www.competitive-energy.com 866.408.4591

CES Overview of Services for

MaineHealth & Maine Medical

Center

Competitive Energy Services

May 23, 2014

Presentation Agenda

CES Overview

Accomplishments for MMC / MaineHealth

Selected Case Studies

Procurement strategy

2

Competitive Energy Services 3

An independent energy services firm

800+ clients; $2 billion in energy spend

Industrial, institutional, governmental, commercial

Proud Maine business

Local resources to provide responsive services

Clients across the US and Canada

Supplier-neutral, product neutral

Always working on behalf of our clients

Transparent fees

Customized Solutions

Clients choose from Procurement, Full Service or Consulting options

Experience 4

Headquartered in Portland, Maine

30+ employees based in Maine covering account management, pricing, analytics, consultation

Serving healthcare industry since 2001

Professional advice for all energy issues including utilities, utilization, demand side initiatives, risk, budget, finance, sustainability, commodities, etc.

Local expertise and availability

Market Monitoring

Focused on markets, economics, analysis, details, granularity

Nine person analytical team and seven Account Managers

Real-time market information

ICE, Bloomberg, RTO’s/ISO’s, Pipelines

Electricity, Natural Gas and Liquid Fuels priced daily

CNG and Biomass are monitored as needed

Constant field access and knowledge

By minute, hour, daily reads and views

Produce CES Market Summary, a weekly analysis of the energy markets

Write weekly blogs on current and pertinent topics for clients

Custom database

Specific to CES and its customers

CES Online Portal is currently being updated and will be available in its new form, the CES Dashboard, September 2014 at no additional cost to our clients.

5

Selected Clients

Healthcare Eastern Maine Healthcare System -

all members including: Acadia Hospital Eastern Maine Medical Center Inland Hospital Maine Coast Memorial Hospital MDI Hospital Redington Fairview Hospital

Cottage Hospital Covenant Health System Harrington Memorial Hospital Heywood Memorial Hospital Martin’s Point Healthcare York Hospital

Non-Healthcare Huhtamaki/Chinet Co.

New Balance Athletic Shoe

Hannaford Bros. Supermarkets

Pratt & Whitney

University of Maine

LL Bean

State of Maine

Ethan Allen

Adobe

Texas Instruments

Dartmouth College

University of Massachusetts

City of Portland

6

No Typical Strategy

CES understands each client’s: Operations

Holistic energy portfolio understanding

Integral component of Client’s team

Risk Tolerance Locked vs. open positions across all energy

products

Daily price vs. futures market

How much product and/or dollars at risk?

Budgetary concerns Timing of budgets, outlook term, management

priorities

7

CES Suite of Services

Long-term energy and risk management strategies as

part of a master planning process

Alternative Fuel and Conversion Analysis

Development and management of energy budget

Evaluation of efficiency measures and assistance with

grant applications

Greenhouse gas benchmarking and management

Evaluation of onsite generation including renewables

Formal and CES Self-Help demand response

Regulatory and tariff negotiations

Fuel arbitrage

Other “On Call” energy services as requested

Procurement of electricity, natural gas, heating oil,

residual oil, propane, biomass, RECs, carbon offsets

Evaluation of load profile and risk tolerance

Strategy design and implementation

Continuous market monitoring, including weekly

energy market summary

Supplier and utility communication

Supplier Contract Negotiation/execution

Bill audits and cost recovery

8

Full Service Procurement

9

CES Accomplishments

with MMC / MaineHealth

Current MaineHealth status

Maine Medical Center

New England Rehabilitation Hospital

Scarborough Surgery Center

Pen Bay HealthCare

Pen Bay Medical Center

Quarry Hill

Kno-Wal-Lin

Knox Long Term Care

HomeHealth - Visiting Nurses of Southern Maine

Lincoln County Health Care, Damariscotta

Maine Mental Health Partners, South Portland

Maine Physician Hospital Organization (MMC Realty)

NorDx

Southern Maine Health Care, Biddeford & Sanford

Spring Harbor, Westbrook

St. Andrews Hospital, Boothbay Harbor

Synernet (MMC Realty)

Stephens Memorial Hospital, Norway

Waldo County Healthcare, Belfast

MaineGeneral Health, Augusta

Mid Coast Hospital, Brunswick

10

Full Service Procurement

Consulting

MaineGeneral – alternative fuel analysis

Mid Coast – utility tariff negotiation

History with MaineHealth

MMC

Client since 2001

21 commodity contracts for EL, NG, #2 oil

Pen Bay Healthcare

Client since 2003

26 commodity contracts for EL, #6 oil, propane

MaineHealth (Spring Harbor, SMMC, Mid Coast)

Clients since 2007

51 commodity contracts Elec, NatGas, Oil #2 and #4

11

MMC Electricity Contracts 12

Short Term Contracts In

Declining Market

Focus On:

Year-Over-Year Savings

Budget Certainty

Potential for future savings

Longer Contract Terms At

Market Low

2 yr term

MMC Natural Gas Contracts 13

Short Term Contracts to

take advantage of

Market

Focus On:

Year-Over-Year Savings

Budget Certainty

Potential for future savings

Longer Contract Terms At

Market Low

2 yr term

Pen Bay Electricity Locks 14

MaineHealth Electricity Locks 15

MaineHealth Natural Gas locks 16

17

Selected Case Studies

Case Study:

MaineGeneral Alternative Fuels

Alternative Fuels Evaluation For New Hospital

Detailed report on alternatives including soliciting bids for alternatives including: LNG, CNG, propane, #2 oil, pipeline natural gas

Recommended propane backup to pipeline natural gas

Assisted SMRT with energy calculations

Active Fuel Arbitrage:

Propane used on days with high spot natural gas pricing ‘13/’14 winter

18

Client Profile:

Client Since 2008

Contract Type: Procurement & Consulting

Case Study:

Mid Coast Hospital

Fuel Conversion Assistance #2 oil to natural gas

Utility Negotiations Maine Natural Gas: CES has twice

negotiated special rate discounts off PUC approved tariffs

> $250,000 Savings 2008-2013

> $350,000 Savings 2014-2023 (Estimated)

19

Client Profile:

Client Since 2007

Contract Type: Procurement & Consulting

Case Study:

Maine Medical Center

Electricity & Natural Gas Procurement Over 50 million kWh per year

Over 250,000 MMBtu per year

Development of detailed annual energy budgets

Design and implementation of strategic energy procurement plan

Contract terms and conditions negotiations with suppliers

Fuel conversion analysis and Bill Audit

Cogeneration and Boiler ROI Analysis

20

Client Profile:

Client Since 2006

Contract Type: Monthly Retainer, Full Service

Case Study:

EMMC Cogen

4.5 MW natural gas-fired CHP unit

CES performed the economic analysis and financial modeling

CES represented and negotiated terms with utilities and Maine PUC

Worked with EMMC and the local utility to secure an interconnection agreement

Nominated and secured all natural gas and ultra-low sulfur diesel (ULSD)

Continues to help EMMC realize savings by designing and implementing a detailed fuel hedging strategy for the CHP

21

Client Profile:

Client Since 2003

Contract Type: Consulting and Procurement

Case Study:

Harrington Hospital

Oil to Natural Gas Conversion

Fuel savings of over $100,000

Lighting Retrofit

Helped secure $43,000 rebate

Retrofit had a net present value of

$95,000

Retrofit financed through utility bills

Currently Evaluating Solar Options

22

Client Profile:

Client Since 2004

Contract Type: Full service

23

Procurement

Procurement Strategies

Understand your risk tolerance Risk vs reward

Costs for insurance

Make a market assessment High prices

How high?

Relief

Market Intelligence/Forecasts

Finance – internal discussion Budget Assurance

Political Management

Product Discussion Electricity – fixed, heat rate,

block and index, index

Natural Gas – fixed, dailies, combinations

Oil/Propane – spot and future market adders

All products – hedge, hybrid vs spot

Terms Long

Mid

Short

24

CES procurement strategy

MMC Example 1

MMC natural gas strategy (2014 & 2015)

25

Lock 1 Trigger 1 Trigger 2

Locked 7/30/2013 6/28/2013 50% 50% wtd avg price with

Basis NYMEX Price Volume Discount Price Volume Discount Price Volume Discount price basis

Oct-14 $ 1.852 $ 3.934 12,182 $ 3.934 $ 5.79

Nov-14 $ 1.852 $ 3.958 $ 3.839 8,029 3% $ 3.721 8,029 6% $ 3.780 $ 5.63

Dec-14 $ 1.852 $ 4.108 $ 3.985 9,100 3% $ 3.862 9,100 6% $ 3.923 $ 5.78

Jan-15 $ 1.852 $ 4.201 $ 4.075 10,003 3% $ 3.949 10,003 6% $ 4.012 $ 5.86

Feb-15 $ 1.852 $ 4.186 $ 4.060 9,014 3% $ 3.935 9,014 6% $ 3.998 $ 5.85

Mar-15 $ 1.852 $ 4.150 $ 4.026 8,712 3% $ 3.901 8,712 6% $ 3.963 $ 5.82

Apr-15 $ 1.852 $ 3.950 $ 3.832 7,650 3% $ 3.713 7,650 6% $ 3.772 $ 5.62

May-15 $ 1.852 $ 3.967 $ 3.848 6,734 3% $ 3.729 6,734 6% $ 3.788 $ 5.64

Jun-15 $ 1.852 $ 3.978 $ 3.859 5,366 3% $ 3.739 5,366 6% $ 3.799 $ 5.65

Jul-15 $ 1.852 $ 4.020 $ 3.899 4,731 3% $ 3.779 4,731 6% $ 3.839 $ 5.69

Aug-15 $ 1.852 $ 4.040 $ 3.919 4,663 3% $ 3.798 4,663 6% $ 3.858 $ 5.71

Sep-15 $ 1.852 $ 4.030 $ 3.909 5,048 3% $ 3.788 5,048 6% $ 3.849 $ 5.70

Oct-15 $ 1.852 $ 4.051 $ 3.929 6,091 3% $ 3.808 6,091 6% $ 3.869 $ 5.72

CES procurement strategy

MMC Example 2 26

FY2012 Actual

10/6/2010 10/11/2010 11/12/2010 2/24/2011 9/2/2011 2012 Savings

10:00 AM Lock 1 Vol 1 Discount 1 Lock 2 Vol 2 Discount 2 Lock 3 Vol 3 Discount 3 Lock 4 Vol 4 Discount 4 Average vs. 2011

Oct-11 4.602 5.09 4,154 0% 4.81 4,154 5.0% 4.56 4,154 10.0% 4.30 4,154 15.0% 4.69 31%

Nov-11 4.870 5.09 5,708 0% 4.81 5,708 5.0% 4.56 5,708 10.0% 4.30 5,708 15.0% 4.69 11%

Dec-11 5.209 5.09 6,269 0% 4.81 6,269 5.0% 4.56 6,269 10.0% 4.30 6,269 15.0% 4.69 11%

Jan-12 5.379 5.09 2,281 0% 4.81 2,281 5.0% 4.56 2,281 10.0% 4.30 2,281 15.0% 4.69 11%

Feb-12 5.360 5.09 1,771 0% 4.81 1,771 5.0% 4.56 1,771 10.0% 4.30 1,771 15.0% 4.69 11%

Mar-12 5.235 5.09 6,044 0% 4.81 6,044 5.0% 4.56 6,044 10.0% 4.30 6,044 15.0% 4.69 11%

Apr-12 4.990 5.09 4,480 0% 4.81 4,480 5.0% 4.56 4,480 10.0% 4.30 4,480 15.0% 4.69 11%

May-12 4.990 5.09 3,825 0% 4.81 3,825 5.0% 4.56 3,825 10.0% 4.30 3,825 15.0% 4.69 11%

Jun-12 5.030 5.09 3,463 0% 4.81 3,463 5.0% 4.56 3,463 10.0% 4.30 3,463 15.0% 4.69 11%

Jul-12 5.080 5.09 3,329 0% 4.81 3,329 5.0% 4.56 3,329 10.0% 4.30 3,329 15.0% 4.69 11%

Aug-12 5.120 5.09 3,606 0% 4.81 3,606 5.0% 4.56 3,606 10.0% 4.30 3,606 15.0% 4.69 11%

Sep-12 5.140 5.09 3,632 0% 4.81 3,632 5.0% 4.56 3,632 10.0% 4.30 3,632 15.0% 4.69 11%

Actual 5.063 5.09 48,562 0% 4.81 48,562 5.0% 4.56 48,562 10.0% 4.30 48,562 15.0% 4.69 14%

Target 5.06 48,562 0% 4.81 48,562 5.0% 4.56 48,562 10.0% 4.30 48,562 15.0% 4.68 14%

FY2012 Note: ≈38,000 MMBtu used in Jan/Feb at the Bramhall and Brighton dual fuel acts locked on 12/1/2011 at $7.50/MMBtu.

FY2013 Actual NYMEX Settlement

12/6/2011 1/10/2012 1/10/2012 1/19/2012 11/2/2012 2013 Savings

11:50 AM Lock 1 Vol 1 Discount 1 Lock 2 Vol 2 Discount 2 Lock 3 Vol 3 Discount 3 Lock 4 Vol 4 Discount 4 Average vs. 2012

Oct-12 3.78 3.8 4,154 0% 3.8 4,154 0% 3.265 4,154 5% 3.02 4,154 10% 3.47 26%

Nov-12 3.92 3.8 5,708 0% 3.8 5,708 0% 3.265 5,708 5% 3.471 5,708 10% 3.58 24%

Dec-12 4.21 3.8 6,269 0% 3.8 6,269 0% 3.265 6,269 5% 3.77 6,269 10% 3.66 22%

Jan-13 4.34 3.8 2,281 0% 3.8 2,281 0% 3.265 2,281 5% 3.77 2,281 10% 3.66 22%

Feb-13 4.32 3.8 1,771 0% 3.8 1,771 0% 3.265 1,771 5% 3.77 1,771 10% 3.66 22%

Mar-13 4.28 3.8 6,044 0% 3.8 6,044 0% 3.265 6,044 5% 3.77 6,044 10% 3.66 22%

Apr-13 4.20 3.8 4,480 0% 3.8 4,480 0% 3.265 4,480 5% 3.77 4,480 10% 3.66 22%

May-13 4.22 3.8 3,825 0% 3.8 3,825 0% 3.265 3,825 5% 3.77 3,825 10% 3.66 22%

Jun-13 4.25 3.8 3,463 0% 3.8 3,463 0% 3.265 3,463 5% 3.77 3,463 10% 3.66 22%

Jul-13 4.29 3.8 3,329 0% 3.8 3,329 0% 3.265 3,329 5% 3.77 3,329 10% 3.66 22%

Aug-13 4.31 3.8 3,606 0% 3.8 3,606 0% 3.265 3,606 5% 3.77 3,606 10% 3.66 22%

Sep-13 4.32 3.8 3,632 0% 3.8 3,632 0% 3.265 3,632 5% 3.77 3,632 10% 3.66 22%

Actual 4.179 3.80 48,562 9% 3.80 48,562 9% 3.27 48,562 22% 3.67 48,562 12% 3.63 23%

Target 4.18 48,562 0% 4.18 48,562 0.0% 3.97 48,562 5.0% 3.76 48,562 10.0% 4.02 14%

FY2013 Note: Excludes Jan/Feb at Bramhall and Brighton. Jan/Feb FY2013 strike to be set separately at $7.50/MMBtu for both Bramhall and Brighton.

• 2012 & 2013

• 100% Hedged For

FY2013

• $200,000, 23%,

Year-Over-Year

Savings

Annual Savings $ %

2011 Savings vs 2010 $ 235,205 18%

2012 Savings vs 2011 $ 148,426 14%

2013 Savings vs 2012 $ 205,150 23%

Risk Management

Benchmarks

CES Budget

Previous contract

CES forecast based on

market knowledge

27

Maine Medical Center

NG Bid comparison to budgetBasis rates WTD AVERAGE

FY14 budget 4.242$

FY13 budget 1.555$

Metromedia Lock, 24 mo 1.852$

Basis costs TOTAL

FY14 budget cost 699,763$

FY13 budget cost 256,563$

Metromedia Lock, 24 mo 305,480$

Basis Difference from FY TOTAL

FY14 (394,283)$ under FY14 budget

FY13 48,917$ over FY13 budget

FY14 Commodity - 100% UNLOCKED WTD AVERAGE

NYMEX Futures as of 6/26/13 3.98$

Commodity Cost (w/ current NYMEX) 656,292$

TOTAL COST - FY14

Total Cost (w/ current NYMEX &

Metromedia Lock) 961,772$

Effective All-In Rate 5.83$

MaineHealth Portfolio Strategy

Evaluate aggregation

CES will chair quarterly meetings

Share best practices

Review markets

Review strategy

On-site meetings at each facility as needed

28

Risk Assessment & Strategies 29

CES will factor in system-wide goals and objectives

Overall energy initiatives (efficiency, demand side, sustainability)

Aggregated procurement

CES will examine the value of aggregating vs. individual hospital campuses

On a voluntary basis only

Individual Procurement strategies will reflect the risk tolerance specific to each entity

What is the desired outlook for budget certainty? ( e.g. 1 year outlook vs. 3 years)

To what extent does usage need to be hedged going into each fiscal year? What is the risk tolerance for open positions?

Sample Energy Strategy

Maine Medical Center

MaineGeneral

Pen Bay Medical Center

Southern Maine Healthcare

Mid Coast Medical Center

HomeHealth - Visiting Nurses of Southern

Maine

Lincoln County Health Care

Maine Mental Health Partners

Maine Physician Hospital Organization

NorDx

Spring Harbor Hospital

St. Andrews Hospital

Synernet (MMC Realty)

Stephens Memorial Hospital

Waldo County Healthcare

30

Hospitals to Use Full Scope Scope – TBD

31

Markets

Focus On Natural Gas Basis

Natural Gas Markets 32

Record cold this past winter for Midwest

High withdrawals

Lower production

Currently 43% below 5-year average for gas in storage

Natural Gas Basis 33

Basis is the price differential at

the NYMEX hub at Erath,

Louisiana, and at your utility i.e.

the cost to transport the gas

through interstate pipelines from

the wellhead to your utility.

It includes supplier costs such as

credit, margin, scheduling and

balancing services.

Natural Gas Basis 34

Constraints on pipelines from

the South to the 2 major New

England hubs Tennessee Gas Pipeline Zone 6 (TZ6)

Algonquin Citygates (AGT)

Run-up in basis prices since

December 2011

New England

Gas pipeline infrastructure

Existing interstate pipeline

infrastructure developed based

on gas flows predominantly

from

US Gulf Coast

Western Canada Sedimentary

Basin

Eastern Canada off shore

New Shale Developments in

Northeast impacting gas flows

and basis

Marcellus

Utica

Horton Bluff

35

Proposed Pipeline Solutions

Algonquin

AIM – 313,000 to 443,000

2016 (FERC Certificate)

Tennessee Gas Pipeline Co.

500,000 scalable to 1.2 bcf per day

2017?

PNGTS

130,000 to 180,000 mmbtu per day

2016

36

Natural Gas Spot Prices 37

EAST Day Ahead Indices

Hub Wtd Avg

Index Change($) Change(%) High Low Vol(MMBTU)

No. of Trades

No. of Companies

Weekly Avg Monthly Avg Begin End

Algonquin Citygates 78.6393 21.14 36.77% 93.0000 59.0000 96,700 29 20 68.0676 22.7161 01/23/14 01/23/14

Beverly Salem 79.0638 27.91 54.57% 90.0000 63.0000 47,000 12 10 65.1079 47.2655 01/23/14 01/23/14

Clarington 8.8569 2.85 47.53% 10.5000 8.2500 25,500 5 4 7.4302 5.1390 01/23/14 01/23/14

Col Gas TCO 5.0592 0.34 7.32% 5.0975 4.9700 680,000 111 38 4.8868 4.4570 01/23/14 01/23/14

Col Gas TCO-Seg Pool 5.0319 0.32 6.88% 5.0800 5.0300 7,800 2 3 4.8700 4.4410 01/23/14 01/23/14

Dominion-South 5.3664 0.34 6.76% 5.7000 4.9900 574,500 117 44 5.1964 4.1627 01/23/14 01/23/14

Dracut 86.1106 30.74 55.52% 91.5000 62.0000 86,800 12 10 70.7398 42.6544 01/23/14 01/23/14

Iroquois (into) 79.5284 19.54 32.58% 92.5000 50.0000 109,000 41 25 69.7576 21.3911 01/23/14 01/23/14

Iroquois-Z2 70.4832 -0.90 -1.27% 98.0000 58.0000 50,700 16 16 70.9348 21.9368 01/23/14 01/23/14

Leidy-Transco 5.0658 0.40 8.55% 5.5000 4.6000 69,000 17 16 4.8662 3.4332 01/23/14 01/23/14

Millennium EP 7.4000 1.31 21.50% 7.5000 6.5000 6,000 3 5 6.7454 4.4536 01/23/14 01/23/14

REX E-ANR 7.2016 1.39 23.97% 8.5000 6.5000 120,300 18 12 6.5054 4.9532 01/23/14 01/23/14

REX E-MidW 7.1027 1.28 22.02% 9.0000 6.5000 155,900 22 13 6.4618 5.0463 01/23/14 01/23/14

REX E-PEPL 7.7833 1.76 29.30% 8.5000 6.8500 30,000 3 2 6.9015 5.0949 01/23/14 01/23/14

TETCO-M2 5.6000 0.25 4.75% 5.6000 5.6000 3,000 1 2 5.4731 4.9744 01/23/14 01/23/14

TETCO-M2 (receipt) 5.0654 -0.02 -0.42% 5.2500 4.9500 55,100 10 11 5.0762 4.3898 01/23/14 01/23/14

TETCO-M3 73.7421 1.93 2.69% 98.5000 53.0000 206,500 63 32 72.7764 20.3726 01/23/14 01/23/14

TGP-Z4 Marcellus 4.6045 0.30 7.02% 4.7300 4.5000 28,000 7 11 4.4535 3.3403 01/23/14 01/23/14

TGP-Z4 Sta-219 5.2001 0.33 6.80% 5.3500 5.0500 178,900 43 19 5.0345 4.3572 01/23/14 01/23/14

TGP-Z4 Sta-313 5.1456 0.38 8.05% 5.3500 4.8000 55,800 11 10 4.9539 4.1696 01/23/14 01/23/14

TGP-Z6 200L 82.6535 27.01 48.55% 92.0000 65.0000 32,900 10 9 69.1465 23.7678 01/23/14 01/23/14

Transco-Z5 (non-WGL) 85.0896 -35.12 -29.21% 120.0000 65.0000 94,300 37 23 102.6486 26.9460 01/23/14 01/23/14

Transco-Z6 (non-NY) 79.8426 -43.66 -35.35% 120.0000 62.5000 52,100 18 15 101.6730 26.8945 01/23/14 01/23/14

Transco-Z6 (NY) 81.9877 -38.71 -32.07% 120.0000 67.0000 89,300 30 19 101.3427 27.5001 01/23/14 01/23/14

Northeast

World Record

Prices!

38

Natural Gas Conclusions

New shale gas discoveries and drilling techniques should keep commodity prices

low in the near and mid term

Northeast currently has inadequate infrastructure to move supply

Major projects projected to have impact ~2017

Risks include:

Increased regulation to mitigate environmental issues surrounding new fracking

techniques

Increased demand, power generation, transportation, manufacturing and LNG exports (NEPOOL – over 50 percent natural gas power gen)

Lack of Infrastructure to move gas into demand centers

39

CES Summary

CES is a full-service energy advisory firm

All energy commodities - electricity, natural gas, fuel oils, biomass, REC’s

Maine-based company with North American footprint - fast response time

Represent clients with suppliers, utilities, and governmental agencies

Sustainability, Efficiency and Grant Assistance

Customized Energy Services that have helped our clients save millions of dollars

www.competitive-energy.com | Portland, ME & Topsfield, MA

Phone 866.408.4591 | Fax 866.743.4968

Competitive Energy Services 40