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AEA Utility Management Conference Smart Sourcing of Electricity Supply March 13, 2013

AEA Utility Management Conference Smart Sourcing of Electricity Supply March 13, 2013. John Berg-Manager MidAtlantic Sales Mobile: 732.259.9072 Office: 732-494-0089 x226 John.berg@directenergy.com. Who is Direct Energy Business?. KEY FACTS 25 years of industry experience

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AEA Utility Management Conference Smart Sourcing of Electricity Supply March 13, 2013

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  1. AEA Utility Management ConferenceSmart Sourcing of Electricity SupplyMarch 13, 2013 John Berg-Manager MidAtlantic Sales Mobile: 732.259.9072 Office: 732-494-0089 x226 John.berg@directenergy.com

  2. Who is Direct Energy Business? • KEY FACTS • 25 years of industry experience • 180,000+ customers of all sizes • $4 billion company providing electricity and natural gas supply • Headquartered in Pittsburgh, PA Direct Energy Business is one of North America’s leading competitive energy suppliers offering: • Highly competitive supply rates • Flexible product options • Expert advice • Unparalleled customer service FOR THE COMMUNITY Each year, Direct Energy donates over $1.8 million to charitable organizations across North America through corporate donations in the areas of finding solutions to homelessness, energy poverty, climate change, and supporting employee charitable endeavors.

  3. Developing a Procurement Strategy Consideration of Your Needs and Current Supply Arrangements Risk Tolerance Operational Concerns Business and Financial Needs/Requirements Development of Procurement Strategy Evaluation of Competitive and Default Supply Options Development of Budgetary Expectations and Internal Procurement Requirements Analysis of External Market and Regulatory Conditions

  4. PSEG Power Cost Components

  5. Energy

  6. Capacity – RPM – UCAP – Locational Reliability

  7. Market/Regulatory Changes Scarcity Pricing Took effect on 10/01/201 Minimal impact to pricing (~3¢/MWh) Not explicitly modeled into Cogs Generation Deactivation a.k.a. RMR 22 GWs of coal capacity retirements expected for all US through 2015; of which 11 GWs in PJM Stringent EPA regulations on existing and future new coal gen; namely MATS Low commodity price environment NITS-related cost re-allocation Ferc filing, pending Commision approval in Spring 2013 Proposal to change the allocation of costs for RTEP projects Costs expected to remain the same for PJM as a whole; impact will be significant shuffling of costs among load zones

  8. Demand Side Initiatives Renewables Co-Generation Demand Response Energy Efficiency Supply Side Flexibility to Demand Initiatives • Product Flexibility • Fixed price provisions • Time-of-use vehicles to navigate price signals associated with demand-side activity • Encourages demand–side activity without penalty

  9. Implementation Implementing Strategy and Supplier Selection Final Selection of Product and Hedging Strategy Timing of Purchase and Term Ensure Transparency Implement a Competitive Procurement Process Benchmark and Improve

  10. Questions and Answers

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