Green-e Marketplace presents REI’s Kevin Hagen How Green Power Delivers Profit and Value

Certify organization’s use of renewable energy and verify associated claims 52 organizations participate nationwide: Intel, PepsiCo, Aveda, SC Johnson, Santa Cruz Organics, Neenah Paper Renewable energy purchased or generated by participants: 114,000 MWh in million MWh at the end of 2008 Over 70 unique products display the Green-e logo more slated for 2009 Green-e logo use, renewable/climate policy updates, market research, promotional services Why are companies interested in this certification program? Logo is recognizable Consumers, employees, and stakeholders interested in renewable energy 3 rd party certification adds credibility

Green Power Delivers REI Kevin Hagen - Director, Corporate Social Responsibility With thanks to Allison Grappone, MBA in Sustainable Business

Consumer co-op founded in million active members $1.4B annual sales Stores in 27 States + REI.com We inspire, educate and outfit for a lifetime of outdoor adventure and stewardship.

Sustainability (where mission meets metrics) In 2005, REI’s sustainability efforts moved From random acts of kindness To a frameworks-based strategic focus We look for ways to solve environmental challenges while we make our business stronger Example: Carbon footprint and annual accounting Electricity 22.9% in 2007

REI Offset Strategy REI offsets our largest GHG impact, our travel business, with a four year commitment to purchasing over 240,000 RECs from Bonneville Environmental Foundation Climate Neutral Travel

Climate Change and Energy Aspiration: to be a climate-neutral company by electricity usage: 60,600 MWh Developed a three part Energy Strategy

Energy Strategy Increase energy efficiency Objective: zero kWh growth Purchase Green Power 20% of total use Financial hedge products On-Site Generation BIPV tested at new locations 11 store PV retrofit program in ‘08

Load Growth +22% square feet +9% electricity usage

The Next Generation of REI Stores Round Rock, TX store is modeled at 49% below ASHRAE 2004

Committed to 100% Qualified Renewable Energy Since 2006 over 25,000 MWh of Green Power deals Over 10,000 MWh/year Converting 6 more stores to Green power in 2009: 2,500 MWh/yr

Green Power “Pitch” Utility C&I Customer Base Charge Electrons

Green Power “Pitch” Utility C&I Customer Base Charge Electrons Green Price CO2 Benefits “Green” Benefits

Green Power Value Proposition Utility C&I Customer Electrons Base Charge

Green Power Value Proposition Utility C&I Customer Electrons CO2 Benefits “Green” Benefits Stable Pricing Avoided Fuel volatility Base Charge

Green Power Value Proposition Utility C&I Customer Electrons CO2 Benefits “Green” Benefits Stable Pricing Avoided Fuel volatility Premium Pricing

Business Value of Green Energy Products RECs or Floating Green power premium Meet CO2, Green goals

Business Value of Green Energy Products RECs or Floating Green power premium Full Value Green Product Meet CO2, Green goals Financial hedge benefits Less value Greatest value

Business Value of Green Energy Products RECs or Floating Green power premium Capped Premium Tariff with Surcharge Avoidance Full Value Green Product Meet CO2, Green goals Partnership with utility Avoid fossil fuel volatility Financial hedge benefits Less value Greatest value

Business Value of Green Energy Products RECs or Floating Green power premium Capped Premium Tariff with Surcharge Avoidance Full Value Green Product Meet CO2, Green goals Partnership with utility Avoid fossil fuel volatility Financial hedge benefits $ 37, % $ (116,598) (12.0%) $ (28,402) (12.4%) Net Cost/Benefit Returns $ 665,809$ 852,404$ 200,876 “Brown Power” Pricing $ 628,278$ 969,002 $ 229,279 Actual Spend

REI Green Power Requirements 1.Quality Independently verified source and chain of custody Green-e certified 2.Financial value Hedge value Fixed prices Avoided fuel cost adjustments Tariff escalation tied to renewable cost 3.Premium – based on Net Present Value calculation

Conclusions 1.Green Power products can (and do) deliver financial benefits as well as “soft benefits” 2.Few suppliers have crafted Green Power products with a complete value proposition 3.Any utility can offer differentiated power products IOU’s, Municipals, co-ops and 3 rd Party providers No deregulation required (but it helps) 4.We need to ask utilities for better products Deliver bottom line results Increase the market for renewable generation

www. REI.com/ stewardship REI reports publically on our progress

Questions? Kevin Hagen Director, Corporate Social Responsibility REI Orrin Cook Senior Analyst Green-e Marketplace Center for Resource Solutions