1. 2 nd ACC Workshop June 20, 2014 The SSVEC Perspective David Bane, Key Account Manager dbane@ssvec.com

2. Major Differences SSVEC doesn’t own generation assets Power Purchasing Contract (Partial Requirements) Large monthly fixed cost element 46% of Bill prior to November 2013 51% after November 2013 rate change Low Demand charge (no time of day differences) $4.38 per kW (Average) prior to November 2013 $4.52 per kW (Average) after November 2013 rate change Fixed kWh charge (no time of day differences) Baseline kWh charge $0.02975 (80% of needs) Average kWh Cost is $0.0307 (period ending 5/31/14)

3. Fixed Costs collected in a kWh charge (variable) A portion of our Fixed Costs and all Margins are recovered from the sale of each kWh For SSVEC Rate R this is $0.047404 per kWh STANDARD RATE R Power Supply Distribution Charges Total Rate Metering Meter Reading BillingAccess Service Availability Charge ($/Customer/Mo) $3.67 $0.10 $6.04 $0.44 $10.25 $10.25 Energy Charge ($/kWh/Month) All kWh $0.078634 $0.047404 $0.047404 $0.126038

4. Estimated Impact in 2013 There was 6,926kW of PV installed as of 12/31/13 Estimated production of = 12,693,019 kWh There were 2,956,968 of kWh Sales to PV Customers to meet additional needs (as a group not a Net Zero Customer) The following chart shows the impact of lost kWh sales

5. Impact of 12,693,019 kWh Reduction in Sales

6. Determining the per kW Loss Estimated Loss of Fixed Cost and Margins = $465,786 Loss Divided by 1,252 PV systems = $31 per Month Full recovery of losses based on system size would need a $5.04 per kW Surcharge Average charge would be $28.25 per month Not likely to be accepted by our Members or the ACC Although the ACC approved a $0.70 per kW charge for APS SSVEC’s cost to serve a meter is between $39.00 to $40.00 per month.

7. Where is the problem? Is it really NET Metering? Or An historic rate design philosophy that needs to be revised so that Net Metering is not an issue where: Fixed Costs are covered in a Fixed Charge De-coupled Rates where the kWh is a pass through Non-solar Customers are NOT supporting Solar Customers

8. Thank you Questions?