E MISSIONS R EDUCTIONS SB5 G RANT P ROGRAM P RESENTED TO THE TERP B OARD A UGUST 4, 2004

1. Statutory Requirements Background Electric Efficiency 2. PUC Responsibilities SB 5 and SB 7 3. Quantitative Results Energy Savings & Emissions Reductions

B ACKGROUND G ENERATION Harris County Ellis County SPP WECC ERCOT SPP SERC Kiowa, OK Wind site Undetermined (ERCOT) 83 Brazoria County Jefferson County M Under construction = 2,483 MW 68 Generation projects = 29,375 MW 14 Generation announced = 7,108 MW 15 Delayed = 8,212 MW 11 Cancelled = 7,349 MW 24 Facilities: 7,296 MW mothballed; 1,211 MW retired Travis County Tarrant and Dallas Counties 85

SB 5 (2001 session) requires PUC to conduct grant program to help meet emissions reduction shortfall, in non-attainment and affected counties, by reducing electric demand and peak loads SB 5 G RANT P ROGRAM

 Utilities in non-attainment areas and affected counties apply for grants  Utilities may use standard offer or market transformation programs  Funded from SB 5 revenues  SB 5 requires calculation of reduction in air emissions from SB 5 and SB 7 programs SB 5 G RANT P ROGRAM

 Retail competition in ERCOT began January 1, 2002 for investor-owned utilities ( Senate Bill 7 – 1999 session )  SB 7 also requires utilities to conduct energy-efficiency programs SB 7 E NERGY E FFICIENCY

 integration of 24 different federal data sources on power plants and power companies  power plant emission rates, historical relationships between the areas of power production and areas of consumption, and the primary fuel type utilized to generate electricity  Energy Information Administration generation data to generate the value of pounds per megawatt-hour (lbs/MWh) that is a direct correlation between electrical generation and environmental quality EPA - EGRID Emissions & Generation Resource Integrated Database

SB 5 P ROJECTS F UNDED Commercial Lights & Air Conditioning Load-Management Energy Star Homes Residential Air Conditioning & Refrigerators Vending Misers Exit Sign L.E.D. Lights Reflective Roofs

SB 5 G RANT R ESULTS $3 Million Awards  249 Tons NOx Reductions  Equal to Removing from the Roadway – 47,600 Newer Motor Vehicles  Net Cost - $10,986 / ton NOx Avoided  Value of Saved Energy $5,311,222

 4,581 Tons NOx Reductions  Equal to Removing from the Roadway –875,000 Newer Motor Vehicles  Net Cost - $9,748 / ton NOx Avoided  Value of Saved Energy $80,125,788 SB 7 R ESULTS $35 Million Expenditures