1. Technical Advisory Group Meeting on BGE’s Conservation Program
January 4, 2008

2. Current Status of BGE’s Conservation Programs
BGE Smart Energy Savers ProgramSM originally filed 1/23/07
October 26, 2007 filing in Case No and Tariff filing for Riders on gas and electric efficiency charges
Reviewed at Hearings held on November 14 and December 19
December 27, 2007 Commission Order (ML #108061)
Rider 2 - Electric Efficiency Charge approved with a $0.000 cents/kWh rate and elimination of “ Program Incentives” in “Eligible Costs” (Commission plans to implement separate proceeding on incentives)
Insufficient information for Commission to approve Rider 1 – Gas Efficiency Charge and BGE to work with Staff and OPC to develop data needed to conduct an analysis of gas programs
Commission acknowledged benefit of implementing cost effective energy efficiency and conservation programs

3. December 27, 2007 Commission Order (cont.)
The Commission directed Staff to convene a technical advisory group to:
Develop and issue a comprehensive data request that incorporates any data that Staff, OPC or MEA believes is necessary from BGE to analyze the energy efficiency programs before the Commission
No later than January 30, 2008, provide the Commission a report that includes
an analysis of the cost effectiveness of the programs, including the assumptions that were used to calculate the cost effectiveness of the programs
whether the costs incurred to implement the programs are reasonable or if there are portions of the program that should be accomplished statewide rather than individually by each electric company
the details of the programs that should be implemented and any recommendations as to whether the details of the program should be common to similar programs implemented by other electric companies; and
a standard for measuring and evaluating these programs as they are implemented

4. BGE Demonstrating Success With Fast-Track Program
625,000 discounted CFLs have been purchased as of December exceeding 2007 goal of 250,000 by more than 150%
294 million kWh lifecycle savings and $40 million dollar savings
5 months of operation
About 4,200 appliance rebate requests as of December 24, approaching 2007 goal of 5,000 units
Program administration, implementation and marketing costs coming in about 17% below projected cost levels
$208,000 less than $1.2 million budget in these areas

5. Implementing Full Portfolio of Conservation Programs
Case to Move Forward Expeditiously
Programs are drawn from universe of well-established, best practice results from other states – based on expertise of ACEEE, Honeywell, and other experienced participants -- BGE is not “reinventing the wheel”. Significant leverage of the national Energy Star brand and programs.
Majority of programs have clear cut economic benefits. Life-cycle cost averages 2 cents per avoided kWh, well below 14 cent per kWh cost to supply
Governor O’Malley’s 15% per capita energy usage by 1025
Reliability concerns in 2011 and 2012
Customers are dealing with higher prices now -- delays in implementation translate into significant, non-recoverable lost savings opportunities
Programs will evolve over time
BGE will implement programs using vendor(s) to avoid costly infrastructure with vendor selection via competitive RFI/RFP process
RFI issued on December 21, 2007 and responses due January 25, 2008
RFP to be issued upon Commission order approving programs

6. Summary of Proposed Conservation Programs
6 mass market programs: 5 residential and 1 for small commercial customers
Expanded ENERGY STAR® products
Incentives and awareness building
Online, web-based store
Residential gas and electric heating, cooling and water heating
Incentives and outreach to HVAC manufacturers, distributors and contractors
Focus on installed performance for heat pumps, central air conditioners, gas furnaces
ENERGY STAR Home Performance Platforms – Residential Retrofit
Focus on whole-house, performance-based projects, using the Energy Star® platform
Energy audits (online and in-home)

7. Summary of Proposed Conservation Programs (cont.)
Residential ENERGY STAR New Construction
Incentives to builders and developers to partially offset incremental cost and verification
Infrastructure support for Home Energy Ratings and ENERGY STAR certification
Small Commercial Energy Efficiency
Incentives for energy efficient lighting – lamps/ fixtures, for building/ equipment upgrades
Low Income
Looks at all aspects of residential structure, energy systems, energy use from a holistic perspective
Customized program that includes weatherization, health and safety, appliance replacement
BGE has not proposed programs for mid-sized and large commercial and industrial customers since we believe the competitive market is serving this market

8. BGE’s Primary Meeting Objectives for January 4
Acceptance of BGE’s assumptions or agreed upon revised assumptions
Agreement that the cost effectiveness tests were correctly used
Agreement on test which will be used to determine cost effectiveness
Acceptance that BGE’s programs are cost effective, if no additional data requested to make this determination
A single, complete data request by the end of the day if there are any outstanding questions

9. Avoided Cost Assumptions
Energy
NYMEX on-peak and off-peak forwards for PJM Western Hub through 2012 as of October 12, 2007
2012 pricing held flat thereafter (real decline of 2.5% annually)
Forwards adjusted for premise-level pricing by adding congestion, load shaping, ancillary services and line loss costs
Capacity
RPM results through May 2010
Declining to net cost of new entry (net CONE) by delivery year, assuming new resources and import capability grow faster than demand
pricing held flat thereafter (real decline of 2.5% annually)
RPM results (actual and projected) adjusted for premise-level pricing by adding line loss and PJM’s Forecast Pool Requirement costs
See Attachment 7 of provided file for actual numbers