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  1. The Future of Supply-Side Energy Management

  2. Today’s Agenda • Fellon-McCord Overview • Energy Market Update • Future of Supply-Side Energy Management • Meeting Energy Needs • Supply & Demand-Side Considerations • Closing Thoughts Confidential & Proprietary

  3. Fellon-McCordOverview What We Do Key Statistics Reduce Costs for Energy Consumers 1992 Founded in Louisville, Kentucky $14 Billion Annual client energy spend in North America and UK/Europe 400 Supported by a partnership network of more than 400 energy professionals worldwide 24/7 Power Control Center staffed 24 hours per day 7 days per week with certified energy professionals Services Energy Consulting & Management Energy Scheduling & Dispatching • Data Management & Utility Bill Payment Some of Our Clients Confidential & Proprietary 3

  4. GlobalFocus Fellon-McCord delivers energy solutions for global organizations y Confidential & Proprietary

  5. Energy MarketUpdate

  6. Disclaimer • The data and information contained in this presentation are gathered and provided to Fellon-McCord & Associates through proprietary and public sources and are published with the intention of being accurate. Fellon-McCord & Associates, and any affiliates cannot, however, insure against or be held responsible for inaccuracies and further assumes no liability whatsoever arising from use of such data or any information contained in this presentation. • The material in this presentation does not, in any way, represent a recommendation of any kind that you or your company purchase or sell any commodity. Discussions or representations of past market performance do not predict future market results. Any forecast of potential future energy prices or market trends are for discussion purposes only and are expressly not intended to induce the purchase of any commodity of any kind. Confidential & Proprietary

  7. U.S. Natural Gas Production Increasing U.S. Natural Gas Production Has Pulled Prices Down Source: EIA, NYMEX Confidential & Proprietary

  8. Power Prices Correlated with Gas Prices Source: InterContinentalExchange, Market View Confidential & Proprietary

  9. NGL Prices Trending Down Source: EIA Confidential & Proprietary 9

  10. North American Competitive Advantage Source: EIA, Bloomberg, Europe’s Energy Portal, Shenzhen Government Online, Canadian Electricity Association Confidential & Proprietary

  11. ManufacturingRenaissance Confidential & Proprietary

  12. Long-TermEnergy Price Risks The Four Forces that are driving U.S. energy prices higher Confidential & Proprietary

  13. EPA FrackingStudy Due December 2014 • Impetus – As part of a 2009 appropriations bill, Congress directed EPA to study impacts of fracking on drinking water. • Focus – Five main areas • Large volume water withdrawals from ground and surface waters • Surface spills on or near well pads • Well injection and fracturing process • Surface spills of flowback water • Wastewater treatment and disposal • Progress • Progress Report released December 2012 (no conclusions) • Final draft scheduled for release “late 2014” for public comment and peer review. Confidential & Proprietary

  14. CoalRetirements Source: SNL Financial Confidential & Proprietary

  15. Natural Gas Needed to Replace Coal Source: SNL Financial, Fellon-McCord Confidential & Proprietary

  16. US Nuclear Plant Closures / Additions Vt. Yankee 620 MW Kewaunee 556 MW Watts Bar 1,200 MW San Onofre 2,150 MW Virgil C Summer 2,200 MW Vogtle 2,234 MW Crystal River 838 MW New – Under Construction (5,634 MW) At Risk (11,535 MW) Closures Announced (4,164 MW) Source: Nuclear Regulatory Commission, Inside Climate News, Bechtel Corp, Southern Company Confidential & Proprietary

  17. CoalGeneration Being Displaced by Natural Gas Coal Generation Being Displaced by Natural Gas Source: EIA Confidential & Proprietary

  18. LNG Historical Price Disparity Confidential & Proprietary

  19. LNG Export Approval Pipeline Freeport LNG (1.8 Bcf per Day) Lake Charles (2.0 Bcf per Day) Cove Point (0.8 Bcf per Day) More than 20 pending applications (>25 Bcf per Day) Sabine Pass (2.2 Bcf per Day) Cameron (1.7 Bcf per Day) DOE Approval Construction FERC Approval Exports (late 2015) Five terminals with a total of 8.5 Bcf per day of capacity have received DOE approval for LNG exports to non-FTA countries Confidential & Proprietary

  20. IndustrialConsumption Increasing Source: EIA Confidential & Proprietary

  21. Major Shift in Crude Oil Confidential & Proprietary

  22. U.S. Crude Production Source: EIA Confidential & Proprietary

  23. Canadian Crude Production Confidential & Proprietary

  24. U.S. Now a Net Exporter ofPetroleum U.S. became a net exporter in late 2010 Source: EIA Confidential & Proprietary

  25. North American Liquids Production Source: Citigroup Could increase by as much as 74% by 2020 Confidential & Proprietary

  26. Mexico Energy Reforms • Mexico’s state-owned oil company, Pemex, has held a monopoly on oil and gas production for the past 75 years, per constitutional amendment. • Aging fields and the lack of capital, technology, and expertise to develop new resources have resulted in declining production. • Mexico’s president pushed through constitutional reforms that passed the legislature in December 2013. Secondary laws to enable implementation are due by mid-April. • These reforms will allow foreign capital, technology and expertise to enter Mexico’s energy markets, providing a path to increased production and market transparency. Confidential & Proprietary

  27. Summary • Oil and natural gas production in North America have increased more than 30% in the past five years. • Increased supplies have pulled industrial gas and power prices down to give the U.S. and Canada a competitive advantage in energy prices. • This, and other competitive advantages are attracting manufacturing back to North America. • There are four forces that can drive energy prices higher • Fracking regulations • Coal generation retirements • LNG exports • Industrial (manufacturing) renaissance – increasing demand Confidential & Proprietary

  28. Low Prices Uncertainty High Volatility Energy markets are dynamic and always a cause for a plan Confidential & Proprietary 28

  29. MeetingEnergy Needs Developing a Plan • A centralized solution (i.e., single source) for energy supply and demand • Ways to leverage energy needs to create savings across all locations • Ways to track Plan performance • Ability to demonstrate Environmental Stewardship CEO’s, CFO’s, COO’s, CPO’s are looking for: Confidential & Proprietary 29

  30. MeetingEnergy Needs Goals/Challenges: Procurement Strategies Load Aggregation Contract Management Sustainability Initiatives Reporting and Benchmarking Data Management Managing Risk Price Forecasting Market Timing Market Movement Developing a Plan Low Cost Supply Budget Certainty Confidential & Proprietary 30

  31. MeetingEnergy Needs Developing a Plan 10% - 30% of metered cost 70% - 90% of metered cost Consumers need to create transparency in the Energy Supply Chain. Confidential & Proprietary 31

  32. MeetingEnergy Needs Developing a Plan • Opportunities exist in deregulated and regulated markets Look for solutions in all regions where you have facilities. Confidential & Proprietary 32

  33. Supply & Demand Side: Today CUSTOMER’S TOTAL ENERGY COST SUPPLY DEMAND Procurement Risk Management Data Management OPEX CAPEX • Aggregation • RFPs • Contract Optimization • Benchmarking • Opportunity Targeting • Performance Assessment • Market Intelligence • Market Timing • Continuous Monitoring • System Optimization • Operating Procedures • Behavior Modification • Equipment • Controls • Building Modification Supply and Demand-Side Services are typically fulfilled in a non-aligned manner. Confidential & Proprietary 33

  34. Supply & Demand Side: Future CUSTOMER’S TOTAL ENERGY COST SUPPLY DEMAND Procurement Risk Management Data Management OPEX CAPEX • Aggregation • RFPs • Contract Optimization • Benchmarking • Opportunity Targeting • Performance Assessment • Market Intelligence • Market Timing • Continuous Monitoring • System Optimization • Operating Procedures • Behavior Modification • Equipment • Controls • Building Modification Businesses need to reduce energy usage, and obtain the most reliable and economic energy supplies available. Confidential & Proprietary 34

  35. Closing Thoughts For Kentucky, as well as much of the Midwest: • Physical, financial, regulatory and legislative factors - globally, nationally and locally - will continue to impact our region’s energy pricing. • Energy Pricing will likely continue an upward trend. • Power now tracks natural gas and this fact likely will not change any time soon due to coal and nuclear plant retirements. • Accessing the real market price of power will be a challenge in Kentucky and could put Kentucky at a disadvantage to other areas of the country that can readily access third-party supplies. • Focus on lowering your energy usage, first, and then buy what your facilities do need to consume as close to market pricing (i.e. wholesale) as possible. Confidential & Proprietary 35

  36. Thankyou We appreciate the opportunity to present to Andrew R. (Drew) Fellon President & CEO 502-214-9418 Confidential & Proprietary