1. E MISSIONS R EDUCTIONS SB5 G RANT P ROGRAM P RESENTED TO THE TERP B OARD A UGUST 4, 2004

2. 1. Statutory Requirements Background Electric Efficiency 2. PUC Responsibilities SB 5 and SB 7 3. Quantitative Results Energy Savings & Emissions Reductions

3. B ACKGROUND G ENERATION 11 13 21 16 22 23 49 38 42 31 54 27 26 25 18 24 19 17 41 52 48 39 20 40 32 35 34 43 33 46 37 86 30 103 112 45 55 53 50 59 113 57 51 105 108 89 88 100 101 110 72 82 60 44 47 Harris County 2 3 4 5 7 8 9 12 14 15 6 10 28 29 62 96 93 99 61 68 98 102 91 Ellis County 04-15-04 56 36 90 81 SPP WECC ERCOT SPP SERC 1 64 80 69 92 84 109 63 97 104 111 106 107 94 114 65 77 75 87 58 Kiowa, OK 73 71 66 67 70 74 76 78 95 Wind site Undetermined (ERCOT) 83 Brazoria County Jefferson County M1 116 115 117 118 119 120 121 122 123 124 125 126 127 128129 130 131 132 133 134 135136 137 138 79 6 Under construction = 2,483 MW 68 Generation projects = 29,375 MW 14 Generation announced = 7,108 MW 15 Delayed = 8,212 MW 11 Cancelled = 7,349 MW 24 Facilities: 7,296 MW mothballed; 1,211 MW retired Travis County Tarrant and Dallas Counties 85

4. SB 5 (2001 session) requires PUC to conduct grant program to help meet emissions reduction shortfall, in non-attainment and affected counties, by reducing electric demand and peak loads SB 5 G RANT P ROGRAM

5.  Utilities in non-attainment areas and affected counties apply for grants  Utilities may use standard offer or market transformation programs  Funded from SB 5 revenues  SB 5 requires calculation of reduction in air emissions from SB 5 and SB 7 programs SB 5 G RANT P ROGRAM

6.  Retail competition in ERCOT began January 1, 2002 for investor-owned utilities ( Senate Bill 7 – 1999 session )  SB 7 also requires utilities to conduct energy-efficiency programs SB 7 E NERGY E FFICIENCY

7.  integration of 24 different federal data sources on power plants and power companies  power plant emission rates, historical relationships between the areas of power production and areas of consumption, and the primary fuel type utilized to generate electricity  Energy Information Administration generation data to generate the value of pounds per megawatt-hour (lbs/MWh) that is a direct correlation between electrical generation and environmental quality EPA - EGRID Emissions & Generation Resource Integrated Database

8. SB 5 P ROJECTS F UNDED Commercial Lights & Air Conditioning Load-Management Energy Star Homes Residential Air Conditioning & Refrigerators Vending Misers Exit Sign L.E.D. Lights Reflective Roofs

9. SB 5 G RANT R ESULTS $3 Million Awards  249 Tons NOx Reductions  Equal to Removing from the Roadway – 47,600 Newer Motor Vehicles  Net Cost - $10,986 / ton NOx Avoided  Value of Saved Energy $5,311,222

10.  4,581 Tons NOx Reductions  Equal to Removing from the Roadway –875,000 Newer Motor Vehicles  Net Cost - $9,748 / ton NOx Avoided  Value of Saved Energy $80,125,788 SB 7 R ESULTS $35 Million Expenditures