1. Colorado Rural Electric Association Energy Innovations Summit Demand Response: Are Customers Ready to Change Their Ways? Confidential October 27, 2014 Dr. Stephen George Senior Vice President Customer Strategy, Planning and Analysis

2. Confidential 2 Energy Software Utilities Services Energy & Chemical Advisory

3. Confidential Energy Expertise across the Globe Atlanta Boston Boulder Chandler Chicago Des Moines Houston Jacksonville Los Angeles Madison Nashville Philadelphia Portland Raleigh Sacramento Salt Lake City San Francisco San Mateo Washington D.C. White Plains Toronto San Francisco London Utrecht Frankfurt Bahrain Cairo Cotonou Abuja Beijing Kuala Lumpur New Delhi Seoul Tokyo Shanghai Bangkok Singapore Global Offices Headquarters Project Offices Representative Offices Planned 2014 Offices Energy and software specialists, many recognized as leaders in the industry 600+ 3

4. Confidential 4 A Diverse Customer Base Utilities Energy Companies Transmission & Distribution Financial & Private Equity Government And many more…

5. Confidential Utility Services 5 Focused Expertise Customer Business Strategy Customer Initiatives Strategy Planning and Design Delivery and Management Evaluation, Measurement & Verification (EM&V) Nexant helps utilities embrace a customer-centric model that aligns demand side programs, and strategic planning to reduce costs, manage risk, improve customer engagement, and achieve superior results.

6. Confidential Customer Strategy, Planning and Analysis (CSPA) We help utilities, regulators and others understand how markets work and what customers want and need We translate that information into successful business strategies, policies and service offerings 6

7. Confidential EE, DR and behavioral conservation planning Potential analysis Portfolio strategy Program design Pricing strategy Design, implementation and evaluation of experiments and pilots Assessment of new technology and service offerings Impact and process evaluations Economic analysis Cost effectiveness analysis Reliability and resiliency improvement impacts Impact of distributed energy resources Integrated resource planning Validated learning (test and learn) Statistical and econometric analysis Market research CSPA’s Areas of Expertise Include 7

8. Confidential Pricing Pay for Performance Load Control Peak time rebate (PTR) programs pay customers for load reductions but do not charge more for load increases No losers, only winners Payments are made using estimates of reference loads based on usage in prior days Numerous studies show that baselines are inherently inaccurate and when average impacts are small, payment error is a very large share of total cost SDG&E, SCE, BGE & Pepco recently implemented default programs but SDG&E and SCE changed to an opt-in program due to high payment error With larger impacts from opt-in enrollment and/or enabling technology, average payment error is much less Been used since the 1960s For A/C load control, there are a growing number of options – switches, PCTs, smart thermostats For the right incentive, customers will agree to 100% cycling, but lower cycling is much more common Some utilities (PG&E) have enrolled large numbers of customers for a small, one-time incentive but most programs make annual payments Customer-purchased smart thermostats (e.g., Nest, EcoBee, etc.) offer the potential for lower cost options in the future Requires teaming with third party suppliers for device control Potential loss of control by utilities An alphabet soup of pricing options – TOU, CPP, VPP, RTP 4 decades of pilots and programs show that customers can and will change their usage pattern in response to time- varying price signals Peak period reductions of 5% to 20% are possible with no enabling technology – reductions of 15% to 30% or more are possible with technology SMUD’s SmartPricing Options pilot showed that 60% to 75% of customers on time varying rates said the rates “helped them save money” compared with 33% on the standard rate ~95% of customers defaulted onto time- varying rate stayed and complaints were minimal Aggregate load reductions were 3 times larger on default rates compared with opt-in rates Are Customers Ready to Change Their Ways? Customers do not “do DR” on their own – but decades of experience indicates that many customers will change their ways for the right DR program 8

9. Dr. Stephen George Senior Vice President Sgeorge@nexant.com Sgeorge@nexant.com 415 948-2328 Nexant, Inc. 101 Montgomery St., 15 th Floor San Francisco, CA 94104 9