On December 10, 2009, a sea change began in the Texas electric market. ERCOT began wholesale settlements using smart meter data on Dec. 7, 2009.

1. The Texas Smart Meter Revolution How Can Your Company Benefit? Opportunities to Take Advantage Of Right Now! May 25, 2010

3. Latest Progress On Smart Meter Texas Initiatives

4. Market Opportunities2

5. Mark Burlingame, CPASenior Director, UtiliPoint Analytics, UtiliPoint International, Inc. Mr. Burlingame is an international utility expert with 19 years in the utility industry including research and development, business case modeling, financial resource budgeting, business planning, system development, pricing administration, market forecasting and marketing. Prior to entering the utility industry, he was a Senior Management Consultant with Coopers & Lybrand. Mr. Burlingame's hands-on experience in several jurisdictions and markets includes the UK, Massachusetts, Pennsylvania, California, Washington, Florida, Texas and Oklahoma. 3

7. Latest Progress On Smart Meter Texas Initiatives

9. The Electric Reliability Council of Texas (ERCOT) operates the electric grid and manages the deregulated market for 75 percent of the state.

10. 6.5 million customers have choice of electric suppliers

11. 1,130 kWh/mo. average residential usage5

13. Installed capacity: 80,076 megawatts

14. High-voltage transmission monitored: 40,327 miles

15. 828 entities generate, move, buy, or sell electricity6

16. Some Texas Terms There are 4 Transmission and Distribution Service Providers (TDSPs) There are over 40 Retail Electric Providers (REPs) QSE is a Qualified Scheduling Entity responsible for submitting REPs’ next day’s schedule of expected power requirements. 7 Load Serving Entity (LSE) is an organization serving end-use customers. For our purposes today, this is usually a REP.

17. Texas Meter Conversion Source: http://www.puc.state.tx.us/electric/projects/34610/AMITMtg0909/AMITBoardMtg0909.pdf 8

18. 9 Almost 3 Petabytes of Storage Needed by 2014 Source: UtiliPoint proprietary database

20. 1,034,711 AMS meters

21. 1,985 residential users have created accounts

22. 31 REP entities created and registered successfully on SMT portal3 TDSP entities created and registered successfully on SMT portal

23. 61 TDSP users created

24. 71 HAN devices successfully provisioned Source: http://www.puc.state.tx.us/electric/projects/34610/AMITMtg022410/SMT-AMIT-Status-FTPS-Integration_022410.pdf 10

25. Texas Meter Data Flow TDSP Meter Read Enrollment Historical Consumption Meter Reads Customer Wire Charges / Payments Enrollment Invoicing Settlement Transactions Remittance Retailer QSE 11

26. Texas Smart Meter Data Flow TDSP Load Control 15 min Interval Meter Reads HAN Events HAN Texas Portal & Data Repository Account Data Enrollment Fuel Cells Customer Historical Consumption Enrollment Meter Reads PHEV Invoicing Wire Charges / Payments HAN Services Retailer QSE Remittance Settlement Transactions Customer Account Data Pricing Solar / Dist. Gen 12

27. The Value Chain © 2010 Pariveda Solutions, Inc. 13

28. The Retail Challenges Customer Adoption and Education Consumer Behavior Disruptive Technology New Competition Systems Portfolio and Integration 14

30. Introductions

31. Latest Progress On Smart Meter Texas Initiatives

32. Market Opportunities

33. Systems Impactquestions@utilipoint.com

34. Pricing Product Differentiation Current Retail Market After Smart Meters Month to month Term –plus 6, 12, 18, 24 month Signing Incentives Single price ($/kWh) with or without monthly base charge Seasonal Price guarantee Limited Prepay and TOU Plans MCPE plus mark up Heat Rate plus NYMEX gas Indexed plans All Current Products and: More robust Prepay and TOU plans Contract-for-differences (RTP using MCPE and prearranged block or load shape Creative “Fixed Bill” plans Interruptible/curtailable plans 16

35. Pricing Plan Value Positioning Value of Branding Fixed Bill -simple and secure - a fixed monthly bill Fixed price– secure and simple TOU- secure, some choice and control, and customized bundled service options CFD - control and access to wholesale prices Point of Sale Support # Subscribers Size of Subscriber Load Simple Choice (Value Added) Price Security Price Risk CFD TOU Fixed & Indexed Fixed Bill 17

36. Match Product to Value Sales volume certainty Lower risks on high volumes, hedging value High CFD TOU Season Blocks Price Variability High margin potential Fixed Plans Low Access to a big, but reluctant to change, market share Low High Degree of Involvement 18

37. Customer Portfolio of Choices High CFD Some years are easier to predict than others I don’t like the current market price outlook TOU Season Blocks Fixed Plans Low Low High I’d like to give load management a try 19

38. TOU Pricing Plans 20

39. TOU Benefits Why Offer TOU? Commodity costs vary with time of day and season Consumers will change behavior if properly incented Consumer response to prices offers an offset to expanded usage by other customers on other programs Improve earnings by better managing risk 21

40. TOU Failures Selling program based on peak load reduction or bill savings alone Many programs aren’t “marketed” to customers Poor design (ratio of on/off-peak price, length of on-peak window) Solutions: Achieve success by selling TOU to customers premised on access to lower prices during low cost times. Design product with customer behavior in mind 22

41. A Better TOU Product Features that Improve Customer Acceptance Shorter Peak Period Limited Peak Season Better Prices High Peak to Off-Peak Price Ratio (Shifters) Lower relative Off-Peak Prices (Growers) Demonstrable Savings Term Flexibility Choice and Control 23

42. Type of TOU Plans Fixed TOU Plan – prices and time periods fixed for term Flex TOU plan – a platform of plans with varying price levels and peak period duration Variable Peak Period Price – would use Nodal Day ahead market MCPE to establish next day peak price level TOU combined with price overcall plan – TOU and Critical Peak Price 24

43. Flex Choice TOU Service Plans Plan 1 Plan 2 Peak 3:00 - 7:00 Peak 3:00 - 7:00 Prices Peak $.36 Off $. 10 Prices Peak $.34 Off $.11 Choices Plan 4 Plan 3 Peak 1:00 - 9:00 Peak 1:00 - 9:00 Prices Peak $.36 Off $.09 Prices Peak $.34 Off $.095 25

45. On peak price based on Day Ahead Market MCPE averaged for the peak duration

46. Fixed On Peak duration (2 PM – 7 PM)26

48. Limited number of days and hours CPP events can be called

49. Day ahead or 4 hour advance notice of CPP event

50. CPP event can be called for any day of the week

51. An option to allow customers to participate if CPP events are called in the off peak season

52. Incentive For Participation – either a reduced peak period price or in the form of a payment for performance27

53. Prepaid Plans 28

54. Prepaid Plans Current Retail Market After Smart Meters Term – month to month and may include discount for staying longer than one month No deposit, credit check or I.D. Might include a monthly service charge and a fixed rate Smart Meter can provide daily usage, turnoff meter when prepaid limit reached Greater customer satisfaction as they have greater control over managing usage –daily info provided by email or phone An in-house monitor might be installed to provide near real time usage and bill amount to date Term – month to month but may require activation fee that requires 6 month service No credit check No deposit No I.D. check Monthly Service charge plus high fixed rate Problems determining when prepaid limit reached – turn off complaints 29

55. Contract for Differences Plans 30

56. Contract for Differences 31

57. Fixed Bill Plans 32

59. To increase Brand presence – even customers that do not sign up will talk to others about your offering

60. To increase profits from the residential and small commercial customer markets - Customers are willing to pay a premium for convenience and stability 33

61. Fixed Bill Process Weather Adjustment Historical kWh MAY BILL Target Market Adjust for Price Response ESTIMATED kWh JUN 1,007 JUL 1,234 AUG 1,333 SEP 999 OCT 888 NOV 650 DEC Fixed BILL “Make me an offer.” ADJUSTED kWh JUN 1,177 JUL 1,345 AUG 1,444 SEP 1,100 OCT 959 NOV 770 DEC Apply Forward Price Curve YES Calculate monthly FB amount Add Risk Premium Make Offer Add Base Charge $ % 34

62. Pricing Plans After Smart Meters Remember: Smart Meters should unlock access to niche markets that increase your bottom line! 35

64. Market, Market, Market! Promotion is key!

68. Metering, Billing, Risk Management, Customer Accounting, and Product Accounting are all necessary for program success. Risk Management Prices CIS Offers Reports Subscription Sales Billing 37 37

69. Contact Information 6000 Uptown Blvd. NESuite 314 Albuquerque, NM 87110 Direct: 214.821.8099 Cell: 214.684.6888 mburlingame@utilipoint.com www.utilipoint.com Mark Burlingame, CPA Senior Director, UtiliPoint Analytics 38