Economics | Strategy | Stakeholders | Sustainability

The energy and utility market is changing like at no other time in the past 50 years. Advancements and developments in

smart grid, renewable energy, regulations, rates, distributed generation, energy efficiency and

electric vehicles are driving significant change in the electric grid, utility operations, financial

performance and consumer expectations and behavior. NewGen’s approach helps our energy

and utility clients navigate and optimize these issues and options by applying multiple, expert

perspectives in each project we perform. We specifically address each client’s unique

requirements and deliver tangible results to meet our client’s needs. Properly navigating these

issues and delivering a tangible path forward for our clients ensures successful implementation

and adoption of the required changes. NewGen delivers tangible results and high value by providing clients a clear

direction, improving and performance supporting effective strategic and financial decision-making.

Appraisal and Valuation Services

NewGen’s appraisal and valuation team has broad experience across the power and utility

business spectrums, including expertise in generation assets of all kinds, electric transmission and

distribution, water, wastewater, solid waste, gas and oil assets.

NewGen’s appraisal and valuation consulting practice provides comprehensive valuation services

and expertise in the following areas:

Appraisal Services

Our reports comply with the Uniform Standards of Professional Appraisal Practice

(USPAP)

Our appraisals consider the three generally accepted approaches to value: Cost Approach,

Income Approach, and Market Approach

NewGen employs two of the approximately 30 Accredited Senior Appraisers accredited by

the American Society of Appraisers with a public utilities designation

Valuation Consulting

Our appraisers have a wealth of experience assisting in the transaction process with valuation

assistance including:

Fairness opinions

Valuation for financing

Depreciation studies

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Litigation Support

Expert witness testimony before courts and regulatory bodies across the country

Our comprehensive analyses support litigation efforts at trial

Our reputation for objectivity and unbiased conclusions provides credibility at trial

Our Team

NewGen’s appraisal/valuation team is led by two of the leading experts in the United States.

Nancy Hughes has 35 years of experience in utility rates and regulation, depreciation and

valuation. Ms. Hughes has performed appraisal studies of electric, water, wastewater, solid

waste, natural gas and oil pipeline properties, and has testified as an expert witness before

regulatory commissions, arbitration boards and courts of law.

Michael Lane has been active in the power plant, electric distribution, water, and gas industries

for over 25 years including experience in management, operations, finance and valuation. Mr.

Lane’s broad range of experience includes strategic and business planning, business development,

financial and economic feasibility studies, cost-of-service analysis and rate design, system

valuation studies, and power plant operation, maintenance and planning.

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Power Generation

Appraisal of Scherer 2 Coal Plant

Bank of America Leasing

As Bank of America Leasing’s (BOA) existing sale-leaseback arrangement was scheduled to expire,

Mr. Lane’s assistance was requested regarding negotiations surrounding the renewal/termination

of the sale lease-back agreement of the Scherer 2 coal-fired plant. Mr. Lane was able to provide

a fair market value of the facility, including projected fair market rental payments, in order to

allow BOA to enter into negotiations regarding an extension of the lease or sale of the assets.

Mr. Lane researched the technical profile of the facility, conducted a market simulation, and

calculated net cash flow projections, analyzing the gross revenue and operating expenses of

Scherer 2, assuming output from the facility is sold into the open market. In addition to the

income approach, Mr. Lane also estimated the value of the facility based on cost and market

approaches.

Appraisal of Boston Generating Projects

Capstone Advisory Group / Boston Generating, LLC, Massachusetts

Mr. Lane was retained by Boston Generating, LLC to perform an appraisal study to determine

the fair market value of four electric generating facilities owned by subsidiaries and affiliates

of Boston Generating and by a special purpose entity of the lenders. The appra isal included

four facilities in Massachusetts, and was conducted to comply with Financial Accounting

Standards Board (FASB) Rule No. 141 reporting requirements. This included valuing tangible

and intangible benefits associated with the Boston Generating projects.

Mr. Lane conducted an inspection of the facilities in connection with the appraisal. As the

studies and analyses also required an evaluation with respect to the fair market value of the

Boston Generating projects, our appraisal team relied on generally accepted valuation

methods and procedures.

Valuation Analysis in Support Possible Litigation and Appraisal Activities

Alcoa Power Generating, Inc., Pennsylvania

During the early 1900’s, America’s first hydro-electric dam became the property of Alcoa,

along with several other hydro-electric projects in Tennessee and North Carolina. Together,

these assets comprise a major portion of the power portfolio owned by Alcoa Power

Generating, Inc. (APGI). In 2003, APGI’s assets in Graham County, North Carolina, were

appraised by a Graham County property assessor. APGI disputed the valuation, but lost its

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appeal before the tax commission. As a result, NewGen Staff was retained to provide

consulting services to help APGI devise a strategy to deal with issues relating to a possible

increase in the assessed value of its generating assets in Tennessee. Mr. Lane provided

valuation consulting and negotiation support, assisting AGI in negotiating a reasonable value.

Mr. Lane’s assistance aided in a successful conclusion of APGI’s Tennessee tax negotiations.

Appraisal of Wind Power Facilities

Capstar Partners Capital, LLC, Oregon

In early 2006, Capstar Partners Capital, LLC (Capstar) and other select energy companies

combined a portfolio of wind generation assets to be sold on the open market. As part of the

transaction, Capstar required an appraisal of the wind power facilities co llectively known as

Aeolus Wind Power I Facilities. Mr. Lane assembled a team of professionals with national

experience in public utility and power plant appraisals that provided the expertise needed by

Capstar.

The team visited the facilities and reviewed associated documents to assess the fair market

value, and then developed indicators of value. Mr. Lane additionally prepared an estimate of

the facilities’ replacement cost, which included calculation of the facilities’ depreciation

based on the age and estimated useful life remaining.

From this analysis, an appraisal report was provided, documenting the basis for the estimate

of the fair market value of the facilities, including a description of the facilities, the

methodology used, and information supporting the opinion of the fair market value.

Appraisal of Biomass Facility

Smurfit-Stone Container, South Carolina

Smurfit-Stone Container needed to determine the estimated fair market value of its 72 MW

cogenerations facilities located in Florence, South Carolina. Mr. Lane’s thorough analysis

assisted Smurfit-Stone Container in deciding whether to purchase the facilities at fair market

value, extend its current lease of the facilities at the fair market value rental rate, or extend

its lease at a mutually agreed-upon rate. Mr. Lane began the process by reviewing

documents to assess the fair market value, while incorporating additional information

obtained from previous work efforts. After the initial analysis, Mr. Lane performed an

inspection of the facility to supplement the data received. He then interviewed staff

responsible for plant management to gain insight on future plans, procedures and programs.

Following, the fair market value and fair market rental value of the facility were estimated.

The appraisal report included a review of the facility, the methodology incorporated to

arrive at his findings, and a summary outlining his opinion of the fair market value of the

facility, the remaining useful life, and the fair market rental value of the fac ility.

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Valuation of Generating Assets

Confidential Client

In today’s competitive marketplace, cooperatives are faced with evaluating their power

supply arrangements with generating and wholesale suppliers in order to remain

competitive themselves. A confidential client had begun to examine the competitiveness of

its purchasing arrangement with the Generation and Transmission (G&T) cooperative of

which it is a member. As the client had identified the need to determine the value of its

equity interest in the G&T’s generating assets, Mr. Lane was asked to conduct a valuation.

Mr. Lane reviewed contracts and documents associated with the generating assets in order

to assess their value impact, and to help define parameters likely to affect the overall value.

The results of this valuation supported the client in negotiations with the G&T relating to its

wholesale power contract, including any potential separation agreement reached by the

parties.

Springerville Power Station

Key Equipment Finance Corporation

Mr. Lane performed an appraisal of the common facilities associated with the coal-fired

generation plant at the Springerville Power Station in Arizona. Mr. Lane developed a replacement

cost new less depreciation (RCNLD) value estimate of the common facilities to support a

sale/lease-back transaction for Key Equipment Finance Corporation. Results of the analysis were

used for internal decision-making regarding the transaction. Mr. Lane also appraised the common

facilities at Springerville Power Station for lease negotiations in 2005, 2017, and 2021 to

determine the fair market value of these assets.

South Texas Project Electric Generating Station

Nuclear Innovation North America

The South Texas Project (STP) Electric Generating Station is one of the newest and largest nuclear

power facilities in the nation. The STP’s two units produce 2,700 megawatts of carbon-free

electricity - providing clean energy to two million Texas homes. In anticipation of the proposed

addition of two new reactor units, the developer retained Mr. Lane to perform an appraisal study

to determine the fair market value of existing facilities (common facilities) that would be required

to operate the proposed addition. Included were a 7,000-acre cooling reservoir and associated

equipment, a nuclear training facility, maintenance buildings and structures, a warehouse and

security functions, water treatment systems, and roadways/parking lots. Mr. Lane also

determined fair market value of participation rights associated with the expansion. While the

common facilities and participation rights belong to the existing facility owners, NINA would have

the rights, or option, to purchase them. In both cases, fair market value was estimated using the

income approach.

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Natural Gas-Fired Combustion Turbine Generating Facilities

Philip Morris Capital Corporation

Mr. Lane was hired to determine the fair market value of six 65 megawatt natural gas-fired

combustion turbine generating facilities owned by Philip Morris and operated and maintained by

Luminant Power. The facilities appraised consisted of the generating units and associated step up

transformers. Each facility was comprised of GE combustion-type turbines with associated electric

generators.

Mr. Lane determined that the income approach to valuation was the best indicator of value for

the property. The value of the facilities was then determined from the discounted net cash flow

that could be supported by the earnings stream.

Renewable Energy

Granite Reliable Power

Granite Reliable Power, LLC

Mr. Lane performed an appraisal of the Granite Reliable Project in Coos County, New Hampshire.

Mr. Lane estimated the fair market value of the project assets, which included 33 Vestas-

American Wind Technology, Inc. Model V90-3.0 wind turbine generators, each capable of

producing 3.0 megawatts of electricity. The results of the appraisal were used by Granite Reliable

to support the purchase of an equity interest in the project and to support the requirements

established by the U.S. Department of Energy under the Section 1705 Loan Guarantee Program.

Tieton Hydroelectric Project

Southern California Public Power Authority

The Tieton Hydroelectric Project, located in central Washington, is a qualified generator of

renewable energy credits and production tax credits, and is certified by the California Energy

Commission as eligible for California’s renewable portfolio standard (RPS). The Southern California

Public Power Authority (SCPPA) sought to purchase the project to help support RPS requirements

and hired Ms. Hughes to perform an independent appraisal to determine the project’s fair market

value.

The facilities appraised included a 13.6-megawatt hydroelectric generating plant, a substation

(13.8/115 kV), and a 22-mile 115-kV transmission line that interconnects the hydroelectric

generating plant to the PacifiCorp electric system. The appraisal was performed using the income

approach with a discounted cash flow model.

Based on the outcome of the independent appraisal, Ms. Hughes assisted SCPPA in negotiating

the purchase price, which resulted in successful acquisition of the project in 2010.

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North Brawley Geothermal Energy Project

Ormat Nevada, Inc.

Mr. Lane was retained to perform an appraisal of the North Brawley geothermal facility. The

facility is located in the Southern California town of Brawley, and consists of a geothermal power

generation cycle in which energy is extracted from a high-temperature geothermal resource (i.e.,

brine) and converted into electricity through an Ormat Energy Converter system. The project is

supported by a long-term Purchase Power Agreement and eligible for production tax credit. Mr.

Lane estimated the fair market value of the facility using the income approach, and the study

results were used to facilitate a potential sale of the facility.

Delano Biomass Energy Facility

AES Corporation

As a green power source, AES Corporation’s biomass fired generating plant, located in Delano,

California, can collect Production Tax Credits as a part of its revenue. When the tax credit was set

to expire in 2009, Mr. Lane performed an appraisal of the entire plant to estimate the fair market

value and set the stage for the facility to re-qualify for credit after it was sold and deemed a

capital-upgraded facility. Throughout the appraisal, the team worked closely with Mr. Lane

financial and technical experts to determine upgrade costs based on plant condition. Mr. Lane

also called upon an in-plant specialist to add credibility to the condition assessment and to

enhance the integrity of the appraisal value presented to potential buyers.

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Electric Transmission and Distribution

Value of Electric Distribution System

South San Joaquin Irrigation District, California

Ms. Hughes performed appraisals in 2006 and 2009 for South San Joaquin Irrigation District

(SSJID) to determine the fair market value of electrical distribution facilities that SSJID sought

to acquire from Pacific Gas and Electric Company (PG&E) in order to provide retail electric service

to customers within SSJID’s service territory. The SSJID service territory covers approximately 112

square miles and includes the cities of Escalon, Manteca and Ripon, and portions of

unincorporated San Joaquin County. The appraisal reports also estimated severance damages

due PG&E resulting from the separation of the electrical distribution facilities and compensation

for the value of remaining PG&E substation facilities that may be impaired due to the transfer of

customers and electric loads to SSJID. Ms. Hughes continues to assist SSJID in its acquisition

efforts.

Electric Transmission and Distribution System Appraisal

Dayton Power and Light Company/Dayton, Ohio

Ms. Hughes was the project manager on an independent appraisal study to determine the fair

market value of the electric transmission and distribution system located at Wright-Patterson Air

Force Base that DP&L purchased from the U.S. Department of Defense.

Appraisal Study of Kaua‘i Electric

County of Kaua‘i, Hawai‘i

Ms. Hughes was the project manager of an appraisal study to determine the estimated fair

market value of Kaua‘i Electric (KE). KE served approximately 30,000 customers on the Island of

Kaua‘i. Citizens Communications Company, which owned KE, announced plans in 2000 to sell KE

and its other energy and water utilities in order to focus its business in the telecommunications

industry. An agreement was reached in 2000 between Citizens and the Kaua‘i Island Utility

Cooperative (KIUC), a newly formed electric cooperative, in which KIUC would purchase KE for

$270 million. However, the Hawai‘i Public Utilities Commission denied the sale amidst concerns

over the financial fitness of the cooperative and the purchase price being too high.

In 2001, Ms. Hughes performed an independent appraisal study of KE for the County of Kaua‘i.

The property appraised included all of the generating, transmission, distribution and general plant

assets of the utility. Citizens declined to cooperate with the appraisal so it was necessary to

develop the inventory of the system based on field review and publicly available information.

Under Ms. Hughes’ direction, indicators of value were developed based on the cost and income

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approaches to valuation. The market approach was not relied upon due to a lack of comparable

sales, KE being an isolated, island utility system. Ms. Hughes estimated the fair market value of KE

to be $190 million. Ms. Hughes presented the results of the appraisal to the County Council and

in meetings with Citizens and KIUC. In March 2002, Citizens and KIUC announced that an

agreement had been reached to sell KE for $215 million.

Appraisal of Electric Distribution Property

City of Hermiston, Oregon

In September 1998 the citizens of Hermiston, Oregon affirmatively voted to acquire by

negotiation or condemnation PacifiCorp’s electrical distribution property within the City in order

to establish a municipal electric utility serving the City. Ms. Hughes performed an appraisal to

estimate the fair market value of the facilities, which included an analysis of severance costs. In

June 1999, the City filed a condemnation action against PacifiCorp to acquire the electric

distribution facilities. Ms. Hughes provided expert witness services to the City and its counsel

during legal proceedings. In August 2001, after two years of legal proceedings, the City and

PacifiCorp reached a settlement regarding the purchase price for the electric distribution

property. The City’s new municipal electric utility began operations on October 1, 2001.

Appraisal of Douglas-Hayfork 60-kV Transmission Line

Trinity Public Utilities District, California

Ms. Hughes performed an independent appraisal for Trinity Public Utilities District to determine

the fair market value of Pacific Gas & Electric Company’s Douglas-Hayfork 60-kV electric

transmission line, which the District sought to acquire from PG&E. The appraisal also included an

estimate of severance costs. Ms. Hughes’ opinion of fair market value was based on the cost and

income approaches, taking into account the effect of rate regulation and the process by which

utility owners are compensated by the California Independent System Operator (CAISO), which

has operational control of the electric transmission line system in California. PG&E declined the

District’s offer to purchase the transmission line; consequently, the District brought an eminent

domain action to condemn the line. Following confidential negotiations, the District and PG&E

reached a settlement agreement for the District to acquire the transmission line.

Appraisal of Electric Distribution Facilities

Lafayette Utilities System/Lafayette, Louisiana

R. W. Beck was retained by Lafayette Utilities System (LUS) to perform an independent appraisal

to determine the just compensation due Entergy Gulf States Utilities in connection with the

expropriation of electric distribution facilities located in sixteen parcels of land that were annexed

by the City of Lafayette. Entergy provided electric service to approximately 453 customers

located in the parcels. The matter had been disputed between LUS and Entergy for many years.

Ms. Hughes provided expert testimony on behalf of LUS at the expropriation hearing regarding

the value of the facilities acquired. The trial court decision adopted Ms. Hughes’ appraisal and

opinion of fair market value.

1300 E Lookout Drive, Suite 100 Richardson, Texas 75082 (972) 680-2000 515 Congress Avenue, Suite 1515 Austin, Texas 78701 (512) 479-7900

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PO Box 1329 Brentwood, Tennessee 37204 (615) 800-8916

Appraisal of Electric Distribution Property

Eugene Water and Electric Board and Springfield Utility Board/Oregon

Ms. Hughes prepared an independent appraisal study for the Eugene Water and Electric Board

(EWEB) and the Springfield Utility Board (SUB) to estimate the value of electric distribution

property EWEB planned to sell to SUB. The property to be sold involved three separate areas with

approximately 1,400 residential EWEB customers. Over the years, the urban growth boundary for

the City of Springfield had grown to the point where it overlapped in certain areas with EWEB's

service territory. The two municipal utilities agreed that, in these areas, it made sense for EWEB

to sell its electric distribution facilities to SUB. Electrical engineers on the appraisal team led by

Ms. Hughes developed an inventory of the facilities to be sold based on maps and records

provided by EWEB, and conducted field inspections to verify the inventory data and determine

the age and condition of the facilities. Ms. Hughes developed indicators of value based on the

original cost less depreciation (OCLD) and reproduction cost new less depreciation (RCNLD) value

of the facilities. The results of the appraisal study were used by EWEB and SUB to negotiate a

purchase price for the facilities.