1. A T-348 ENERGY PROJECT

2. Cut ENERGY cost by half? or more? Q:Is this POSSIBLE? A:YES!

3. Income Statement – no IMPROVEMENTS Total RevenuesRRRRR Total ExpensesEEEEEE NIBIT (Net Income Before Interest and Taxes) Less: Interest Payments Less: Taxes NIAT (Net Income After Taxes) Cash Flow Statement – no IMPROVEMENTS SourcesRevenues LESS Costs UsesTaxes PLUS Interest PLUS Principal NNCF (Equity & Project Streams)Sources LESS Uses IRR (Equity & Project)Dependent upon Investment and NNCF

4. Income Statement – with IMPROVEMENTS Total RevenuesRRRRR + EEE Total ExpensesEEE NIBIT (Net Income Before Interest and Taxes) =  HIGHER Less: Interest Payments =  slightly higher (influenced by decisions) Less: Taxes =  very slightly higher NIAT (Net Income After Taxes) =  HIGHER Cash Flow Statement – with IMPROVEMENTS SourcesRevenues LESS Costs =  HIGHER UsesTaxes PLUS Interest PLUS Principal =  (decisions) NNCF (Eq & Proj Streams)Sources LESS Uses =  HIGHER IRR (Equity & Project)Higher Streams ==  HIGHER IRR

5. Tristan Calasanz – I have been there before 1.Vice President for Utility Operations – National Power Corporation Assets: US$10 billion; Gross Revenues: US$1 billion (1983) Energy-Efficiency Savngs: US$15 million (1983) 2.Vice President for Project Development – First Private Power Corporation Co-Generation Faciility: Conceptualization, Feasibility Studies, Engineering, Bid Evaluation Project Investment: US$65 million 3.Associate for Energy Management – SGV&CO/ArthurAndersen&CO

6. PROJECT "TRIO" PROPONENT – Target – Small Equity, &/or No Cash Out Possible – Signs a Fixed-Term Contract with an IPP Ind. Power Producer (IPP) / Target Subsidiary – BOT - Build-Operate-Transfer – BOO - Build-Operate-Own Financing Institution – JP Morgan / Target Bank: "Project-Finance“ – Loans are assured with Contract

7. IPP's Business Elements Partner with an Engineering Firm Design and Build Standardized Packaged Units – in Container Vans for Portability Requirement: Clean Fuel, e.g., Natural Gas Equipment – ICE: Caterpillar, and/or Clunkers – Heat Pumps: York, and/or Sanyo + Kawasaki + Mitsubishi + HVAC/R Contractor Project-Finance

8. Overall Net Effect ELECTRICITY  Owner: Reduced outside procurement  IPP: Displaced with energy from fuel and from heat pump  P&L Income Stream: Displaced electricity - Proponent-Owned ENERGY SERVICES  Owner-Owned: Substantial savings  IPP-Owned: High Internal Rate of Return PRODUCT/COMMODITY  IPP: Pioneer in "packaged cogeneration" systems (a Niche)  IPP: Eligible for Export

9. Merchandise / Commodity 1.Services Provided Supply energy in the form of electricity, heating, chilling Radically alter the Income Statement: Revenues, Expenses, Bottom Line 2.Strategic Advantage Energy Cost Reduction Transportable for easy replication to different sites 3.Competition Walmart, Trader Joe’s, Haggen, Whole Foods, Safeway Costco, Sam’s Club