Christopher Russell (443)

2 Principal, Energy Pathfinder Management Consulting, LLC Largest current contract: Energy Manager for Howard County, MD Former director of industrial programs, Alliance to Save Energy Author: Managing Energy from the Top Down The Industrial Energy Harvest North American Energy Audit Program Best Practices Board of Directors, Fuel Fund of Maryland Association of Energy Engineers: seminar instructor Putting a “business face” on energy decisions.

 POLICY: EmPOWER Maryland Energy Efficiency Act of 2008 ◦ Preparing the state for the impact of future energy markets ◦ MD Public Service Commission (MD PSC) responsible for implementation  BUSINESS PERFORMANCE & INVESTMENT ◦ Energy increasingly impacts top-line and bottom-line performance ◦ Energy is a factor in local infrastructure costs – and economic development ◦ 21 st century business potential obscured by 20 th century perceptions of energy & utility service  ACCOUNTING, COMMERCE, AND LEGAL COMMUNITIES: ◦ Increasingly offer corporate-level business strategy advising ◦ Energy risk management is equivalent to financial risk management MD PSC is seeking creative ways to advance the business sector’s relationship with the energy it uses 3

 20 th century legacy: businesses delegate ALL energy decision-making to the boiler room  21 st century energy risks becoming more complex, with strategic business implications  Today, energy poses operating, capital, and financial management challenges (and opportunities)  Corporate involvement is KEY …but limited by lack of awareness  Energy policy outreach fails to engage corporate leaders – messages currently go to A/P and facility clerks. 4

 The messenger is as important as the message!  Trusted advisors can carry the PSC’s energy policy/program message, opening the door to corporate audiences.  The program team develops and delivers advisory content, once we get in the door.  Outcome: get businesses to embrace energy as a component of business risk management Initiating corporate engagement for current and future energy policy initiatives 5

6 Simple Payback Return on Investment Life Cycle Cost Net Present Value Internal Rate of Return Save-or-Buy Fuel Cost Ratio Annual Penalty for Doing Nothing “Two Price Tags” FACILITY LEVEL FINANCE LEVEL INTEGRATIVE

7 CURRENT ANNUAL ENERGY EXPENDITURE PROPOSED ANNUAL ENERGY EXPENDITURE ANNUALIZED PROJECT COST ANNUAL GROSS ENERGY SAVINGS Annualized net savings Annualized penalty for DOING NOTHING Free cash flow to: Working capital (to finance operations) Or Investment capital (to finance asset base) ? 7

ACCEPTREJECT GET Gross annual energy savings $$$ Satisfaction of no capital expenditure? $0 GIVE UP Annualized project cost $$$ Annual cost of DOING NOTHING $$$ ANNUAL RESULT GET – GIVE UP= +FREE CASH FLOW GET – GIVE UP= -FORFEITED NET CASH FLOW PRICE TAG $Project Invoice$Capitalized Waste Value 8

 Raise the energy dialogue to corporate levels  Identify and motivate corporate population with business advisors’ help  Build relationships for future C&I program outreach  Calculator provides unbiased support to all technology-specific EmPOWER MD program initiatives  Present to program participants a portfolio of monetized energy improvement initiatives 9

10 ACTIVITYCALENDAR*HOURS Identify & engage key business advisory groups Months Collaborative agenda-buildingMonths Piloting to refine outreach methodsMonths Deliver post-implementation consumption analysis to participants At least 24 months10 HRS/mo *Estimates! LABOR$144,000For start-up, program maintenance, and evaluation for 24 months INTERNET CALCULATOR DEVELOPMENT $15,000Best current third-party estimate EXPENSES$1,000Mileage, parking, etc. Total$180,000

 140,000 Maryland C&I facilities  Reach 1% of C&I consumers via business advisors = 1,400 participants  5MM kWh average annual consumption per participant  10% annual savings per participant = 500,000 kWh x 1,400 participants 700,000 mWh $0.12/kWh = $84 million  $84 million savings / $180,000 program cost = 525:1 11

 Contact: ◦ MD Association of CPAs ◦ Chambers of Commerce (central MD counties) ◦ Others?  Demonstrate the calculator ◦ Audience of business advisors ◦ Convert to online platform – link from PSC website  Pilot implementation 12