Cooperative Policy

Policy Number: 118

Subject: Generation Fuel Diversity and Fossil Fuel Generation

Objective: To state the Cooperative's policy regarding Generation Fuel Diversity and Fossil Fuel Generation

Efficiency in compliance with the Energy Policy Act of 2005, PURPA 111(d) Standard (12) and (13).

Reference: Energy Policy Act of 2005, PURPA Title I Standards, SEIEC Management Recommendations,

April 18, 2007

Policy:

The Cooperative has a full-requirements power supply contract with Southern Illinois Power Cooperative, Inc. (SIPC), which expires in 2033. Therefore, SIPC is responsible for supplying the generation and transmission requirements of the Cooperative and is directly responsible for implementing generation fuel diversity and achieving fossil fuel generation efficiency.

Through active participation on the SIPC Board of Directors, the Cooperative has and will continue to encourage SIPC to diversify the fuels used to generate the electricity purchased by the Cooperative. Fuel diversity mitigates the risk associated with fluctuations in the price of generation fuels and the regulatory risk associated with individual fuels.

Through active participation on the SIPC Board of Directors, the Cooperative has and will continue to encourage SIPC to maximize the efficiency of all generation facilities including the fossil fuel generation facilities. Maximizing the efficiency of the generation facilities provides more economical energy and also creates environmental advantages.

Approved: August 7, 2007