Independent Energy Consultants, Inc. Concerns with Direct Energy’s PerformanceDraft Material to Facilitate Discussion

Presented by: Mark Burns CONFIDENTIAL MATERIAL February 1, 2013

                                   

Why the Slow Growth in Enrollment?

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Customer CountCommunity Jul-12 Aug-12 Sep-12 Oct-12 Nov-12City of Elgin 0 8 337 28,496 25,973

NIGEAC 59 6,448 12,489 18,010 15,355Total 59 6,456 12,826 46,506 41,328

Consumption (Kwh)Community Jul-12 Aug-12 Sep-12 Oct-12 Nov-12City of Elgin 0 7,133 182,160 13,326,303 13,598,877

NIGEAC 64,824 5,106,710 11,312,513 12,872,850 8,923,304Total 64,824 5,113,843 11,494,673 26,199,153 22,522,181

PaymentCommunity Rate Jul-12 Aug-12 Sep-12 Oct-12 Nov-12City of Elgin 0.0004 $0.00 $2.85 $72.86 $5,330.52 $5,439.55

NIGEAC 0.0004 $25.93 $2,042.68 $4,525.01 $5,149.14 $3,569.32Total $25.93 $2,045.54 $4,597.87 $10,479.66 $9,008.87

Average Use kWh 1,098.7 792.1 896.2 563.3 545.0

Elgin letters were are allmailed at the same timeif some customers were enrolled in August andother meter reads didn’t permit thatall should have beenenrolled by the 2nd month (Sep). We don’t see any growth until the 3rd month (Oct).

NIGEAC enrollment iseven worse. It’s not until the 4th month do we reach full enrollment.There’s only three reasonswhy this could occur and allare bad. Either Directstill can’t produce reports, orComEd didn’t send youand pay you for theaccounts you were owed, or Direct messed up onSubmitting enrollments.

That pattern doesn’t Exist in the other 100+ programs we’vebrokered with Directand other suppliers.

These average kWh use numbers I calculated look reasonable.

Commission Reporting and Payment for Former Vectren Programs

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On the previous slide we’re asked to believe that it can take 4 months to start a program and here were asked to believe the program commissions end immediately. There are obvious problems here and we need answers not made-up stories. Just be honest with us. If the data is lost and not retrievable, we can tell our clients that and come up with a forecasted means to be compensated for commissions owed. We’ve been doing this for hundreds of programs with many suppliers and commissions always linger for 2-3 months after the end date.

Our Numbers Don’t Match Direct’s?

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Direct Energy’s Year-2 Price Quoting

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*On Peak *Off Peak ATC OnPeak OffPeak Total Total

Date $/MWH $/MWH $/MWH Hours Hours Hours Class 23 Class 24 Load (MWH)

6/1/2013 38.50 23.40 30.11 320 400 720 13831432 858151 14689583

7/1/2013 49.60 27.35 37.88 352 392 744 18347858 1084653 19432511

8/1/2013 45.10 25.35 34.69 352 392 744 24032654 1532258 25564912

9/1/2013 36.90 23.45 29.43 320 400 720 17355290 1114590 18469880

10/1/2013 34.25 22.75 28.44 368 376 744 11770208 745580 12515788

11/1/2013 34.60 24.45 28.95 320 401 721 11173838 692442 11866280

12/1/2013 34.65 25.30 29.52 336 408 744 13960305 858045 14818350

1/1/2014 39.55 30.15 34.60 352 392 744 18913928 1069669 19983597

2/1/2014 35.80 27.65 31.53 320 352 672 14450831 938481 15389312

3/1/2014 37.75 25.91 31.26 336 407 743 12158234 805318 12963552

4/1/2014 36.96 25.54 31.12 352 368 720 11865751 745382 12611133

5/1/2014 37.59 24.12 30.20 336 408 744 11187200 691065 11878265

Fixed Commodity Price 31.96 MWH

Fixed Commodity Price 0.03196 KWH

Adder 0.01630 KWH

Total Fixed Price 0.04826 KWH

* PJM NIHub Day Ahead NIHUB Forward Curve (MWH)

Load (MWH)The process used appearscorrect but the months are incorrect. The 2nd year runs through July 2014. Also, our numbers are slightly different. What is Direct using as their datasource and how “fresh” are the numbers? For example. I received this quote from Direct at 11:34. Your July Contract is shown at $49.60for peak hours, our chart produced slightly later shows $47.14. If produced at 11:34 or earlier it would have been even lower.

We’d like to see a timestampor screenshot w/ time of market prices when your quote was produced.

Offer Runs Through the July 2014 Bill Cycle

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Consumer Education Material for NIGEAC

• Thank you for the draft material.

• After a quick review it appears to be too much of a sales pitch for Direct Energy. We cautioned not to do that.

• It’s supposed to be Educational Material Only

• Talk about Aggregation Process, Customer Options, High Levels of Participation, Significant Savings via Municipal Aggregation, etc.

• Credit should go to Community

• Any sales pitch should be limited to “enrollment remains open, contact Direct Energy to join the program”

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Canfield Township Columbia Customers

• IGS Energy did not enroll “current” Columbia Gas of Ohio customers following the opt-out period.

– Letters were mailed to residents but a computer glitch caused the subsequent enrollment EDI not to be processed with Columbia.

– IGS did enroll the newly eligible COH customers. This masked the issue until Independent Energy Consultants continued to question Direct Energy and IGS Energy on the low enrollment levels.

• IGS Energy is enrolling these customers now and sending a letter to residents and community officials to explain that ~ 400 accounts were delayed in starting.

• IGS Energy will be crediting these customers with a refund that makes up for the difference between the SCO rate and what they should have been charged if properly enrolled.

• Direct Energy should have submitted drop notices to Columbia (and Dominion East Ohio) for the accounts that were being turned over to IGS Energy.

• After discussion with COH it was discovered that Direct is still serving these customers, albeit, without a contract. That’s tantamount to slamming.

• Direct Energy needs to determine the rate they are illegally charging these ~400 customers and how they plan to reimburse them the difference between that rate and the SCO rate.

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City of Green

• Direct Energy has a contractual obligation to allow residential and commercial customers to convert to a fixed rate.

– 8% Discount off of Direct’s comparable Apples to Apples offer.

• We’ve had repeated calls from residents over a prolonged period of time saying Direct Energy won’t allow them to convert to a fixed rate.

• Even when they’re “permitted” to convert it doesn’t appear to be working?

• Mr. and Mrs. Shahan are the latest to complain. They’ve been trying to get the fixed rate since July 2012.

– We’ve also not heard back from Rich/Adam as promised?9

Closing Thoughts

• We have had issues with virtually all aspects of Direct’s performance serving Governmental Aggregation Programs dating back a couple of years. It is not our intention to bring them all up at this time. Adam and Rich are well aware of our concerns and I believe they share them as well.

• We have not seen the progress we’ve been told is coming.

• We do not have similar issues when working with Direct on C&I accounts.

• We continue to offer help and point out problem areas but our patience and that of our client’s is wearing thin.

• We are aware of other brokers who share similar frustration with Direct Energy.

• In our humble opinion, Direct Energy needs to fix these “problems” fast and once and for all. Otherwise, they may lose their reputation as a viable player in the Governmental Aggregation business.

• Some clients are already expressing serious concerns to others considering Governmental Aggregation.

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