Chairman’s Letter to Stakeholders

James E. Rogers, CEO

JAMES E. ROGERS
Chairman, President and
Chief Executive Officer

Dear fellow investors, customers, employees and all others who have a vested interest in our success — including our partners, suppliers, policymakers, regulators and communities:

Flipping a light switch is simple. Our mission of providing our customers with affordable, reliable and cleaner energy, 24/7, is not.

Our industry is capital-intensive. Our assets are built to last for decades to meet the long-term needs of our customers. We must make billion-dollar investment decisions today to build large-scale plants that will operate half a century or more. Today’s uncertainties around new environmental regulations and climate change legislation make these decisions even more difficult.

We expect Congress or the U.S. Environmental Protection Agency (EPA) to regulate carbon emissions as early as 2011. We also expect an onslaught of new environmental regulations on coal — not only for carbon emissions, but also for hazardous air pollutants, ash ponds, the production of coal from mountaintop removal and water discharge. These new rules could require us to retrofit or retire thousands of megawatts (MW) of coal-fired generation, beyond what we were already planning.

We make the best decisions when we listen carefully to our stakeholders, bring our expertise to bear on critical political, economic and environmental issues, and stay focused on our mission. Engaging constructively in a dialogue will help protect the interests of both our customers and our investors.