City and County of San Francisco Local Agency Formation Commission April 19, 2002 William Pezalla Adrian Chiosea Linda Stevens

Markets Served Office Locations United States Atlanta, GA Office United Kingdom London Office United States Sacramento, CA Corporate Office North America Western Europe Australia Other Regions Future Plans Australia Adelaide Office

Strategic Consulting Services Henwood Strategic Consulting Services Henwood helps clients create value, analyze power market opportunities and risks, and optimize energy portfolio performance through the strategic assessment of energy markets, prices, assets and risk.

Initial Project Tasks Risks Benefits Feasibility Investigate the: for providing electric utility services

Vertically Integrated Value Chain Utility Operations Vertically Integrated Value Chain Fuel Procurement Generation Transmission Distribution Retail Services

Key Elements of Energy Service Power supply procurement & management Load forecasting & supply scheduling Risk management Energy delivery facilities Revenue cycle services & settlements Customer services Regulatory requirements

The City’s Interests Managing energy costs is essential for: Current residents Future growth/development Lowering energy costs to maintain services within budget Create self-sustaining operations

Energy Strategy Selection There is no “one size fits all” approach Identify City’s key drivers Balance economic, social and political factors Identify possible City roles Evaluate opportunities

Define Key Drivers City objectives (long-term & short-term) Expected benefits Risk tolerance Available resources Constituents’ requirements/support Level of commitment

Possible City Roles Be a provider of specific Value Chain services Fuel Procurement Generation Transmission Distribution Retail Services Commodity Be a provider of specific Value Chain services Delivery Systems Customer Service Facilitate actions by others

“Sample” Investigations Strategic alliance opportunities with other local entities Economic, social and environmental values of “green” power Legal and political threats Distributed generation to enhance reliability, power supply and price stability

Merced Irrigation District Henwood Experience Merced Irrigation District Provided strategic planning and management assistance in becoming a retail electric utility Developed strategic plans for providing competitively priced retail electric services Negotiated inter-utility contract agreements Managed the procurement of economic power supplies and other wholesale electric services Supported regulatory and legal proceedings

Henwood Experience Presidio Trust Developed strategic utilities business planning Provided financial analysis of utilities Developed utility load forecasts Assisted with commodity procurement Assessed utility easements

Hetch-Hetchy Water and Power Henwood Experience Hetch-Hetchy Water and Power Treasure Island utilities system transfer Port of San Francisco electric distribution system transfer from PG&E Hunters Point utilities system assessment San Francisco International Airport – power interconnection at transmission level

Oakland Base Reuse Authority Henwood Experience OBRA Oakland Base Reuse Authority Developed a strategic plan to take over the operation of utilities at Oakland Army Base Provided financial analysis of utility operations and forecasted future cash flows Investigated procurement contracts for commodities and developed a financial model to calculate utility rates Negotiated utilities partnership program with Port of Oakland Managed the start-up and interim operations

City and County of San Francisco Local Agency Formation Commission April 19, 2002 William Pezalla—Project Manager, Power Business Solutions 916-569-0985 ext. 358 wpezalla@hesinet.com Adrian Chiosea—Project Manager, Power Business Solutions 916-569-0985 ext. 312 achiosea@hesinet.com Linda Stevens—Marketing Manager, Strategic Consulting 916-569-0985 ext. 322 lstevens@hesinet.com