Energy Markets Overview, Strategies and New Developments

1
Energy Markets Overview, Strategies and New
Developments

• June 5th, 2008
• Jon F Sorenson
• Partner
• Competitive Energy Services, LLC

2
The Solution to High Energy Prices?
3
Overview of Presentation

• Brief Review of CES
• Current Energy Market Conditions
• Procurement Strategies
• Customer results throughout
• New Issues in NEPOOL
• Green Power and Carbon Footprints

4
Competitive Energy Services Overview

• CES is an Energy Services Company
• Represents the end user, the customer in their
  management and procurement of energy
  
• We assist and guide the customer during these
  difficult and volatile times in the energy
  market, which brings focus and value to the
  customer
• End result yields cost containment, potential
  savings, sound and justifiable economics and most
  importantly peace of mind

5
Competitive Energy Services
Procuring Electricity, Nat Gas, Oil, Propane, etc
.
Full Service Energy Customers Growing Rapidly
Energy Procurement Customers 20,000
Energy Consulting Services
Cogen, Assets eval, Conversion Analysis, Reg
ulatory,
Etc
Procurement, Strategy, Budgets Arbitrage
3 Wind Projects, REC analysis And Purchase
100 Renewable, Hydro Electric Residential
Maine Renewable Energy Retail Green 2,800
Renewables Wind RECs Carbon Footprint
Small Commercial Program 7,000
Fixed Price Power and Nat Gas Small Commercial
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Competitive Energy Services

• Licensed Agent, Aggregator/Customer
  Representative, Consultant, Broker
  
• ME, MA, NH, CT, NY, MD, TX, IL, NB, NS
• Retail Electric Provider
• ME, Green Power
• Residential
• Small Commercial
•  
•  

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  CES Services

• Energy Markets (Electricity, Oil, Gas, Propane)
• Market monitoring and procurement
• Energy forecasting and strategies
• Natural gas nomination and scheduling
• Supply contract negotiation
• Hedging and Arbitrage strategies where
  applicable
  
• Utility relations and negotiations
• Alternate generation analysis and management
• Conversion analysis for equipment upgrades and/or
  commodity changes
  
• Carbon and renewal management
• Market information services

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Competitive Energy Services

• 20,000 Business, Commercial and Industrial
  accounts in Maine, NH, NY, CT, MA, Texas and
  Atlantic, Canada new office in IL
  
• Texas formerly managed P3 largest aggregation
  in the country includes City of Dallas Harris
  County (Hou) now manage FW School District
  
• Up to 6 billion kWh of electricity annually
• Over 1,000,000 barrels of oil and and 20 million
  dths ( 20 bcf) of natural gas
  
• This equates to in excess of 750 million in
  annual commodity value for our customers
  

9
CES Customers Include
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Competitive Energy Services

• Full Service Customers
• Pratt Whitney
• Juniper Networks
• OConnell Companies
• New England Fertilizer
• Springfield Technical Community College
• Dartmouth College
• Bowdoin College
• Amherst College
• The University of Maine
• The Jackson Laboratory
• Eastern Maine and Maine Health System member
  hospitals and Medical Centers
  

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Relationships w/ Suppliers

• Agreements with over 35 Competitive Suppliers
  across NA
  
• Most Suppliers are Investment Grade
• Irving Oil Dominion Gexa (FPL)
• Hess Energy Strategic Energy Constellation
  NewEnergy
  
• TransCanada Integrys Energy Suez (Tractabel)
• Sempra Direct Energy ConEdison Solutions
• Sprague Energy Global Energy Pepco Energy
• Champion Reliant Energy Green Mountain Power
• Process flow is detailed, communicative, very
  efficient
  
• CES fees are uniform across all Suppliers
• Savings flow back to customers direct to
  bottom line
  
• Continuous feedback to Suppliers
• Improves market liquidity and transparency
• Suppliers know to be aggressive in this
  competitive process

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Acknowledged Industry Leader

• Our partners have more than 100 years in the
  energy business and have been at the vanguard of
  the industry
  
• We have extensive involvement in utility
  regulation and deregulation across the country
  
• We procure over 750 million of energy
  commodities annually for over 20,000 commercial
  and industrial accounts
  

13
Todays Energy Markets

• Todays energy markets relentless and volatile
• Record prices of crude oil, 80 - 100 per bl
  now peaking as high at 135 per bbl
  
• High natural gas prices breaking through 12 per
  mmbtu despite ok fundamentals (demand,
  production, crude and storage)
  
• Is there relief ??
• If so when?
• Warmest winter in 2005/2006 in 100 years
  2006/2007 warm January Cold Feb!
  
• 2007/2008 real winter
• How deep? How broad?
• We must now consider
• Hurricanes, Summer, Next Winter

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Todays Energy Markets

• What is causing this change?
• Demand - US, China, India, Brazil
• Tight and/or controlled supply
• Terrorism / Political Unrest (Geo-politics)
• Weather
• Media Scrutiny
• Technical market no longer
• fundamental
• Indexes
• Financial Houses
• Premium paid for peace
• What will bring prices down?
• Supply Improvements (oil/gas)
• Infrastructure improvements?
• Demand slow down - prices can not be absorbed in
  marketplace
  
• Recession or Govt involvement
• No heat, no hurricanes, no cold?

15
China The Black Hole?

• Is China a black hole with unlimited demand?
• Industrialization
• Making the worlds products
• US and Germany
• Commercialization
• An internal revolution with demand to westernize
• Autos
• Electricity
• Hydro and Nuclear
• Other
• 1.3 billion people
• Olympics
• Show case to the world!
• Currency
• Manipulated
• Subsidized
• New Efficiency Improvement Demands
• Government requiring improvements for all
  territories
  

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The Technical Market

• How much are the financial markets driving
  prices?
  
• Dollar Devaluation
• How much per bbl of oil?
• Other currencies
• Speculators
• Taking positions on both sides of the market
• Hedge Funds, Pension Funds
• Positions on oil and commodities instead of
  monetary based funds
  
• Fundamentals or Financial?
• Both

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Weather Scrutiny and Reality
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Weather Scrutiny and Reality
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Weather Scrutiny and Reality
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Weather and its effects
Weather Monitoring Buoy
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Current Energy Markets

• Energy Markets remain unstable and as a result
  price volatility is the single most important
  issue today driven by tight production
  conditions, political and regulatory risks and
  hedge fund activities
• Energy prices remain high
• Crude oil prices are in the 100 - 135 per bbl
  range
  
• Natural gas commodity prices are in the 8 - 12
  per MMBTU for a 12 month NYMEX strip despite
  strong fundamentals (demand, production, and
  storage)
• Strong demand for coal has put upward pressure on
  coal prices (prices have doubled)
  
• Electricity prices are following suit
• International funds are investing into
  commodities
  

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Crude Oil Trends
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Crude Oil Trends
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Crude Oil Trends
25
Crude Oil Trends
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Crude Oil Recent Trends
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Crude Oil Recent Trends
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Crude Oil Recent Trends
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Natural Gas Price Trends
Natural Gas Data as of May 19, 2008
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Natural Gas Price Trends
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Natural Gas Trends
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Natural Gas Shorter Trends
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Natural Gas Shorter Trends
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Surprisingly Long-Term Prices are more favorable
thanShort-Term Prices
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Surprisingly Long-Term Prices are more favorable
thanShort-Term PricesMay 19, 2008
36
One year forward is more flat though decline
after the winterMay 19, 2008
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Long-Term Prices are more favorable
thanShort-Term PricesMarch 17, 2008
38
Natural Gas fundamentals remain very strong aswe
are now in the heating season (recent drop below
record levels)
Working Gas in Underground Storage Compared with
5-Year Range
Source U.S. DOE - Energy Information Agency
05/29/08
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Natural Gas fundamentals remain very strong aswe
are now in the heating season (recent drop below
record levels)
Working Gas in Underground Storage Compared with
5-Year Range
Source U.S. DOE - Energy Information Agency
05/15/08
40
Natural Gas fundamentals coming out of the
heating season (recent drop below record levels)
Working Gas in Underground Storage Compared with
5-Year Range
Source U.S. DOE - Energy Information Agency
03/13/08
41
View from November, 2007Natural Gas fundamentals
were very strong aswe head into the heating
season (forecast was above normal)
Working Gas in Underground Storage Compared with
5-Year Range
Source U.S. DOE - Energy Information Agency
11/01/07
42
Market Volatility

• Reserves of oil and natural gas have remained
  largely unchanged over the past 2 decades, even
  though oil consumption has grown significantly
  
• Production capacity, however, has not kept up
  with worldwide demand
  
• Asian demand plus limited production expansion
  has put many small oil-producing countries at
  the margin with respect to worldwide oil supply
  
• As a result, even small disruptions to supply can
  have major impacts of prices
  

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The Stock of oil has remained largely
unchangedrelative to consumption.
44
Similarly, the Stock of Natural Gas has
remainedlargely unchanged over the past 25 years.
45
Since 1978, virtually all of the increase in
oilconsumption has occurred in Asia
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There is a very fragile global balance between
energydemand and energy supply that will
continue tocreate market volatility

• Demand Continued industrialization of China and
  India will drive worldwide demand for energy
  
• Supply Non-OPEC countries have no spare
  production capacity. Only Saudi Arabia has spare
  production capacity and this is less than 2
  million barrels per day
• New Supply Barely adequate to keep up with
  growth in demand
  

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Oil to Nat Gas Comparison
48
Oil to Nat Gas Comparison
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Oil to Nat Gas Comparison
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Oil and Natural Gas Thoughts

• Oil
• Supply and Demand
• Speculation
• E P Drilling, Fields
• Refining
• Issues
• Natural Gas
• Supply
• Rockies
• LNG
• Demand
• Short, Mid and Long-term
• Tracking Crude
• Price
• Issues

Oil Drilling and Refining
Natural Gas - LNG
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Procurement/Purchasing

• Purchasing Strategies
• Strategy Implementation
• Budget developed
• Product discussion
• Risk Assessment vs Budget Assurance
• Strategy sign off
• Strike price
• Action - Able to ACT on short notice
• Process must be in place
• Timeliness is critical
• Customer Savings - Containment Examples
• Electricity Purchase
• Prices have ranged from 0.074 per kWh to 0.09
  per kWh
  
• Savings against electricity budget ranges from
  20,000 to 500,000
  
• Savings against existing electricity agreement
  approx 20,000 to 750,000
  
• One customer savings against 2007 standard offer
  prices 633,100
  
• Savings against real-time market pricing,
  approximately 0 to 175,000 no risk, no
  credit
  
• Natural Gas hedging has yielded large savings as
  well

Market Monitoring Understand Data

• The time to act through sound market
  understanding - is below the trend line. Many CES
  customers were successful in accomplishing this
  crucial task

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Budget and Hedging Strategies
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Budget and Hedging Strategies
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Procurement Strategies

• Electricity
• Fixed Price
• Replacement of All or Full Requirements Contracts
  (fixed price)
  
• Strike Price approach to Fixed or All
  Requirements Contracts
  
• Heat Rate Contracts
• Block Pricing w/ Market Settlement
• Real-time - Purchase at the Spot Market Price
• Supplier or
• ISO-NE direct

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Electricity Procurement

• Fixed Price
• Usage Bandwidths
• Zero up to 25 percent
• All requirements
• Use as much or as little as you would like
• Pay for the insurance or positioning of the
  product
  
• Other Issues
• Contractual Terms
• Credit
• Pass through items
• RMR
• LICAP (Now FCM)
• Other

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Strike Price Option

• Market Realities
• Difficult (impossible) to time market
  consistently
  
• Internal Budget Targets often impose important
  constraints or goals within Company
  
• Monitoring Market takes up valuable time and
  resources
  
• Strike Price Solution
• Set a Trigger or Strike Price
• Execute contract extension as soon as Strike
  Price is achieved

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Strike Price Option - continued

• Strike Price
• First Priority Meet Budget Targets
• Rule 1 As forward time horizon expands, you
  should be more aggressive on setting Strike
  Price
  
• Rule 2 As you get closer to execution date,
  adjust Strike Price upward to reflect market
  conditions
  
• Rule 3 Once strategy is adopted, stick to it
  key to strategy is consistency
  
• Strike Price Supplier Option
• A new option in the market is for suppliers to
  offer to pay a certain amount a month for the
  right to exercise a Trigger Price
  
• Supplier is betting (hoping) on the market price
  falling below the trigger price to recover the
  payment to the customer. Depending on the
  contractual agreement with certain suppliers, the
  supplier may not be under any obligation to lock
  the trigger, even if the market price hits the
  agreed upon trigger

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Electricity - Heat Rate

• Heat Rates are?
• A power plants efficiency in converting fuel to
  electricity
  
• The number of btus required to generate a kWh of
  power
  
• The lower the heat rate the more efficient the
  power plant tends to be
  
• Heat Rates ease of use
• Product offers end-users the ability to link
  power prices with natural gas indexes
  
• Typical index New York Mercantile Exchange
  (NYMEX)
  
• Electricity Price can vary based on the
  following
  
• Variable electricity price settlement with nat
  gas settlement
  
• Hedging lock in a portion of the load or months
  based on usage patterns and/or market conditions
  
• Retail adder will include ancillaries, line
  losses, environmental, shaping (load
  following/balancing), etc.
  
• Product is more attractive in a downward trend of
  nat gas prices
  
• Heat Rate Risks
• Product is tied to natural gas market (note all
  electricity in NE is tied to nat gas market)
  
• Market Monitoring is a key for locking in nat gas
  each month or via a hedge
  
• The higher heat rate (e.g. a 10 heat rate), every
  1.00 per mmbtu in nat gas prices will have a 10
  per MWh impact on your energy bill

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Electricity - Heat Rate

• How to calculate heat rate and a correlating
  electricity price

Electricity Price (9.7 X 7.80) 9.50
85.16 per MWh
Equals 0.08516 per kWh
Note price does not include FCM or RMR
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Define Strike Prices
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Heat Rate Strategy Example
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Heat Rate Strategy Example
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Electricity Blocks

• By selecting Blocks that are close to average
  hourly usage, the settlement of longs and shorts
  exposes certain customers to very little risk
  
• Industrial (24x7) type load
• Load that is not weather sensitive
• Load that is otherwise interruptible
• Load that is stable

65
Electricity - Block Illustration
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Spot Market Real-time and Day Ahead

• Options are to work with supplier or go direct to
  NE-ISO
  
• ISO
• Credit oriented pay in advance for power,
  payment every 10-days
  
• Settlement daily balancing and financial
  settlement rolled up per month
  
• Supplier relationship
• Charges flat monthly fee or minimal fee per kWh
  to administer relationship.
  
• All energy and energy related products, including
  line losses, are purchased at spot market prices
  or administratively set clearing prices.
  
• NOTE In Maine PUC requires suppliers to provide
  warning to customers of the risks inherent in
  buying electricity at the spot market price.

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Spot Market Real-time and Day Ahead
Actual Maine Customer January 2005 forward
Katrina
Rita
Prices do not include ancillaries, RMR, nor FCM
0.1300
0.11437
0.10147
0.1100
0.09664 Offer
Price ( /kwh )
0.0900
CMP Std Offer
Competitive Supply
ISO Day Ahead
0.0700
0.0574
ISO Real Time
CMP Price Lock
0.0500
Jul-05
Jul-06
Jan-05
Apr-05
Jun-05
Oct-05
Jan-06
Apr-06
Jun-06
Oct-06
Jan-07
Feb-05
Mar-05
May-05
Aug-05
Sep-05
Nov-05
Dec-05
Feb-06
Mar-06
May-06
Aug-06
Sep-06
Nov-06
Dec-06
Feb-07
0.0300
Date Line
Note analysis conducted by Freedom Energy
Partners, LLC
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Spot MarketReal-time and Day-ahead Pricing

• Issues with real-time and day-ahead
• Costs that are passed through and not shown
• Standard costs - 7 to 12 per MWh
• Ancillaries
• Line losses
• Renewables
• Margin or fees
• New Regulatory Costs
• FCM - 5 to 15 per MWh
• RMR - 0 to 7 per MWh
• Market volatility risks
• Costs - spikes
• Weather
• Hurricanes
• Extreme temperatures
• Other

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Real Time and Day Ahead Prices
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Real Time and Day Ahead Prices
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Real Time and Day Ahead Prices
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Real-time and Day-ahead PricingCES services

• Services with real-time and day-ahead
• Cost Analysis
• Real-time/day ahead NEPOOL vs Supplier
• Real-time/day-ahead versus other products
• Risk Analysis
• NEPOOL vs Suppliers
• Dollars at risk vs ability to hedge
• Day to day services
• Schedule and nominating electricity
• Audit of bills
• Event notification
• Market notification and information
• Attend applicable meetings
• File applicable reports

73
Electricity Procurement

• CES Scorecard
• Algorithm with natural gas and oil data points
• Proves market should be monitored and electricity
  procured in shorter terms
  
• Strategy states that terms in shorter increments
  helps in managing risk and to purchase during
  downward trends
  
• Key is to be happy and satisfied - not greedy

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Procurement Strategies

• Oil and Propane
• Market based
• Buy fuel and pay the price at the time of either
  purchased or delivered
  
• Lock or fixed
• Lock in a certain amount of load
• Monthly, annual or seasonal
• Hedging
• Base load for certain terms
• Over lay market product or other products
• Btu contracts
• Gas vs Oil
• Arbitrage

The key to the process is to peel the onion,
index the oil price, focus on transport and
adders - providing complete transparency to the
process
75
  2005 0il Strategy
   

• Oil Strategy revised for large hospital and
  university during 3rd Quarter 2005
  
• Strategy at the time seemed to fit the market
• The market continued relentlessly upward
  reaching 70 per bbl
  
• Do we revise once again and buckle to senior
  management??!!
  
• Focus on patience/sticking to the strategy!
  RESULTS SAVED OVER 25 PERCENT!

The revised Oil Strategy was focused on a 50
to 55 per bbl
   
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  2006 2007 0il Strategy
   

• Oil Strategy for large Hospital Association and
  Large College in 2006
  
• Presented to Senior management CFOs and Facility
  Directors
  
• Oil was approaching 80 per bbl
• Many were scared/concerned and locking in at
  2.50 per gallon
  
• CES recommended to remain calm during the
  process
  
• Results
• College locked in distillate oil (2 heating oil)
  at 1.92 per gallon
  
• Savings against budget - 25,000
• Savings against market panic _at_ 2.50 per gallon -
  125,000
  
• Savings against System lock (2.15 per gallon) -
  48,000

   
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Budget and Hedging Strategies
Hedge Natural Gas and potentially sell ½ for
2.50 profit per dth, reduces overall fuel price
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Fuel Strategies

• Hedges and overlays
• Overlay risk and security positions over months
  and seasons
  
• Multi-tiered approach blending hedges and spot
  market to meet budget requirements

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Procurement Strategies

• Natural Gas
• Basis
• Price above an indexed price, typically NYMEX
• Load following, balancing, capacity, margin
• Fixed Price
• Set or allotted amount of gas
• Swing up or down based on variance and either
  daily or monthly settlements
  
• Full load or percentage of load
• Variable
• Market based monthly settlement, typically
  NYMEX
  
• Daily
• Ride the market
• Daily settlement at a liquidity or reference point

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Account is a process load with a winter heating
demand overlay
Customer Swing Defined With settlement (Monthl
y)
Lowest Bids
81
Natural Gas Dailies
Highs and lows more reflective of real market
conditions
82
Dailies Three Winters(January and February
2004 2006)
83
Dailies Natural Gas(Prices May 20, 2008
Liquidity Pts)
Dracut and Tetco M3
Transco Z6 Non NY
84
Action on Fuel Switching and Comparison
85
Price Comparison for fuel purchase
Natural Gas Conversion Analysis comparing
Natural Gas to 2 Oil products
Facilities Building Savings with current market c
onditions has increased from 32k per year to
56,000 per year
86
Price Comparison for fuel purchase
87
Fuel Savings at Steam PlantToday
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Procurement Strategies What to do?

• Understand your risk tolerance
• Risk vs reward?
• Make a market assessment
• High prices
• How high?
• Relief
• Finance internal discussion
• Budget Assurance
• Product Discussion
• Electricity fixed, heat rate, block and index,
  index, etc
  
• Nat Gas fixed, dailies, combinations
• Terms
• Long
• Short

89
New Issues in NEPOOL

• There are four new issues in NEPOOL that are
  having or will begin to have an impact on the
  electricity prices you pay
  
• Reliability Must Run (RMR)
• Forward Capacity Markets (FCM)
• Transmission Upgrades
• Regional Greenhouse Gas Initiative (RGGI)

90
Reliability Must Run (RMR)

• ISO-NE request that certain generators operate in
  order to ensure system reliability
  
• Required to meet the reliability criteria for
  interconnected systems operation
  
• Needed to meet load (demand) in constrained areas
  and provide voltage and/or security support for
  the ISO System
  
• In return for payment, generators agree to be
  dispatched in order to meet system requirements
  
• SEMA and NEMA are the biggest demand areas
• Prices have ranged from as little as 0.000 per
  kWh to as much as 0.009 per kWh

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Regulatory Developments Summary

• FCM (Formerly LICAP)
• Changes the way generators are paid for the
  capacity value they provide to the market.
  
• Policy is to provide incentives to generators to
  build new capacity in congested or capacity
  starved areas (MA/CT)
  
• Policy is also to force end users to shed load
  during peak
  
• The ISO proposal will impose a charge of
  approximately
  
• 3.05 kW/month 12/01/06 to 05/31/07
  (implemented Dec 06)
  
• 3.75 kW/month 6/01/07 5/31/08
• 4.10 kW/month by mid 2009
• Charges for customers range from 0.005 to 0.015
  per kWh
  
• System Peak or OP4 Events
• A July 22nd peak in 2005
• Fiscal year July 1st charge
• Set August 2nd 133pm hour EST 2006 (1400)
• Set August 3rd 243pm hour EST 2007 (1500)

92
Load Response Programs

• ISO-NE has established demand response programs
  to permit customers to reduce capacity payments
  by interrupting load when called upon by ISO-NE.
  
• Amount of payment is equal to what customer would
  otherwise pay as capacity charge so customer is
  left harmless to FCM.
  
• Programs are very attractive during Transition
  Period may become less attractive during
  Auction Period, as frequency of being called upon
  could increase considerably.

93
LRP enables a customer that can interrupt load
tooffset FCM Charges it would otherwise face
Reduction of about 16 MW for this one 3 hour
period will save this customer about 800K in FCM
Charges in 2008
ISO-NE Peak Load for 2007 set at HE 15 on August
3rd
94
Regulatory Developments Actions

• Load Response Program
• Revenue program compensation for agreeing to
  reduce load
  
• Fire drill, audit, and actual
• Revenue based
• FCM tag is reconstituted
• Self Help Program
• During ISO event shed load to reduce capacity tag
  
  
• Cost Containment
• Issues to consider
• Grid parallel
• Air Emissions
• Liability

95
Actions and Estimated Results

• Self Help Program Example UMaine
• Communication between UMaine and CES
• Timing of actual hours predicted and
  communicated
  
• Campus team makes effort to shed load across
  campus
  
• Results
• The New Sub reduced load from its 2006 capacity
  tag of 5,643.11 KW of peak demand to 500.8 KW of
  peak demand, a estimated load shed of 637.61 KW
  of shed load
• The Steam Plant reduced load from its 2006
  capacity tag of 2,280.68 KW of peak load during
  the system peak, to an estimated 1,641.36 KW of
  peak demand, shedding an estimated total of
  639.32 KW
• Total estimated load shed during system peak hour
  1,276.63 KW
  
• Total estimated/projected savings
• 60,742.06 annualized
• Run Rate Projections
• Assuming increased demand of 10 percent
• Savings is closer to 70,000 annually

96
Transmission Upgrades

• Transmission charges are embedded in rates
  charged by CMP or BHE for Delivery Service
  Open Access Transmission Tariff or OATT
  
• OATT charges are the same regardless of where you
  obtain your electricity.
  
• OATT charges have been relatively small less
  than 10/MWh for all customers
  

97
Transmission Upgrades 2

• There are significant transmission upgrades and
  expansions that ISO-NE has approved up to 10.0
  billion.
  
• Most of these are designed to improve reliability
  in CT, VT and MA and to move less expensive power
  to customers in these regions.
  
• Cost of upgrades is socialized across all load
  in NEPOOL OATT rates are projected to increase
  by 80 over the next few years.
  

98
Regional Greenhouse Gas Initiative

• The Regional Greenhouse Gas Initiative is a
  multi-state agreement entered into by all
  northeastern states from Maine to Maryland.
  
• Purpose is to reduce the amount of GHG emissions
  from power plants in the region.
  
• Caps the tons of GHG emissions for each state.
• Each State has some discretion in how it
  administers the RGGI Program.
  

99
Regional Greenhouse Gas Initiative

• All fossil fuel power plants in the RGGI states
  must purchase RGGI certificates from its state
  for each ton of GHG emitted.
  
• States use money from sale of RGGIs to fund
  energy conservation efforts.
  
• The cost of a RGGI is added to the cost of
  generating electricity.
  
• We estimate that the RGGI Program will increase
  the cost of electricity by about 5 per MWh in
  2009.
  

100
Green Power

• Supply Options
• On-site supply primarily solar
• Long-term off-take agreements with renewable
  energy developers.
  
• By wire products offered by competitive
  energy providers.
  
• RECs Renewable Energy Credits

The costs of these various options range from
almost insignificant to very expensive
understanding the costs is essential for informed
decision making in this area.
101
Green Power continued

• Costs of RECs
• NJ Solar RECs 260.00
• MA RECs 55.00
• CT Class I 54.00
• NJ Class I 22.00
• ERCOT (TX) Wind 3.30
• Green-E National Wind 3.75
• Green-E Any Tech. 3.00
• Maine RPS .50

102
Green Power continued

• We are seeing upward pressure on market-based
  RECs as more companies are meeting their carbon
  footprint objectives through the purchase of
  RECs. For example, Green-E, National Wind prices
  are
• 2008 Q1/2 4.40
• 2008 Q3/4 5.25
• 2009 Q1/2 5.75
• 2009 Q3/4 6.25

103
Green and Reduction Initiatives

• CES can assist you in many green initiatives,
  such as
  
• Energy Management
• Demand Side Management
• Load Response
• Energy Efficiency
• ESCO management
• Audit Trail
• Conversion Analysis and Management
• ROI
• Alternate Generation
• ROI
• REC purchases
• Carbon Management

104
Carbon Footprints and Management

• CES now offers two new products to help you
  assess and manage your companys or institutions
  carbon footprint.
  

105

• Establish Baseline Greenhouse Gas (GHG)
  emissions
  
• Measure GHG emissions overtime against Baseline
  to assess performance in attaining corporate GHG
  emission reduction goals
  
• Evaluate the potential benefits and associated
  costs of corporate strategies and policies
  designed to reduce GHG emission
  

106

• Measures your GHG emissions over time and
  compares them with corporate goals and
  objectives
  
• Report format that is ready to disseminate to
  customers, employees, stockholders or other
  constituency groups.
  
• Shows Changes against Baseline
• Reports total GHG emissions and emissions per
  unit of operations, e.g., employees, square
  footage, customers, revenues or sales
  

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109

• Identifies a broad range of strategies that a
  company can implement to reduce GHG emissions
  
• Calculates the cost of implementing each GHG
  reduction strategy
  
• Compares the cost-effectiveness of alternative
  GHG reduction strategies
  
• Develops a set of GHG strategies that meets
  overall corporate goals and objectives in the
  most cost-effective manner.
  

110

• Easy to use but provides powerful results
• Input requirements are minimized and input
  screens are logical and easy to complete
  
• Reports are clear, easy to understand and ready
  to disseminate within your company
  

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113
UMaine Annual Emissions Analysis - Comparison
114
Fuel Switching EmissionsBenefits/Reductions