Four Seasons, Landisville, PA Introductions Sponsors REAP - - PowerPoint PPT Presentation

September 28, 2012 Four Seasons, Landisville, PA

 Introductions  Sponsors  REAP Performance  Market Update  PA PUC Commissioner Witmer  On-site Renewables  REG Initiatives  Prizes  Lunch/Golf

1.

Complete the referral sheet

2.

Your referral joins REAP or does a lighting retrofit by the end of 2012

3.

You get a $75 gift certificate from Haydn Zugs

• r Horse Inn

 Pete Richards: Vice President/CVO/CTO  Tara Quigley: COO/General Manager  Mike Frey: Director, Sales & Procurement  Steph Baylor: Manager, Procurement & Admin  Don Hornung: Manager, Consulting & Fuels  Andrew Fritz: Senior Lighting Coordinator  Julia Smith: Senior Analyst

 Victor Wueschinski: IT Lead  Mike Basta: Senior Sales Engineer  Derek Jones: Energy Engineer  Linda Ulmer: Account Manager II  Michele Leabhart: Admin Support  Scott Richards: Billing Analyst  Lew Knepp: Ambassador  Mary Richards: Treasurer

 Platinum

 Customized Energy Solutions  Sustainable Energy Fund

 Gold

 Direct Energy

 Silver

 Constellation, an Exelon Company  Creative Financial Group  Hess  Hudson Energy  Veolia Environmental Services  Washington Gas Energy Services

 Contributing

 TriEagle

 Amelia’s  Citizen Bank  Dutch Gold Honey  GSM Industrial  Haydn Zug  Horse Inn  Kauffman’s Fruit

Farm

 Mr. Bill’s Seafood  OnDemand  Palmyra Bowling  S Clyde Weaver  Sight and Sound  SKH  TriEagle  Willow Valley

Retirement Communities

 Gall Laminating  REG

 Sustainable Energy Fund

 John Costlow

 Customized Energy Solutions

 Rick Gilkey

Customized Energy Solutions and Richards Energy

Richard Gilkey VP DR and Fuels Services

Customized Energy Solutions

Confidential (www.ces- ltd.com) 12

Customized Energy Solutions

• What do we do for our clients?
• Provide wholesale market services that enable our clients to provide value

added services for their customers

• Examples
• LSEs
• Aggregators (REAP)
• Munis, Coops
• Provide additional value to REAP Services
• We are independent and provide services to a broad spectrum of participants

in the energy markets

Confidential (www.ces- ltd.com) 13

PJM Load Response Programs

• Economic Program
• REAP Electrical Agreement provides economic benefits

to Customers who reduce load at high prices

• Emergency Program
• ISO or Utility calls interruption
• Payment based on load reduction capability
• Performance test required if no event occurs
• Payment will offset portion of fixed charges under

REAP contract for energy

Customized Energy Solutions Market Operations Center

REAP Performance & Energy Market Update

2012 Annual REAP Meeting Mike Frey Richards Energy Group, Inc.

9.28.2012

Today’s Goals

Keep REAP members up to speed Provide energy market update Give Richards Energy’s interpretation of market conditions Explain good buying opportunities available right now Don't want to exclude Members from the decision making Provide forum for REAP member questions Provide clarity in a confusing marketplace Review the benefits of REAP membership

 single channel providing you access to ALL options and product types

Address your concerns… We are listening to you Our best customer is an educated customer!

Discussion Topics

Part I: REAP & Electricity Purchasing Part II: Energy Market Update Part III: Market Outlook Part IV: Procurement Solutions

Part I

REAP & Electricity Purchasing

REAP: Richards Energy Affinity Program

Who?

 Team of energy experts, PE’s, CEP’s, CEM’s, utility experience, etc.

Where?

 Located in Lancaster County, serving PA and the mid-Atlantic region

What?

 An energy consulting company focused on helping REAP Members shop

for electric supply and manage energy costs over time

When?

 Licensed since 1999 - providing REAP Members with ongoing, full-time

energy purchasing expertise

Why?

 The power of together  Large group entices supplier interest = More options for REAP Members  Shopping expertise

REAP: Richards Energy Affinity Program

Mission:

 Educate Members on energy issues and purchasing options  Shop for electricity to help Members manage energy costs

We understand energy is a major input cost to your business We provide full evaluation of ALL supplier quotes and product offerings: ALL supplier quotes (to find best fixed price on a given day) ALL supplier products (more than just fixed prices)

 Customer service – we support the deals after the contract

is signed

REAP: Richards Energy Affinity Program

Two unique advantages to the REAP model:

 Exclusive representation as your purchasing agent

REAP Members appoint us as the exclusive representative Represent electricity consumers (you - the REAP Members), not electric suppliers Single channel access to the retail marketplace to evaluate all options Electricity is unique from anything else your business may buy

 Authority to sign electric supply contracts

Supplier quotes generally expire in a matter of hours REAP Members give us the power to act quickly in response to market opportunities Has nothing to do with Richards Energy… not about keeping you captive or locking you in Model was designed to provide Members with access to all options and capitalize on

• pportunities in a volatile climate

REAP: Richards Energy Affinity Program Question:

How to find the best price or right product when there are more options than ever before?

Licensed Suppliers, Brokers and Marketers in PA

Yes, there are more players than ever before. But really, how many viable options are there?

50 100 150 200 250 300 Number of new licenses (cumulative) Year

Who are players in the Marketplace?

• 1. Wholesale Generators
• nly 4 to 6 in a given EDC
• 2. Retail Suppliers
• nly 25 - 30
• 3. Brokers, Marketers & Consultants

hundreds! and many more who are not licensed with the PUC

Who are players in the Marketplace?

1.) Wholesale Generators

Only 4 to 6 in a given EDC Functions:

 Own and/or operate electric generation assets  Want to get best ROI  Their commodity value is 100% driven by supply & demand

Sell to:

 Retailer suppliers (not end-users)  Utilities (for “default” rates for customers who choose not to shop)  PJM real time markets

Examples: Goldman Sachs, etc. Note: Customers do not buy directly from wholesalers

Who are players in the Marketplace?

2.) Retail Suppliers

Only 25 – 30 in PA Functions:

 Outlet for wholesale generation  Serve and bill for electric supply

Sell to:

 End-users (like REAP members)

Examples: CNE, DE, Hess, Hudson, TriEagle, Washington Gas, etc. Notes:

 Compete fiercely to gain retail customers because prevailing energy

prices are about the same every day for all suppliers

 Very difficult to have best product (or offer all products) for every

segment of the industry (RS, small commercial, industrial) so they tend to find a “niche” for themselves, and differentiate on product

Who are players in the Marketplace?

3.) Hundreds of brokers Few are comfortable with all the products that exist

 Because it’s too complicated  Most do fixed price products only  Most are not sophisticated enough to make offers apples to apples

Few (if any) work with all retail suppliers

 Your options are limited unless your broker is shopping ALL

suppliers for you

 Many represent only a single supplier!

Richards Energy: A different kind of energy consultant

1.

We aren’t electric suppliers, nor are we beholden to any

2.

We represent you (REAP Members), not suppliers

3.

We do not offer electric quotes…

4.

We evaluate all supplier quotes and products for you

5.

We fix supplier problems for you

6.

We fix distribution company problems for you

7.

We’ve been doing this since 1999, when deregulation started in PA

8.

We have extensive utility background

9.

We are engineers and certified energy professionals

10.

Our clients are Members of REAP which yields unique solutions for power purchasing

11.

We educate and update Members regularly

Richards Energy’s Supplier Partnerships

Richards Energy maintains partnerships with 20+ electric suppliers This ensures REAP Members access to the widest array of

• fferings available in the marketplace

REAP = single channel to evaluate offers from 20+ retail suppliers on your behalf 17 different suppliers have received/won contracts through REAP since rate cap expiration Richards Energy ensures a competitive bid process every time we shop Note: These are vetted suppliers… Richards Energy has even “fired” suppliers occasionally. (e.g., when we find problems/concerns with their product or contract language that is unacceptable for end-users)

REAP: Your single shopping channel

We are a single channel to obtain/evaluate offers and products from the 25 – 30 retail electric suppliers available to your business We do the shopping for you With price offers and products changing daily in a volatile commodity-driven market, how can you possibly compare offers apples-to-apples by getting quotes from all suppliers?

Typical model:

Marketing to You

Versus Going to Market

Price A Price B Price C Price D

Richards Energy’s REAP model:

Going to Market for you

Getting the best solution customized for you

Solution/Price A Solution/Price B Solution/Price C Solution/Price D Solution/Price E Solution/Price F

Richards Energy

Your Single Channel

Why a single channel makes sense

Power Energy Watts Energy Work Energy Left Energy Hertz Energy Your Energy Potential Energy Faraday Energy Overall Energy Franklin Energy Volta Energy Current Energy Joules Energy Shop Energy Edison Energy Ability Energy

Broker 207

Supplier 5

Consultant 167

Broker 207

Consultant 167 Consultant 167 Consultant 167

Broker 207

Supplier 20

Multiple channels LIMIT your options Multiple channels do not bring you more options

Channel Conflict

Can’t have multiple channels when shopping for electric 25-30 retail suppliers will not bid against themselves There are consequences to you entertaining an offer or two Limits your own competitive process! When Richards Energy gets locked out from a supplier, we can't do

• ur best job for you

Checking a price quote here or there seems innocuous, but really you're preventing a full analysis of the total market offers available to you Single channel is the best way to access all market options and

• ptimize your electric buying experience

You’re getting better offers?

The price you’re paying right now was competitively shopped and evaluated carefully when the deal was secured There are no better offers Just different prices on different days – reflecting mkt movements Richards Energy does not even have offers Shop around, buy the cheapest TV… two months later retailer drops the price… If I only waited two months (and not watched TV) then I could get today’s lower price for TVs Market moves everyday. No one can control that, but Richards Energy offers solutions that address this reality. Electricity is a volatile commodity (moves like stock market) How do you pick the best day to buy? Maybe a layering product is appropriate for your needs.

Part II

Energy Market Update

PPL Shopping Environment – Q4 2009

2010 PPL tariff rate for GS accounts: 10.402 c/kWh

 based purely on market purchases made by PPL

2010 PPL tariff rate for LP accounts: 9.3 – 9.7c/kWh

 determined by PPL’s October 2009 market

Supplier Options were limited in Fall of 2009 Yet average savings of 1 penny per kWh or greater were available based on market conditions in Q4 2009

Small Meters (GS Accounts) Large Meters (LP Accounts) Direct Energy (Pool) Direct Energy Dominion (brief period) Constellation Constellation Sempra (Noble Americas) PPL Energy Plus Hess GDF Suez

Energy Prices - 10 year snapshot

REAP PPL Pool Launched

Hurricanes Katrina & Rita PPL under “rate caps” Oil $147/Barrel Trader Speculation

Forward Wholesale Energy Prices

On-Peak Power (PPL Zone)

Term Oct 6, 2009 CY 2010 6.638 CY 2011 7.338 CY 2012 7.567 CY 2013 7.805 CY 2014 N/A CY 2015 N/A CY 2016 N/A May 6, 2010 N/A 5.765 6.172 6.458 N/A N/A N/A Sept 12, 2012 N/A N/A N/A N/A 4.570 4.720 4.942

“Pool 1” was initiated (Jan 2010 – May 2012) “Pool 2” was initiated (May 2012-May 2014)

Energy past 5 years

Energy past 12 months

Forward Energy Market – PPL Zone (ATC)

Forward Market

Price Trend Analysis Outer Year Prices currently trading in 6-8% percentile 92-94% of the time, prices have traded higher A buyer’s perfect scenario!

Energy Markets:

Forward Market vs. Index Market

• 1. Forward Market (Wholesale, Fixed, Term)

A price that a generator quotes (for a specific term) for a “block” of power

Priced in On-peak and Off-peak blocks

Generators charge a premium for setting a block price for a specific term (12, 24, 36 months, etc.) Prices are driven by Geopolitical turmoil, oil, long term weather forecasts, long term hurricane forecasts, nat gas storage, long term supply and demand forecasts, global economic conditions

• 2. Index Market (Real time, Day-Ahead, Spot)

Over time there is a discount to the Wholesale market Prices are volatile relative to the wholesale market Driven by immediate supply and demand (e.g., current weather conditions)

Forward Market vs. Index Market (cents/kWh)

Calendar Year On Peak Price Off Peak Price 60/40 Split of On-Pk/Off-Pk Use 2014 4.611 3.196 4.045 2015 4.762 3.420 4.225 2016 4.986 3.624 4.441 Index Market Jan 2012 - Aug 2012 3.753 2.903 3.413

Utility Price To Compare:

Independent of market conditions! Time Period PPL GS1/GS3 (cents/kWh) PPL LP (cents/kWh)

2010 10.402 9.5 (+/-) Jan 2011 – May 2011 9.77 Hourly June 2011 – Aug 2011 13.028 Hourly Sept 2011 – Nov 2011 10.184 Hourly Dec 2011 – Feb 2012 6.775 Hourly Mar 2012 – May 2012 6.387 Hourly June 2012 – Aug 2012 9.154 Hourly Sept 2012 – Nov 2012 10.346 Hourly Tariff rates are not solely reflective of market conditions

Part III

Market Outlook

Electric Supply Price Components

Energy/Commodity: Can be purchased from the forward market or the index

• market. What each account pays

for energy depends on market conditions and your specific load shape and time of use. Regulatory Charges: Largest regulatory component is Capacity and is determined by annual RTO (PJM) auctions and your PLC kW demand value Energy Supplier Fees GRT Transmission Ancillaries

Capacity Distribution

Market Outlook – Many variables Bullish Factors

 Energy/Commodity

Coal to gas fuel switching (tightening environmental standards & plentiful inexpensive gas supply available) Long term - Potential US LNG exports in the future? Marcellus Shale drilling slowing due to fall in gas prices Potential Mideast turmoil: Israel/Iran conflict? Hurricane season is here… potential for natural gas supply disruptions?

 Regulatory Charges:

Capacity auctions in future years are at risk for high prices. ATSI zone in Ohio increased by 120%! Most recent auction for future capacity in this zone cleared at $294/MWday… up from $130)

Market Outlook – Many variables Bearish Factors

 Weak economic fundamentals… Jobless

economic growth

 Marcellus shale natural gas production  Natural Gas glut due to mild 2011-12 winter  Drilling does not slow substantially due to lease

arrangements and other by-products of drilling

 Markets continue to soften in the outer years  Hurricane season is here… new Marcellus gas

supply makes the northeast US less vulnerable to hurricane activity in the Gulf of Mexico

Buying Opportunity?

 No crystal ball, but…  Now appears to be great time to strike  Current offers are very low…  Harder to imagine prices going lower from here, but

easy to imagine prices going higher

 There is a floor… energy prices will not go to $0  But there is no ceiling for energy prices…

Sky is the limit Rates are no longer regulated Market rates will be driven by supply/demand fundamentals

Part IV

Procurement Solutions

Procurement Options Today

Products:

• 1. Block & Index
• 2. Fixed Price (via layering)
• 3. Fixed Price (via single purchase on one day)
• 4. 100% Index

Richards Energy will explain the subtle differences

 No right or wrong way to purchase power

 Different tools available to fit your buying strategy  Richards Energy offers you all buying options

 Considerations:

Risk Profile Impact of energy on overall profitability Overall business plan

Procurement Options Today

1.) Block & Index (e.g., “The Pool”)

 Leverage both markets (forward market & spot market)

Block = Layer forward mkt purchases over time (dollar cost averaging strategy) Index = Blend in spot mkt purchases as well

 Strategy used by large C&I users to manage risk and volatility

• ver time

 Layering purchases since Jan 2010 has performed well in a

falling market

 Very popular (one of only a few options for GS accounts in ‘09)  Pool 3 is open now for May 2014 to Dec 2016 to begin taking

some positions at current historic lows!

 Available to all size customers

Richards Energy will make sure there is no negative contract language based on a particular REAP Member’s situation

Block & Index Illustration: layering and blending

Hedges are purchased in blocks in a dollar cost averaging fashion Remaining power is purchased from the index

Forward or Day-Ahead Purchase Balancing or Day-Ahead Purchase

Month Usage

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Off-peak Month

Dec

Usage

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

On-peak

Purchase # 1 wholesale supplier A Purchase # 2 wholesale Supplier B Purchase # 3 wholesale Supplier A Buy # 4 Buy # 5 #6

Procurement Options Today

2.) Fixed Price (via layering)

 Layer forward purchases via dollar cost averaging strategy

(same as B&I above)

 However, no index would be used  Features:

Budget Certainty Easier bill

 However, less flexible and no opportunity for real time mkts to

blend down costs

 Not available to smaller users (midsize users and above only)

Richards Energy will make sure there is no negative contract language based on a particular REAP Member’s situation

Layer To Fixed Illustration: (layering, but no blending)

Layer 1 – any % of load

Time – TERM of Contract – e.g., May 2014 to May 2015

Layer 4 – any % of load

Usage (Kwh) Dollar cost Averaging but 100% from forward market (i.e. No Real time Purchases)

Procurement Options Today

3.) Fixed Price (via single purchase on one day)

 Richards Energy brings you the broadest array of fixed price

• ptions available from any consultant in the Eastern USA

 Features:

Budget certainty Simplest bill

 However, least flexible product

No opportunity for real time markets to blend down costs Forfeit your ability to reduce risk by staggering multiple purchases across different days

 Reverse auction available at customer’s preference

Although we know not all suppliers participate in this platform And we have evidence that this does NOT necessarily yield best price

 Available to all size customers

Richards Energy will make sure there is no negative contract language based on a particular REAP Member’s situation

Procurement Options Today

4.) 100% Index

 Features:

No price premiums For aggressive risk appetite customers

 Concerns:

No price protection (potential for large price volatility) No budget certainty Potentially complex bill

 Available to all size customers

Richards Energy will make sure there is no negative contract language based on a particular REAP Member’s situation

Next Steps

Richards Energy will continue working to secure deal extensions at historic low prices If this makes sense to you:

 We encourage you to sign a reaffirmation of our

POA so we can act more quickly on your behalf while prices remain so low

If this does not make sense to you:

 Just let us know. Don’t want unhappy REAP

• Members. We will not shop your accounts.

 PA PUC Commissioner Pam Witmer

 Visit Sponsor Tables  Complete Referral Sheets  Complete POA Reaffirmation

 Pete Richards

 Status update on current ACT 129 incentives  Current ACT 129 nuances  Lighting market updates  Case study

 Act 129 Utility Rebate Programs

 In 2008, Pennsylvania passed Act 129 which

required all major electric utility (distribution) companies to design and implement Energy Efficiency & Conservation Programs to reduce peak electric usage on the grid

 Utilities collect money to fund these programs

through line item charges on every customers’ electric bill

 Funds are redistributed in the form of rebates to

customers who install energy efficient equipment

 Programs for most PA utilities run from 6/1/2009

until 5/31/2013

 PA PUC currently evaluating extension of this

program for 3 years

PPL Electric Utilities



Large businesses



Rate classes: LP4, LP5 and up



Status: prescriptive program is exhausted…applications are waitlisted in case more funds become available



Small & Medium sized businesses



Rate classes: GS1, GS3, and similar



Status: prescriptive program pays a fixed “per fixture” rebate…funds are currently available, though always subject to change



Small businesses



Rate classes: GS1 & GS3 with annual usage below 400,000 kWh annually



Direct Discount program pays $0.17/kWh reduced (higher rebate than prescriptive program) www.pplelectric.com/rebates

FirstEnergy

(Met-Ed, Penelec, PennPower, West PennPower)



Large Commercial & Industrial



Rate classes: GP*** and other large/primary services



Status: prescriptive program is exhausted…applications are waitlisted in case more funds become available



Small & Medium Commercial & Industrial



Rate classes: GS-Large, GS-Medium and GS-Small, etc.



Status: “Non-Standard Lighting” program pays $0.05/kWh reduced



Small Commercial & Industrial



Rate classes: GS-Small, GS-Medium only



Status: $0.03/kwh reduced BONUS rebate ($0.08 total) was available through 6/15/12, then reduced back to the standard $0.05/kWh reduced



www.energysavepa-business.com

PECO



All rate classes are wait-listed until new funds become available



https://www.peco.com/Savings/Progra msandRebates/Business/Pages/default.a spx

 Other rebates, grants, federal/state/local

incentives:

 Database of State Incentives for Renewables &

Efficiency (DSIRE) http://www.dsireusa.org (select PA)



TAKE NOTE: Most rebates and incentives are being offered to help make the overall transition to newer, more efficient lighting

• technologies. Once the newer technologies become the “norm”,

the rebates WILL GO AWAY. Current Program expires 5/31/2013



You pay for Act 129 on your electric bill!



You will have to do it at some point…why not get paid for it?

 Bonus incentives

 Off and On for several utilities

 Demand Response

 Double Dip with PJM  Anti- Competitive

Service Provider Limitation. Customer agrees not to contract with any other demand response service provider for the Term of this Agreement.

 Customer’s Case

 18 Electric Accounts  Estimated 4 year Act 129 Rider Payments

$116,286

 11 Energy Efficiency Projects

$134,594 in rebate checks

Net Positive $18,308

 Unfortunately – Not the case for most

Accounts

 3 year term – 6/1/2013-5/31/2016  No Demand reduction component

 Direct Load Control Canceled  Demand Response Canceled  Why?

 Not retroactive  Approved for “Rebate Ranges”

 Harder for budgeting

 CSP selection

 Turn Key CSP’s  Program Managing CSP’s

 Government Regulations have / are changing

and will force you to become more efficient

 Soon you won’t be able to find the most

common lamps on the market

 You are paying your utility for a rebate that

you may not have taken advantage of – get it back before its too late!

 No money in the budget for the upgrades

 What is it?

 Federal legislation that outlines “technology

neutral” efficiency standards for screw-in lighting technologies

 Designed to eliminate outdated, inefficient

technology

 Does not “ban” specific technologies

 Effective January 2012 – January 2014

Effects of the Act

Existing Wattage New Wattage Effective Date 100 watt < 72 watts January 1, 2012 75 watt < 53 watts January 1, 2013 60 watt < 43 watts January 1, 2014 40 watt < 29 watts January 1, 2014

Replacement Options:

• Compact fluorescent (CFL)
• LED (light-emitting diode)
• Halogen Incandescent

Where are we at with it now?

 Many manufacturers retooled their

equipment

 U.S. Congress “Defunded” enforcement of the EISA

as part of the 2012 budget

 Some manufacturers now selling 100 Watt Heaters

What are the options now to replace 100 Watt Incandescent A Bulb (1700 Lumens)?

 72 Watt Incandescent  23 Watt Compact fluorescent  LED? Not quite… 1000 Lumens

What is it?



Federal legislation that outlines specific efficiency standards (lumens per watt) for fluorescent lighting technologies



Designed to eliminate outdated, inefficient technology



Effective July 14, 2012



Manufacturing of lamps that do not meet these minimum efficiency requirements is prohibited past July 14, 2012



Does not prohibit the sale or use of existing inventory

2009 Department of Energy Lumens Per Watt (LPW) Regulations

T12 Fluorescent Phase-

• ut

What is eliminated?

 T12 Lamps

Most standard and High Output 8’ T12 lamps All standard and High Output 4’ T12 lamps All U-shaped T12 lamps

 T8 Lamps

 Older generation and standard efficiency 4’ T8

lamps (700 series, “non-XP” series)

 “800 series”, “XP”, & other “super T8” lamps ARE

NOT affected

2009 Department of Energy Lumens Per Watt (LPW) Regulations

T12 Fluorescent Phase-

• ut

 Standard PAR Halogen lamps are also

eliminated

 EXCEPTIONS exist for:

 Cold Temperature lamps  Odd length lamps (2 ft., 3 ft., & 5 ft. lamps)  Plant growth, Colored, Impact Resistant, High

CRI, etc.

2009 Department of Energy Lumens Per Watt (LPW) Regulations

T12 Fluorescent Phase-

• ut

 Manufacturers

have already ceased production

• f these obsolete

lamps and ballasts

 Basic supply and

demand

 As inventories

decrease, prices increase and replacement parts become harder to find

 If your facility still utilizes outdated

lighting technologies such as…

 T12 Fluorescent  HIDs (metal halide, high pressure sodium, etc.),

• r

 Incandescent

…you are paying to operate inefficient technology and it is going to become difficult to keep your lighting system in working order.

Solution = Retrofit Your Lighting!

2F96T12 High Output 240 watts 2F32T8 High Ballast Factor 74 watts

THE POWER OF TOGETHER



Lighting retrofits are almost always cost- effective due to energy savings alone



With the elimination of traditional lighting technology and rebates to help fund your upgrade, there’s no reason not to!



Additional benefits of a lighting retrofit include:



Reduced lamp inventory & maintenance



Improved light quality & working conditions



Improved employee morale



Increased flexibility in controlling your lighting

How can my business afford a lighting retrofit?

 LED – Getting Better all the time  Wall-packs  Accent lighting  Spot/Flood lights (interior and

exterior)

PAR30, PAR38, MR16, etc.

 Tube Replacements  Parking lot lighting  DOE CALiPER program  Prices are coming down  Color is getting better  T5 versus T8 Fluorescent  Occupancy Sensors and Controls

Existing Fixture # of fixtures: HID Pole Light - 1000W Metal Halide 16 HID Pole Light - 1000W Metal Halide 20 HID Pole Light - 1000W Metal Halide 2 HID Pole Light - 1000W Metal Halide 6 HID Pole Light - 250W Metal Halide 6 HID Pole Light - 1000W Metal Halide 10 HID Canopy Light - 400W Metal Halide (to LED) 16 HID Wallpack - 150W High Pressure Sodium (to LED) 10 HID Wallpack - 175W Metal Halide (to LED) 4 HID Wallpack - 250W Metal Halide (to LED) 12 HID Flag Pole Light - 250W Metal Halide (to LED) 4 HID Floodlight - 250W Metal Halide (to LED) 3 HID Pole Light - 1000W Metal Halide 2 HID Pole Light - 400W Metal Halide 3

Existing Annual Operating Costs Annual Reduction in kWh Proposed Annual Operating Costs Annual Savings

$20,346.88 144,294 $5,996.24 $14,350.64

Initial Investment - TURNKEY Payback

Current rates Labor and Materials $ 64,137.99

3.8 Years

Recycling $ 2,280.00 Total $ 66,417.99 Act 129 Rebate* $ (11,581.30)

<Valid through 3/1/2013 4.6 Without Rebates

 Capital improvement Project

 Time  Approval by management  Red Tape  May make the 2013 or 2014 budget  Often cut by production needs

 Change them when bulbs or ballasts fail

 Little immediate savings  Time consuming  Rebate paper work nightmare

 You already have budget approval

 Electricity Bills

 Take your Budget for electricity and finance a

low interest loan to create a Positive Cash Flow

 Most Lighting Retrofits are 3 years or less

payback

 Financed on 48 or 60 months, this leaves cash

in the troffer to help with other expenses

 You Are Paying for the system - Upgraded or

not

 Creative financial tools

 Low interest loan  Capital Lease  Line of Credit

 Sustainable Energy Fund (www.thesef.org)

 Financing for up to 60 months for energy efficiency

projects of all sizes

 How does it work?

Monthly payments structured to be less than the projected monthly energy savings from the lighting retrofit Difference between your monthly payments and energy savings results in a net positive cash flow for your business!

Quantity Old Configuration Retrofitted with

12 HID - 250W Pulse Start Metal Halide (2x4 Ceiling) → HBF - 4F32T8841XPHBF (Troffer - New Fixture) 5 Incandescent A-Bulb 100W (Non-Dimming) → CFL - 23 Watt 167 Incandescent A-Bulb 25W (Non-Dimming) → CFL - 9 Watt 140 Incandescent A-Bulb 40W (Non-Dimming) → LED - 3W Candelabra 4 INDUSTRIAL 4' - 2F34T12CW ES → INDUSTRIAL 4' - 1F32T8841XPHBF 8 STRIP 4' - 1F34T12CW STD → STRIP 4' - 1F32T8841XPLBF 3 STRIP 4' - 2F34T12CW ES (1 lamp kit) → STRIP 4' - 1F32T8841XPHBF (1 lamp kit) 1 STRIP 4' - 2F40T12CW ES → NEW STRIP 4' - 1F32T8841XPHBF 2 STRIP 8' - 1F96T12CW → STRIP 8' - 2F32T8841XPLBF 51 STRIP 8' - 2F96T12CWES → STRIP 8' - 2F32T8841XPHBF 7 TROFFER 2'U - 2FB34T12CWES UTUBE → TROFFER 2' - 2F17T8841XPNBF 19 TROFFER 4' - 2F34T12CW ES (1'x4' Kit) → TROFFER 4' - 1F32T8841XPHBF (1'x4' Kit) 39 TROFFER 4' - 4F34T12CWES → TROFFER 4' - 2F32T8841XPHBF 4 TROFFER 4' - 4F34T12CWES → TROFFER 4' - 4F32T8841XPLBF 16 WRAP 4' - 2F34T12CW ES → WRAP 4' - 2F32T8841XPLBF 8 WRAP 4' - 4F34T12CWES → WRAP 4' - 4F32T8841XPLBF

Existing Annual Operating Costs Annual Reduction in kWh Proposed Annual Operating Costs Annual Savings

$19,137.54 90,032 $8,920.81 $10,216.73

Initial Job Cost - TURNKEY Payback

Current rates Labor and Materials $ 21,512.29

2.3 Years

Recycling $ 1,115.56 PA Sales Tax $ 1,357.67 Total $ 23,985.53 Act 129 Rebate* $ (4,417.50) 1.9 With Rebates

Annual Environmental Impact Tons of CO2 reduced Cars off the road Gallons of gasoline saved 70 13 8,535

Positive Cash Flow Option (SEF)

24 Months 36 Months 48 Months 60 Months Projected Monthly Energy Savings $851.39 $851.39 $851.39

$851.39

Monthly Payment $893.85 $617.16 $479.17

$396.67

Estimated Monthly Cash Flow x $234.24 $372.22

$454.73

 Your competitors may have already retrofit  Stocking up on old inefficient over-priced

lamps will leave you in the dark

 Your old lights may have been good to you,

but not as good as new lights will be!

 Positive Cash Flow opens up money to be

spend on other upgrades.

On-site renewable projects and how they can impact power purchasing

2012 Annual REAP Meeting Julia Smith Richards Energy Group, Inc.

9.27.2012

Main purpose of today’s presentation

Renewable energy projects can have substantial and lasting impacts to your current AND future power purchasing deals… therefore it is IMPERATIVE that you consider how a renewable project may impact power purchasing BEFORE you commit to a project.

Reasons for renewable projects

Green initiatives and marketing

Reasons for renewable projects

Power generation Green initiatives and marketing

Reasons for renewable projects

Power generation Match or reduce energy consumption Green initiatives and marketing

Factors for consideration

Relative size of the renewable system Power generation Match or reduce energy consumption Green initiatives and marketing

Factors for consideration

Relative size of the renewable system Contract language Power purchasing product Metering

Factor 1: Size of system

Size of the load on the meter relative to the renewable system

 small project /large load  large project / small load  large project / large load

Factor 1: Size of system

Peak demand (kW) Annual kWh Size of system (kW) Projected annual output (kWh) Reduction 770 3,600,000 50 ~70,000 2% 146 710,000 750 ~4,000,000 560% 321 1,250,000 600 ~600,000 48%

Factor 2: Contract language

Bandwidth

 What is it and will the “new load” comply with it?

Excess power

 Will the electric supplier buy it?  Will the utility buy it?  How is a net monthly versus a net hourly excess handled

by the supplier?

 At what rate?  How often will they pay?

Factor 3: Product type

Fixed contract

• Compensation

for excess?

• Bandwidth a

potential issue Full index

• Compensation

for excess?

• Bandwidth a

non-issue Block and index

• Compensation

for excess?

• Be mindful of

forward market purchases Fixed contract

• Compensation

for excess?

• Bandwidth a

potential issue Full index

• Compensation

for excess?

• Bandwidth a

non-issue Block and index

• Compensation

for excess?

• Be mindful of

forward market purchases

Factor 4: Metering

Is the correct metering installed? “Net meter” may not be sufficient

 Depending on whether or not and how the supplier will credit

for the excess, the meter type and functionality may be of critical importance

Case Studies

Case study #1

50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec baseline

Case study #1

50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec baseline renewable installed

Case study #1

50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec baseline renewable installed lighting retrofit

Case study #1

Case study Peak demand (kW) Annual kWh Size of system (kW) Projected annual output (kWh) Reduction

#1 770 3,600,000 50 ~70,000 2%

 Buying excess not a problem because was no excess  Bandwidth is not a problem, because the change is so

small

 Metering - reduction so small meter never spins

backwards, metering not important

Case study #2

(350,000) (300,000) (250,000) (200,000) (150,000) (100,000) (50,000) 50,000 100,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec baseline renewable installed

Case study #2

Case study Peak demand (kW) Annual kWh Size of system (kW) Projected annual

• utput

(kWh) Reduction #2

146 710,000 750 ~4,000,000 560%

 Customer was in block and index product and still liable

for forward power that was already purchased

 Metering – meter was capable of spinning backwards and

supplier was willing to buy excess power at real-time price

20,000 40,000 60,000 80,000 100,000 120,000 140,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec baseline

Case study #3

20,000 40,000 60,000 80,000 100,000 120,000 140,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec baseline renewable installed

Case study #3

20,000 40,000 60,000 80,000 100,000 120,000 140,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec baseline renewable installed post-installation

Case study #3

Case study Peak demand (kW) Annual kWh Size of system (kW) Projected annual

• utput

(kWh) Reduction #3

321 1,250,000 600 ~600,000 48%

 Customer was in block and index product but still using

some power, hedges mitigated due to unique product

 Customer not producing monthly excess power  Customer is producing HOURLY excess power  Net meter did not spin backwards during hours of net

generation

As a result customer was charged for more kWh than they used

Case study #3

Recommendations

Renewable field is rapidly evolving

 options for buying and selling electricity

 suppliers currently not required to buy back electricity

Virtual metering

 Buy low sell high

Recommendations continued

Know your assumptions

Difficult to determine/predict payback on projects Don’t depend on the salesman’s assumptions

Must understand both the utility and the supply side

Utilities manage the metering but cannot tell you how a product will impact your supply contract Suppliers often do not know or understand how the utility side works and have their own self-interests in mind

You have a consultant who understands the supply side, the utility side, and can objectively evaluate the sales proposal

Take aways…

Renewable projects can have potential financial impacts to existing power purchase deals Let us know whether or not renewable projects are in the future for your company as we discuss future power purchasing

Help us help you!

Questions?

 Tara Quigley

2012 Business Initiatives

Customer Relationship Management

 Customer Service  Sales  Marketing  Analytics  Workflow

Serving Members

Customer Relationship Management

Goals

 Provide excellent Member experience  Understand Member’s needs  Enhance communication

Customer Service

 Every interaction with a REAP member is vital.  Ability to access data  Ability to coordinate services  Timely response for all issues

Communication/Messaging

 Provide critical information to Members that apply to

them

Account Management

Customer Relationship Management

 Access to Members entire

portfolio of services

 Data immediately available  Issues, emails,

communications tracked

 Ability to coordinate

services

 Audit changes to data with

automatic notifications

Cases

Customer Relationship Management

 Response time reduced  Actionable items

immediately tracked and routed to appropriate resource

 Details of item tracked in

system

Workflows

Customer Relationship Management

 Automatic work routing  Ensure QA



Example: Contract Verification and Flagged Contracts

Analytics

Customer Relationship Management

 Insightful, actionable intelligence  Instantaneous reporting  Track and measure performance  Analyzing data which allows us to better serve Members

Issue trends Supplier trends

 Don Hornung

 Many REAP members use natural gas for

heating or process use

 Many of the same forces move both the

electricity and natural gas markets

 Many of the same risk management tools are

available in these markets

 REAP members recognize that utility default is

neither always cheap or predictable

 REAP members want to focus on their business

and less on energy services management

 REG is expanding REAP to include natural gas

procurement

 REG has partnered with the area’s major

suppliers

 REAP Natural Gas procurement process will be

similar to that of electricity:

 Right Utility Rates  Right Supply Terms  Right Prices  Right Outcomes for You

 More rural REAP members use propane for

heating or process use

 Many have a good relationship with their

current supplier

 REAP Propane may provide a viable alternate

for:

 Market Awareness / Risk Management  Prices  Services

 Andrew/Linda/Michele/Scott

 What is REAP, really?  Your channel to all electric shopping choices  What’s the harm in just checking some prices?  Thwarts our efforts on your behalf  “Watt’s left hertz your overall shop-ability”

 Thanks to all sponsors and prize donors  Lunch is down the hall.  Golf Tee Time ____  Thanks for letting us show you

The Power of Together