Leveraging Energy Infrastructure to Drive Revenue November 13, 2017

Who is 5? 40 person team based in DFW with employees in Texas, New Jersey, New York, Maryland, Washington D.C. and Mexico Team members include engineers, energy traders, quants and regulatory experts that cover a wide range of energy issues Experts in deregulated energy markets throughout the United States, Canada and Mexico Serving over 1400 clients throughout North America including commercial and industrial customers, as well as government entities Founded by energy CEO’s, COO’s, corporate energy managers and commodity traders 2 www.energyby5.com

Most Common Opportunities Power factor correction (minimize billed demand) Demand ratchet management (minimize billed demand) Grid reliability programs: Utility Commercial Load Management ($40 per KW per year) ERCOT ERS10/30 Demand Response ($50 per KW per year) ERCOT Load Resource ($100 per KW per year) 4CP demand management ($45 to $55 per KW per year) Tier 2 versus Tier 4 – What you need to know 3 www.energyby5.com

Power Factor Correction KVA2 = KW2 + KVAR2 Power Factor (%) = KW / KVA As KVAR , Power Factor Utilities like Oncor will increase billed demand as Power Factor drops below 95% [billed demand = metered demand * (0.95/pF)] Centerpoint delivery charges are based upon KVA, so any amount of lagging Power Factor increases demand costs Simple to correct, typically less than 24 month simple payback 4 www.energyby5.com

Demand Ratchet Billed demand = greater of metered demand or 80% of max from prior 11 months Low load factor meters can experience significant increases in delivery charges per kWh Demand excursions can be the “gift that keeps on giving” Operational issues that cause abnormal spikes in demand should be avoided wherever possible Setting a separate meter for new loads can be costly when compared to feeding from an existing service due to demand ratchet implications www.energyby5.com

Grid Reliability Programs Utility Commercial Load Management Program mandated by the Public Utility Commission of Texas Focused on only June through September, non-holiday weekdays from 1pm to 7pm Curtailment events are 1 to 4 hours in length with 25 hours max during June 1 to September 30 period Requires one annual test, usually about 3 hours in length Events usually mirror ERCOT ERS demand response events but may not always Cannot be enrolled concurrently in ERCOT ERS or LR $40 per KW in Oncor service territory during the summer of 2017 www.energyby5.com

Grid Reliability Programs ERCOT ERS 10/30 Demand Response Program sponsored by ERCOT to improve grid reliability Year around program with no minimum load size; accounts with demands less 100 KW can be aggregated 10 minute or 30 minute notice to curtail (30 minute resources called first) 3 enrollment periods: Feb 1 to May 31, Jun 1 thru Sept 30 and Oct 1 thru Jan 31 Six time periods for each enrollment period: www.energyby5.com

Grid Reliability Programs ERCOT ERS 10/30 Demand Response Participants can be curtailed up to 12 hours per program enrollment period Minimum of one test per year typically less than 1 hour in duration Participants are paid each year regardless of whether or not there is an event Generators can be used to curtail as long as certain emissions standards are met Last event was in early 2014: Approximate value is $50 per KW per year www.energyby5.com

Grid Reliability Programs ERCOT Load Resource 10 minute responsive reserve ancillary services program sponsored by ERCOT to improve grid reliability Year around program with 100 KW minimum; most participating meters are 1 MW and up Two second demand metering and under-frequency trip relay are required by ERCOT Curtailments can last several hours and affect all participants or a subset of participants Minimum of one test per year typically less than 1 hour in duration Participants are paid regardless of whether or not there is an event www.energyby5.com

Grid Reliability Programs ERCOT Load Resource Generators can be used to curtail as long as certain emissions standards are met 4 system-wide events and 11 local under-frequency events since 2011 Approximate value is $100 per KW per year www.energyby5.com 10

4CP Demand Management 4CP KW/KVA is a component of ERCOT electric utility delivery charges that amount to about $45 to $55 per KW/KVA per year Only applies to interval data recording meters (typically over 700 KW) 4CP KW/KVA is calculated by the utility as follows: Average of the 15 minute demands measured at the time of the monthly ERCOT system 15 minute peak demand for the months of June, July, August and September www.energyby5.com

4CP Demand Management Reducing 4CP KW/KVA demand by 100 KW would save about $5000 per year at each ESID By minimizing load during non-holiday weekdays in June, July, August and September between 3:00 pm and 6:00pm, end users can significantly reduce delivery charges the following calendar year Sample 4CP data summary: ESID Facility Name 2016 4CP Value Annual 4CP Cost June 6/15/16 @ 5pm July 7/14/16 @ 4:00pm August 8/11/16 @ 4:30pm September 9/19/16 @4:15pm 1044372000XXXXXX1 Pump Station #1 464 $ 23,839 1,093 200 58 504 1044372000XXXXXX2 Pump Station #2 133 $ 6,608 509 5 9 7 1044372000XXXXXX3 Pump Station #3 13 $ 669 1044372000XXXXXX4 Pump Station #4 519 $ 25,826 539 532 529 475 1044372000XXXXXX5 Pump Station #5 18 $ 908 21 19 16 17 1044372000XXXXXX6 Pump Station #6 104 $ 5,174 2 410 TOTAL ==> $ 63,024 www.energyby5.com

Tier 2 versus Tier 4 – The Basics Tier definitions are tied to a 1996 EPA regulatory change that originally addressed on road vehicles and non-road mobile diesel engines Rules were extended to newly manufactured stationary diesel engines in July of 2006 under EPA’s NSPS standards At a high level, Tier 2 diesel engine/generators are only allowed to be used in emergency applications (e.g. utility power outages) In order to operate in non-emergency situations (demand response, 4CP avoidance, pre-storm operation, etc) engines must now meet the more stringent Tier 4 emissions requirements Some Tier 2 engines can have emissions retrofits that will allow for non- emergency operation Permitting and annual run time limitations exist in both federal and state laws www.energyby5.com

Examples They can all drive revenue for your organization as a part of a well thought out demand management program www.energyby5.com

Thank You! Josh D. Coleman, PE L5E, LLC d/b/a 5 4545 Fuller Drive, Suite 412 Irving, Texas 75038 www.energyby5.com 972-445-9584 www.energyby5.com