IAPSS & ISRSA Top Ways to Cut Costs Conference June 2, 2015 Utility Co-Ops

Discussion Objective  Brief overview of Hard Cost Reduction Items  Brief overview of Soft Cost Reduction Items  Highlight Additional Value

 “Difficulties in purchasing natural gas often stem from the fact that most parts of the task are highly invisible to the customer.” – John Righeimer

HARD COSTS REDUCED by as much as 35%  Lower Energy Price  Lower Transportation Price  Lower Supplier Fees  Lower Balancing Fees  Lower Fixed Price Transaction Fees

Value in Dollars…it’s not about “beating the market”  $0.30 in group volume discount  $0.20 in basis/transport rates  $0.05 in cash-out “slippage”  $0.02 in NYMEX fill “slippage”  $0.10 in avoiding being pushed in fixed $  $0.10 in fair supply contracts (not 1-sided)  $0.10 in flexibility & “insurance” of unknown (e.g. quick reaction, MEGA/EC example)  The above adds up to $0.87 x insert your volume here _________ = the value for you.

SOFT COSTS REDUCED Save Time, Reduce Fees & Business Risk  Streamlined Procurement Process  Streamlined Contracting Process  Proactive Management, Protects Budgets, Reduces Risk!

Additional Value  Individual Districts protected from bad suppliers and unfair practices.  Positioned to take advantage of Fuel and Electricity Buying  Professional Networking  Time gained to focus on other business opportunities

Russ Paluch John Righeimer