Enabling Customer Demand Management

Kevin Evans President & CEOJune 24, 2010

Proprietary Company Information 2

• Legacy market: Grid Operator/Utility Centric “Command and Control” driven environment

• Emerging market: Hybrid market with traditional Command and Control augmented by more customer

centric “Inform and Motivate”

• Situational awareness is better than command and control Command and control may remain appropriate for ancillary services or emergency

peak reduction until telemetry provides real-time situational awareness

• Factors limiting customer participation Complex rules differentiated across all jurisdictions

Pricing implications not put in “easy to understand” context for customers

Enabling technology not available, too costly or too complicated to use

Evolution of Demand Response

Proprietary Company Information 3

DR Forces – RTO vs. Energy User

RTO / ISO Energy User

RTO needs and energy user

desires often at odds with each

other

Needs

• Reliability

• Predictability

• High Capacity Factor

• Efficient Markets

Desires

• Min. Operational Impact

• On Demand

• Flexibility

• Lowest Cost Electricity

Proprietary Company Information 4

Demand Resource

Enabling technology that inform and motivate energy

users and meet Grid’s needs

Demand Resource

Enabling technology that inform and motivate energy

users and meet Grid’s needs

Bringing Forces Together

Needs

• Reliability

• Predictability

• High Capacity Factor

• Efficient Markets

Desires

• Min. Operational Impact

• On Demand

• Flexibility

• Lowest Cost Electricity

Energy User RTO / ISO

Win/Win

• Curtailment Planning

• Adequate Compensation

• Situational Awareness

• Price Discovery

Proprietary Company Information 5

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09

ECIAll Others

RTLMP (PECO zone)5 day Moving Average (Noon to 6 PM)

0

50

100

150

200

250

300

01/01/0

7

03/01/0

7

05/01/0

7

07/01/0

7

09/01/0

7

11/01/0

7

01/01/0

8

03/01/0

8

05/01/0

8

07/01/0

8

09/01/0

8

11/01/0

8

01/01/0

9

03/01/0

9

05/01/0

9

07/01/0

9

09/01/0

9

11/01/0

9

2007 – 2008: Program Design & Testing Baselines, price signals Rebate or incentives

2009 – 2010: Getting the Rules Right Standardized baseline usage calculation Curtailment plans and telemetry FERC NOPR Compensation Market education & adoption

2011 and Beyond Wider adoption in other RTO’s

$48M

$27M

$1M

PJM moves from full LMP to LMP - G

History of Price Response in PJM

Proprietary Company Information 6

Assess Curtailment Capability

Install Telemetry

Set Notification Criteria

Notify Customer of Opportunities

Settlement and Payment

Accept, Modify, or Ignore

Test & Certify

Value Proposition

Putting Price Signals in Context

Market opportunities automatically monitored for customers and put in their perspective

Proprietary Company Information 7

• More than just a “price signal,” full value proposition quantified for customer

• Makes it easy for customers understand value from THEIR perspective

• Easy “what if” analysis of running modified scenarios

• Enables direct scheduling of load shift via BAS or other control tech

Value Proposition

Easily Evaluate and Modify Schedules

Proprietary Company Information 8

Real-time Price Discovery

13 14 15 16 17 18 19 20 21 22 23 24

05 6.04 5.73 13.00 15.38 16.54 12.49 5.12 5.41 5.90

10 6.07 4.92 8.56 13.01 13.94 18.89 13.18 5.63 13.50 5.41 5.07

15 6.10 4.84 8.69 14.08 14.22 17.43 11.17 12.29 5.53 14.30 5.82 5.08

20 6.36 6.44 14.10 12.35 12.18 11.18 12.30 12.68 5.82 4.60

25 8.30 9.10 14.83 12.47 8.24 10.61 7.48 5.21 4.61

30 4.17 8.74 15.26 12.19 11.90 8.01 10.45 6.49 4.81 3.59

35 1.78 7.74 12.99 13.65 11.57 11.69 7.53 10.45 6.48 5.02 3.60

40 1.71 7.65 7.87 15.13 13.64 9.48 7.54 8.26 5.92 5.02 3.87

45 10.96 7.65 7.87 15.51 13.38 11.05 7.49 9.50 5.63 4.71 3.62

50 5.90 7.64 15.90 13.32 7.50 5.02 4.87 3.62

55 5.88 7.61 11.50 5.47 17.97 5.04 5.35 3.62

00 3.58 13.00 16.06 13.03 17.10 5.22 5.85 5.90 3.36

5.32 6.79 8.95 14.50 13.69 14.25 11.94 8.94 9.28 8.03 5.28 4.21

2.55 1.39 1.92 1.22 0.99 2.89 2.63 2.84 3.97 3.59 0.41 0.82

Customer Wholesale Price Report

Realtime 5-Minute - USDA - HQ

5/26/2010

(Prices in ¢/kWh, x10 for $/MWh)

Date

Hourly Avg.

Std. Dev.

Proprietary Company Information 9

Real-time Performance Monitoring

Proprietary Company Information 10

Utility Based Dynamic Capacity Pricing

Average Historical Peak Loads and Act 129 Mandated Peak Demand Reductions as Measured in Megawatts

EDC Load 4.5% Reduction

Duquesne 2,518 113

Met-Ed 2,644 119

Penelec 2,395 108

Penn Power 980 44

PPL 6,592 297

PECO 7,899 355

West Penn 3,496 157

Total 26,524 1,193

2008 Top 200 Hours

100 hours of $100/MWh = $10,000Low

Incentive

Assume the capacity payment is $50,000/MWyr., the economic offer could be:

Medium Incentive 50 hours of $300/MWh = $15,000

High Incentive 50 hours of $500/MWh = $25,000

“Reconstituting” capacity payments to a “Pay for Performance” incentive

26,500

26,250

26,000

25,750

25,500

25,25025,000

Proprietary Company Information 11

Full Integration with Grid Operations

• Automatically processes notification from utility or grid operator

• Customer notification options via e-mail, voice message to phone, pager, etc.

• Processes 10,000’s of messages per minute

• Communicates directly with customer control systems

• Remotely starts processes or back-up generation

Independent System OperatorElectric Utility

, or

Retail Electric Supplier

Baselines

,

Usage Information

,

Settlement Information

Notification of System Events

Internet, Phone Connection,

Cellular Modem

Participant Site

On-Site Collection (e.g., data logger,

BAS, etc.)

Electric Meter (s)

Control System

Electricity Usage

Information

Control Signals

Electric Utility

Bidding, Notification, Performance, Settlement

Operations Personnel

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Proprietary Company Information 12

Automated Load Management

National Retailers

Main Office

Internet

Satellite LocationUtility Meter(s)

Andover Network Controller

Richards -Zeta Mediator

Submeters / CTs

Customer Managed

VPN

HVAC Lighting

Baselines

,

Usage Information

,

Settlement Information

Notification of System

Events &

Andover Continuum

ServerKey

MeteringEvents / Control

Satellite LocationUtility Meter(s)

Siemens / ALC / etc.

Richards -Zeta Mediator

Submeters / CTs

HVAC Lighting

Customer Managed

VPN

Price Info

DR Interface

Proprietary Company Information 13

Command & Control

Shaping the Smart Grid

• Communication & Control Network• Resource Energy Controller (REC)• Thermal Network• Electric Network• Virtual End Node (VEN)

E-ConnectEnergy Resource

Interface(ERI)

• Communication & Control Network• Resource Energy Controller (REC)• Thermal Network• Electric Network• Virtual End Node (VEN)

Inform & Motivate

Proprietary Company Information 14

Technology Enabled Demand Response

Demand Resource

Enabling technology that inform and motivate energy users and

meet Grid’s needs

Demand Resource

Enabling technology that inform and motivate energy users and

meet Grid’s needs

Win/Win

• Curtailment Planning

• Adequate Compensation

• Situational Awareness

• Price Discovery