Attachment

UTILITY COMMITTEE AGENDA September 28, 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. Update on Federal Energy Stimulus Funds (Tabled by Committee on 8/10/09) 2. Status Report on Recycling 3. PACE/NAES Monthly Report (July) 4. Adjournment by 5:55 P.M. /tm S:\ClerksOffice\PACKETS\2009\Committee\UTILITY\09-28-2009\09-28-2009 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.

Memorandum Office of the City Manager PO Box 475 Dover, DE 19903 Phone: (302) 736-7005 FAX: (302) 736-7002 E-mail tdeprima@dover.de.us To: Utility Committee From: Anthony J. DePrima, AICP, ICMA-CM City Manager Date: September 15, 2009 Subject: Status Report on Recycling 1. Status of Dover’s Recycling Program. As of June 30, 2009, Mr. Koenig’s Department has successfully completed the roll out of recycling containers to subdivisions in Dover. As of August 31, 2009, there are 7,565 containers in the curbside recycling system. For the month of August 2009, 116.68 tons of materials were picked up in the curbside recycling program. The tracking reports are attached for your review. 2. Status of Delaware Legislation I have done a search of the Delaware Legislature website and I did not finding any pending legislation in the 145th General Assembly. I did find a Joint Resolution passed by the House, but not the Senate, that requested the Department of Natural Resources and Environmental Control, in cooperation with the Delaware Solid Waste Authority and in conjunction with all interested parties, to enter into discussions leading to a plan with enabling legislation to be delivered to the Legislature by the first day of session in 2010 and that this plan and legislation must bring the State into compliance with the Governor’s expressed goal of “Zero Waste” by 2020. In addition I learned from a DNREC Recycling Program Manager that the DSWA and DNREC are working on a new Delaware Solid Waste Plan. The person I spoke with did not know of any recycling legislation plan by the administration, but noted that he did expect legislation amending and improving the “Bottle Bill”.

3. Status of DSWA contract The DSWA recycling contract expires in February 2010. The DSWA has expressed a strong desire to continue serving Dover. However, they did inform us that they will not unilaterally offer a new contract, and will only offer a contract within the context of a formal Request for Proposal that is open to all possible contractors. Therefore I have asked Mr. Koenig to prepare a RFP for recycling services. The goal is to have the RFP on the streets this fall so that we can make a decision before the end of the year. I have also asked Mr. Koenig to develop a cost analysis for the City operation of the recycling service in case we want to consider that option.

City of Dover July Monthly Report Energy and Operations Management August 20, 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 July, 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..........................................................................................................23 Appendices..........................................................................................................................................39 I. PJM Invoice Breakdown....................................................................................................39 II. Load, All In Energy and all in cost of service table ..........................................................40 III. Glossary ........................................................................................................................41 Dover Monthly PGAM Report July 2009 - Final 1

1.0 - EXECUTIVE SUMMARY All In Unit Energy Cost - Actual v Budget Generation MWh's: Actual v Budget Actual Load vs Budget Load 10,000 $96 100,000 $94 7,500 75,000 $92 $90 MWh MWh 50,000 $ /M W h 5,000 $88 $86 2,500 25,000 $84 $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 July was 71,704 MWhs versus a three year historic weather normalized load of 81,189 MWhs. Hedged transactions accounted for 70,640 MWhs or 98% of this volume (87% of forecasted load) at a cost of $5.9 million. Spot Market purchases resulted in a PJM charge of $233 thousand ($266 thousand charge in the Day Ahead market and a $33 thousand credit in the real time market). Other PJM related charges accounted for an additional $1.4 million cost, inclusive of all load related fees. July All-In Energy Unit Cost, excluding capacity obligations and credits was $0.66/MWh favorable compared to the budget for July 2009 of $93.76/MWh. For the year, projected All-In Energy Unit Cost is $99.49/MWh favorable to budget; based on YTD actual 1 month results and 11 months projected costs. Generation and Asset Management For the month of July McKee Run and Van Sant units did not dispatch into the PJM market. A relatively low average on-peak LMPs for the month demonstrated that the PJM system did not generally require support from the peaking units. The budget for the month expected approximately 3,500 MWhs of generation. Emissions and Allowance Management As shown in Exhibit 1, City of Dover holds 2,691 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. Dover Monthly PGAM Report July 2009 - Final 2

Exhibit 1: Emissions and Allowance Summary through July 31, 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 1/1/09 2008 2,691 0 Carryover 1/1/09 Initial 2009 2,723 -- -- 51 76 -- -- Allocation 7/30/09 2009 YTD 1 -- -- 6 12 -- -- Emissions3 Totals - 2007 Vintage 549 -- -- 0 -- -- -- Allowances - 2008 Vintage 2,691 -- -- 0 -- -- -- Allowances - 2009 Vintage 2,722 -- -- 45 64 -- $0 Allowances $0 $0 Total Revenue $0 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 July, and no units dispatched. City of Dover commenced its new fiscal year and the total net revenue through July 31st from allowance sales for the 2009-10 fiscal year was $0. Given current dispatch expectations, the market value of the 2007-2009 Dover allowance inventory is approximately $515 thousand at the time of this report. This represents 5,962 SO2 allowances trading at $77.50, 51 Seasonal NOx allowances trading at $150, and Annual NOx trading at $650. Compliance emissions allowance values continue to remain well below the cost of emission controls, but some hope exists for a return of market value next year. Dover Monthly PGAM Report July 2009 - Final 3

EMISSIONS & ALLOWANCE SUMMARY Allowance Allowance Emissions Emissions Allowances Allowances Allowance Vintage Allocation Month Sold Month Sold 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 0 12 0 0 64 NOx Seas – 2009 51 0 6 0 0 45 Operations Management Summary During the month of July, there were no employee or contractor related OSHA injuries, illnesses, time loss accidents or near misses. 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. Monthly Budget Variance - The actual expenses attributable to O&M of the two sites for the month of July were $562,248. The expenses were $56,831 or 0.98% over the approved budget of $505,417. The principal reason for the negative variance is due to insurance costs which were budgeted later in the year but were paid in July. In addition the insurance costs were also higher than budgeted. This was offset by lower personnel expenses which are attributable to having the first payroll of the current year accrued in June. Risk Management Summary Power demand in the PJM region has been down substantially during the summer as a result of the sluggish economy and markedly cool weather. This factor has largely offset the impact of rising oil prices over the past several months, which have recently traded above $70 per barrel. While the very recent heat wave increased cooling demand and pushed natural gas and power prompt 12- month prices slightly higher, longer-term gas and power forward prices continued to drift down. Overall, On-Peak Dover power prices for FY 2010-11 rose slightly (1.5% or $0.80/MWh) while the FY 2012-13 and FY 2013-14 fell 3.9% ($2.36/MWh) and 5.5% ($3.50/MWh), respectively, compared with the last reporting period. 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 and June emission testing. Dover Monthly PGAM Report July 2009 - Final 4

Wholesale Cost-of-Service Summary (Projected) Date Budget August July June 08/10/2009 Cost- Hedge Ratio Year-to Forecasted Cost-of Cost-of Cost-of Power of- Service w/o w/ Year over Service Service Year Service Solar Solar C-O-S 2008-09 $/MWh $/MWh $/MWh Budget Plant Plant Increase Budget 2009-2010 $93.26 $92.46 89% 89% 2.7% 2.53% $92.41 $92.79 2010-2011 N/A $85.28 85% 86% -7.8% -5.44% $85.17 $85.82 2011-2012 N/A $80.76 74% 76% -5.3% -10.45% $80.87 $82.09 2012-2013 N/A $73.95 56% 59% -8.4% -18.00% $74.97 $76.98 2013-2014 N/A $73.39 18% 20% -0.8% -18.62% $76.31 $79.58 *FY 08/09 Budgeted Cost-of-Service was $90.18/ MWh Dover Monthly PGAM Report July 2009 - Final 5

2.0 - BUDGET REPORT 2.1 – VARIANCE REPORT Budget Actual Variance Jul-09 Jul-09 Jul-09 Load Forecast 81,189 71,704 9,485 Power Supply Power Supply $5,929,094 $5,929,094 $0 Power Supply Management $269,593 $260,275 $9,318 Capacity Charges - Load $1,149,137 $1,154,394 ($5,258) PJM Charges - Load $1,413,674 $486,701 $926,973 Total - Power Supply $8,761,498 $7,830,464 $931,033 Generation Plant Operations $505,266 $562,248 ($56,982) Generation Fuel $293,361 $8,211 $285,150 Capacity Credits ($1,032,361) ($1,032,361) $0 PJM Credits ($434,112) ($5,487) ($428,625) Total - Generation ($667,846) ($467,389) ($200,458) Emission Allowance Sales Total - Emission Allowance Sales $0 $0 $0 Total Power Supply & Generation $8,093,651 $7,363,076 $730,576 Total Power Supply, Generation & Emission Sales $8,093,651 $7,363,076 $730,576 Unit Costs Total – Power Supply $107.91 $109.21 ($1.29) Total - Generation + Emission Sales ($8.23) ($6.52) ($1.71) Final Cost of Service to City of Dover Ratepayers $99.69 $102.69 ($3.00) Dover Monthly PGAM Report July 2009 - Final 6

Budget Actual Variance YTD YTD YTD Load Forecast 81,189 71,704 9,485 Power Supply Power Supply $5,929,094 $5,929,094 $0 Power Supply Management $269,593 $260,275 $9,318 Capacity Charges - Load $1,149,137 $1,154,394 ($5,258) PJM Charges - Load $1,413,674 $486,701 $926,973 Total - Power Supply $8,761,498 $7,830,464 $931,033 Generation Plant Operations $505,266 $562,248 ($56,982) Generation Fuel $293,361 $8,211 $285,150 Capacity Credits ($1,032,361) ($1,032,361) $0 PJM Credits ($434,112) ($5,487) ($428,625) Total - Generation ($667,846) ($467,389) ($200,458) Emission Allowance Sales Total - Emission Allowance Sales $0 $0 $0 Total Power Supply & Generation $8,093,651 $7,363,076 $730,576 Total Power Supply, Generation & Emission Sales $8,093,651 $7,363,076 $730,576 Unit Costs Total – Power Supply $107.91 $109.21 ($1.29) Total - Generation + Emission Sales ($8.23) ($6.52) ($1.71) Final Cost of Service to City of Dover Ratepayers $99.69 $102.69 ($3.00) Dover Monthly PGAM Report July 2009 - Final 7

2.2 – VARIANCE ANALYSIS Power Supply • The Power Supply Management variance is merely an estimate at this point. • As discussed during the June, 2009 Management Committee, City of Dover’s approved budget established in April utilized a preliminary PJM Base Residual Auction values. On June 2nd 2009, PJM announced final Base Residual Auction for current FY that resulted in increase of $5.25 per MW.day UCAP charge ($196.57). In addition PJM also discovered and corrected errors to the variables that calculate the current FY UCAP Obligation. Collectively these charges will result in unfavorable variances each month. • The PJM Charges for Load experienced a positive $927 thousand variance due to 12% reduction in demand that displaced the expected Open Position by the same amount; a $227 thousand favorable Basis variance; and an $191 thousand favorable Load Following variances for the month. Furthermore there was a $94 thousand favorable variance in transmission costs and a $45 thousand favorable variance in the PJM ancillary charges for the month. Offsetting these favorable variances were a $26 thousand unfavorable variance in transmission rights credits and $77 thousand unfavorable variance in the transmission loss refund. • For the month a favorable $926 thousand net variance between the Power Supply (fixed positions) and PJM Charges Load (Open positions and transmission etc) was realized through a favorable $849 thousand variance caused by the change in volume and a unfavorable $78 thousand variance caused by the change in price. Hence, 91% of the variance can be attributed to the change in the volume. Generations • Plant O&M resulted in an unfavorable variance of $56 thousand compared to the approved budget of $505 thousand due to maintenance expenses associated with the insurance costs that were paid earlier than the budgeted month. • Generation Fuel realized a favorable variance of $285 thousand for the month due to no dispatch for the month. • PJM Credits resulted in $429 thousand unfavorable variance for the month. The budget expected 3,500MWhs of generation for the month. Neither McKee Run nor Van Sant units were dispatched into the PJM market. Dover Monthly PGAM Report July 2009 - Final 8

3.0 – ENERGY MANAGEMENT 3.1 - PURCHASED POWER Management Highlights • Dover’s July load was 71,704 MWh which was 11.7% below the historic weather normalized load of 81,189 MWh. Hedge volumes accounted for 98.5% of actual load for the month. • The July All In Unit Energy cost excluding capacity of $93.11 is $0.66 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 Dover Monthly PGAM Report July 2009 - Final 9

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 Dover Monthly PGAM Report July 2009 - Final 10

Purchased Power Variance Report Budget Actual Variance Jul-09 Jul-09 Jul-09 City of Dover Load Load Obligation (MWh) 81,189 71,704 9,485 Unit Energy Costs ($ per MWh) Energy Cost (inc. Load Following & Pace Fees) $87.28 $87.46 ($0.18) Pass Through $5.22 $4.34 $0.87 Incentive Fees $1.27 $1.31 ($0.04) Total - All In Unit Energy Cost $93.76 $93.11 $0.66 Purchased Power Variance Analysis • Actual Dover load of 71,704 MWh was 11.6% below the projected July load of 81,189 MWh. • The All In Unit Energy Cost resulted in an favorable $0.66 per MWh variance due to lower than anticipated open position energy costs due to lower demand compared to historical July demand; a favorable Basis variance; and favorable Load Following variances for the month. Furthermore there was a favorable variance in transmission costs and PJM ancillary charges for the month. Offsetting these favorable variances were unfavorable variance in transmission rights credits and transmission loss refund. • The Management Incentive fee variance on a $/MWh basis is merely an estimate at this point. PJM Power Balancing and Load Related Fees Purchased Power (Hedges): 70,640 MWh’s @ $83.93/MWh: $5,929,094 Power Balancing and Additional PJM and Energy Manager Fee 3: $1,901,370 Total Cost to Serve Load (71,704 MWh’s) $7,830,464 ALL in $/MWh load cost inclusive of Energy Manager Fees: $109.21/MWh 3 Includes estimated Incentive Fees. Dover Monthly PGAM Report July 2009 - Final 11

3.2 - GENERATION MANAGEMENT • PJM did not dispatch Dover units into the market - approximately 3,500MWhs of generation was budgeted for the month. Generation MWh's: Actual v Budget 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 Dover Monthly PGAM Report July 2009 - Final 12

2009-10 Generation Production Margin v Budget $500 Thousands $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Budget ($) Actual ($) Dover Monthly PGAM Report July 2009 - Final 13

Generation Management Variance Report Budget Actual Variance Jul-09 Jul-09 Jul-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 1.7 Total Capacity from Gen (MW) 173.3 175 1.7 Gen Capacity Sales to PJM ($/MW.d) $191.32 $191.32 0 Incremental Auction Sales to PJM ($/MW.d) $0.00 $86.00 $86.00 Power Sales Power Sales (MWh) 3,576 0 (3,576) Sales Revenue ($ per MWh) ($119.87) $0.00 ($119.87) Power Sales Revenue ($) ($428,708.75) $0.00 ($428,708.75) Variable Fuel & Transport Fuel Oil No.2 Volume - McKee (gal) 0 0 0 Fuel Oil No.2 - McKee ($/gal) $0.00 $0.00 $0.00 Fuel Oil No.2 Cost of Goods Sold - McKee ($) $0.00 $0.00 $0.00 Fuel Oil No.2 Volume - VanSant (gal) 0 0 0 Fuel Oil No.6 - VanSant ($/gal) $0.00 $0.00 $0.00 Fuel Oil No.2 Cost of Goods Sold - VanSant ($) $0.00 $0.00 $0.00 Gas Volume (Dth) 46,493 0 46,493 Unit Gas Price ($/Dth) $5.55 $5.55 $0.00 Variable Gas Cost ($) $258,222.35 $0.00 $258,222.35 Transport ($) $27,430.89 $0.00 $27,430.89 Variable Gas and Transport Costs ($) $285,653.24 $0.00 $285,653.24 Variable Fuel & Transport Costs ($) $285,653.24 $0.00 $285,653.24 Testing $0.00 $0.00 $0.00 Generation Production Margin ($143,055.51) $0.00 ($143,055.51) Generation Capacity Payment Total - Generation Capacity Payment ($1,032,361) ($1,032,361) $0 Dover Monthly PGAM Report July 2009 - Final 14

Generation Management Variance Analysis Fuel Expense • PJM did not dispatch Dover units into the market and it did not consume any fuel oil nor spot natural gas purchase related to the power generation. 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. PJM Invoice (Black Start) $5,487 Fuel Oil Tank Heating & Black Start Gas Supply $0 Eastern Shore Demand Charge ($4,489) Eastern Shore Transport and Imbalance Charge $0 Transco Demand Charge ($3,722) Non-Production Energy Revenue/Costs ($2,724) Dover Monthly PGAM Report July 2009 - Final 15

Fuel and Transportation Date Volume (Dth) Price ($/Dth) Total Commodity Cost ($) Hess Corp Sub-Total 0 $0.00 $0.00 PESCO Sub-Total 0 $0.00 $0.00 NJNG Sub-Total 0 $0.00 $0.00 Total 0 $0.00 $0.00 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. Dover Monthly PGAM Report July 2009 - Final 16

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 $4,489 TransCo FT Demand Charge $3,722 Total Purchases $8,211 Other Gas Purchases Commodity and transportation imbalances on Eastern Shore Pipeline for the month resulted in no charge and it is summarized as follows. Eastern Shore Transport and Imbalance Charges Imbalance/dth Estimated Cost/dth Estimated Total Cost 0 $0.00 $0.00 $0.00 Transport Volume/dth $/dth Total Cost Firm/IT 0 $0.00 $0.00 Net Charge $0.00 Dover Monthly PGAM Report July 2009 - Final 17

Purchased Commodity Fuel Oil Summary Neither McKee Run units nor Van Sant were dispatched into PJM and no fuel oil #2 was consumed for the month. 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 it is a prudent purchase timing. Tank Inventory Estimates as of July 31 Tank Tank Capacity Inventory In Days of Burn (gallon) (gallon) (Typical Dispatch 4) McKee Run (#2 Fuel 2,554,105 337,519 3 Oil) VanSant 258,000 94,557 3 (#2 Fuel Oil) 4 As measured by tank level instruments. Tank levels may change due to oil temperature. Dover Monthly PGAM Report July 2009 - Final 18

3.3 - EMISSIONS AND ALLOWANCE MANAGEMENT As shown in Exhibit 1, City of Dover holds 2,691 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 July 31, 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 1/1/09 2008 2,691 0 Carryover 1/1/09 Initial 2009 2,723 -- -- 51 76 -- -- Allocation 7/30/09 2009 YTD 1 -- -- 6 12 -- -- Emissions3 Totals - 2007 Vintage 549 -- -- 0 -- -- -- Allowances - 2008 Vintage 2,691 -- -- 0 -- -- -- Allowances - 2009 Vintage 2,722 -- -- 45 64 -- $0 Allowances $0 $0 Total Revenue $0 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 July, and no units dispatched. City of Dover commenced its new fiscal year and the total net revenue through July 31st from allowance sales for the 2009-10 fiscal year was $0. Given current dispatch expectations, the market value of the 2007-2009 Dover allowance inventory is approximately $515 thousand at the time of this report. This represents 5,962 SO2 allowances trading at $77.50, 51 Seasonal NOx allowances trading at $150, and Annual NOx trading at $650. Dover Monthly PGAM Report July 2009 - Final 19

Compliance emissions allowance values continue to remain well below the cost of emission controls, but some hope exists for a return of market value next year. SO2 The SO2 allowance market remains supportive of prices in the $60-$80/ton range, with the most recent closing price at $77.50/ton. SO2 market prices are down for a number of reasons. In the wake of the initial CAIR rule promulgation, pre-2010 banked SO2 allowance prices spiked anticipating lower compliance values for allowances issued in 2010 or later. The DC Circuit remanded the rulemaking back to the EPA with the instruction that lessening the value of SO2 allowances established under the Clean Air Act was outside the scope of the EPA’s rulemaking authority. Thus, prior to CAIR re-promulgation, the market generally is seeing less of a premium on banked SO2 allowances. The slowed economy and lower power production for 2009 appears to be lessoning the demand for SO2 allowances as total emissions among covered entities will be significantly down compared to 2007 and 2008 (see Table 1). Through the first 6 months of 2007, SO2 emissions were approximately 4,445,372 tons for covered units. Through the first 6 months of 2008, SO2 emissions were approximately 3,939,906 tons for covered units. Through the first 6 months of 2009, SO2 emissions are only 2,546,000 – a significant drop from the previous two years. This emissions data, among other factors, calls into question whether there will be a December true-up spike in SO2 prices, as we have seen in the past. It is possible, that a December drop in prices will result from the lower emission levels of 2009. However, trades in the $85/ton range for Dec 09 delivery have been noted. Overall expectations are that SO2 trading volume will continue to be thin with a generally backwardated forward price curve as market participates await the repromulgation of CAIR. Again there is a sense among many of the market participants that the pre-2010 banked premium is unlikely to reappear. NOx The steady decline of annual NOx allowance values continued from approximately $1,100/ton down to $650/ton over the past month. Seasonal NOx allowance value also continued declining, moving from $250/ton down to $150/ton in thin trading. NOx prices, both annual and seasonal, are also down for a number of reasons. For starters, many recent NOx emission control installations (SCR, SNCR, low-NOx burners, etc.) put in place anticipating CAIR implementation (or a regime at least as strict from EPA’s upcoming new rule) are reported to be performing better than expected. Annual NOx emission prices have been further dampened in part due to State allocation of early action allowance pools under CAIR. Additionally, some states (VA for example) are beginning to redistribute to existing sources a number of annual NOx allowances set-aside for early action credit or new entrants. Annual prices have been still further depressed as a result of the EPA Compliance Supplemental Pool, which distributed an additional 200,000 Annual NOx allowances, which must be used this year, further depressing expectations of a 2009 true-up price spike. As with SO2 emissions, NOx emissions are way down this year when compared to 2007 and 2008 emissions data. NOx emissions for covered units for the first 6 months of 2007 and 2008 were Dover Monthly PGAM Report July 2009 - Final 20

approximately 1,712,000 and 1,622,000 tons respectively. NOx emissions for the first 6 months of 2009 were 984,000 tons. A slower economy with lower energy demand, gas prices at recent historical lows, gas storage at historical highs, and generally lower dispatch of NOx intensive units has contributed to lower NOx emissions levels for 2009 thus far. The NOx forward price curve is also backwardated as market participants await CAIR promulgation. Table 1 January - June Emissions 00 0 ,0 50 0 4 , ,0 0 0 , 00 00 4 ,0 0 50 0 3 , ,0 0 0 Tons 00 0 3 , ,0 0 0 , 50 00 2 ,0 0 00 0 2 , ,0 0 0 50 0 1 , ,0 0 0 , 00 00 1 ,0 0 50 0 2007 2008 2009 SO2 Nox SOx and NOx Outlook Hopes for a return of regulatory certainty in the emissions markets have been flat of recent. Senator Carper announced intention to introduce a three pollutant bill to add to carbon legislation after the August Recess. It is safe to say that politically Carpers push currently lacks legs and is not likely to garner relevant attention in Congress anytime soon. His intended link to carbon legislation may be broken if an energy bill only track is created in the Senate. Overall, legislative action to affirm CAIR and / or establish new requirements for SOx, NOx, and Hg is looking unlikely for the near future. Regarding, CAIR repromulgation EPA indicated that it plans to issue a draft of the new Clean Air Interstate Rule (CAIR) in early 2010; we expect it sometime in Q2 2010. Regulatory intelligence currently indicates that emissions trading system will be used similar to CAIR structures. Overall, the emissions markets are trading very thin and will likely continue to do so till the uncertainty lifts with market fundamentals clarifying in regulation. In addition to the control investments and orders made prior to the CAIR vacatur, this recent uncertainty has driven many Dover Monthly PGAM Report July 2009 - Final 21

compliance entities to look towards emission control installations as a firm risk management mechanism. 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 and Federal Carbon Outlook RGGI market prices are currently floating around $2.95/ton. Maintaining open interest between $2.75 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 $206,500. The main buoy of RGGI pricing currently is not market fundamentals as the market is expected to remain over-allocated / long into 2010. Rather, the conversion potential of RGGI allowances into Federal allowance volume in a national carbon market is the main support for RGGI pricing. While the reality of RGGI compliance for covered units exists, for many compliance is little more than “noise in the system” and opportunities to monetize or covert to federal and then monetize RGGI volume are being hunted. The “coastal” Democratic leadership behind the Waxman / Markey bill ensured that RGGI allowance conversion would take place – continuing the drive of federal market speculation into RGGI. Indeed, Waxman / Markey established the ratio for conversion based on the average RGGI auction clearing price as opposed to the actual “cost of obtaining and holding the allowance” thereby functionally allowing Dover to lift its cost basis on free allowance allocation up from zero for federal conversion. Thus, currently the value of RGGI allowances in the bank should be valued with consideration of potential conversion should a federal system be enacted, in addition to their higher regional value in a non-overallocated RGGI future. Dover Monthly PGAM Report July 2009 - Final 22

4.0 – OPERATIONS MANAGEMENT Management Highlights • During the month of July, there were no restricted work days or lost time accidents. The facility has now gone 185 days without an OSHA recordable accident and 1,578 consecutive days without a lost time reportable accident. There were no Near Miss events during the month. The plant received no Notice of Violations (NOVs) or other permit deviations during the month. • 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 were available for the month of July. • The plant received the final report from Lewellyn Technology (LT) who performed an Arc Flash Analysis of both generating facilities. The plant has evaluated the recommendations and is now in the process of developing an action plan to implement the recommendations and to use the findings from the report to implement new procedures for safety. • Ariva vibration report indicated excessive vibration on tower fan three. Ariva report also indicated abnormal results in the unit 1&2 tower fan gearboxes. Maintenance team addressed these issues. • The Capital Improvement Projects for the 2009-2010 physical year have been approved. • A Capital Improvement Project has been developed for cooling tower repairs and improvement to extend the lives of the cooling towers. • Final revisions are being made to the Appendix E reports from the emissions testing which occurred in June 2009. • NAES Scholarship awards were presented for the month. • The following is the NAES Monthly Report as submitted to PGAM Dover Monthly PGAM Report July 2009 - Final 23

NAES Corporation Dover, Delaware July 2009 Monthly Report NAES Scholarship Awards were presented to Dave Hodge’s daughter Mariah and Phil Marvel’s daughters Kelly and Katie. Dover Monthly PGAM Report July 2009 - Final 24

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 Dover Monthly PGAM Report July 2009 - Final 25

1.0 Environmental, Health and Safety: During the month of July, there were no restricted work days or lost time accidents. The facility has now gone 185 days without an OSHA recordable accident and 1,578 consecutive days without a lost time reportable accident. There were no Near Miss events during the month. The plant received no Notice of Violations (NOVs) or other permit deviations during the month. Environmental, Health and Safety Statistics Month Fiscal Year to Date (July 2009) (7/1/09-6/30/10) NOVs 0 0 Opacity Deviations 0 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 0 10 Man Hours Worked 5,123.5 5,123.5 Date last OSHA Recordable 1/27/09 Date last Lost Time Accident 4/05/05 Days since last OSHA recordable 185 Days since last Lost Time Accident 1,578 Emissions (NOx & SO2) All data thru 7/31/09 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 Dover Monthly PGAM Report July 2009 - Final 26

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 7/31/2009 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 2723 Note: Denoted data is as of 7/31/2009 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. 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 McKee VanSant McKee Run VanSant Vintage 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 Dover Monthly PGAM Report July 2009 - Final 27

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. Dover Monthly PGAM Report July 2009 - Final 28

2.0 Financial Financial – Current Month Month – July 2009 Actual Budget Variance Personnel 199,279 355,389 156,110 Materials & Supplies 2,681 25,875 23,194 Administrative Expenses 360,288 124,153 (236,135) Total $562,248 $505,417 ($56,831) Financial – Fiscal Year to Date Number of Months – 1 Actual Budget Variance Personnel 199,279 355,389 156,110 Materials & Supplies 2,681 25,875 23,194 Administrative Expenses 360,288 124,153 (236,135) Total $562,248 $505,417 ($56,831) 2.1 Variance analysis: The original budget for July was $505,417. The actual expenses for July are $562,248 for an unfavorable variance of $56,831 or 0.98%. The variance was due to the following: PERSONNEL EXPENSES - Labor, overtime, and burdens accounted for a favorable variance of $156,110. The first payroll of the current fiscal year accrued in the last fiscal year. MATERIALS AND SUPPLIES EXPENSES- A favorable variance of $23,194 was due to some of these costs being accrued into June of 2009. ADMINISTRATIVE EXPENSES - An unfavorable variance of $236,135 was due to insurance costs that were considerably higher than anticipated and budgeted later in the fiscal year. The current forecast is to finish this fiscal year at $5,883,743 expensed versus $5,798,711 budgeted putting us at 101.5%. This should change once we make the adjustments to the forecast, specifically in the insurance account. Dover Monthly PGAM Report July 2009 - Final 29

3.0 Operations Unit Operations / Outages / Trips During the month, there were no units dispatched at McKee Run or Unit #11 at VanSant. Month – July 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 0.00 0.00 0.00 0.00 0.00 0.00 Starts # 0 0 0 0 0 0 Gross Generation MWh 0.0 0.0 0.0 0.0 0.0 0.0 Net Generation MWh 0.0 0.0 0.0 0.0 0.0 0.0 Total Auxiliaries MWh 20.914 20.914 149.667 191.495 946 192.441 Auxiliaries purchased MWh 20.914 20.914 149.667 191.495 946 192.441 Fuel Gas Used MMBTU 0.0 0.0 0.0 0.0 0.0 0.0 Fuel Oil Used MMBTU 0.0 0.0 0.0 0.0 0.0 0.0 Fuel Oil Used Gallons 0.0 0.0 0.0 0.0 0.0 0.0 Total Fuel MMBTU 0.0 0.0 0.0 0.0 0.0 0.0 Net Heat Rate BTU/KWh 0.0 0.0 0.0 0.0 0.0 0.0 Unit Trips # 0 0 0 0 0 0 Capacity Factor % 0.0 0.0 0.0 0.0 0.0 0.0 Availability Factor % 100.00 100.00 100.00 100.00 100.00 100.00 Commercial % 0 0 0 0 0 0 Unavailability (CU) Planned Outage 0 0 Hours 0 0 0 0 Hours Maintenance Outage Hours 0.0 0.0 0.0 0.0 0.0 0.0 Hours Forced Outage Hours Hours 0 0 0 0 0 0 Reserve Shutdown Hours 744.000 744.000 744.000 744.000 744.000 744.000 Hours HW Boiler Gas Usage MMBTU 0 0 Pilot Gas Usage MMBTU 0 0 0 0 # Note: Does not include HWB or Pilot Gas. Fuel usage numbers are taken from fuel flow instruments Dover Monthly PGAM Report July 2009 - Final 30

2009-2010 Fiscal Year-to-Date (1 Month) 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 0.0 0.0 0.0 0.0 0.0 0.0 Starts # 0.0 0.0 0.0 0.0 0.0 0.0 Gross Generation MWh 0.0 0.0 0.0 0.0 0.0 0.0 Net Generation MWh 0.0 0.0 0.0 0.0 0.0 0.0 Total Auxiliaries MWh 20.914 20.914 149.667 191.495 .946 192.441 Auxiliaries purchased MWh 20.914 20.914 149.667 191.495 .946 192.441 Fuel Gas Used MMBTU 0.0 0.0 0.0 0.0 0.0 0.0 Fuel Oil Used MMBTU 0.0 0.0 0.0 0.0 0.0 0.0 Fuel Oil Used Gallons 0.0 0.0 0.0 0.0 0.0 0.0 Total Fuel MMBTU 0.0 0.0 0.0 0.0 0.0 0.0 Net Heat Rate BTU/KWh 0.0 0.0 0.0 0.0 0.0 0.0 Unit Trips # 0 0 0 0 0 0 Capacity Factor % 0.0 0.0 0.0 0.0 0.0 0.0 Availability Factor % 100.00 100.00 100.00 100.00 100.00 100.00 Commercial % 0 0 0 0 0 0 Unavailability (CU) Planned Outage Hours Hours 0 0 0 0 0 0 Maintenance Outage Hours 0.0 0.0 0.0 0.0 0.0 0.0 Hours Forced Outage Hours Hours 0 0 0 0 0 0 Reserve Shutdown Hours Hours 744.000 744.000 744.000 744.000 744.000 744.000 HW Boiler Gas Usage MMBTU 0 0 Pilot Gas Usage MMBTU 0 0 0 0 VanSant Lifetime through 7/31/09 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 09-10 Fuel FY 09-10 Inventory Inventory Purchases Inventory Inventory Purchases Inventory (Start) (End) (Month) (Change) (Start) (YTD) (Change) McKee Run (#2 Fuel Oil) 337,519 337,519 0 0 337,519 0 0 VanSant 94.388 94.557 0 114 94,388 0 114 (#2 Fuel Oil) Note: As measured by tank level instruments. Tank levels may change due to oil temperature. Dover Monthly PGAM Report July 2009 - Final 31

Capacity Testing – FY 2009-2010 Summer 2009 (June 1- Aug 31) Winter 2009-2010 (Dec 1- Mar 1) Unit Rated Net Reported Net Unit Rated Net Reported Net Capability (MW) Capability (MW) Capability (MW) Capability (MW) 1 17 17.24 1 17 17.3* 2 17 17.59 2 17 17.9* 3 102 102.00 3 102 102.3* VanSant 39 40.30 11 40 40* Total 175 177.13 Total 176 177.50 Note: * depicts a unit that has not completed capacity test for the PJM Demonstration Period in FY 2009- 2010. Team Report: Operations completed project on #1, #2, & #3 fuel oil burner pump rooms by removing insulation, lagging, and unused heat tracing. After all the insulation was removed all the oil lines were painted with epoxy paint. To finish the project teams labeled all the piping with directional flow labels on all the oil piping. Operations completed a similar project in epoxy painting the oil piping on all three burner decks and new fuel oil regulating stations from the oil conversion project on #3 unit and labeled oil piping with directional flow labels. A study group is being formed to help operators pass the PJM Dispatcher Certification exam. The study group will be lead by an Operations Supervisor and will concentrate on areas that need to be focused on like Emergency Procedures or other areas the operators are weak on. Teams continued training within the Plant Readiness Program (PRP) to keep their skills and knowledge of the plant up to date particularly when the generating units are off line or when they are not supporting maintenance activities. The GPI online training which supports our safety and environmental training are being used by the teams to complete their training. GPI also has a number of courses that are used to support operator advancement and refresher training. Dover Monthly PGAM Report July 2009 - Final 32

4.0 Maintenance During the month of July, plant maintenance staff continued addressing the backlog of work orders. Sixty-eight work orders were issued during the month, with sixty-eight work orders being completed during the month. The table below summarizes the monthly work order activities. Work Order Report July - 09 Outstanding From Outstanding Previous Issued This Completed at the end of Priority # Months Month This Month the month P1 0 0 0 0 P2 0 3 3 0 P3 9 21 23 7 P4 26 23 19 30 P5 20 1 0 21 P6 0 0 0 0 P7 8 0 2 6 P8 13 0 0 13 P9 13 6 2 17 P6 - 1 0 0 0 0 P6 - 2 0 0 0 0 P6 - 3 0 2 2 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 22 12 17 17 Totals 111 68 68 111 Note: PM's are included in the priority totals Notable activities during the month include: 1) Ariva vibration report indicated excessive vibration on tower fan three. Maintenance team inspected tower fan and found two damaged fan blades. Both fan blades were replaced and the fan test run for vibration. Fan tested OK. 2) Ariva report indicated abnormal results in the unit 1&2 tower fan gearboxes. Maintenance staff changed the tower fan gearbox oil in all ten fans. 3) XL Insurance Company suggested a cathodic protection inspection be performed at VanSant for all below ground oil piping. Inspection of the oil piping and the integrity of the piping metal were reported to the plant staff. Lightening arrestors were placed on all exposed oil piping flanges resulting in added protection of the oil system piping. Dover Monthly PGAM Report July 2009 - Final 33

4) Jersey IC completed a thermography survey while each unit was in operation during our June testing. A detailed report was received by the plant staff. Maintenance staff completed three action items from the thermography report. Hotspots were found on 3B vacuum pump lead wires, 3B vacuum pump breaker and VanSant’s “A” exhaust frame blower lead wire. Each item was inspected, cleaned and retighten or replace hardware per the report. 5) Radius completed our quarterly fire protection inspection at each cooling tower. Fire protection systems were manually tested. Both fire alarm bells would not sound off and one remote alarm to the control room wasn’t working. Two safety work orders were written as a result of the inspection. Both safety work orders were completed within two days of the inspection. Dover Monthly PGAM Report July 2009 - Final 34

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. Units 1, 2 and 3 have successfully made the Equipment conversion and successfully completed a Winter Period Capacity Test. Schedule: Additional testing & tuning needed to optimize Unit 3 operation will be done as opportunities arise with dispatch by PJM. Final reports from the emissions testing for DNREC that occurred in June have been received but had errors in the report and we are working with the testing company to resolve. EG0904 MR & VS Arc Flash Progress: Phase One of the project is complete and a final Analysis report was received. The report findings are being reviewed to determine scope for phase two. Schedule: Task statement(s) will be developed as necessary for implementation of action items from report. EG1001 VanSant Mark IV Progress: Task statement and work scope is being developed Controls Upgrade for distribution in early September. Schedule: Send out for bids in early September. Evaluation of bids and selection of vendor in October 2009. Engineering, design and procurement to follow with installation and testing of system in addition to operational testing of the system in May 2010. McKee Run Plant Progress: Task statement and work scope is being developed Paving for distribution in late 2009. Schedule: Send out for bids, EG1002 evaluation of bids and selection of vendor for a Spring 2010 completion. Miscellaneous Progress: This project is for the unexpected needs that may Capital Equipment occur during a budget year that were unexpected due to EG1003 Replacements equipment failure for example. Schedule: The funding is in place and there are no capital items identified at this time to go into this project fund. Mckee Run Progress: A task statement has been developed and needs to Warehouse & be finalized. A RFP will be then be advertised in late August EG1004 Administration 2009. Schedule: After some planning the work should take Building Fire place in early 2010. Protection Dover Monthly PGAM Report July 2009 - Final 35

5.1 CIP Budget Original Latest Project Budget Estimate Description Number ($ X 1000) ($ X 1000) MR Fire Protection System EG0801 50 50 Upgrades MR Pollution Remediation EG0804 3800 3200** Equipment MR & VS Arc Flash Analysis Phase EG0904 125 75* II EG1001 VanSant Mark IV Controls Upgrade 700 700 EG1002 Mckee Run Plant Paving 240 240 Miscellaneous Capital Equipment EG1003 51 51 Replacements Mckee Run Warehouse & EG1004 Administration Building Fire Protection 55 55 * $50K removed and put into O&M budget. The remaining $75K was put into the 2010 O&M budget **Includes latest projection for fuel usage for testing Dover Monthly PGAM Report July 2009 - Final 36

6.0 General Plant Information Training The plant had training on our updated Facility Response Plan. The training went over scenarios of having an oil spill getting to one of our outfalls and making it to the lake. From the training personnel came up with some ideas how to improve our reaction time. We purchased some plugs for the outfalls so we could stop any oil or chemical by plugging the outfall so there would be no or minimal contamination in the lake. Plant staff continues to train with the GPI online training for completing the OSHA and environmental training requirements for the year. Plant staff have also continued to review the Plant SMPs (Safety Manual Procedures) for 2009. Plant personnel continue to train using the EDQP program. This program is used for developing the employee for the next level at their position or we use it for a refresher course for the plant personnel that are at a senior position so they can review plant systems. Topics discussed during the monthly safety committee meeting were reviewed by the entire staff. Other Events The plant received the final report from Lewellyn Technology (LT) who performed an Arc Flash Analysis of both generating facilities. The plant has evaluated the recommendations and is now in the process of developing an action plan to implement the recommendations and to use the findings from the report to implement new procedures for safety. Labeling of electrical panels has been completed indicating arc flash hazards. In addition, training is being scheduled for plant personnel to provide greater understanding of arc flash exposure and personnel safety. A Capital Improvement Project has been developed for cooling tower repairs and improvement to extend the lives of the cooling towers. This plan prioritizes work that needs to be completed by the inspection report that was supplied by SPIG on #3 unit cooling tower. On a parallel path, the plant has received a budgetary quote for a tower replacement. This information will be provided to Pace Global who will assist in determining which option to pursue. NAES Scholarship awards were presented to Mariah, daughter of Senior Operator Dave Hodge and Katie and Kelly Marvel, daughters of Phil Marvel, Maintenance Supervisor. Mariah is a first time recipient and will be a freshman at the University of Pennsylvania studying psychology. Katie and Kelly are recipients for the third consecutive year. They both attend Liberty University and will be juniors, both majoring in communications. The Capital Improvement Projects for the 2009-2010 physical year have been approved. These projects include a Mark IV controls upgrade at VanSant, paving the roads at the McKee Run Generating Station, Miscellaneous Capital Equipment Replacements, and the installation of a Heat and Smoke Detection for the McKee Run warehouses and administration building. Final revisions are being made to the Appendix E reports from the emissions testing which occurred in June 2009. Catalyst is in the process of revising the reports as well as providing the plant with the Dover Monthly PGAM Report July 2009 - Final 37

Particulate Testing test results. These reports will be submitted to the EPA and DNREC after a thorough review by the plant with assistance from Monica Lopes, NAES ESS. The plant FRP has been updated as well as the plant-wide training of all plant staff. In addition, table top drills were utilized to aid in preparing plant personnel for a possible spill drill that the EPA had scheduled for the Dover area. Calendar of Events Date Toxic Release Inventory (TRI) Due July 1, 2009 Fiscal Year 2009-2010 Begins July 1, 2009 EIA Reporting Requirements EIA-860 Report July 15, 2009 McKee Run and VanSant Title V Semi-Annual Certification Due August 1, 2009 NOx Ozone Season Ends September 30, 2009 Winter Capacity Period December 1, 2009 to February 28, 2010 #1 Unit Annual Inspection October 5 to October 11, 2009 #2 Unit Annual Inspection October 12 to October 18, 2009 One Year Accident Free Target January 27, 2010 McKee Run and VanSant Title V Annual Certification Due February 1, 2010 #3 Unit Annual Inspection March 9 to May 3, 2010 NOx Ozone Season Starts May 1, 2010 Fiscal Year 2009-20010 Ends June 30, 2010 7.0 Summary of NAES Performance to Date Plant Performance FY 2009-2010 Measure Month Year to Date YTD FY Maximum Incentive Incentive Commercial Unavailability (CU) 0% 0% $88,611 $88,611 Safety 0 0 $16,614 $16,614 Environmental 0 0 $16,614 $16,614 Capacity Tests Summer Winter Summer Winter Completed Unit 1 No No Yes * No $1,662 $3,323 Unit 2 No No Yes * No $1,662 $3,323 Unit 3 No No Yes * No $9,969 $19,938 Unit 11 No No Yes * No $3,323 $6,646 Total YTD Total YTD 89.29% $138,454 $155,069 Incentive % Incentive Note: * depicts a unit that has completed capacity test during the Summer PJM Demonstration Period which includes the months from June 1 to August 31. Dover Monthly PGAM Report July 2009 - Final 38

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 ($266,887.27) ($266,887.27) Realtime Energy $0.00 $33,441.09 $33,441.09 Transmission Losses Credits $0.00 $58,179.26 $58,179.26 Network Integration Transmission Service Charges $0.00 ($216,216.94) ($216,216.94) Inadvertent Interchange Charges $0.00 ($1,616.92) ($1,616.92) Regulation Charges $0.00 ($24,460.45) ($24,460.45) Synchronized Reserve Charges $0.00 ($3,146.94) ($3,146.94) Balancing Operating Reserves Charges $0.00 ($5,239.48) ($5,239.48) Day Ahead Operating Reserves Charges $0.00 ($8,794.57) ($8,794.57) Day-ahead Scheduling Reserve $0.00 ($199.98) ($199.98) Synchronous Condensing Charges $0.00 ($45.55) ($45.55) Reactive Services Charges $0.00 ($20,832.58) ($20,832.58) Meter Correction Charges $0.00 ($11.78) ($11.78) Day-ahead Economic Load Response Program Charges $0.00 $0.00 $0.00 Real-time Economic Load Response Program Charges $0.00 $0.00 $0.00 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 ($1,171,202.92) ($1,171,202.92) Capacity Transfer Rights Credits $0.00 $16,801.07 $16,801.07 Capacity Resource Deficiency Credits $0.00 $7.44 $7.44 Demand Response and ILR Compliance Penalty Credits $0.00 $0.00 $0.00 RPM Auction Credits $1,032,360.76 $0.00 $1,032,360.76 Auction Revenue Rights Credits $0.00 $52,183.27 $52,183.27 Synchronized Reserve Credits $0.00 $0.00 $0.00 PJM Scheduling System Control and Dispatch Service Charges $0.00 ($17,085.73) ($17,085.73) Transmission Owner Scheduling System Control and Dispatch Service Charges $0.00 ($5,454.54) ($5,454.54) Reactive Supply and Voltage Control from Generation Sources Service Charges $0.00 ($24,777.82) ($24,777.82) Black Start Service Charges $0.00 ($1,205.73) ($1,205.73) North American Electric Reliability Corporation (NERC) Charge $0.00 ($499.21) ($499.21) Reliability First Corporation (RFC) Charges $0.00 ($638.70) ($638.70) Expansion Cost Recovery Charges $0.00 ($431.52) ($431.52) Transmission Enhancement Charges $0.00 ($31,635.67) ($31,635.67) Black Start Service Credits $5,486.77 $0.00 $5,486.77 Non-Firm Point-to-Point Transmission Service Credits $0.00 $1,545.52 $1,545.52 Generation Deactivation $0.00 $789.19 $789.19 Market Monitoring Unit (MMU) Funding $0.00 ($394.43) ($394.43) Organization of PJM States, Inc. (OPSI) Funding $0.00 ($46.25) ($46.25) FERC Annual Recovery $0.00 ($4,096.43) ($4,096.43) PPA $0.00 $879.62 $879.62 $1,037,847.53 ($1,641,094.95) ($603,247.42) Dover Monthly PGAM Report July 2009 - Final 39

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 71,704 $93.76 $93.11 $93.11 $99.69 $102.69 $102.69 Aug 82,798 $94.09 $101.23 Sep 67,000 $93.03 $99.53 Oct 61,170 $89.63 $98.32 Nov 58,037 $89.30 $98.74 Dec 59,534 $89.46 $99.70 Jan 64,805 $92.14 $100.84 Feb 63,547 $91.38 $97.04 Mar 58,753 $90.80 $99.03 Apr 56,824 $92.10 $101.53 May 62,655 $91.96 $99.69 Jun 72,496 $94.17 $105.37 Dover Monthly PGAM Report July 2009 - Final 40

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. Dover Monthly PGAM Report July 2009 - Final 41