In the Post 06 Environment November 9, 2006 Jim Eber Demand Response

2 What is DR at ComEd? Commercial and Industrial Programs –ComEds retail DR programs provide mechanisms to transfer market values, and reliability incentives, to participating business customers, with the minimum amount of barriers to participation. –Capacity programs provide fixed and known incentives, based on capacity auction clearing prices, for firm commitments to reduce load, these resources are submitted to PJMs Active Load Management program and result in credits to capacity obligations. Currently 816 participating locations providing 304 MWs –Energy programs provide variable incentives, based on real-time market prices, for voluntary reductions in load, these resources are submitted to PJMs Demand Response Program. Currently 3,700 participating locations providing 820 MWs Residential –ComEds Nature First, Air Conditioner Cycling Program, provides residential customers up to a $40 per year credit in exchange for allowing ComEd to control the AC systems compressor. Currently 56k participants provide 68 MW of capacity and up to 104 MW of load drop Dynamic Pricing –Post 2006 all customers over 3MW, that procure energy from ComEd, will be on hourly pricing –Hourly pricing available as an option for all customers –RHEP – Residential Hourly Energy Pricing 1200 customer pilot program with expansion pending

Long Term Reliability Assessment Shows long term forecast of generation vs. load and tightening of the capacity market

4 PJM DR Framework All DR resources in ComEd are submitted to PJM PJM has rights to call resources ComEd has rights to call resources Both PJM and ComEd structures are changing in 2007 PJM settlement: Goal is to improve long term market signals to support resource development Filed September 29 th, 2006 PJM resource auctions to move from planning period to procuring 3 years in advance

5 Recent Experience The integration of ComEd into PJM enabled a new level of market- based demand response. Resources integrated into the PJM DR framework. Transparent pricing for capacity and energy products. 40 percent of the potential demand response capabilities in PJM. Continued evolution from bundled to market-based. End of transition period will continue portfolio transformation. Have maintained use of all resources for delivery relief, to enhance reliability. After four summers, 2002 to 2005, of no demand response activities, ComEd utilized most of the portfolio to aid system performance and provide resources to the market this summer. Wide scale dispatch of demand response resources. July 31 August 1 August 2

6 PJM DR Framework – Capacity Capacity Active Load Management Load Response Synchronous Emergency Economic Reserves PJM CSPs Retail Customers Retail Product Offerings ResidentialSmall C&ILarge C&I ComEd Products Nature First Capacity Product

7 PJM DR Framework - Energy Capacity Active Load Management PJM CSPs Retail Customers Retail Product Offerings ResidentialSmall C&ILarge C&I ComEd Products Nature First VLR Load Response Synchronous Emergency Economic Reserves Capacity Product

8 PJM DR Framework – Other Providers Capacity Active Load Management Load Response Synchronous Emergency Economic Reserves PJM CSPs Retail Customers Retail Product Offerings ResidentialSmall C&ILarge C&I ComEd Products Other CSPs Nature First CSP X VLR CSP Y Capacity Product

9 ComEd Demand Response Role Stay actively involved in DR for reliability and market efficiency purposes: Continue current transition toward DR programs that are economically viable within PJM framework. Maintain / Expand residential direct load control programs. Facilitate DR markets development over the next 2-3 years: Create Curtailment Service Provider (CSP) friendly environment. Provide access to meter data. Assist in back office activities. Design aggregator options into retail products. Implement RHEP expansion upon ICC approval. Monitor and adjust to DR market development over the next 2-3 years: Watch for continued emergence of Curtailment Service Providers (CSP). Evaluate changes, and continue in the stakeholder process for in PJM DR framework. Track evolving customer interest and participation in DR. Expansion of DR Programs will require utility having the ability for timely and full rate recovery.

10 PJM Market Monitor Report to FERC Taken from PJM report Table 2 presents the zonal distribution of DSR capability in the Emergency Program as of December 31, One zone, ComEd, includes 95 percent of all available sites and 59 percent of all available MW in the Emergency Program.