Leveraging the Skills of Load Research to Add to the Bottom Line AEIC Load Research Conference Myrtle Beach, SC July 10-13, 2005

Topics Project Description A little history Role of Load Research Process Analysis/Reports Current Status with Southern Company

Project Description: Flat Bill

Fixed electric bill amount each month regardless of Customer usage characteristics Changes in weather Changes in the rate Changes in fuel prices One-year contract No “true-up” at end of contract period Company Stockholders assume risk Flat Bill Attributes

Flat Bill Policies Customer must have one year of history at current location Renewal is automatic with an “opt-out” Early Termination of contract results in a “true-up”

A Little History

Georgia Power Flat Bill History Program design began in customer pilot in 2000 Expanded to 10,000 in 2001 Full role-out in 2002 Offered to both Residential and Non- Demand Small Commercial

Role of Load Research

Key Skill Sets of Load Research Comfortable pulling large amounts of customer billing data on individual basis from billing system Expertise in weather normalization procedures Expertise in regression technique and statistics Expertise in planning and performing energy and demand impact studies Expertise in SAS

Role of Load Research Pilot Phase Developed price offers Planned sample for demand analysis Analyzed energy and demand impacts Expanded Pilot Phase Coordinated model development with outside firm Implemented model Worked with Billing Systems to develop interface Analyzed energy and demand impacts including relationship between model statistics and growth rate

Role of Load Research Full Roll-Out Restructured model for increased efficiency Implement model on monthly basis Analyze energy impacts on monthly basis Created process to identify “outlier” data Developed report to analyze churn rate Sample development for both analysis and regulatory purposes

The Flat Bill Offer Process “Make me an offer.” MAY BILL Adjust for Price Response Weather Normalize Historical kWh ESTIMATED kWh JUN 1,007 JUL1,234 AUG1,333 SEP999 OCT888 NOV650 DEC ADJUSTED kWh JUN 1,177 JUL1,345 AUG1,444 SEP1,100 OCT959 NOV770 DEC Apply Energy Rate Adjust for Clauses Add Risk Premium $% FLAT BILL Make Offer Target Market YES Calculate monthly FB amount Add Base Charge

Example of Flat Bill Model Fit

Energy Analysis Description Two Questions to be answered How does energy usage change as a result of going on flat bill? What percent do we need to add to the forecasted usage to adjust for changes in behavior?

Energy Analysis Methodology Takes advantage of weather relationship from pricing model Adjusts forecast to actual weather Compares adjusted forecast to actual consumption Accounts can then be grouped numerous ways such as tenure and customer type

Future Analyses What happens to usage once customer leaves flat bill program?

Current Status within Southern Company

Current Status Flat Bill has been a permanent tariff at Georgia Power since 2002 and has approximately 170,000 residential and small commercial participants Alabama Power has been in pilot program status since 2003 and has approximately 20,000 residential participants Flat Bill at Savannah Electric gained permanent status in 2004 and has approximately 500 residential participants Gulf Power filed and received approval for permanent status in 2004 and has approximately 1000 residential and small commercial participants Flat Bill is under investigation at Mississippi Power