CURRENT Group, LLC • 20420 Century Boulevard • Germantown, MD 20874 • 301-944-2700

CURRENT Group, LLCNARUC Panel: Experience with Getting Retail and Wholesale

Incentives Aligned for CustomersNovember 11, 2007

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Leader in Smart Grid services

Integrated communications, sensors, system management, and analytic software solution

Largest global Smart Grid services deployment in progress with Oncor (f/k/a TXU) Electric Delivery in Dallas/Ft. Worth (1.8M homes, 200K businesses, 450K Smart Grid elements)

300 Employees worldwide

Winner of Red Herring’s Top 100 Private Companies for 2006

Winner of 2006 Platts Global Energy Commercial Technology of the Year award of the Year Award

Investors include:

About CURRENT Group, LLC

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Oncor (formerly TXU Electric Delivery)

CURRENT awarded the Nation’s largest BPL / Smart Grid deployment and services agreement ever by Oncor Electric Delivery

Services Include:

– Smart Metering – over 1.8 million meters in Dallas/Fort Worth

– Transformer Deterioration & Overload Detection – 400,000+ transformers

– Outage Detection and Restoration

– Substation Connectivity

– Sale of retail communications services

Actively reading meters and billing customers using system

Present Status

– Over 100,000 homes passed

– May 2007 Texas PUC Rule Making defined requirements for an Advance Meter Surcharge

• As a result, Oncor converting to 100% remote connect/disconnect meters in 2008

Dallas Deployment Map

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Why a “Smart Grid”

Smart Grid can improve energy efficiency and reliability

“If we could make the electric grid even 5 percent more efficient, we would save more

than 42 gigawatts of energy: the equivalent of production from 42 large coal-fired

power plants. Those are plants that we would not need to build and emissions that we

would not produce” (Commissioner Wellinghof, U.S. Federal Energy Regulatory

Commission testifying to U.S. Congress, May 2007)

“A peer-reviewed analysis of 11 studies in 2004 indicated a median achievable

economic potential (savings from the intelligent air conditioner and similar devices), of

24% of total U.S. electricity demand . . . Customers equipped with enabling

technologies (automatic price-sensitive thermostats) delivered a response that was

twice as high as those customers who did not have enabling technology.” (Michael

Howard of EPRI testifying to U.S. Congress, May 2007)

The grid is going to have to be updated to handle 20-30% of renewables that many

state renewable portfolio standards are calling for . . . That can be challenging with

intermittent resources such as wind. . . . Turbines have to shut down to protect

themselves when wind hits 60 mph and if wind blows at night the Danes often have to

shut off other generators. (EPRI President Dr. Steven Specker presenting at the 2007

Deloitte Energy Conference)

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CURRENT Smart Grid™ Vision

CURRENT’s Smart Grid

True “Smart Grid”

Robust Network Management

Diagnostic & Diagnostic & Predictive Predictive AnalyticsAnalytics

• Collection/analysis of sensor & grid device data

• Delivered to utilities and its customers in usable form

Enterprise AnalysisEnterprise Analysis

• High speed, low latency

• Two way, symmetrical• IP-based, open

standards

High Performance High Performance CommunicationsCommunications

• Embedded • Distributed• Real time

Advanced SensingAdvanced Sensing

System-wide System-wide Integration Integration of Devicesof Devices

“. . . a power system that can incorporate millions of sensors all connected through an advanced communication and data acquisition system. This system will provide real-time analysis by a

distributed computing system that will enable predictive rather than reactive responses to blink-of-the-eye disruptions.” (EPRI, emphasis added)

“…Communications is a foundation for virtually all the applications and consists of high speed two-way communications throughout the distribution system and to individual customers.” (CA

Energy Commission Report)

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“Future-Proof” Advanced Metering

Monitored by network management system, CURRENT Look®

“Under the Glass” Smart Grid communications technology

Comprehensive functionality 1-minute increment reads On-demand reads Remote software upgrade capability Proactive alarming for “Unusual” events

Demand-response tools Real-time or peak pricing Time-of-use pricing

Greatly reduced service costs Real-time meter data information can avoid truck rolls Real-time power outage and restoration detection

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Meter Instant Read

An “Instant Read” can be performed on a Smart Grid-enabled meter to display real time usage and other data.

Date/Time when the reading was taken

kWh calculated kWh reading from meter

240V Voltage voltage reading from meter

Positive Pulses # of positive pulses measured (used to calculate usage)

Negative Pulses # of negative pulses detected (used to measure and calculate distributed generation level )

Refresh Collects new reading from meter

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Incentives for Demand Response

What’s Missing Now (particularly for residential and small commercial users)

- There is no direct link of savings and value between customer incentive, distribution grid operational value, and capacity value

- There is no method of real-time measurement and verification of DR load reductions by customer, even if the customer is on line during the shed event

- The Generator settlement is based on generic load profile, not actual usage

- There is minimal to no economic benefit for Generators to provide demand response

- Generators have minimal to no incentive because they are paid as if customer has no demand response

Next Steps

- Real-time alignment of retail energy prices with generation and power supply costs

- Base DR opportunities on individual customer’s dynamic base profile information (not generic or sample profiles)

- Develop pricing options and DR incentives that align customer reduction with greatest need

- Reassess value of DR that both is immediately verifiable and creates both capacity and distribution operational benefits

- Decoupling

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Smart Grid - Enabling Dynamic Base Profiles

Definition: A dynamic base profile is an individual customer profile based on daily updated AMR data (15-minute increments)

A Smart Grid is Required:

Real-time access to dynamic base profiles

Real-time measurement and verification of impacts

Advanced meters will enable provision of DR programs as never before

Need greater frequency of meter read capability (e.g., 15 minutes)

Residential, not just C&I customers, can control energy usage

Companies providing DR products will have unlimitedly ability to creatively package services

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Mass Market DR Requires Actual Customer kWh Usage Data

Adoption of DR in mass market will be driven by wholesale pricing/settlements based closely on actual customer kWh usage

Provides appropriate economic incentive for retailers to provide DR

Without retailer incentives, products will not be deployed in areas where customers have advanced meters

Pricing Options for Residential Demand Response Programs

Credits: One-time Enrollment Credit, $25-$100 per household % Discount off total monthly bill:

- based on number of devices (e.g., thermostat, AC, pool pump), e.g. 15% > 5 devices, 10% for 3-4 devices, 5% for 1-2 devices

- based on usage, e.g. $10 for using 10% less energy than previous month

Information Displayed on Bill

Usage: kWh shed = total $$ saved, broken out by peak, mid-peak and non-peakkWh consumption - monthly/annual usage comparison

Distributed Energy: kWh contributed, broken out by peak, mid-peak and non-peak credit for kWh uploaded to electric grid

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Texas Experience

CURRENT is working on DR in the ERCOT market

Structural separation between unregulated generators, regulated transmission of distribution companies, and unregulated retail electric providers (REPs)

Proving more complicated issue than initially thought, but first revisions anticipated in 3Q 2008

Challenges in Texas:

- REPs without DR plans oppose computer programming changes in wholesale settlement process for all REPs if DR is offered by a single REP

- ERCOT IT system, which performs as a third-party clearing house for wholesale settlements between generators and REPs, is not equipped to handle 15-minute (or more frequent) data (which PUCT recently implemented) from more than 50,000 meters – Texas is looking at a deployment of 7 million advanced meters by 2012

- ERCOT budget comes from fee assessed on all consumers, and existing budgets exclude this cost, so PUCT approval would likely be necessary for IT upgrade

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Texas Experience

CURRENT is participating in trials with the Center for Commercialization of Electric Technologies (CCET)

REPs and TDUs still resolving respective responsibilities and system requirements

Smart Grid advancing independently, and with critical benefits beyond DR:

“24/7 Demand Response” - beyond peak times

Network efficiency – utilities no longer have to run “hot” or inefficiently

Shaving 3-5 volts off for millions of end users yields immense savings

Granular Demand Response events on select feeders can help ease grid congestion and improve reliability