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Investor Presentaiton

ALLETE clean energy. SMART. POWERFUL. AHEAD. Tax equity arrangement - illustration $ millions ACE After-Tax Profile: 100% PTC, 100 MW Project Average Net Income Annual Net Income w/HLBV $9 $8 $7 $6 $5 $4 $3 $2 $1 Year 1 Year 2 Year 4 Year 5 • • Year 3 Gradual slope upward as tax equity investor progresses toward achieving its yield Allocations of pre-tax gain are larger to tax equity in earlier periods and decrease as yield is achieved Year 6 Year 7 Year 8 Year 9 Year 10 Tax Equity Structure Pre-flip Sponsor ACE Tax Equity Partner Tax 1% Cash 80% Post-flip Tax 95% Cash 95% Wind Project, LLC Pre-flip Tax 99% Cash 20% Post-flip Tax 5% Cash 5% Offtaker Pre-Flip Period - 9.5-10 Years Investor Pre-Flip Yield - 5.75-6.5% Partners tax, cash, & PTC allocation percentages will change over the course of the deal HLBV method of accounting for allocation of GAAP earnings Individual project structures and tax equity arrangement terms are unique, provided they comply with IRS regulations. Allocations of income and loss and cash distributions are dependent on deal terms and structure agreed upon with tax equity investor including liquidation provisions. As with any wind facility, revenue and PTCs are dependent on wind resources. Non-cash benefits (PTC and MACRS depreciation) allocated to the tax equity investor will be accretive to ACE over the yield term. The tax equity partner is in a preferred position until its yield is achieved and there may be cash sweep mechanisms in certain periods to achieve or maintain the tax equity partner's yield. 39 ALLETE
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