1. Musings of a Midwest Non-Utility Guy Greg Collins Vectren Retail, LLC Marketing Executives Conference San Antonio, Texas October 19, 2009

2. Trend #1 Customers’ ability to pay energy bills is steadily decreasing

3. How long will low fuel prices last? 20082009

4. Jobs outlook is bleak

5. Huge Investments Required

6. Waxman Markey CO 2

7. Implications Increasing complexity of energy picture makes an already difficult job of communicating with customers even more difficult Customer unrest Deteriorating regulatory relationships Political targets Distrust of corporations at an all-time high Not a pretty picture!

8. Sleeper Trend Retail competition may not be dead after all  Texas electricity and Georgia natural gas markets fully competitive  Developments in other states:  New York  Pennsylvania  Illinois  Michigan  Kentucky  Connecticut, Massachusetts, Maryland, Delaware  even California?

9. Best Kept Secret Ohio Natural Gas Markets – Exit Merchant Function  Dominion East Ohio – Standard Service Offer (SSO) auctions followed by Standard Choice Offer (SCO) auction  Of 1.2 million customers, only 186,000 remain on SCO  Vectren Energy Delivery of Ohio - SSO & SCO auctions – almost 40% switching  Columbia – stipulated agreement filed for both SSO & SCO auctions  Duke – agreement to collaborative discussions? Utility benefits – reduced regulatory risk for gas procurement practices, dramatic decrease in working capital requirements

10. Consumer Benefits Explosion of pricing plans  Fixed rates – terms from 3 months to 5 years  Variable rates – based on wholesale market  Guaranteed Savings compared to SSO or SCO  Capped rates Evidence consumers are beginning to understand choice  High attrition rates  Call center teams dedicated to “save-the-sale” and “win-backs” How will this evolve given factors contributing to the first trend?

11. Growing Concern Consumer reaction to Smart Grid –Smart Grid is economic only if customer adoption and behavior change is significant –What makes us think consumers will embrace? –Will high prices drive consumers to adopt? –Will customer trust support adoption? –Can competitive markets help solve this dilemma? –Are energy retailers capable of offering sophisticated behind-the-meter services?