CenterPoint Energy Commercial and Industrial Standard Offer Program 2008 Workshop October 4, 2007

1. CenterPoint Energy Commercial and Industrial Standard Offer Program 2008 Workshop October 4, 2007 www.centerpointcisop.com

2. Workshop Agenda • Introduction • Status of 2007 Program • C&I SOP Rules and Process • M&V – Calvin Burnham • EnerTrek – Bill Brooks (Patty Keegan) • New Program Announcement • EnergyShare – Jerry Golden • Lunch – Fajita Buffet • Golf

3. David Dzierski • C&I Standard Offer Program Manager • CenterPoint Energy • 713-207-3341 • david.dzierski@centerpointenergy.com

4. C&I SOP Team Members • CenterPoint Energy • Jarrett Simon • Calvin Burnham • Michael Espinola • Loretta Battles • Roxanne McFarland • Nexant • Brian Miller • Krishnan Umamaheswar • Jessy Shao • Frontier • Patty Keegan • Jeff Chien

5. 2007 C&I SOP Summary • Program Summary (9/15/2007) • 2007 Budget $7,000,000 • 155 Projects submitted $14,000,000 • Sold out in 8 seconds! • 92 Active Projects • 25 Completed Projects - $1.4 M • 79 Cancelled Projects - $10.2 M • 9 MW Program Goal • 21.4 MW Estimated Total Reduction

6. 2007 C&I SOP

7. Examples of Projects • Several photos of projects that our Sponsors completed in 2007.

12. 2007 Program Concerns • > 50% Cancellation Rate • Project deadlines / milestones missed! • Deposit checks sent to the wrong address. • Submit project start and estimated completion date with application. • Provide complete site address on CalcSmart and Lighting spreadsheets. Include Project ID # on spreadsheets. • On all correspondence (including e-mails and deposit checks) please refer to the project ID # • Need unique project name on each submittal. • Lighting spreadsheets – Provide room by room descriptions. • Auditor should be present during inspections. • Deposit checks sent in with Gas bill.

13. 2008 C&I Standard Offer Program • Rules and Requirements

14. 2007 $7 million SB7 5% deposit after IA No ESID requirement Industrial customer included 2008 $6.1 million HB 3693 5% deposit before IA ESID required for IA Transmission customer excluded - pending PUCT ruling 2008 C&I SOP Key Changes

15. The Standard Offer Program • Open to all eligible providers within CNP’s service territory • Transmission Class Customers (>69 kV) are excluded • This has not been finalized by the PUCT. • First come, first serve • Single set of fixed prices • One year payout • Payments tied to verified savings • Standardized terms for all participants • Retrofit and new construction measures

16. Program Incentives & MW Goal • 2008 Program Savings Goal and Budget • Incentive rates are $175/kW and $0.06/kWh • Incentives paid for verified annual savings over a one-year period • One Project Sponsor may reserve and receive up to 20% of the program budget.

17. 2008 Program Timing • Project Sponsor registration available today. • Begin on-line application development today after setting up on-line User account • Timeline • Applications accepted beginning 1 P.M.,Central Time, 10/4/2007. • EnerTrek closed 12 A.M.-10:00 A.M. on 11/01 • Submit Day = Nov. 2, 2007 10:00 AM Central Time • No incentive payments before January 1, 2008. • Installation Reports due no later than December 1, 2008.

18. Submit Day • November 2, 2007 @ 10:00 AM Central Time • In order to submit your project CNP must have your deposit before November 1, 2007!

19. Program Resources • www.centerpointcisop.com • Downloads • Contract • Spreadsheets • Letter of Intent • Program Manual

20. CenterPoint Energy’s Role • Act as Program Administrator • To help Sponsor navigate program • Review applications • Enter into Standard Agreements with Sponsors • Review and approve M&V Plan • Review and approve savings • Make incentive payments

21. Eligible Project Sponsors A qualified entity that provides energy engineering, energy efficiency measure design, equipment installation, equipment maintenance, or finance services may be a Project Sponsor. • Contractors • ESCOs • Design/build firms • Architectural and engineering firms • Customers

22. Project Sponsor Qualifications • Participants must have the following: • Evidence of good credit rating (10K or Financial Statement) • List of references • Must hold all applicable licenses • Evidence of all building permits • Evidence of necessary insurance

23. Project Sponsor Responsibilities • Market and sign contracts with individual CenterPoint Energy customers • Apply for funding from program • Submit deposit & Letter of Intent • Sign Standard Agreement with CenterPoint Energy • Implement energy efficiency project • Measure and verify energy savings

24. Customer Role • Install or have energy efficient equipment installed at its site(s) • Allow facility access for pre and post inspections and to verify savings • Certify installation of equipment

25. Project Eligibility • Project requirements: • C&I customers within CenterPoint Energy service territory-verified by ESI ID • Minimum reduction of 20 kW during peak period • Similar customers/sites may be aggregated to meet this requirement • LOI and 5% deposit is required at time of Initial Application

26. Project Aggregation Any number of project sites may be submitted as a project if they are similar. Contingent on having the same: • Sponsor • Measures • Occupancy schedule • Functional use • Energy consumption patterns • Measurement & Verification Plan

27. Measure Eligibility • Produces measurable peak demand and/or energy savings • Peak demand is defined as May 1 through September 30, M-F, 1 pm – 7 pm • Useful life is at least ten years • Permanently installed (No plug load) • Exceeds minimum efficiency standards

28. Baseline for Calculating Savings • Savings are calculated based on the following standards (Federal Guidelines Apply): Equipment Type Applicable Baseline Standard Cooling ASHRAE Standard 90.1-1989 Lighting Standard Lighting Wattage Table Motors ASHRAE Standard 90.1m-1995 All New Construction International Energy Conservation Code ASHRAE/IESNA Standard 90.1-1999

29. Examples of Eligible Measures • Chiller replacement • Packaged cooling unit replacement • Lighting retrofits (lamp and ballast) and controls • Motor efficiency measures • Window film applications • Roofing applications • Industrial process measures (Non Transmission Class Cust.) • Variable Frequency Drive (VFD) Projects (don’t qualify as stand alone since normally does not produce peak demand reduction)

30. Ineligible Measures • Measures with life less than 10 years (except CFL’s with locking devices) • Removable measures (including plug loads, except vending machines) • Cogeneration or self generation (except renewables) • O&M measures (i.e. Air Filters)

31. Ineligible Measures • Fuel switching to electric • Measures that require no capital investment • Measures that receive incentives from other CenterPoint Energy programs • Redundant equipment (example: backup chillers) • Lamp replacement without ballast

32. Application Deposit • The application deposit is 5% of the submitted Initial Application incentive • The deposit must be submitted before November 2, 2007 • Deposit is fully refundable for projects that receive 75% or more of the incentive estimated in the approved Final Application • Projects that deliver between 50% and 75% of contracted incentive will get 50% of the deposit back

33. Limits on Incentives • Project Sponsor Limit: Up to 20% of Budget • Lighting Limit: Up to 65% of the total demand and energy savings may come from lighting. A requirement to encourage the installation of multiple measures.

34. Invoicing and Payment • Performance Payment • Based on verified savings and approved Savings Report • Total payment cannot exceed amount in Project Authorization • Deemed method – 100% payment after Installation Report • M&V method – 40% after Installation Report, 60% after savings report

35. C&I Program Process

36. Program Process • 4 Major Applications/Reports for each Project • Initial Application (IA) • Final Application (FA) • Installation Report (IR) • Savings Report (SR)

37. Program Process

38. Program Process

39. Getting Started • Register as a Sponsor in EnerTrek • Enter project information and prepare submittal on-line in EnerTrek system • CenterPoint will begin accepting Initial ApplicationsOctober 4, 2007 • Check web site at www.centerpointcisop.com for most up-to-date information • Send hard copy information (when required) to: • CenterPoint Energy • 1301 Travis Street • Floor 16 • Houston, TX 77002 • Attn: David Dzierski

40. The Most Important Slide • Golf! • 1st Annual C&I SOP Tournament - Shotgun Start • 4 – Person Scramble, Wolf & Horse Courses • Bogey is your friend – pick up and move on! • White Tees – Men, Red Tees - Ladies • Soft Drinks and Bottled water provided at no cost • Prizes • 1st & 2nd Place teams • Long drive – Hole # 1 Horse Course • Close to Pin – 2 holes: #3 Horse & #7 Horse

41. Break

42. M&V • C&I Program Measurement and Verification (M&V) Requirements

43. Required for all measures not meeting criteria for Deemed or Simplified M&V. Based on engineering calculations using typical equipment characteristics for particular applications. Based on data from past DSM programs and industry data. Use more rigorous application of end-use metering, regression analysis, or computer simulation. Reduce need for certain types of field monitoring by using stipulated values for operating hours, equip. efficiencies, etc. General guidelines available, but need to be adapted to specific measures. May involve spot or short-term metering and sometimes simple, long-term monitoring. No metering required. C&I Program M&V Approaches Deemed Savings Simplified M&V Full M&V

44. Develop Project Specific M&V Plan Review and approve M&V Approach Conduct Pre-installation Equipment Survey Conduct Pre-installation Equipment Inspection Conduct Post-installation Equipment Survey Conduct Post-installation Equipment Inspection Calculate Verified Savings Conduct Due-diligence Review of Savings Steps in the M&V Process Project Sponsor CenterPoint Energy Conduct Pre-installation Metering (as needed) Project Time Line Install Equipment Conduct Post-installation Metering (as needed)

45. Streamlined M&V Procedures • Measure-specific M&V guidelines • see manual (www.centerpointcisop.com) • International Performance Measurement & Verification Protocol (IPMVP) (www.ipmvp.org) • Equipment inventory forms • M&V PLAN must be submitted electronically with Final Application • Stipulated values for data such as operating hours, fixture wattages and equipment efficiencies • Pre-derived savings calculations for many measures—“Deemed Savings” • Minimize Sponsor M&V costs and utility administration, while producing justifiable energy savings

46. Deemed Savings Applications • Lighting Efficiency Upgrades • Deemed option is available for certain building types • Pre- and post-installation conditions determined through equipment surveys and inspections • Stipulated annual operating hours • Stipulated interactive HVAC factors for conditioned spaces • Installation of Lighting Controls • Accepted only in conjunction with lighting efficiency upgrades • Stipulated Power Adjustment Factors for different control types to calculate reduction in operating hours

47. Deemed Savings Applications, cont. Window Films • Shading coefficients and glass area used in simple savings calculations High-efficiency Cooling Equipment • Use CalcSmart to record equipment information and calculate savings • Deemed savings are available for certain building types (17) and certain equipment types. Multi-unit plants will be stipulated • Pre- and post-installation conditions verified through equipment surveys and inspections

48. Deemed Savings Applications, cont. • High-efficiency Cooling Equipment, Continued… • Savings calculated using equations and pre-set coefficients that take into account building type, equipment type, capacity, equipment efficiency, and weather zone • Retrofit or new construction • Air or water cooled equipment • Local weather conditions selectable • Calculations based on standard ARI conditions at Full Load • Pre-retrofit equipment efficiency based on ASHRAE 90.1-1989 efficiency standard • All newly installed equipment must be more efficient than the ASHRAE 90.1-1999 efficiency standard • Redundant HVAC equipment not eligible for rebate

49. Simplified M&V Applications • Lighting Efficiency and Lighting Control Measures • Simplified M&V approach may be used for any facility, but must be used for facilities with no stipulated operating hours • Differs from Deemed Savings Approach in that post-installation monitoring of operating hours is required • Generic sampling guidelines included in Appendix • Interactive savings always stipulated • Cooling Equipment • Simplified M&V approval may be used for any facility, but must be used for facilities for which coefficients do not exist • Differs from Deemed Savings Approach in that post-installation monitoring of PEAK DEMAND and energy use are required

50. Full M&V Applications • Generic Variable Load Measures • “Catch-all” category for fuel switching, major chiller plant modifications, industrial process, etc. • May use system or equipment performance curves or regression analysis • Pre- and post-installation energy use monitoring required • Utility Bill Regression Analysis and Calibrated Simulation Analysis • Savings are determined by “whole facility” • Use of a calibrated simulation tool to estimate “before” and “after” energy use