Focus 2028 – Energy Efficiency Listening Sessions March 2016

BONNEVILLE POWER ADMINISTRATION WELCOME Richard Génecé, Vice President of Energy Efficiency 2

BONNEVILLE POWER ADMINISTRATION Process overview and timeline Topic discussion – BPA’s target – Self-funding and backstop – Program efficiencies and realignment opportunities Appendix: other topics from Feb. 29 th Agenda 3

BONNEVILLE POWER ADMINISTRATION Process and Timeline 4 Follow up 2/29 Advance discussion on topics raised on 2/11 Listening sessions 3/7 – Tacoma Power 3/9 – Missoula Electric 3/10 – Benton PUD 3/16 – EWEB 3/17 – ICUA Focus on program efficiencies and realignment Wrap up session Portland Early April (TBD) BPA proposal followed by public comment period April - May Feed into IPR for BP- 18 Identify any follow up engagements

BONNEVILLE POWER ADMINISTRATION CURRENT MARKET CONTEXT Scott Wilson, Customer Account Executive 5

BONNEVILLE POWER ADMINISTRATION TOPIC DISCUSSION Matt Tidwell, Policy Specialist 6

BONNEVILLE POWER ADMINISTRATION Should BPA reconsider how it determines its EE target, e.g., by considering a needs-based methodology? BPA’s Target 7

BONNEVILLE POWER ADMINISTRATION Should BPA increase the self-funding percentage from 25% and, if so, should BPA revisit its backstop role? Self-funding and Backstop 8

BONNEVILLE POWER ADMINISTRATION What is needed to make it easier for customers to work with BPA on energy efficiency? Are there opportunities for squeezing more value out of each dollar collected in BPA rates for energy efficiency? What opportunities are there for BPA to realign its program given the market context? Program Efficiencies and Realignment 9

BONNEVILLE POWER ADMINISTRATION Click to edit Master title style Program Efficiencies and Realignment Planning & Policies Market research and landscape Program objectives Portfolio strategy (EE Action Plan) Funding approach (equity, transfers, performance payments, etc.) Design Identify measures; quantify savings Implementation approach: UES, Protocol, Custom Impleme nt Implementation / Installation requirements Documentation, process, and verification requirements Program support services and regional programs Verify Reporting Oversight Evaluation BPA’s EE Program Elements

BONNEVILLE POWER ADMINISTRATION Listening Sessions –March 7 Tacoma Power (9am – noon) –March 9 Missoula Electric (10am - 2) –March 10 Benton PUD (1pm – 4) –March 16 EWEB (10am – 2) –March 17 ICUA meeting in Boise (1:30 – 4:30) Wrap up meeting in Portland (TBD) prior to BPA’s proposal for public comment What Comes Next 11

BONNEVILLE POWER ADMINISTRATION APPENDIX: OTHER TOPICS FROM FEB. 29 TH 12

BONNEVILLE POWER ADMINISTRATION Energy Efficiency in Rates (FY16-17)* 13 *Updated since 2/11 to reflect removal of “Reimbursable” budget From BP-16 Final Proposal

BONNEVILLE POWER ADMINISTRATION The EE Budget $(thousands) FY 2016FY2017 Energy Efficiency Incentive (EEI)73,10074,360 Regional Programs14,20015,700 Infrastructure and Contract Staff14,63314,642 Demand Response & Smart Grid1,245 Federal Staff9,4569,731 Low-Income and Tribal Weatherization Grants5,3365,422 NEEA Grant (Market Transformation)12,53112,691 Generation Conservation R&D (Technology Innovation)4,2144,223 Agency Services for Energy Efficiency10,40610,823 Legacy Programs605 Billing Credits Generation5,300 Amortization Conservation Acquisition39,795 Net Interest16,58315,623 Reimbursable EE Development (rate neutral)15,0007,000 Subtotal222,404217,160 Reimbursements(15,000)(7,000) Conservation Expense Offset(71,542)(67,685) Total135,862142,475 From BP- 16 Final Proposal Debt service + legacy Agency costs Core EE Program Grants 14

BONNEVILLE POWER ADMINISTRATION Click to edit Master title style Energy Efficiency in Rates (FY16-17) Total BP-16 Energy Efficiency Cost in Rates $(thousands) 278,337 Total BP-16 EEI (Incentives) Costs $(thousands) 147,460 Tier 1 Priority Firm Public 2-Year Loads (GWh) 120,286 Industrial Firm 2-Year Loads (GWh) 1,599 Total Energy Efficiency Cost ($/MWh) 2.28 Returned to Priority Firm Public Customers via EEI ($/MWh)

BONNEVILLE POWER ADMINISTRATION Should BPA incentivize those utilities that currently don't see it in their interest to invest in energy efficiency and make it something that has value for them? Aligning Incentives Within Tiered Rates* 16 *Alternate wording offered on 2/29: How can BPA create value for EE that is relevant to all customers regardless of their Tier 1 situation?

BONNEVILLE POWER ADMINISTRATION How can BPA improve on how it accounts for the benefits/revenues of energy efficiency (not just the costs)? “EE Model for Focus 2028” is available A Full Accounting of EE 17

BONNEVILLE POWER ADMINISTRATION Click to edit Master title style This information has been made publicly available by BPA on February 29, 2016 and contains information not reported in BPA’s financial statements. Financial Disclosure 18