PUC of Texas EEIP Meeting Residential A/C Load Control Program ©2012 Comverge – Confidential and Proprietary

Comverge Introduction ©2012 Comverge – Confidential and Proprietary 2 Operating in Texas since 2001 –Austin Energy – Power Saver Free Thermostat Program –TXU Energy - iThermostat program –Utility C&I Standard Offer DR Programs –ERCOT C&I ERS Program (Formerly EILS) Equipment provider for other Texas energy service providers Active market participant at ERCOT

 World-leading provider of Intelligent Energy Management (IEM)/Demand Response (DR) solutions  Headquartered in Atlanta, GA  ~520 employees  Revenues: $136.4 million $119.4 million  Q1 2012: Revenue growth of 75% compared to 2011  Acquired by H.I.G. Capital – 5/2012 Highlights Leading Provider of Intelligent Energy Management/Demand Response Solutions Revenues From All Customer Classes (2011) Client Base Geography PPS CHART #3 USE RIDER A (next page) Residential 57% C&I 43% Grid Operators Electric Utilities C&I 43% Wide Range of Services  Program Design, Planning and Execution  Marketing Strategy & Execution  Installation  Measurement and Verification  Energy Audit  Customer Care © 2012 Comverge, Inc. 3

VPC Structure Description VPC™ – Virtual Peaking Capacity –Pay-for-Performance Payment is based on delivered Peak Load Reduction Paid through a $/kW-yr charge M&V Methodology is specified by contract –Fully Outsourced –Comverge takes the risk of performance Can be offered through REP’s, Utilities or Direct from Comverge or other third party Can be tailored to fit the market need ©2012 Comverge – Confidential and Proprietary 4

Demand Response is our Business 5 © 2012 Comverge, Inc. Confidential and proprietary.

Offer Summary 400 MW Residential Air Conditioning Cycling Pilot 2 pilot locales each 200 MW Pay for Performance – Comverge guarantees MW –Direct Air Conditioning Load Control – Smart Switches Communications over Paging & Zigbee using AMI –Residential & Small Commercial market –Creates jobs in Texas –Representative Implementation Costs $145/kW-yr Includes $50/yr Incentive per device & $50/customer sign on bonus –Pilot roll out over 4 years, Device life > 10 years ©2012 Comverge – Confidential and Proprietary 6

Switches Allow for Flexible Control - Load Guard Load Guard is a Comverge program implemented for Com Edison for their real time pricing program 7  Load Guard is an optional “set and forget” service that utilizes the already deployed load management switch population to allow participants (via a website) to make their own cycling option decisions for dynamic pricing events  Load guard enables customers to take advantage of dynamic pricing events automatically by pre-selecting a cycling level that runs during a high price event  Provides added value at little incremental cost to utilities

8 8 Real Time Pricing – Innovative Set & Forget Solution ©2012 Comverge – Confidential and Proprietary

Measurement and Verification (M&V) Plan Basic Assumption – Use Customer’s or Aggregations of Customer’s individual AMI Meter data Two Options for Measurement and Verification (M&V) –Controlled/Comparison Methodology Performance calculated by statistical sample of Customers’ metered load prior to dispatch instruction compared to metered load at the reduction deadline This is a very common methodology for residential air conditioning load control –Baseline Methodology A baseline is defined as an estimated or predicted load in the absence of a DR deployment. Baselines are appropriate for loads or aggregations of loads that are predictable in nature Can be modeled based on their historical usage patterns This is an appropriate methodology for Weather Sensitive residential air conditioning load. Both Methodologies are recognized as applicable for DR programs by the International Performance Measurement and Verification Protocol (IPMVP) Option ©2012 Comverge – Confidential and Proprietary 9

Comverge M&V Experience Comverge Energy Sciences team: –10 engineers and mathematicians –Oversee & shepherd the process –M&V processes have been evaluated and approved by numerous utilities and by PJM Responsible for M&V measurements & evaluation of many residential and small commercial DR programs since 2006 –Seven seasons of meter deployment and data acquisition for thirteen programs –Energy Sciences team creates a detail M&V plan annually –Per the plan, meters are deployed, baseline and event measurements are obtained during the summer season and a final report is prepared in the fall Comverge has used many different approaches for measurement –Direct metering of air conditioners and hot water heaters, including monitoring run times as determined by the thermostats and service meter measurements –For the proposed program, Comverge envisions using AMI service meters to calculate demand reduction –Estimates can be prepared for each event using a prior day(s) baseline based approach –The estimates from each premise would be aggregated to provide a system wide determination of the demand response ©2012 Comverge – Confidential and Proprietary 10

Summary of Results Residential programs produce reliable Demand Reduction Programs across the country producing perennial results –Emergency Curtailment, Ancillary Svc, Operating Reserves –Attacks the primary Contributor to annual Peak System Load Job Creation – as many as 85 Jobs if fully deployed (400 MW) –Potential for more during deployment phase (3-5 years) –Scales down by 30-40% after deployment phases Assumed Penetration Rates –6.7% Proposed Penetration –432,350 Proposed Enrollments –18 Months expected to reach the proposed penetration level Assumes Two largest TDSP service territories as target markets ©2012 Comverge – Confidential and Proprietary 11

Demonstrated Performance 12 14% Penetration 119,077 Enrollments 26 Months Utility 1

Demonstrated Performance % Penetration 56,604 Enrollments 16 Months 14% Penetration 119,077 Enrollments 26 Months Utility 1 Utility 2

Demonstrated Performance % Proposed Penetration 432,350 Proposed Enrollments 18 Months 9.4% Penetration 56,604 Enrollments 16 Months 14% Penetration 119,077 Enrollments 26 Months Utility 1 Utility 2

Applicability Demand Response is an integral component of several existing EE Program offerings –Oncor, CenterPoint, AEP – Load Management Standard Offer Program for Commercial & Industrial Customers –TNMP – Commercial Load Management Pilot Program –Other Texas Utilities – Various Load Management Standard Offer Programs Residential programs will be a valuable addition Program Structure fits well in the Texas Market –Ability to transition program to ERCOT when appropriate Comverge design reduces risk for the customer through experience and process –Example - in VPC, Comverge assumes risk for program dropouts and customer opt outs Allowances for these risks are designed into the program plan Allow customers to opt out of 2 control events per season Program is Voluntary – If customer wants to leave the program – accommodate the request Since contract is MW based we manage churn through the life of the program ©2012 Comverge – Confidential and Proprietary 15

Market Demand Response is a critical element in Texas Resource Adequacy Discussion Residential Price Responsive Demand is a desired end-state ERCOT making strides to facilitate products for loads to participate in Market –30 min Emergency Response Service Pilot in Second Season Load Aggregation Participation –Weather Sensitive Loads Product category Protocol changes currently in development –Aggregated Load Resources Draft White Paper Residential DR – Deployment through multiple channels –Third Party DR Providers –Retail Electric Providers –Channel Partners (HVAC, Security, Cable) ©2012 Comverge – Confidential and Proprietary 16

Conclusions Demand Response is our business –The estimates are achievable –The Resource is reliable –M & V is proven industry accepted practice Pay for performance structure ensures value 400 MW pilot offer –Large enough to provide system value –Small enough to fit the budget over roll-out period Next steps: –Meet with PUCT Staff and/of Commissioners to Answer additional questions –Road show to gauge interest from TDSP’s and Utilities –Advance the program concept to filing phase with Sponsor Utility ©2012 Comverge – Confidential and Proprietary 17