Attachment

EXHIBIT #1 Council Workshop of 12/1/2008 City of Dover City Council Meeting 2030 Energy Plan Committee EXHIBIT #1 Status Report December 1, 2008 Council Workshop of 12/1/2008

Agenda • How Dover provides electric service – Dover generates, distributes and provides retail services – A member of an 11 state wholesale market – Dover participates in a broad and diverse set of markets: including electricity, fuel, and environmental compliance • Securing Dover’s energy future – Objectives – Options reviewed – Next steps • Managing today’s energy challenges – Energy conservation – Greening the environment -2- The Power of Integration

Dover … Electric Service Provider -3- The Power of Integration

Delivering Electrical Service Relies on Numerous Functions Dover Electric Department • Develops strategy and capital budgets • Manages day-to-day operations for transmission, distribution and retail ƒ T&D O&M ƒ Retail customer relationship management, billing, A/R management, etc. ƒ Develop rates ƒ Long range resource planning Pace NAES • Asset Management • O&M • Energy Management • Training • Risk Management • Operating Programs • Strategic Advisory • Preventative Maintenance -4- The Power of Integration

Dover Receives Electricity From Numerous Sources Power Flows to Dover from Plants as far away as PA & OH X Dover Source: PJM 98% of Dover’s electricity is sourced from plants outside of Dover’s electrical grid. -5- The Power of Integration

Power Generation in PJM Widely Disbursed PJM has over 1,000 generating sources, with diverse fuel types, most of which are located outside of Delaware. -6- The Power of Integration

Dover Manages Markets that are Diverse & Individually Complex Forward Purchase of a pre-defined quantity of electricity delivered Electric to a specific location at a pre-defined price. Dover has contracts procured Power through 2013. Spot ISO Daily purchases of the projected wholesale electricity needs Electricity in the Day Ahead (DA) market and then the balancing of the (DA & RT) wholesale load in the Real Time (RT) market. Natural Gas Purchase commodity in spot OTC market on Transco & Commodity & Columbia pipelines; purchase of interruptible transport Transport services; and balancing of actual vs. projected usage. Fuel Oil Purchase of distillate fuel oil for inventory to be used as Markets back up fuel; and manage oil deliveries and quality control. SO2 and NOx Sale of sulphur dioxide (SO2) and nitrogen oxide (NOx) Compliance allowances in the Over-The-Counter (OTC) markets and Allowances transfers through the EPA Allowance Tracking System. RGGI Carbon Purchase in auction or OTC and sales in OTC; Authorized Compliance Account Representative transfers carbon allowances Allowances through the RGGI Allowance Tracking System -7- The Power of Integration

Dover 2030 Energy Committee has a Focused Objective & a Broad Based Membership Objective: Identify and pursue options for long-term reliable, cost competitive and environmentally prudent electricity for the citizens of Dover. Membership: The City of Dover Outside Representation Council Member and Committee Frederick James, Pace Chair Eugene B. Ruane Francis Hodsoll, Pace Council Member Beverly C. Keith Mills, Pace Williams Vincent Scire, NAES Corporation Mayor Carleton E. Carey, Sr. Anthony DePrima Ronald Lunt Donna Mitchell -8- The Power of Integration

The Committee has Achieved Substantial Progress Toward its Objective Conducted market Formed the 2030 assessment; Developed RFQ & Energy Plan evaluated RFP Process Committee Dover’s energy & capacity needs Conducting RFP: Conducted RFQ … Enhancing 4 developers market invited to next assessment & phase evaluating proposals -9- The Power of Integration

Securing Dover’s Energy Future - 10 - The Power of Integration

Electricity Service Requires Both Capacity and Energy CAPACITY ENERGY Electrical Electrical energy to generation potential satisfy customer to ensure system usage reliability. Capacity and energy are sold and priced independently. - 11 - The Power of Integration

Dover Faces Net Deficits in Energy and Capacity Dover Generation Deficit: FY 2007-08 Actuals Total Energy Energy Capacity & Capacity Dover Obligation 770,999.0 MWh 190.2 MW* -- Cost ($56.9) M ($12.2) M ($69.1) M Value from Dover Generation $1.0 M $11.7 M $6.4 M** Dover Dependence on PJM ($55.9) M ($0.5) M ($62.7) M Market (effective purchases) Supplied by Dover 1.7 % 96.4 % 9.3 % Generation * Weighted average capacity obligation accounting for change in obligation with the start of the PJM 2009 Capacity Year ** Value remaining after $6.6M Generation O&M expense is subtracted. - 12 - The Power of Integration

Fuel and Power Prices Are Extremely Volatile … - 13 - The Power of Integration

… Environmental Compliance Markets Are Likewise Extremely Volatile Historical SO2 and NOx Allowance Prices Historical EUA Carbon Allowance Prices - 14 - The Power of Integration

Reliability Continues to Plague the Grid Blackouts Transmission Line Blamed on Failure Creates Transmission Potential for Rio Line Failure Grande Valley Outage Associated Press August 26, 2005 AEP Texas Dover, Del., October 17, 2006 Businesses Suffer Power Outage Delaware State Edmonton Power Transmission Line Outages Fuel News Failure Affects July 20, 2006 Blackout Fears – Nearly 3,500 in Increased Demand Southwest Mason Across Transmission County Power Lines Could Cause Outage Catastrophic Failure Stormwire Mason County PUD July 22, 2008 November 25, 2008 - 15 - The Power of Integration

Dover’s Position and Market Dynamics Drove Decision Energy + Capacity Deficits Unprecedented Volatility in Decision to Energy, Capacity and Explore New Compliance Markets Sources of Long Term Supply Concerns about through an Reliability of Imported RFP – New Supply Steel in the Ground Concerns about New Environmental Compliance - 16 - The Power of Integration

Request for Proposal (RFP) Designed to Leverage Competitive Market Objectives • Explore generation options for meeting the City’s growing capacity shortfall • Enhance reliability and provide cost effective energy solutions – The RFP stated “The City is particularly interested in cost-based, intermediate or higher dispatch generation to compliment its current supply portfolio. Dover is also interested in opportunities to integrate renewable energy sources into its supply mix. ” • Provide options for utilizing the Garrison Tract site • Employ the development community to present viable options • Utilize market based information from the development community, enhanced with Pace’s independent view, to assess proposals - 17 - The Power of Integration

RFP Process Designed for Flexibility Governed by Clear Objectives Request for Qualified Qualifications Bidders & RFP • Advertise • Review Qual Request for Short Packages Proposals List 1 including Concept • Develop list of “Qualified Bidders” • Review indicative proposals Exclusive, Decision Open Book • Utilize open book • Ratify a contract, or process to perform due Negotiations with • Re open RFP, or diligence Competitive • Cancel RFP • Conduct One-on-ones Threat • City Council updates • Collaboratively develop binding contract • Chose Finalist for • Solicit market bid for capacity and energy “Exclusive” • Maintain right to walk away from deal - 18 - The Power of Integration

Seven Unique Proposals Received In Four Categories Capacity In-Service Acres Option Fuel Term* Location (MW) Date Required Peaking Plant NG / Fuel 98 30-yr PPA 2013 Garrison Tract 20 Option 1 Oil Backup Peaking Plant NG / Fuel 92 30-yr PPA 2013 Garrison Tract 20 Option 2 Oil Backup Combined Cycle 100 NG / Fuel Off-Site - New 20-yr PPA 2012 N/A Out of State Oil Backup Jersey Combined Cycle NG / Fuel 150 30-yr PPA 2012-2013 Garrison Tract 30 Garrison Tract Oil Backup Solar Panels 10 N/A 25-yr PPA 2011 Garrison Tract 80 Off-Site - Wind Turbine 15 N/A 25-yr PPA 2011 N/A Delaware Market Capacity 2-yr Forward 25 N/A N/A DPL N/A & Energy Contract * PPA: Purchased Power Agreement, a long term agreement with fixed terms for capacity, energy or both - 19 - The Power of Integration

Evaluation Approach Designed to Provide Both Structure and to Allow for Diversity of the Proposals Peakers Economic Assessment • Capacity/Energy Pricing Qualitative Assessment • Minimize cost of • Environmental service Stewardship • Maintain price stability • Use of Garrison Tract Site • Capacity Factors • Schedule / Timing GTCC/ • Ownership Participation: Intermediate Equity Performance Risk • Technology Risk • Developer Qualifications • Technical & Market Renewables • Municipal Experience • Approach to Process - 20 - The Power of Integration

All Proposals Have Economic Pros, Cons and Risks Environmental Capacity Levelized Proposal Energy Price Fuel Risk Compliance Value Cost Risk Peaking Plant Option 1 Peaking Plant Option 2 Combined Cycle Out of State Combined Cycle Garrison Tract Solar Panels Wind Turbines The Renewables levelized costs does not include the value from compliance with renewable portfolio standards and carbon regulations - 21 - The Power of Integration

All Proposals Had Strengths and Weaknesses Qualitative Performance Risks Renewable Dover Technology Developer City’s Option Attributes Site Risk Risk Reliability Peaking Option 1 Peaking Option 2 Combined Cycle – Out of State Combined Cycle – Garrison Tract Solar Panels Wind Turbines - 22 - The Power of Integration

Several Proposals Appear to Dominate Qualitative Performance Option Economics Assessment Risk Peaking Option 1 Peaking Option 2 Combined Cycle – Out of State Combined Cycle – Garrison Tract Solar Panels Wind Turbines - 23 - The Power of Integration

Conceptual Rendering of Combined Cycle Plant - 24 - The Power of Integration

5 MW Solar Plant – Espenhain, Germany - 25 - The Power of Integration

RFP Next Steps Focused on Finalizing Phase II Request for Qualified Qualifications Bidders & RFP • Advertise • Review Qual Request for Short Packages Proposals List 1 including Concept • Develop list of “Qualified Bidders” To Dos • Second Order Exclusive, Decision Economic Analysis Open Book • Ratify a contract, or • EPC Market Negotiations with • Re-open RFP, or Assessment Competitive • Cancel RFP • Solar Market Threat Assessment • Translate negotiation objectives into • Develop Final negotiation strategy and tactics Recommendation • Develop priority of economic drivers • Repetitive assess and negotiate cycles - 26 - The Power of Integration

Managing Today’s Energy Challenges - 27 - The Power of Integration

The City is Promoting Conservation and Renewables • Conservation – The City has secured the services of Energy Depot to support rate payers’ conservation and energy efficiency efforts. – The City participates in PJM’s demand response program. – The City supports the development of the Sustainable Energy Utility (SEU): promotion of energy conservation, energy efficiency, renewable energy, and energy financing. • Renewables – Dover makes available to its rate payers voluntary renewable energy credits. – The City participates in the Delaware Green Energy Program: cash incentives for homes and businesses for the installation of renewable energy systems. – The City contracted through DEMEC for a portion of the BlueWater Wind energy output. Bluewater was recently approved by the DE Public Commissioner. - 28 - The Power of Integration

Web Access to Conservation Resources and Renewable Support - 29 - The Power of Integration