Hospital Energy Group

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Hospital Energy Group

• The Hospital Energy Group was founded in 1996 to
  help nine Connecticut hospitals address their
  energy needs. As a result of electricity supply
  contracts arranged through this Group, total
  savings for the original members now exceed 15
  million.
• Today, the Group has expanded to serve some 125
  hospitals with more than 500 million in
  long-term electricity supply under contract.
  Participating hospitals include some of the
  nations most prominent healthcare institutions.

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New Energy Offerings

• Clean Power Generation, including more than 150
  million in new hospital combined heat power
  (CHP) plant construction. These new highly
  efficient and power plants will significantly
  reduce the Groups energy costs over the next
  twenty years. Renewable energy options include
  Fuel Cells, Solar, Wind and Green Gas.
• Energy Financial Hedging, including more than
  100 million in long-term fuel hedges through the
  Groups banking partners. This will allow the
  Hospitals to stabilize their natural gas cost in
  five year segments over the next twenty years.

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Combined Heat Power Finance

• How Hospitals Buy Energy Now
• Why CHP Works Financially
• Standard 1 MW Model CHP Results
• Hospital Group Fuel Procurement
• Off-Balance Sheet CHP Financing

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How Hospitals Buy Energy Now

• Utility Transmission Distribution
• Third-Party Energy Supply Contract
• Ancillary Costs Imposed by ISO-NE

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Why CHP Works Financially

• CHP Saves Money By Increasing External Lower Cost
  Fuel Purchases and Reducing Higher Cost Grid
  Electricity Purchases.
• Key Factors in Successful CHP Project
• - Efficiency of Plant Operation
• - Stability of Fuel Supply Costs

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CHP Financial Benefits

• Reduction in Utility TD Charges
• Reduction in Ancillary Charges
• Reduced Unit Cost of Fuel
• Government Subsidies

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Standard 1 MW CHP Unit Results

• CHP Sized to Electrical Load 10 million kwh/yr.
• Displaces up to 65 percent of Thermal Load,
  equivalent to 45,000 MMBTU of Boiler Fuel.
• Unit Cost of Energy Reduced By 2 Cents/Kwh in
  Year 3 and up to 6 Cents/Kwh by Year 15.
• Dollar Cost of Energy Reduced by over 100k in
  Year 3 and over 300k by Year 15

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Fuel Is Key to CHP Success

• CHP Saves Money By Increasing External Less
  Expensive Fuel Purchases and Reducing More
  Expensive Grid Electricity Purchases.
• Key Factors in Successful CHP Project
• - Efficiency of Plant Operation
• - Stability of Fuel Supply Costs

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Hospital Group Fuel Procurement

• Typical Hospital Fuel Purchased in 12 Month
  Increments or Less.
• Hospital Group Fuel Hedge Allows Firm Price Fuel
  Purchases Over Much Longer Term.
• Average Rate Difference of 1.5/MMBTU Lowers
  Annual Fuel Cost for 1 MW CHP by 133k.

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12 Month vs Hedged Fuel Pricing
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Zero Balance Sheet Impact

• Hospital Group Program provides use of energy
  assets with zero hospital investment and zero
  balance sheet impact to the hospital.
• Power plant owned by hospital energy, a dedicated
  Hospital Utility, providing electricity, heating
  and cooling at firm prices below current rates.
• Fuel to operate plant is purchased by the
  hospital at rates stabilized by the Hospital
  Energy Group Fuel Hedge Program. Fuel treated as
  operating cost.
• No hospital liability for plant operation or
  maintenance

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Hospital Energy Contacts

• Mark Mininberg Noah Paley
• President Vice President
  General Counsel
• [phone]
  [phone]
• mark_at_hospitalenergy.com
  noah_at_hospitalenergy.com
• Gregory Besek
  Nancy Eatough
• Director, Client Services
  Director, Energy Markets
• [phone] [phone]
• greg_at_hospitalenergy.com
  nancy_at_hospitalenergy.com