NOx – 2007 198 0 32 0 166 0 NOx – 2008 198 0 20 0 178 0 2 NOx Annu – 2009 76 6 12 0 0 64 NOx Seas – 2009 51 6 6 0 0 45 Operations Management Summary During the month of June, there were no employee or contractor related OSHA injuries, illnesses, or time loss accidents. There was one near miss for the month. There were zero Environmental Notices of Violations issued during the month. There were no unit dispatches of any of the McKee Run Units or the VanSant Unit 11 for PJM. However all units at McKee Run and VanSant were run for emission testing only. A DNREC representative was on site for the emissions testing Monthly Budget Variance - The actual expenses attributable to O&M of the two sites for the month of June were $1,130,209. The expenses were $304,507 or 5.14% over the approved budget of $825,702. The principal reason for the negative variance is due to an additional accrued payroll and timing of maintenance expenses associated with the cooling tower repairs and faulty battery charger replacement on unit 1. Risk Management Summary Forward energy markets fell sharply as the demand for energy decreased due to both economic downturn and lack of cooling demand. Forward crude oil prices declined below $60/barrel and forward natural gas prices fell since the last reporting period, with the prompt month (August 09) trading below $3.40 per MMBtu. In turn, PJM forward power prices fell since the last reporting period. On-Peak Dover power prices for FY 2010-11 and FY 2011-12 fell 9.7% ($5.02/MWh) and 9.6% ($5.76/MWh), respectively, compared with the last reporting period. As the result of these market movements, the City’s wholesale Cost-of-Service across all forward power years had decreased since the last reporting period. Also, FY 2008-09 was settled and rolled off. PGAM benchmarked The reported wholesale Cost-of-Service values in the table below are reflective of the market movements compared to the prior reporting period: 1 Corrected 2007 SO2 tons emitted to reflect actual emission for Units 3 & 11. December, 2007 report included emissions for all four units. 2 The NOx Emissions are result from February McKee testing associated with Pollution Remediation project. 4 Dover Monthly PGAM Report June 2009 - Final

Wholesale Cost-of-Service Summary (Projected) Date 07/08/2009 Budget July June May Cost-of- Cost-of Hedge Year-to Forecasted Cost-of Cost-of Service Service Ratio Year over Service Service Power Year Budget $/MWh Increase 2008-09 $/MWh $/MWh Budget* 2009-2010 $93.26 $92.41 89% 2.6% 2.47% $92.79 $93.60 2010-2011 N/A $85.17 85% -7.8% -5.55% $85.82 $87.67 2011-2012 N/A $80.87 74% -5.1% -10.33% $82.09 $83.58 2012-2013 N/A $74.97 56% -7.3% -16.87% $76.98 $83.26 2013-2014 N/A $76.31 18% 1.8% -15.38% $79.58 $81.71 *FY 07/08 Budgeted Cost-of-Service is $90.18/ MWh 5 Dover Monthly PGAM Report June 2009 - Final

2.0 - BUDGET REPORT 2.1 – VARIANCE REPORT Budget Actual Variance Jun-09 Jun -09 Jun -09 Load Forecast 72,496 63,881 8,615 Power Supply Power Supply $4,574,499 $5,167,767 ($593,268) Power Supply Management $239,163 $268,276 ($29,113) Capacity Charges - Load $1,125,644 $1,116,806 $8,837 PJM Charges - Load $1,588,891 $171,357 $1,417,534 Total - Power Supply $7,528,197 $6,724,207 $803,990 Generation Plant Operations $701,732 $1,130,209 ($428,477) Generation Fuel $23,316 $36,515 ($13,198) Capacity Credits ($994,673) ($999,059) $4,386 PJM Credits ($5,403) ($5,487) $83 Total - Generation ($275,028) $162,178 ($437,206) Emission Allowance Sales Total - Emission Allowance Sales $0 $0 $0 Total Power Supply & Generation $7,253,169 $6,886,385 $366,784 Total Power Supply, Generation & Emission Sales $7,253,169 $6,886,385 $366,784 Unit Costs Total – Power Supply $103.84 $105.26 ($1.42) Total - Generation + Emission Sales ($3.79) $2.54 ($6.33) Final Cost of Service to City of Dover Ratepayers $100.05 $107.80 ($7.75) 6 Dover Monthly PGAM Report June 2009 - Final

Budget Actual Variance YTD YTD YTD Load Forecast 788,808 751,171 37,637 Power Supply Power Supply $51,608,358 $56,924,483 ($5,316,125) Power Supply Management $2,788,808 $3,000,000 ($211,192) Capacity Charges - Load $10,692,738 $10,778,420 ($85,683) PJM Charges - Load $15,311,915 $6,234,700 $9,077,214 Total - Power Supply $80,401,818 $76,937,604 $3,464,214 Generation Plant Operations $5,871,646 $5,870,412 $1,234 Generation Fuel $2,382,179 $1,482,053 $900,126 Capacity Credits ($9,317,447) ($9,303,462) ($13,985) PJM Credits ($2,501,303) ($1,528,674) ($972,629) Total - Generation ($3,564,925) ($3,479,671) ($85,254) Emission Allowance Sales Total - Emission Allowance Sales ($1,432,000) ($165,470) ($1,266,530) Total Power Supply & Generation $76,836,893 $73,457,934 $3,378,960 Total Power Supply, Generation & Emission Sales $75,404,893 $73,292,464 $2,112,430 Unit Costs Total – Power Supply $101.93 $102.42 ($0.50) Total - Generation + Emission Sales ($6.33) ($4.85) ($1.48) Final Cost of Service to City of Dover Ratepayers $95.59 $97.57 ($1.98) 7 Dover Monthly PGAM Report June 2009 - Final

2.2 – VARIANCE ANALYSIS Power Supply • Power Supply realized an unfavorable $593 thousand variance compared to the budget due to the purchase of additional 11.7% hedge forward positions totaling 6,960 MWh in June. This purchase was transacted after the FY 2008 budget was submitted to Dover. • The budget Power Supply Management variance did not account for the maximum allowable costs. • PJM Base Residual Auction on June 2, 2009 resulted in 2.7% increase per MW.day UCAP charge ($196.57) which was adjusted to Interruptible Load for Reliability (ILR) resources certified for the Delivery Year in comparison to the Forecast RTO IRL Obligation. This charge will result in unfavorable variances each month. • The PJM Charges for Load experienced a positive $1.4 million variance due to the placement of additional hedge position of 6,960MWh, thereby displacing the Open Position by the same amount; 12% reduced electric demand compared to 3 year historical average Dover June load, a $124 thousand favorable Basis variance; and an $165 thousand favorable Load Following variances for the month. Furthermore there was a $18 thousand favorable variance in transmission costs, $52 thousand favorable variance in the PJM ancillary charges for the month. Offsetting these favorable variances were a $22 thousand unfavorable variance in transmission rights credits and $55 thousand unfavorable variance in the transmission loss refund. • For the month a favorable $824 thousand net variance between the Power Supply (fixed positions) and PJM Charges Load (Open positions and transmission etc) was realized through a favorable $720 thousand variance caused by the change in volume and a favorable $104 thousand variance caused by the change in price. Hence, majority of the variance can be attributed to the change in the volume. Generations • Plant O&M resulted in an unfavorable variance of $428 thousand compared to the approved budget of $701 thousand due to an additional accrued payroll and timing of maintenance expenses associated with the cooling tower repairs and faulty battery charger replacement on unit 1. • Generation Fuel realized a favorable variance of $13 thousand for the month primarily due to the unwinding of previously contracted base load gas costs. Also the net PJM revenue and fuel costs associated with unbudgeted VanSant capacity testing is allocated into the Fixed Fuel and Transport Charges costs. This revenue/expense is not part of the generation production margin. • Capacity Credits is favorable by $4 thousand compared to the budget due to Dover’s increased generation capacity rating revenues from the PJM’s incremental auction. 8 Dover Monthly PGAM Report June 2009 - Final

3.0 – ENERGY MANAGEMENT 3.1 - PURCHASED POWER Management Highlights • Dover’s June load was 63,881 MWh which was 11.9% below the historic weather normalized load of 72,496 MWh. Hedge volumes accounted for nearly all of actual load for the month. • June All In Unit Energy cost excluding capacity of $87.78 is $0.54 per MWh lower than budget for the month. Actual Load vs Budget Load 100,000 75,000 MWh 50,000 25,000 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Budget Actual 9 Dover Monthly PGAM Report June 2009 - Final

All In Unit Energy Cost - Actual v Budget $96 $94 $92 $90 $/MWh $88 $86 $84 $82 $80 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Budget ($/MWh) Actual ($/MWh) Budget WA Actual WA 10 Dover Monthly PGAM Report June 2009 - Final

Purchased Power Variance Report Budget Actual Variance Jun-09 Jun-09 Jun-09 City of Dover Load Load Obligation (MWh) 72,496 63,881 8,615 Unit Energy Costs ($ per MWh) Energy Cost (inc. Load Following & Pace Fees) $82.87 $82.59 $0.27 Pass Through $4.45 $3.59 $0.86 Incentive Fees $1.00 $1.59 ($0.59) Total - All In Unit Energy Cost $88.32 $87.78 $0.54 Purchased Power Variance Analysis • Actual Dover load of 63,881 MWh was 11.9% below the projected May load of 72,496 MWh. • The All In Unit Energy Cost resulted in an unfavorable $0.50 per MWh variance due to positive $165 thousand load following variances, $124 thousand favorable basis variance, lower than anticipated open position energy costs due to significant lower demand compared to historical June demand, transmission costs, and PJM ancillary charges contributed to favorable variance for the month. The favorable variances were offset by an increased hedge cost over budget created when hedges were procured in a rising market and after the finalization of the fiscal year budget; a reduced transmission loss refund; and a lower than expected transmission rights credit. • The Management Incentive fee variance results are accrued at end of the Dover fiscal year to the contractual amount. PJM Power Balancing and Load Related Fees Purchased Power (Hedges): 66,400 MWh’s @ $77.83/MWh: $5,167,767 Power Balancing and Additional PJM and Energy Manager Fee 3: $1,556,447 Total Cost to Serve Load (63,881 MWh’s) $6,724,214 ALL in $/MWh load cost inclusive of Energy Manager Fees: $105.26/MWh 3 Includes estimated Incentive Fees. 11 Dover Monthly PGAM Report June 2009 - Final

3.2 - GENERATION MANAGEMENT • During the month, there were no unit dispatches of any of the McKee Run units or Unit #11 at VanSant. All units at McKee Run and VanSant ran for emissions and capacity testings only. Generation MWh's: Actual v Budget 12,500 10,000 7,500 MWh 5,000 2,500 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Budget Gen Actual Gen 12 Dover Monthly PGAM Report June 2009 - Final

2008-09 Generation Production Margin v Budget $500 Thousands $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 ($50) Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun ($100) Budget ($) Actual ($) *Notes: July 2008 Report’s 2008-09 Generation Production Margin v Budget graph displayed incorrect actual amount. The graph shown above has been corrected to reflect the actual value. 13 Dover Monthly PGAM Report June 2009 - Final

Generation Management Variance Report Budget Actual Variance Jun-09 Jun-09 Jun-09 Self-Supplied Capacity from Gen (MW) McKee Run 1 17 17 0 McKee Run 2 17 17 0 McKee Run 3 100.3 100.3 0 Van Sant 39 39 0 Self Supplied Capacity from Gen (MW) 173.3 173.3 0 Additional Capacity from PJM Incremental Auction 0 1.7 1.70 Total Capacity from Gen (MW) 173.3 175 1.70 Gen Capacity Sales to PJM ($/MW.d) $191.32 $191.32 $0.00 Incremental Auction Sales to PJM ($/MW.d) $0.00 $86.00 $86.00 Power Sales Power Sales (MWh) 0 0 0 Sales Revenue ($ per MWh) $0.00 $0.00 $0.00 Power Sales Revenue ($) $0 $0 $0.00 Variable Fuel & Transport Fuel Oil No.2 Volume (gal) 0 0 0 Fuel Oil No.2 ($/gal) $0.00 $0.00 $0.00 Fuel Oil No.2 Cost of Goods Sold ($) $0.00 $0.00 $0.00 Fuel Oil No.6 Volume (gal) 0 0 $0.00 Fuel Oil No.6 ($/gal) $0.00 $0.00 $0.00 Fuel Oil No.6 Cost of Goods Sold ($) $0.00 $0.00 $0.00 Gas Volume (Dth) 0 0 0 Unit Gas Price ($/Dth) $0.00 $0.00 $0.00 Variable Gas Cost ($) $0.00 $0.00 $0.00 Transport ($) $0.00 $0.00 $0.00 Variable Gas and Transport Costs ($) $0.00 $0.00 $0.00 Variable Fuel & Transport Costs ($) $1,200.00 $0.00 $1,200.00 Testing $0.00 $0.00 $0.00 Generation Production Margin $1,200.00 $0.00 $1,200.00 Generation Capacity Payment Total - Generation Capacity Payment ($994,673) ($999,059) $4,386.12 14 Dover Monthly PGAM Report June 2009 - Final

Generation Management Variance Analysis Fuel Expense • Dover generations did not dispatch for economic or reliability grid support to PJM. Generation Production Margin Transaction Volumes Revenue/(Cost) PJM Invoice for Power Sold 0 MWh’s $0 Fuel and Transport 0 dth gas/0 gal #6 oil $0 0 gal #2 oil Generation Production Margin 0 MWh’s $0 The following non-production energy revenues and costs are generally fixed and not directly related to generation dispatch and power production. The details of gas purchases breakdown are provided on the “Fuel and Transport” section of this report. PJM Invoice (Black Start) $5,487 Fuel Oil Tank Heating & Black Start Gas Supply $0 Eastern Shore Demand Charge ($2,628) Eastern Shore Transport and Imbalance Charge $0 Transco Demand Charge ($3,602) Non-Production Energy Revenue/Costs ($743) 15 Dover Monthly PGAM Report June 2009 - Final

Fuel and Transportation • During the month, there were no unit dispatches of any of the McKee Run units or Unit #11 at VanSant. All units at McKee Run and VanSant ran for capacity and emissions testing only. The following spot gas purchases primarily results from the June emissions testing which are to be allocated into the Pollution Remediation CIP account. Date Volume (Dth) Price ($/Dth) Total Commodity Cost ($) Hess Corp 4 03-Jun 3,000 $4.15 $12,450.00 08-Jun 5,540 $4.05 $22,460.40 09-Jun 9,500 $4.11 $39,025.00 Sub-Total 18,040 $4.10 $73,935.40 PESCO 5 08-Jun (300) $3.00 ($900.00) 10-Jun 2,500 $4.96 $12,405.00 Sub-Total 2,200 $5.22 $11,505.00 NJNG 01-Jun 3,033 $4.53 $13,751.77 02-Jun 10,000 $4.26 $42,600.00 02-Jun (10,000) $4.02 ($40,245.30) 04-Jun 600 $4.01 $2,406.00 05-Jun 2,800 $3.81 $10,668.00 07-Jun 500 $4.15 $2,075.00 10-Jun 5,000 $4.11 $20,537.50 11-Jun 1,000 $4.06 $4,060.00 Sub-Total 12,933 $4.32 $55,852.97 Total 33,173 $4.20 $141,293.37 From the total spot monthly gas purchases of $141,293.37, VanSant capacity demonstration is an operations expense of $6,742.45. 6 Do to the conversion from #6 residual oil to Low sulfur #2 oil the need for a constant supply of natural gas to heat the #6 fuel is no longer required. Some gas will still be required for winter heating of the building(s). Pace will still coordinate with NAES on the procurement of supply. However, this expense will now fall under the plant utility costs and be paid and budgeted for by the station. 4 As of July 15, 2009 Hess Corporation data is an estimated invoice. 5 As of July 15, 2009 PESCO data is an estimated invoice. 6 All PJM revenues & fuel costs associated with VanSant CIP capacity demonstration will be applied to “Fixed Fuel and Transportation Charges”. 16 Dover Monthly PGAM Report June 2009 - Final

Gas Transportation Purchased Eastern Shore Natural Gas Pipeline and TransCo agreements provide for deliveries to the McKee Run and VanSant stations. These charges include a firm demand charge and adjustments as follows: ESNG FT Demand Charge $2,628 TransCo FT Demand Charge $3,602 Total Purchases $6,230 Other Gas Purchases Commodity and transportation imbalances on Eastern Shore Pipeline for the month resulted from pollution remediation CIP; and therefore the total amount of $3,933.34 cost will not be allocated into the Dover Power Supply budget. Eastern Shore Transport and Imbalance Charges Imbalance/dth Estimated Cost/dth Estimated Total Cost 2,632 $2.95 $7,769.66 $7,769.66 Transport Volume/dth $/dth Total Cost Firm/IT 35,187 ($0.33) ($11,703.00) Net Cost ($3,933.34) 17 Dover Monthly PGAM Report June 2009 - Final

Purchased Commodity Fuel Oil Summary • During the month, there were no unit dispatches of any of the McKee Run units or Unit #11 at VanSant. All units at McKee Run and VanSant ran for emissions testing only. The following oil inventory costs resulted from the June emissions testing and all testing fuel costs are to be allocated into the Pollution Remediation CIP account. June 2009 Fuel Oil Consumption McKee Run Date #2 Oil 7 Inventory Market Price Inventory Cost Market Cost Burns / gal Price ($/gal) ($/gal) 4-Jun 16,320 1.79 NA ($29,229.12) NA 8-Jun 15,863 1.79 NA ($28,410.63) NA 10-Jun 40,538 1.79 NA ($72,603.56) NA 11-Jun 423 1.79 ($757.59) Total 73,144 1.79 ($131,000.90) June 2009 Fuel Oil Consumption VanSant Date #2 Oil Inventory Market Price Inventory Cost Market Cost Burns / gal Price ($/gal) ($/gal) 11-Jun 253 2.03 NA ($514.78) NA 12-Jun 18,456 2.03 NA ($37,552.40) NA Total 18,709 2.03 ($38,067.18) McKee Run tank will maintain 3 days of load equivalent dispatches for McKee Run Units. At current fuel market prices, Pace and NAES are considering purchasing ultra low #2 fuel oil inventory when McKee Run tank testing are complete. Tank Inventory Estimates as of June 30 Tank Tank Capacity Inventory In Days of Burn (gallon) (gallon) (Typical Dispatch 8) McKee Run 9 (#2 2,554,105 337,519 3 Fuel Oil) VanSant 258,000 94,388 3 (#2 Fuel Oil) 7 #2 Low Sulfur. 8 As measured by tank level instruments. Tank levels may change due to oil temperature. 9 #6 Fuel Oil was sold ( approx. 122, 000 gallons) and #2 Fuel Oil was purchased in October and December. 18 Dover Monthly PGAM Report June 2009 - Final

3.3 - EMISSIONS AND ALLOWANCE MANAGEMENT As shown in Exhibit 1, total net revenue from allowance sales for the 2008-09 fiscal year is $165,470, accounting for Broker’s fees. City of Dover holds 2,693 tons of vintage 2008 SO2 allowances and no tons of vintage 2008 NOx allowances. Additionally, the City has a balance of 549 tons of vintage 2007 SO2 allowances. At the August 21, 2008 Management Committee meeting the Committee set a trigger price for the SO2 allowances of $260/ton whereby if the City could achieve this price it would sell half of its SO2 allowances. Exhibit 1: Emissions and Allowance Summary through June 30, 2009 2008-2009 EMISSIONS & ALLOWANCE SUMMARY SO2 NOx Date Action Allowance Sale Revenue1 Allowance Sale Revenue1 Allocation Price Allocation2 Price Seas. Ann. 1/1/08 Initial 2008 2,723 -- -- 198 -- -- -- Allocation 1/1/08 2007 549 -- -- 0 -- -- -- Carryover 7/21/08 Sold 150 -- -- -- -150 -- $975 $144,750 tons NOx 10/14/08 Sold 28 -- -- -- -28 -- $750 $20,720 tons NOx 12/31/08 2008 YTD -32 -- -- -20 -- -- -- Emissions 1/1/09 Initial 2009 2,723 -- -- 51 76 -- -- Allocation 6/30/09 2009 YTD 1 -- -- 6 12 -- -- Emissions3 Totals - 2007 Vintage 549 -- -- 0 -- -- -- Allowances - 2008 Vintage 2,691 -- -- 0 -- -- -- Allowances - 2009 Vintage 2,722 -- -- 45 64 -- $165,470 Allowances $165,470 $0 Total Revenue $165,470 Notes: (1) Revenue calculations account for a $1/ton broker fee for SO2 and a $10/ton broker fee for NOx. (2) Per the Clean Air Interstate Rule, in 2009, NOx emissions will be governed by a seasonal and annual program. The NOx seasonal emissions pertain only to emissions (May 1 – Sep 30), similar to the previous trading regimen. Annual emissions cover the entire year. (3) The 2009 initial allowance allocation accounts for the reinstatement of CAIR while new SO2 and NOx emissions rules are completed. These allocations may changes as the rulemaking process continues. Dover engaged in no allowance transactions during the month of June, and no units dispatched. All unit operated for testing purposes, and the appropriate allowance deduction are noted in the table 19 Dover Monthly PGAM Report June 2009 - Final

above. Total net revenue through March 31st from allowance sales for the 2008-09 fiscal year is $165,470, accounting for Broker’s fees. Given current dispatch expectations, the market value of the 2007-2009 Dover allowance inventory is approximately $510 thousand at the time of this report. If sold, Dover would realize approximately $676 thousand in revenue for the year. This would result in a $756 thousand unfavorable variance. Compliance emissions allowance values continue to remain well below the cost of emissions controls, but some hope exists for a return of market value next year. The SO2 allowance market remains supportive of prices in the $60-$-75/ton range, with the most recent closing price at $73/ton. The steady decline of annual NOx allowance values continued from approximately $1200/ton down to $1060/ton over the past month. Seasonal NOx allowance value also continued declining, moving from $250/ton down to $200/ton in limited trading. Hopes for a return of regulatory certainty in the emissions markets have been slightly buoyed buy the recent actions on the Senate Committee on Environment and Public Works. At a subcommittee meeting, EPA indicated that it planned to issue a draft of the new Clean Air Interstate Rule (CAIR) in early 2010. The intended structure of the rule has yet to be set, but EPA Administrator McCarthy noted that emission trading was still being considered for inclusion as part of the rule. Sen. Voinovich and Sen. Inhofe also unveiled plans for legislation to require any CAIR replacement rule to include emissions trading, though there is no predominant view as to the support for this legislation. In spite of these longer-term hopes, uncertainty and market fundamentals continue to dampen allowance values. Uncertainty remains as to the exact structure of the future compliance emissions markets, and as noted in the May monthly report, estimates are that the CAIR rulemaking could take up to two years. Additionally, coal consumption in the U.S. power industry is projected to be down five percent this year. This reduced consumption, combined with lower natural gas prices and a relatively mild summer, suggests that SO2 emissions will be lower this year, and generators already are in a strong allowance position give that 2008 emissions were nearly two million tons less than the statutory cap. Pace continues to closely monitor the NOx and SO2 markets and will provide Dover with assessments of allowance allocations, liquidity, and value as information becomes available. RGGI market prices are at $3.32/ton. Though maintaining prices between $3.00 and $4.00, the RGGI market has seen a lot of movement in its early stages, so no clear long-term price signals are yet evident. Based on projected generation and emissions Dover is projected to have an excess of 70,000 allowances through 2013 with a market value at current prices of $245,000. Pace will continue to monitor the RGGI market and will advise Dover regarding allowance sales if the market alters. 20 Dover Monthly PGAM Report June 2009 - Final

4.0 – OPERATIONS MANAGEMENT Management Highlights • During the month of June, there were no restricted work days or lost time accidents. The facility has now gone 154 days without an OSHA recordable accident and 1,547 consecutive days without a lost time reportable accident. There was one Near Miss event during the month. The plant received no Notice of Violations (NOVs) during the month. There was one opacity deviation which occurred on initial start up operation of the ID fans on Unit 3. • During the month, there were no unit dispatches of any of the McKee Run units or Unit #11 at VanSant. All units at McKee Run and VanSant ran for emissions testing only. • The plant received notification from the EPA that during the week of July 20, 2009, they will conduct Spill Response drills in the Dover area which may include McKee Run site personnel. • Mr. Tom Lilly, the DNREC contact for the Dover Generating Facilities, conducted a Title V Compliance Audit (Full Audit) in early June. Preliminary feedback from Mr. Lilly is that he found no discrepancies and that the plant is in compliance with all permit requirements. • Operations operated all four units during the month of June for the purpose of performing emissions testing, as required by the DNREC. While each unit was operating on-line, operations teams were able to successfully complete a capacity test for the particular unit. • Eastern ISI completed the removal and replacement of the Unit Three Cooling Tower East Stairwell. • The plant contracted with Lewellyn Technology (LT) to perform an Arc Flash Analysis of both generating facilities. This work was awarded after comparing bids from five companies. • An inspection on the cooling towers at McKee Run was performed during the month of April and the final report has been received. The inspection results indicated that repairs will be needed to replace the tower fill, tower wood members and stairwells on the Unit 3 tower. The stairwell replacement was completed in June and is now back in service. • Discussions continued with Pace Global and Advance Power (APP) on the addition of a HRSG at VanSant which could supply additional power output on the unit. The ball is now in APP’s court as to what performance they could guarantee as well as the amount of the liability they would assume before the project proceeds any further. • The following is the NAES Monthly Report as submitted to PGAM 21 Dover Monthly PGAM Report June 2009 - Final

NAES Corporation Dover, Delaware June 2009 Monthly Report New Stairwell on East Side of Unit #3 Cooling Tower 22 Dover Monthly PGAM Report June 2009 - Final

Table of Contents 1.0 Environmental, Health and Safety 2.0 Financial 3.0 Operations 4.0 Maintenance 5.0 CIP 6.0 General Plant Information 7.0 Summary of NAES Performance 23 Dover Monthly PGAM Report June 2009 - Final

1.0 Environmental, Health and Safety: During the month of June, there were no restricted work days or lost time accidents. The facility has now gone 154 days without an OSHA recordable accident and 1,547 consecutive days without a lost time reportable accident. There was one Near Miss event during the month. The Near Miss involved the rupture of a sulfuric acid line while under pressure due to pluggage. An evaluation of the system has resulted in the addition of a flushing line as well as amending the existing procedure to include flushing of the lines after each regeneration of the demineralizer. The plant received no Notice of Violations (NOVs) during the month. There was one opacity deviation which occurred on initial start up operation of the ID fans on Unit 3. The plant received notification from the EPA that during the week of July 20, 2009, they will conducting Spill Response drills in the Dover area which may include McKee Run site personnel. Mr. Tom Lilly, the DNREC contact for the Dover Generating Facilities, conducted a Title V Compliance Audit (Full Audit) in early June. During the course of the audit, Mr. Lilly reviews operations log, plant documentation files associated with required Title V Permit record keeping, touring the plant property as observing the units while they are on-line. Preliminary feedback from Mr. Lilly is that he found no discrepancies and that the plant is in compliance with all permit requirements. A letter from Mr. Lilly stating this fact will be forthcoming. Environmental, Health and Safety Statistics Month Fiscal Year to Date (June 2009) (7/1/08-6/30/09) NOVs 0 0 Opacity Deviations 1 9 Environmental Deviations 0 1 OSHA Recordable 0 1 OSHA LTA's 0 0 First Aid cases 0 0 Restricted Workday Accident 0 1 Near Miss 1 10 Man Hours Worked 5,075 58,920 Date last OSHA Recordable 1/27/09 Date last Lost Time Accident 4/05/05 Days since last OSHA recordable 154 Days since last Lost Time Accident 1,547 24 Dover Monthly PGAM Report June 2009 - Final

Emissions (NOx & SO2) All data thru 6/30/09 NOx Summary - Year (May-Sept.)Tons Year Unit #1 Unit #2 Unit #3 Unit #11 TOTAL 2008 1.01 0.96 17.0 1.28 20.25 2009 0.9 0.7 3.1 0.5 5.2 2010 0.0 0.0 0.0 0.0 0.0 NOx Summary - Year (Jan-Dec)Tons Year Unit #1 Unit #2 Unit #3 Unit #11 TOTAL 2009 0.9 0.7 9.0 0.5 11.1 2010 0.0 0.0 0.0 0.0 0.0 2011 0.0 0.0 0.0 0.0 0.0 SO2 Summary - Year (Jan.-Dec.)Tons Year Unit #1 Unit #2 Unit #3 Unit #11 TOTAL 2007 6.28 5.31 97.69 0.28 109.56 2008 0.011 0.009 31.0 0.6 31.6 2009 0.0 0.0 0.1 0.2 0.3 Note: *Denoted data is as of 6/30/2009 SO2 Allowances Summary SO2 Allowances SO2 Available Total SO2 SO2 Allowances (Per Unit, Prior to Tons Allowances SO2 Allowance Sold - YTD Sale & Emitted – Balance Vintage Reconciliation) U3 and U11 Unit #3 Unit #11 YTD 2007 2076 2585 138 98 549 2008 0 2585 138 32 2691 2009 0 2585 138 0.3 2723 Note: Denoted data is as of 6/30/2009 NOx Allowances Summary NOx Allowances NOx Available Total NOx NOx NOx Allowance Allowances (Per Facility, Prior to Tons Allowances Vintage Sold - YTD Sale) Emitted Balance (NOx Season) Unit #3 Unit #11 2007 165 191 7 33 0 2008 178 191 7 20 0 2009 0 191 7 6 192 2010 0 191 7 0 198 Note: NOx Season is May 1 to September 30. 25 Dover Monthly PGAM Report June 2009 - Final

CAIR NOx Allowances Summary* CAIR CAIR NOx NOx Allowances Available Total NOx Allowance Balance NOx Allowances (Per Facility, Prior to Sale) NOx Tons Allowance Sold YTD Emitted Vintage McKee VanSant McKee Run VanSant Run (Yr/Season) (Yr/ (Yr/Season) (Yr/Season) Season) (Yr/Season) 2009 0 71/48 5/3 12/6 60/43 4/2 2010 0 71/46 5/3 0 71/46 5/3 Note *– CAIR legislation is pending revision CO2 Allowances Summary* CO2 CO2 CO2 Allowances Available Total CO2 CO2 Allowance Allowances (Per Facility, Prior to Sale) Tons Emitted Allowance Vintage Sold YTD Balance McKee VanSant Run 2009 0 55,132 1,699 5,019 53,851 2010 0 47,844 1,636 0 49,480 2011 0 35,883 1,227 0 37,110 2012 0 23,922 818 0 24,740 2013 0 11,961 409 0 12,370 Note: All CO2 allowance values are provided by the RGGI CO2 Allowance Tracking System. 26 Dover Monthly PGAM Report June 2009 - Final

2.0 Financial Financial – Current Month Month – June 2009 Actual Budget Variance Personnel 698,251 539,110 (159,141) Administrative 227,063 175,492 (51,571) EH & S 15,228 9,000 (6,228) Maintenance Expense 125,075 39,350 (85,725) Operations Expense 64,592 62,750 (1,842) Total $1,130,209 $825,702 ($304,507) Financial – Fiscal Year to Date Number of Months – 12 Actual Budget Variance Personnel 3,415,826 3,398,082 (17,744) Administrative 949,070 1,027,964 78,894 EH & S 44,598 42,000 (2,598) Maintenance Expense 564,448 526,200 (38,248) Operations Expense 871,427 927,400 55,973 Total $5,845,369 $5,921,646 $76,277 2.1 Variance analysis: Our original budget for June was $825,702. The actual expenses for June are $1,130,209 for an unfavorable variance of $304,507 or ≈ 5.14%. The variance was due to the following: PERSONNEL EXPENSES - Labor, overtime, incentives and burdens accounted for a total unfavorable variance of $159,142 than what was originally budgeted. Payroll accruals contributed significantly to the variance. ADMINISTRATIVE EXPENSES - An unfavorable variance of $51,571 was due to purchase of new work stations and Contract Service/Fees from the Arc Flash Study. ENVIRONMENTAL, HEALTH, AND SAFETY EXPENSES – An unfavorable variance of $6,228 was achieved due to the purchase of confined space and fall protection equipment for the facility. MAINTENANCE EXPENSES- An unfavorable variance of $85,725 was due to combustion turbine maintenance, Unit #3 cooling tower repairs and the replacement of the faulty battery charger on the Unit #1 / #2 battery system. OPERATING EXPENSES – An unfavorable variance of $1,842 was due to higher water usage costs than anticipated to support emissions testing. We are currently forecasted to finish the fiscal year at $5,845,369 expensed versus $5,921,643 budgeted. There are still a few invoices in the system that could be accrued which would affect the final budget total. 27 Dover Monthly PGAM Report June 2009 - Final

3.0 Operations Unit Operations / Outages / Trips During the month, there were no unit dispatches of any of the McKee Run units or Unit #11 at VanSant. All units at McKee Run and VanSant ran for emissions testing only. Month – June 2009 McKee McKee McKee MRS VanSant Total Unit 1 Unit 2 Unit 3 Facility Unit 11 All Units Capacity MW 17 17 102 136 39 175 On Line Hours Hrs 44.167 33.000 35.917 113.084 15.533 128.617 Starts # 1 2 2 5 2 7 Gross Generation MWh 386.940 332.288 2,602.919 3,450.764 412.319 3,863.083 Net Generation MWh 368.559 314.183 2,403.912 3,086.654 412.007 3,498.661 Total Auxiliaries MWh 62.740 62.464 3,692.230 3,817.434 1.873 3,819.307 Auxiliaries purchased MWh 44.359 44.359 170.223 258.941 1.561 260.502 Fuel Gas Used MMBTU 3,255 2,146 20,820 26,221 3,072 29,293 Fuel Oil Used MMBTU 2,429 1,825 5,789 10,043 2,602 12,645 Fuel Oil Used Gallons 17,527 13,167 41,772 72,466 18,800 91,266 Total Fuel MMBTU 5,683 3,970 26,608 36,262 5,674 41,936 Net Heat Rate BTU/KWh 15,422 12,636 11,069 11,748 13,772 11,987 Unit Trips # 0 0 0 0 0 0 Capacity Factor % 3.01 2.57 3.27 2.95 1.47 2.58 Availability Factor % 70.42 83.75 63.75 69.04 90.42 77.08 Commercial % 0 0 0 0 0 0 Unavailability (CU) Planned Outage 0 0 Hours 0 0 0 0 Hours Maintenance Outage Hours 213.000 117.000 261.000 591.000 69.000 660.000 Hours Forced Outage Hours Hours 0 0 0 0 0 0 Reserve Shutdown Hours 460.883 471.000 468.029 1,399.912 488.467 1,888.379 Hours HW Boiler Gas Usage MMBTU 0 0 Pilot Gas Usage MMBTU 442 442 883 883 # Note: Does not include HWB or Pilot Gas. Fuel usage numbers are taken from fuel flow instruments 28 Dover Monthly PGAM Report June 2009 - Final

2008-2009 Fiscal Year-to-Date (12 Months) McKee McKee McKee MRS VanSant Total Unit 1 Unit 2 Unit 3 Facility Unit 11 All Units Capacity MW 17 17 102 136 39 175 On Line Hours Hrs 55.233 44.667 318.283 418.183 52.727 470.910 Starts # 2 3 24 29 10 39 Gross Generation MWh 510.255 464.700 19,140 20,115 1,767 21,882 Net Generation MWh 487.070 440.689 17,547 18,475 1,766 20,241 Total Auxiliaries MWh 387.378 387.205 7,027 7,766 46.428 7,812 Auxiliaries purchased MWh 364.193 364.194 2,110 2,839 45.308 2,884 Fuel Gas Used MMBTU 4,012 3,119 139,036 146,167 12,987 159,154 Fuel Oil Used MMBTU 3,205 2,441 68,700 74,346 8,875 79,452 Fuel Oil Used Gallons 0/23,095 0/17,585 0/178,647 297,805 64,128 581,260 /219,327 Total Fuel MMBTU 7,217 5,558 207,735 220,510 21,862 242,372 Net Heat Rate BTU/KWh 15,354 13,200 11,842 11,967 12,389 12,003 Unit Trips # 0 0 0 0 0 0 Capacity Factor % 0.33 0.30 1.96 1.55 0.52 1.32 Availability Factor % 77.57 78.66 58.50 71.58 97.29 78.01 Commercial % 0 0 0 0 0 0 Unavailability (CU) Planned Outage Hours Hours 1,752 1,752 3,373.629 6,877.629 159.667 7,037.296 Maintenance Outage Hours 213.000 117.000 525.417 855.417 133.500 988.917 Hours Forced Outage Hours Hours 0 0 0 0 0 0 Reserve Shutdown Hours Hours 6,738.767 6,845.333 4,806.088 18,390.188 8,469.106 26,859.294 HW Boiler Gas Usage MMBTU 9,198 9,198 Pilot Gas Usage MMBTU 499,250 530,172 1,029,581 1,029,581 VanSant Lifetime through 6/30/09 Actual Starts Factored Starts Fired Hours VanSant 1193 2011.75 3,934.2 Since HGP - Dec 2004 144 344.05 550.578 Fuel Oil Inventory Monthly Monthly Fuel Monthly FY 08-09 Fuel FY 08-09 Inventory Inventory Purchases Inventory Inventory Purchases Inventory (Start) (End) (Month) (Change) (Start) (YTD) (Change) McKee Run (#6 Fuel Oil 410,663 337,519 0 73,144 426,048 536,660 (88,529) to #2 Fuel Oil) VanSant (#2 Fuel Oil) 112,676 94.388 0 18,288 99,950 56,801 (5,562) Note: As measured by tank level instruments. Tank levels may change due to oil temperature. Note: * - #6 Fuel Oil was sold ( approx. 122, 000 gallons) and #2 Fuel Oil was purchased in October and December. 29 Dover Monthly PGAM Report June 2009 - Final

Capacity Testing – FY 2008-2009 Summer 2008 (June 1- Aug 31) Winter 2008-2009 (Dec 1- Mar 1) Unit Rated Net Reported Net Unit Rated Net Reported Net Capability (MW) Capability (MW) Capability (MW) Capability (MW) 1 17 17.09 1 17 17.3 2 17 17.55 2 17 17.9 3 102 102.72 3 102 102.3 VanSant 39 40.09 11 40 40* Total 175 177.45 Total 176 177.50 Note: * depicts a unit that has not completed capacity test for the PJM Demonstration Period in FY 2008-2009 but has been accepted into the PJM Winter Capacity Test Exemption Program. Team Report: Operations operated all four units during the month of June for the purpose of performing emissions testing, as required by the DNREC. While each unit was operating on-line, operations teams were able to successfully complete a capacity test for the particular unit. The completion of the capacity tests at this time will save money by not having to operate the units at a later date in the summer test period when costs and conditions may not be as favorable. The successful testing of the units during the PJM Summer Period is just one of the requirements necessary to be included in the PJM Winter Capacity Test Exemption Program. Operations personnel have been supporting maintenance by working on Preventative Maintenance (PM) work orders and other work orders that they the necessary skill set to successfully complete the task. The Operations Department has two operators (Flex Team) helping complete work orders during day shift when the units are not running. Senior Operators are training for their PJM exam and are taking the online courses to gain CEH credits that count toward their certification hours in which the must have two hundred hours of training in five years. The operators continue to use the plant readiness program for training and refreshing their plant knowledge on different systems to improve the plant’s reliability. Some of the training involved promotes teamwork with other staff members to work together to find a solution and to promote further discussions on equipment operation. The operators also use the GPi Learning courses to improve their knowledge and skills. The GPI online training which supports our safety, OSHA, and environmental training are being used by the teams to complete their training for the year. 30 Dover Monthly PGAM Report June 2009 - Final

4.0 Maintenance During the month of June, plant maintenance staff continued addressing the backlog of work orders. One hundred seven work orders were issued during the month, with sixty-nine work orders being completed during the month. The table below summarizes the monthly work order activities. Work Order Report June - 09 Outstanding From Outstanding Previous Issued This Completed at the end of Priority # Months Month This Month the month P1 0 1 1 0 P2 2 8 9 1 P3 7 25 23 9 P4 13 25 14 24 P5 1 19 0 20 P6 0 0 0 0 P7 10 0 2 8 P8 11 2 0 13 P9 13 1 0 13 P6 - 1 0 0 0 0 P6 - 2 0 0 0 0 P6 - 3 0 0 0 0 P6 – 4 0 0 0 0 P6 – 5 0 0 0 0 P6 – 6 0 0 0 0 P6 – 7 0 0 0 0 P6 - 8 0 0 0 0 PM 18 26 19 25 Totals 75 107 69 113 Note: PM's are included in the priority totals Notable activities during the month include: 1) Replaced the Unit 3A Boiler Feed Pump inboard seal. The pump seal repair was verified as complete during operational testing of the equipment. 2) Completed vibration readings on MRGS and VanSant plant equipment during test runs. Vibration results will be sent out and analyze. A final report will be sent to the plant identifying any potential problems. 3) The NAES Dover staff provided support to Apex Heat and Power LLC for the repairs of Unit Two superheat header supply tube. A leak was discovered after the unit had been taken off line and repaired once the boiler had cooled down. 31 Dover Monthly PGAM Report June 2009 - Final

4) Completed the installation of the new Beck drive for the BOFA fan damper. This will allow operations to have better control and repeatability of damper positions when tuning the boiler for lower emissions. 5) The NAES maintenance staff provided support to Otis Elevator Co. for the upgrade and installation of new cart doors and tracks. Upgrades were needed to provide reliability and safe operation of the elevator. 6) The NAES maintenance staff provided support to operations on the completion of all four unit capacity summer tests. 7) Completed the change out of DI resin at VanSant Unit 11. The resin had reached the end of its’ usable life. New resin will provide increased through-put and lower chemical usage by reducing the number of regenerations needed to make an equivalent amount of DI water as compared to using the older resin. 8) Eastern ISI completed the removal and replacement of the Unit Three Cooling Tower East Stairwell. 32 Dover Monthly PGAM Report June 2009 - Final

5.0 Capital Improvement Projects (CIP) Project Description Update Number EG0801 MR Fire Protection Progress: Project deferred to 2009 to investigate an System Upgrades alternative technical approach. XL Insurance is assisting in this endeavor. Schedule: Installation now projected to be October 2009. EG0804 MR Pollution Progress: Change out of fuel oil equipment has been Remediation completed. Plant in final stages of testing and tuning Unit 3. Equipment Units 1, 2 and 3 have successfully made the conversion and successfully completed a Winter Period Capacity Test. Schedule: Additional testing & tuning needed to optimize Unit 3 operation. Emissions testing for DNREC slated for June 2-1, 2009 occurred. Final reports are expected to be received the week of July 13, 2009. EG0901 MR Unit 3 Progress: Complete Continuous Replacement was completed in October 2008. Emissions Monitor (CEM) EG0902 VS Unit 11 Progress: Complete Continuous Replacement was completed in October 2008. Emissions Monitor (CEM) EG0903 MR Unit 3 Progress: Complete Continuous Opacity Replacement was completed in November 2008. Monitor (COM) EG0904 MR & VS Arc Progress: Phase One will determine scope and costs to Flash Analysis implement which will provide input to cost benefit analysis/ justification to proceed with the second phase. Task statement defining the scope of work has been sent out to a number of vendors. Quotes were received in early April and the work was awarded after a thorough analysis. The data collection process occurred in May with a final report due by the end of June 2009. Schedule: The initial phase of the project to be completed no later than June of 2009 and the second phase to complete in May 2010. Final report was received on June 30, 2009 and is currently under review. Task statement(s) for Phase 2 of the project will be developed as necessary for implementation of action items from report. 33 Dover Monthly PGAM Report June 2009 - Final

6.0 General Plant Information Training During the month of June entire plant staff had training on SPCC, NPDES, ARPP and Storm Water. These training sessions were site specific and were based on the plant’s permit requirements. The training consisted of a quiz at the beginning of a topic then some discussion as the quiz was being reviewed. The permit was reviewed as well. Plant employees continue General Physics safety training and environmental courses to enhance their overall knowledge of permit and safety requirements. As the GPI courses are being completed the employee reviews the standard operating procedure (SMP) for the same topic they are training on to review NAES policy as well. Topics discussed during the monthly safety committee meeting were reviewed by the entire staff. Other Events Discussions continued with Pace Global and Advance Power (APP) on the addition of a HRSG at VanSant which could supply additional power output on the unit. Money had been appropriated for APP to conduct a feasibility study of the project. The final report was received on May 15, 2009. A review of the report by plant management and Pace Global was scheduled for early June after which a conference call was be set up with Advance Power to clarify statements in the report, performance guarantees and estimated costs. This follow up conversation with APP resulted in a further investigation by both APP and Pace Global into the federal grant as well as discussions pertaining to performance guarantees and liability limits. The ball is now in APP’s court as to what performance they could guarantee as well as the amount of the liability they would assume before the project proceeds any further. The plant contracted with Lewellyn Technology (LT) to perform an Arc Flash Analysis of both generating facilities. This work was awarded after comparing bids from five companies. A preliminary report was provided on June 30, 2009 as well as a site visit by a Lewellyn technician who installed Arc Flash exposure level stickers (1-4) to plant equipment. Level 0 stickers will be applied by maintenance staff. A final report is en route to the plant. After a review of the recommendations, an action plan will be developed to implement the findings as part of Phase 2 of the project. An inspection on the cooling towers at McKee Run was performed during the month of April and the final report has been received. The inspection results indicated that repairs will be needed to replace the tower fill, tower wood members and stairwells on the Unit 3 tower. The stairwell replacement was completed in June and is now back in service. SPIG, the contracted cooling tower inspection company supplied budgetary estimates of the repairs identified within their report to the plant. Plant staff is now developing a CIP for the repairs needed on the tower in order to extend their life and the efficiency of Unit 3 cooling tower. 34 Dover Monthly PGAM Report June 2009 - Final

Plant staff worked with the City of Dover Accounting Department on 2009-2010 budget account numbers for the purpose of streamlining the plant budget and making them more consistent with the City of Dover accounts. Finalization of the plant’s budget account numbers occurred in early June 2009 with cooperation from the COD finance department and have now been implemented into the 2009-2010 budget. Calendar of Events Date EIA Reporting Requirements May 15, 2009 Annual Emission Statement Due May 15, 2009 Appendix E Testing for Units 1 and 2 June 2-10, 2009 Unit 3 RATA Testing and Particulate Testing June 2-10, 2009 Unit 11 Appendix E Testing June 11-12, 2009 Fiscal Year Ends June 30, 2009 Toxic Release Inventory (TRI) Due July 1, 2009 EIA Reporting Requirements 860 Report July 15, 2009 7.0 Summary of NAES Performance to Date Plant Performance FY 2008-2009 Measure Month Year to Date YTD FY Maximum Incentive Incentive Commercial Unavailability (CU) 0% 0% $85,863 $85,863 Safety 0 1 $8,050 $16,099 Environmental 0 0 $16,099 $16,099 Capacity Tests Summer Winter Summer Winter Completed Unit 1 No No Yes Yes $3,220 $3,220 Unit 2 No No Yes Yes $3,220 $3,220 Unit 3 No No Yes Yes $19,319 $19,319 Unit 11 No No Yes Yes* $6,440 $6,440 Total YTD Total YTD 94.64% $142,211 $150,261 Incentive % Incentive Note: * depicts a unit that has not completed capacity test for the PJM Demonstration Period in FY 2008-2009 but has been accepted into the PJM Winter Capacity Test Exemption Program signifying completion of test. 35 Dover Monthly PGAM Report June 2009 - Final

APPENDICES I. PJM INVOICE BREAKDOWN The PJM bill is a record of all Electricity Transactions, Transmission Services, Ancillary Services and Miscellaneous fees that allow the PJM to operate. Below is a list of the line items on the PJM bill including all generator activity. PJM Bill Line Items Gen Load Net Day Ahead Energy $0.00 ($73,845.70) ($73,845.70) Realtime Energy $0.00 $80,390.24 $80,390.24 Transmission Losses Credits $0.00 $51,700.27 $51,700.27 Network Integration Transmission Service Charges $0.00 ($209,242.20) ($209,242.20) Inadvertent Interchange Charges $0.00 ($1,369.19) ($1,369.19) Regulation Charges $0.00 ($28,505.23) ($28,505.23) Synchronized Reserve Charges $0.00 ($3,729.07) ($3,729.07) Balancing Operating Reserves Charges $0.00 ($4,044.13) ($4,044.13) Day Ahead Operating Reserves Charges $0.00 ($6,784.53) ($6,784.53) Day-ahead Scheduling Reserve $0.00 ($218.55) ($218.55) Synchronous Condensing Charges $0.00 $0.00 $0.00 Reactive Services Charges $0.00 $0.00 $0.00 Meter Correction Charges $0.00 ($614.32) ($614.32) Day-ahead Economic Load Response Program Charges $0.00 ($141.76) ($141.76) Real-time Economic Load Response Program Charges $0.00 ($7.14) ($7.14) Balancing Operating Reserves Credits $0.00 $0.00 $0.00 Day Ahead Operating Reserves Credits $0.00 $0.00 $0.00 Locational Reliability Charges $0.00 ($1,133,098.80) ($1,133,098.80) Capacity Transfer Rights Credits $0.00 $16,259.10 $16,259.10 Capacity Resource Deficiency Credits $0.00 $33.40 $33.40 Demand Response and ILR Compliance Penalty Credits $0.00 $0.00 $0.00 RPM Auction Credits $999,058.80 $0.00 $999,058.80 Auction Revenue Rights Credits $0.00 $50,499.90 $50,499.90 Synchronized Reserve Credits $0.00 $0.00 $0.00 PJM Scheduling System Control and Dispatch Service Charges $0.00 ($10,974.93) ($10,974.93) Transmission Owner Scheduling System Control and Dispatch Service Charges $0.00 ($4,854.99) ($4,854.99) Reactive Supply and Voltage Control from Generation Sources Service Charges $0.00 ($24,912.38) ($24,912.38) Black Start Service Charges $0.00 ($1,300.53) ($1,300.53) North American Electric Reliability Corporation (NERC) Charge $0.00 ($444.37) ($444.37) Reliability First Corporation (RFC) Charges $0.00 ($568.49) ($568.49) Expansion Cost Recovery Charges $0.00 ($431.40) ($431.40) Transmission Enhancement Charges $0.00 $20,116.40 $20,116.40 Black Start Service Credits $5,486.77 $0.00 $5,486.77 Non-Firm Point-to-Point Transmission Service Credits $0.00 $1,376.80 $1,376.80 Generation Deactivation $0.00 $0.00 $0.00 Market Monitoring Unit (MMU) Funding $0.00 ($369.94) ($369.94) Organization of PJM States, Inc. (OPSI) Funding $0.00 ($41.18) ($41.18) FERC Annual Recovery $0.00 ($3,646.19) ($3,646.19) PPA $0.00 $598.30 $598.30 $1,004,545.57 ($1,288,170.61) ($283,625.04) Note: Generation - Realtime Energy credit of $14,562.96 and Balancing Operating Reserves Charges of $38.06 resulted from the Pollution Remediation CIP project. Therefore these PJM balances are allocated into June 2009 “Fixed Fuel and Transport Charges”. 36 Dover Monthly PGAM Report June 2009 - Final

II. LOAD, ALL IN ENERGY AND ALL IN COST OF SERVICE TABLE Budget Load Actual Load Budget AIE Actual AIE Actual YTD AIE Budget AICS Actual AICS Actual YTD AICS (MWh) (MWh) ($/MWh) ($/MWh) ($/MWh) ($/MWh) ($/MWh) ($/MWh) Jul 81,189 81,060 $92.30 $94.46 $94.46 $94.85 $97.04 $97.04 Aug 82,798 73,039 $92.29 $91.36 $92.99 $101.51 $101.39 $99.10 Sep 67,000 66,214 $85.81 $89.01 $91.80 $93.47 $95.27 $97.89 Oct 61,170 58,391 $87.47 $87.60 $90.92 $96.39 $97.90 $97.82 Nov 58,037 56,361 $87.62 $85.62 $90.02 $96.60 $93.43 $97.08 Dec 59,534 61,078 $87.25 $85.03 $89.25 $97.05 $98.21 $97.26 Jan 64,805 65,021 $88.79 $88.78 $89.19 $101.90 $99.99 $97.65 Feb 63,547 55,533 $89.48 $87.92 $89.05 $77.20 $97.01 $97.07 Mar 58,753 58,162 $86.98 $83.54 $88.49 $95.92 $92.43 $96.58 Apr 56,824 54,206 $85.94 $85.68 $88.25 $96.34 $97.54 $96.68 May 62,655 58,225 $85.52 $86.50 $88.10 $93.92 $95.96 $96.62 Jun 72,496 63,881 $88.32 $87.78 $88.07 $100.05 $107.80 $97.57 37 Dover Monthly PGAM Report June 2009 - Final

III. GLOSSARY All In Unit Energy Cost ("AIE") accounts for the wholesale energy costs excluding capacity obligations, capacity credits for Dover-owned generation, generation revenues, generating plant costs, the black start ancillary services credit for the Van Sant plant, and revenues associated with the sale of emission allowances. The AIE includes the costs from settling the hedged or forward transactions; the energy bought on the ISO (Independent System Operator or PJM) day-ahead to cover the open position (un-hedged); load following costs associated with balancing the actual load in the ISO real-time market; energy management service related fees; the ISO transmission charges and credits to load serving entities; the ISO ancillary services charges such as generation regulation, spinning reserve, and reactive power; and the ISO administrative charges and cost of service recovery fees. All In Cost of Service ("AICS") accounts for the net cost of wholesale power to the City of Dover Electric Utility. The AICS starts with the AIE and adds the costs or credits from capacity obligations, capacity credits for Dover-owned generation, generation revenues, generating plant costs, the black start ancillary services credit for the Van Sant plant, and revenues associated with the sale of emission allowances. Black Start is a generating ancillary service that is the process of restoring a generating plant to service without the support of an external power supply to power auxiliary equipment needed for start up operations. Capacity UCAP Obligated Purchased is the obligation and payment by all load serving entities in PJM including Dover for the Unforced Capacity (UCAP) requirement from PJM that satisfies the PJM reserve requirements. Generation Capacity Credit: is the credit provided to generators for supply capcity to the system. The price is determined by the PJM Reliability Pricing Market auction process that includes three auctions for each capacity year. Generation Production Margin accounts for the variable margin excluding variable O&M and emissions. The Generation Production Margin is calculated by taking the PJM revenues credited to the plant including any balancing charges or credits less the fuel costs. Generation Production Margin includes both “Economic and reliability dispatch” and “Testing.” Economic and reliability dispatch equals the margin achieved when Dover’s generating plants are dispatched by PJM for either economic dispatch (the system energy price is greater than the Dover bid price) or reliability dispatch whereby PJM pays the generating cost of the plants for the hours the plant is run to support the system. Generation Testing equals the Generation Production Margin associated with testing. This is usually expected to be a negative margin because the plant is potentially being dispatched / run when energy prices do not cover its costs. Non-Production Revenue equals the credits from PJM to Dover for Generation Capacity Credit, the Black Start Revenue and the sales by Dover of Emission Allowances. 38 Dover Monthly PGAM Report June 2009 - Final