This is a work letter. At work, we have been planning to add some new generation resources. In addition to adding some large solar photovotalic (PV) generation coupled with some batteries for energy storage, we need to add some quick start - quick ramp natural gas fired generation to provide for ancillary services and capacity backup for the solar facility. This was planned to be accomplished with some GE LM6000s. The GE LM6000 is essentially a Boeing 747 engine with some extra turbine stages and hooked up to an electrical generator. This is a land based aero-derivative gas turbine. In order to build any generation, the first step is to get it approved through the Arizona Corporation Commission (ACC). Arizona Electric Power Cooperative (AEPCO) is a regulated utility in Arizona. (all but SRP are regulated through the ACC.). The approval process for AEPCO looks like this. Step 1: get ACC approval to finance the capital required to build generation. Step 2: get approval through the Arizona Department of Environmental Quality (ADEQ) for a title V air permit (allows emissions into the air). Step 3: Get ACC approval to roll the cost recovery for the capital acquisition into new electric rates charged to the Members. Actually building the units can happen anytime after Step 1 and before Step 2. It is a convoluted process that is not without risks. In Louisiana, Big Cajun II power plant owned by Cleco went into bankruptcy in 2006 due to capital improvements approved in Step 1, but denied in Step 3. By not being able to recover the capital costs in their rates, they were forced into bankruptcy.

Wednesday October 12, was the date of the open meeting with the AEPCO financing application on the agenda. As part of the strategy for approval, our Member cooperatives spread the word about our plan for new resources and sought local support from the communities which they serve. Sulfur Springs Electric Valley Cooperative (SSVEC) rented a couple of busses and actually bussed people from their communities to Phoenix to be present during the open meeting and to provide comments should they desire. All of AEPCO's Board members and management staff were present for the meeting, and 5 people including Pete Scott (CFO) Chris Jimenez (Director of Energy Services), Katie Hardman (Resource Planning Manager), Michelle Freeark (Director of Regulatory Affairs) and me (Director of Generation Engineering). Our attorney, Jennifer Cranston was to represent us at the open meeting, but we are there to answer any questions that may be asked of us during the meeting. AEPCO also had shirts printed to be given to supports such that the commissioners would be able to easily identify the local support that showed up during the meeting.

After the opening comments from our attorney, the floor was opened up for public comments. There were roughly 30 people who commented on our financing application. All of them, with the exception of 1 from the Sierra Club were in favor of application being approved. During the public comments a timer was set up and each person was limited to 2 minutes of comment to keep the meeting moving forward. After the public comments, the commissioners were allowed to ask questions. Only 2 had questions for us. Sandra Kennedy & Ana Tovar. During these questions, Jennifer would pause her comments and confer with the appropriate individual of AEPCO's staff to address the nature of the question. The first question was about rates and how much they would be increased due to this project. The answer was they would actually be decreased as they would offset market purchases and produce power with a more efficient unit than is presently operating. Commissioner Kennedy asked this question 3 times and was not happy with our response - she finally acknowledged that we didn't understand the question and moved on. The next question was about a unit outage on Gas Turbine 3 (GT3) at the plant. During this question, I was the one to provide the reasoning and I did so. Then there was a follow up question on GT3 and as I was briefing Jennifer, the ACC staff attorneys interrupted the questioning and informed the Commissioner that her questions about a specific event were not relevant to this application approval on the agenda. This happened 2 more times and finally Commissioner Kennedy was done asking questions.

Commissioner Tovar started to ask questions. Her first question wanted to know what reliability issues AEPCO experienced in February 2021 due to winter storm Uri that affected the natural gas production of Texas. As I was briefing Jennifer on this response, the ACC staff attorneys again reminded the Commissioners that questioning about a specific event in the past is not relevant to the matter of the financing application on the agenda. The question was phrased in many ways and finally the ACC staff attorney stated that open meeting violations are personal, and if the Commissioners continue on their line of questioning they would be receiving a violation - but the staff attorney had performed her job by warning the Commissioners. At this, Commissioner Tovar was finished with her questioning.

After this the voting was held. After the open remarks, Commissioner O'Connell had proposed an amendment to our application that would remove the interest rate cap of 6.5% that was attached to our application as we didn't' have any control on market conditions. This was voted to pass 4-1. Next was the vote on our financing application. This passed 3-2. This means we can begin construction on the new generation as proposed. The plan is to have it in operation prior to the summer of 2024. If you have a desire to watch the open meeting proceedings, here is a link. It begins at 50 minutes in. We were second on the agenda. After looking back on the process, I am reminded of one of my father's sayings: "If you like sausage, or respect the law, you should not inquire into how either are made".

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