1. Duke Energy’s Energy Efficiency Programs 2011

2. Smart $aver ® Incentive Programs 2 Why invest in energy efficiency? Lowers energy costs for years to come Money saved to invest back into the business Minimize future rate increases Helps utility defer the cost of building additional generating facilities Fosters a cleaner environment by saving valuable energy resources Provides a more comfortable, positive work/learning environment Lowers market prices by increasing sales volume of higher efficiency equipment Duke’s Programs are Designed to Motivate Customers to TAKE ACTION

3. Energy Efficiency Programs for Non-Residential Customers (Scroll down to see description in the notes section of this slide.) 3 Energy Assessments OnlineOff-SiteOn-Site Smart $aver Prescriptive Incentives LightingHVACChillers & TESChiller Tune-ups (Ohio Only)MotorsPumpsVariable Frequency DrivesProcess EquipmentFoodservice Equipment Smart $aver Custom Incentives Applies to cost-effective projects not addressed by Prescriptive Incentive based on projected electricity savings If efficiency gains can be validated, incentives can be offered Over 250 prescriptive incentive possibilities

4. Energy Assessments  Off-Site and On-Site Assessments are available for all Large Business customers and Business accounts greater than 500 kW  Online Assessment - Self-directed – FREE  Carolinas Business Services Newsline Carolinas Business Services Newsline  Midwest Business Services Newsline Midwest Business Services Newsline  Off-Site Assessment - Telephone-based – NO COST  Customer completes a questionnaire  1-2 hour interview  Sometimes substituted with a ½ day on-site (still no cost)  On-Site Assessment - COST SHARING*  Customer pays $3,000 for one-day, $600 each additional day  Reimbursable cost: for every dollar of S$ incentive, the customer receives another dollar up to the cost of the assessment  System-specific and/or general facility assessment 4 *Customers who have opted-out of the Smart $aver program must pay the full costs for On-Site Assessments

5. 5 Energy Assessments – Other Programs in Pilot Stage  SmartBuilding Advantage SM – for qualified commercial customers  On-site Assessment (costs are slightly different than typical on-site)  Investment Grade Assessment  Support for Smart $aver Incentive application, Smart Grid Integration, Implementation, and Performance Verification  Prescription for Energy Savings – for qualified healthcare customers Energy Savings Master Plan-for qualified commercial real estate customers  Energy Smart Data Centers – for qualified data center customers  Retro-Commissioning-for any qualified commercial customer  Check out our home page (http://www.duke-energy.com) for other programs to help you TAKE ACTIONhttp://www.duke-energy.com

6. Smart $aver ® Incentive Rules & Requirements (Scroll down to see additional information.) Who is Eligible? All Duke Energy business customers who are not on a residential rate and who have not opted out of the program Who can receive the payment? Customer, Vendor, or other Third Party can receive the incentive payment More information found at: Application forms, FAQs and additional information found at www.duke- energy.com under the Business or Large Business tabwww.duke- energy.com Prescriptive IncentivesCustom Incentives Submission requirements Submit within 90 days after installation Submit prior to project initiation Timeline Completed applications processed within 3 business days 1-2 months is typical for a pre-approval application review; after project completed, payment request takes 1-2 weeks 6

7. Smart $aver ® Incentive Applications  Always go to the website for current application forms –http://www.duke-energy.com/north-carolina-business/energy- management/energy-efficiency-incentives.asphttp://www.duke-energy.com/north-carolina-business/energy- management/energy-efficiency-incentives.asp  If you need help  Contact your account manager  1-866-380-9580  “E-mail a Question” online  Submit completed applications via fax, email or mail as noted on the forms 7

8. PRESCRIPTIVE INCENTIVES 8

9. Prescriptive Incentive Examples  Commercial Office Building  Improvements included over 3000 28w T8 lamps, a 100hp motor, VF drive for HVAC, and a major chiller retrofit.  Duke Energy Incentive: $43,000  Commercial Office Building Lighting Retrofit  Improvements included over 600 T8 high bay fixture replaceents of HID fistures lamps, a 100hp motor, VF drive for HVAC, and a major chiller retrofit.  Duke Energy Incentive: $32,000 9

10. Application Requirements must be followed  Prescriptive is NOT flexible  Pre-determined energy savings  Affects what is reported to the regulators  Third party evaluates our program for accuracy and cost- effectiveness.  If every application doesn’t meet the requirements, impacts and revenues are reduced 10

11. Projected Prescriptive Additions 11 Smart $aver Prescriptive Incentives Projected Additions Lighting HVAC Chiller Tune-ups Motors/Pumps/Variable Frequency Drives Foodservice Equipment

12. Common Reasons a Prescriptive Incentive Payment Is Delayed  Multiple account numbers listed on one application. There should only be one account number per application.  Account # provided does not match the address where the installation took place  Model numbers on the application do not match the model #’s on all or one of the following items: Manufacturer’s spec sheet Invoice  Quantities on the invoice do not match what was reported on the application  All required documentation not submitted – spec sheets, itemized invoice, etc. 12

13. CUSTOM INCENTIVES 13

14. Smart $aver ® Custom Incentive Basics  For high efficiency projects that are not addressed by prescriptive incentives  Note: equipment that is less efficient than the prescriptive requirement is not eligible for a custom incentive.  Example: chillers that do not meet the prescriptive incentive requirement cannot be submitted for a custom application.  Custom incentives require pre-approval before the project starts. No exceptions. 14

15. Smart $aver ® Custom Incentive - Timeline 15 Step Two Duke Energy Evaluates Application Duke Energy Communicates Incentive Pre- Approval Step Three Customer Installs Project Customer Requests Incentive Payment Duke Energy Pays Incentive Step Four Duke Energy Performs Measurement & Verification* 1 - 2 months (sooner if possible) Installation time + 10 days for payment Occurs within a few months after installation Step One Customer Completes the Application Customer or Trade Ally Provides Energy Savings Calculations Depends on Project * Measurement & Verification is performed on a portion of all installations; pre-measurement is sometimes requested prior to equipment installation if time allows

16. High Efficiency Lighting Custom Incentive Examples  Typical projects consist of:  Energy efficient outdoor lighting (that is not eligible for prescriptive incentives)  LED or induction fixtures  New construction involving lighting that is more efficient than the building code  Lighting retrofit that is not one-for-one replacement (not eligible for prescriptive)  Specialty light fixtures  Example: Manufacturer’s lighting redesign project that involved replacements that were not one-for-one. 862 T-12 and metal halide fixtures were replaced with 568 T-8 fixtures. Demand reduced by 2/3.  Customer cost: $45,714  Energy reduction: 498,910 kWh and Demand reduction: 111 kW  One-time Smart Saver Custom Incentive: $9,000 16

17. Energy Management / Controls Systems Custom Incentive Examples  Any new or upgraded control systems other than occupancy sensors on lighting should be applied for pre-approval of a custom incentive. Typical equipment being controlled:  Lighting nighttime setbacks  HVAC equipment, including chillers, ventilation, pumps, fans; schools can program an out of session sequence for HVAC equipment  Process equipment, to prevent exceeding a set demand or to idle/ shut off equipment when not in use  Note that metering equipment being used to monitor usage is not eligible for incentives unless that equipment is also being used to control electrical usage.  Example: National account customer installed EMS to control HVAC and Lighting.  Customer cost: $207,581 (for all sites)  Energy reduction: 956,103 kWh and Demand reduction: 227 kW  One-time Smart Saver Custom Incentive: $48,000 17

18. Green Building Design (New Construction) Custom Incentive Examples  The entire project is reviewed in one custom application to determine a custom incentive. The custom incentive will be some percentage of the cost premium for the green building design. Example projects include:  New construction or major retrofit being designed to achieve LEED certification, earn the Energy Star, or any green building recognition  New construction or major retrofit that is not trying to achieve recognition, but is being designed using green building principles  Example: Three new K-12 schools pursing LEED for Schools certification. Design includes such features as: white roof, triple pane low-e windows, daylighting and integral blinds, high efficiency HVAC, demand control ventilation.  Customer incremental cost: $1,240,020 (for all sites)  Energy reduction: 1,329,072 kWh and Demand reduction: 988 kW  One-time Smart Saver Custom Incentive: $186,000 18

19. Other Custom Incentive Examples  HVAC Projects  Water-source heat pumps  Free-cooling heat exchangers  Energy recovery ventilators  Air-side economizers  VFD Projects  Compressed Air Equipment  Compressed air storage system  Addition of a control system to further increase energy savings  Building Envelope  Window replacement, white and green roofs, various means of improving wall insulation and reducing building fenestration or leakage. 19

20. Performance Contracts  Can involve projects that would be eligible for both prescriptive and custom incentives  For projects that are submitted for pre-approval through a custom application:  Incentives are based on electric savings only  Example of a past project approved through the custom application  Performance contract for multiple facilities that involved controls, lighting retrofits, window replacements and other projects  Project Cost: $1,000,000 (total performance contract)  Expected Annual Energy Savings: $58,000  One-Time Duke Energy Incentive: $21,000 20

21. 21 Smart $aver ® Custom Incentive  Examples that are NOT eligible for Custom Incentives  Renewable energy generation projects, including Solar PV  Work that was begun prior to Duke Energy incentive approval  Projects that cannot be supported with data and calculations performed using acceptable engineering methods  De-lamping of lighting fixtures, unless the project involves a complete redesign and a lighting study shows that the proposed light levels are appropriate  Eliminating electric loads, or moving to another facility  Replacing electric loads with another fuel source  Measures that are not sustainable over time

22. Common Reasons a Custom Pre-Approval is Delayed Custom Incentive applications can be delayed or rejected because:  If the the customer has already decided to proceed, the application is rejected.  Applications for renewable energy generation projects, natural gas conservation or fuel-switching can not be approved.  Electric demand and/or energy reductions must be well documented with auditable calculations. Dialogue with the customer or vendor who performed the calculations can sometimes take many weeks.  If the simple payback without incentive is less than 1 year, no incentive can be approved.  Customer signatures are required for the application to be reviewed.  Measures that are not sustainable over time are not eligible for incentives.  LED fixtures require an independent lab test report. 22

23. http://www.duke-energy.com