Johnathan H. Christoforatos

Alternative Energy

Why Alternative Energies?The rise of gasoline and oil prices may be the most prominent concern driving the consuming public’s interest in alternative fuels, but there are a variety of other factors that attract investors and consumers to the alternative energy sector:

Global Industry Concerns of global warming Public desire for energy independence Geopolitical concerns Expansion of federal and/or state incentives and tax benefits. The alternative energy sector offers dramatic growth whereas the oil

industry can potentially become stagnant Significant increase in the generation and distribution of alternative

energies

Industry History

1700

Coal Begins to Displace Use of Other Energies

1800/1821Process of Electrolysis

Discovered. First Natural Gas Well in

US Is drilled

1882First Electric Plant Built by Thomas

Edison in New York. First Hydroelectric plan in operation

1888First Windmill to

Generate Electricity 

1906The "Free Alcohol Bill" Is Signed to

Promote the Use of Alcohol as an Alternative to

Gasoline

1924-1927First Federal Law

Established to Control Pollution from the Oil

Industry. First Commercial Wind Turbines Sold to

Generate Electricity 

1957First Commercial

Nuclear Power Plant Begins Operation

1973

OPEC Oil Embargo Against the US

Causes Gas Shortages and

Rationing

1977

Department of Energy Organization

Act Is Signed, Creating the US Department of

Energy

Industry History (Cont.)

1979Three Mile Island Nuclear Accident in Pennsylvania

1986/1989Largest Nuclear

Accident Ever Takes Place at Chernobyl.

Exxon Valdez Disaster in Alaska

Becomes the Largest Oil Spill in US Waters

2003President Bush

Unveils the Hydrogen Fuel Initiative to

Promote Hydrogen Fuel Cell

Development

2009US Invests $3.4

Billion to Modernize

Energy Grid

2010/2011BP Oil Rig

Explodes & Causes Largest Oil Spill in US

History. Earthquake off Coast of Japan Damages Six Power plants

2012US Nuclear Regulatory

Commission (NRC) Approves New Nuclear Power

Plants 

Variety of Alternatives

• Nuclear• Natural Gas• Biomass• Geothermal• Wind• Solar• Hydroelectricity• Wave• Tidal Power• Landfill Gas

Energy Regulation• Department of Energy (DOE)• North American Electric Reliability Corp. (NERC)• U.S. Nuclear Regulatory Commission (NRC)• Bureau of Ocean Energy Mgmt. (BOEM)• Environmental Protection Agency (EPA)• National Institute of Standards and Technology

(NIST) • Chemical Safety Board (Recommendations)• Deregulation of Electricity Utilities

Mission Statement

“The AES Corporation is a global power company with generation and distribution companies. Through our portfolio of thermal and renewable fuel sources-biomass, coal, diesel, gas, hydropower, solar, wind—we safely provide affordable and sustainable energy in 29 countries. We are committed to operational excellence and to meeting the world’s changing energy needs.”

Target Market: All Building owners looking to utilize electricity. Virtually the entire world.

AES History 1980’s

AES is founded First AES power plant built AES becomes largest independent power producer in the USA

1998 AES acquires a minority stake in a power plant in the first-and-

only generation privatization in India

2002-2011 AES pioneers new pollution control technology and biomass

conversions in 5 countries. Brought Renewable energy to market through acquisition and

development of AES Wind generation in the U.S. and Europe

2012 AES Brings patented storage operation system to market

AES Corporation Marketing• The AES Corporation (AES) is a global

power company

• AES owns a portfolio of electricity generation and distribution businesses in 25 countries across five continents

• Distribution networks serving over 11 million people

• Generation capacity of approximately 43,000 megawatts (MW)

Strengths• Global presence• Strong financial

performance• Diversified and balanced

energy portfolio

Weaknesses• Concentrated suppliers

and customers• Very Slow Growth in latter

years

Opportunity• Project order backlog• Increasing demand for

electricity in the U.S.• Focus on alternative energy

Threats• Rising fuel prices• Foreign currency fluctuation• Environmental regulations

Coal36%

Natural Gas36%

Renewables23%

Oil2%

Diesel2%

AES Energy Generation Portfolio

AES ManagementCharles Rossoti

Non Executive Chairman of the board

Holds MBA with high distinction from Harvard Business school. From 1997 to 2002 Rossoti was

the commissioner of internal revenue for the IRS

Executive Vice President,

CFO

COO, Executive

Vice President CIO, SVP of

Global Operations

Brian Miller

Executive Vice President, General Counsel, and Corporate Secretary

Andrés GluskiPresident, Director, CEOHolds insightful experience in the global electricity business. Named International CEO of the Year by

Latin Trade Magazine

AES Litigation

Craig Imler, et al. v. AES Corporation, et al Claim: AES issued a series of material misrepresentations to

the market between April 26, 2001 and February 14, 2002, thereby artificially inflating the price of AES securities.

Outcome: AES settled the lawsuits which resulted in them having to pay a total of $5 million to the settlement fund.

Donald O. Stafford, et al. v. AES Corporation, et al. Claim: AES materially misrepresented the Company's business

condition and failing to disclose material facts concerning the impact of the business decline of its United Kingdom operations

Outcome:  Court dismissed all of the claims except for the claim alleging that the registration statement and prospectus disseminated to the IPALCO stockholders for purposes of the Share Exchange failed to disclose purported temporary defaults on their contracts

Mission Statement

“At Duke Energy, we make people’s lives better by providing

gas and electric services in a sustainable way — affordable,

reliable and clean. This requires us to constantly look for ways

to improve, to grow and to reduce our impact on the

environment.”

Duke Energy History Early 1900’s

Catawba Power Company is founded by three visionaries Catawba Hydro Station became CPC’s first electricity providing power plant Hydroelectric fleet continues to grow and begins to serve both commercial and

residential grids

1965 The first nuclear project, the Keowee-Toxaway Project, was launched Keowee-Toxaway project earns Duke Energy its first of three Edison Awards, the power

industry's highest honor

1980’s Duke Power president leads the creation of the Institute of Nuclear Power Operations Duke president again takes the lead and organized the World Association of Nuclear

Operators

1990’s Duke takes interest in natural gas Duke Power and PanEnergy merged to form Duke Energy

2000-Present Duke Energy and Cinergy Corp merge expanding services into 3 states Duke Energy and Progress Energy merge and expands service into Florida and forms the

largest electric utility in the United States

Duke Energy Mgmt.Jim Rogers

Chairman, President and CEORogers has been with Duke

Energy for over 15 years. Also he was Chairman and CEO of

Cinergy Corp. from 1994 until its merger with Duke Energy

Jennifer Weber

Executive Vice President and

CHRO

Keith Trent

Executive Vice

President and COO

Lee Mazzocchi

Senior Vice President and CIO

Lynn Good

Executive Vice

President and CFO

Duke EnergyMarketing

Strengths• Strong market position• Increasing revenues and

operating profits• Extensive generation,

transmission and transportation infrastructure

Weaknesses• Concentrated area of

operation• Unfavorable generation

portfolio

Opportunity• Growing popularity of

renewable energy• Rising population in Ohio• Increasing demand for

electricity in the U.S.

Threats• Consolidation in the North

American electricity utility industry

• Compliance to enviromental laws and regulations

• Economic slowdown in the U.S.

• Corporate Social Responsibility

• New Nuclear Generation

• Smart Grid

• Energy Efficiency & Conservation Initiatives

Coal94%

1%1% 1%

.03% 2%1%

2012 Duke Energy Generation Portfolio (Indiana)

Hydro

Renewable

Mkt

EE

CC

CT

Duke Energy Litigation KENNETH WALTON GEORGE, et al, v. DUKE ENERGY

RETIREMENT CASH BALANCE PLAN, et al. (2002) Claim: The class pursued claims that Duke Energy calculated

interest credits at an incorrect rate and that Duke energy also failed to properly calculate certain lump sum distributions.

Outcome: Duke Energy and plaintiffs came to settlement resulting in Duke Energy paying $30 million dollars to class members

Maurine Nieman, et al. v. Duke Energy Corporation, et al. (2012) Claim: The class is currently pursuing claims that Duke Energy

issued misleading statements about their merger with “Progress Energy” in order to obtain approval from Progress Energy’s Board of Directors.

Outcome: Pending

Mission Statement

“We are committed to meet future energy demand with less

impact on our climate and with minimal burden on the

nation’s economy. To meet these challenges, the Exelon

family of companies strives for the highest standards in all

aspects of energy, from generation to marketing to delivery.”

Exelon History Early 1900’s

The Philadelphia Electric Company (PE) is incorporated Samuel Insull merges Commonwealth Electric Company and

Chicago Edison Company to form Commonwealth Edison (ComEd) 1930’s

PE merges with United Gas Improvement Company 1953

The Public Service Company of Northern Illinois merges with ComEd

1960’s ComEd operates the nation's first privately financed commercial

nuclear power station 1990-2000

PE adopts the name PECO Energy Company; ComEd becomes part of a new holding company, Unicom Corporation

PECO and Unicom merge to form Exelon Corporation 2012

Exelon Corporation merges with Constellation

Exelon Management

Christopher CranePresident & CEO

Crane has over 30 years in the alternative energy industry. Since joining Exelon in 1998, Crane served as Chief Nuclear officer, and currently serves as president and CEO.

Amy BestSenior VP & CHRO

Best is responsible for setting the human

resources strategy and service delivery for 9,500

employees.

Ruth GillisExecutive VP & CAOGillis joined the Exelon family in 2000. Gillis has over 35 years in the financial sectors.

Jonathan ThayerExecutive VP CFO

Thayer has been with Exelon for over 10 years. Has an MBA

from Harvard University

Sonny GargSenior VP & CIO

Controls all aspects of IT and oversees

1300 IT employees.

Exelon Marketing Corporate Social

Responsibility Diversified Energy

Portfolio

Exelon 2020

Strengths• Significant nuclear power

generation assets• Strong retail customer base• Extensive generation,

transmission and transportation infrastructure

Weaknesses• Sluggish revenue growth

and fluctuating margins• Weak performance of

ComEd• Dependence to meet

financial obligations

Opportunity• Growing popularity of

renewable energy• Investment in solar energy• Increasing demand for

electricity in the U.S.

Threats• Consolidation in the North

American electricity utility industry

• Environmental Liabilities• Expiry of PPA

Nuclear55%

Gas28%

Oil3%

Wind/Solar4%

Hydro6%

Coal4%

Exelon Energy Generation Portfolio

Exelon Corp. Litigation

Nicholas Stavros, et al., v. Exelon Corporation, et al. Claim: Exelon repeatedly issued statements concerning the strength

of its operations and repeatedly assured the market that it would meet or beat its $4.50 per share earnings figure for 2001.

Outcome: Exelon won the case. Defendants' earnings projections were accompanied by sufficient cautionary language such that the statements fall under the first prong of the PSLRA's safe harbor.

United States v. Exelon Corporation and Constellation Energy Group, Inc. Claim: Exelon’s acquisition of Constellation Energy group would

create one of the largest electricity companies in the United States, and substantially lessen competition.

Outcome: The courts ruled that the acquisition of Constellation may be approved given that Exelon sell three electricity-generating plants.

Financials

Current Ratio

Debt Ratio

Growth Rate

P/E Ratio

AES Corporation

1.02 .89 7% N/A

Duke Energy Corporation

1.01 .64 35% 20.64

Exelon Corporation

1.3 .72 23% 14.28

6 Month Comparison

Technological Impact

• Technology is always changing and evolving

• New safety and protection to avoid disasters

• More efficient energy generation structures

• The U.S. is investing in technology to increase the production of Alternative Energies

“The advance of technology, like the growth of population and industry, has also been proceeding exponentially.”

----CARL KAYSEN, Foreign Affairs

Alternative Energy’s Future

• Research into Polymer Solar Cells

• Common Algae for Biofuel Production

• Flying Wind Farms: Future Power Harvesters

My Recommendation

• A lot of room for growth• Diversified Energy generation portfolio• Stable financials• Great Management background*

*AES Legislation issues