1. Restructuring and Energy Efficiency, Conservation & Demand Response Susan Gray August 26, 2008 PPRAC Meeting

2. What else has been happening recently at the PSC? Doug Nazarian replaced Steven Larsen as Chairman on August 16. Mr. Nazarian served as PSC General Counsel (since June 2007) Doug Nazarian replaced Steven Larsen as Chairman on August 16. Mr. Nazarian served as PSC General Counsel (since June 2007) Restructuring/SB400 – best price/lowest cost/least price volatility/maintain reliability Restructuring/SB400 – best price/lowest cost/least price volatility/maintain reliability Case 9117 (IRPs), Case 9149 (RFPs); PC-13 Case 9117 (IRPs), Case 9149 (RFPs); PC-13 Energy Efficiency, Conservation & DSM Energy Efficiency, Conservation & DSM Case 9111 (TAG); PC-12 (EmPwer MD), PC-15 (Utility Incentives for EE&C and DR) Case 9111 (TAG); PC-12 (EmPwer MD), PC-15 (Utility Incentives for EE&C and DR)

3. Restructuring-Related Cases Major Elements (PSC has authority to order): Utilities to build new power plants Utilities to build new power plants Greater electricity supply reliability Greater electricity supply reliability Long-term contracts for power supply (SOS) Long-term contracts for power supply (SOS) Could result in construction of new power plants, greater rate stability Could result in construction of new power plants, greater rate stability Energy efficiency/conservation as part of supply portfolios Energy efficiency/conservation as part of supply portfolios Integrated Resource Plans (IRPs) to be filed by the utilities in October 2008 Integrated Resource Plans (IRPs) to be filed by the utilities in October 2008

4. Energy Efficiency & Conservation (EE&C) and Demand Response Major Considerations: Reliability (PJM projects problems as early as 2011/2012) Reliability (PJM projects problems as early as 2011/2012) Increases reliability by reducing load on grid Increases reliability by reducing load on grid Pricing/charges Pricing/charges How to pay for these programs How to pay for these programs Electricity consumption Electricity consumption EmPower MD goal: 15% reduced consumption by 2015 EmPower MD goal: 15% reduced consumption by 2015 Wholesale/retail prices Wholesale/retail prices Decreased demand means downward pressure on price Decreased demand means downward pressure on price Environmental policies Environmental policies RGGI/GHG – reductions in emissions; increased price RGGI/GHG – reductions in emissions; increased price EE&C program proposals to be filed by the utilities on September 1, 2008. EE&C program proposals to be filed by the utilities on September 1, 2008.