investor day, september, 2011s1.q4cdn.com/423065009/files/pri investor day sept 2011 final.pdf ·...

Investor Day, September, 2011Investor Day, September, 2011

Forward Looking StatementsForward Looking Statements

� Forward-Looking Statements When used in this presentation, the words “anticipate”, “expect”, “project”, “believe”, “estimate”, “forecast” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions pertaining, but not limited, to operating performance, regulatory parameters, and weather and economic conditions and the factors discussed in the Company’s public filings available on SEDAR at www.sedar.com. These forward-looking statements are made as of the date of this presentation and the Company assumes no obligation to update or revise them to reflect new events or circumstances except as required by applicable securities laws.

� EBITDAReferences to “EBITDA” are to earnings before interest, taxes, depreciation and amortization

� Forward-Looking Statements When used in this presentation, the words “anticipate”, “expect”, “project”, “believe”, “estimate”, “forecast” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions pertaining, but not limited, to operating performance, regulatory parameters, and weather and economic conditions and the factors discussed in the Company’s public filings available on SEDAR at www.sedar.com. These forward-looking statements are made as of the date of this presentation and the Company assumes no obligation to update or revise them to reflect new events or circumstances except as required by applicable securities laws.

� EBITDAReferences to “EBITDA” are to earnings before interest, taxes, depreciation and amortization

2

References to “EBITDA” are to earnings before interest, taxes, depreciation and amortization and certain other adjustments

� Adjusted EBITDA DefinitionReferences to “Adjusted EBITDA” are to EBITDA as adjusted for certain non-recurring major maintenance expenses and general and administrative (“G&A”) expenses that represent expenditures that are not expected to be part of the Company’s ongoing business activity.

� Free Cash Flow DefinitionReferences to “Free Cash Flow” are to cash provided by operating activities as adjusted for capital expenditures.

� All dollar amounts in thousands of U.S. dollars except per share amounts.

References to “EBITDA” are to earnings before interest, taxes, depreciation and amortization and certain other adjustments

� Adjusted EBITDA DefinitionReferences to “Adjusted EBITDA” are to EBITDA as adjusted for certain non-recurring major maintenance expenses and general and administrative (“G&A”) expenses that represent expenditures that are not expected to be part of the Company’s ongoing business activity.

� Free Cash Flow DefinitionReferences to “Free Cash Flow” are to cash provided by operating activities as adjusted for capital expenditures.

� All dollar amounts in thousands of U.S. dollars except per share amounts.

Efficiency = Lower Cost & EmissionsEfficiency = Lower Cost & Emissions

33

Heat is PowerHeat is Power

� Primary Energy, GE and Turbine Air Systems are the founding members of the Heat is Power organization

� There are 18 companies currently supporting the efforts to raise awareness of waste heat

� This is an educational organization to promote the clean attributes of capturing waste heat and why it

� Primary Energy, GE and Turbine Air Systems are the founding members of the Heat is Power organization

� There are 18 companies currently supporting the efforts to raise awareness of waste heat

� This is an educational organization to promote the clean attributes of capturing waste heat and why it

4

clean attributes of capturing waste heat and why it should be supported just like wind and solarclean attributes of capturing waste heat and why it should be supported just like wind and solar

Priorities are ClearPriorities are Clear

Strategy to Grow

2012-2013

Extend contracts

2010-2013

Re-establish Dividend

2012 - 2013

Buy out manager

2011-2012

5

StabilityStability

&Growth

Capital Allocation PhilosophyCapital Allocation Philosophy

� Capital allocation decisions, whether it involves operating budgets, organic growth, M&A, dividends, a share buyback or other allocation of limited capital shall be made with the view of selecting alternatives that maximize shareholder value.

� Capital allocation decisions, whether it involves operating budgets, organic growth, M&A, dividends, a share buyback or other allocation of limited capital shall be made with the view of selecting alternatives that maximize shareholder value.

6

� Plans, budgets and strategies that are approved for implementation must be consistent with the goals and mission of the Company, have flexibility and capacity to respond to adversity and new opportunity, and yield intended results based upon the risks and rewards undertaken.

� Plans, budgets and strategies that are approved for implementation must be consistent with the goals and mission of the Company, have flexibility and capacity to respond to adversity and new opportunity, and yield intended results based upon the risks and rewards undertaken.

� As the Company considers its future, capital allocation will be a key consideration

� Shareholder value is paramount and all allocations must be measured against maximum shareholder value

� Current dividend policy is to refrain from restarting payments until there is a high degree of certainty that they can be sustained

� Want to have all contracts renewed

Need to eliminate loan constraints which preclude dividend by

� As the Company considers its future, capital allocation will be a key consideration

� Shareholder value is paramount and all allocations must be measured against maximum shareholder value

� Current dividend policy is to refrain from restarting payments until there is a high degree of certainty that they can be sustained

� Want to have all contracts renewed

Need to eliminate loan constraints which preclude dividend by

Capital AllocationCapital Allocation

7

� Need to eliminate loan constraints which preclude dividend by amending or replacing existing senior loan

� Share buy back is always a consideration when conditions are favorable

� If minority interest is purchased with debt or cash on hand, it has the same effect as a share buyback

� Growth opportunities, whether organic, asset acquisition or investment in existing plant, will be screened for risk and reward to assure value to shareholder

� Need to eliminate loan constraints which preclude dividend by amending or replacing existing senior loan

� Share buy back is always a consideration when conditions are favorable

� If minority interest is purchased with debt or cash on hand, it has the same effect as a share buyback

� Growth opportunities, whether organic, asset acquisition or investment in existing plant, will be screened for risk and reward to assure value to shareholder

Near term Contract Renewals Near term Contract Renewals

Portside

� Expires in August 2013 � Preliminary discussions have begun � 10 – 15 year term likely � Capital upgrade costs likely� Cost less than North Lake likely

� Expires in October 2013

8

Cokenergy

� Expires in October 2013 � Three-party transaction� 10 – 15 year term likely � Possible capital upgrade costs� Cost likely more than North Lake

Goal: Long term extension and incremental return on all new capital deployed

Projected Contract Duration - Example Projected Contract Duration - Example

9

Contract Term (Yrs)

Expected weighted contract life ~ 15+ years

Capex and Major Maintenance UpdateCapex and Major Maintenance Update

� PERC Capital expenditure full year forecast = $7.3M

� Assumes full $6.0M for North Lake & $1.3M for Portside and Cokenergy

� Total Q2 YTD spend = $4.1M

� $3.2M related to the North Lake upgrade

� The remaining $0.9 related to the purchase and work on a water plant at the Cokenergy facility as well as preparations for a future overhaul at the Portside facility

� PERC Capital expenditure full year forecast = $7.3M

� Assumes full $6.0M for North Lake & $1.3M for Portside and Cokenergy


� $3.2M related to the North Lake upgrade

� The remaining $0.9 related to the purchase and work on a water plant at the Cokenergy facility as well as preparations for a future overhaul at the Portside facility

10

overhaul at the Portside facility

� Expensed major maintenance full year forecast = $2.2M


� The full YTD spend relates to a boiler retubing project at the Cokenergy facility

� For the total capex and the expensed major maintenance forecast, PERC is currently on budget and expects to remain so for the remainder of the year

overhaul at the Portside facility

� Expensed major maintenance full year forecast = $2.2M


� The full YTD spend relates to a boiler retubing project at the Cokenergy facility

� For the total capex and the expensed major maintenance forecast, PERC is currently on budget and expects to remain so for the remainder of the year

Northlake Steam TurbineNorthlake Steam Turbine

Generator

Low Pressure Turbine

Condenser

11

High Pressure Turbine

Plant Modeling and AnalysisPlant Modeling and Analysis

Extensive modeling and cost analysis performed on the

turbine and the balance of plant equipment

Extensive modeling and cost analysis performed on the

turbine and the balance of plant equipment

1212

Phase 1 OutagePhase 1 Outage

� March 2011

� Re-blade 3rd and 4th Stage Low Pressure Turbine (LPT)

� Corrosion resistant material and new design

� Replace LPT coupling

� Major overhaul of LPT

� March 2011

� Re-blade 3rd and 4th Stage Low Pressure Turbine (LPT)

� Corrosion resistant material and new design

� Replace LPT coupling


13


� Major inspection and overhaul of generator

� Cleaned and inspected Cooling Tower


� Major inspection and overhaul of generator

� Cleaned and inspected Cooling Tower

New Rows of BladesNew Rows of Blades

1414

Phase 2 OutagePhase 2 Outage

� Install new High Pressure Turbine (HPT)

� Rotor, blades, diaphragms, diaphragm carriers

� Installed as a unit

� Replace Gears/Bearings using existing gear box

� Increase horsepower and torque

� Increase buss duct amp

� Install new High Pressure Turbine (HPT)

� Rotor, blades, diaphragms, diaphragm carriers

� Installed as a unit

� Replace Gears/Bearings using existing gear box

� Increase horsepower and torque


15


� Generator terminals to step-up transformer

� Increase transformer cooling capacity

� Upgrade turbine controls, protection system and HMI

� Upgrade Automatic Voltage Regulator


� Generator terminals to step-up transformer

� Increase transformer cooling capacity

� Upgrade turbine controls, protection system and HMI

� Upgrade Automatic Voltage Regulator

Northlake HP Turbine Northlake HP Turbine

1616

Phase 2 Balance of PlantPhase 2 Balance of Plant

� Condenser� Increasing condenser performance

� New instrumentation for additional modeling

� Cooling tower� New 5th cell

� Condenser� Increasing condenser performance

� New instrumentation for additional modeling

� Cooling tower� New 5th cell

17

� Relocate 69kV line � Relocate 69kV line

North Lake UpgradesNorth Lake Upgrades

1818

1. Coal Conveyor for Oven Charge Coal

2. Uptake Damper

3. Heat Recovery Steam

Cokenergy Boiler OverviewCokenergy Boiler Overview

19

Steam Generator (HRSG)

4. By-Pass Stack2

Cokenergy Boiler TubesCokenergy Boiler Tubes

20

2

20

Portside – Gas Path Parts Refurbishment Portside – Gas Path Parts Refurbishment

21

� Consistent with its previously stated objectives, PERC remains interested in the purchase of the PERH minority interest and buyout of the management agreement

� With the purchase of Capital Power Income LP (CPILP) by Atlantic Power Corporation (Atlantic Power), future control of PERH minority interest will be by Atlantic Power

� PERC has met with Atlantic Power to:

� Consistent with its previously stated objectives, PERC remains interested in the purchase of the PERH minority interest and buyout of the management agreement

� With the purchase of Capital Power Income LP (CPILP) by Atlantic Power Corporation (Atlantic Power), future control of PERH minority interest will be by Atlantic Power


Minority Interest BuyoutMinority Interest Buyout

22


� Confirmed willingness to explore buyout options

� Provided background and responsibilities associated with the minority interest and management agreement

� Outlined several concepts and potential structures, including buyouts

� Additional discussions are on-going


� Confirmed willingness to explore buyout options

� Provided background and responsibilities associated with the minority interest and management agreement

� Outlined several concepts and potential structures, including buyouts

� Additional discussions are on-going

� PERC has the right to:

� Terminate management agreement and pay termination fee if the Manager agrees to sell the minority interest to a third party

� Termination fee now $6.5M decreases monthly by $62,500 to a floor of $5.0M

� Terminate the management agreement if the Manager is in default of performing a material obligation under the agreement

� Receive back-office services, including accounting, plant operations and general services from the Manager in the operation of PERC and its subsidiaries

� PERC has the right to:

� Terminate management agreement and pay termination fee if the Manager agrees to sell the minority interest to a third party

� Termination fee now $6.5M decreases monthly by $62,500 to a floor of $5.0M

� Terminate the management agreement if the Manager is in default of performing a material obligation under the agreement

� Receive back-office services, including accounting, plant operations and general services from the Manager in the operation of PERC and its subsidiaries

PERC Rights By AgreementPERC Rights By Agreement

23

subsidiaries

� Be assigned 4 employees of the Manager dedicated full time to managing any aspect of PERC’s business

� Perform executive management services, including planning, strategy, growth and development, finance and investor relations, with its own employees and the dedicated employees

� Remove PERH board member assigned by minority interest holder upon Atlantic Power acquiring CPILP

subsidiaries

� Be assigned 4 employees of the Manager dedicated full time to managing any aspect of PERC’s business

� Perform executive management services, including planning, strategy, growth and development, finance and investor relations, with its own employees and the dedicated employees

� Remove PERH board member assigned by minority interest holder upon Atlantic Power acquiring CPILP

Neither party has the right to force a sale of the minority interest and no pricing formula is specified in the event of a sale of the minority interest

Primary Energy Rationale for Buy-outPrimary Energy Rationale for Buy-out

� Accretive

� Simplifies business� Allows for setting priorities and allocating costs� Trust like vehicles all moving to self management� More easily understood structure by investors and analysts� Build own culture and coordinate growth with dedicated team� Eliminates all conflicts of interest with Manager

� Allows for proper incentives to employees� Focus employees on Company goals and objectives

� Accretive

� Simplifies business� Allows for setting priorities and allocating costs� Trust like vehicles all moving to self management� More easily understood structure by investors and analysts� Build own culture and coordinate growth with dedicated team� Eliminates all conflicts of interest with Manager

� Allows for proper incentives to employees� Focus employees on Company goals and objectives

24

� Focus employees on Company goals and objectives� Align employees with shareholder interest� Can establish long term incentives

� Anticipate more productive and cost effective use of people� While no cost reductions are anticipated as a result of a management agreement

termination, there is potential for more value for the same costs � People will likely be utilized in multiple aspects of the business increasing their

knowledge of and contribution to the business� Multiple disciplines could contribute expertise on ad hoc basis to corresponding

aspects of growth considerations which should reduce need for some dedicated growth staffing

� Focus employees on Company goals and objectives� Align employees with shareholder interest� Can establish long term incentives

� Anticipate more productive and cost effective use of people� While no cost reductions are anticipated as a result of a management agreement

termination, there is potential for more value for the same costs � People will likely be utilized in multiple aspects of the business increasing their

knowledge of and contribution to the business� Multiple disciplines could contribute expertise on ad hoc basis to corresponding

aspects of growth considerations which should reduce need for some dedicated growth staffing

Financing UpdateFinancing Update

� PERC has been and continues to survey options for refinancing

� Have spoken with many different lending institutions

� Exploring the B Loan, Bank Loan and Bond Markets

� Received indicative term sheets from a small, diverse group of institutions

� US downgrade and concerns for the economy has created uncertainty in lending markets

� PERC has been and continues to survey options for refinancing

� Have spoken with many different lending institutions

� Exploring the B Loan, Bank Loan and Bond Markets

� Received indicative term sheets from a small, diverse group of institutions

� US downgrade and concerns for the economy has created uncertainty in lending markets

25

uncertainty in lending markets

� Lending activity has been curtailed

� All-in rates and terms for B-loans have moved unfavorably

� Bank loans seem less impacted

� Looking to near term activity to establish market direction

� Market considerations and business requirements will drive PERC refinancing decisions

� No time pressure or dead line to re-finance

uncertainty in lending markets

� Lending activity has been curtailed

� All-in rates and terms for B-loans have moved unfavorably

� Bank loans seem less impacted

� Looking to near term activity to establish market direction

� Market considerations and business requirements will drive PERC refinancing decisions

� No time pressure or dead line to re-finance

Rapid Deleveraging & Building EquityRapid Deleveraging & Building Equity

$105,000

$94,838

$87,950

$79,461$71,366

$64,135$58,403

$40,521

$60,000

$80,000

$100,000

$120,000

26

$40,521

$4,908$0

$0

$20,000

$40,000

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

YE

2011*

YE

2012*

YE

2013*

Outstanding Credit Facility Balance Actual Outstanding Credit Facility Balance Proj.

*projected debt balances dependent upon major expenditures, if any associated with the Portside and Cokenergy renewals

27

Project Overview Project Overview

Company FacilitiesCompany Facilities

East Chicago, INELECTRIC CAPACITY

95 MW


95 MW

COKENERGYCOKENERGY

East Chicago, INELECTRIC CAPACITY110 tons per hour

East Chicago, INELECTRIC CAPACITY110 tons per hour

HARBOR COALHARBOR COAL

East Chicago, INELECTRIC CAPACITYCurrently 75 MW

East Chicago, INELECTRIC CAPACITYCurrently 75 MW

NORTH LAKENORTH LAKE

Portage, INELECTRIC CAPACITY

63 MW

Portage, INELECTRIC CAPACITY

63 MW

PORTSIDEPORTSIDE


50 MW


50 MW

IRONSIDEIRONSIDE

28

PortagePortage

ILLINOISILLINOIS

ChicagoChicago

East ChicagoEast

Chicago

HammondHammond

INDIANAINDIANAGaryGary

ELECTRIC CAPACITY95 MW

STEAM CAPACITY896 Mlbs/hr



ELECTRIC CAPACITY110 tons per hourPulverized coal for blast furnaces

ELECTRIC CAPACITY110 tons per hourPulverized coal for blast furnaces

ELECTRIC CAPACITYCurrently 75 MW90 MW in 201230 Year Renewal

ELECTRIC CAPACITYCurrently 75 MW90 MW in 201230 Year Renewal









PRECLUDED 1.185 M TONS OF CARBON DIOXIDE

PRECLUDED 1.185 M TONS OF CARBON DIOXIDE

27

Project Overview

North LakeNorth LakeStrengths

� Integrated with the largest & one of the most efficient blast furnaces (BF#7) in North America

� Allows the host to recover & use excess blast furnace gas from its operations

� The U.S. EPA recognized North Lake in 2007 for environmental efficiency

� Plant produced 217,011 fewer tons of CO2 when compared to other plants using separate heat and power sources

� Integrated with the largest & one of the most efficient blast furnaces (BF#7) in North America

� Allows the host to recover & use excess blast furnace gas from its operations

� The U.S. EPA recognized North Lake in 2007 for environmental efficiency


Operations Overview

29

Project Overview

� Customer: ArcelorMittal

� Host Moody’s/S&P Rating: Baa3/BBB-

� Location: East Chicago, IN – East Mill

� Capacity: 75 MW (Upgrade to 90MW)

� Fuel: Blast Furnace Gas, Natural Gas

� COD: May 1996

� Contract Expiration: End of useful life (~ 2041)

� Customer: ArcelorMittal

� Host Moody’s/S&P Rating: Baa3/BBB-


� Capacity: 75 MW (Upgrade to 90MW)


� COD: May 1996

� Contract Expiration: End of useful life (~ 2041)

Permits, Environmental, and Safety

� North Lake has all required permits & approvals for current operations

� Operates in material compliance with all regulatory requirements

� Host holds the Title V air permit

� North Lake is incorporated into host permit

� North Lake has all required permits & approvals for current operations


� Host holds the Title V air permit

� North Lake is incorporated into host permit

Operations Overview

� Last Major Maintenance:

� Partial ST Overhaul – 2007

� Preparation for 2012 Upgrade - 2011

� Upcoming Major Maintenance

� Upgrade to 90MW – 2012

� On 12/3/09 the host for North Lake was awarded $31.6M from the DOE for a BFG flare capture project

� Project will install efficient recovery boiler to use waste BFG to produce electricity & steam

� Electricity generated by this additional steam will come from the North Lake facility

� New boiler expected to come online in 2012

� Last Major Maintenance:

� Partial ST Overhaul – 2007

� Preparation for 2012 Upgrade - 2011

� Upcoming Major Maintenance

� Upgrade to 90MW – 2012

� On 12/3/09 the host for North Lake was awarded $31.6M from the DOE for a BFG flare capture project

� Project will install efficient recovery boiler to use waste BFG to produce electricity & steam

� Electricity generated by this additional steam will come from the North Lake facility

� New boiler expected to come online in 2012

Project Overview

PortsidePortsideStrengths

� Strong off-taker

� No Fuel Risk – host provides natural gas at no cost

� Highly efficient trigeneration process

� Provides 100% of the thermal energy & much of the electricity its host requires

� The U.S. EPA recognized Portside in 2007 for environmental efficiency


� Strong off-taker

� No Fuel Risk – host provides natural gas at no cost

� Highly efficient trigeneration process

� Provides 100% of the thermal energy & much of the electricity its host requires

� The U.S. EPA recognized Portside in 2007 for environmental efficiency


30

Project Overview

� Customer: US Steel� Host Moody’s/S&P Rating: Ba2/BB

� Location: Portage, IN – Midwest Mill

� Capacity: 63MW, 495 Mlb/hr Steam, 330 MMBtu/hr hot water

� Fuel: Natural Gas

� COD: September 1997

� Contract Expiration: 2013

� Customer: US Steel� Host Moody’s/S&P Rating: Ba2/BB

� Location: Portage, IN – Midwest Mill

� Capacity: 63MW, 495 Mlb/hr Steam, 330 MMBtu/hr hot water

� Fuel: Natural Gas



Major Equipment

� 44 MW GE Frame 6B gas turbine

� 19 MW GE Automatic extraction, non-condensing steam turbine

� OTSG with three pressure levels

� 2 auxiliary boilers

� 44 MW GE Frame 6B gas turbine

� 19 MW GE Automatic extraction, non-condensing steam turbine

� OTSG with three pressure levels

� 2 auxiliary boilers

power sourcespower sources

Operations Overview

� Last Major Maintenance:� Steam turbine overhaul – 2010 (~$700K)

� Upcoming Major Maintenance� Major overhaul of gas turbine – 2012/2013

� Last Major Maintenance:� Steam turbine overhaul – 2010 (~$700K)

� Upcoming Major Maintenance� Major overhaul of gas turbine – 2012/2013


� Portside has all required permits and approvals for current operations


� Portside has all required permits and approvals for current operations


Project Overview

CokenergyCokenergyStrengths

� Investment Grade off-taker

� No Fuel Risk

� Allows for the recycling of waste heat from the coke making process

� Treats the flue gas from the HRSGs to remove SO2 and particulate matter

� Supplies significant portion of the host facility’s electricity & steam process needs

� The U.S. EPA recognized Cokenergy in 2007 for environmental efficiency


� No Fuel Risk

� Allows for the recycling of waste heat from the coke making process

� Treats the flue gas from the HRSGs to remove SO2 and particulate matter

� Supplies significant portion of the host facility’s electricity & steam process needs

� The U.S. EPA recognized Cokenergy in 2007 for environmental efficiency

31

Project Overview

� Customer: ArcelorMittal� Host Moody’s/S&P Rating: Baa3/BBB-


� Capacity: 95MW & 896 Mlb/hr Steam

� Fuel: Waste Heat

� COD: October 1998




� Capacity: 95MW & 896 Mlb/hr Steam

� Fuel: Waste Heat



Major Equipment

� 95 MW GE extraction/condensing steam turbine

� 16 HRSGs

� Flue gas treatment system

� 95 MW GE extraction/condensing steam turbine

� 16 HRSGs

� Flue gas treatment system

environmental efficiency� Plant produced 516,442 fewer tons of CO2 when

compared to other plants using separate heat and power sources

environmental efficiency� Plant produced 516,442 fewer tons of CO2 when

compared to other plants using separate heat and power sources

Operations Overview

� Last Major Maintenance:� Boiler Tube Replacement – 2010

� Upcoming Major Maintenance� Boiler Tube Replacement - 2011

� Last Major Maintenance:� Boiler Tube Replacement – 2010

� Upcoming Major Maintenance� Boiler Tube Replacement - 2011


� Cokenergy has all required permits and approvals for current operations

� Working proactively to resolve outstanding notice of violation

� Currently pursuing Title V Renewal

� Cokenergy has all required permits and approvals for current operations

� Working proactively to resolve outstanding notice of violation

� Currently pursuing Title V Renewal

Project Overview

Harbor Coal Harbor Coal Strengths

� Proven ability to work with & restructure tolling agreement when necessary

� Serves the largest and one of the most efficient Blast Furnaces (BF#7) in North America

� Provides 100% of the host’s pulverized coal for BF operations

� Use of pulverized coal to replace a portion of the coke (also natural gas & fuel oil) in the blast furnace has substantial economic benefits to host

� Proven ability to work with & restructure tolling agreement when necessary

� Serves the largest and one of the most efficient Blast Furnaces (BF#7) in North America

� Provides 100% of the host’s pulverized coal for BF operations

� Use of pulverized coal to replace a portion of the coke (also natural gas & fuel oil) in the blast furnace has substantial economic benefits to host

Operations Overview

32

Project Overview



� Capacity: 110 tons per hour coal grinding capacity

� Fuel: coal & waste heat





� Capacity: 110 tons per hour coal grinding capacity

� Fuel: coal & waste heat



Major Equipment

� Coal pulverization equipment

� Pneumatic conveyors to host’s BF#7

� Silos designed to store pulverized coal

� Silos designed for raw coal storage

� Coal pulverization equipment

� Pneumatic conveyors to host’s BF#7

� Silos designed to store pulverized coal

� Silos designed for raw coal storage

Operations Overview

� Harbor Coal amendment (1/1/08) improves predictability & stability of results

� Results solely tied to coal injection in BF #7

� Late 2010, O&M amendment removed exposure to facility O&M expenses

� ArcelorMittal operates & maintains the facility

� Outages generally scheduled in line with BF#7

� Harbor Coal amendment (1/1/08) improves predictability & stability of results

� Results solely tied to coal injection in BF #7

� Late 2010, O&M amendment removed exposure to facility O&M expenses

� ArcelorMittal operates & maintains the facility

� Outages generally scheduled in line with BF#7


� Harbor Coal has all required permits & approvals for current operations

� The host holds the Title V Air permit� Harbor Coal is incorporated into permit

� Harbor Coal has all required permits & approvals for current operations

� The host holds the Title V Air permit� Harbor Coal is incorporated into permit

Project Overview

Ironside Ironside Strengths


� No Fuel Risk

� Allows the mill to utilize the blast furnace gas from its operations

� Supplies significant portion of host facility’s electricity requirements

� U.S. EPA recognized Ironside’s 2007 operations for high environmental efficiency

� Produced 271,812 fewer tons of CO2 when compared to other plans using separate heat and power sources


� No Fuel Risk

� Allows the mill to utilize the blast furnace gas from its operations

� Supplies significant portion of host facility’s electricity requirements

� U.S. EPA recognized Ironside’s 2007 operations for high environmental efficiency

� Produced 271,812 fewer tons of CO2 when compared to other plans using separate heat and power sources

33

Project Overview


� Location: East Chicago, IN – West Mill

� Capacity: 50MW & 460 Mlb Steam





� Location: East Chicago, IN – West Mill

� Capacity: 50MW & 460 Mlb Steam




Major Equipment

� GE 50 MW Condensing steam turbine

� 460,000 pph ABB Alstom boiler

� GE 50 MW Condensing steam turbine

� 460,000 pph ABB Alstom boiler

to other plans using separate heat and power sourcesto other plans using separate heat and power sources

Operations Overview

� Host responsible for all O&M of Ironside

� Host provides all water, other utilities, & services & is responsible for all of its own backup power requirements

� Host responsible for all O&M of Ironside

� Host provides all water, other utilities, & services & is responsible for all of its own backup power requirements


� Ironside has all required permits and approvals for current operations


� Ironside holds Title V permit

� Ironside has all required permits and approvals for current operations


� Ironside holds Title V permit

Proven, Clean, TodayProven, Clean, Today

�

�

Stable, predictable cash flows under long-term contractsStable, predictable cash flows under long-term contracts

No fuel price exposure and limited operating expense exposure No fuel price exposure and limited operating expense exposure

�

� Save our customer’s millions of dollars per year with low carbon emissions facilities Save our customer’s millions of dollars per year with low carbon emissions facilities

34

� World class steel companies and premier host facilitiesWorld class steel companies and premier host facilities

� Very Conservative financing structure, tax shield to at least 2015Very Conservative financing structure, tax shield to at least 2015

� Proven success in re-contractingProven success in re-contracting

� Proven assets which provide significant high reliability and capacity factors Proven assets which provide significant high reliability and capacity factors

� Priorities are clear, building equity each quarter, remains a value opportunity Priorities are clear, building equity each quarter, remains a value opportunity

35

Questions? Questions?

Appendix:Appendix:

3636

#5 Boiler House#5 Boiler House#5 Boiler House#5 Boiler House

#7 Blast Furnace#7 Blast FurnaceNorth Lake EnergyNorth Lake Energy

Coke OvensCoke Ovens

Waste Heat Boiler

3737

Cokenergy - Red hot coke Cokenergy - Red hot coke

38

Export Steam, 300 psig

Arcelor Mittal94 MW

Generator

Power

1850 F Flue Gas

Emergency Vent

350 F Flue Gas

Flue Gas Desulfurization System

Turbines

Process LayoutProcess Layout

39

Wet QuenchScreening

Plant

Coal Unloading Blending & Crushing

SunCoke Energy Heat Recovery Coke Oven Technology- 268

Ovens

16 Heat Recovery Steam

Generators

Arcelor Mittal

1.35 MM TPY Furnace Coke

FansFabric Filter

Spray Dryer

Main Stack

Indiana Harbor Operations

Coke Energy Operations

Non Recovery Coke OvenNon Recovery Coke Oven

4040

Coke OvensCoke Ovens

4141

PortsidePortside

4242

Portside – Gas TurbinePortside – Gas Turbine

4343

IronsideIronside

Cooling TowerCooling Tower

Steam Turbine BuildingSteam Turbine Building

44

Boiler BuildingBoiler Building

44

IronsideIronside

4545

Sources of U.S. CO2 emissionsSources of U.S. CO2 emissions

~6,000MTons / year

4646

CHP Share of Total Power ProductionCHP Share of Total Power Production

4747

0.50.60.70.80.91

CO2 Tons / MWH

CHP 2x work = less cost & half emissionsCHP 2x work = less cost & half emissions

Centralized Distributed

Average US

Best Central Plant

48

00.10.20.30.40.5

CO2 Tons / MWH

CoalPlant

CCGTPlant

CHP /Cogen

RecycledEnergy

@ 20% of DemandSaves 848M tons/yrOr154M cars off road

Source: DOE

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