1 Retail Structure Review Committee 2006 Report & Recommendations December 14, 2006 NAESB Board of Directors Meeting By: Bill Bourbonnais

2 Retail Structure Review Committee 2006 Report 2005 RSRC Formation  Both Retail Quadrants were below the bylaw 40 member levels (E- 27, G-29)  In June 2005 Board of Directors requested volunteer board members to:  address the retail quadrant membership issues and  make recommendations to the board of directors by the end of 2005.

3 Retail Structure Review Committee 2006 Report 2005 RSRC Options  Increase retail quadrant membership to bylaw requirement.  Change bylaws to reduce the membership requirement.  Combine the two Retail Quadrants to reach the bylaw membership levels.  Delay any structural changes until completion of the original work plan of developing business practices for the customer choice retail market.

4 Retail Structure Review Committee 2006 Report 2005 Approved Recommendations  Delay any structural changes to Retail Quadrants allowing completion of the original work plan for customer choice business practices.  Complete a strategic plan in 2006 to determine the direction of the two Retail Quadrants after  Provide a recommendation to the Board in one year based on 2006 experience and strategic plan

5 Retail Structure Review Committee 2006 Report RSRC Activities  NAESB Advisory Council  AGA, EEI, and NARUC  EEI National Accounts  Resources Committee efforts to increase retail membership  Over a dozen RSRC meetings for activity and strategic planning

6 Retail Structure Review Committee 2006 Report Results  The 2 retail quadrants still below bylaw member levels (E-26, G-25).  Suggestions for development of 2007 business practices for traditional regulated and retail choice markets.  Completed Standard Retail Contracts  Added two business practice initiatives for traditional regulated and customer choice markets to the 2007 retail quadrant plans.  Standard Gas Design Day (9)  Quantify Demand Side Benefits (10)

7 Retail Structure Review Committee 2006 Report Current Options  Change the bylaws to reduce the membership requirement.  Could be a short term remedy since membership decline is continuing.  Membership levels well below 40 may not be viewed as critical mass for national standard development

8 Retail Structure Review Committee 2006 Report Current Options  Combine the two Retail Quadrants to reach the bylaw membership levels.  May be a short term solution if membership continues to decline and potential loss of members due to combination  Requires significant by-law changes  Must take care to retain current leadership  Interferes with completion of current customer choice business practices

9 Retail Structure Review Committee 2006 Report Current Options  Expand Focus and Increase Membership  Has not yet resulted in membership increase  Did increase interest & participation in the 2007 planning process and the addition of two projects for both markets  Need experience with new projects to see if they increase interest and membership

10 Retail Structure Review Committee 2006 Report Current Options  Delay structural changes for another year.  Allows completion of customer choice business practices in 2007  Allows determination if increased scope and new projects will increase interest and membership  Allows time to determine strategy beyond customer choice business practices  Does not address optics of vacant Board and EC seats

11 Retail Structure Review Committee 2006 Report Other Findings  None of the available options will have any appreciable effect on the finances of the NAESB organization.  It is believed that the Retail Quadrants are operating as efficiently as possible.  Only a major increase in Retail Quadrant members will have any significant improvement in NAESB finances.

12 Retail Structure Review Committee 2006 Report RSRC Recommendations  Continue to delay any structural changes for another year  Continue the RSRC for another year  provides structural recommendations in December 2007 based on 2007 experience and  complete strategic plan for beyond 2007

13 Retail Structure Review Committee 2006 Report QUESTIONS