### November2,2010

ExhibitA PacifiCorp's Emissions Reductions Plan

In connection with its Best Available Retrofit Technology ("BART") determinations and its otherregional haze planning activities, the Wyoming Department ofEnvironmental Quality, Air Quality Division ("AQD") asked PacifiCorp to provide additional information about its overall emission reduction plans through 2023. The purpose is to more fully address the costs of compliance on both a unit and system-wide basis. PacifiCorp is committed to reduce emissions in a reasonable, systematic, economically sustainable and environmentally sound manner while meeting applicable legal requirements. These legal requirements include complying with the regional haze rules which encompass a national goal to achieve natural visibility conditions in Class I areas by2064 Summary PacifiCorp owns and operates 19 coal-fueled generating units in Utah and Wyoming, and owns 100% ofCholla Unit 4, which is a coal-fueled generating unit located in Arizona. PacifiCorp is in the process of implementing an emission reduction program that has reduced, and will continue to significantly reduce emissions at its existing coal-fueled generation units over the next several years. From 2005 through 2010 PacifiCorp has spent more than $1.2 billion in capital dollars. It 

### is anticipated that the total costs for all projects that have been committed to will exceed $2.7 billion by the end of2022. The total costs (which include capital, O&M and other costs) that will have been incurred by customers to pay for these pollution control projects during the period 2005 through 2023, are expected to exceed $4.2 billion, and by 2023 the annual costs to customers for theseprojects will havereached $360 million peryear. Envirorunental benefits, including visibility improvements will flow from these planned emission reductions. PacifiCorp believes that the emission reduction projects and their timing appropriately balance the need for emission reductions over time with the cost and other concems of our customers, our state utility regulatory commissions, and other stakeholders. PacifiCorp believes this plan is complementary to and consistent with the state's BART and regional haze planning requirements, and that it is a reasonable approach to achieving emission reductions in Wyoming and otherstates. PacifiCorp's Long-TermEmission Reduction Commitment
Table I below identifies the emission reduction projects and related construction schedules as currently included in PacifiCorp's reduction plan.Exhibit A - PacifiCorp's Emissions Reduction Plan November 2, 2010 Page 2 of 10 Table I: Long-Tel111 Reduction Plan
Status ofS02 S02 Scrubbers Low NOx /L B/ Selective Installation - I Burner Baghouse Baghouse Catalytic Plant Name Upgrades - U Installations lnstallations Pennitting Reduction Hunter I 2014 - U 2014 2014 Pennitted Hunter2 201 I - U 2011 201 I Under Construction Hunter 3 Existing 2008 Existing Completed Huntington I 2010 - U 2010 2010 Under Construction Huntington 2 2007 - I 2007 2007 Completed DaveJolmston 3 2010 - I 2010 2010 Completed DaveJolmston 4 2012 - I 2009 2012 Under Construction Jim Bridger I 2010 - U 2010 Completed 2022 Jim Bridger2 2009 - U 2005 Completed 2021 Jim Bridger3 2011 - U 2007 Permitted 2015 Jim Bridger4 2008 - U 2008 Completed 2016 Naughton 1 2012 - 1 2012 Under Construction Naughton 2 2011 - I 2011 Under Construction Naughton 3 2014 - U 2014 2014 Baghouse 2014 Pennitted Wyodak 2011 - U 2011 2011 Under Construction Cholla 4 2008 - U 2008 2008 Completed
The following charts represent the reductions in emissions that will occur at units owned by PacifiCorp in Utah, Wyoming and Arizona'. It is significant to note that pennitting has been completed for all but the SCR projects; pennitting for the SCR projects will be completed as needed in advance ofproject construction. The emission estimates shown in these charts have been calculated using projected unit generation and heat rate data in conjunction with each unit's pennitted emission rate. In those cases were the units do not have emissions controls the estimates have been based on projections ofthe future coal quality. All projections used are from PacifiCorp's ten-year business plan. Actual future emissions will be less than those estimated in these charts since the units will operatebelow theirpel111itted rates.

1 PaciriCorp is also ajoint ownerofcoal·fucled facilities 111 Colorado and Montana that are subject 10 regional haze planning requirements and for which PacifiC0'1) will incurassociated costs ofemissions controls.Exhibit A - PacifiCorp's Emissions Reduction Plan November2, 20I0 Page 3 of10

2005

- 2009Actual and 2010- 2023 Projected 802 Emissions PacifiCorp'sArizona, Utab & Wyoming Coal-Fired Units 120,000 112,500 105,000 97,500 90,000 82,500 75,000

'" 67,500 60,000 iii 52,500 45,000 37,500 30,000 22,500 15,000 7,500 

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2004-2009Actual and 2010

- 2023 Projected NOx Emissions

PacifiCorp'sArizona, Utah & Wyoming Coal-Fired Units 110,000 100,000 90,000 80,000 70,000



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### ExhibitA - PacifiCorp's Emissions Reduction Plan November2, 2010 Page4 of10 ProjectInstallation Schedule
Emission reductionprojects ofthe number and sizedescribed above take many years to engineer, plan and build. When considering a fleet the size ofPacifiCorp's, there is a practical limitation on available construction resources and labor. There is also a limit on the number ofunits that may be taken out ofservice at any given time as well as the level ofconstruction activities that can be supported by the local infrastructures at and around these facilities. Such limitations directly impactboth the overall timing ofthese projects as well as theirtiming in relation to each other. Additional cost and construction timing limitations include the loss oflarge generating resources during some parts of construction and the associated impact on the reliability of PacifiCorp's electrical system during these extended outages. In 

### other words, it is not practical, and it is unduly expensive, to expect to build these emission reduction projects all at once or even in a compressed time period. The pressure on emission reduction equipment and skilled labor is likely to be exacerbated by the significant emission reduction requirements necessitated by the Environmental Protection Agency's Clean Air Transport Rule which requires emission reductions in 31 Eastern states and the District ofColumbia beginning in 2012 and 2014. The Envirorunental Protection Agency has indicated that a second Transport Rule is likely to be issued in 2011, requiring additional reductions in the Eastern U.S. beyond those effective in 2014. The balancing of these concerns is reflected in the timing of PacifiCorp's emission reduction commitments. Priority ofEmission Reductions PacifiCorp's initial focus has been on installing controls to reduce S02 emissions which are the most significant contributors to regional haze in the western US. In 

### addition, PacifiCorp continues to rely on the rapid installation of low NO, burners to significantly reduce NOx emissions. Also, the installation offive SCRs (or similar NOx-reducing technologies) will be completed by 2023 and reduce NOx emissions even further. PacifiCorp's commitment also includes the installation ofseveral baghouses to control particulate matter emissions. For those units which utilize dry scrubbers, baghouses have the added benefit ofimproving S02 removal. Baghouses also significantly reducemercuryemissions.
In addition to reducing emissions at existing facilities, PacifiCorp has avoided increasing emissions by adding more than 1,400 megawatts ofrenewable generation between 2006 and 2010. In 

### order to meet growing demand for electricity, PacifiCorp added non-emitting wind generation to its portfolio at a cost ofover $2 billion and has dismissed further consideration ofa new coal-fueled unit.
Emission Reductions and BART Deadlines
As depicted in thetable and charts above, PacifiCorp began implementing its emissionreduction commitments in 2005. This was well ahead of the emission reduction timelines under the regional haze rules which require BART to be installed no later than five years following approval ofthe applicable Regional Haze SIP. This also provides a graphic demonstration ofthe construction schedule and otherlimitations described above, as PacifiCorp was required to begin installing emission control projects at some units earlier in order to complete projects at other

### ExhibitA - PacifiCorp's Emissions Reduction Plan November 2, 2010 Page 5 of10 units within the five years after SIP approval. The table above demonstrates that most ofthe projects to be builtbetween 2010 and 2014, likewise, will be installed in advance ofthe required completion dateunderBARTrequirements.

CustomerImpacts 

### The following charts identify the timing and magnitude ofthe capital and O&M expenses that will be incurred dueto the projects identified in Table I. The charts identify: 1. Thetiming and magnitudeofthecapital costs. 2. TheO&M expenses that will be incurred due to theseprojects. 3. The expected arumal costs2 

### through 2023 that customers will be incur as aresult ofthese specificpollution control projects.

Capital Expenditures toAdd Pollution Control Equipment onPacifiCorp's Arizona, Utah & Wyoming Coal-Fired Units

$600,000

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8 $400,000 = =.

.s "0 $300,000 Q
$200,000

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2 PacifiCorp has made every attempt to provide an accurate estimate ofthe anticipated increase in annual revenue requirements that will ultimatelybetranslated to increases in customers' electricityrates. However, there are several variables such as interest rates, inflation rates, discount rates, depreciation lives, and final construction costs and operating and maintenance expenses that will be considered at the time these projects actually go into rate base and will influence theactual revenue requirements associated with thesecapital projects.ExhibitA - PacifiCorp's Emissions Reduction Plan November

### 2,2010 Page 6of

### 10

Increases In 0&1\1 Expenses Due to Additional PollutionControl Equipment onArizona, Utah & Wyoming Coal-Fired Units

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-Annual O&M Expenses

Annuallncrease to Customers Due toAdditionalPollution Control EquipmentonArizona, Utah & Wyoming Coal-Fired Units



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## IExhibitA

- PacifiCorp's Emissions Reduction Plan November2,2010 Page 7 of10
As can be seen fi'om the previous charts, the rate increases for PacifiCorp customers associated with PacifiCorp's emission reduction strategy alone will be significant. In the event that PacifiCorp is required to accelerate or add to the planned emission reduction projects, the cost impacts to our customers can be expected to increase incrementally, paliicularly as plant outage schedules are extended and the need for skilled labor and material increases in the near term. Ofpmiicular note, theprojected costs reflect onlythe installation ofthe noted emission reduction equipment. These cost increases do not include other costs expected to be incurred in the future to meet fUliher emission reduction measures or address other environmental initiatives, including but not limited to (seeAttachment 1):
I. Implementation of Utah's Long Tem1 Strategy for meeting regional haze requirements during the 2018-2023 time period.
2. The addition of mercury control equipment under the requirements of the upcoming mercury MACT provisions. PacifiCorp estimates that $68 million in capital will be incurred by 2015 and annual operating expenses will increase by $21million per year to comply with mercury reduction requirements. In addition, anticipated regulation to address non-mercury hazardous air pollutant (HAPs) emissions may require significant additional reductions ofSOz, as a precursor to sulfuric acid mist, from non-BART units that clllTently do not have specific controls to reduce S02 emissions.
3. Mitigating and controlling 

### COz emissions. While Congress has not yet passed comprehensive climate change legislation, in December 2009, the Administrator ofthe Environmental Protection Agency made a finding that greenhouse gases in the atmosphere threaten the public health and welfare of cunent and future generations. Having made the so-called "endangenl1ent finding," EPA issued the final greenhouse gas tailoring rule, effective January 2, 2011, which will require greenhouse gas emissions to be addressed under PSD and Title V permits3 Likewise, mandatory reporting of greenhouse gas emissions to the Enviroru11ental Protection Agency commenced beginning in January 2010.
4. 1n addition, there are a number ofregional regulatory initiatives, including the Westem Climate Initiative that may ultimately impact PacifiCorp's coal-fueled facilities. PacifiCorp's generating units are utilized to serve customers in six states

- Wyoming, ldaho, Utah, Washington, Oregon and Califomia. California, Washington and Oregon are participants in the Western Climate Initiative, a comprehensive regional effOli to reduce greenhouse gas emissions by 15% below 2005 levels by 2020 through a cap-and-trade program that includes the electricity sector; each state has implemented state-level emissions reduction goals. California, Washington and Oregon have also adopted greenhouse gas emissions performance standards for base load electrical generating resources under which emissions must not exceed 1,100 pounds of CO2 per megawatt

J The EnvironmeI1lal Protection Agency has not yet published its proposed guidance on what constitutes Best Available Control Technology for greenhouses gases.ExhibitA - PacifiCorp's Emissions Reduction Plan November2, 2010 Page 8 of10 hour. The emissions perfonnance standards generally prohibit electric utilities from entering into long-tenn financial commitments (e.g., new ownership investments, upgrades, or new or renewed contracts with a tenn of5 or more years) unless the base load generation supplied under long-tenn financial commitments comply with the greenhouse gas emissions perfonnance standards. While these requirements have not been implemented in Wyoming, due to the treatment ofPacifiCorp's generation on a system-wide basis (i.e., electricity generated in Wyoming may be deemed to be consumed in California based on a multi-state protocol), PacifiCorp's facilities may be subjectto out-of-state requirements.
5. Regulations associated with coal combustion byproducts. In June 2010, the Environmental Protection Agency published a proposal to regulate the disposal ofcoal combustion byproducts under the Resource Conservation and Recovery Act's Subtitle C orD. Under either regulatory scenario, regulated entities, including PacifiCorp, would be required, at a minimum; to retrofit/upgrade or discontinue utilization ofexisting surface impoundments within five years afterthe Environmental Protection Agency issues afinal rule and state adoption ofthe appropriate controlling regulations. It is anticipated that the requirements under the final rule will impose significant costs on PacifiCorp's coalfueled facilities within the next eightto ten years. 6. The installation of significant amounts of new generation, including gas-fueled generation and renewable resources. 7. The addition ofmajor transmission lines to support the renewable resources and other added generation.
8. Increasing escalation rates on fuel costs and othercommodities

BART and Regional Haze Compliance PacifiCorp finnlybelieves that the commitments described abovemeet the letterand intentofthe regional haze rules, including the guidance provided by the EPA known as "Appendix Y." The regional haze program is a long-tenn effort with long-tenn goals ending in 2064. It must be approached from that perspective. It was never intended to require SCR on BART-eligible units within the first five years ofthe program. Rather, it calls for a transition to lower emissions exactly as PacifiCorp has implemented to date and as it has proposed going forward through 2023.
In its evaluation ofemission reductions for regional haze purposes, the state should also consider several othervariables which will significantly affect emissions and costs overthe next ten years. These include such things as the development ofnew emission control technology, anticipated new emission reduction legislation and rules, the new ozone standard, the one hour S02 and N02 standards, the PM2
.5 standard, potential CO2regulation and costs, an aging fleet, and changing economic conditions. All ofthese variables matter and will affect the long-tenn viability ofeach PacifiCorp coal unit and will contribute to the reduction ofregional haze in the course ofthe

### ExhibitA

- PacifiCorp's Emissions Reduction Plan November2, 2010 Page 9 ofI0 implementation of these programs. This, in tum, will affect the controls, costs and future operational expectations associated with these generatingresources. Conclusion PacifiCorp has made a significant, long-term conunitment to reducing emissions from its coalfueled facilities and requests thatthe AQD considerthis commitment as areasonable approach to achievingemissionreductions in Wyoming.

### November2,2010


## Attachment 1 

# Possible Timeline for Environmental Regulatory Requirements forthe Utility Industry 

# I Ozone (03) 

# I I SOx/NOx

# I ICAIRlTransport

# I 

# I Water

# I

liB

# r~':'s:'~~ECTJ PMIPM2.5 

# I EffluentGuidelines Compliance3·5yrs afterfinal ru Ie



# IC02 

# I
-Adaptedfrom Wegman (EPA2003) Upd<ied7.28.10 316(b)Compliance 3·4yrsafterfinal rule 

# ,------- _1_

- -r- ., 1 , , ,



# I Hg/HAPS

# I t--------------J-------------l----------------

# r --------------_:
TransportRule HAPSMACT Begin Compliance PhaseII Compliance3yrs Requirements Reductions afterfinal rule underFinalCCB Rule(ground watermonitoring, double**mon~ors,** closure,dryash

conversion) EffluentGuidelines Final ruleexpected Transport 

# I
PM Rule II (NOx) Transport

proposal Rule
316(b)final rule expected

Transport Rule PhaseI Reductions Ozone Transport Rule Effluent Guidelines proposed rule expected

HAPSMACT

final rule expected FinalTransport SOxIN02x RuleExpected Secondary (CAIRReplacement) NAAQS OZOne NAAQS Revision

C02 Regulation (PSDIBACT) N02 Primary NAAQS TransportRule proposal issued (CAIRReplacement) S02Primary

NAAQS

Final 

# j NextPM· Rulefor 2.5 CCBs NAAQS Mgmt Revision Proposed LHAPS MACT

Rulefor proposed CCBs rule Management 316(b)proposed ruleexpected 

# IAsh

# I BeginCAIR Phase IAnnual S02Cap
BeginCAIR

Phase I AnnualNOx Cap CAIR Remanded

BeginCAIR Revised Phase I Ozone Seasonal NAAQS NOx.Cap CAIR Vacated

CAMR& Delisting

Rule vacated