Matthew Sheehan, Regional Sales Manager 10/08/2014

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Matthew Sheehan, Regional Sales Manager

10/08/2014

GDF SUEZ Energy Resources Overview & Factors to consider when buying Electric Supply for large industrials

9/12/2013

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A World Leader in Energy

Leader in Electricity

#1 independent power producer in the world

113.7 GW of gross installed power generating capacity

32 renewable operating facilities with a generation capacity of 1,000 MW and 1,153 MW of pumped hydro storage

World leader in LNG & Natural Gas

# 1 importer of LNG and buyer of natural gas in Europe

# 1 in natural gas transport and distribution networks in Europe

A supply portfolio of more than 1,334 TWh

Energy & environmental efficiency services

#1 supplier to cities and businesses across Europe (180 million heating & cooling networks managed in Europe)

Environment

#1 supplier of energy and environmental efficiency services in the world (91 million people supplied with drinking water)

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Global Fast Facts

GDF SUEZ Group headquarters located in Paris and Brussels

2013 GDF SUEZ Revenues totaled €81.3 billion

A publically traded company, GDF SUEZ is listed on the Euronext Paris, Euronext Brussels, and Luxembourg markets under the symbol GSZ

Strong credit ratings: A / A-1 (outlook stable) (S&P, July. 2014)

Ranked No. 1 most admired company in the world for Social Responsibility by CNN Money in 2012

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GDF SUEZ Energy Resources place in the global structure

KCAREY

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North America Structure

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Financial Stability

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GDF SUEZ North America Corporate & Business Unit Functions

GDF SUEZ North America (GSENA)

GSEMNA

GSEGNA

Natural Gas & LNG

Trading & Portfolio Management

Power Generation

Retail Electricity

Manages North America’s liquefied natural gas operations and gas sales to large customers in the U.S. and LDCs and gas transportation in Mexico

Manages wholesale commodity price risks and optimizes North America’s businesses’ positions through Central Portfolio Management

Manages power generation operations in North America, including natural gas-fired, renewable, and thermal plants

Provides Commercial & Industrial customers in the United States with products and services to help control costs when procuring electricity

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GDF SUEZ Energy Resources NA

GDF SUEZ Energy Resources NA is a licensed provider of retail electricity and related services to industrial and commercial customers in the United States

One of the largest national energy providers, licensed to serve 12 deregulated markets, with customers in TX, CT, DE, IL, NY, NJ, MA, MD, ME, PA, OH & DC

GDF SUEZ Energy Resources NA serves over 3,000 customers and over 60,000 accounts

Customer accounts represent almost $4 billion in contract value

The first retail supplier to publicly guarantee on-time enrollment

Recognized by customers and energy partners as a leader in quick problem resolution, execution on price quotes and on-time, accurate billing

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GDF SUEZ Energy Resources Service Areas

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We take pride in who we serve, we serve over half of the Fortune Top 100 ™ in 2014

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Informational Leader providing Industry Experts & Insight

Seminars: 2014 GDF SUEZ Road Show Speaking series featuring Andrew Weissman, Publisher of Energy Business Watch and CEO of EBW Analytics. Weissman discusses current market conditions and price forecasts specific to the region of event.

— Dallas 7/31/2014 (recording available)— Philadelphia 8/21/14 (recording available)— Boston 10/28/14 — Cleveland Spring 2015

Webinars: Current Intelligence Series Educational live webinars hosted by energy experts who will highlight the most relevant topics to the industry.

— Check out the latest on Reducing Commodity Costs By Integrating Load Analytics

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Click here to subscribe for weekly post updates

Decision-Making Tools

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Decision-Making Tools

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Decision Making Tools: historical price data right from your phone

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Hassle free-streamlined Services

Ease of contracting allows customer to be time efficient and focus on other areas of their business.

Quick turnaround on pricing, even for multiple products

Single master contract for multi-site accounts

On time and accurate billing

Fully Integrated Billing System

Gold Standard for Gas Locks

All review

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Assessing Risk Appetite

GDF SUEZ Energy Resources offers a range of core products that cover the spectrum below. Notice the tip of the cone rests to the left of the vertical axis due to the fact the Delivery charges are not driven by market forces and may be subject to adjustment, meaning that prices can never be 100% “fixed.”

---- = Risk Premiums

Fix= High Certainty & High Risk Premiums

Flex=Low Certainty & Low Risk Premiums

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Transparent Pricing

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Simplified Products & Services

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GDF Suez Confidential

Compare Stipulated Quantity vs Price Lock

Standard RTC Block and Index Block does not follow the customers load.Block portion represented as an adjustment to the customer bill.

Easy Flex with Price LockPrice lock follows the customers load.Price Lock quantity varies with customers usage. Price Lock portion represented as component of the customer’s bill.

1 43 85 127169211253295337379421463505547589631673715 -

2,000 4,000 6,000 8,000

10,000 12,000 14,000 16,000 18,000 20,000

Stip Q Block

RTC Block Load

1 43 85 1271692112532953373794214635055475896316737150

2,0004,0006,0008,000

10,00012,00014,00016,00018,00020,000

Easy Flex Price Lock

Price Lock 80% Load

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GDF Suez Confidential

Number of Locks

Price Lock minimum increments are 20% of historical load.

Increments can be in units of 20%, 25%, 30% etc.

Executed at time of contract signing or during the term.

Must be done 3 business days before delivery month.

Not available via recorded line.

Does not have to be locked for remainder of term.

Tolerance bands apply to months where 100% locked.

Incremental locks are opportunities for incremental margin.

Price Locks are not transparent.

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Product SelectionRisk Tolerance & Energy Procurement Strategies

High

price variationsIndex on 100% of Load Active Trading - Completely subject to market - Actively try to beat the market price variations - Resource Intensive - Retain ability to lock fixed price for portions of load

Fixed Price Defined Hedging Strategy - Not exposed to market variations - Define specific objectives - Locked into price - Develop quantifiable plan - Price will be 100% based on market - Strictly adhere to plan conditions at time of purchase

Low High

Proactiveness

Ris

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ran

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Product SelectionProduct Determination

Once you have established your risk tolerance level, choose a product that matches your needs

— Fixed Price Full Requirements – Price Certainty— Day Ahead or Real Time Index – Floating Price— Heat Rate – Floating price with the power price tied to the price of natural

gas, ability to lock-in price— Stipulated Quantity (a.k.a. Block & Index) – partial Fixed Price hedge with

exposure to index pricing hybrid product

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Basic Rules for Electricity PurchasingClearly identify the product and features you want

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Buying Electricity is Like….Choosing a Cell Phone Plan

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Basic Rules for Electricity PurchasingSolicit bids from qualified suppliers

How many years serving customers?

How many customers served?

Creditworthiness/Financial Stability

Service

Negotiate contract with shortlisted suppliers

X Price

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Basic Rules for Electricity Purchasing Make an Apples to Apples Comparison

Look closely at definitionsPrice Component

Contract Rate Through Applicable

Supplier Billing Charge or Service Charge Per Meter X

Supplier Margin/Operating Costs X

Commodity:

Wholesale Price of Energy X

Transmission and Distribution Line Losses X

Unaccounted For Energy (UFE) X

Independent System Operator (ISO) Ancillary Services & Other Fees:

Reliability Must Run (RMR) ERCOT Fees X

Black Start Service X

ERCOT Administration Fee (Inclusive of Texas Regional Entity) X

DAM Make Whole Charges X

Real - Time Revenue Neutrality Allocation X

Regulation Up Service X

Regulation Down Service X

Responsive Reserve Service X

Non-Spinning Reserve Service X

Emergency Interruptible Load Service X

Renewable Energy Requirement Charge X

Nodal Market Congestion Management: HUB to Zone Congestion Charge X

Reliability Unit Commitment X

Qualified Scheduling Entity (QSE) Fees: X

Regulated Delivery Charges (Assessed by regulated utility company per tariff) X

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Basic Rules for Electricity Purchasing Make an Apples to Apples Comparison

Use a bid-table

Forces suppliers to present information in a manner you can easily compare and analyze

Confirms the number of ESI being priced matches expectations

Number of ESI priced = <enter ESI count>

Term

Commodity Price 10% 15% 20%12 Months (6/2010 - 5/2011) $0.05967/kwh $0.06034/kwh $0.06101/kwh24 months (6/2010 - 5/2012) $0.06209/kwh $0.06281/kwh $0.06353/kwh36 months (6/2010 - 5/2013) $0.06464/kwh $0.06541/kwh $0.06619/kwhOther Charges

Specify:

Specify:

Specify:Gross Receipts PUCACPL regulated tariff charges Pass through

INDICATIVE PRICING based on <Date>

Pricing From: < Insert REP name>

Bandwidth

Pass ThroughPass through

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Basic Rules for Electricity PurchasingTiming of Contract Execution

Establish price targets and be ready to contract when the opportunity arises

Have a back-up plan if price target isn’t reached

*Note: Does not apply to customers on an “Index All Pass Through” product

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Basic Rules for Electricity PurchasingTiming of Contract Execution

Be ready to execute quickly

— Executable hold premiums can be significant

Example

— Supplier’s executable offer = 7.00 cents— Supplier’s executable offer with 12 hour hold open= 7.15 cents— Supplier’s executable offer with 24 hour hold open= 7.30 cents

How much is the hold premium costing you?

— 10 million kWh/year $15k – 30k per year

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Looking At The Fine Print

Contract Expiration

Expected Usage

Components of an Electricity Bill

Line Losses

Treatment of regulatory/market events

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Looking At The Fine Print… Contract Expiration

When does the contract really expire?

— Most contracts end on the meter read after the “End Date”— Some contracts stipulate a specific #months service. If a meter is enrolled late then the term is

extended for that meter – causes issues for next contract

Switching too early may result in early termination payments to the supplier

Switching too late may result in paying the “rollover” or “transition” rate

— Price may include monthly service charge per meter— Price may be indexed to gas (e.g., Heat Rate * Gas + Adder)— Price may be based on Index + Adder— Price may be based on Index+ Adder + Additional Pass Through Charges

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Looking At The Fine Print… Expected Usage

Basics

Suppliers need to know how much power to hedge

Customers must provide a reasonable estimate of how much power will be consumed

Contract stipulates that price is based on expected consumption (within stipulated tolerance bands)

Things to Consider

How far away is the start date of the next contract?

How does the historical usage compare to the expected forecast?

Communicate to suppliers how energy consumption will change in the future

— Energy efficiency projects— New construction, expansions, deletions

Establish reasonable projections of usage

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Looking At The Fine Print…Line Losses

Supplier #1’s price includes line losses

— Sample Bill calculation:Energy charge = $0.075/kWh * 600,000 kWh = $45,000Utility Charge = $10,000 Total Charge = $55,000

Supplier #2 is passing through losses as a line item under the T&D charge category 

— Sample Bill calculation:Energy charge = $0.074/kWh * 600,000 kWh = $44,400Utility Charge = $10,000 + ($0.074/kWh * 600,000 kWh * 5%) = $12,220Total Charge = $56,620

 Supplier #3 is grossing up the usage to account for the T&D losses

— Sample Bill calculation:Energy charge = $0.074/kWh * (600,000 kWh *1.05) = $0.074/kWh * 630,000 =

$46,620Utility Charge = $10,000Total Charge = $56,620

As shown above, Supplier 1 has the lowest effective price to the customer.