1. EnerNOC: Demand Response Solutions Texas Public Utilities Commission – September 15, 2006

2. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 2 Agenda get more Texas’ Underlying Needs Types of Demand Response EnerNOC Overview Next Steps

3. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 3 Record-Breaking Peak Demand August 2, 2006, New England “New England consumers set a new record for electricity consumption today…. Regional electricity use reached 28,021 megawatts (MW) this afternoon, surpassing the record of 27,401 MW, set just yesterday.” August 2, 2006, New York “The statewide demand for electricity reached a record for the second day in a row—and for the third time in two weeks—Wednesday as New Yorkers kept air conditioners humming and fans blowing to beat the heat and humidity of an unrelenting heat wave…. The hourly average peak load hit 33,939 megawatts (MW)…, breaking Tuesday’s record of 33,879 MW.” August 1, 2006, Midwest “The Midwest Independent Transmission System Operator, Inc. (Midwest ISO)…met its second record demand of the summer, reaching 136,520 megawatts (MWs)…, eclipsing the record of 132,658 MWs set just two weeks ago.” August 1, 2006, Ontario, Canada “Ontario set a new all-time record for electricity demand of 27,005 megawatts (MW)…, exceeding the previous record of 26,160 MW set on July 13, 2005.” July 24, 2006, California “Another record peak was set at 50,270 megawatts…. This breaks the record of 49,036 megawatts set just last Friday, July 21.” July 17, 2006, PJM “PJM Interconnection…set an unofficial record for peak electricity use of 139,746 megawatts today.” July 17, 2006, Texas “The Electric Reliability Council of Texas, Inc. (ERCOT) region set a new electricity usage record of 62,396 megawatts (MW) of power today, …exceeding the previous all-time peak of 60,274 MW, set on August 23, 2005.” get more

4. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 4 Record-Breaking Peak Demand July 26, 2006, United States of America “The United States has seven regional independent operators of electrical grids, stretching from California to New England, and every one of them experienced record power demand in late July…. Regional grid operators reported a new aggregated peak record of electricity usage of 483,233 megawatts during the extreme heat and high humidity, a full 7,500 megawatts above last year’s peak.” - United States Department of Energy get more

5. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 5 Current Solution: Demand Response “Today’s peak record would have been hundreds of megawatts higher if it were not for ISO New England’s demand response programs and conservation efforts of consumers.” - ISO-NE August 2, 2006 “The NYISO’s Demand Response customers, however, helped keep the statewide electricity load from climbing even higher by curtailing afternoon usage.” - NYISO August 2, 2006 “Commercial customers…shed an estimated 855 megawatts just as California was setting the new sky-high record demand for electricity on July 24.” - CAISO August 1, 2006 get more

6. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 6 Demand Response provides a better solution to meeting peak demand than the traditional solution of over-building generation. Demand Response Impact Potential 40 80 0 ERCOT Peak Demand: 63 GW Nuclear Gas/Oil Steam Other ERCOT Generating Capacity: 78.2 GW Source: EIA Electric Power Annual 2003 8,760 Hours 1% of hours require ~10% of capacity Hydro Coal Renewables Combined Cycle Gas

7. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 7 The New Energy Crisis As much as 50% of the nation’s anticipated load growth over the next decade could be displaced through energy efficiency, pricing reforms, and load management programs. The DOE’s five National Energy Laboratories concluded that cost- effective energy efficiency investments could displace 15% of the nation’s total electrical demand by the year 2010. Customer market studies and load-response pilot programs demonstrate that the potential for load management is also quite substantial. Approximately 15% to 17% of commercial load could be managed in response to short-term price signals. A FERC-commissioned study reported that a moderate amount of demand-response could save about $7.5 billion annually in 2010. Source: Efficient Reliability: The Critical Role of Demand-Side Resources in Power Systems and Markets. Prepared for the National Association of Regulatory Utility Commissioners. Author - Richard Cowart, Regulatory Assistance Project, June, 2001. get more

8. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 8 Texas’ Underlying Needs Source: Report on Capacity, Demand and Reserves in the ERCOT Region, June 2006. Projected Announced Additions Reserve Margins in TX are declining Some suggest mothballed plants will be back online Demand response is an underutilized resource that can be enabled to respond NOW

9. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 9 Demand Response in TX an Underutilized Resource ERCOT load management programs declined significantly between 1998 and 2003. Of all NERC regions, ERCOT has the lowest existing demand response resource contribution as a percentage of projected summer demand Source: FERC Assessment of Demand Response and Advanced Metering, August 2006, pp. 22 & 100.

10. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 10 Texas’s Unrealized Demand Response Potential Overall DR potential: 5 to 8% of peak load; equivalent to 3 to 5 GW today Industrial Commercial Residential Current Status of DR Most utilized resource Virtually none utilized Some existed previously, but no longer actively utilized Potential DR Capacity ~ 1 GW ~ 2 to 3 GW ~ 1 GW Comments More capacity possible with a few program changes Capable resources are currently lying untapped but current programs and existing market structures will enable NONE of this potential More cost effective than new peakers In need of longer term contracts

11. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 11 Agenda get more Underlying Needs Types of Demand Response EnerNOC Overview Next Steps

12. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 12 kWh’s 24 Hours $/kWh 24 Hours Demand Response – A familiar slide today Demand response is achieved when end-users reduce their demand for electricity from the grid in response to market signals. Reliability/Security – DR can be brought to market more quickly and precisely than comparable generation or T&D, giving grid operators resources needed to better manage reliability NOW while paying end-users to tap into existing resources. Price – DR can dramatically reduce pricing power of well-positioned generators and incentivizes end users to become active participants in energy markets – active participation keeps markets healthy and prices low. Efficiency – Demand response raises the specter of efficiency. Increased end user market participation puts energy back on the business planner’s map and, when properly deployed, can save end-users 25% or more on energy bills. Generation Capacity Demand kW 24 Hours With EnerNOC

13. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 13 Demand Response in the Northeast New York –Emergency Demand Response –Installed Capacity / Special Case Resources –Day-Ahead Demand Response New England –Real Time Demand Response –Real Time Price Response –Day-Ahead Option get more

14. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 14 NYISO Demand Response Performance

15. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 15 NYISO EDRP & SCR Capacity Growth – 1450 MW get more

16. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 16 ISO-NE Energy Management Philosophies

17. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 17 ISO-NE Energy Management Philosophies

18. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 18 ISO New England Demand Response Capacity – 600 MW get more 2-Hour 30-Minute Price Profile

19. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 19 ISO-NE Experience on August 2, 2006

20. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 20 What is Demand Response? Demand response actions come in two basic forms. Self Generation – This can include emergency/backup generation, peaking and continuous-duty distributed generation, or even UPS systems. Curtailment – Turning off lights, turning up cooling set-points, turning off air handlers, shifting production schedules, escalators, elevators, water features, parking lights, signage, heating elements, etc. 1 2

21. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 21 What is Demand Response? Demand response can be accomplished manually or automatically (i.e., remotely controlled). Manual – Personnel receive an EnerNOC phone call, email, and/or page and respond to an event, shutting down devices, turning up set points, and turning on generation. Automatic –EnerNOC remotely controls relays, ATS’s, and building management systems en masse to reduce demand or self-generate. 1 2

22. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 22 Agenda get more Underlying Needs Types of Demand Response EnerNOC Overview Total Energy Management Next Steps

23. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 23 Proven and growing track record - Over 350 MW’s of demand response capacity managed at more than 600 customer sites. Approximately 1,000 MW’s of peak demand in network monitored by PowerTrak® Compelling offering – Total Energy Management Solutions Provider encompassing – Demand Response, Demand Management, Data Management, Research, Education, Permitting, Financing, Metering, Aggregation, Enrollment, Installation, Payment Reconciliation, Maintenance Management, Risk Management Significant and growing market - Currently serving: – ISO New England (Certified IBCS and Demand Response Provider) – NYISO (Responsible Interface Party) – PJM (Emergency Demand Response Provider) – California (Demand Reserves Partnership Provider) – SDG&E, SCE, National Grid, NStar Distinguished technology - Provides 24/7, real-time metering and web- based device monitoring and control through open architecture technology that leverages customers’ existing assets Significant resources – Strong balance sheet and impressive financial track record – Deep management team – over 70 employees with more than 85 engineering and management degrees EnerNOC is the leading technology-enabled, C&I-focused total energy management solutions provider EnerNOC Overview

24. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 24 About EnerNOC: A National Clean Tech Leader The greenest kWh is the one never used EnerNOC Recent Cleantech Company Awards June 27, 2005: Red Herring names EnerNOC one of 10 Cleantech Companies to Watch April 4, 2005: EnerNOC voted one of Top three companies at Cleantech Venture Network 2005 Forum EnerNOC profiled in Forbes, May 8, 2006 A Sensible Energy Response Brett Perlman and Phil Giudice Tuesday, April 25, 2006 – The recent rolling blackout in Texas highlighted the need for fresh thinking about how the state manages its electric grid. Last week, the Electric Reliability Council of Texas, the state's electricity grid operator, was forced to cut power to more than 200,000 customers when demand for electricity spiked due to unseasonably warm weather. With temperatures reaching almost 100 degrees and many generation plants still on spring maintenance, ERCOT failed to keep the lights on.

25. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 25 About EnerNOC: Growth Summary

26. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 26 EnerNOC Examples and Experience EnerNOC’s rapid success is based on the value we’ve delivered to our customers through demand response and energy management solutions. GovernmentLight IndustrialEducation Food Sales and Storage Healthcare Lodging and Resorts Commercial Office and High Tech

27. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 27 EnerNOC enables existing assets with inexpensive, scalable technology to accomplish significant and guaranteed reductions in demand. The Energy Network Operations Center

28. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 28 EnerNOC Examples and Experience An industry-specific solution should always be deployed to maximize the demand response opportunity. Supermarket 24 Hour Load Profile and EnerNOC Demand Response Application 0 50 100 150 200 250 300 350 400 12:00 am2:00 am4:00 am6:00 am8:00 am10:00 am12:00 pm2:00 pm4:00 pm6:00 pm8:00 pm10:00 pm12:00 am Time of Day kW ISO Calls “Event” 30 Minutes Prior to Required Response EnerNOC Responds Automatically within 30 Minutes EnerNOC Restores Operations Automatically 30 kW from 1/3 Lights 20 kW from Store AC or Air Handler 20 kW from Backup Generator

29. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 29 EnerNOC DR Event Summary – February 27, 2006 EnerNOC’s aggregate coincident performance was over 100 MW during a demand response event in New England

30. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 30 kW Notification 1:00 PM Event Start 1:30 PMEvent End 6:00 PM Baseline Stacked Meter Demand Commitment: 370 kW Performance: 416 kW Load Curtailment Provider Summary Sites: 5 Commitment: 370 kW Performance: 424 kW (non-coincident) 416 kW (coincident) Voluntary Extension 7:15 PM EnerNOC DR Event Summary – July 27, 2005 Curtailment: University provider curtails more than 400 kW of load at five individual sites.

31. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 31 Provider Summary Commitment: 1,450 kW Performance: 1,727 kW kW Notification 1:00 PM Event Start 1:30 PMEvent End 6:00 PM Baseline Meter Demand Commitment: 1,450 kW Generator Output Load Curtailment Performance: 1,727 kW Voluntary Extension7:15 PM EnerNOC DR Event Summary – July 27, 2005 Generation and curtailment: University provider combines generation with load curtailment to reduce more than 1.7 MW from the electrical grid.

32. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 32 kW Notification 1:00 PM Event Start 1:30 PMProgram End 6:00 PM Baseline Provider Summary Sites: 50 Commitment: 12,050 kW Performance: 13,418 kW (non-coincident) 12,980 kW (coincident) Performance: 12,980 kW Generator Output Stacked Meter Demand Commitment: 12,050 kW Voluntary Extension 7:15 PM EnerNOC DR Event Summary – July 27, 2005 Parallel processing: Communications provider simultaneously transfers 50 facilities to backup generators, totaling over 12 MW.

33. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 33 DR Case Studies – EnerNOC SDG&E Clean Gen Project EnerNOC has deployed a 25 MW “Negawatt Network” in San Diego Gas & Electric service territory in 6 months and hopes to deploy another 25 MW’s in the next 6 months. 25 MW’s currently Real-time control and monitoring of clean, fully permitted emergency generators “Single Button” dispatch of entire network within 10 minutes of notification of CAISO reliability or economic event, such as Stage 2 alert

34. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 34 DR Case Studies – ISO-NE Winter Demand Response EnerNOC deployed a 100 MW “Negawatt Network” in 2 months in New England to avert a potentially disastrous winter peak and dependency on NG-fired central generation. 100 MW’s in 60 days Real-time control and monitoring of curtailable loads (e.g., lights, BMS, electric heating, process), cogeneration, fuel-switched loads, and emergency generation “Single Button” dispatch of entire network within 30 minutes of notification from ISO-NE of a OP4 Action 9/12 event

35. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 35 DR Case Studies – PJM Synchronized Reserves EnerNOC was the first company to enter the newly formed PJM Synchronized Reserves 10-minute market and has enrolled nearly 20 MW’s within first 30 days of program. 20 MW’s in past 30 days. Expected to grow to 500 MW’s Fully integrated market control – PJM’s signal processed automatically by EnerNOC’s NOC and loads are automatically controlled 10 minute automatic dispatch

36. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 36 Agenda get more Underlying Needs Types of Demand Response EnerNOC Overview Next Steps

37. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 37 Up to 300 MW or more of quick-start peaking capacity to cover demand through 2008 in 54 towns of Southwest Connecticut (Meriden to Greenwich) Includes Emergency Generation as an eligible resource Participants paid for capacity (kilowatts) and load reductions (kilowatt-hours) in accordance with the ISO-NE Demand Response Program, but also receive supplemental payments for capacity through RFP Four-year contract term with an option to extend for one year Resources must be capable of responding to DR events within 30-minutes of notification Resources required to have an Internet-Based Communication System (IBCS) to transmit energy data to ISO-NE Consider what other markets have done… EnerNOC won 76 MW’s of demand response in the Southwest Connecticut ISO-NE RFP. ISO-NE’s SWCT Gap RFP get more

38. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 38 Proposal Summary ISO-NE 2004 Gap RFP for 300 MW’s of Supplemental Capacity Targeted For Just 54 Towns in Connecticut Summary of Proposals Received Consider what other markets have done…. Source: ISO-NE

39. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 39 Proposal Summary ISO-NE 2004 Gap RFP for 300 MW’s of Supplemental Capacity Targeted For Just 54 Towns in Connecticut Summary of Proposals Selected Consider what other markets have done….

40. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 40 Next Steps: Pilot Project The following table summarizes key aspects of a program concept Program TypeDemand response resources participating in market as ancillary services Program SizeAddress the Market’s Need for 2007, 2008, and beyond Start DateDemand resources will be ready to respond June 2007 NotificationResources will be able to respond within 10 minutes of dispatch by ERCOT Program specificationsProgram must incorporate existing technology to ensure that demand response resources are as reliable as peaking generators

41. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 41 EnerNOC, Inc. 28 West 44th St. Suite 1200 New York, NY 10036 212.624.0000 – Phone 212.624.0001 – Fax EnerNOC, Inc. 5155 Sunlight Place Los Angeles, CA 90016 323.937.7888 – Phone 323.937.8889 – Fax EnerNOC, Inc. 75 Federal St. Suite 300 Boston, MA 02110 617.224.9900 – Phone 617.224.9910 – Fax get more EnerNOC, Inc. 1010 Lamar, Suite 1040 Houston, Texas 77002 713-933-8836 - Tel 713-659-0098 - Fax

42. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 42 Appendix

43. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 43 Load and Technical Analysis Enable and Enroll Facilities Program Managemen t Event Managem ent Conduct facility walk- through –Identify curtailable loads –Identify backup generator potential –Identify existing metering systems to integrate and save money Interview facility engineering and operations staff to identify customer sensitivities Develop technical solution options Summarize load analysis, present options for load control and program involvement, and present economic potential Begin collecting data Research, file, and renew all required city and state permits for program participation Maintain all required records Enroll load in daily/monthly markets to maximize potential benefit while minimizing risk Present real-time meter data to ERCOT for verification and to customer for reporting Monitor loads continuously and adjust enrollments accordingly Reconcile data with ERCOT monthly and collect and disburse program payments Manage any program disputes and changes for customer Notify customers in advance of potential events Notify customers during day of event of event “window” and requirements Curtail load/initiate backup generator operation as required Monitor, meter, and adjust performance according to enrolled load Notify customers of event completion and restore normal operations Provide event and load reports accordingly Continually ensure operational integrity of technical solution Design technical solution Procure required technology (e.g., metering, relays, controls) Install (or integrate with existing) metering, controls, and communication Test and troubleshoot technical solution Initiate monitoring and begin metering loads Apply for, administer, and secure eligible cost reimbursements Register as customer’s Responsible Interface Party (RIP) Aggregate customer loads as applicable Enroll assets into each DR program EnerNOC’s offering is a tailored outsourced solution designed to maximize participation while minimizing end user and utility/ISO effort. EnerNOC Approach

44. © 2006 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution 44 A modified BUL Market could increase demand response resources in ERCOT market Three hurdles to consider removing: ERCOT should enable payments to go directly to the demand response aggregator instead of the retail energy provider (REP) Each end-user should have its own baseline; QSEs should be allowed to represent each end-user individually. Demand response resources should be allowed to participate in both the BUL and the LaaR markets