Natural Gas Sourcing Presentation for Armstrong Management Services Prepared by: Mark R. Burns, President Independent Energy Consultants, Inc. January.

Natural Gas Sourcing Presentation for Armstrong Management Services Prepared by: Mark R. Burns, PresidentIndependent Energy Consultants, Inc.January 22 , 2008

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Potential Aggregation of Loads

• Loads of at least 50,000 Dth/year needed for auction

• Larger groups draw more suppliers

• Combining loads may improve load profile and result in lower prices

• Larger group spreads acquisition and transaction costs over greater base resulting in lower rates

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Gas Only

Experience in Managing Complexity

Broad market coverage (25+ States, 100+ Utilities) enables us to support Clients with locations across the country

Electricity + Gas

Ontario

Not Currently Active or Not Deregulated

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An “EBay” for Energy

Independent Energy Consultants brings together the intelligence and tools to enable energy buyers to procure energy more efficiently - reducing cost and limiting risk.

ENERGYCOSTS

CONFIDENCE

• Partner with Internet Auction Site that has procured over $1.2bb in electricity, natural gas, and financial instruments. Saved Customers over $100,000,000

• 5x the volume of nearest competitor• Runaway market leader of 40 competitive

exchanges

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The Procurement Process

NeedsPlanning

MarketAnalysis

Auction ContractOngoingSupport

• Discuss Goals

• Review current market conditions

• Identify Locations

• Request and Format 12 months historical usage

• Perform Price-to-Compare Analysis

• Identify Contract Parameters

• Structure RFP

• Alert 100% of registered supply base

• Run reverse auction

• Upload contracts, sites and usage

• Prepare for Renewals

Proven Process Ensures Success and Supports Compliance

• Perform Savings Analysis

• Recommend Contracting Terms

• Review and finalize contract

Life of Contract

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WGL 5-Year Gas Cost Recovery vs. Market Forecast and Sample Offer Price

$3

$5

$7

$9

$11

$13

$15

$/D

th

Actual Contract Linear (Actual)

Decision Support Modeling

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Intelligence to Guide Strategy Decisions

• Platform contains market analysis for all deregulated markets

• Wholesale Pricing trends

• Market Characteristics

– Switch Rules

– Regulatory History

– Rate Classes

• Current Go-to-Market recommendation

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Auction View

• Proven time and time again to deliver the lowest price available in the market

• Design to favor consumer – fixed end time, direct entry bidding

• Engagement cost contingent on you saving – paid by supplier

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Data Needs Before Auction

• Most recent 12-months of natural gas consumption

• Completed Deal Sheet for participating accounts

– Service address, billing address, account numbers, D&B number, current contract details, etc.

• Signed Exchange Agreement With Auction Provider

– No cost to client to use this service

– Exchange paid by supplier, if and only if, offer accepted

– Commits client to accept an offer if it is lower than price to beat

– Exclusivity for 12 months

• Do not accept offers sought through other channels

– Similar to other agent agreements

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REQUEST TO WASHINGTON GAS CORRESPONDENCE DEPARTMENT FOR MCF/CCF/THERM USAGE HISTORY

From: To: Washington Gas Correspondence Department Sent via FAX to: 703 750-4858 Please provide twenty-four (24) months Mcf/Ccf/Therm usage history for the following facilities: Service Address Account Number Description Please email, or Mail, or fax this information to our Licensed Consultant who is a limited agent to receive the information requested at:

Independent Energy Consultants, Inc. Attn: Mark Burns 820 Deepwoods Drive Aurora, Ohio 44202 Ph: 330 995-2675 Fax: 216 274-9176 [email protected]

If you have any questions, please contact me at _________________________________.

Sincerely,

Name:

Title:

Signature:

Date:

Letter of Authorization (LOA)

• Client Provides Utility with account information

• Requests utility turn over data to consultant

• Most efficient means of assembling accurate data

• Consultant needs to analyze load data and prepare RFPs

• Suppliers will need data to bid and enroll accounts

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Contact Information

Contact your licensed full service independent energy experts:

Independent Energy Consultants

Ph: 330 995-2675

Toll Free: (888) 862-6060

Email: [email protected]

Fax: (216) 274-9176

Web: naturalgas-electric.com

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Mark Burns Biographical Summary

• Owner/Founder of Two Successful Energy Consulting Firms

• Licensed Natural Gas and Electric Broker and Aggregator by State Regulators

• Bachelors Degree in Electrical Engineering Technology

• Masters Degree in Business Administration

• Former Risk Control over $1 Billion Electric/Natural Gas Trading Floor

• Former Strategic Planning Manager Major Utility

• Develop & Oversee $250 Million Annual Capital Budget for Major Utility

• Designed Energy Trading Models Successfully Used by Major Utility

• Senior License from Nuclear Regulatory Commission to Operate and Manage a Nuclear Power Plant

• Electric Test Engineer on Several U.S. Naval Nuclear Powered Submarines

• Certified in Performance of Energy Efficiency Projects

• 23 Years Professional Development and Training

• Member The Association of Energy Engineers

• Member Facility Managers Institute of AEE

• Member of various Boards and Councils

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Sample Questions - Self Assessment

• My company spent $________ for electricity last year and used ______ kWh

• My company spent $________ for natural gas last year and used ______ MCF

• The cost and use figures are ___%, ___%, ___%, and ___% higher or lower than the prior year

• If asked, I could readily develop an energy budget, by utility meter, for next year Y/N

• In this FY we are currently ___% over/under budget for natural gas, and ____% over/under for electric

• The temperature forecast for the next 14 days calls for ______ HDD and ______ CDD

• The forecast mentioned above will cause my company to use ____% more gas ____% electric

• The top three drivers of my natural gas use are _______________________________________________________

• The top three drivers of my electric use are __________________________________________________________

• Natural gas in storage is ____BCF. That is ____% higher or lower than last year and ____% from the 5-yr average

• The upcoming U.S. hurricane season is expected to be worse, better or equal to the 100-year average

• Natural gas and electric prices are correlated Y/N If so, which commodity drives the other?

• If I have a choice of heating fuels, I would know how to value and select the least cost alternative?

• My electric utility charges me a penalty for low power factor? If so, it is costing me $_______/month.

• Last month I paid multiple utility bills and I am confident each amount was correct Y/N ?

• I am confident a faulty utility meter (water, electric, gas) would be promptly identified by our maintenance staff?

• I received literature talking about energy conservation measures (ECM) for lighting, ventilation, motors, etc. I am confident we’re doing all we can to identify ECMs and I would be able to perform a cost/benefit analysis on the same?

• A 10% reduction in electric energy kWh would reduce my bill by ____%. A 10 reduction in demand kW would reduce my bill by ____%

• I could perform a historical analysis to determine if a fixed rate or indexed rate would have resulted in lower costs

• I would be able to value a contract with a swing tolerance to determine if it were lower cost than a full requirements agreement Y/N