Duke Energy’s Energy Efficiency Programs 2011

1. Duke Energy’s Energy Efficiency Programs2011

2. Smart $aver® Incentive Programs Why invest in energy efficiency? Lowers energy costs for years to come Money saved to invest back into the business Minimize future rate increases • Helps utility defer the cost of building additional generating facilities Fosters a cleaner environment by saving valuable energy resources Provides a more comfortable, positive work/learning environment Lowers market prices by increasing sales volume of higher efficiency equipment Duke’s Programs are Designed to Motivate Customers to TAKE ACTION

3. Energy Efficiency Programs for Non-Residential Customers(Scroll down to see description in the notes section of this slide.) Over 250 prescriptive incentive possibilities

4. Energy Assessments Off-Site and On-Site Assessments are available for all Large Business customers and Business accounts greater than 500 kW Online Assessment - Self-directed – FREE Carolinas Business Services Newsline Midwest Business Services Newsline Off-Site Assessment - Telephone-based – NO COST Customer completes a questionnaire 1-2 hour interview Sometimes substituted with a ½ day on-site (still no cost) On-Site Assessment - COST SHARING* Customer pays $3,000 for one-day, $600 each additional day Reimbursable cost: for every dollar of S$ incentive, the customer receives another dollar up to the cost of the assessment System-specific and/or general facility assessment *Customers who have opted-out of the Smart $aver program must pay the full costs for On-Site Assessments

5. Energy Assessments – Other Programs in Pilot Stage • SmartBuilding Advantage SM – for qualified commercial customers • On-site Assessment (costs are slightly different than typical on-site) • Investment Grade Assessment • Support for Smart $aver Incentive application, Smart Grid Integration, Implementation, and Performance Verification • Prescription for Energy Savings – for qualified healthcare customers • Energy Savings Master Plan-for qualified commercial real estate customers • Energy Smart Data Centers – for qualified data center customers • Retro-Commissioning-for any qualified commercial customer • Check out our home page (http://www.duke-energy.com) for other programs to help you TAKE ACTION

6. Smart $aver® Incentive Rules & Requirements(Scroll down to see additional information.)

7. Smart $aver® Incentive Applications • Always go to the website for current application forms • http://www.duke-energy.com/north-carolina-business/energy-management/energy-efficiency-incentives.asp • If you need help • Contact your account manager • 1-866-380-9580 • “E-mail a Question” online • Submit completed applications via fax, email or mail as noted on the forms

8. PRESCRIPTIVE Incentives

9. Prescriptive Incentive Examples • Commercial Office Building • Improvements included over 3000 28w T8 lamps, a 100hp motor, VF drive for HVAC, and a major chiller retrofit. • Duke Energy Incentive: $43,000 • Commercial Office Building Lighting Retrofit • Improvements included over 600 T8 high bay fixture replaceents of HID fistures lamps, a 100hp motor, VF drive for HVAC, and a major chiller retrofit. • Duke Energy Incentive: $32,000

10. Application Requirements must be followed • Prescriptive is NOT flexible • Pre-determined energy savings • Affects what is reported to the regulators • Third party evaluates our program for accuracy and cost-effectiveness. • If every application doesn’t meet the requirements, impacts and revenues are reduced

11. Projected Prescriptive Additions • Smart $aver Prescriptive Incentives Projected Additions • Lighting • HVAC • Chiller Tune-ups • Motors/Pumps/Variable Frequency Drives • Foodservice Equipment

12. Common Reasons a Prescriptive Incentive Payment Is Delayed • Multiple account numbers listed on one application. There should only be one account number per application. • Account # provided does not match the address where the installation took place • Model numbers on the application do not match the model #’s on all or one of the following items: • Manufacturer’s spec sheet • Invoice • Quantities on the invoice do not match what was reported on the application • All required documentation not submitted – spec sheets, itemized invoice, etc.

13. Custom Incentives

14. Smart $aver® Custom Incentive Basics • For high efficiency projects that are not addressed by prescriptive incentives • Note: equipment that is less efficient than the prescriptive requirement is not eligible for a custom incentive. • Example: chillers that do not meet the prescriptive incentive requirement cannot be submitted for a custom application. • Custom incentives require pre-approval before the project starts. No exceptions.

15. Smart $aver® Custom Incentive - Timeline Step Four Duke Energy Performs Measurement & Verification* Step Three Customer Installs Project Customer Requests Incentive Payment Duke Energy Pays Incentive Step Two Duke Energy Evaluates Application Duke Energy Communicates Incentive Pre-Approval Step One Customer Completes the Application Customer or Trade Ally Provides Energy Savings Calculations Occurs within a few months after installation Installation time + 10 days for payment 1 - 2 months (sooner if possible) * Measurement & Verification is performed on a portion of all installations; pre-measurement is sometimes requested prior to equipment installation if time allows Depends on Project

16. High Efficiency Lighting Custom Incentive Examples • Typical projects consist of: • Energy efficient outdoor lighting (that is not eligible for prescriptive incentives) • LED or induction fixtures • New construction involving lighting that is more efficient than the building code • Lighting retrofit that is not one-for-one replacement (not eligible for prescriptive) • Specialty light fixtures • Example: Manufacturer’s lighting redesign project that involved replacements that were not one-for-one. 862 T-12 and metal halide fixtures were replaced with 568 T-8 fixtures. Demand reduced by 2/3. • Customer cost: $45,714 • Energy reduction: 498,910 kWh and Demand reduction: 111 kW • One-time Smart Saver Custom Incentive: $9,000

17. Energy Management / Controls Systems Custom Incentive Examples • Any new or upgraded control systems other than occupancy sensors on lighting should be applied for pre-approval of a custom incentive. Typical equipment being controlled: • Lighting nighttime setbacks • HVAC equipment, including chillers, ventilation, pumps, fans; schools can program an out of session sequence for HVAC equipment • Process equipment, to prevent exceeding a set demand or to idle/ shut off equipment when not in use • Note that metering equipment being used to monitor usage is not eligible for incentives unless that equipment is also being used to control electrical usage. • Example: National account customer installed EMS to control HVAC and Lighting. • Customer cost: $207,581 (for all sites) • Energy reduction: 956,103 kWh and Demand reduction: 227 kW • One-time Smart Saver Custom Incentive: $48,000

18. Green Building Design (New Construction) Custom Incentive Examples • The entire project is reviewed in one custom application to determine a custom incentive. The custom incentive will be some percentage of the cost premium for the green building design. Example projects include: • New construction or major retrofit being designed to achieve LEED certification, earn the Energy Star, or any green building recognition • New construction or major retrofit that is not trying to achieve recognition, but is being designed using green building principles • Example: Three new K-12 schools pursing LEED for Schools certification. Design includes such features as: white roof, triple pane low-e windows, daylighting and integral blinds, high efficiency HVAC, demand control ventilation. • Customer incremental cost: $1,240,020 (for all sites) • Energy reduction: 1,329,072 kWh and Demand reduction: 988 kW • One-time Smart Saver Custom Incentive: $186,000

19. Other Custom Incentive Examples • HVAC Projects • Water-source heat pumps • Free-cooling heat exchangers • Energy recovery ventilators • Air-side economizers • VFD Projects • Compressed Air Equipment • Compressed air storage system • Addition of a control system to further increase energy savings • Building Envelope • Window replacement, white and green roofs, various means of improving wall insulation and reducing building fenestration or leakage.

20. Performance Contracts • Can involve projects that would be eligible for both prescriptive and custom incentives • For projects that are submitted for pre-approval through a custom application: • Incentives are based on electric savings only • Example of a past project approved through the custom application • Performance contract for multiple facilities that involved controls, lighting retrofits, window replacements and other projects • Project Cost: $1,000,000 (total performance contract) • Expected Annual Energy Savings: $58,000 • One-Time Duke Energy Incentive: $21,000

21. Smart $aver® Custom Incentive • Examples that are NOT eligible for Custom Incentives • Renewable energy generation projects, including Solar PV • Work that was begun prior to Duke Energy incentive approval • Projects that cannot be supported with data and calculations performed using acceptable engineering methods • De-lamping of lighting fixtures, unless the project involves a complete redesign and a lighting study shows that the proposed light levels are appropriate • Eliminating electric loads, or moving to another facility • Replacing electric loads with another fuel source • Measures that are not sustainable over time

22. Common Reasons a Custom Pre-Approval is Delayed Custom Incentive applications can be delayed or rejected because: • If the the customer has already decided to proceed, the application is rejected. • Applications for renewable energy generation projects, natural gas conservation or fuel-switching can not be approved. • Electric demand and/or energy reductions must be well documented with auditable calculations. Dialogue with the customer or vendor who performed the calculations can sometimes take many weeks. • If the simple payback without incentive is less than 1 year, no incentive can be approved. • Customer signatures are required for the application to be reviewed. • Measures that are not sustainable over time are not eligible for incentives. • LED fixtures require an independent lab test report.

23. http://www.duke-energy.com