ESCO Technical Conference 05/31/2016

WE’RE WE’RE GOING WE’RE GOING TO GET STARTED I’M FROM THE DEPARTMENT OF PUBLIC SERVICE WE ARE WAITING FOR THE ELECTRIC AND GAS FOLKS TO COME UP TO TALK GAS, WE HAVE A VERY LIMITED WINDOW TO TALK ABOUT GAS, SO WE’RE GOING TO HOLD OFF TALKING ABOUT GAS UNTIL HE’S AVAILABLE AND WE ARE WAITING FOR MIKE TO COME TO TALK ABOUT ELECTRIC IN THE MEANTIME, WE HAVE TWO OTHER, ONE A CONSENT AND ONE IS OTHER SECURITY DEPOSITS, OUR INTERESTS WE THOUGHT WE COULD START THE CONVERSATION I JUST WANT TO MAKE SURE EVERYBODY UNDERSTANDS THIS IS A CONVERSATION WE’RE NOT THE COMMISSION WE TOOK PEOPLE TO INVOKE DISCUSSION THAT’S WHAT WE DO WEN WHEN HE ISSUE WHITE PAPER WE WANT YOUR FACTS AND COMMENTS I’M NOT SURE WE CAN ANSWER QUESTIONS WE’LL TRY THERE MAY BE — WE’RE HOPING TO HEAR FROM YOU WHAT WE GOT RIGHT AND WHAT WE GOT WRONG I’M SURE MOSTLY YOU’RE GOING TO TELL US WHAT WE GOT WRONG, WHICH IS OKAY WE MIGHT AGREE, MYSELF DISAGREE ULTIMATELY THE COMMISSION DECIDES TO LET’S START THE DISCUSSION GO AHEAD >> JUST TO ADD TO THAT, ONE OF THE MAIN REASONS WE WANTED TO HAVE THIS MEETING, GET EVERYONE TOGETHER BEFORE THEIR COMMENTS WERE DO, BACK AND FORTH WITH EVERYONE’S COMMENTS WITH THAT, INITIAL COMMENTS ON THE WHITE PAPERS ARE DUE JUNE >> AND SO JUST AS A REMINDER, A SPECIAL ITEM WE’RE NOT — STAFF WOULD NOT LOOK FAVORABLY ON REQUESTS FOR EXTENSIONS ON THOSE FILING DATES YOU CAN TRY THE ACCOUNT WILL ALWAYS ASK FOR PEN BEFORE SHE ISSUES A DECLARATION ANYWAY, TO THE EXTENT WE HAVE COMMENTS, QUESTIONS, THOUGHTS ABOUT SOMETHING OTHER THAN REFERENCE BY PHONE, LET’S GET STARTED IF YOU’RE SITTING AT THE BACK, COME TO THE PODIUM IF YOU’RE AT A TABLE, SPEAK INTO THE MIC FOR THOSE ON THE WEB, IF YOU HAVE QUESTIONS, PLEASE SEND THEM TO THE E-MAIL ADDRESS OR COMMENTS PLEASE SEND THEM TO E-MAIL ADDRESS IDENTIFIED AND MAKE SURE WE GET THOSE COMMENTS OR QUESTIONS SO WE CAN TRY TO RESPOND TO THEM WANT TO START? GO AHEAD >> GOOD MORNING JOHN HOLTZ WITH NRG THANKS, LUANN, CHRIS I’LL START OFF WITH PERFORMANCE BOND PAPER IN THE COURSE OF REVIEWING THE WHITE PAPER, I DON’T THINK I SEE ANYTHING ABOUT A PROCESS FOR COMMISSION OR WHOEVER ENDS UP ADMINISTERING FINANCIAL SECURITY TO DRAW ON OR CALL UPON A

FINANCIAL SECURITY INSTRUMENT DO YOU HAVE THOUGHTS ABOUT WHAT THAT PROCESS WOULD BE? >> PART OF THAT DEPENDS ON WHO IS ADMINISTERING THE PERFORMANCE BOND IF IT COMES INTO THE DEPARTMENT, IT WOULD REQUIRE FURTHER PROCESS MEANING LEGISLATURE TO DIRECT WHERE THOSE FUNDS GO IN MY POINT OF VIEW WE’RE LEANING AWAY FROM HAVING THE MONEY COME INTO THE DEPARTMENT IF IT WAS THE UTILITY, WE WOULD NEED TO HAVE FURTHER DISCUSSIONS WITH THE UTILITY ON HOW THEY WOULD ADMINISTER THAT, HOW THE FUNDS WOULD BE HELD AND HOW THEY WOULD BE DISTRIBUTED I THINK WE JUST WANTED TO SORT OF SET UP THE GROUNDWORK AND LEAVE THAT OPPOSING OPEN TO INTERPRETATION WHERE IT GOES AND WORK ON THE IMPLEMENTATION AT THAT POINT >> THANKS, TOM ALSO THE PATH OF THE SECOND QUESTION I HAVE ON WHO IS ADMINISTERING IT I’LL COME BACK TO THAT IN A SECOND IN TERMS OF THE PROCESS, WOULD THERE BE A SHOW CAUSE PROCESS OR SOMETHING? IN OTHER WORDS, IF YOU’RE GOING TO CALL ON FINANCIAL SECURITY FOR SOME ISSUE, SOME MATTER, WOULD THERE BE A NOTICE, A HEARING AND ALL THAT BEFORE YOU DRAW ON THAT? >> WE WOULD HAVE TO SHOW SOME VIOLATION OF THE COMMITMENT FOR GUARANTEED SAVINGS BEFORE WE ALSO GOT TO REMEDIES, THE BOND WOULD BE POSTED >> SO FAILURE TO DO SOMETHING STEMS FROM A COMPLAINT >> LET ME JUST ADD, JOHN WE HAVE A KNOWN HISTORY OF OVERSEEING WE DO NOT TAKE ACTION, ANY KIND OF ACTION WITHOUT A LOOK AT THE PROCESS I’M NOT SURE, WE’RE NOT SURE WE’RE NOT SURE IF IT’S A MATTER OF THE COMMISSION ISSUING AN ORDER SAYING — THE TRADINGS COMMITMENT OR IF IT WOULD BE A STAFF DIRECTOR WE’RE NOT REALLY SURE YET BUT I THINK WE’RE PRETTY CONFIDENT IT’S NOT GOING TO BE LIKE — WE DON’T — WE DO THINGS AFTER CONSIDERATION OF ALL THE ISSUES THINGS DON’T HAPPEN QUICKLY IT MAY TAKE FIVE OR SIX MONTHS TO DRIVE DOWN ON SOMETHING >> I APPRECIATE THAT I’M WELL AWARE OF THAT SURE >> THE COMMISSION IS COLLECTING, ACTION VERSUS UTILITIES >> IT MAY IT’S JUST GENERALLY I MEAN WHEN IT COMES INTO THE COMMISSION IT WOULD GO INTO THE GENERAL FUND THE DEPARTMENT WOULDN’T HAVE MUCH SAY DIRECTING WHERE IT GOES THIS IS SIGNIFICANT GENERALLY EITHER JUST AN INITIAL LOOK AT THE SUBJECT THAT LEGISLATIVE ACTION MAY BE REQUIRED TO RECEIVE THESE BONDS, HOLD THEM AND DIRECT THEM FOR ANY SPECIFIC PURPOSE >> THAT’S MY UNDERSTANDING, YES >> SO AS YOU KNOW UVP ALREADY REQUIRES THE UTILITY HOLD SECURITY IN CERTAIN INSTANCES IF THE SECURITY — FOR US TO IMPLEMENT IT >> IS YOUR VOLUME ON? >> OKAY ON THAT POINT ABOUT SECURITY, ONE OF THE ISSUES IN THE WHITE PAPERS DISTINGUISH BETWEEN HOLDING, WHATEVER IT IS NEAR THE END OF THAT WHITE PAPER YOU INDICATE LOOKING MAYBE AT THE POR MECHANISM, SO TO SPEAK, THAT WOULD HELD PI FACILITY THE PROBLEM THAT I THINK WE HAVE, AT LEAST I HAVE, IS THAT WE HAVE A LOT OF BUILDING PROBLEMS WITH THE UTILITIES NUMBER OF PROCEEDINGS ON THE COMMISSION NOW WHERE THERE’S HUGE BUILDING AREAS GOING 18 MONTHS TO TWO YEARS I’M NOT SAYING WHO IS AT FAULT OR NOT AT FAULT IF THAT ALSO BECOMES PART OF THE MECHANISM WHEREBY THEY ARE

COLLECTING THE SECURITY, OUT THAT MONEY, THE UTILITY HAS BUILT OR NOT BUILT, CANCELED PROCESS, OUT OF STATE FACILITY NOW CAME BACK TO BILL US ON CASH OUTS 18 MONTHS AGO, CURRENT ONGOING POR THAT ALSO HAD SIGNIFICANT PERIOD OF TIME THAT ELAPSED IF THIS HAS BECOME FULL FOR THE SECURITY >> AFTER A LOT OF DISCUSSION, WE IDENTIFIED THE MECHANISM AS AN OPTION ONE OF MAYBE POSSIBLY MANY OPTIONS TO BE FAIRWAY UTILITY WITH SIGNIFICANT PROBLEMS I DON’T KNOW THERE ARE SIGNIFICANT POR PROBLEMS THROUGHOUT THE STATE >> I COULDN’T SAY I KNOW I HAD SIGNIFICANT EXPERIENCES — SOMETIMES STRAIGHT UP LIKE PROBLEMS HAPPEN THAT PEOPLE DIDN’T ENVISION, CHANGES EVEN THE ONES WHO DON’T HAVE A PROBLEM NOW THEORETICALLY YOU COULD HAVE PROBLEMS NOW — WHICH NOW ONLY BETWEEN THE REVENUES BUT ALSO IMPLICATED >> SO I APPRECIATE YOUR COMMENTS I THINK THAT WAS OUR ATTEMPT TO COME UP WITH SOMETHING THAT MIGHT BE LESS COSTLY, TRYING TO KEEP SECURITY BONDS OR PERFORMANCE BONDS IF YOU HAVE OTHER THOUGHTS OR IDEAS, PLEASE PUT THEM FORTH AND WE’LL CONSIDER THEM >> — WHETHER CASH, LETTER OF CREDIT, SECURITY BONDS, I DON’T THINK THE COMMISSION SHOULD — WHY THE SECURITY POSSIBILITY TO BE, I THINK THAT WORKS BETTER TO LOOK FOR ALSO TO INCLUDE A GUARANTEE THAT’S WHY WE FOCUS ON, THE WIDER IT IS, THE WIDER THE OPPORTUNITY >> GREAT THANK YOU IS EVERYTHING OKAY? >> TEST, TEST, TEST >> THE GREEN LIGHT IS ON >> IS THIS ONE WORKING? >> YES >> OKAY THANK YOU FIRST, I HAVE A GENERAL SUGGESTION PERFORMANCE BOND SEEMS TO HAVE SOMEWHAT OF A CONFUSING EFFECT GIVEN THERE IS DIFFERENT MECHANISM THAT YOU’VE SPOKEN ABOUT THAT COULD BE IN PLACE TO GUARANTEE SAVINGS MY SUGGESTION WOULD BE TO ALTER NAME TO GUARANTEED SAVINGS ASSURANCE PRODUCT SO IT’S CLEARLY DELINEATED TOWARD GUARANTEED SAVINGS, RESPONSIBLE FOR MY QUESTION IS, HOWEVER, GIVEN HOW IT IS SPECIFICALLY MEANT FOR GUARANTEED SAVINGS, HAS THERE BEEN ANY DISCUSSION ABOUT HOW THAT FORMALLY OR NUMBER WOULD BE ARRIVED AT GIVEN THAT MANY WOULD REQUIRE A PRODUCT THAT WOULD NOT REQUIRE SAVINGS? >> WHAT WOULD THOSE PRODUCTS BE? RIGHT NOW THERE’S JUST TWO PRODUCTS RAINFAL PRODUCTS >> I ACTUALLY THINK PERFORMANCE BOND OR SECURITY MECHANISM WE THINK THE MOST SIGNIFICANT USE WOULD BE FOR GUARANTEED SAVINGS, IF WE FIND OUT THAT A COMPANY IS NOT PROVIDING THEIR 30% RENEWABLE ENERGY, THERE MIGHT BE A NEED TO PROVIDE A CREDIT TO CUSTOMERS RELATED TO THAT I’M NOT REALLY SURE AT THAT POINT >> I WOULD THAT’S WHERE THE DISCUSSION IS, MAKE PEOPLE WHOLE, THEY DIDN’T REALIZE GUARANTEED SAVINGS IT’S NOT LIMITED JUST TO THAT SO I THINK WE WOULDN’T BE LIMITED TO ESCOS OFFERING PRODUCT THAT COULD BE ONE OF THE THINGS TO CONSIDER WHEN CALCULATING

SUCH A BOND WE WOULD APPRECIATE COMMENTS ON THAT, IF YOU THINK OFFERING SAVINGS PRODUCT OR NOT SHOULD HAVE AN IMPACT ON THE AMOUNT OF THE BOND >> PERHAPS MY READING OF THE FEBRUARY 23rd ORDER WAS NARROWER MY UNDERSTANDING WAS THAT IT WAS SPECIFICALLY PEGGED TOWARDS GUARANTEED SAVINGS I UNDERSTAND THERE’S OTHER RULE MAKING GOING ON THAT HAVE BEEN RELATED TO ELIGIBILITY REQUIREMENTS AND A BOND UNDER THOSE CIRCUMSTANCES SO IT WOULD HELP IF WE HAD CLARITY ON WHAT FINANCIAL ASSURANCE MECHANISM WOULD BE SET FOR SPECIFICALLY THE GUARANTEED SAVINGS PRODUCT VERSUS ANOTHER BOND OR FINANCIAL ASSURANCE THAT MAY GO TOWARDS COVERING OTHER ISSUES WHICH MAY BE THE RESULT MORE OF DECEPTIVE PRACTICES THAN NOT MEETING A GUARANTEED SAVINGS PROMISE THANK YOU >> YOU’VE GOT TO SPEAK INTO — >> JUST IN THAT LIGHT, THE PERFORMANCE BOND, IT SEEMS TO ME, AT LEAST IN THE DISCUSSION, MAY BE MY MISINTERPRETATION, THAT IT WAS FOCUSING ON THE INTEREST OF NOT MEETING YOUR GUARANTEED SAVINGS I MAY BE WRONG >> WHAT SAYS, SUBJECT OF THIS PROPOSAL INTENDED TO SERVE A DISTINCT PURPOSE AND ARE NECESSARY TO ENSURE AT A MINIMUM ENSURE PRICE SAVINGS GUARANTEE AND OTHER ELEMENTS OF THE RESET ORDER >> WHAT DID YOU READ FROM? >> PAGE 5 UNDER THE DISCUSSION, LIKE THE SECOND SENTENCE >> I GOT IT >> ADDITIONAL REQUIREMENTS CUSTOMERS SHOULD BE BASED ON THE NUMBER OF CUSTOMERS ESCO SERVES OR REVENUES OR QUALITY OF ELECTRIC AND GAS PROVIDED TO CUSTOMERS >> SO THE OTHER ELEMENT SORT OF BRINGS IN EVERYTHING ELSE? >> IT’S NOT INTENDED FOR ENFORCEMENT IN GENERAL IF WE GET COMPLAINTS WE’RE NOT INTENDING TO USE PERFORMANCE BONDS TO PREVAIL FROM PENALTY TO ESCOS THE MOST GENERAL USE WOULD BE FOR GUARANTEED SAVINGS HOWEVER, THERE MAY BE OTHER THINGS THAT IDENTIFY ON THE RESETTING ORDER, MAYBE IDENTIFIED ON THE JULY ORDER THAT MIGHT BE COVERED UNDER THESE PERFORMANCE BONDS OR WHATEVER SECURITY INSTRUMENT >> JUST INTENDING TO SAY THAT ANOTHER WAY, WE’RE NOT EXPECTING PERFORMANCE BOND TO BE USED AS SOMETHING TO PUNISH, PUNITIVE AGAINST ESCO, IT’S REALLY THE IDEA IS TO MAKE CUSTOMERS WHOLE WHEN THERE’S HARM TO CUSTOMERS THE MOST OBVIOUS EXAMPLE IS GUARANTEED SAVINGS NOT REALIZED THERE ARE POTENTIAL OTHERS >> THIS WHOLE THING IS JUST PUZZLING THE HECK OUT OF ME, I HAVE TO ADMIT IT SEEMS LIKE A PERFORMANCE BOND SHOULD FIRST OF ALL I THINK WE ALL UNDERSTAND A BOND HAS TO GUARANTEE A SPECIFIC THING IT CAN’T JUST BE, HEY, WE WANT YOU TO POST SECURITY BECAUSE WE THINK IT WOULD BE A GOOD IDEA GENERALLY BUT WHEN I THOUGHT ABOUT THIS, IT SEEMS LIKE YOU HAVE A PRETTY BROAD RANGE OF THINGS, PERFORMANCE, IF YOU WILL, THAT A BOND COULD SECURE PREVIOUSLY BEFORE THE FEBRUARY OBLIGATIONS THAT WE MADE ON BEHALF OF CUSTOMERS THAT COULD HAVE HAD A PERFORMANCE BOND TO GUARANTEE A FIXED PRICE A FIXED PRICE IS A GUARANTEE >> EXCEPT ESCO AGREEMENT WHICH ACTUALLY HAPPENED FREQUENTLY >> WE’RE IN VIOLENT AGREEMENT THAT’S MY POINT YOU COULD HAVE A PERFORMANCE BOND TO GUARANTEE ANY OBLIGATION OF AN ESCO TO A CUSTOMER, INCLUDING A FIXED PRICE OR 30% RENEWABLE THE PRICE GUARANTEE OR YOU COULD ALSO HAVE A PERFORMANCE BOND TO GUARANTEE SOME OTHER TYPE OF PERFORMANCE IN THE MARKET SUCH AS OBLIGATION TO THE COMMISSION DUE TO SOME TYPE OF PENALTY I’M PUZZLED — THIS IS WHAT I’M PUZZLED BY, THE LIMITATIONS IN THE WHITE PAPER, THE THINGS, THE

PERFORMANCE BOND COULD GUARANTEE THE PERFORMANCE OF RATHER THAN HAVING IT GUARANTEE GENERALLY AN ESCO’S OBLIGATIONS IN THE MARKET THERE ARE SPECIFIC THINGS YOU COULD ILLUMINATE OR NUMBER RATE TO SATISFY THE PEOPLE BUT THEY AREN’T GOING TO SAY WE WANT A PERFORMANCE BOND WHY IN THE WORLD WOULD YOU SAY WE’RE NOT GOING TO HAVE A PERFORMANCE BOND, GUARANTEE THE CIRCUMSTANCE IN WHICH AN ESCO OWES A LARGE FINE OR A LARGE PENALTY OR SOMETHING LIKE THAT THAT’S PUZZLING WHAT’S GOING ON? >> WE APPRECIATE YOUR COMMENTS IF YOU WOULD LIKE US TO EXPAND USE OF PERFORMANCE BONDS FOR EVERYTHING, PROBABLY GET THE COMMISSION TO CONSIDER THAT >> I’M NOT — WHAT’S YOUR THINKING? WHY WOULD YOU WANT A GUARANTEE IF SOMEONE GOES OUT OF BUSINESS, LET’S SAY AND LEAVES IN THEIR WAKE A LOT OF UNPERFORMED UPON OBLIGATIONS WITH RESPECT TO GUARANTEED SAVINGS BUT ALSO LEAVE A TRAIL OF OTHER VIOLATIONS OF UPC THAT WOULD OTHERWISE RESULT IN A LARGE FINE, WHY WOULDN’T YOU WANT THE PERFORMANCE BOND TO GUARANTEE THAT AS WELL? >> JUST FOR BACKGROUND AND CONTEXT, I THINK THE REASON WE FOCUS ON PERFORMANCE BOND, POLICY IDEA BEHIND IT IS TO PROTECT CUSTOMERS, TO MAKE CUSTOMERS WHOLE SO I SEE AND I TAKE YOUR POINT WE COULD DO MORE, USE IT TO SATISFY FINES OR OTHER OBLIGATIONS OF THE ESCO BUT REALLY I MEAN OUR IDEA IN SNUGT THIS IN THE FIRST PLACE WAS TO PROTECT CUSTOMERS >> SO AS A REMINDER, POR IS A WAY TO MAKE SURE THAT THE UTILITY ISN’T HARMED THE SECURITY PROBLEMS, WHICH IS A WAY TO MAKE SURE GENERATORS AREN’T HARMED THIS IS THE ONLY MECHANISM TO MAKE SURE CUSTOMERS AREN’T HARMED WE CAN CONSIDER EXPANDING IT TO OTHER THINGS IF THAT’S WHAT THE PARTIES ARE INTERESTED IN >> THERE ARE A LOT OF COMPLAINTS, FOR EXAMPLE, THAT RESULT IN SOME TYPE OF REMUNERATION BACK — >> NOT FINANCIAL — THE ACTION THAT THE COMMISSION TAKES ARE NOT FINANCIAL PENALTIES WE HAVE NOT TAKEN ANY ACTIONS THAT RESULTED IN A FINANCIAL IMPACT ON THE ESCO >> WITH RESPECT TO AN INDIVIDUAL CUSTOMER COMPLAINT? >> WITH RESPECT TO INDIVIDUAL CUSTOMER COMPLAINTS, YES THAT’S FROM THE OFFICE OF COMPUTER SERVICES, YEAH THERE’S OFTENTIMES WHEN A CUSTOMER GETS — IN TERMS OF ACTIONS OF THE COMMISSION, COMMISSIONER NOT TAKING ANY ACTIONS AGAINST ESCO THAT RESULTED IN A FINANCIAL PENALTY TO THE ESCO >> WHAT YOU PROPOSE WOULDN’T REACH THE RERATING, FOR EXAMPLE, OF A LARGE NUMBER OF CUSTOMERS >> ISN’T THAT WHAT WE’RE TALKING ABOUT? IF A LARGE NUMBER OF CUSTOMERS, THE GUARANTEED SAVINGS WASN’T ACHIEVED, THEY HAVE TO BE RATED AND THE ESCO DOESN’T HAVE RESOURCES TO RATE THE CUSTOMER, THE PERFORMANCE BOND WOULD BE THE MECHANISM TO DRAW OFF OF >> MAYBE IT’S JUST A TUESDAY MORNING THERE ARE ALL SORTS OF CIRCUMSTANCES, CUSTOMERS HAVE BEEN RERATED FOR A LONG TIME AND THERE’S NO GUARANTEED SAVINGS SO THERE ARE ALL SORTS OF CIRCUMSTANCES IN WHICH A CUSTOMER WOULD BE RERATED >> RIGHT >> IT JUST SEEMS LIKE YOU WOULD WANT TO — SEEMS LIKE EVEN IF YOUR AIM IS TO PROTECT CUSTOMERS, YOU WOULD WANT PERFORMANCE BOND TO GUARANTEE THOSE AS WELL >> AGAIN, IF ESCO HAS RESOURCES TO DO IT, WE DON’T HAVE TO DRAWDOWN IF IS MORE IF ESCO DOESN’T ARE RESOURCES FOR THE SAVINGS WE WOULD DOUBLE DOWN ON PERFORMANCE BONDS THAT’S THE WAY I SEE IT AGAIN, CONSIDER WHATEVER COMMENTS YOU WANT TO FILE MIKE >> OKAY THAT LAST THOUGHT I LIKE THIS IS MIKE NOVAK NATIONAL FIELD DISTRIBUTION WE WANT TO MAKE SURE PERFORMANCE BOND — >> IS IT ON? >> IT ON FOR NATIONAL FUEL WE WOULD PREFER OBVIOUSLY THE COURSE OF BUSINESS TO HOLD FUNDS FOR PRICE GUARANTEE FOR POR AND HOPEFULLY WE NEVER GET TO A POINT WHERE WE WOULD NEED TO DRAWDOWN ON THE

BOND WE WOULDN’T WANT BOND TO BE THE FIRST RESORT SATISFYING OBLIGATION FOR CUSTOMER CREDITS IN READING THE WHITE PAPER, WE ALSO READ THIS MORE EXPANSIVELY SOME LIKE CHRIS DID WITH RESPECT NOT SO MUCH THE PRICE GUARANTEE BUT TERMS OF OTHER RESET CAN’T FIND IT ON HERE SECOND PURPOSE RESET OBLIGATIONS THAT MAY COME FORWARD WE’LL REDRAW THE DISTINCTION, THE OBLIGATION — WE ALL KNOW IT ULTIMATELY TO SUPPORT THE CUSTOMER BUT IF IT’S AN OBLIGATION TO THE UTILITY, IN OTHER WORDS, IMPACT ON THE UTILITY BILL, EXTENDING THE CREDIT, SO FORTH, TO A CUSTOMER WE THINK SHOULD BE HOLDING PERFORMANCE GUARANTEE IF IT’S A COMMISSION OBLIGATION, IF IT’S EXPANDED, AS CHRIS SEEMS TO BE SUGGESTING MIGHT BE APPROPRIATE THAT IN THAT CASE WE THINK THAT THE COMMISSION SHOULD BE HOLDING THE DEVICE, SO WE THINK THAT PART OF THE THINKING HERE NEEDS TO BE BECAUSE OF THE FIVE OR SIX MONTHS TO DO A DRAWDOWN, WE TAKE THAT INTO ACCOUNT IF IT’S INDIRECT, WHETHER YOU NEED TO COME TO WHAT THE COMMISSION NEEDS TO COME TO, DRAWDOWN DEVICE, OUTSIDE THE BILLING SYSTEM, UTILITY NEEDS TO GO TO THE COMMISSION TO DRAWDOWN PERFORMANCE DEVICE, IT’S JUST GOING TO ADD EXTRA TIME LET’S TAKE EFFICIENCY INTO ACCOUNT, AND SO FORTH >> THANK YOU OTHER COMMENTS ON PERFORMANCE BONDS? >> GOOD MORNING NEW YORK STATE ENERGY I JUST WANTED TO MAKE SURE BECAUSE I DON’T SEE THE ACTUAL WORDS HERE YOU’RE OPEN TO CONCEPT OF PARENTAL GUARANTEE AS WELL? >> I DON’T THINK IT’S WRITTEN IN THERE BUT CERTAINLY COMMENTS AND MEDIA WORK FOR THAT AND WE WOULD CONSIDER IT YOU KNOW, I THINK OUR GOAL IS TO TRY TO MAKE THIS AS PAINLESS AS POSSIBLE, EVEN THOUGH IT GOING TO COST SOMEBODY SOME MONEY IF THERE’S A MECHANISM THAT WE CAN BE CONFIDENT IN THAT INCLUDES PARENTAL GUARANTEE, LET’S HEAR IT >> SURE I THINK IT GOES BACK TO COMMENTS MADE EARLIER, IF WE CAN KEEP THIS AS POSSIBLE, ACCOMPLISH WHAT YOU’RE LOOKING FOR, NOT MAKE IT SO NARROW THAT IT’S CONSTRAINS CERTAIN COMPANIES AND OTHERS >> I WANT TO SAY FROM OUR PERSPECTIVE, WE WOULD RATHER NOT HAVE ANY SORT OF SECURITY COLLECTED THROUGH POR HONESTLY, THE THE POINT TOM WAS MAKING EARLIER ABOUT THE MONEY COMING IN, WOULD HAVE TO GO TO GENERAL FUND, WE WOULD TREAT ANY SORT OF REVENUES THROUGH THE POR AS GENERAL REVENUE, WHICH WOULD CREATE COMPLICATION WITH RESPECT TO HAVING TO TRACK THOSE FUNDS SO IF WE’RE GOING TO DO SOMETHING LIKE THAT, UTILITIES HAVE TO BE THE HOLDER OF THAT MONEY, WE WOULD MUCH RATHER IT BE THROUGH SOME DISTINCT INSTRUMENT, WHETHER BONDS, THE INSTRUMENT EARLIER I WOULD RATHER IT GO THROUGH THAT METHOD >> THANK YOU ANY OTHER QUESTIONS ON PERFORMANCE BOND >> JUST TO BE CLEAR, I THINK MARK GOT AT THE ISSUE BEHIND MY QUESTION WHEN YOU TALK ABOUT THAT, POR SOUNDS LIKE CASH AS OPPOSED TO BOND SUPPORTED BY CASH, LC, LETTER OF CREDIT, WHICH IS WHERE WE PAY A BANK TO POST THAT ARE ALL THESE INTERESTS IN PLAY? >> I THINK WE WILL CONSIDER COMMENTS ON ALL OF THOSE INSTRUMENTS AGAIN, WE INCLUDE POR BECAUSE IT’S A MECHANISM THAT ALREADY EXISTS WE DIDN’T WANT TO THINK THROUGH HOW IT WOULD WORK IF THERE’S OPPOSITION AGAINST IT, WE’LL CONSIDER WHATEVER — I GUESS FROM MY LIMITED UNDERSTANDING OF PERFORMANCE BONDS, THEY ARE NOT EASY INSTRUMENTS TO DEAL WITH THAT’S KIND OF — WE TALKED A LOT ABOUT PERFORMANCE BONDS, BUT WE’RE NOT SURE THAT’S THE BEST THING SO WE WERE REALLY OPEN TO COMING UP WITH OTHER MECHANISMS THAT ACHIEVE THIS ON PURPOSE IF YOU HAVE OTHER THOUGHTS, LET US KNOW >> I KNOW INITIALLY WHEN I THOUGHT ABOUT THE BONDING AT THE COMMISSION LEVEL AND EVERYBODY KIND OF GETS TREATED WITH THE

SAME FORMULA, I GUESS WHAT I’M STRUGGLING WITH IS IF YOU’RE IN SIX DIFFERENT SERVICE TERRITORIES AND YOUR POSITION COULD BE DIFFERENT IN EACH ONE, HOW DO YOU ARRIVE AT A FAIR FORMULA ACROSS ALL THE SERVICE TERRITORIES, OR IS IT JUST A FLAT FEE EVERYBODY PAYS IN ORDER TO PLAY >> I THINK THAT’S A REALLY GOOD POINT, CHRIS I THINK WHEN WE PREPARED WHITE PAPER WE IDENTIFIED A COUPLE DIFFERENT OPTIONS FOR CALCULATING THE AMOUNT AGAIN, THOSE ARE IDEAS, NEVER BEEN SHY ABOUT SHOOTING THEM DOWN AND COMING UP WITH BETTER IDEAS WE WELCOME WHATEVER YOU THINK, OTHER OPTIONS, LET US KNOW >> JUST TO POINT OUT, UNDER YOUR QUESTION AND COMMENT, SO IF IT’S AT THE UTILITY LEVEL AND OPERATING THREE UTILITY TERRITORIES, IS THERE A POINT YOU WOULD RATHER HAVE ONE FLAT FEE AS OPPOSED TO PAY MAYBE THREE BONDS, THREE DIFFERENT BONDS IN SERVICE TERRITORY BASED OFF A NUMBER OF CUSTOMERS YOU SERVE IN THAT TERRITORY? >> I THINK IT WOULD — EVERY COMPANY HAS DIFFERENT POSITIONS, MAYBE STRONGER POSITION IN ZONE J VERSUS ZONE A SECOND THING IS YOU CREATE ADDITIONAL ADMINISTRATIVE SET OF ISSUES MANAGING MULTIPLE BONDS, ADJUST AT SOME FREQUENCY LIKE ANNUALLY >> THANK YOU CHRIS >> THE DIFFICULTY OR PERCEIVED DIFFICULTY EXECUTING ON A PERFORMANCE BOND IS AN ISSUE, I THINK THERE ARE OTHER OPTIONS WE CAN ELUCIDATE THERE ARE OTHER FORMS OF FINANCIAL INSURANCE THAT ARE MORE OR LESS EASY TO EXCUSE ON YOU’RE RIGHT WE’RE NOT SHARE I REALLY DON’T LIKE THE POR IDEA IN PART BECAUSE — >> IT SOUNDS LIKE THE ESCO OR UTILITY LIKE THE POR IDEA WE ACTUALLY THOUGHT IT WAS GOING TO BE THE CHEAPEST WAYS FOR ESCO WE CAN TAKE IT OFF THE TABLE >> I THINK DEPENDING ON YOUR POSITION MIGHT END UP BEING VERY EXPENSIVE IF YOU HAVE A LARGE BOOK YOU’RE GOING THROUGH, POR, ALTERNATIVE IS A FLAT PERFORMANCE BOND AMOUNT, THEN YOU MIGHT BE AT A DISADVANTAGE ALSO, WASN’T THERE SOMETHING HE WOULD TALKING ABOUT YEARS AGO RUNNING THROUGH THE DISCOUNT? IT WOULD HAVE BEEN BEFORE YOUR TIME >> IT WOULD HAVE BEEN BEFORE MY TIME >> THAT’S WORTH TALKING ABOUT SEEMS LIKE PHILOSOPHICAL — THIS IS WHY I TRY TO PUT THINGS INTO PRINCIPLES THAT I CAN UNDERSTAND AND WHEN THE UTILITY BUYS OUR RECEIVABLES, THAT MEANS A PARTICULAR THING IT’S A TRANSACTION THAT’S RELATIVELY WELL-KNOWN TO PEOPLE OUTSIDE UTILITY WORLD YOU CAN BE A FACT OR THERE ARE PRIVATE SERVICES YOU CAN DO THIS WITH AND PEOPLE GENERALLY UNDERSTAND WHAT IT MEANS THEY ARE BUYING OUR RECEIVABLES AND DEDUCT A DISCOUNT FOR EXPECTED UNCOLLECTIBLES THAT MAKES SENSE THE IDEA OF HOLDING OUR MONEY FOR SOME OTHER REASON IS THAT UNRELATED TO THE THING WE’RE GETTING BY UTILITY BUYING PRINCIPLES AGAIN, FROM A PRINCIPLE PERSPECTIVE NOT THAT WE’RE ALL — WE SHOULD BE HUNG UP ON REAL PRINCIPLE BUT IT JUST SEEMS LIKE IT’S BETTER TO KEEP THAT AS CLEAN AS POSSIBLE WE SAW THIS WITH THE ASSESSMENT ONCE YOU OPEN THE DOOR TO OTHER THINGS THAT AREN’T THE ORIGINAL INTENT, SOME OF US REMEMBER THE FUEL COST, THE FUEL COST TO PAY FOR THE FUEL, BY THE END OF THE WHOLE THING IT PAYS FOR 20 DIFFERENT THINGS IT JUST SEEMS LIKE ONCE IT BECOMES, WE’LL THROW IT IN POR DISCOUNT >> GO AHEAD, MIKE >> YES I WANT TO DRAW THE DISTINCTION BETWEEN USING PORs PRIMARY FUNDING DEVICE AND TWICE AS GUARANTEE HYPOTHETICALLY IF CHRIS SENT US A SERIES OF CREDITS THAT RESULTED IN $10,000 IN CREDITS

ISSUED TO HIS CUSTOMERS, AND WE WERE SCHEDULED TO PAY HIM PAY HIM $90,000 THAT’S JUST IN THE NORMAL COURSE OF BUSINESS WHERE THE PERFORMANCE GUARANTEE BONDS OR DEVICES COME INTO PLAY IS IF HE DOESN’T HAVE 100,000 SCHEDULED NEXT DAY ONCE WE GET BEYOND THAT POINT, THAT’S WHY WE’RE TALKING THERE WANT TO UNDERSTAND BASICALLY — WE WOULD ALSO AGREE WE WANT TO KEEP POR PURE >> WE DEFINITELY HEAR YOU GUYS WE CAN TAKE POR OUT OF THE WORKS HERE THERE ARE OTHER QUESTIONS, COMMENTS INSIGHTS INTO THE PERFORMANCE BOND ISSUE? GO AHEAD >> WANT TO ADD ONE THING CHRIS, YOU MENTIONED ANOTHER MECHANISM, THE NO NOTICE LETTER OF CREDIT I EXPECT EVERYONE IF THEY HAVE PROPOSALS TO PRESENT THEM IF YOU TAKE LIKE A COUPLE MINUTES TO DESCRIBE HOW THAT WOULD WORK THAT’S NOT A FINANCIAL MECHANISM I’M FAMILIAR WITH >> I’M NOT A FINANCE GUY I REMEMBER FROM YEARS AGO WHAT I WAS WORKING ON THAT’S BASICALLY THERE ARE LETTERS OF CREDIT TYPICALLY HELD BY A BANK AND YOU KNOW, FOR ANY EVENT OF DEFAULT IN THE EYES OF THE LETTER OF CREDIT OR BOND THEY EXECUTE ON THE COLLATERAL THAT’S BEING HELD NOTICE NOTICE MEANS NO NOTICE IT’S GONE LIKE I SAY, THERE’S A SLIDING SCALE, AS I UNDERSTAND IT, AT THE VERY HIGH LEVEL KIND OF A SLIDING SCALE OF CREDIT MECHANISMS FROM THE EASIEST TO EXECUTE UPON TO THE MOST DIFFICULT I THINK THAT IS AND MAKES SENSE NOW THAT WOULD BE PRIMARY CONCERN IN OUR COMMENTS URGE OTHERS TO GIVE YOU KIND OF A RANGE OF DIFFERENT OPTIONS >> ABSOLUTELY >> THAT WOULD BE GREAT OKAY QUESTIONS ON PERFORMANCE BONDS WE HAVE THE ELECTRIC FOLKS HERE WE CAN’T TALK ABOUT GAS BUT WE CAN TALK ABOUT ELECTRICAL SPACING MY ASSUMPTION IS THAT’S REALLY WHY EVERYBODY IS HERE TO TALK ABOUT DOES EVERYBODY — REMEMBER ELECTRIC QUESTIONS, NOT GAS >> THIS AFTERNOON >> SO IF YOU HAVE QUESTIONS YOU WANT TO START WITH? >> WELL, I JUST — >> I DON’T KNOW IF EVERYBODY KNOWS HIM, HE WORKS WITH MIKE THIS IS PAUL AND MIKE >> ACTUALLY I DO HAVE NOT ONLY ELECTRIC BUSINESS >> I KNOW YOU DO >> I’M GOING TO MAKE SOME GENERAL COMMENTS TO JUMP IN STRAIGHT THERE’S A LOT OF COMMENTS TO MAKE ABOUT THE FORMULA I DO HAVE ONE TO MAKE, TAKE IT FROM THERE TO OTHER PEOPLE GOING FORWARD IF WE’RE GOING TO GO THIS PROCESS, WE NEED SOME TIME OF ILLUSTRAIVE EXAMPLE LOOKING AT A WORKSHOP ENERGY EXPERTS SIT DOWN, PEOPLE DOING THE TRADING, FORMULAS, CAN SIT DOWN AND ACTUALLY GO THROUGH IT I THINK KICK IT OFF AN EXAMPLE OF HOW IT MAY WORK IN A CERTAIN TERRITORY WOULD BE VERY HELPFUL SO I CAN’T — I KNOW ENOUGH TO BE DANGEROUS THE WAY THE FORMULA IS, WE SHOULD GO THROUGH IT THROW ONE THING OUT, LET OTHER PEOPLE SPEAK I THINK THAT’S SOMETHING WE ABSOLUTELY NEED SO WITH THAT SAID, KICK OFF ON SAYS REFERENCE PRICE WILL BE DONE SIX WEEKS BEFORE THE FIXED PRICE IS IN EFFECT >> THAT’S WAY TOO LONG PEOPLE THAT DO PRICING IN THE BUSINESS, IF WE HAVE RACK RATES OR SOMETHING, DO WEEK IN ADVANCE TO DO SIX WEEKS AHEAD IS WAY TOO SOON THEN I FOUND, I DON’T WANT TO BE INSULTING BUT THE APPROACH HERE, THREE-DAY AVERAGE SIX WEEKS AHEAD PROBABLY DON’T NEED THREE-DAY AVERAGE IF YOU’RE SIX WEEKS AHEAD >> LET ME MAKE A POINT I’M OBVIOUSLY NOT THE EXPERT BUT THE INTENT WAS TO COME UP WITH A NUMBER >> YEAH >> SO YOU CAN MARKET THE NUMBER THIS IS A NUMBER WHICH IF YOU’RE MARKETING IT WE’RE NOT GOING TO SAY A YEAR FROM NOW THE NUMBER WAS TOO HIGH

>> NO, I UNDERSTAND THAT THE MARKET CHANGES LET THE MARKET SPEAK TO IT, CHANGES SO RAPIDLY, GOES SIX WEEK AHEAD FIRST I’D LIKE TO SEE AN ILLUSTRATIVE EXAMPLE AND SECONDLY I THINK THE TIME IS TOO LARGE I THROW THAT OUT THERE FOR DISCUSSION YOU TALKED ME INTO IT >> WELL, PART OF THAT FROM PERSONAL EXPERIENCE HAVING RECEIVED OFFERS FROM ESCOs, FIXED PRICE PRODUCTS, THEY USUALLY OPEN ABOUT 30 DAYS I DON’T RESPOND TO THE ESCO THAT WEEK SO SIX WEEKS WAS MEANT TO, AGAIN, AS MENTIONED, PROVIDE THE ESCOs ENOUGH TIME TO MARKET A FIXED PRICE PRODUCT >> MAYBE COMMENT ABOUT A SIGNIFICANT CHANGE IN THE MARKET, WOULD HAVE TO BE UP THERE, IF THE NARCOTIC MOVES I HEAR WHAT YOU’RE SAYING THAT IS A POINT PEOPLE DO MARKET AHEAD SIX WEEKS JUST SEEMS LIKE A LONG — >> THAT IS A LONG TIME TO HOLD A >> A LONG TIME TO HOLD A PRICE I DON’T THINK EVEN A MONTH OTHER EXPERTS WILL ADDRESS IT HERE WE UPDATE RACK RATES WEEKLY WHEN WE FIND CUSTOMERS ON THE WEB OR SOMETHING LIKE THAT I THINK IT’S AN IMPORTANT POINT THERE’S A FEW OTHER DETAILS TO GO THROUGH, LET OTHER PEOPLE IF THEY WANT TO COMMENT ON THAT >> DO WE HAVE OTHER COMMENTS ON THE SIX WEEK, FOCUS ON AREAS AND REMPS POINTS? >> I THINK A LITTLE MORE GENERAL PERSPECTIVE, THERE’S A PROBLEM OR CONCERN, IN TERMS OF THE TIME PERIODS BETWEEN WHEN THE PRICE IS BEING SET, I THINK IT’S LIKE GENERAL WE’RE LOOKING AT AND TIME THE ESCO GOES TO THE MARKET THAT’S NOT SOMETHING ANY OF US KNOW WHEN WE’RE DOING IT BUT THE FURTHER YOU PUSH IT OUT, THE GREATER PROBABILITY OF FIXED COST I THINK THAT’S THE GENERAL PROBLEM EITHER NOT EXACTLY CLEAR TO ME WHAT THE PERFECT NUMBER WOULD BE IF YOU’RE DOING SOMETHING SIX WEEKS OR SIX MONTHS, WHATEVER THE CASE MAY BE, THAT LENGTH OF TIME CAN MAKE A VERY BIG DIFFERENCE IN THE REAL WORLD >> THERE’S NOOT PERFECT NUMBER PEOPLE DO EVERYTHING NOW IF YOU HAVE A SIX-WEEK NUMBER, THE ONLY THING THAT PREVENTS ESCOs FROM DOING IS SIGNING UP CUSTOMERS MORE THAN SIX WEEKS IN ADVANCE OR RENEWING CUSTOMERS ON A FIXED PRICE, MORE THAN SIX WEEKS IN ADVANCE AND WE DO THAT ALL THE TIME GIVEN THE TIME LINES FOR RENEWAL, ESPECIALLY IN THE SMALL BUSINESS SECTOR YOU MIGHT BE SENDING OUT RENEWAL OFFERS TWO OR THREE MONTHS AHEAD OF TIME YOU CAN HEDGE FOR ANY FUTURE DATE ESPECIALLY AGAIN THE SMALL BUSINESS SECTOR, FIXED PRICE IS SO IMPORTANT FOR CUSTOMERS WE’RE OFTEN AND USUALLY GOING OUT TO NEW CUSTOMERS ON NEW FIXED PRICE OFFERS MUCH EARLIER THAN SIX WEEKS OF COURSE, YOU KNOW, IF YOU’RE NOT GOING TO KNOW WHAT THE PRICE CAP IS BEFORE SIX WEEKS, WE CAN’T DO THAT ANYMORE SO A HUGE — SIX WEEKS, TAKE ANY HARD NUMBER, THEN YOU’VE ELIMINATED ANY NUMBER, ANY OFFER TO COME THAT WOULD COME TYPICALLY BEFORE — MORE THAN SIX WEEKS BEFORE THE START DATE WHICH AGAIN, ESPECIALLY FOR SMALL BUSINESS CUSTOMERS LIMITS A BIG PART OF THE VALUE THEY GET FROM A FIXED PRICE YOU TRY TO MOVE IT BACK TO ACCOMMODATE THOSE OFFERS, YOU WOULD EXACERBATE MARKET MOVEMENT BETWEEN THE TIME YOU SET THE CAP AND THE START DATE AGAIN, THERE’S A PRETTY BIG DIFFERENCE BETWEEN ACQUISITION PRICING AND RENEWAL PRICING PEOPLE, ESPECIALLY IN SMALL BUSINESS, YOU MIGHT BE DOING — CHANGING YOUR ACQUISITION, YOU THINK YOU CAN GET THAT RENEWAL INTO THE QUEUE TO MAKE IT INTO THE SWITCHES FOR THAT MONTH MARKET MOVEMENT.” THE WHOLE IDEA HAVING A SPECIFIC DATE, HAVING A SPECIFIC DATE ELIMINATES A WHOLE RANGE OF OPTIONS THAT EXIST NOW THAT MIGHT BE TYPICALLY DONE BEFORE, BEFORE THE DATE, AFTER THE DATE >> I’M DAVE FROM NATURAL GAS AS POINTED, A NUMBER OF ISSUES ON REFERENCE PRICES BUT IF WE’RE JUST FOCUSING ON THE ISSUE OF

SIX WEEKS IN ADVANCE ECHO WHAT CHRIS SAID OUR MOST COMMON COMMERCIAL CUSTOMERS ARE CONTRACTING MONTHS — RIGHT NOW WE’RE PRICING PEOPLE 2017, 2018 WHO PERCEIVED A VALUE OUT IN LONG DATED START MONTHS SO THE SIX WEEKS CANNOT POSSIBLY APPLY TO THAT NOT ONLY THAT THE CURVES ARE DIFFERENT BUT THE TIME BETWEEN THEN AND NOW IS MUCH GREATER >> QUICKLY, YOU SAY COMMERCIAL, ARE YOU TALKING LARGE INDUSTRIAL OR SMALL COMMERCIAL AGAIN, WE’RE FOCUSING ON THE MASS MARKET >> ABSOLUTELY I UNDERSTAND THAT OUR SMALL COMMERCIAL GAS CUSTOMERS ARE WHO WE FOCUS ON ARE ALL — WOULD ALL BE SUBJECT TO THAT KIND OF, YOU KNOW, PRODUCT AVAILABILITY RESIDENTIALS, I UNDERSTAND MIGHT APPLY, COMMERCIALS SEE VALUE ON FIXED PRICE PRODUCT FOR OTHER PRODUCT WE OFFER, LONG DATED START DATES ALSO WE MIGHT RENEW A CUSTOMER WHO DOESN’T — THERE’S NO ENROLLMENT INVOLVED SO SIMPLY DOING A RENEWAL, WE COULD CHANGE THEIR PRICE TOMORROW ON A SIX-WEEK PERIOD SHOW YOU TIMES, NIM EX AND BASIC CURVES THE PRICE HAS DOUBLED IN SECTION WEEKS TIMING IS DIONNE ANY PRICE CONTROL I ESPECIALLY WANT TO POINT OUT LONG DATE AND START DATES AND IMMEDIATE RENEWALS THAT DON’T ALLOW A DELAY IN SWITCH PROCESS >> HI, COUNCIL FOR ECOCOALITION GENERALLY TO ECHO WHAT MANY SAID, A PRICE ABOUT SIX WEEK OUT IN ADVANCE WITH REGARD TO HOW THE PRICING OFTEN FOLLOWS THE WHOLESALE MARKETS AND THE WHOLESALE MARKETS TEND TO HAVE SEASONAL VOLATILITY AND CHANGE ON A REALTIME BASIS THERE’S ALSO AN IMPACT ON HEDGING AND HOW AN ESCO WOULD BE TO HENLEY WHICH IS OFTEN A COUNTERPART FOR FIXED RATE PRICE YOU HAVE A COMBINATION ON WHAT YOU CAN MITIGATE IT WITH BY HEDGING AND IF WE’RE GOING TO BE SETTING A PRICE, YOU KNOW, I THINK THAT WE REALLY NEED TO CONSIDER HOW YOU’RE ABLE TO DO THAT UNDER MECHANISMS MOST USE IN ORDER TO PRICE STRAIGHT PRODUCTS THE VOLATILITY REALLY WOULD PUT A PRODUCT THAT IS PRICED SIX WEEKS AHEAD OF TIME BASICALLY OBSOLETE CHRIS MENTIONED YOU’RE ACTUALLY SELLING A PROJECT SIX WEEKS IN VAN AND PRICING IT ON THAT DAY FOR WHEN THEY WOULD START THE PRODUCT >> SORRY, YOU’RE SAYING SIX WEEKS IS TOO LONG AS WELL? >> I SUGGEST, YES, I THINK SIX WEEKS IS TOO LONG THE LONGER THE TIMEFRAME OUT, THE LESS ACCURATE THE REFERENCE PRICE IS LIKELY TO BE I THINK MOST ESCOs I WORK WITH IN PREFERRED SUPPLY AGREEMENTS, THEY ARE RECEIVING UPDATES FROM THEIR SUPPLIERS MAYBE A WEAKEN ADVANCE SO LET ME BACK UP PREFERRED SUPPLY AGREEMENTS MIGHT HAVE AN ARRANGEMENT WHERE THE SUPPLIER WOULD — THEY WOULD OFFER AN ESCO A PRODUCT THEY WOULD GIVE THE ESCO ITSELF PRICING FOR SIX TO EIGHT PRODUCTS, 12 MONTHS, 24 MONTHS, THOSE PRICINGS USUALLY COME OUT ONCE A WEEK AND SOMETIMES DAILY BECAUSE THIS IS HOW THE PRICING IS OCCURRING IN THE REAL MARKET, I THINK IT’S A REALLY STRONG INDICATOR OF HOW WE SHOULD BE FOLLOWING — HOW WE SHOULD BE APPROACHING REFERENCE PRICING >> THANKS JUST REAL QUICK, WE RECOGNIZE CONCERNS, ADVANCE, PRICES MAY CHANGE LIKE MIKE HAD MENTIONED EARLIER, WE’RE TRYING TO FIND THAT MIDDLE GROUND THAT WOULD STILL PROVIDE ESCOs A CHANCE TO RECEIVE IT TREND BACK TO ESCOs, YOU DON’T NEED TO SUMMONED NOW, YOU CAN DO SO IN YOUR COMMENTS, WHAT WOULD BE A BETTER TIME RECOGNIZING THERE’S TIME INVOLVED IN CREATING THIS PRICE AND PUTTING IT OUT THERE SO THERE’S TIME TO MARKET IT AND EXPIRED AND ONTO

THE MEMBERS MONTH >> WOULD YOU CONSIDER THIS DISCUSSION ABOUT RENEWALS AND CONTRACTS AND A LOT OF INTERESTING POINTS PEOPLE RAISED WOULD IT BE POSSIBLE IF YOU USED SIX MONTHS THE MARKET MOVED TO REDO IT OR SOMETHING — WE ADOPT KNOW HOW IT WILL BE USED ENFORCEMENT MECHANISM THE MARKET HAPPENED TO MOVE OVER SIX WEEKS AND LOOK AT PARTICULAR SURFACE, THAT MAY BE A WAY OF MAKING IT SIMPLER YOU KNOW, REFERENCE SITES SIX WEEK IN ADVANCE AND IF SOMETHING HAPPENS AND THE MARKET MOVED, THAT WOULD BE TAKEN INTO CONSIDERATION, SO YOU CAN KIND OF FORMALIZE THAT >> I’LL JUST THROW IT OUT AS A POSSIBLE CONSIDERATION MORE DYNAMIC >> SO I KIND OF FEEL LIKE THE ANSWER TO THE QUESTIONS, THERE ISN’T AN ANSWER TO THE QUESTION >> I JUST WANT TO REMIND EVERYBODY AGAIN, WHICH I’VE DONE MANY TIMES, THE COMMISSION WILL ISSUE AN ORDER IT’S IN YOUR BEST INTEREST TO HELP COME UP WITH AN ANSWER >> WHICH BRINGS BACK TO A PROPOSAL WE HAVE MOOTED IN OTHER DISCUSSIONS, THIS CONSTRUCT IS SIMILAR TO ONE WE LOOK AT OFFERS OUT THERE IN THE MARKETPLACE >> WE’VE RAISED THAT AT THE HIGHEST LEVELS FROM THIS AGENCY AND THEY ARE NOT INTERESTED IN CONSIDERING THAT SO I THINK WE NEED TO FOCUS — >> I THOUGHT YOU SAID THE COMMISSION WAS GOING TO — DECIDE YOU’RE SAYING THE COMMISSION HAS ALREADY DECIDED >> NO, I’M NOT SAYING THE COMMISSION HAS ALREADY DECIDED IF YOU HAVE A PROPOSAL, WE’LL INCLUDE IT IN THE ORDER WE HAVE TALKED TO THE AGENCY AND THEY WANT US TO PURSUE THE REFERENCE PERSON NOT THE — THERE’S A LOT TO CONFRONT I DON’T KNOW IF ANYBODY — CUSTOMERS WERE OVERCHARGED $195 MILLION FOR THE LAST 24 OR 28 MONTHS IN THE TERRITORY THE COMMISSION ISN’T INTERESTED IN SEEING CUSTOMERS — >> FIXED PRICE OFFERS >> WAS THERE ANY EVIDENCE THAT WHAT, CHRIS? >> MY GUESS IS IT WAS A COMBINATION OF VARIABLES >> JUST A GUESS >> JUST A GUESS MY SENSE WITH MY 20 YEARS EXPERIENCE IS THAT CUSTOMERS HAVE BEEN OVERCHARGED AND SO AS I WAS SAYING, YOU CAN PUT THAT ON THE TABLE AND IT WOULD BE CONSIDERED ALONG WITH EVERYTHING ELSE OUR RESPONSIBILITY, WHICH HAS BEEN DIRECTED TO US, IS TO COME UP WITH A REFERENCE PRICE IT’S IN EVERYBODY’S BEST INTEREST TO COME UP WITH A REFERENCE PRICE >> NOW THROUGH 2017 THE IRONY HERE, HAVE YOU GUYS LOOKED AT THE PRICE CURVES? HAVE YOU? >> THE FUTURES, YES >> SO WHAT YOU’RE PROPOSING IS GOING TO COST CUSTOMERS MONEY, BECAUSE WE CAN’T OFFER THEM — IF THE PRICE IS BACK, THAT MEANS YOU MIGHT GET A CALENDAR 2017 PRICE THAT IS CHEAPER THAN AN OFFER THAT INCLUDES 2016 THAT’S WHAT A BACK RATED CURVE MEANS, WHICH IS WHAT WE HAVE SO IF WE CAN’T DO THAT, BECAUSE IS A CRAP SHOOT, AND WE’RE NOT GOING TO DO THAT, THEN YOU’RE COSTING CUSTOMERS, BUILDING — WE WERE AT HISTORICALLY LOW PRICE WE MAY NEVER SEE THIS AGAIN CUSTOMERS ARE NOT GOING TO BE ABLE TO TAKE ADVANTAGE OF IT, YOU’RE NOT GIVING SUPPLIERS FLEXIBILITY TO DO THINGS WE’VE BEEN DOING FOR YEARS THAT ACTUALLY SAVE CUSTOMERS MONEY I KNOW YOU LAUGH BUT YOU KNOW, WHERE WE GOT HERE — >> WE HAVE NO EVIDENCE CUSTOMERS ARE SAVING MONEY FOR US WE HAVE ZERO EVIDENCE CUSTOMERS ARE SAVING MONEY >> WITH THIS PRICE, EVERYBODY UNDERSTANDS THERE’S A HEDGING COST, A COST TO HEDGE, AND NO ONE HAS SAID THAT ANY OF WHAT YOU CALL OVERCHARGING, BECAUSE RIGHT NOW THE HEDGING PREMIUM WOULD JUST GET ROLLED INTO WHAT YOU CALLED OVERCHARGING, EVEN THOUGH CUSTOMERS LOOK AT THAT AS MONEY WELL SPENT AGAIN, NOBODY IS SAD AT THE END OF THE YEAR THEY PAID FOR LIFE INSURANCE AND DIDN’T DIE SO THERE IS NOT A BIT OF EVIDENCE THAT PEOPLE ARE PAYING TOO MUCH TO HEDGE IN THIS MARKET YOU ARE TAKING A NUMBER OF OPTIONS TO HEDGE THAT CUSTOMERS, ESPECIALLY SMALL BUSINESS CUSTOMERS, NOT AN IOTT

CUSTOMERS, NOT AN IOA OF EVIDENCE IN THE RECORD, ESPECIALLY SMALL BUSINESS, THEY ARE PAYING TOO MUCH TO HEDGE THAT’S JUST THE REALITY OF THE SITUATION >> THANK YOU >> JUST A COUPLE OF POINTS TO CONSIDER, AND THAT IS TO GO BACK ON LOW COMMODITY PRICE, WENT FROM 2013, VORTEX WHERE IT WAS TRIPLE DIGITS, $100 PLUS WE ALSO SAW PAST WINNER $25 PRICING IN FEBRUARY IN NEW YORK CITY SO WE SAW ALMOST LIKE A 6-1 DIFFERENCE IN MARKETS OVER A PERIOD OF TIME, WHICH IS JUST A NATURE OF MARKET, COMMODITIES, DEMAND AND EVERY THING ELSE THEY POINT OUT THAT’S AN ISSUE THAT JUST HAPPENED IN THE MARKET THE OTHER THING, GO BACK TO RON’S POINT THERE’S TWO NEEDS, RIGHT? A NEED FOR ADVANCE PRICING, GO OUT AND CAMPAIGN AND OFFER A PRODUCT GOING FORWARD THEN THERE’S ALSO A NEED TO HAVE SOME UPDATING LET’S SAY, FOR EXAMPLE, IN THAT SIX OR EIGHT-WEEK WINDOW, A MAJOR UNIT AT THE BOTTOM TRACKS AND IT’S GOING TO BE OUT FOR THREE MONTHS OR A MAJOR TRANSMISSION LINE WITH MAJOR TRANSFER CAPABILITIES GOES DOWN AND ALL OF A SUDDEN THAT CAN CHANGE THE DYNAMIC OF THE MARKET YOU HAVE TO AT LEAST FIGURE OUT A WAY TO FACTOR IT IN >> CONSTELLATION, YOU GUYS SEND OUT LETTERS WITH A FIXED PRICE >> YOU COULD CONCEIVABLY HAVE LIKE A CAMPAIGN BUT IN THAT SIX MONTHS INSIDE THE WINDOW, ALL OF A SUDDEN SOMETHING MAY OCCUR YOU MAY SAY I’M STILL GOING TO OWE THAT PRICE BECAUSE THAT’S WHAT I’M GUARANTEED DOESN’T MEAN IN CHECK PRESUPPOSING YOU HAD AN ESCO THAT THEIR BUSINESS IS TO HEDGE IN ADVANCE BLOCK OF POWER AND FIGURE OUT WHAT A REASONABLE OFFER IS AND SELL THAT TO RESIDENTIAL CUSTOMERS IF THAT’S YOUR MODEL YOU GHO OUT AND HEDGE POWER AND GOES DOWN SIGNIFICANT AND A NEW REFERENCE PRICE IS SET.” NOW SIGN UP CUSTOMERS ON FIXED PRICE OFFER FOR WHATEVER LENGTH OF TIME IT IS ARE YOU PRICE GOUGING? IN THE INTERVENING PERIOD THE WHOLESALE MARKET HAS GONE DOWN? YOU’RE NOT PRICE GOUGING, THAT’S WHAT YOU HEDGED THAT CAN BE BAD FOR YOUR BUSINESS THAT’S NOT PRICE GOUGING I WANT TO GO BACK TO CHRIS’S POINT, WHICH IS A REALLY, REALLY GOOD ONE WE’RE FOCUSING ON PROTECTING CUSTOMERS, WHICH ABSOLUTELY SUPPORTS THAT HOW MUCH OF THAT QUOTE, UNQUOTE, OVERPAYMENT ON FIXED PRICE PRODUCT IS A REALLY, REALLY IMPORTANT QUESTION WHEN WE’RE TRYING TO FIGURE OUT WHAT THE RIGHT POLICY IS MOVING FORWARD IF THE VAST MAJORITY OF THAT QUOTE, UNQUOTE, OVERPAYMENT IS ON MONTH TO MONTH PRODUCTS, WE SHOULD BE FOCUSING ON MONTH TO MONTH PRODUCTS LOOKING AT PRICE GOUGING >> WHEN WE LOOK AT THE WEBSITE AND LOOK WHAT’S OFFERED IN THE WEBSITE, VAST MAJORITY OF THE PRODUCTS ARE STILL NOT SIX STRAIGHT OFFERS A YEAR AGO THE VAST MAJORITY OF THE OFFERS ARE NOT FIXED RATE OFFERS DO WE HAVE A DEEP UNDERSTANDING OF WHAT THE OVERCHARGES WERE? NO, BECAUSE THE UTILITY DON’T KNOW THE CUSTOMERS DON’T KNOW WHAT THE CUSTOMERS PRODUCT THEY PURCHASED WAS WE DO KNOW THERE’S A LIMITED NUMBER OF FIXED RATE >> TURNED OUR POSITION, CHANGE IT A LITTLE, I THINK THE COMMISSION DID COME OUT WITH UTILITY HAVE A DIFFERENT MECHANISM >> THE COMMISSION — >> PAY FOR THAT COMING OUT >> FEBRUARY ORDER DOES NOT ALLOW FOR FIXED RATE OFFERS JULY ORDER WE EXPECT FIXED RATE OFFERS >> THE QUESTION, DO THIS WITH

ELECTRIC, HAVE YOU IN GAS, 9 INCH, PARTICULARLY ELECTRIC MSC — NOT MSC BUT PLUS I WOULD CONSIDER BASED ON VARIABLE INDEX TRANSPARENT THE OTHER IS A FIXED RATE WOULD YOU RIGHT THAT IN THE COMMENTS WOULD YOU AGREE WITH THAT? THE RISK IS LOCKED IN AND THE INDEX IS TRANSPARENT YOU CAN’T HAVE GOUGING LIKE YOU HAVE WITH VARIABLE PRICES, WHATEVER ESCO MADE UP, ESCO HAPPENED TO MAKE UP WOULD YOU CONSIDER THAT? >> CAN WE TALK GAS FOR A SECOND? IF YOU TOOK THE FUTURES ELECTRIC COMMODITY PRICE AND HAD FIXED, ZONE J PLUS $0.04 PER HOUR, I CONSIDER THAT A FIXED PRICE, A LOT OF RISK, ALL THE ANSWER LATER AND EVERYTHING THE INDEX YOU WOULD MEASURE FORKS AGAIN, IS TRANSPARENT THE CUSTOMER CAN LOOK IT UP YOU CAN’T CHEAT ON IT IT’S PUBLICLY AVAILABLE CONSIDER THAT HYBRID PRODUCT AS A FIXED RATE PEOPLE DO SELL THAT, ESPECIALLY POPULAR IN GAS I WANT TO MAKE SURE WE HAVE THAT AS A FIXED RATE WE’RE GOING TO MAKE THE ARGUMENT IT SHOULD BE A FIXED RATE IT WAS LEFT OUT OF THE WHITE PAPER SO I’M RAISING IT NOW IT NEEDS TO BE CONSIDERED WHERE IT FITS I DON’T THINK IT’S VARIABLE, TRANSPARENT, LOCKED IN HAVE YOU CONSIDERED ANY OF THAT? >> ON THE ELECTRIC SIDE THAT’S WHAT WE DID ESSENTIALLY ADDED — WE HAVE MULTIPLIERS AND ADDED TWO AT THE END >> IF THE COMMISSION HAD TWO STANDARDS ONE FOR VARIABLE RATE FOR UTILITY PRICE AND ONE FOR FIXED, INDEX PLUS FIXED ADDER YOU WOULD PUT IN FIXED CATEGORY NOT VARIABLE CATEGORY THAT’S WHAT I’M SAYING A 12-MONTH TERM LONG-TERM HYBRID PRODUCT FOR 12 MONTH PERIOD RAINFALL IT’S A NIM EX, ZONE J PLUS >> WHOLE DIFFERENT — NOT COMPLETELY FIXED >> PUBLISHED INDEX SO THERE’S NO DISPUTE AS TO WHAT THAT PUBLISHED INDEX IS A LOT OF CUSTOMERS LIKE NYMEX THEY WANT THE VARIABLE PORTION OF IT WE LOCK IN ERROR, PROFIT MARGIN, CAPACITY, I CONSIDER THAT FIXED PRICE 12-MONTH TERM AND IT’S TRANSPARENT >> INDEX PRICE >> YES >> CALCULATED DAILY? >> NO, CALCULATED 12 MONTHS IN ADVANCE IT WOULD BE NYMEX PLUS, I DON’T KNOW, $0.40 >> $0.40 A YEAR IN ADVANCE, NIM EX IS WHAT IT IS >> EVERY MONTH, CLOSES EVERY MONTH PLUS AGREED UPON IN ADVANCE — IF YOU HAD DIFFERENT REGULATIONS FOR VARIABLE, THAT SHOULD BE IN THE FIXED BUCKET >> OKAY THAT’S NOT REALLY — THE PRICE HAS CHANGED, HAVE WE NOT, BASED ON PUBLISHED INDEX >> I AGREE WITH YOUR POINT ON TRANSPARENCY WE REALLY HAVE BEEN LOOKING TOWARDS FIXED DEFINITION IF YOU MARKET A FIXED PRICE PRODUCT TO THE CUSTOMER, THAT MEANS A PRODUCT WITH THE SAME PRICE FOR THAT 12-MONTH PERIOD I SEE WHERE — YOU KNOW, JUST PERSONALLY I HESITATE TO CALL THAT FIXED EVEN THOUGH IT’S ON A PUBLIC INDEX IT’S A DIFFERENT PRICE EACH MONTH FOR THE CUSTOMER >> SOMETHING THEY WANT AND DO HAVE PROTECTION BECAUSE YOU CAN’T ADD CHARGES TO IT IF THEY DISAGREE WITH THE RATE, THEY CAN JUST CHALLENGE IT RIGHT AWAY NOT LIKE NORMAL VARIABLE RATE WITH RECONCILIATION, CHARGES YOU MAY BE THROWING IN CUSTOMER WOULDN’T KNOW NIM ECK OR CHANGE, WHATEVER, NOT THE DISCRETION OF THE MARKETER IS WHAT I’M SAYING THAT’S WHY MORE LIKE A FIXED PRODUCT UNPOPULAR PRODUCT, LESS POPULAR THAN ELECTRIC BUT MAY BE SOMETHING PEOPLE DEMAND >> BENEFIT THE RECORD BY REALLY DESCRIBING THAT >> DID YOU WANT TO — >> YOU SAID SOMETHING SIGNIFICANT BEFORE THAT I THINK WE KIND OF GLOSSED OVER

IT, WHICH IS UTILITIES AND THEREFORE COMMISSION DOESN’T KNOW WHAT TYPE OF PRICE THE CUSTOMERS ARE ON, WHICH IS WHY, YOU KNOW, IT CAN BE ALLEGED THAT SOME OF THE PRICE, RELATED TO FIXED PRICE MY ATTITUDE WHEN I FIRST READ THE WHITE PAPER, THIS IS ONE AREA WHERE COMPETITION IS LEAST FETTERED IN NEW YORK A NUMBER OF COMPETITORS HAVE A WE RELY ON PRESSURE TO KEEP THE CUSTOMER ONCE THEY ARE ON, THE CUSTOMER CAN BE ASSURED THEIR PRICES WILL MOVE UNLIKE VARIABLE PRICING >> NOT WANT TO GO THERE AND TALK ABOUT HOW MANY ESCO AGREEMENTS >> THAT’S A SIGNIFICANT ISSUE, I WOULD AGREE ON THAT THE THAT’S NOT SOMETHING WE WOULD SUPPORT WITH RESPECT TO MECHANISM IF YOU DON’T KNOW WHAT RATE A CUSTOMER OOR WHAT PRICE A CUSTOMER IS ON, HOW IS THIS GOING TO BE APPLIED? >> AGAIN, APPLIED THROUGH THE COMPLAINT PROCESS JUST LIKE WE DO NOW, DON’T HAVE A STRONG OVERSIGHT ROLE BUT WHEN WE GET COMPLAINTS WE LOOK INTO IT I JUST WANT TO REMIND EVERYBODY THAT THREE YEARS AGO OR TWO YEARS AGO, THERE ARE MAYBE A HANDFUL AND I MEAN A HANDFUL OF ESCO SUNSHINE OFFERING FIXED RATE AGREEMENTS THANKS FOR COMING, KIM WE’LL HAVE HER FOR ANOTHER 30 SECONDS IN A MINUTE OR TWO SO I THINK IT’S GREAT WE’VE GOTTEN MORE FIXED RATE AGREEMENTS BECAUSE WE DON’T SEE VALUE IN THE COMMODITY AND I THINK IT’S GREAT THERE’S MORE ESCOs WILLING TO OFFER AGREEMENTS BUT WE STILL NEED PARAMETERS AROUND THEM >> ONE OF THE ITEMS THAT CAME UP IN THE WHITE PAPER, A 12-MONTH LOOK HAVE YOU THOUGHT ABOUT EVEN LONGER TERMS GOING BACK TO CHRIS’S POINT THAT A 24, 36 THE REASON I BRING IT UP, NOT ONLY RECENT AGGREGATION LONGER TERM BUT THEN PEOPLE MAY SEE A VALUE IN LOOKING FURTHER OUT, JUST IN THEIR VIEW, AND HAVE YOU THOUGHT ABOUT THAT? >> AT THE MOMENT, NO, ONLY THOUGHT ABOUT A 12-MONTH PRODUCT >> I JUST WANT TO SAY THE MAJORITY OF THE 12 MONTH — FIXED RATE CONTRACTS ARE FOR 12 MONTHS THAT SEEMS TO BE WHAT MOST ESCOs OFFER I THINK A GOOD POINT, ESPECIALLY WITH CCA THAT’S SOMETHING WE’LL NEED TO CONSIDER >> DAVE FROM NATURAL GAS I’M NOT COMPLETELY SURPRISED THAT THE COMPLAINTS FOR PRICING BEING DIFFERENT FROM UTILITY HAVE INCREASED WE ARE AT WHAT APPEARS TO BE THE END OF A THREE-YEAR DOWN MARKET SINCE APRIL OF 2013, THE MARKET HAS BEEN MOVING DOWN IN OUR AREA NEW YORK STATE DRAMATICALLY DOWN TWO YEARS AGO OR THREE YEARS OR LAST YEAR HAVE SEEN PRICES GO DOWN UNDER FIXED PRICES I’M NOT SPRICHD RAMPED UP IN THAT REGARD BACK TO FIXED PRICE ISSUE AND I DON’T MEAN THIS TO SOUND LIKE YOU HAVEN’T THE SKILL OR RIGHT IDEAS BUT ANY REFERENCE YOU MAKE THAT REGARDS THE KIND OF COMMERCIALS WE’RE TALKING ABOUT, COMMERCIAL CUSTOMERS INCLUDED, IS DOOMED TO BE WRONG I AM A SUPPLY GUY I’VE RUN SUPPLY FOR ELECTRICITY AND NATURAL GAS FOR RG & E ENERGETICS AND BOUGHT TENS OF THOUSANDS OF MEGAWATT AND MILLIONS OF NATURAL GAS YOU CAN’T MAKE A REFERENCE POINT THAT WILL BE RIGHT >> LET ME AGAIN REMIND YOU OUR

RESPONSIBILITY IS TO COME UP WITH A REFERENCE PRICE THAT WORKS DESPITE THE IMPOSSIBLE, WE’RE LOOKING FOR YOUR HELP TO COME UP WITH A REFERENCE PRICE THAT WORKS >> I UNDERSTAND THAT >> WE’RE GOING TO BE MAKING RECOMMENDATION TO THE COMMISSION >> KNOWING FULL WELL IT WOULD BE VERY DIFFICULT IF NOT IMPOSSIBLE TO MAKE A REFERENCE PLACE THAT WOULD WORK — THE GENTLEMAN IN FRONT OF ME FROM CONSTELLATION AND THE GENTLEMAN DOWN AT THE END OF THE TABLE, FIXED PRICES ARE NOT WHAT’S AT ISSUE HERE THEY ARE EXTREMELY COMPETITIVE AGAINST ONE ANOTHER THEY MAY BE EASY GUN THE LINE FIXED PRICES ARE NOT HARD TO COMPARE, THAT’S NOT WHAT THE PROBLEM IS THE PROBLEM IS WHAT HAPPENS WHEN THEY ARE NOT UNDER FIXED PRICE BEAR IN MIND YOU HAVE SEEN CIRCUMSTANCES WHERE PEOPLE DEFAULTED ON CONTRACTS THEY DON’T STAY IN BUSINESS VERY LONG WE HAVE NEVER DEFAULTED ON FIXED PRICE CONTRACT SO FIXED PRICES NOT AT THE ISSUE, IT’S WHEN THEY ARRIVE AT COMPETITIVELY KNOWN PRICE THAT’S WHEN THE GOUGING OR WHATEVER WE WANT TO CALL IT IS COMING FROM I’M CONVINCED OF THAT BUT I HAVE AS LITTLE MATERIAL PROOF AS MOST OF US HAVE IN THE CIRCUMSTANCE I WANT TO BE CLEAR, I DON’T THINK FIXED PRICING IS OUR ISSUE A FIXED REFERENCE PRICE WILL AT BEST BE A PRETTY COOL MEASURE AGAIN, I DO THIS FOR LIVE I’VE MADE PRICES 20 YEARS IN THIS BUSINESS IT’S DIFFICULT THERE WOULD HAVE TO BE 24 FORWARD START MONTHS FOR EVERY DIFFERENT RATE CLASS AND LOAD FACTOR IN ORDER TO GET IT NEAR RIGHT I APPRECIATE AND SUPPORT THE EFFORT TO FIX THIS YEAR BUT I DON’T THINK THERE’S AN ANSWER >> ONE THING WE DO COLLECT A LOT OF DATA AS YOU KNOW, AGAINST US POSTING THE DATA WE HAVEN’T — WE’VE COLLECTED ON SIX MONTHS AND VARIABLE AND THE PRODUCTS ARE CLUSTERED BUT A LOT OF OUTLIERS THERE ARE CLUSTERS BUT A LOT OF OUTLIERS STILL CUSTOMERS BEING CHARGED WAY ABOVE VAST MAJORITY >> EVEN ON FIXED PRICE WE HAVE TO LET COMPETITION WORK HERE AND LET FIXED PRICES WORK I THINK MY DIFFICULT-OF- BIGGEST DIFFICULTY IN APPLYING THEM IS WE’RE APPLYING TO DIFFERENT CLASS OF CUSTOMERS COMMERCIAL CUSTOMERS EVEN THOSE WITH 750 AS DEFINED HAVE DIFFERENT PROFILES COMPLETELY I SPECIFICALLY TALK ABOUT GAS BUT IT’S ALSO TRUE FOR TRCHLT THOSE CUSTOMERS PRICES CAN VARY BECAUSE THEY HAVE A DIFFERENT LOAD PROFILE AND USE IT DIFFERENTLY WE DON’T WANT TO PUNISH THOSE TYPE OF CUSTOMERS WHEN WE TALK ABOUT RESIDENTIAL CUSTOMERS THEY ARE MORE AMORPHOUS BLOB WE HAVE 250,000 CUSTOMERS, I COULD TREAT THEM LIKE ONE GIANT BLOB, THEY ALL ACT THE SAME WHAT’S GOOD FOR ONE IS GOOD FOR THE OTHER WHAT’S NOT THE SAME IS RESIDENTIAL CUSTOMERS PEOPLE WHO MAKE POTTERY OR PIZZAS WITH OVENS OR DO LAUNDRY WHATEVER THEY DO, THEY HAVE DIFFERENT LOAD IN THE UTILITY DIFFERENT PRICING, HIGHLY ANTICIPATED PRICING EVEN SMALLEST COMMERCIAL CUSTOMERS INTO KIND OF REREGULATION MAKES IT DIFFICULT FOR COMMENTS ON A REFERENCE PRICE MAKES IT MORE COMPLEX >> THERE WOULD BE SMALL PRICES FOR COMMERCIAL AND RESIDENTIAL >> SMALL COMMERCIAL IS INFINITE RANGE WHEREAS RESIDENTIAL IS REALLY A MORE HOMOGENEOUS GROUP >> CHRIS >> I THINK IN LINE WITH REMIND HE ME TO MAKE A POINT WHAT’S REALLY — WE KEEP SAYING YOU CAN’T DO IT IT’S IMPOSSIBLE WE MUST DO IT I THINK WHAT’S GETTING US, SAID — WE LOOKED AT THIS, TOO WE LOOKED AND SAID WHAT IF YOU’RE GOING TO HAVE A GUIDELINE BASED ON THE BOARD, A SIMPLE AVERAGE AND ADDED 20% THERE WERE LIKE THREE ABOVE THAT WHAT’S GETTING PEOPLE IS THE FACT WE UNDERSTAND —

>> TALK CLOSER TO THE MIC >> AS YOU UNDERSTAND THE WHITE PAPER — IT’S ON, I KNOW THE CONSPIRACY TO LOWER MY VOLUME >> WE DON’T INTEND TO LOWER YOUR >> IT WOULD BE UNLAWFUL TO PROVIDE A PRICE ABOVE THAT I THINK THAT’S WHAT’S GETTING EVERYBODY YOU CAN CERTAINLY HAVE — WE DISCUSSED IT ENTIRELY WHEN WE WERE LOOKING AT WHAT IF YOU DID A BENCHMARK BASED ON THE ACTUAL PRICES, THEN THE QUESTION WAS RAISED WHAT WOULD THE CONSEQUENCE BE ASSUMING YOU COULD GET THIS INFORMATION TO CONSUMERS, OF COURSE, THE PREDOM NAN ANSWER WAS IF YOU’RE 30% OR 40% ABOVE THE AVERAGE, THE CONSEQUENCE IS THAT YOU’RE 30 OR 40% ABOVE THE AVERAGE THAT CERTAINLY COULD BE A PLACE TO START WITH ANY KIND OF BENCHMARK OF THE FACT THAT IT’S BEING PROPOSED AS WE INTERPRET IT AS A HARD PRICE CAP, IF WE WERE OTHERWISE — IF LET’S SAY WE WERE A LITTLE DIFFERENT, AND YOU SAID, WELL, RATHER THAN A PRESUMPTION OF UNLAWFULNESS, WHICH SEEMS TO BE WHAT THE WHITE PAPER WAS SAYING, LET’S SAY YOU DIDN’T HAVE THAT OKAY SO YOU KEEP — YOU PUT AN OFFER OUT THERE THAT’S WITHIN THE SIX-WEEK WINDOW, BUT THE MARKET HAS CHANGED AND IT’S HIGHER THAN THE REFERENCE PLACE YOU KNOW, INSURER GOOD REASONS FOR IT OR YOU HAVE AN OFFER FOR CALENDAR 2017 YOU WANT TO OFFER BUT THERE IS NO REFERENCE PRICE THEN YOU KNOW, EVENTUALLY IN SIX MONTHS OR — SIX MONTHS WHEN THE REFERENCE PRICE FOR JANUARY OF YOU’VE ALREADY SIGNED CUSTOMERS UP, YOU KNOW, IF IT WAS ANYTHING BUT A HARD PRICE CAP PEOPLE WOULD BE ABLE TO GET THEIR HEADS AROUND TAKING ON OTHER KINDS OF RISK RELATED TO OPERATING IN THE FIXED PRICE MARKET I THINK WHAT WE’RE ALL REACTING TO EXTREMELY NEGATIVELY IS THE FACT THAT IT’S JUST — SIX WEEKS, IT’S A HARD PRICE CAP AND, BOOM, THAT’S IT, WHICH MEANS, I THINK, REALISTICALLY WHAT YOU’LL SEE IS YOU’LL SEE PEOPLE MARKET WITHIN A VERY NARROW BAND, IF THEY MARKET AT ALL AND THAT WILL BE IT I DON’T KNOW IF YOU HAVE ANY THOUGHTS ABOUT AN APPROACH OTHER THAN PRESUMPTION OF UNLAWFULNESS >> WE HAVE DISCUSSED THIS ISSUE AND AN ALTERNATIVE OPPOSED TO BEING A HARD CAP AND IF YOU’RE ABOVE YOU’RE IN VIOLATION OF SOME RULE WOULD BE IT’S MORE OF A PRESUMPTION OF OVERCHARGING WHERE IT MIGHT BE THE TRADITIONAL PROCESS, A NOTICE OF APPARENT FAILURE, STAFF CONTACTS ESCO AND ASKS THEM TO JUSTIFY THESE CHARGES OR LOOKS INTO IT TO SEE WHAT’S GOING ON AS OPPOSED TO SEEING A PRICE OVER THE CAP AND ORDER SHOW CAUSE INSTITUTING PROCEEDING AGAINST THE COMMISSION WE DIDN’T SPECIFICALLY PROPOSE EITHER OF THOSE OPTIONS IN THE WHITE PAPER I THINK IT’S SOMETHING THAT’S AN ONGOING DISCUSSION AND WE EXPECT A NUMBER OF COMMENTS ON THAT ISSUE AS WELL BUT THAT WOULD BE AN ALTERNATIVE TO IT BEING A HARD CAP AS YOU SAID >> ACTUALLY THE WHITE PAPER DOES SAY PRICES ABOVE REFERENCE PRICE WOULD BE SUBJECT TO STAFF REVIEW AND POSSIBLE COMPLIANCE ACTION >> IT DOESN’T SAY ANYTHING ABOUT BEING LAWFUL OR UNLAWFUL >> STILL PRETTY OMINOUS LANGUAGE TO, YOU KNOW — >> GO AHEAD >> GOT A LITTLE BORING THERE, I THINK THE NUTS AND BOLTS OF THE WHITE PAPER I’M GOING TO GET A LITTLE GEEKED OUT BUT I THINK I JUST WANT TO — I THINK YOU DID A GOOD JOB OF TRYING TO DO A COM INDICATED FORMULA >> COULD YOU PLEASE REPEAT THAT >> YES, YOU DID A PRETTY GOOD JOB OF TRYING TO TAKE A VERY COMPLICATED FORMULA AND PUT IT IN WRITING AND NOT MAKING IT TOO GREEK BUT AT THE SAME TIME AS I SAID EARLIER, WE DO NEED A WORKSHOP OR AN EXAMPLE SO PEOPLE WHO DO THIS FOR A LIVING CAN GO THROUGH IT ON PAGE THREE OF THE WHITE PAPER ON THE REFERENCE PRICE YOU HAVE AN F AND A P IT SAYS FACTORS S&P WILL BE CITED PERIODICALLY BY PFC YOU INDICATE, UNLIKE GAS, WHICH WE’LL TALK ABOUT SECOND, A 2% ERROR WHICH IS WIGGLE ROOM TO TAKE IN STUFF WE DISCUSSED I WAS GOING TO ASK ON P, AS FAR AS RECONCILIATION CHARGES AND WEATHER RISK, WAS THAT MEANT TO

BE COVERED IN P? IF IT WAS, WE SAID IT WILL BE DECIDED PERIODICALLY BY PFC DO YOU HAVE AN INDICATION OF WHAT THAT MEANS? SORRY FOR BEING LIKE A COURT EXAMINER >> NO, THAT’S GOOD >> I DON’T KNOW IT’S SPECIFICALLY ISO RECONCILIATIONS >> MAYBE CHRIS CAN HELP ME HERE OTHER PEOPLE IN THE ROOM DO HAVE CONSIDERABLE EXPERIENCE IN THIS WHEN YOU’RE PRICING THE PRODUCT AND HEDGING, THE HEDGES IS NEVER GET INTO EXTREME WEATHER CONDITION, PRICES WILL FLY UP YOU’RE NOT HEDGED FOR THE AMOUNT OF POWER YOU’RE HEDGING IN AND YOU HAVE TO EAT THAT IF YOU’RE DOING A FIXED PRODUCT THAT’S PART OF THE ISO RECONCILIATION AND ALSO PASSED THROUGH BY UTILITIES, APPEARS IN THE UTILITY PRICE SO WE NEED TO TAKE THAT INTO ACCOUNT, WEATHER RISK, IT MAY BE COLDER THAN NORMAL IT’S BEST PROBABLY, WHEN IT GETS REALLY EXTREME IT’S MORE DIFFICULT >> THAT KIND OF THING IS MEANT TO BE COVERED WITH COMBINATION OF S AND THE P IN OTHER WORDS, THE F HAD THE LOAD SHAPING AND THE P IS JUST A GENERAL $0.02 TO COVER COSTS AND THINGS LIKE YOU MENTIONED >> SO THE P IS THE TWO CENTS, NOT THE P PLUS THE TWO CENTS >> THE P IS THE TWO CENTS >> BEFORE YOU GO ON, THERE’S A QUESTION WHICH KS HOW STAFF ARRIVED AT TWO CENTS RETAIL COST >> CAN HE ASKED ESCOs TO HELP US OUT AND SEVERAL CAME FORWARD THIS NUMBER IS ABOUT 50% NORTH OF THE HIGHEST NUMBER I RECEIVED FROM AN ESCO ENTERMS OF THESE OTHER COSTS, MARKETING, THINGS LIKE THAT IT WAS ACTUALLY MEANT TO BE GENEROUS >> IF IT’S NOT — >> OKAY >> WITH SEVERAL, RIGHT, THAT CAME FORWARD TO KIND OF HAVE BILATERAL CONVERSATION >> LET ME MAKE A POINT WITH REGARD TO THAT SO WE HAD ASKED SEVERAL — AT SEVERAL MEETINGS FOR FOLKS TO COME FORWARD AND TALK ABOUT REFERENCE PRICING THERE WERE A NUMBER OF ESCOs THAT CONTACTED US THAT THEY WOULD BE WILLING TO TALK ABOUT IT BUT WOULDN’T BE WILLING TO TALK ABOUT IT IN TERMS OF ENTIRE GROUPS OF PEOPLE WE DID MEET WITH SEVERAL ESCOs SEPARATELY IT WASN’T MEANT TO NOT INCLUDE PEOPLE BUT THESE ESCOs WERE WILLING TO HELP OUT AND WILLING TO SIT WITH US OUTSIDE OF THIS ROOM SO EVERYBODY HAD THE SAME OPPORTUNITY >> SOME CASES REVEALING WHAT THEY CONSIDER TO BE CONFIDENTIAL INFORMATION >> EVERYBODY HAD THE SAME OPPORTUNITY AND THEY VOLUNTEERED TO DO IT WE ACCEPTED THEIR INTEREST IN DOING SO >> TRIED TO DO THE BEST WE CAN REFLECTING IT IN THIS FORMULA >> THE BROADER YOU MAKE THE TWO CENTS, MAKES PROBLEMS OTHER PEOPLE HAVE GO AWAY TWO CENTS DEFINING ISSUE, MAKE IT GO AWAY WE’LL PROBABLY WRITE THAT IN THE COMMENT >> I WOULD ASK TO THE EXTENT IT CAN BE AS SPECIFIC AS POSSIBLE >> LET ME ASK SAME, STAFF EXPECTATION REMPS PRICE CALCULATION EXCLUDING TWO CENT RETAIL COST ADD WOULD REVEAL REFERENCE PRICE LOWER OR EQUAL TO HIGHER RETAIL PRICE SINCE THESE ARE FIXED RATES, THERE ARE CHANCES FOR FIXED RATES >> I DON’T KNOW HOW WE’LL COMPARE I WOULD THINK IT WOULD BE BELOW THE UTILITY’S PRICE BECAUSE THE HEDGES ARE OUT OF THE MONEY >> YOU’RE SAYING — >> I’M SAYING — >> YOU HAVE TO UNDERSTAND OUR BUSINESS MODEL IS A LITTLE DIFFERENT THAN THE UTILITIES THEY HAVE THE ABILITY TO RECOVER OVER TIME YES, THEY CANNOT MAKE MONEY ON THE COMMODITY BUT THEY WILL ALWAYS BE MADE WHOLE CUSTOMERS THAT TURN OFF OF ME ON A FINANCIALED PRICE, I’M SITTING ON THAT HEDGE RIGHT NOW I’M SITTING ON A LOT OF HEDGES UNDER WATER THAT PEOPLE ARE NOT HONORING THEIR CONTRACTS ON WHERE DO YOU THINK THOSE COSTS GO? >> WE’RE TALKING ABOUT, OR AT LEAST I TOOK THAT QUESTION TO BE OFFERING A BRAND-NEW FIXED PRICE PRODUCT TODAY COMPARED TO WHAT UTILITIES — >> I STILL HAVE TO INCORPORATE COSTS IN PRODUCTS GOING FORWARD I HAVE TO RECOVER THOSE COSTS

THOSE COSTS EXIST FOR ME I HAVE TO RECOVER THEM GOING FORWARD AGAIN, IF I EXPERIENCE CHURN OR A WEATHER EVENT HAPPENS, A LOT OF PEOPLE WERE BURNED IN GAS WHO HAD GAS HEDGES THIS PAST WINTER WHERE DOWN THOSE COSTS ARE GOING THOSE COSTS ARE GOING INTO OUR PRODUCTS >> SO KEVIN, WE APPRECIATE YOUR COMMENTS I THINK IF YOU DO NOT THINK THE TWO CENT ADD IS ENOUGH TO HELP YOU RECOVER COSTS YOU MAY LOSE BECAUSE PEOPLE RENEGE ON CONTRACTS, YOU SHOULD PUT THAT IN YOUR COMMENTS >> WITH RESPECT TO ESCOS THAT HAVE LOW OR NO COMPLAINTS OR VERY LITTLE CHURN LEVELS, OFTENTIMES COMPANIES ADDING A VALUE ADD SERVICE ARE GOING TO BE PRICED HIGHER AND THAT VALUE ADD IS NOT GOING TO BE CAPTURED WITHIN, YOU KNOW, A NUMBER LIKE LONG ISLAND CUSTOMERS HAVE OVERPAID VERSUS THE UTILITY PRICE SO MY QUESTION IS, HOW ARE THOSE COMPANIES GOING TO BE CONSIDERED? BECAUSE THESE COMPANIES COULD JUST BE THROWN OUT WITH THE BATH WATER IT’S A DEEP CONSIDERATION WHEN YOU HAVE A COMPANY THAT HAS ENTRENCHED RELATIONSHIPS IN A COMMUNITY PROVIDING SERVICE AT SUCH A HIGH LEVEL THAT DESPITE THE FACT THE PRICE GOES HIGHER, THE CUSTOMER IS WELLING TO PAY IT BECAUSE THEY KNOW THEIR HEAT WILL BE FIXED IN THE MIDDLE OF THE NIGHT OR THEY WANT TO SUPPORT A LOCAL BUSINESS OR THEY JUST DON’T LIKE THE UTILITY’S CUSTOMER SERVICE MY QUESTION IS, HOW IS THE COMMISSION GOING TO ACCOUNT FOR THESE BUSINESSES, BECAUSE I’M SURE THE COMMISSION ISN’T LOOKING TO PUT THESE GOOD BUSINESSES OUT OF COMMISSION >> NO TO ANSWER YOUR QUESTION, THE >> I’M WONDERING IF THE COMMISSION WOULD BE OPEN TO DISCUSSIONS ABOUT THAT SO WE CAN AVOID UNINTENDED CONSEQUENCES >> WE APPRECIATE YOUR COMMENTS AND WE’RE LOOKING FORWARD TO REVIEWING THEM THANK YOU >> ARE WE STILL ON THIS TOPIC? I NOTICE THE LOOK OF I WANT TO MOVE ON >> AS LONG AS YOU WANT TO TALK ABOUT ELECTRIC PRICING WHEN JOHN GETS HERE WE’LL TALK ABOUT GAS PRICES WE’LL BE HERE ALL DAY >> SOME CONCERN ABOUT SEPARATING OUT VALUE ADDED ESCOS EFFICACIOUS WORK WITH A SINGLE PRICE DO WHATEVER THEY HAVE TO DO FINANCIALLY PUT INTO THE COMP >> GREAT THANK YOU JOE WAS FIRST, CHRIS >> QUICK QUESTION FOR YOU THERE IS A LOT OF WORD IN THE WHITE PAPER ABOUT THINGS COULD BE ADJUSTED ON P NEED I WAS JUST CURIOUS HOW YOU FORESAW THAT PLAYING OUT BASICALLY COMING UP AND SAY, HEY, ESCO, ISO PRICES GOING CRAZY, HAVE YOU TAKEN A LOOK? HOW DO YOU SEE THAT PLAYING OUT? >> ARE YOU TALKING ABOUT AFTER REFERENCE PRICES ISSUE >> ADJUSTED ON NEED, I WAS WOUND ERING THAT’S A LITTLE BIT — >> VAGUE COULD BE ON STAFF MOTION COULD

BE AN ESCO MOTION >> COULD BE INITIATED EITHER WAY >> YES >> THANK YOU >> THIS IMPLIES AT LEAST FOR S&P MAKING ADJUSTMENT >> TRULY PRACTICAL IF YOU REQUIRE COMMISSION HAVE TO NOTICE, HELPING PEOPLE >> BELIEVE ME, WE KNOW ALL ABOUT THAT >> I ONLY SAID BY ACCIDENT NEED SOME NOTICE, MAY WANT TO SEND IT OUT TALKING ABOUT A THREE-MONTH PROCESS MINIMUM >> THE NEED MAY NOT BE RELEVANT BY THE TIME UNDER THE CIRCUMSTANCES THE RESULT >> I WOULD RELY ON AT LEAST THAT STATEMENT EARLY IN THE WHITE PAPER THAT TALKS ABOUT — PRICES ABOVE RELEVANT PRICES FOR REVIEW >> REVIEW APPROPRIATE STUFF I GUESS THE MORE WE GET SOMETHING OF A HANDLE ON IT, SOMETHING OF A HANDLE ON IT >> I UNDERSTAND AN IDEA PUT OUT THE PRICE WITH REASONABLE ENOUGH HEAD ROOM ESCO SHOULD HAVE NO PROBLEM UNDER NORMAL CIRCUMSTANCES PUTTING OUT A FIXED PRICE OFFER AT THOSE PRICES IF FOR SOME REASON SOMETHING GOES WRONG, COMPLIANCE CALLS AND ESCO SHOWS JUST RECOVERING OUR COST, I’M ASSUMING WE WILL BE FINE WITH THAT AM I SAYING TOO MUCH? >> COMMISSION COMMISSION WANTS TO DELEGATE AUTHORITY TO DO THAT I THINK HE BRINGS A GOOD POINT THAT DISCUSSION IRRELEVANT LET ME JUST — GO AHEAD >> I WAS GOING TO TRY TO MAKE THE DISTINCTION, TOO WE’RE NOT EXPECTING WE’RE GOING TO HAVE A COMMISSION ORDER EVERY MONTH TO ISSUE A PRICE BUT WHEN YOU’RE REFERRING TO, USHER, IS JUST IN THAT EXTREME CIRCUMSTANCE WHERE UNESCO SAYS YOU PUT THIS PRICE ON TWO WEEKS AGO AND THE MARKET HAS DROPPED, WE NEED TO CHANGE IT RIGHT AWAY AM I CORRECT >> THAT’S ONE TIME, OTHER THINGS CAN HAPPEN THEORETICALLY ACTIVITIES CAN TAKE PLACE MIKE INDICATED VARIOUS ELEMENTS BASED ON NEED, APPROPRIATE I THINK THAT’S A GOOD EXAMPLE AN EXPLOSION IN PRICES AFTER IT’S ISSUED WE PETITIONED — WE DO A PETITION IN 24 MINUTES WE SEND IT ON TO MIKE AND LUANN, AND GET HELD UP BY THE PROCESS >> THE OTHER POINT IS THE WHITE PAPER IS CLEARLY SAYING, WE JUST TALKED ABOUT THIS, ABOUT ABOVE THE REFERENCE PRICE COULD RESULT IN THE INVESTIGATION IF WE DO OUR INVESTIGATION AND FIND OUT THE REASON WHY YOU COULDN’T SELL THE PRODUCT AT THE PRICE THE REFERENCE POINT WAS BECAUSE THE PRICE SHOT UP I DON’T THINK WE’RE UNREASONABLE I DON’T THINK WE’RE UNREASONABLE >> I HEAR YOU BASICALLY MEANS GOING FORWARD — I CAN SEE AN ESCO HAVING HESITATION BECAUSE THEY ULTIMATELY DON’T KNOW >> I THINK ONE OF THE THINGS WE HAVE TO THINK THROUGH, OBVIOUSLY THE PRACTICAL APPLICATION OF WHAT COULD BE AN ORDER ESTABLISHING A BENCHMARK WE HAVE TO THINK THROUGH ALL THE HYPOTHETICALS ONE THING I KNOW THIS GROUP IS GOOD AT DOING, THINKING EVERY MINUTIAE OF HYPOTHETICAL OUT THERE A LOT OF COULD YOU CRAFT SOMETHING THAT SAYS THIS THE BENCHMARK FOR THIS SPOT IN TIME IT HAS BUILT-IN CUSHION IN THE FORMULA ITSELF TO REFLECT COST OF DOING BUSINESS, ALSO PRICE FLUCTUATION IF SOMETHING HAPPENS IT’S BEYOND THAT, ONE POSSIBLE SHOT IS THAT YOU CAN MAKE THIS — THE DESIGN HERE IS TO MAKE THE ORDER ITS RECEIVE EFFECTUATING AS

POSSIBLE IN A CLEAR MANNER YOU CAN LOOK AT THE REALITY OF TODAY AND SAY THIS IS WHAT THE ORDER MEANS GIVEN THIS REALITY SO ONE POSSIBLE THOUGHT IS TO SAY, TAKE THAT FORMULA AND ADD IN THERE ALMOST LIKE A FORCE MAJOR, THE MARKET HAS SPECIFIC PRICE ENTITY, FLUCTUATED X%, AUTOMATIC DEAD BAN WOULD APPLY AROUND THAT PRICE THAT WAY YOU GUYS WOULD KNOW AND WOULDN’T BE GUESSING WHOEVER STAFF IS AT THE TIME, I REALIZE THAT, PUT IN STAFF HANDS AND SAY, WERE YOU REASONABLE? WAS THERE ANYTHING OUT THERE THAT CAUSED YOUR PRICE TO DEPART OR BE ABOVE THE BENCHMARK? THIS WAY IT’S MORE FORMULAIC, YOU COULD HAVE FORCE MAJOR, EVEN THOUGH YOUR PRICE IS ABOVE BENCHMARK THE FACT TOOK PLACE >> CONSTRAINED BY A DEAD MAN WHAT WE DON’T WANT TO HAPPEN — TWO THINGS, SOMEHOW — I’M JUST CALLING IT FOR LACK OF A BETTER TERM, THE TRIGGERING EVENT WE DON’T WANT TO HAVE TRIGGERING EVENT RESULT IN THE OPERATION OF A DEAD LAND THAT IS SO BROAD AND SO BIG IT NEGATINGS WHOLE PURPOSE OF THE COMMISSION’S ORDER AT THE SAME TIME WE COULD RECOGNIZE — I’M JUST TALKING TO YOU THIS IS NOT VETTED AT ALL AMONG ANY OF THE PEOPLE ALONG THIS ROW LET’S TALK POSSIBLE SOLUTIONS AT THE SAME TIME THE DEAD BAN COULD BE ENOUGH YOU COULD BE A COUPLE OF BASIS POINTS OVER THE BENCHMARK BUT THERE’S A TRIGGERING EVENT THAT COVERS YOU HAVE YOU CONFIDENCE TO KNOW AS YOU’RE OPERATING THIS ISN’T GOING TO BE AN ISSUE OF STAFF IMPRESSION, THERE’S A FORMULA HERE THIS IS HOW IT CAN WORK SO THIS IS THE KIND OF CREATIVE PROBLEM SOLVING WE WANT WITH YOU GUYS WE KNOW STAFF IS DIRTY WORD INSIDE COUNCIL STAFF OFFICE EVERYBODY GETS MAD BECAUSE WE CAN’T DO THINGS IMMEDIATELY THAT’S LIFE HOW DO WE LIVE LIFE THIS DEAD BAN TRIGGERING EVENT, CHRIS, YOU BETTER HAVE A SOLUTION FOR ME AND NOT A PROBLEM RIGHT NOW THIS TRIGGER EVENT IS SOMETHING WE CAN TALK THROUGH PUT IN YOUR COMMENTS YOU CAN’T SEE MORE OPEN STAFF TEAM TO PROBLEM SOLVING WITH YOU GUYS WITH THE REFLECTION THAT OUR REALITY IS WE HAVE A VERY CONCERNED COMMISSION WHO WANTS A BENCHMARK SO LET’S SOLVE CHRIS, WHAT IS YOUR SOLUTION? >> I HAVE THREE QUESTIONS >> HE’S IGNORING ME, DO YOU HEAR THAT? >> THREE RELATED POINTS I’M GOING TO GET THEM OUT THERE IF YOU’RE OPEN, WOULD YOU BE WILLING TO GIVE US WHATEVER DETAIL UNDERPINS THE TWO CENTS IN MINUTE DETAIL EVERYTHING WHY NOT >> PROVIDED ON CONFIDENTIAL BASIS >> YOU DON’T HAVE TO REVEAL >> MIB I’M NOT INTERESTED IN DOING THAT MAYBE I’M INTERESTED IN WHAT THE COMMISSION’S TWO CENTS IS BASED ON I’M INTERESTED IN KNOWING WHAT STAFF IS PROPOSING TYPICALLY I DON’T THINK YOU GUYS DO THIS WITH UTILITY — TYPICALLY IF YOU’RE DOING THIS WITH THE UTILITY, YOU DON’T GET — TWO CENTS BASED ON CONVERSATIONS WE HAD THAT WAS MY QUESTION, WHICH HAS BEEN ANSWERED THANK YOU NUMBER TWO DID YOU CALCULATE ANY PRICES WITH YOUR FORMULA THEN THE LAST QUESTION, THIS IS ALMOST AS CLOSE TO A SOLUTION AS I COULD GET ANY REASON YOU COULDN’T CALCULATE THE BENCHMARK ON A DAILY BASIS? >> YES, CALCULATE PRICES WITH A FORMULA PROBABLY PROVIDE THAT >> I DID IT FOR ALL THE UTILITIES EXCEPT FOR COMMENT AND ALARM AT THE MOMENT >> SOMEONE — >> I DON’T SEE WHY NOT >> IT WOULD BE PROPOSING AND HAD

IT FOR CERTAIN PERIODS >> YES >> DID YOU COMPARE THAT TO THE OFFER? >> I DID NOT >> HOW ABOUT THE — CAN WE PUT OUT A DAILY PRICE? I DON’T KNOW IF WE HAVE THE STAFF RESOURCES FOR THAT IN THAT CASE — >> THE ONLY THING WE’RE CHANGING, CERTAIN KNOWN PRICE INDEXES, RUN AUTOMATICALLY, THE PROGRAM >> WHY DON’T YOU PUT THAT IN YOUR COMMENTS AS SOMETHING WE’LL CONSIDER I THINK MIKE IS RIGHT, WE DON’T HAVE THE RESOURCES WE MAY BE ABLE TO DO IT, I’M NOT REALLY SURE IF YOU PUT IT IN YOUR COMMENCE, WE’LL TALK TO THE COMMISSION >> YOU TALK ABOUT LIKE A SOFTWARE PROGRAM, AUTO GENERATE >> RIGHT >> ONLY VARIABLE IS KNOWN INDEX I DON’T KNOW IF YOUR FORMULA WORKS THAT WAY AT SOME POINT THAT ONLY CHANGE ON NEED, CALCULATED ON ANNUAL I THINK UP CHANGED ON ANNUAL BASIS THEN IT SEEMED LIKE THERE WERE OTHER THINGS >> CERTAIN PRICES ANNUALLY, CHANGED EVERY MONDAY >> CHANGED ON A MONTHLY BASIS OTHERWISE WHATEVER THE ENERGY INDEX WAS CHANGES EVERY DAY IN THEORY YOU COULD PULL THOSE — TODAY’S NUMBERS >> IN THEORY WE COULD GENERATE A PRICE EVERY DAY >> OKAY WE ONLY HAVE TIME FOR VERY SHORT PERIOD OF TIME IF WE COULD SKIP TO GAS, WE COULD COME BACK TO ELECTRIC >> THE QUESTION, VERY BRIEF, WHAT KIM SAID IN THE DISCUSSION SO MANY TIMES WE HAVE REGULATORY OUTS IN THE CONTRACT, REGULATORY CHANGES, ZONAL AND GAS CAPACITY PROJECTS THAT COME ON THAT WE’RE NOT AWARE OF I ASSUME THOSE WOULD BE THE TYPE OF EXTRA FACTORS THAT WOULD BE ALLOWABLE AS EXCLUSIONS UNDER BENCHMARK WHERE BENCHMARK COULD TAKE THOSE INTO ACCOUNT SOMETIMES WE HAVE FIXED PRICES LOCK IN WITH THE CUSTOMER AND CHARGE ANOTHER SEVEN CENTS, SOMETHING HAPPEN ON REGULATORY BASIS OR SOMETHING NOT INCLUDED IN THE ORIGINAL PRICING EXPLICIT I ASSUME THAT WOULD BE ADDED TO THE BENCHMARK IF THAT OCCURRED STANDARD CONTRACTS >> WE’RE GETTING COMPLAINTS FROM THE WEBCASTER, CAN’T HEAR US EVERYBODY REALLY NEEDS TO TALK BOUGHT MIC >> WHAT IT COMES DOWN TO, THE FORMULA FOR GAS, USE CAPACITY THAT MOST OF YOU ARE ALREADY FACING THAT’S IN THERE TO YOUR POINT ABOUT CAPACITY CONTRACTS, NOT KNOWING ABOUT IT, FIRST OF ALL REALLY TRYING TO BUCKLE DOWN, FAR LESS IN ADVANCE TO WE KNOW SOMETHING IS GOING TO CHANGE A LOT BETTER THAN IN THE PAST YOU KIND OF KNOW PROJECTS ARE COMING ON, TOO AT LEAST YOU SHOULD KNOW THE KIND OF PROJECTS >> SIGNED UP FOR >> APPROVAL, RIGHTS >> THE ISSUE NOW, WHETHER OR NOT SOME OF THESE THINGS DESPERATELY NEEDED FOR SOME AREAS, ESPECIALLY FOR YOU GUYS, SOME THINGS DOING ON, WHETHER OR NOT SOME OF THESE THINGS ARE GOING TO GET IMPROVED WE’LL SEE WHAT HAPPENS AS WE GO ALONG THERE SHOULD BE SOME KIND OF NOTIFICATION THE CAPACITY CHANGES ONCE OR TWICE A YEAR DEPENDING ON THE UTILITY I’M NOT AWARE OF ANYBODY THAT CHANGES FOR FREQUENTLY >> SOMETIMES THE PROJECT IN THE MIDDLE OF THE WINTER, SOMETIMES IN JULY FOR THE WINTER >> YEAH, BUT YOU WON’T BE CHARGED THAT UNTIL LATER SO BASICALLY ONCE IT COMES ON, NOTIFIED IT COMES ON, YOU’VE GOT SOMETHING COMING UP YOU’RE NOT GOING TO GET MORE THAN SIX TO 12 MONTHS THAT’S THE MOST YOU GET IS NOTICE IF YOU’VE GOT CONTRACT MORE THAN SIX TO TWELVE MONTHS YOU’RE AT RISK WE WOULD DISCUSS IT >> SURE YOU COULD DISCUSS THAT IF THAT WAS REALLY THROWING YOU OFF THAT MUCH I’M HOPING IT WOULDN’T, THOUGH >> I DON’T KNOW, THANKS USING THE WEIGHTED AVERAGE COST OF CAPACITY IS FINE WHEN IT APPLIES TO HOMOGENEOUS GROUP OF CUSTOMERS LIKE RESIDENTIAL BUT USING WEIGHTED CAPACITY DOESN’T GIVE YOU WHAT AN INDIVIDUAL COST FOR THEIR LOAD

PROFILE OF CAPACITY WOULD BE I’VE WORKED WITH YOU — YOU UNDERSTAND THIS STUFF I JUST WANT TO STRESS THAT APPLYING THIS TO A GROUP OF CUSTOMERS LIKE RESIDENTIALS WORKS VERY WELL I WANT TO FOLLOW KIM’S SUGGESTION AND COME UP WITH A SOLUTION, CREATIVE SOLUTION BUT WHEN YOU APPLY THIS TO THE INFINITE NUMBER OF COMMERCIAL LOAD SHAPES THAT MIGHT EXIST, THE COST OF CAPACITY FOR ONE CUSTOMER WOULD BE 10 CENTS DECO THERM, HIS NAMES WOULD BE 8 CENTS YOU APPLY TO COMMERCIAL CUSTOMERS WE CAN’T COME UP WITH SINGLE PRICE WE CAN FOR RESIDENTIALS I KNOW WE CAN DO THAT >> LET ME STOP YOU BEFORE WE GO FURTHER ARE WE TALKING ABOUT CUSTOMERS THAT USE LESS >> WE’RE TALKING RIGHT NOW ABOUT MASS MARKET CUSTOMERS THOSE WOULD BE RESIDENTIAL OR COMMERCIAL >> I THOUGHT TALKING ABOUT RESIDENTIAL AND COMMERCIAL I DON’T THINK WE WERE TALKING ABOUT ANYBODY OVER 5,000, ARE WE? >> NUMBER >> NOBODY OVER 700 >> 5,000 IS YOUR AGGREGATION LEVEL >> IT’S 700 >> BASICALLY — NO INDIVIDUAL CUSTOMER OVER 5,000 IS INVOLVED HERE I DON’T UNDERSTAND YOUR LOW PROFILE PROBLEM — OVER 5,000 I COULD UNDERSTAND IT COMPLETELY I DIDN’T THINK WE WERE TALKING ABOUT THAT IF YOU ARE PART OF THE PROGRAM, COMMISSION REQUIREMENTS ARE WEIGHTED AVERAGE COST OF CAPACITY EXCEPT FOR BASICALLY STRAIGHT TO ME, NATIONAL FUEL >> THEY DO RELEASE CAPACITY AT THE WAITED AVERAGE COST OF CAPACITY, BUT THAT DOESN’T ACCOUNT FOR WHAT AN INDIVIDUAL CUSTOMER’S COST OF CAPACITY IS I HAVE I’LL SAY 200 RESTAURANTS THAT HAVE A VERY HIGH CAPACITY FACTOR NATIONAL GRID, NOT NATIONAL FUELS YET WHOSE COST OF CAPACITY IN THEIR ACTUAL PRICES, LET’S SAY 10 CENTS A DECO THERM THEIR NEIGHBOR DOESN’T USE CAPACITY, ONLY HEAT IN THE WINTER, COST OF CAPACITY AND PRICE IS $0.80 DECO THERM INDIVIDUAL CUSTOMER’S PROFILE NOT CAPACITY COST >> HOW DIFFERENT GOT THE SAME PROBLEM >> LDC HAS ONE LOAD SHAPE AND ONE PRICE >> NO >> WELL — >> AGGREGATION OF CUSTOMERS SAME AS YOU GUYS DO >> THAT’S YOURS TO MANAGE >> I DON’T PRICE CUSTOMERS WITH ANY AGGREGATE I PRICE CUSTOMERS INDIVIDUALLY THAT’S WHAT THE COMPETITIVE MARKET DOES >> PRICING ONE THING, MANAGEMENT AS A WHOLE TODAY THE SITUATION TO SEE HOW IT WORKS OUT IS UNDER YOUR MANAGEMENT THAT IS PART OF YOUR RISK >> RIGHT THAT IS MY RISK THAT’S THE KIND OF CUSTOMERS THAT GRAVITATE TOWARD OUR PRODUCT, CUSTOMERS HAS HAVE AN ADVANTAGE OVER THE UTILITY SOMEONE WITH FLAT LOAD PROFILE DOES BETTER ON A COMPETITIVE PRICE BY A LONG STRETCH THAN YOUR TYPICAL RESIDENTIAL PEAKING ONLY USE CUSTOMER I AGREE FOR RESIDENTIAL CUSTOMERS WE CAN MAKE REFERENCE PRICE PROBABLY VERY ACCURATE EVEN IF WE ONLY ISSUE EVERY SICK WEEKS OR MORE FREQUENTLY ONCE YOU PRODUCE COMMERCIAL CUSTOMERS — A PERSON THAT NEEDS THEIR HOUSE TO RUN A MALBUSINESS HAS A DIFFERENT IDEA HOW TO MANAGE ENERGY THEIR BUSINESS THAT MAKES PIZZA OR CLAY POTS THAN THEY DO ABOUT USING ENERGY AT HOME THEY MAY WANT TO MAKE VERY DIFFERENT DECISIONS ABOUT HEDGING WILL THEY MAY WANT DIFFERENT DECISIONS BECAUSE THEY ARE GOING TO GET A DIFFERENT PRICE OFFER IF THEY ARE AN EFFICIENT USER OF GAS I’M NOT OPPOSED TO US TAKING THIS PROBLEM I REALLY WANT TO I DON’T WANT TO CREATE ANOTHER ONE FOR THESE COMMERCIAL CUSTOMERS >> I UNDERSTAND YOUR SITUATION I DO THINK THAT THE ABILITY OF ANY ESCROW TO COME IN AND PROVIDE THAT KIND OF SERVICE, SPECIFICALLY TO THAT CUSTOMER WHERE AN LDC HAS ONE SIZE FITS ALL, YOUR VALUE COMES IN I THINK IT’S UP TO YOU AND OTHER ESCOs LIKE YOU DEALING WITH THOSE CUSTOMERS TO TAKE ADVANTAGE OF THAT SITUATION BECAUSE THAT’S WHERE YOUR MARKET IS OPENING LDC I’M NOT ABOUT — IF YOUR POINT IS THE REFERENCE PRICE PULLS YOU AWAY FROM THAT, COULD BE A APPOINT WELL TAKEN BUT THEN AGAIN, LET’S HOW YOU MANAGE IT DEPENDING HOW THE FORMULA WORKS, COULD BE ENOUGH ” – BIGGEST I HAVE IN THERE, WE DON’T KNOW ABOUT PUTTING IN FOR MARGIN REQUIRED IN THE FORMULA AND WHETHER OR NOT SOMETHING LIKE THAT CAN BE TAKEN UP IN THERE WHETHER IT’S INCLUDED OR NOT

MY QUESTIONS THAT’S WHERE WE SHOULD TAKE CARE OF SOMETHING LIKE THAT BUT THE QUESTION IS DO YOU WANT A DIFFERENT MARGIN, TALKING ABOUT DIFFERENT CUSTOMERS FOR DIFFERENT MARGIN? >> IF THE MARGIN — LET’S SEE THE DEAD BAND FOR RESIDENTIAL OR LOAD SHEET, IN BEST, 750 DECO THERMS, THEIR PRICE TO BE HALF OF WHAT RESIDENTIALS CAN BE I WANT TO URGE WE DON’T HARM THOSE SMALL BUSINESSES IN THE PROCESS AT THE — >> MIKE >> I’D LOVE TO SAY YOU HAD A PERFECT FORMULA HERE, AND WE MIGHT >> I’D LOVE TO SAY A PERFECT FORMULA, TOO >> WE CAN’T TELL, YOU’RE HITTING THE RIGHT FACTORS, WITHOUT VALUES FOR THOSE FACTORS, SOME TYPE OF BACK CASTING, IT’S VERY DIFFICULT FOR US TO SAY ANYTHING AT THIS POINT IN TIME WE HAVE A DEADLINE RECOGNIZE THE COMMISSION WANTS TO GET SOMETHING IN SOONER THAN LATER I GUESS SOME OF THE THINGS THAT POPPED OUT WERE FIRST OF ALL GOUGING FACTOR WE SORT OF RECOGNIZE WHY, YOU KNOW, FROM A POLICY POINT OF VIEW WE HAVE SOME SORT OF CATCHALL FORMULA THAT RESULTED IN SOMETHING CRAZY NUMBERS WILL DO CRAZY THINGS AT TIMES THEY WILL BE LOW THEY WILL BE HIGH IS THAT NUMBER LESS THAN 0, DAMPEN THE RESULT OR USE IT LATER IF YOU THOUGHT THE RESULT WAS TOO LOW >> I THINK THAT’S SOMETHING WE HAVE TO TAKE A LOOK AT WE WAN TO HEAR COMMENTS FROM EVERYBODY IS THE REASON WE GOT IT OUT WITH IT >> AT THIS POINT BOTH OUT AND DISCUSSIONS ON THE TABLE I DON’T KNOW WHAT TO SAY YOU COULD VERY EASILY SET SOMETHING UP BUT WHAT DOES THAT ACCOMPLISH? DOES IT ACCOMPLISH THE COMMISSION’S GOAL SETTING IT UP HOW DO YOU IDENTIFY AND PROVIDE QUESTIONS LIKE THAT IN THE FORMULA TO FIGURE OUT WHAT A GOOD NUMBER AND GOOD BASIS IS IT MIGHT BE SOMETHING SIMILAR TO WHAT WE WERE JUST TALKING ABOUT WITH MAYBE DIFFERENT TYPES OF CUSTOMERS WITH DIFFER LOAD FACTORS HAVE TO HAVE DIFFERENT PERCENTAGES, ISSUES LIKE THAT, WHICH WE DO MAYBE THAT’S SOMETHING TO ADDRESS A POINT WELL TAKEN THAT’S SOMETHING TO HEAR YOUR COMMENTS ON, SEE WHAT EVERYBODY THINKS ABOUT TO SEE WHAT NEEDS TO BE DONE, TOO >> YEAH I WOULD SAY NATIONAL FUEL WOULD HAVE PREFERRED SMALL CUSTOMER ALIGNED WITH CAPACITY BUT A MUCH LOWER NUMBER I DON’T KNOW WITH THE 750 DEKATHERM AND SOME ASKED THAT BE LOWERED FURTHER, I THINK THE MORE — LOWER THAT NUMBER GOES MORE LIKELY YOU SEE, WITH SOME EXCEPTIONS, BEHAVIOR THAT’S CLOSER TO A RESIDENTIAL CUSTOMER BUT THAT’S SOMETHING TO MOLT WITH THE NATIONAL FUELS MECHANISM, THERE’S A WAY TO ACCOUNT FOR, ORGANIZE CUSTOMERS, HIGH AND LOAD FACTOR CUSTOMERS ON POOL AT THAT LEVEL THAT’S ANOTHER REMEDY AT FIRST BLUSH IT SEEMS TO ME IF YOU’VE GOT A CUSTOMER WITH A BETTER THAN AVERAGE LOAD FACTOR, AND THE NUMBER OF THE FORMULA BASED ON AVERAGE LOAD FACTOR, FORMULA COMES WITH HIGHER PRICE CAP I’M NOT SURE THAT BETTER THAN AVERAGE CUSTOMER IS HARMED I GUESS COMMENCE WE HAVE LOOKING AT THIS FORMULA, AGAIN, GETS BACK TO LOOKING AT WHAT IT IS, WE’RE NOT SURE IT PROPERLY CAPTURES ALL OF THE DIFFERENTIALS BETWEEN UTILITY TERRITORIES IT’S MORE THAN CAPACITY A LOT HAS TO DO WITH HOW GAS IS APPLIED TO THOSE TERRITORIES YOU KNOW, MAYBE WE’RE RIGHT, MAYBE WE’RE WRONG ONE OF THOSE THINGS IF WE SAW HOW THIS WOULD HAVE WORKED OUT FOR THE PAST 12 MONTHS AND THEN LOOKED AT IT, WE’D FIND OUT THAT WASN’T A CONCERN FOR EXAMPLE, WE USED TO PURCHASE A LOT OF CANADIAN GAS HIGH PRICED RELATIVE, WE DON’T ANY MORE CERTAIN UTILITIES STILL RELY ON CANADIAN MARKET BECAUSE THEY DON’T HAVE CAPACITY OPTIONS AVAILABLE THAT’S GOING TO HAVE A PRICING IMPACT

THREE YEARS FROM NOW IT COULD BE SOMETHING ENTIRELY DIFFERENT WE THINK THAT NEEDS TO BE LOOKED AT FROM A TECHNICAL POINT OF VIEW AND LET’S SEE ONE OTHER THING I THINK WITH THE CAPACITY, WE HAVE THAT LEVELING MECHANISM THANKS TO MR. FOGLE WHO SUGGESTED IT WHEN WE CAME UP WITH CAPACITY PRICING YEAH, YOU GOT INVOLVED IT WAS GOING TO RUN AMOK UNTIL SAID, HEY, WHAT ABOUT IF WE LEVELIZE IT ANNIKA UP WITH FORMULA BASICALLY EVERY DAY RESTART CAPACITY COST THE ONLY TIME WE’LL CHANGE IT DURING THE YEAR IS IF WE CALCULATED IT EVERY MONTH BUT UNLESS IT IS 5% FROM THE BENCHMARK WE SET IN APRIL YOU KNOW, IT STAYS THE SAME WE MADE A COUPLE EXCEPTIONS ALONG THE WAY IF WE HAD A SIGNIFICANT CHANGE IN THE PAPER RATES, PIPELINE CAPACITY, CLOSE TO 5% WE’VE TALKED WITH STAFF AND MADE ADJUSTMENTS SO I WANT TO GIVE PEOPLE SOME COMFORT THERE IS SOME — AT LEAST NATIONAL FUELS TERRITORY SOME PREDICTABILITY IF YOU WANT TO FORECAST, A LOT HAS TO DO WITH SIX-WEEK PEOPLE ARE MISSING DISTINCTION AS WE READ THIS, THIS ISN’T SOMETHING THAT COMES OUT EVERY SIX WEEKS THIS IS LEAD TIME IT’S SOMETHING THAT HAS TO COME OUT 12 TIMES A YEAR IF YOU WANT US TO PROVIDE A PROJECTION, YOU’LL HAVE TO ASK US TO DO SO WE WOULD DO SO IN THAT MOST OF THE TIME WE KNOW IT’S GOING TO BE LEVELIZED, WE WOULD BE RIGHT ON THE MONEY THE MONTH BEFORE APRIL, YOU KNOW, WE’RE GOING TO BE OFF NOT MAYBE BY A LOT BUT THE POINT IS WE WANT TO MAKE SURE EVERYONE UNDERSTANDS THAT THE FURTHER WE ARE IN ADVANCE OF THE RESET DATE, THE MORE VARIABILITY THERE’S GOING TO BE JUST THE NUMBERS THANK YOU >> ALSO A GOOD POINT BECAUSE THE PRIME EXAMPLE WE USE WITH THE FORMULA TO BEGIN WITH WAS TERRITORY BECAUSE IT’S SIMPLE, STRAIGHTFORWARD DOMINION CAPACITY, DOMINION SERVICE PROVIDED WITH RELEASE OF THE COMPANY TO THE ESCO AND ESCO GETS TO BALANCING SERVICE FROM DOMINION THIS WAS THE SIMPLEST WE GOT BALANCING PIECE IN THERE BECAUSE IT’S ZERO, INCLUDED IN EVERYTHING YOU’RE GETTING FROM THE PIPELINE THAT WAS THE EASIEST AN SIMPLEST YOU’RE ABSOLUTELY RIGHT WHEN WE GET DOWN TO LOOKING AT A CON EDISON, TO SOME DIAGNOSIS BUT THE TWO GREATEST COMPANIES IN THE STATE, IT GETS A LITTLE MORE COMPLICATED EACH ONE OF THOSE PIECES END UP WITH PIECES THAT GO INTO IT, DIFFERENT PIPELINES THAT COIN LOOKING AT THAT, BASICALLY THINK BETWEEN CON ED AND TWO COMES DOWN STATE, LOOKING AT MAYBE THREE-LEGGED ANIMAL ON EACH ONE OF THOSE ITEMS BASED ON HOW GAS IS DELIVERED INTO THE SYSTEM AGAIN, HOW GAS IS DELIVERED INTO THE SYSTEM BECAUSE UPSTREAM THE CAPACITY, EVERYBODY IS RELEASED INTO THOSE STATIONS COME FROM A VARIETY OF DIFFERENT LOCATIONS, WHICH IS WHAT GIVES YOU VARIETY AND GIVES YOU THE ABILITY TO COME FROM THE NORTHEAST PRODUCTION ZONE OR COME FROM THE GULF COAST ZONE, OR, MORE IMPORTANTLY, SOME PEOPLE IMPRESSED ON ME THEY TOTALLY MISSED, ANY POINT IN BETWEEN BASICALLY ANY PLACE YOU CAN GET THE BEST PRICE OF GAS, YOU’RE GOING TO GET IT EXACTLY WHAT LDCs THROUGHOUT THE STATE DID EXACTLY WHAT WE ANTICIPATE ESCOs ARE DOING AT THE SAME TIME DOWN STATE, SOME OF THOSE OTHER AREAS, IT’S GOING TO BE A LOT MORE COMPLICATED WE DO THINK IT’S WORKABLE WE MOVED FORWARD AND START DEVELOPING FOR EACH INDIVIDUAL COMPANY YOU’RE RIGHT, WE ARE PUTTING SOME PLANNING — IT’S SOMETHING THAT WOULD COME OUT EVERY MONTH SIX-WEEK ADVANTAGE, PRIMARILY USING SIX WEEKS AHEAD OF TIME FOR THE ELECTRIC SITE OF IT’S ONE OF THE FEW TIMES GAS IS AGREEABLE WITH WHAT ELECTRIC WANTS TO DO WHAT IT COMES DOWN TO, WE COULD DO IT ONE MONTH, WHICH WOULD BE THE END OF THE MONTH CLOSE FOR THE PREVIOUS MONTH OF WE FIGURE IF WE DO IT SIX WEEKS, WE GO TO NYMEX >> I DISAGREE WITH SIX WEEKS IT WORKS WOULD FIVE WEEKS BE BETTER WHATEVER YOU PICK, I THOUGHT IT WAS AN INTERESTING POINT YOU BROUGHT UP TODAY THERE MAY BE SOME OTHER LEAD TIME NOT THAT SIX WEEKS WOULDN’T WORK, WE JUST DON’T KNOW THAT’S SOMETHING FOR PEOPLE TO THINK

ABOUT AND KIND OF GETS DOWN TO IF WE SOLVE REAL NUMBERS WE KNOW BETTER >> TAKE THE MIDDLE OF THE MONTH — WHETHER YOU USE NYMEX OR ICE, YOU TAKE THE MIDDLE OF THE MONTH AVOIDING HEDGE PER SHARES >> MAYBE >> MAYBE >> MAYBE BETTER THAT’S MONACO ELSE WE’D LIKE TO HEAR FROM YOU, TOO >> WE ALSO THINK THAT ONE OF THE BIG DIFFERENCES BETWEEN THE GAS FORMULAS AND ELECTRIC FORMULAS, ELECTRIC IS CENTERED ON ISO OF COURSE WE DON’T HAVE THAT TYPE OF MARKET STRUCTURE FOR GAS A LOT OF IT YOU MENTIONED SECONDARY IMPACT ACCESS TO THOSE POOLING POINTS ALSO THINK ESCOs CAN’T DISTINGUISH AMONG THEMSELVES EXPERTISE THEY HAVE WITHIN THEIR GAS PROCUREMENT GROUPS YOU CAN GET SOME COMPETITION WE THINK THE FORMULA — IT SEEMS TO BE IN THE RIGHT AREA, IT’S JUST DIFFICULT TO SAY FOR SURE AT THIS POINT >> INDEX OF SOME SIDE WORKING WITH THE ACTUAL INDEX THE DAY YOU TOOK IT OR WORKING AT THE SAME TIME WITH THE BASIS DIFFERENTIAL ON THE DAY YOU TOOK IT BOTH HAVE CERTAIN AMOUNT OF VARIABILITY, CERTAIN ERROR TO THEM THE QUESTION IS HOW DOES THAT IMPACT YOU MOVING FORWARD AND WHAT CAN YOU DO ABOUT IT? AGAIN, LOVE WHAT EVERYBODY WOULD SAY ABOUT THAT TOOK OUR BEST SHOT LET’S PUT THIS OUT FOR COMMENT AND SEE WHAT EVERYBODY SAYS >> THANK YOU, JOHN >> COUPLE OF QUESTIONS FIRST OF ALL, JUST MORE PROCESSWISE, IF WE HAVE THE JULY ORDER, WHEN DO YOU SEE THE WHOLE IDEA OF HAVING BENCHMARK IN PLACE UP AND RUNNING TIMING WISE? IS THAT NEARLY THE END OF THIS YEAR? WHAT’S THE SENSE OF WHEN YOU WOULD ACTUALLY HAVE SOMETHING? >> I DON’T THINK WE’VE ACTUALLY THOUGHT ABOUT THAT, CHRIS WE’RE GOING TO THINK ABOUT IT >> I NOT JUST WHEN IS THE BENCHMARK READY BUT HOW LONG TO TAKE TO IMPLEMENT IT INTO YOUR BUSINESS AS FAR AS THE COMMENTS PROCESS >> SO FOR THOSE ON THE WEBCAST KIM JUST MENTIONED WE NEED TO — PUT THEM IN YOUR COMMENTS >> JUST A COUPLE OF OTHER ISSUES JUST TO THINK ABOUT THAT IS WE ARE IN HISTORICALLY LOW GAS MARKET RIGHT NOW IF THIS GETS STRETCHED OUT, YOU COULD BE GIVEN UP VALUE TO AN UNUSED CUSTOMER JUST BECAUSE YOU HAVE TO LET THE PROCESSES CATCH UP THE OTHER THING WOULD BE GOING BACK TO THE SAME QUESTION — ON THE ELECTRIC SIDE, THAT IS A A NUMBER OF CUSTOMERS SAYING I WANT 24, 36 MONTHS I’M BETTING GAS PRICES WILL RISE, NATURAL GAS PRICES WILL RISE THE REASON WHY NATURAL GAS IS SO IMPORTANT, NOT JUST FOR NATURAL GAS BUT ALSO COULD FLOW INTO THE ELECTRIC SIDE, BOTH IN RELATIONSHIP WITH EACH OTHER THAT’S AN IMPORTANT >> CHRIS, IT WOULD BE REALLY HELPFUL IN YOUR COMMENTS IF YOU COULD — I THINK YOU DO RAISE A GOOD POINT, HOW WOULD WE SET THE REFERENCE PRICES FOR LONGER TERM CONTRACTS? SO WE THOUGHT ABOUT 12 MONTH FIXED RATE BENCHMARK WOULD BE, REFERENCE WOULD BE HOW 24, 36-MONTH PRODUCT WOULD BE DIFFERENT, THAT WOULD BE GREAT >> SOUNDS LIKE GAVE A LOT — ELECTRIC PUTS TWO CENTS IN AND WE STILL, I THINK, FOR BOTH ELECTRIC AND GAS, EXAMPLES, I AGREE WITH MIKE ON THAT I THINK A LOT OF EXAMPLES I WAN TO ASK YOU WHY YOU DIDN’T PUT A NUMBER INTO GAS, WE HAVE A FEEL I THINK THE BROADER — I WENT THROUGH TECHNICAL DETAILS, PEAKING SERVICES, HARD TO TELL IF I LOOKED AT EXAMPLES I WOULD KNOW SPECIFICALLY TOO SOON, WONDERING WHY YOU DIDN’T PUT IT IN >> THE PROFIT MARGIN, ALL THE RISK >> THE MARGIN ALL THAT IN WITH THE MARGIN LEVEL >> TALK TO US ABOUT WHAT YOU THOUGHT SHOULD BE IN THERE LET’S FIGURE OUT TO BREAK SOMETHING OUT OR NO >> WE DIDN’T >> WE DIDN’T WE DID IT ON PURPOSE YOU WANTED — ON THE GAS SIDE

WE COULD HAVE PUT THEM UP WITH SOMETHING BUT LET’S JUST CONSIDER A BIGGER MARGIN, CONSIDER WHAT’S HERE ON THE BALANCING SIDE, YOU’RE RIGHT DIFFERENT BALANCING SERVICES, OTHER COUNTRIES TAKE A LOOK AT RG&E AND GET THE SERVICE FROM DOMINION OTHER SERVICES NOT THE ROOF SYSTEM PUT IN PLACE WITH GRID UNITS DOWN STATE CON ED MOVING IN SAME DIRECTION SO YOU’VE GOT VARIETY SO THE BALANCING PIECE IS GOING TO BE DIFFERENT IT’S GOING TO BE DEFINED DIFFERENT BASED ON SERVICE PROVIDED COMPANY TO COMPANY TO COMPANY THAT NUMBER IS DIFFERENT, TOO FIGURE OUT EXACTLY WHAT’S GOING TO BE IN THERE ALSO >> SO BASICALLY YOUR STRATEGY FOR THE GAS IS YOU WANT US TO PROPOSE WHAT THE MARGIN IS WHEREAS ELECTRIC PROPOSE SOMETHING — >> YOU PROPOSE SOMETHING BASED ON EXAMPLE PEOPLE GAVE YOU AND THEN COME UP WITH THE BEST GUESS, RIGHT? >> SO BASICALLY — >> I DON’T WANT TO GUESS >> I DON’T WANT TO GUESS I DON’T WANT TO GUESS AND HAVE SOMETHING COME OUT I WANT TO HEAR WHAT YOU NEED IF YOU NEED SOMETHING DIFFERENT BASED ON LOAD FACTOR, THIS THE POINT TO LET US KNOW >> PROCEDURALLY, SOME EXAMPLES OF HOW THIS IS GOING TO BE COMPUTED >> ALREADY LOOKING AT THE METHOD MIKE BROUGHT WHEN HE WAS UP WROTE A NOTE AHEAD OF TIME, DID YOU EVER THINK OF BACK HALF FIRST THING WE DID WAS FIGURE OUT WHAT IT WOULD LOOK LIKE IF WE WERE DOING WHAT WE SAID WE WOULD DO NEXT TAKE A LOOK AT ACTUAL PRICES AND SEE HOW IT COMPARES THAT’S A LOT OF WORK AND NO WAY WE’LL GET THAT DONE BY TODAY IF WE COULD WE WOULD MAKE A PRESENTATION TODAY >> I THINK WHAT THEY ARE ASKING IS FOR THE FORMULA THAT WAS PROPOSED IN THE WHITE PAPER, THE ELECTRIC CALCULATED WHAT THE RATES WOULD HAVE BEEN FOR A SPECIFIC PERIOD MAKING THAT AVAILABLE YOU SAID YOU DID A CALCULATION, HAS THAT AVAILABLE >> I THINK WE CAN MAKE THAT AVAILABLE I’M NOT AWARE OF ANYTHING IN THERE CONFIDENTIAL, PROPRIETARY ALL CHARGED TO TARIFF >> AN ELECTRIC ONE, TOO >> I DON’T CARE I JUST WANT TO SEE SOMETHING THAT’S FINE THANK YOU >> JOHN — >> USHER, SPEAK CLOSER >> IT’S ON >> THEY ARE JUST HAVING TROUBLE HEARING ON THE WEBCAST >> I JUST WAS A LITTLE BIT CONFUSED ARE YOU INDICATING THAT THE — WHAT YOU LEFT HERE, UNLESS YOU GET SOME INFORMATION FROM US, YOU CAN’T DETAIL WHAT THE P FACTOR WOULD BE? IS THAT WHAT YOU’RE SAYING? >> THE P FACTOR >> PREMIUM INCLUDED SUPPLY MARRIAGE AND RELATED COST INCLUDING PURCHASE OF RECEIVABLES AND BILLING >> WE WANTED TO STICK THE MFC IN AS A SEPARATE ISSUE SOME PEOPLE WE BOUNCED OFF OF, LIKE A SELECT ONE OR TWO PEOPLE IN THE ROOM WHO WE BOUNCED IT OFF OF WE GOT A LOT OF PUSHBACK ON MFC THAT’S WHY WE THREW IT THERE, PUSHBACK A LOT OF PEOPLE IN THE ROOM TOLD US — THE PEOPLE IN THE ROOM WE TALKED TO SAID THEY DIDN’T THINK COMPANY MFC WAS REPRESENTATIVE, ONLY A PORTION OF IT THAT’S WHY WE THREW IT IN FOR COMMENT TO SEE WHAT UNDER THE CIRCUMSTANCES FROM EVERYBODY >> I TOOK YOUR FORMULA TODAY, I REALLY COULDN’T COMPUTE IT, BECAUSE THERE IS NO SPECIFIC FACTOR SETTING UP, INDICATING — >> IF WE DO IT WE’LL HAVE TO MAKE ASSUMPTION SO WE’LL HAVE TO IDENTIFY ASSUMPTIONS MADE FOR THOSE DIFFERENT ITEMS WHEN WE SHOW IT TO YOU NOT SURE IF THAT’S THE GUESS I DON’T KNOW IF THE ASSUMPTIONS WILL BE CORRECT OR NOT WE CAN DO THAT >> FOR EXAMPLE JUST MAKE IT EASY, IF WE AGREE WITH A TWO CENT ADD, BENCHMARK FOR ELECTRIC, WE SAY WE THINK THAT WOULD BE A GOOD NUMBER, IT’S THAT TYPE OF SUMMATION YOU’RE LOOKING FOR >> EXACTLY, YOU KNOW WE CAN LOOK AT MFC, DISCOUNT RATES ON PURCHASE AND RECEIVABLES FROM COMPANY TO COMPANY, THINGS LIKE THAT WE CAN SETTLE ALL THAT UP SEPARATELY OR THROW IT INTO ONE THING AND USE THAT TO IDENTIFY WHAT THAT ONE NUMBER IS, TOO DO IT EITHER WAY AGAIN, WE’D LIKE TO SEE WHAT YOUR PREFERENCE IS DO YOU WANT A FORMULA THAT GOES

ON WHOLE LENGTH OF THIS ROOM OR SOME ITEMS THAT MIGHT BE INCLUDED IN DIFFERENT PORTIONS >> GENTLEMEN, HOW ARE YOU DOING? JUST WANT TO ASK YOU A QUESTION JUST TO CLARIFY THE GENTLEMAN, YOU READ IT TO GO IN EITHER DIRECTION THE CAN YOU GO, WHICH COULD BE TO ALLOW SOME HEAD ROOM UNDER WHICH WE MANAGE THE BUSINESS OR TO PREVENT PRICE GOUGING LOOKS LIKE SOME SORT OF CLAWBACK TO SUPPRESS THE RATING AND KEEP IT FROM GOING TOO HIGH I’M CURIOUS HOW YOU ENVISIONED IT WHEN YOU WROTE IT >> WHAT I’D REALLY LIKE TO KNOW HAVING COME OUT OF PRIVATE INDUSTRY, PRODUCTION ENGINEER, WORK TOWARDS PROFIT MARGIN I ALWAYS HAD TO MAKE SURE THAT AS AN EXAMPLE I ALWAYS HAD TO MAKE SURE MY OPERATING COSTS WERE AT LEAST HAL OF WHAT THE SELLING COST WAS GOING TO BE AND NO MORE OR THEY FIND SOMEBODY TO TAKE MY JOB THAT’S WHERE I SEE THE END COMING FROM IT’S THAT KIND OF CONCEPT THE POINT IS RATHER THAN EVERYBODY TELLING US CONFIDENTIAL, WE KNOW THEY ARE NOT GOING TO GET, WHAT ITEMS IN THERE THAT’S WHAT WE’RE LOOKING FOR WHAT KIND OF IDEA SHOULD WE HAVE IF THERE’S A RANGE, SOMETHING BY CUSTOMER BECAUSE OF LOAD FACTOR WE TALKED ABOUT OR SOME OTHER KIND OF ISSUE, LET US KNOW WHAT IT IS THEN GO BACK AND CONTINUE TO DEVELOP AND EVOLVE THIS FORMULA TO THE POINT WE HAVE SOMETHING WORKABLE >> ANY OTHER QUESTIONS ON GAS? >> ANY OTHER QUESTIONS ON GAS? >> THIS ACTUALLY RELATES TO BOTH GAS AND ELECTRIC SIDE I CAN SEE WHAT YOU’RE TALKING ABOUT, I HAVE NO VISION ON THE CUSTOMERS WHAT ABOUT CUSTOMERS I’VE BEEN SERVING FOR YEARS AND RENEWING I HAVE VERY, VERY CLEAR INFORMATION ON THOSE CUSTOMERS, INCLUDING CAPACITY TAGS ON THOSE CUSTOMERS WHEN I RENEW CUSTOMERS I REWARD CUSTOMERS WITH LOWER CAPACITY TAGS WITH LOWER PRICES I COULD VERY EASILY FIND MYSELF FINDING CUSTOMERS WITH LOWER CAPACITY TAGS BEING OUTSIDE OF YOUR PRICING BUT YET I’M PRICING THEM BASED ON WHAT I BELIEVE MY COST IS GOING TO BE TO SERVE THAT INDIVIDUAL CUSTOMER AS WE JUST TALKED ABOUT A LITTLE WHILE AGO UNFORTUNATELY WHEN YOU GET INTO A SITUATION LIKE THAT WHEN YOU HAVE A ONE SIZE FITS ALL EQUATION THAT CAN BE AN ISSUE, AND WE COULD VERY EASILY START IT OFF BY SAYING THAT’S A RISK YOU HAVE TO MANAGE BY MAKING — HAVING YOU GO GET AGGREGATION OF CUSTOMERS TO FIT THE ACTUAL GENERAL MOLD WHAT IF YOU WANT TO DO THAT I UNDERSTAND YOUR POINT WHAT IF YOU WANT A MARKET NICHE OF CUSTOMERS, ONLY CERTAIN PERCENTAGE OF LOAD FACTOR CUSTOMERS AND MOSTLY — SHOULD WE MODIFY THE EQUATION FOR YOU IN THAT SITUATION? WE NEED TO HEAR FROM YOU ON THAT WE NEED TO KNOW WHETHER THAT’S SOMETHING THAT SHOULD BE DONE IN THE PORTION OF THE FORMULA OR SEPARATE PORTION, BREAK IT OUT DIFFERENTLY THE LOAD FACTORS DO WE HAVE DIFFERENT ASPECTS, LOAD FACTORS TARIFFS DOWN IN THE GRID LONG ISLAND NEW YORK DIFFERENT BALANCING CHARGES IF YOU’RE BELOW 50% LOAD FACTOR COULD WE DO SOMETHING LIKE THAT HERE? YES, WE COULD DO SOMETHING LIKE THAT HERE COULD WE TURN AROUND AND DO SOMETHING BETTER THAN THAT, HAVE THREE POSITIONS RATHER THAN 2014 YEAH, BUT I LIKE TO LEAN TOWARDS TWO BECAUSE IT’S CLOSER TO WHAT ALREADY DO ESPECIALLY IN BALANCING, WHICH IS BASICALLY LOAD FACTOR RELATED I GUESS MY ANSWER TO YOU IS BASICALLY THE SAME QUESTION WE GOT BEFORE AND I THINK WE NEED TO TAKE A LOOK AT IT AND COULD DEFINITELY USE MORE INPUT FROM EVERYBODY HERE TO TELL US WHAT THEY THEY’D AND WHAT THEY MIGHT HAVE TO LIVE W >> QUESTIONS? CHRIS, GO >> I DON’T KNOW — >> CHRIS, YOU’VE GOT A SOLUTION, NOT A QUESTION, RIGHT? >> I LOVE IT, AS A MATTER OF FACT USE IT MORE OFTEN >> RIGHT I GOT IT >> YOU TALK A LOT ABOUT REFLECTING SUPPLIER MARGIN I’M JUST NOT SURE WHERE WE ENDED UP ON THAT TRYING TO FORMULATE THE RIGHT QUESTION IS YOUR GOAL IN THIS EXERCISE TO REFLECT SOME REASONABLE RANGE OF WHAT SUPPLIERS ARE ACTUALLY INCLUDING IN TERMS OF MARGIN FOR

FIXED PRICE? >> YEAH, THE GOAL IS — WHEN YOU TAKE A LOOK AT A 12-MONTH ANALYSIS, WE’RE BASICALLY TRYING TO COME UP WITH A 12-MONTH PRICE BASED ON HOW THE PRICES AND HOW THE VOLUMES MAY BE SCULPTURED OVER THE 12-MONTH PERIOD THAT’S THE BIGGEST ISSUE WE HAVE IS TAKING A LOOK AT EACH — EVERY MONTH YOU’VE GOT A DIFFERENT SCULPTURE YOU KNOW — THE BEGINNING OKAY COLDER OR WARMER A DEVIATION FROM THE REFERENCE PRICE, ALL RIGHT? BASICALLY YOU’RE GOING TO BASE IT ON A NORMAL WINTER, A NORMAL WHAT THE COMPANY IS DOING OR WHAT THE COMPANY IS DOING OR WHAT THE COMPANY — EVEN WHEN WE DO RATES, WE TAKE A LOOK AT EVERYBODY TOGETHER IN THIS CLASS WE DON’T JUST LOOK AT TRANSPORTATION BY IT’S SELF WE SET RATES BY FIRM TRANSPORTATION, TOGETHER, ONE GROUP, SO WE CAN BE INDIFFERENT WHETHER PEOPLE ARE MOVING ESCO TO ESCO, ESCO TO COMPANY WE WANT TO BE INDIFFERENT WITH THAT WE HOPE TO SET THIS UP IN A SIMILAR FASHION THE PROBLEM IS WE’RE TRYING TO SET THAT MARGIN UP SO WE CAN BE AS FAIR, REASONABLE HOPEFULLY WHEN YOU’RE FAIR AND REASONABLE YOU’RE CLOSE TO REALISTIC >> CHRIS, WAIT A SECOND THEY ARE NOT HEARING YOU >> NOT HEARING ME >> USUALLY I TRAVEL WITH MY OWN MICROPHONE >> YOU HAD A GOOD SOLUTION RIGHT THERE SO DID PEOPLE ACTUALLY SUBMIT THEIR MARRIAGE ON A CONFIDENTIAL BASIS? >> I NEVER SAW ANY A COUPLE OF PRIVATE CONVERSATIONS WITH A COUPLE OF COMPANIES THAT WANTED TO — THAT WE WANTED TO PICK THEIR BRAINS ON AND WE GOT SOME NUMBERS, SOME NUMBERS LIKE YOU GUYS, VERY SPECIFIC NUMBERS >> THEY WERE NOT SUBMITTED >> NOT THAT THEY WERE SUBMITTED >> PHONE >> YEAH, THANKS >> MIKE NEVER WRITES ANYTHING DOWN >> WE WERE SO UNCOMFORTABLE PUTTING THE NUMBER IN THERE THAT WE WANTED TO HEAR FROM EVERYBODY WHAT THEY THOUGHT WAS REASONABLE >> YOU WANT TO HEAR FROM US WHAT MECHANISM DO YOU ENVISION THAT WOULD ALLOW YOU TO SORT OF COLLECT ACTUAL INFORMATION ABOUT WHAT MARGIN — >> AT THIS POINT, THE MECHANISM IS THE COMMENTS THAT ARE GOING TO BE FILED ON MONDAY >> THE PUBLIC COMMENTS >> YEAH WE ASK EVERYBODY OVER AND OVER AGAIN TO HELP US CREATE THIS REFERENCE PRICE THE CREATION PROCESS IS DONE NOW IT’S A PROCESS BY WHICH WE GET INFORMATION TO ZO WE CAN MAKE A RECOMMENDATION TO THE COMMISSION >> I JUST WANT TO ADD THAT YOU CAN FILE PUBLIC COMMENTS, AND IN THOSE COMMENTS ASK FOR A PORTION OF THEM TO BE TREATED AS CONFIDENTIAL IF YOU WANT TO PUT MORE INFORMATION INTO THE RECORD THAT SAYS SHOULD NOT BE 2%, SHOULD BE 3 AND HERE ARE ALL THE VARIOUS FACTORS WE USE YOU KNOW, THERE’S NOTHING THAT PREVENTS YOU FROM DOING IT I DON’T WANT PEOPLE TO THINK JUST BECAUSE THEY ARE, QUOTE, PUBLIC COMMENTS, THERE’S A COMMENT FOR THE PUBLIC AT LARGE TO COMMENT ON THE PAPERS THEY PUT OUT IT IS INFORMATION YOU WANT TO SHARE WITH THE STAFF TEAM YOU THINK IS HELPFUL TO FINAL RECOMMENDATION TO COMMISSION THAT INFORMATION, YOUR OPINION IS CONFIDENTIAL, YOU WOULD FOLLOW FLOOR GUIDELINES PUTTING IT IN AND ASKING FOR EXEMPTION FROM DISCLOSURE NOTHING IS WRONG WITH FOLLOW THAT PROCESS IF YOU WANT TO HAVE SOMETHING MORE CONCRETE IN FRONT OF YOU >> BEFORE, I JUST WANT TO UNDERSTAND YOUR INTENTION IN THE FORMULA IS TO INCLUDE A REASONABLE PROFIT >> UNLESS WE DID SOMETHING, CHRIS, WE’RE GOING TO HAVE TO DO SENSITIVITY ANALYSIS, ASSUME SEVERAL DIFFERENT PERCENTAGES TO PUT IN THERE TO SHOW WHAT THE DIFFERENCE IN PRICES WOULD BE BASED ON WHAT’S ASSUMED WE’RE TRYING TO MINIMIZE WHAT WE’RE GOING TO DO, GOING TO BE A LOT OF WORK AGAIN, WE’RE TRYING TO BE AS FAIR AND REASONABLE AND HOPEFULLY REALISTIC >> GO AHEAD >> WE COULD GO TO THE CONVERSATIONS YOU HAD WITH SOME OF THE ESCOs, THOSE WHO STEPPED FORWARD, SOME INPUT YOU CAN’T PROVIDE A LIST OF WHAT THEY SAID AND WHO SAID WHAT BUT IT WOULD BE HELPFUL IF WE KNEW GENERAL CHARACTERISTICS ABOUT WHO YOU SPOKE WITH >> THAT IS NOT SOMETHING WE’RE GOING TO SHARE SORRY >> COMPANIES CALLED US WE DIDN’T CALL THEM

>> WE’RE NOT SHARING WHO ASKED US WE STEPPED UP IN RESPONSE TO OUR REQUEST FOR HELP WE’RE NOT SAYING THEY ASKED TO BE TREATED CONFIDENTIALLY, SIGNED DOCUMENTS, WE’RE NOT SHARING THAT INFORMATION >> WITH ALL DUE RESPECT, THERE WERE COMMENTS SUBMITTED, PRIOR COMMENTS ON THE COMMENT DEADLINES MITT ADD COUPLE MONTH DEADLINES SUBMITTED A COUPLE MONTH AGO I’M NOT AWARE IF STAFF TOOK THAT IN CONSIDERATION OR — >> WE DIDN’T REACH OUT TO ANY COMPANY PRIVATELY WE MENTIONED REPEATEDLY IN THESE TECHNICAL CONFERENCES THAT WE NEEDED HELP DEVELOPING A REFERENCE PRICE ESCOS THAT WANTED TO HELP US DEVELOP A REFERENCE PRICE CONTACTED US THEY CONTACTED US CONFIDENTIALLY THEY DID NOT SUBMIT ANY DOCUMENTS >> LET ME STOP YOU RIGHT THERE THIS ISN’T ABOUT WHO GAVE US WHAT, WHEN, AND HOW MUCH IN DEVELOPING THE 2% THIS IS STAFF LOOKED AT THE INFORMATION AND MADE A RECOMMENDATION IN THE WHITE PAPER, FOR ALL OF YOU TO SHOOT AT YOU CAN NOW TAKE CLIENTS, TAKE THEIR INFORMATION AND SUBMIT IT CONFIDENTIALLY PURSUANT TO FULL EXEMPTIONS AND SAY, YOU KNOW WHAT, 2% IS TOO LOW WE THINK IT SHOULD BE 3, 4, 5 HERE IS THE REASON WHY HERE IS THE REASON WHY HERE IS OUR BREAKDOWN WHAT SHOULD MATTER TO YOU IS THE BASIS OF YOUR CLIENT’S OPERATIONS AND WHAT THEY NEED FOR THAT MARKUP TO ENSURE THEY ARE ABLE TO OPERATE AFTER THIS ORDER IS ISSUED THAT’S REALLY WHAT SHOULD MATTER TO ALL OF US NOT HOW DO WE COME UP WITH 2% IS IT A MEANINGFUL NUMBER >> POINTED OUT WE TOOK WHAT THE NUMBER IS AND WE ADDED TO IT WE DIDN’T TAKE — WE TOOK ALL THE ESCO NUMBERS AND TOOK THEM AND A CAME UP WITH A HIGHER NUMBER >> MY POINT IS SLOWER ESCOs THAT DON’T HAVE CAPACITY TO COME FORWARD TO STAFF WITH RECOMMENDATIONS TAKE YOUR POINT AND WILL MAKE COMMENTS ON THE WHITE PAPERS BUT THE QUESTION WAS, YOU KNOW, NOT — THERE WAS A PILE OF STUFF THAT LED TO DEVELOPING THE REFERENCE PERSON, SUCCESS WOULD JUST BE HELPFUL IN DETERMINING HOW THAT NUMBER WAS DEVELOPED >> USHER, DID YOU HAVE SOMETHING TO SAY? >> NO >> YOU FORGOT >> MY LONG-TERM MEMORY >> THAT’S OKAY >> I DID REMEMBER, I JUST WANTED — >> NO, I THOUGHT YOU HAD SOMETHING NO I’M NOT LOOKING >> I ALWAYS HAVE A COMMENT >> THE ONE GUY THAT KNOWS, HIS PREVIOUS JOB WHAT A COMPANY PORTFOLIO LOOKS LIKE >> I WOULD SAY US TO REFERENCE PRICE, BACK TO SOME KIND OF MARGIN IT’S NOT SECRET >> ESPECIALLY MY FEELING IS WHAT YOU SEE IN THE WHITE PAPERS, WHAT WE GOT, WHAT WE WERE THINKING OF WE THREW EVERYTHING BACK OUT IN THE WHITE PAPERS TO LOOK AT I REALLY DON’T THINK THERE’S ANYTHING ELSE WE’RE GOING TO GIVE YOU >> THIS ISN’T A CRITICISM OR ANYTHING I JUST WANT TO UNDERSTAND THE P WITH THE MARGIN FACTOR IN THE FORMULA IS ESSENTIALLY NOT FILLED IN YET >> NO >> THAT’S WHAT I WANT >> I DON’T THINK ANY OF US COMFORTABLE ASSUMING ANYTHING THERE BECAUSE I THINK WE NEED TO KNOW MORE ABOUT HOW IT OPERATED I DIDN’T WANT TO GIVE CONFIDENTIAL INFORMATION AND START CALLING PEOPLE IT WAS PEOPLE WHO OFFERED THAT WE TALKED TO WHAT YOU’VE GOT IN THE WHITE PAPER AND WHAT YOU SEE IS WHAT WE’VE GOT >> SAME TIME ON THE ELECTRIC SIDE WHERE THEY DID PROVIDE MARGIN THAT ISN’T SET IN STONE YET THAT’S A CHANGE >> THAT FORMULA COULD BE OPERABLE BECAUSE YOU HAVE A PLACE HOLDER >> EXACTLY >> OTHER COMMENTS ON GAS BEFORE WE MOVE ON? OKAY WE’RE GOOD YOU’RE WELCOME TO STAY AS LONG >>> DO YOU WANT TO TAKE A HALF HOUR BREAK FOR LUNCH? OR WOULD YOU RATHER CONTINUE? MOST PEOPLE WANT TO CONTINUE

>> HOW ABOUT A FIVE-MINUTE BREAK JUST A FIVE-MINUTE BREAK AND WE’LL BE BACK — LET’S COME BACK A COUPLE MINUTE AFTER 1:00 >> SO WE’RE NOT GOING TO TALK ABOUT GAS REFERENCE PRICING ANYMORE BUT DO WE HAVE OTHER COMMENTS ABOUT — >> JUST TOUCH UPON GAS AND ELECTRICITY, ANY CHANCE WE CAN GET THE — >> I THINK CAN WE GET AN EDUCATED NUMBER? WE CAN POST — PAUL — IS THAT OKAY? >> THAT WOULD BE GREAT >> I WILL CHECK WITH YOU AND SEE WHETHER OR NOT WE CAN DO THAT YOU’RE WELCOME >> WITH THOSE EXAMPLES YOU’RE GOING HAVE THE VALUES POPULATED? >> YES >> CAN YOU TELL US THE DATE YOU RAN IT? >> RIGHT SO WE CAN DEFINITELY GET THE ELECTRIC UP TO DATE >> GOTCHA THIS QUESTION IS FOR MIKE OR PAUL BUT RELATES TO PAGE 5 OF THE WHITE PAPER WHERE YOU TALK ABOUT CONVERTING THE CAPACITY COST TO A BASIS, SERVICE LOAD FACTOR, CLASS, COINCIDENCE ARE YOU BASICALLY SAYING YOU WOULD USE THE PEAK THAT’S COINCIDENCE, NEW YORK ISO SYSTEM? >> YEAH >> SO THERE I GUESS MY COMMENT I’LL THROW OUT TODAY AND MAYBE PUT IN THE COMPANY COMMENTS FORECASTS COST STANDPOINT UTILITY COST OF STUDY YOU WANT TO USE, FOR COMPETITIVE SUPPLIER THE CUSTOMERS NOT COINCIDENT, CLASS LOAD FACTORS, MORE WHAT WE HAVE TO REFLECT IN OUR COST SO IF THE CUSTOMER HAS A VERY LOW LOAD FACTOR OVERALL, THE AVERAGE COST FOR THEIR CUSTOMER IS GENERALLY HIGHER, RIGHT? >> RIGHT ALTHOUGH THE UTILITIES ARE BASED ON ELECTRIC THEY ARE NOT PRICING INDIVIDUAL CUSTOMERS AS ONE OF THE COMMENTERS SAID, ALMOST LIKE THEY HAVE ONE BIG CUSTOMER >> I GUESS FOR THE CLASS MAY WORK OUT VERY CLOSE OR THE SAME BUT I THINK THE CONCEPT IS A LITTLE DIFFERENT OF BUT THAT’S MY THOUGHT I HAVE ONE QUESTION, WE DIDN’T TALK ABOUT VARIABLE RATES AT ALL YOU PROBABLY THINK THE PAPER IS CLEAR ON IT THERE IS AN EXAMPLE IN MY HEAD I WANTED TO PUT OUT AND GET A REACTION TO, NOT SO MUCH THE MARKET PRICE COULD RUN UP A MONTH AND WE’RE TRYING TO KEEP PACE WITH IT, ON THE GUARANTEED SAVINGS PRODUCT, WHAT HAPPENS IF THE UTILITY PRICE DROPS DRAMATICALLY OR DROPS SOMEWHAT FOR RECONCILIATION ITEM AND WE WIND UP OUT OF WHACK ON THE BILLING CYCLE WITH THE CUSTOMER FOR A MONTH >> THE INTENT IS NOT TO DO A BILLING CYCLE TO BILLING CYCLE COMPARISON IT’S TO DO EITHER A 12-MONTH COMPARISON OR IF THE CUSTOMER IS A CUSTOMER FOR LESS THAN 12 MONTHS, FOR THE TERMS IN WHICH THE CUSTOMER IS A CUSTOMER SO I THINK YOU MIGHT HAVE SOME VULNERABILITY IF THE CUSTOMER IS FOR A VERY SHORT PERIOD OF TIME BUT GENERALLY WITH DO THAT >> I SEE THANK YOU >> ANY OTHER QUESTIONS ON ELECTRIC REFERENCE PRICE OR ELECTRIC REFERENCE PRICE OR REFERENCE PRICE IN GENERAL? GO AHEAD, CHRIS LET’S GET RID OF THAT MICROPHONE GO AHEAD >> 45 DAYS IS CALENDAR MONTH,

CORRECT? >> WHERE IS THAT PUT THE REFERENCE PRICE OUT 45 DAYS IN ADVANCE OF THE FIRST OF THE MONTH START DATE IS THAT WHAT YOU HAD IN MIND >> I’M NOT SURE TALKING ABOUT SIX WEEKS? >> I’M SORRY, SIX WEEKS >> YES IT WILL BE THE START DATE OF A CONTRACT, THE FIRST DATE OF THE FIRST DAY OF THE MONTH >> OKAY >> IS THAT YOUR QUESTION? >> YES, EXACTLY IT’S NOT TIED TO BILLING CYCLES >> NO MEANT TO BE MONTHLY, MONTH TO MONTH >> THE OTHER QUESTION I HAD, THIS MAY HAVE BEEN ASKED ABOUT GAS, BUT WITH RESPECT TO THE CUSTOMER CLASSES LIKE, SAY, CON ED RESIDENTIAL CLASS, A NUMBER OF DIFFERENT CUSTOMER DEFINITIONS, EACH OF WHICH HAD A DIFFERENT LOAD SHAPE ARE YOU DOING A DIFFERENT PRICE? >> NO FOR CON ED, SIX DIFFERENT LOAD SHAPES WE USE THE LOWEST FACTOR OF ANY SHAPES TO CONVERT YES IN OTHER WORDS BELIEVE IT OR NOT THE IDEA WAS TO TRY AND AIR ON OVERSTATING THE PRICE EVERY TIME WE HAD TO MAKE A DECISION — >> JUST A QUICK ONE ON VARIABLE REFERENCE PRICE THE ONLY THING CONCERNED ABOUT, THE WAY YOU EXPRESS CONCERN IF WE HAD A GAP ON GETTING A CUSTOMER FROM A FIX TO A FIX, THEY GO TO VARIABLE FOR ONE MONTH, UTILITY BENCHMARK PROBABLY, I THINK THE EXPRESS CONSENT THE WAY IT’S WRITTEN AND WITH THE INTENT THAT ELIMINATES — WE DON’T NEED SIGN OFF BY CUSTOMERS, THAT WOULD ELIMINATE A VARIABLE ONE MONTH WHAT HAPPENS A LOT, A MONTH LAG, GET THEM BACK ON THEN WE WOULD GET EXPOSED FOR THAT ONE MONTH VARIABLE, THE LADY EXPRESSED WAS WRITTEN WOULD OCCUR IF WE DO EVERYTHING RIGHT >> I THINK, AND MAYBE I’M GOING DOWN THE WRONG TRACK HERE, BUT I THINK THE WAY WE REALLY HAVE PROBLEMS NOW SOMETIMES IS IT’S HARD TO GET IN TOUCH WITH THE CUSTOMER PASS THE DEADLINE FOR RENEWING FIXED PRICE CONTRACT, VARIABLE FOR A MONTH AND THEN BACK ON FIXED SO BE EXPOSED FOR THAT ONE MONTH I THINK THE WAY THE EXPRESS CONSENT IS WRITTEN, AS LONG AS WE FOLLOW EXPRESS CONSENT PROCEDURES AND SEND EVERYTHING TO THE CUSTOMER WE ELIMINATE THAT GAP BECAUSE THE CUSTOMER DOESN’T HAVE TO GET BACK TO US AS LONG AS THEY HAVE GOT EVERYTHING THEY HAVE NO PROBLEM WAS THAT THE INTENT THE WAY WE EXPRESSED INTENT? >> RIGHT >> OH, OKAY >> THERE WOULD BE VULNERABILITY FOR ONE-MONTH PERIOD >> IF THE COMMISSION PROPOSAL SHOULD ELIMINATE THE NARROW WAY THAT HAPPENED >> OKAY SO WE LIKE THAT >> EXPRESS CONSENT PROVISION WAS VERY, VERY NICE THE ONLY THING I HAVE IS WHY WE NEED THREE NOTICES, NOT THAT USUALLY BETTER BUT IN PRACTICE WITH ESCOs FILING, AGAIN, KNOW THE FIRST ONE LIKE 63 DAYS BEFORE, SOMETHING COMING IN THE MAIL FOR YOU, HOWEVER WE WANT TO DO THE LANGUAGE THEN YOU’RE GOING TO GET THE ACTUAL NOTICE, OKAY THEN WITHIN TWO OR THREE DAYS, HAVE TO TELL THEM WHAT THEY HAVE GOTTEN IT’S FROM MY PER SPEBLGTIVE THAT MAY CREATE MORE CONFUSION FOR THE CUSTOMER THEY AREN’T UP TO ALL THESE NICETIES WE ARE I CAN SEE IT ACTUALLY CAUSING CONFUSION ALSO I THINK LEADING TO A LOT GREATER THAN ME ON CUSTOMER SERVICE I’M ASKING YOU TO THINK ABOUT IT I THINK TWO WOULD BE OKAY TAKE OUT FIRST AND LAST AND MAKE THAT MUCH OF A DIFFERENCE I THINK THREE CREATING SOMETIMES MORE PROBLEMS THAN SIMPLY HAVING ONE OR TWO ESSENTIALLY THREE SEPARATE NOTICES GOING OUT TO THE CUSTOMER WITH MAXIMUM 63-DAY PERIOD >> TALK ABOUT THIS

>> IT’S THE PENNSYLVANIA RULE ADAPTED TO NEW JERSEY — NEW YORK, EXCUSE ME I’M THINKING ABOUT WHERE I’M DRIVING TO IN THIS MEETING >> THE THIRD NOTICE, THE POSTCARD IS NOT PART OF THE PENNSYLVANIA ROLE IT’S UNIQUE TO NEW YORK IN THIS ENVIRONMENT TO ENSURE THAT THE CUSTOMER TAKES TIME TO LOOK AT THAT SECOND NOTICE WHICH HAS THE STRUCKS AND THE OPTIONS FOR HOW THEY CAN ACT ON THEIR CONTRACT >> SO YOU KNOW, FROM OUR PERSPECTIVE, — IGNORE THE THIRD NOTICE, SOME OF THEM SO WE WANT TO PROVIDE AS MUCH COMFORT THAT CUSTOMERS ARE GETTING WHAT THEY NEED HOWEVER — >> NOT SOMETHING — BECAUSE OF THE LAW OF UNINTENDED CONSEQUENCES, I THINK THREE NOTICES WAS A SHORT TIME FOR AGENDA >> LET ME JUST SAY THIS, THAT WE HEARD LOUD AND CLEAR CONCERNS ABOUT THE CHANGES THAT WERE PROPOSED IN THE 223 ORDER AND HOW THEY COULD BE IMPLEMENTED BY ESCOs WITH THE WAY THE DEFINITION OF MATERIAL CHANGE WAS FOR LACK OF A BETTER TERM WRITTEN IN UVPs THIS WAS THE BUSINESS REALITY OF THE ESCO’S FACE AND TRYING TO COME UP SOME ALTERNATIVE TO THAT EXPRESS CONSENT I WOULD BE VERY RELUCTANT TO MINIMIZE WHAT’S PUT IN HERE WE STILL WILL HAVE CONSUMER ADVOCATES NOT HAPPY WITH ALTERNATIVE TO EXPRESS CONSENT I WOULD RECOMMEND WE ALL KIND OF GET BEHIND THIS ONE >> THERE WE HAVE IT GO AHEAD WHERE OUR COMPANY IS IN AGREEMENT WITH THAT PROCESS, RATHER THAN AFFIRMATIVE CONSENT I WANTED TO JUMP BACK, I DIDN’T KNOW WE WERE MOVING OFF — >> WE’RE NOT >> I JUST WANTED TO JUMP BACK THERE REAL QUICK AND JUST ASK A COUPLE OF CLARIFIES QUESTIONS, IF YOU COULD CONFIRM A COUPLE THINGS FOR ME IS THE BENCHMARK REFERENCE PRICE GOING TO BE TIED TO THE CONTRACT SIGNING DATE OR ENROLLMENT DATE? >> THE CONTRACT PERIOD >> OKAY SO IN OTHER WORDS, IF A CUSTOMER SIGNS THE CONTRACT MAY 31st, THIS MONTH’S REMPS PRICE, NOT WHEN THEY ARE ENROLLED WHICH COULD TECHNICALLY BE JUNE 2nd >> FROM A CONTRACT STARTED — PRICING PERIOD STARTED IN JUNE, THERE WOULD BE THAT JUNE PRICE >> SO IF THEY SIGN THE CONTRACT IN MAY, HELD TO THE JUNE REFERENCE PRICE >> PUTTING OUT A PRICE IN — ACCORDING TO THE PROPOSAL, JUNE >> WHATEVER ORDER COMES OUT, REALLY CLEAR ABOUT HOW THAT WORKS, I WOULD APPRECIATE THAT THEN THE SECOND QUESTION I HAVE IS WILL ALL OF THE UTILITY REFERENCE PRICES BE RESET AT THE SAME TIME IN WILL FOR ALL ZONES ALWAYS BE THE FIRST OF THE MONTH? THEY ARE NOT GOING TO BE STAGGERED, SO WE CAN ANTICIPATE CONSISTENCY >> WE’LL PUT THEM OUT — PUT >> WE’LL PUT THEM OUT — PUT THEM OUT AT THE SAME TIME >> OKAY >> AGAIN, MAYBE 12 — FOR SOME FUTURE 12-MONTH PERIOD CALENDAR MONTHS >> ALL AT THE SAME TIME >> ALL ISSUED AT THE SAME TIME >> THANK YOU >> JUST ONE QUICK QUESTION >> SPEAK INTO THE MICROPHONE BECAUSE WE’RE REALLY — >> AND SO THE — IN THE EXPRESS CONSENT THE TERM MATERIAL IS WHAT IT IS IN THE CURRENT MVP? >> THE TERM MATERIAL IS DEFINED, ISN’T IT? >> IN THE PAPER IT SAYS I DON’T WANT IT IN FRONT OF ME

I’M SORRY >> THE >> SECTION 5E, WOULDN’T THAT BE IT? CUSTOMER NOTIFICATION THAT’S DISTRIBUTION UTILITY >> HOW ABOUT IF WE GET BACK TO YOU >> CORRECT THAT’S WHAT THE PLAN IS >> SO WHAT WE HAVE IS A COMMISSION ORDER DATED FEBRUARY SERVICE AT GUARANTEED SAVINGS THIS IS — COME UP WITH OTHER OPTIONS WE HAVE NOT COME UP WITH OTHER OPTIONS BESIDES GUARANTEED SAVINGS FOR VARIABLE PRICING >> NO NO RIGHT NOW TALKING ABOUT MINIMUM CHRIS >> I’M BACK ON CANDY’S QUESTION, AND IT RELATED TO A QUESTION ABOUT THE START — THE START DATE SO JUST TO BE CLEAR, LET’S SAY YOU’VE GOT — PRICE COMES OUT FOR ILLUSTRATIVE PURPOSES JUNE >> MIKE, WHAT ARE YOU THINKING — >> I’M SORRY >> I’M SORRY >> I THOUGHT — NO, NO >> I THOUGHT — NO, NO I THOUGHT WE WOULD COME UP WITH A REFERENCE PRICE AND THEN YOU WOULD HAVE A PERIOD TO MARK AT THAT REFERENCE PRICE AND THEN THE CUSTOMER WOULD — >> BUT THAT WAS SIX WEEKS IN OTHER WORDS, SOMETIME IN MID JUNE WE WOULD PUT OUT A PRICE, >> WHAT I’M GETTING AT IS AT SOME POINT THE WINDOW IS GOING TO COME DOWN YOU CAN’T — YOU’VE GOT TO MAKE SURE THAT PRICE — YOU’RE ONLY SELLING AND ENROLLING PEOPLE TO CUSTOMERS WHO WILL ACTUALLY START ON OR BEFORE — ACTUALLY ENROLLED AND WILL BE SWITCHED ON OR BEFORE JUNE 1 WHAT I’M GETTING AT, THERE’S A LITTLE BIT OF A — IF YOUR REFERENCE PRICE IS A CALENDAR BASIS, BUT WE’RE OPERATING ON 21 BILLING CYCLE — >> I THINK THE PRICE WOULD BE VALID, ANY OFFERS IN THAT MONTH >> I ASSUME CUSTOMERS, NOT THE

FIRST OF THE MONTH, ANY VALID IN JUNE >> THEN YOU HAVE TO BE SURE YOU DON’T BLOW ENROLLMENT SO CUSTOMERS DO START >> SOMETIME IN JUNE >> I THINK IT COULD BE THAT YOU SUBMIT THE E-MAIL TRANSACTION BUT YOU SUBMIT EBI TRANSACTION AFTER THE METER READ DATE AND THEN THE CUSTOMER CAN’T BE UNTIL AUGUST I THINK YOU RAISE GOOD POINTS WE HAVE TO THINK ABOUT WHETHER IT’S, INDEED CUSTOMER’S AGREEMENT, ASSUMING ESCO IS GOING TO ENROLL THE CUSTOMER WITHIN A CERTAIN PERIOD, SO THAT IT’S REALLY NOT — THE ESCO ISN’T — THE ESCO DOESN’T HAVE CONTROL WHETHER THE CUSTOMER ACTUALLY GETS ENROLLED SO IF IT’S TWO DAYS AFTER THE METER READING AND SUBMITTED THREE DAYS AFTER THAT, YOU MAY END UP — YOU MAY END UP — THERE MAY BE A DELAY I THINK THE PREVAILING DATE HAS TO BE THE DATE THAT THE CONTRACTOR FINDS >> ACCEPT BUT THEN YOU HAVE THE PROBLEM ON THE FRONT END, BECAUSE FOR SOME PERIOD OF TIME THERE IN THE FIRST COUPLE OF WEEKS AFTER THE PRICE COMES OUT, IF YOU SUBMIT THE ENROLLMENT, THEN IT MIGHT GO THROUGH A DIFFERENT — THE PREVIOUS PRICE IS YOU KNOW WHAT I’M SAYING? >> I UNDERSTAND — >> COME OUT WITH THE PRICE IN JUNE, ON JUNE 15 THERE WAS A PRICE FOR JULY 1 CAME OUT IN MID AUGUST IF YOU SUBMIT YOUR ENROLLMENT ON JUNE 20th, THEN YOU’RE GOING TO BE SUBJECT TO — THE CUSTOMER BOTH SIGNED DURING MAY — EXCUSE ME, JUNE, DURING THE PERIOD THAT THE MAY — THE ONES IN MAY APPLIED AND AT LEAST IF YOU SUBMIT THE ENROLLMENT ON THE THE SWITCH WOULD OCCUR THAT WOULD SEEM TO LOOK LIKE A CONTRACT THAT WOULD BE GOVERNED BY THE JUNE BENCHMARK THAT WAS SET IN MAY DOWNED WHAT I’M SAYING HERE? YOU’VE GOT AN ISSUE ON THE FRONT END WHERE THEY MAY NEED TO HOLD ENROLLMENTS OR JUST SAYING THE DATE THAT THE CUSTOMER SIGNED GOVERNS BUT IF THE CUSTOMER SIGNED IN JUNE FOR AN AUGUST START DATE >> THE FUTURE — THE DATE IS AUGUST THROUGH JUNE DATA THE REFERENCE PRICE IS CALCULATED BASED ON THESE FORWARD CURRENTS, IN EXAMPLE, ICE STARTING IN JUNE, PULLING JUNE 16 THROUGH MAY 17 FORWARD TO ACTUALLY CALCULATE >> I’M NOT GETTING THE ACTUAL PRICE, ENROLLMENT, I THINK I’M WORKING MY WAY THROUGH THIS THERE IS A PERIOD THE LAST TWO WEEKS OF THE MONTH ARE PARTICULARLY PROBLEMATICAL BECAUSE THAT’S THE LAST TWO WEEKS OF THE PREVIOUS SIX-WEEK PERIOD IT’S THE FIRST TWO WEEKS OF THE NEXT SIX-WEEK PERIOD ARE YOU GOING TO BE ABLE TO TELL FOR ENROLLMENT OR CONTRACT SIGNED DURING THAT PERIOD WHO IS SUBJECT — WHICH CUSTOMERS ARE SUBJECT TO THE CURRENT MONTH >> BENCHMARK >> YEAH I WOULD SAY WHEN DID THE CONTRACT — WHEN DID YOU START TO DELIVER ENERGY TO THE CUSTOMER >> SO THE CONTRACT THAT HA TO HAVE A PRECEDENT SO WHEN YOU — WHEN YOU — YOU’RE NOT GOING TO BE ABLE TO FIND OUT WHAT — WHEN THE BILLING SIGNEL STARTS UNTIL YOU GET INFORMATION FROM THE CUSTOMER, RIGHT? >> WHAT I MEAN, HAVE YOU TO GET AUTHORIZATION >> IT STARTS UPON ENROLLMENT YOU HAVE TWO CUSTOMERS ONE LET’S SAY YOU SOLD ON JUNE YOU INTENDED TO START — YOU’RE GOING TO SUBMIT ENROLLMENT FOR

CALENDAR JUNE, SET IN MAY FOR JUNE YOU SIGN UP ON JUNE 20th FOR SUPPOSEDLY AUGUST DATE IF YOU SUBMIT THAT ENROLLMENT, THEY WILL START, WERE SIGNED ENROLLMENT IN JUNE SUBJECT TO THE WRONG BENCH MARK YOU SEE WHAT I’M SAYING? >> YES I SEE WHAT YOU’RE SAYING THE APPROPRIATE BENCHMARK IS WHENEVER YOU START DELIVERING ENERGY TO THEM UNDER THAT CONTRACT >> YOU SHOULDN’T START — >> I UNDERSTAND WHAT YOU’RE SAYING, ESCOs HAVE TOTAL CONTROL WHEN THAT STARTS >> SOME CIRCUMSTANCES WHICH YOU DO HAVE CONTROL BUT YOU’D HAVE TO —ENNING THROUGH WHETHER IT’S CONTRACT DATE OR START DATE IF YOU WANT TO SIGN UP CUSTOMERS FOR THE AUGUST 1st START DATE, YOU SHOULDN’T SIGN THEM UP THE FIRST TWO WEEKS OF THE PERIOD BECAUSE THEN YOU’RE SIGNING THEM UP DURING A PERIOD — SIGNING THEM UP IN THE WRONG MONTH FOR THEM UP IN THE WRONG MONTH FOR THE WRONG BENCHMARK WILL APPLY >> PRIOR BENCHMARK >> THE PRIOR BENCHMARK WHAT YOU’RE PRICING ON IS THE NEXT BENCHMARK >> I’M JUST WONDERING IS THERE A CIRCUMSTANCE YOU HE SAID UP SIGNING UP A CUSTOMER FOR WHICH IS THERE NO BENCHMARK PUBLIC YET BECAUSE OF DAYS IN UTILITIES SWITCHING? >> YOU’VE GOT TO TALK INTO THE MIC >> TIMES WHEN ON THE ELECTRIC SIDE, 10 BUSINESS DAYS, 10 CALENDAR DAYS ON THE FIRST >> ACCELERATE SWITCHING RULES LET’S GO TO THE PODIUM YOU KNOW, I’VE — INDICATED WEBCAST, PODIUM, THE MIC ISN’T WORKING >> I JUST TURNED IT ON >> YOU HAVE TO KIND OF KISS IT >> REGARDING THE FACT YOU DON’T VIEW ANYTHING OTHER THAN 12 MONTH PRICES VALID, AND PREVIOUSLY THE VALUE OF INDEX PRICING WE’RE SPENDING A LOT OF TIME DEVELOPING PROPER FORMULA TO FIGURE OUT WHAT THE REFERENCE PRICE IS VERY SIMPLE TO TAKE THE COMMODITY PORTION OF THAT AND STRIP IT OUT AND SAY THIS IS A VALID INDEX PRICE, FOR THEIR NOT TO BE — NOT TO BE VIEWED AS VALID, BEING THAT THE COMMISSION IS TAKING A VIEW ON WHERE COMMODITY PRICES ARE GOING SOMEBODY CAN TAKE THE POSITION THEY DON’T NECESSARILY WANT TO LOCK IN BOTH THE COMMODITY AND THE DIFFERENTIAL AT THAT POINT BECAUSE THEY THINK MAYBE IT’S A BETTER TIME TO WAIT FOR COMMODITY PRICES TO GO DOWN SO THERE IS A LOT OF VALUE IN HAVING AN INDEX PRICE AS BEING A VALUE PRODUCT AND ALSO SOMETHING THAT SHOULD BE VIEWED AS EQUIVALENT TO A FIXED PRICE THIS IS FIXED PRICE WITHOUT THE COMMODITY BEING FIXED >> SO LET ME JUST POINT OUT WHAT WE’RE DOING HERE THE FEBRUARY ORDER IDENTIFIED TWO PRODUCTS THIS IS — WE’RE TRYING TO FIGURE OUT REFERENCE PRICE FOR WHAT A FIXED PRODUCT WOULD BE I’M NOT SURE THIS INDEX IS SOMETHING NEW >> IT MAY NOT BE NEW TO THE MARKET BUT IT’S NEW TO THESE DISCUSSIONS AT THIS POINT WE’VE GOT TWO PRODUCTS IN THE FEBRUARY 23rd ORDER AND NOW HAVE THIS PRODUCT, WHICH IS A 12-MONTH FIX WITH A REFERENCE PRICE >> THE COMMENTS IN THE ORIGINAL ORDER, I DID REFERENCE AN INDEX PRICE AS BEING A VALUABLE PRODUCT THAT THE MARKET DOES WANT ALONG THOSE SAME LINES, THIS IS HOW YOU CALCULATE THE FIXED PRICE, A PROPER FIXED PRICE, THE COMMODITY PERSON IT’S EASY TO SAY, THAT’S A GOOD REFERENCE PRICE FOR THE FIXED PRICE, VERY EASY TO COME UP WITH A PRICE FOR INDEX YOU CAN THEN TAKE THAT FORMULA AND BREAK IT DOWN WITH MONTHLY CALCULATION AND SAY THIS IS A REASONABLE PLACE TO BE AT ON A MONTH-TO-MONTH BASIS >> OKAY SO WE HAD IN TIME THINKING ABOUT HOW INDEX PRODUCTS WOULD BE

PRIOR TO THE INDEX >> IT’S ESSENTIALLY THE SAME FORMULA YOU HAVE, SUBTRACT THE COMMODITY >> THEN WHAT DO WE USE OUR COMMODITY >> IT’S A MONTHLY SETTLEMENT PRICE OF THE NYMEX AND POWER IS GOING TO BE THE DAILY EMP YOU SUBTRACT THAT OUT AND YOU HAVE THE SAME FORMULA WITH THE FIXED PRICE AND GIVES YOU AN INDEX PRICE UNDER THE SAME RULES >> NOT ALL THE VALUES AND FORMULA MAY BE THE SAME >> YOU CAN ADJUST TO THAT >> YOU CAN ADJUST TO THAT YOU CAN MAKE ADJUSTMENTS FOR THAT THE BULK OF IT IS IN THE COMMODITY PORTION >> THE SAME THING BY TAKING THAT FORMULA AND BREAKING IT DOWN INTO A MONTHLY CALCULATION, THEN YOU’VE ESTABLISHED A BENCHMARK ON A MONTHLY BASIS EASILY IDENTIFIABLE BECAUSE YOU CAN POINT TO IN DECK, EVERY MONTH AND EVERY DAY ON THE POWER SIDE AND COME UP WITH A REASONABLE PRICE.D DECK, EVERY MONTH AND EVERY DAY ON THE POWER SIDE AND COME UP WITH A REASONABLE PRICE.E DECK, EVERY MONTH AND EVERY DAY ON THE POWER SIDE AND COME UP WITH A REASONABLE PRICE.X DECK, EVERY MONTH AND EVERY DAY ON THE POWER SIDE AND COME UP WITH A REASONABLE PRICE.DECK, EVERY MONTH AND EVERY DAY ON THE POWER SIDE AND COME UP WITH A REASONABLE PRICE.ECK, EVERY MONTH AND EVERY DAY ON THE POWER SIDE AND COME UP WITH A REASONABLE PRICE.CK, EVERY MONTH AND EVERY DAY ON THE POWER SIDE AND COME UP WITH A REASONABLE PRICE.K, EVERY MONTH AND EVERY DAY ON THE POWER SIDE AND COME UP WITH A REASONABLE PRICE >> I AGREE >> THANK YOU >> ARE WE DONE? >> ON REFERENCE PRICE, WE’RE NOT DONE LET’S SEE DOES THE STAFF MARKET PLAYER INCLUDE THE FOLLOWING PRICE IMPACTS FOR ENERGY >> YES >> THE ANSWER IS YES >> TWO, STRATO AND IMBALANCE ALONG WITH LOAD SHAPING >> RISK PREMIUM ADDED TO ENERGY POINTS TO ACCOUNT FOR FUTURE LOAD AND HOURLY SETTLEMENT PRICES INHERENT IN THE FULL REQUIREMENT SERVICE OBLIGATION, IMBALANCE BEING THIS PREMIUM TO COVER VOLUME DIFFERENCE WHEN SCHEDULING >> YES THE 10% WAS MEANT TO COVER ALL THAT >> YES, THE 10% WAS MEANT TO COVER ALL THAT THE NEXT QUESTION IS DID THE STAFF RISK PREMIUM INCLUDE THE FOLLOWING ONE, THE COST OF HOLDING A PRICE OPEN FOR A PERIOD OF TIME, LIKE A WEEK OR A MONTH, THAT OPTION IS A RISK TO ESCOs TWO, CUSTOMER ACQUISITION COST MARGINAL BROKER FEE, BILLING AND CREDIT FEES >> THAT WAS ALL INTENDED TO BE IN THE TWO CENTS YEAH OKAY DO WE HAVE OTHER QUESTIONS? GO AHEAD, CHRIS TALK BOUGHT MIC, CLOSER TO THE MIC >> YES I WILL NOT KISS THE MIC >> IT’S 1.3 >> FOR THE 10% AND THE 20%, IS THE ONLY BREAKDOWN YOU CAN PROVIDE ON THAT AS FAR AS YOUR SOURCE AND WHAT THAT’S BASED ON >> ACTUAL NUMBERS WHICH I CONVERTED TO A PERCENTAGE AND AIRED ON THE HIGH SIDE >> A CONVERSATION AGAIN WITH SOMEBODY >> YES >> ANALYSIS OF WHAT THE LONE SHAPING ADJUSTMENT — >> WAS THE CONVERSATION FROM 10% OR 20% >> FOR BOTH >> OKAY SO NO INDEPENDENT ANALYSIS >> A TARIFF FOR LOSSES, THINGS LIKE THAT WE’RE FAMILIAR WITH UFS BUT DON’T OFFHAND KNOW WHAT APPROPRIATE LOAD SHAPING ADJUSTMENT WOULD BE WE CAPTURED — WE’RE WAITING OFF PEAKS WITH ENERGY CONTAINED WITH UTILITY LOAD SHAPES SIMILAR SHAPING GOING ON THERE WE DON’T HAVE MONTHLY LOAD SHAPING >> OKAY THANKS GOING, GOING — >> NOT GONE >> NO GONE OKAY SO ARE WE DONE WITH QUESTIONS, COMMENTS ON REFERENCE? AGAIN, WE APPRECIATE ANY COMMENTS IN WRITING, DESCRIBE — IF YOU HAVE COMMENTS YOU WANT TO FILE AND PORTIONS OF THEM, YOU ARE PRIVILEGED TO DO THAT >> WANT TO MAKE TWO POINTS ON THAT FRONT THE WAY TO DO THIS, FOR YOURSELF AND US CREATE A SEPARATE ATTACHMENT THAT WOULD BE, QUOTE, A CONFIDENTIAL EXHIBIT TO YOUR COMMENTS IT’S EASIEST FOR US TO HANDLE REMEMBER TO USE THE APPROPRIATE SOFTWARE IN PROVIDING A REDACTED COPY FOR THE OFFICIAL RECORD AND

GOES TO — WE’VE HAD EXPERIENCE IN THE PAST OF INDIVIDUALS BEING ABLE TO USE A CERTAIN — I FORGET WHAT IT IS, GOOGLE FEATURE TO UNREDACT YOUR REDACTED VERSION WE DON’T WANT TO HAVE A REPEAT OF THAT HERE THE OTHER THING IS THAT MAKE YOUR CASE IN YOUR COVER LETTER WHY IT SHOULD BE EXEMPTED FROM DISCLOSURE OBVIOUSLY I CAN’T GUARANTEE EXEMPTION FROM DISCLOSURE ON A CASE BY CASE ANALYSIS BUT MAKE YOUR ARGUMENTS SOMETHING LIKE THIS YOU SHOULD BE ABLE TO MAKE WITH REPETITIVE YOU GUYS HAVE DONE SOMETHING LIKE THERE BEFORE AND I’M SURE YOU’LL BE COVERING THE BASES BEFORE >> I HAVE TO ASK YOU THIS, DID ANYBODY DISCOURAGE JOHN FROM USING AN F TURN >> I WOULD SAY ANYBODY — >> ANYBODY WHAT THAT — >> ABOUT FIVE MINUTES AFTER WE POSTED IT, SOMEBODY SAID WE CAN’T USE THAT FU I SAID, TOO LATE, IT’S GONE PEOPLE DID RECOGNIZE SO WE TALKED ABOUT REFERENCE PRICING AND PERFORMANCE BONDS EXPRESS CONSENT OR COMMENTS OR CONCERNS OR THOUGHTS ON EXPRESS CONCERN MIKE AND PAUL ARE GOING TO ESCAPE SO — NOTHING ON EXPRESS CONSENT >> ENCOURAGE — SO WHAT ABOUT — ARE THERE THINGS — GO AHEAD, CANDY >> I HAVE A QUESTION IF YOU DON’T MIND IT’S NOT ON THE WHITE PAPER BUT RELATED TO THIS ISSUE, HAS TO DO WITH THE MAY 4th NOTICE AND DEFINITION OF MATERIAL CHANGE I WAS WONDERING IF — >> CHRIS FOUND THE DEFINITION LET ME JUST READ THE DEFINITION BEFORE WE FORGET NO MATERIAL CHANGE MADE IN THE TERM OR DURATION OF ANY CONTRACT IN A PROVISION, BLAH, BLAH, BLAH >> IS IT COMMISSION ORDER? >> IT’S IN THERE EVERY CHANGE BASICALLY IS MATERIAL CHANGE >> EXCEPT FOR PRICE >> EVERYTHING ON THE PRICE >> THAT WAS ACTUALLY GOING TO BE MY QUESTION NOTICED YOU WOULD BE CONSIDERING EXPANDING THE DEFINITION TO INCLUDE PRODUCTS WEATHER CHANGES RELATED TO PRICE MAY IN SOME CIRCUMSTANCES BE CONSIDERED MATERIAL CHANGES IT WASN’T REAL SPECIFIC OUTSIDE OF THAT I WONDERED IF YOU COULD ENLIGHTEN ME AT ALL ON WHAT YOUR THINKING WAS WITH REGARD TO THAT NOTICE >> I DON’T THINK THERE WAS ANYTHING OTHER THAN TRYING TO GIVE GENERAL NOTICE TO THE WORLD THAT WE’RE LOOKING AT THIS PROVISION IN THE UVP AND THAT WE’RE TRYING TO GET A BETTER HANDLE ON HOW DO YOU DEFINE MATERIAL CHANGE I DON’T THINK THAT MATERIAL CHANGE COVERING EVERYTHING FOR PRICE IS ADVISABLE IN THE FUTURE I THINK WE NEED TO LOOK AT THAT THE WHITE PAPER IS DESIGNED TO TRY TO LOOK AT A WAY TO EFFECT AFFIRMATIVE CONSENT IN A WAY THAT’S FRIENDLY TO THE BUSINESS MODEL DUE NOTICE TO CONSUMER PROTECTION THEN WE HAVE TO DEAL WITH BOTH OF THESE THINGS WHETHER OR NOT A CHANGE IN UVP DEFINITION MATERIAL CHANGE IS UP FOR DISCUSSION IT WAS DESIGNED TO LET EVERYBODY KNOW WE’RE THINKING ABOUT THIS ISSUE THE WHITE PAPER IS ONE WAY, WE COULD BE THINKING ABOUT THE ISSUE THAT DOESN’T NECESSARILY ENCOMPASS TOTALITY OF THE RECORD THE COMMISSION WILL TAKE ACTION ON >> THANK YOU MY CURIOSITY RELATED TO WHAT YOUR THINKING WAS RELATED TO PRICE CHANGES AND EXPRESS CONSENT >> I DON’T THINK THAT — LET ME SAY THIS I DON’T THINK THAT AT THE TIME WE WROTE THAT WE WERE THINKING THAT PRICE — THERE IS A QUESTION A CHANGE IN PRICE IS A

MATERIAL CHANGE I THINK PEOPLE ARE BACK UVP IS LIKE THE BIBLE SOMETIMES YOU REMEMBER THE MOST APTLY QUOTED SECTIONS OF THE BIBLE, FOR ME, AND YOU FORGET ALL THIS OTHER STUFF BUT IT’S STILL IN THE BIBLE YOU GET TO ONE OF THESE SECTIONS, I CAN RECITE EDI TRANSACTION DATES CAN I RECITE A BUNCH OF THINGS UNTIL NOW, BUT THAT ONE CAME OUT — BECAUSE LIKE, WHAT? WE READ IT WOW, PRICES EXEMPTED FROM DEFINITION MATERIAL CHANGE IT CAUSED PEOPLE TO PONDER THE REASONABLENESS OF THAT THAT IS UP FOR DISCUSSION AND CONSIDERATION I’M NOT SURE — WE’RE MORE FOCUSED ON EXPRESS CONSENT AND GETTING A HANDLE ON MATERIAL CHANGE, WHETHER ANY OTHER CHANGE LOOKING AT REVOKING THAT SORRY FOR MY ANALOGY >> OKAY WHAT ELSE WE’RE HERE >> WE CAN TALK ABOUT THE WEATHER >> NOT READY TO TALK ABOUT MY FAVORITE PASSAGES >> GO AHEAD >> I THINK THE DISCUSSION WE HAD HERE ABOUT REFERENCE PRICE AND CHRIS BROUGHT UP THINGS ABOUT TIMING, IF THE BENCH MARKS ARE TOO CLOSE, IT AIN’T GOING TO WORK MEANT TO HAVE CAREER >> GIVE AS MUCH LEEWAY >> ON THAT, YOU KNOW, YES I AGREE QUESTIONS OF DEGREES WE MAY WANT TO TWEAK IT A LITTLE BIT I THINK AS A BROAD NOTION, BENCH MARKS TOO TIGHT AND A LITTLE CHANGE HERE OR THERE TAKING OUT REGULATORY CHANGES AND STUFF LIKE THAT, IT’S JUST NOT WORKING SHOULD BE SOMETHING BROAD ENOUGH WHERE THERE’S NO GOUGING, AT THE SAME TIME OPERATIONAL DON’T GET INTO DAYS LIKE HARD TIME FOLLOWING CHRIS BUT I THINK GOING IN THE RIGHT PLACE THAT SHOULD NEVER TRIP US UP IF IT DOES, WE’RE IN TROUBLE THAT’S WHAT I WANTED TO SAY I WANT TO GO >> THERE’S A LINE OF RESOURCES NEED TO BE DEDICATED MAKE REASONABLE DOESN’T PROCESS TYPE OF — >> ANYBODY ELSE? OKAY THANK YOU ALL FOR COMING WE LOOK FORWARD TO YOUR COMMENTS NEXT WEEK TALK TO YOU SOON THANK null