1. REMITTANCE PROCESSING AT CPS ENERGY Presented BY SYLVIA M ARNOLD DIRECTOR OF CUSTOMER SERVICES SPETEMBER 25, 2007

2. 2 Table of Contents Meet CPS Energy Then and Now Drivers of Change

3. 3 Meet CPS Energy Nations largest municipally owned provider of both electricity and gas Acquired by City of San Antonio in 1942 630,000+ electric customers and and 310,000+ gas customers and growing 8 th largest city in U.S. Provide 20% of Citys operating budget Bills among lowest in nation Highest financial rating of any electric system

4. 4 Meet CPS Energy J D POWER 2007 RESIDENTIAL CUSTOMER SATISFACTION STUDY # 9 in the Nation; #2 in South Region Nationally ranked First Quartile in : Customer Satisfaction Company Image Price and Value Communications Billing & Payments

5. 5 Then and Now

6. 6 What Changed? THEN Limited # of Pay Stations Daily pick-up of cash by armored car Limited functionality of pay stations (no partial or delinquent payments) No credit card or electronic check payments

7. 7 What Changed? NOW Over 100 Pay Agents Payments received electronically Partnered with BillMatrix for credit card and electronic check payments BillPower and Striata for e-billing Electronic ACH Direct On-line Payment files

8. 8 ACH Percent of ACH payments remains constant at.5%. Customers formerly sending check and lists now sending ACHs with addenda records ACH file converted then uploaded. Posted the business day after the payment is posted to CPS Energys bank account

9. 9 ONLINE PAYMENTS Increased from 2.7% to 7.6% Checkfree was our first provider of an electronic file with online payments Currently receive files from six providers Posted between 7 and 9 A.M. the morning file is received

10. 10 DIRECT DEBIT Our product is called AutoPay Percent remains fairly constant. Was 4.2% and is now 4.4% Most convenient way to pay Communicating benefits to customers Automatically posted on the due date

11. 11 PAY AGENTS Over 100 agents in Bexar County Includes all HEBS and Walmarts Increased from 7.5% to 11.7% Can handle both partial payments and delinquent payments Payments posted electronically between 7 and 9 A.M. the following business day.

12. 12 BILL MATRIX Partnership initiated in July 2004 Provides telephone electronic checks, online electronic checks through Bill Matrix website, and credit card payments 4% payments Customer pays usage fee.

13. 13 BILLPOWER E-bill presentment and payment through in-house product First offered in December 2004 Residential Customer Program 6% of payments received Emergis challenge SAP lawsuit pending against Emergis

14. 14 STRIATA Third party provider Pilot program for large commercial customers with multiple accounts Mixed reviews

15. 15 OTHER Still receive most payments through the mail. Have 3 walk-in facilities with tellers Still have drop boxes

16. 16 Payment Statistics – December 2006

17. 17 Payment Options Payment Methods – Jan. 2006 – Dec. 2006 46.2% -U.S. mail 13.0% - In person at CPS Energy service center 11.7% - 107 separate pay agent locations 8.8% - Online banking payments 7.5% - CPS Energy BillPower 5.0% - BillMatrix 4.4% - AutoPay 2.8% - Payment drop box 0.6% - Automated Clearinghouse (ACH) and Wire

18. 18 Costs of Payment Options Cost to Cost to Payment OptionCustomer CPS Energy Pay agent locations $1.00 $0.04 AutoPay0.000.07 BillMatrix2.950.07 CPS Energy BillPower0.000.08 Online banking0.000.12 Payment drop box0.000.14 U.S. mail 0.390.16 ACH~1.000.58 In person at CSC0.001.71 Wire~8.009.09

19. 19 Questions and Comments