1. City of Leesburg AMI Project Paul Kalv, Leesburg Electric Director Doug Handley, Utility Consulting Services Advanced Metering Infrastructure – AMI

2. Overview Introduction Project Components and Investments Cash Flow Analysis – Ongoing Costs compared to – Benefits to be Realized Key Steps for a Successful Implementation Summary

3. Leesburg’s 2020 Vision Leesburg will operate the best and most secure electric grid in the country by the year 2020 by incorporating information and control technologies that can support four goals: (1) Empowering consumers, (2) Rewarding conservation and energy efficiency (3) Improving distribution reliability and resiliency, and (4) Expanding the use of renewable energy, distributed generation, and advanced alternative technologies.

4. Introduction Why do this Project? – Empowers customers with information – Enables rewards for conservation and energy efficiency – Enables improved distribution reliability – Enables greater use of renewable energy, distributed generation, and advanced alternative technologies – Reduces operating expenses – Promotes a competitive advantage – Grants fund more than half the cost

6. Project Components – Overview Program Management Meters Communication System Software Solutions Business and Operations Improvements Home Network Devices

7. Project Components – Program Management Includes – Project Manager – Technology Coach Benefits – Expertise with similar large projects – Centralized control – “one back to pat” and “one throat to choke” – Contract structure and management

8. Project Components - Meters Interval Reads offering rate options for customers Informs customers the “when” and “how much” energy used Remote account services with fewer truck rolls Event Logging Benefits to customers: More rate options and enhanced information for managing electricity usage and costs. More efficient utility operations.

9. The new meters installed in Leesburg will be industry standard. The existing meters are no longer offered.

10. Project Components – Communication System

11. Project Components – Software Solutions Meter Data Management (MDM) System – Monthly vs. 15-minute = 3,000 times more reads Enterprise Service Bus (ESB) – Allows multiple systems to share data Demand Response Management System Customer Web Portal Pre-pay Billing System

12. Project Components – Business and Operations Improvements Business Systems will be Enhanced – More rate plan options available to customers – Information to customer faster and with more detail – 2-Way communication for better energy management Utility operations will be More Efficient – Fewer truck rolls for meter reads, disconnects and reconnects – Near real time data for outage identification and restoration – Better system data for facilities planning

13. Project Components – Home Network Devices Customer access to account and usage information to better manage energy costs Utility messages and price signals Control of appliances to save energy

14. Project Components – Recap – Initial Investments MAJOR COMPONENTS$(000) Meters4,592 Communication System646 Software Solutions5,456 Business and Operations Improvements1,423 Program Management Fee1,681 Sub Total13,798 Home Network Devices (optional)1,240 TOTAL15,038

15. Project Costs – Summary COST AND FINANCING$(000) Project Costs General Electric12,878 City-provided components2,160 Sub Total15,038 DOE Grant(7,519) State Grant(1,240) Net Cost to the City of Leesburg6,279 Net Cost to Leesburg to be debt financed, resulting in an annual debt service expense

16. Cash Flow Analysis – Overview Cash Flow = Benefits – Ongoing Costs Benefits – Only quantifiable financial benefits are counted – Does not consider enhanced customer service and reliability or lower future investment in facilities Net Present Value (NPV) of 20-year Cash Flow – Compared to Initial Investment to determine “payback period”

17. Ongoing Costs Debt Service Information systems hosting service City Operating expenses

18. Annual Debt Service Expense – Example Calculations Key Point: Leesburg debt financing can be structured to allow for flexibility and “shaping” of the repayments. ANNUAL DEBT SERVICE FOR $6.5 MILLION - $(000) TERM3%5%7% 5 Years1,4191,5011,585 10 Years762842925 15 Years544626714 20 Years437522614

19. Information Systems Hosting Systems to be Hosted – Network communication software – Meter data management system (MDMS) – Enterprise service bus (ESB) – Customer web portal – Pre-pay Benefits: – No hardware or software to purchase or maintain – No technical expertise to hire, train and develop – Cash flow more closely matches benefits

20. Information Systems Hosting Fees YEARSANNUAL FEE - $(000) 10 2317 3950 41,584 51,631 6 – 20Add 3.0% Benefits: Many of the risks associated with IT are outsourced. Major component of costs are phased in over the first 5 years and locked in for 10 years.

21. City Operating Expenses - Summary Equipment operation and maintenance Cyber security and data services Personnel – increases – temporary (4) and permanent (2) – reduction (1) Customer outreach

22. Estimated City Operating Expenses YEARSANNUAL EXPENSES - $(000) 1548 2509 3586 4218 5223 6 – 20 *Add 2.0 - 2.5% Note: Years 1 – 3 include customer outreach expenses of $218k - $222k per year. * Excludes $150k for replacement of cyber security hardware every 5 years.

23. Summary of Estimated Annual Expenses - $(000) * Based on assumed 20-year term and 5% interest rate. Note: Years 6 – 20 estimated to escalate at approximately 2.3% per year. Year 1Year 2Year 3Year 4Year 5 Debt Service *522 Hosting Fees03179501,5841,631 City Operating548509586218223 Total1,0701,3482,0582,3242,376

24. Benefits to be Realized Soft Benefits – Customer benefits, choices, rate options – Improved outage restoration Financial Benefits – Power cost reductions – Fewer “truck rolls” for disconnect/reconnect and re-reads – Better revenue collection – Reduced energy theft

25. Relative Financial Benefits Type of Benefit Cumulative 20-Year NPV % of Total Power Cost Reductions $ 38,046,67874% Fewer Truck Rolls $ 8,537,64117% Better Revenue Collection $ 3,079,2186% Reduced Energy Theft $ 1,977,9814% TOTAL 20-YEAR NPV $ 51,641,519100%

28. Key Assumptions for Projected Demand Cost Savings Rate of adoption (i.e. how long until full potential is achieved) Estimated % demand reduction for each type of program Residential Dynamic Pricing – 11.4% Commercial Dynamic Pricing – 5.75% Residential Load Control – 5.35% for selected months Commercial Load Control – 1.75% for selected months Year 123456 % of Potential020406080100

29. Summary of Projected Annual Net Cash Flow - $(000) Year 1Year 2Year 3Year 4Year 5 Demand Savings04108701,3841,957 Other Savings2296578411,0271,218 Expenses1,0701,3482,0582,3242,376 Net Cash Flow84128137787799 Year 6Year 7Year 8Year 9Year 10 Net Cash Flow *1,4211,6891,8141,9482,092 *Net Cash Flow for Years 11 – 20 grows from $2.1 to $4.1 million. Project is break-even in Year 6 (NPV)

30. Summary of 20-Year Cumulative NPV $(000) Financial Benefits51,642 Grants Received8,759 Debt Service6,279 Hosting Fees21,196 Operating18,117 TOTAL 20-YEAR NPV14,809

31. Key Steps for a Successful Implementation Execute contract – tonight’s agenda Dynamic Pricing programs Personnel development Customer outreach

32. Pricing Programs – Cafeteria Plan

33. Illustration of Potential Pricing Programs [does not reflect potential actual rates for Leesburg] ProgramkWhRatekWhRateBill AAverage Cost1,000$0.10--$100 BLarge TOU900$0.089100$0.20$100 CMedium TOU950$0.08450$0.40$100 DCPP1,000$0.081$20.00$80 - $100 ECPR1,000$0.101($20.00)$80 - $100

34. Implementation Steps – Pricing Program Goals Offer customers choices – Pick the plan that’s right for you – Opt-in or Opt-out Provide incentives to customers to reduce peak demand Share power cost savings with customers that cause reductions in peak demand

35. Implementation Steps – Personnel Development Customer service – Pricing programs – Customer usage data and web portal – Service disconnect/reconnect policies Information and communication systems Operations and system planning Finalize communication plan (internal & outreach) Schedule and deliver customer outreach

36. Implementation Steps – Customer Outreach Education – Energy conservation and load management – New equipment capabilities and benefits – New information system capabilities and benefits – New program opportunities Town meetings to explore new rate offerings Market new programs

37. SWOT Analysis

38. Summary Federal and State Grants fund over half the cost of the AMI Project The AMI Project enhances Leesburg’s customer service and system reliability Consumers will have the knowledge and tools to reduce their cost of power GE Costs: $12,878, 119; City Costs: $919,975 Hosting Costs (10 Years): $13,404,600 Total 20-year NPV savings = $14.8 million

39. Acknowledgement & Disclaimer This material is based upon work supported by the Department of Energy under Award Number DE-OE0000365. Disclaimer: This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof.