1. 1 2013 Hard-to-Reach Standard Offer Program October 9, 2012

2. 2 Where in Texas? AEP is offering the Hard-to- Reach Standard Offer Program (HTR SOP) through its Texas distribution companies which include AEP Texas Central Company (TCC), AEP Texas North Company (TNC) and Southwestern Electric Power Company (SWEPCO)

3. 3 HTR Successes 2012 YTD TCC – 1,947 Customers Served; 4,787 total installations TNC - 365 Customers Served; 800 total installations SWEPCO – 982 Customers Served; 2,423 total installations Lower Budgets in 2012 impact # of Customers Served 2012 numbers are from incentive reports processed/paid through October 3, 2012.

4. 4 HTR Successes (continued) TCC:  8 Counties traditionally Underserved experienced measure installations in 2012  HTR Goal met 3 weeks following opening of Program in 2012 TNC:  25% of program savings achieved in traditionally Underserved Counties in 2012 SWEPCO:  6 Counties traditionally Underserved experienced measure installations in 2012

5. 5 2013 HTR SOP Summary  Incentives Paid for kW and kWh savings  Internet Application and Reporting  HCA, Income Eligibility Form and Customer Education Material  Small Projects  No minimum project size  Reserve funds for 30 days  Multi-Family  Reserve up to $ 25,000 at a time  Single-Family  Reserve up to $5,000 at a time

6. 6 2013 KEY CHANGES  Underserved Counties for TNC and SWEPCO have been revised, listed in 2013 HTR Manual  Underserved Measures have been reinstated for 2013  Deemed Savings have been revised for 2013  Work schedules required for Project Sponsors completing Duct Efficiency and Infiltration measures in Single Family projects  Incentive Reports may no longer be submitted the 1st 15 days of each month  All installations must be submitted on an Incentive Report within 45 days of the installation  All host customers must be supplied approved customer education material  Changes to the Host Customer Agreement and Acknowledgement Form to include all Pre and Post CFM readings for Duct Efficiency and Air Infiltration measures and “R” Value of Existing Ceiling Insulation.  Residential dwellings or additions built (completed) after January 1, 2011 do not qualify for the Program

7. 7 2013 KEY CHANGES (continued)  CFL measure not allowed in SWEPCO Hard-to-Reach  All ceiling insulation installations must affirm that an insulation installation certificate was permanently affixed near the attic opening  An updated duct tool spreadsheet has been added to the database  Failure to complete prescriptive requirements will result in a total Measure failure regardless of the CFM reading  Homes cooled with window air conditioning units exclusively must be reported as “gas” heat. Electric space heaters are considered “plug-in” load and do not make the home eligible for electric heating type in this program (Air Infiltration and Ceiling Insulation measures)  The Air Infiltration Deemed Savings were revised January 2012 to include an upper limit of 4 CFM 50 per square foot of house floor area pre-retrofit infiltration rate and this limit will be enforced  All use of marketing, including social media, must be approved by AEP

8. 8 HTR SOP INCENTIVE BUDGETS Budget Limit per PS  TCC $ 953,417$ 75,000  TNC $ 162,719$ 30,000  SWEPCO $ 715,772$100,000

9. 9 How Do I Participate?  Review Program Manual  Review SOP Agreement  Complete and review on-line application  Submit application via internet  If applicable, send testing procedures within 24 hours of submitting application

10. 10 What Happens Next?  Applications will be reviewed based on receipt of all required information  Once eligibility has been verified and application pre-approved, enter into a agreement with AEP to install eligible Measures  Refer to Program Manual for additional information

11. 11 Project Sponsor Requirements A Project Sponsor must have:  Adequate insurance (mailed or e-mailed directly to appropriate Program Administrator by insurance agency)  All appropriate licenses  References  Evidence of technical and managerial capabilities and experience  AEP approved customer education material to be distributed to all host customers

12. 12 Incentive Payments & Example

13. 13 Incentive Payment Structure  Four levels, to encourage Project Sponsors:  Installing Standard Single-Family dwelling Measures  Installing Standard Multi-Family dwelling Measures  Installing historically Underserved Measures  Installing Measures in certain historically Underserved Counties kW kWh StandardSingle-Family$360$0.11 Standard Multi-Family$325$0.10 Underserved Measures$400$0.13 Underserved Counties$440$0.15

14. 14 Underserved Counties - TCC ATASCOSAEDWARDSKINNEYUVALDE BEEFRIOLA SALLEVAL VERDE BROOKSGOLIADLIVE OAKWHARTON CALDWELLGONZALESMAVERICKWILSON COLORADOGUADALUPEMCMULLENZAPATA DE WITTJACKSONMEDINAZAVALA DIMMITJIM WELLSREAL DUVALKENEDYREFUGIO

15. 15 Underserved Counties - TNC BRISCOEFOARDKNOX CALLAHANHALLMOTLEY CHILDRESSHARDEMANNOLAN COTTLEHASKELLSHACKELFORD DICKENSJONESSTONEWALL EASTLANDKENT THROCKMORTON FISHERKINGWILBARGER

16. 16 Underserved Counties - SWEPCO CHILDRESSDONLEYFRANKLIN HOPKINSRED RIVERSHELBY SMITHVAN ZANDTWHEELER

17. 17 Incentive Payment Example Install Measures resulting in savings of: 30 kW 75,000 kWh Incentive Payment: $360/kW$0.11/kWh Total Incentive: $19,050 (before any limits)

18. 18 Incentive Payment Limits Load Factor Caps:  For all combined kW and kWh incentive payments, incentive is limited to: $920 per kW

19. 19 Application Process

20. 20 Create Application  Register on Program website  Complete Project Sponsor Details  Sponsor Profile  Subcontractor Information  Project Description  Qualification Documents  Insurance Information

21. 21 Application Schedule  1 st Day to register  October 18, 2012  Submit applications  December 4, 2012  Implementation begins  February 5, 2013  Must have approved application status  Must have 2013 HCA’s  Must have a budget reservation

22. 22 Multi-Family Projects  Site  Measures  Work Schedule  Duct Description  Individually-metered  $25,000 Budget Reservation  Program Administrator can increase reservations for completion of project per funding availability

23. 23 Identify Project Opportunities  Verify customer eligibility  Original customer signature and date on Income Eligibility Form  Original customer signature and date on Host Customer Agreement & Acknowledgement (HCA) form

24. 24 Install Measures  Reserve funds via internet  Install Measures  Original customer signature and date HCA form to verify completion  If applicable, supply pre and post CFM readings and “R” Value of Existing Ceiling Insulation on HCA.  Provide customer with Approved Educational Materials

25. 25 Reporting  Monthly reporting via internet  Inaccurate reporting results in failures  Un-submitted Measure installations over 45 days old will lock out reservations feature  AEP will process inspection-adjusted Incentive Reports within 45 days under normal circumstances

26. 26 Installation Inspections  Random sample of Measure installations  Verify that number of installed Measures equals number of reported Measures  Verify Measure is installed and capable of performing its intended function (10 yr measure life expectancy)  Verify that Measures qualify and that installation standards were followed

27. 27 2012 Program Issues  Inaccurate pre assessments, i.e. incorrect levels of existing ceiling insulation reported  HCA’s and Installations done prior to application approval  Submitting incomplete HCA forms  Failure to complete daily work schedule  Multi-Family/Single-Family reservations (only one open at a time)  Use of unapproved marketing material. All marketing material must be approved, including social media  Failure to report measure installation within 45 days of the installation date

28. 28 2012 Program Issues (continued)  Customer educational material not being supplied  Must inform customer of inspection possibility  Provide best daytime contact phone #’s  Measures installed should provide an expected life of at least 10 yrs with the exception of CFLs. The following are deemed unacceptable  Taping attic access doors and filter access panels  Plumbing penetrations not covered effectively or with non-rigid material  Supply registers not removed to be sealed nor serviced from attic space  Caulking reported but not found in rooms specified (door frames, baseboards, windows)

29. 29 Program Website Refer to www.aepHTRsop.com for:  SOP schedule  Latest program announcements  Available funding  FAQ’s  Program Manual  Program contact information

30. 30 AEP Contact Information  TCC – Vee Strauss  Phone: 361.574.2252  E-mail: svstrauss@aep.com  TNC – Steve Mutiso  Phone: 325.674.7287  E-mail: smmutiso@aep.com  SWEPCO – Jeff Thigpen  Phone: 318.673.3372  E-mail: jdthigpen@aep.com

31. 31 Comments and Questions……………….