Transcript reap-annual-meeting-presentation-2010

2010
th
12 Annual REAP Meeting
October 15, 2010
Four Seasons, Landisville, PA
REG’s new office
Agenda
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Intro
The Economy…what in the world?
Energy Market Update
Break
REAP Performance
Demand Side Response
Technologies and Lighting
Act 129 Implementation
PUC/Regulatory Issues
Awards
Lunch
Golf-Scramble Format
Refer a Friend Prizes
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Most Referrals = IPad
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Other Referral prizes:
$200 Lowes Gift Card
 $50 Ticketmaster Gift Card
 $50 Sheetz Gas Card
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Refer a Friend
There’s still time! But not much
 Yellow Sheets in your packet
 Must turn in yellow sheets before our midmorning break is over

Meet Richards Energy Group (REG)
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Staff
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Pete Richards
Tina Gentzler
Mike Frey
Steph Baylor
Lew Knepp
Michele Leabhart
Travis Keeney
Greg Steinmetz
Study Team
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Don Hornung
Al Neuner
Ed Brignole
Bob Abbato
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Andrew Fritz
Linda Ulmer
Victor Wueschinski
Charlie Goedken
Gary Gearhart
Mary Richards
Frank Richards
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Advisors
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Bob Cook
Jeff Doane
Platinum Sponsors
Direct Energy
 Customized Energy Solutions
 Constellation New Energy
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Silver Sponsors
PPL Energy Plus
 Liberty Power
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Contributing Sponsors
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Amelia’s: Gift Card
Brenneman Enterprises: Bowling
Party for 10
RW Connection: Tool Kit and hat
PPL+: Jacket
Fulton Financial: Billfold
Constellation: Jacket, Shirts, LED
solar flashlights
The Economy_ What’s Going On?

Tom Weber

Sr. VP Fulton Financial Advisors
Economic and Market Insights
G. Thomas Weber
Senior Vice President
October 15, 2010
717 291-2556
[email protected]
General Themes
 Economy stable but fragile
 Not typical recession – lower interest rates
are ineffective
 Consumer challenged – Employment,
housing, slowed by thrift and productivity
 Too much capacity – Inflation or deflation?
“Like gold, US dollars have value only to the extent that they are strictly
limited in supply. But the US government has a technology, called a printing
press (or today, its electronic equivalent) that allows it to produce as many
US dollars as it wishes at essentially no cost. By increasing the
number of US dollars in circulation, or even by credibly threatening
to do so, the US government can also reduce the value of a dollar in terms
of goods and services, which is equivalent to raising the prices in dollars of
those goods and services. We conclude that, under a paper-
money system, a determined government can always
generate higher spending and hence positive inflation.”
-Ben S. Bernanke, FED Governor
November 21, 2002
Before the National Economists Club, Washington, DC
“Deflation: Making Sure “It” Doesn’t Happen Here”
Key Economic Measures
1943-1965
1974-1999
2003-2007
4.3%
3.2%
2.7%
4.9%
2.7%
2.0%
90.0%
81.5%
81.0%
Unemployment
4.9%
6.5%
5.2%
Personal Sav Rate
8%
4.40%
0.40%
0
120 billion
300 billion
Debt % of GDP
150%
270%
340%
Household Debt
59%
80%
114%
Real GDP
Ave Ann Growth Rate
Indus. Production
Av Ann % Change
Capacity Utilization
end of period
ave last third
Fed Budget Deficit
ave annual
% personal Income
Source: Elliott Wave, FED Reserve, NDR
GDP: Last Fourteen Quarters
5.9
6
4
2
0
3.7
3.2 3.6
2.1
2.2
1.5
1.2
-0.7
-2
1.6
-0.7
-2.7
-4
Cash for Clunkers
-6
• 1.45% in Q3 ‘09
• 0.4% in Q4 ‘09
-5.4
-6.4
-8
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
07 07 07 07 08 08 08 08 09 09 09 09 10 10
GDP: Last Fourteen Quarters – Ex. Cash for Clunkers
6
Change in Private Inventories 5.5
4
• .7% in Q3 ’09
• 3.9% in Q4 ‘09
• 1.7% in Q1 '10
2
0
3.2 3.6
2.1
3.7
1.5
1.2
0.75
-0.7
-2
1.6
-0.7
-2.7
-4
Cash for Clunkers
-6
• 1.45% in Q3 ‘09
• 0.4% in Q4 ‘09
-5.4
-6.4
-8
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
07 07 07 07 08 08 08 08 09 09 09 09 10 10
GDP: Last Fourteen Quarters – Ex. Cash for Clunkers and Inventory
6
Change in Private Inventories
4
• .7% in Q3 ’09
• 3.9% in Q4 ‘09
• 1.7% in Q1 '10
2
0
3.2 3.6
2.1
1.6
1.5
1.2
2.0
1.0
0.1
-0.7
-2
-0.7
-2.7
-4
Cash for Clunkers
-6
• 1.45% in Q3 ‘09
• 0.4% in Q4 ‘09
-5.4
-6.4
-8
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
07 07 07 07 08 08 08 08 09 09 09 09 10 10
Total U.S. Credit Market Debt as % of Nominal GDP
(12/31/1922 – 9/30/09)
375
370%
As of 9/30/09
325
275
260%
1933 when FDR devalued
U.S. Dollar 40%
268%
2000 Stock Market Peak
225
175
164%
1929 Stock Market Top
Past performance is no guarantee of future results
Source: Ned Davis Research
Institutional Sales Material. Not to be reproduced or distributed to the public.
Sep-09
Dec-06
Dec-00
Dec-94
Dec-88
Dec-82
Dec-76
Dec-70
Dec-64
Dec-58
Dec-52
Dec-46
Dec-40
Dec-34
Dec-28
Dec-22
125
Chart has been modified.
Quarterly Data 3/31/1957 - 9/30/2009
Nominal GDP (Ten-Year % Change)
175
170
165
160
155
150
145
140
135
130
125
120
115
110
105
100
95
90
85
80
75
70
65
60
55
175
170
165
160
155
150
145
140
135
130
125
120
115
110
105
100
95
90
85
80
75
70
65
60
55
9/30/2009 = 51.4%
52.75-Year Mean = 100.3%
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
360
360
340
320
340
9/30/2009
9/30/2009
Debt
GDP
= $52. 6 Trillion
= $14. 2 Trillion
= 369.4%
320
300
300
280
280
260
260
240
52.75-Year Mean = 205.3%
240
220
220
200
200
180
180
160
140
(DAVIS131)
160
158.2
Data Subject To Revisions By
The Federal Reserve Board
144.7
140
Total Credit Market Debt (All Sectors) as a % of GDP
Copyright 2010 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved.
See NDR Disclaimer at
www.ndr.com/copyright.html
. For data vendor disclaimers refer to
www.ndr.com/vendorinfo/
.
Diminishing Returns from Debt-Financing by Decade
12/31/1949-6/30/2010
Date Range
Decade
Change in
Debt
(billions $)
Decade
Change in
GDP
(billions $)
Debt/GDP
12/31/1949-12/31/1959
12/31/1959-12/31/1969
12/31/1969-12/31/1979
12/31/1979-12/31/1989
12/31/1989-12/31/1999
12/31/1999-12/31/2009
$338
$752
$2,785
$8,563
$12,550
$26,891
$248
$491
$1,655
$2,922
$4,026
$4,670
$1.36
$1.53
$1.68
$2.93
$3.12
$5.76
Source NDR
Should We Worry About Inflation or Deflation?
Source: Deutsche Bank Securities July 2010
Monthly Data 6/30/2007 - 9/30/2011
Performance of Nonfarm Payrolls vs 1991, 2001 and Average of Last Six Expansions
105.6
105.6
Recession ended
in June 2009.
105.4
105.2
105.4
*Dates used for determining economic expansions
are those designated by the National Bureau of
Economic Research. The data has been adjusted
for ease of comparison with the current cycle.
Expansion starting dates used: November 1970,
March 1975, July 1980, November 1982,
March 1991, and November 2001.
105.0
104.8
104.6
105.2
105.0
104.8
104.6
104.4
104.4
104.2
104.2
104.0
103.8
104.0
Current Expansion
(
)
103.8
103.6
103.6
Average of Last Six
Post World War II Expansions*
(
)
103.4
103.2
103.4
103.2
103.0
103.0
1991 Expansion
(
)
102.8
102.6
102.8
102.6
102.4
102.4
102.2
102.0
102.2
2001 Expansion
(
)
102.0
101.8
101.8
101.6
101.6
101.4
101.4
101.2
101.2
101.0
101.0
100.8
100.8
100.6
100.6
100.4
100.4
100.2
100.2
100.0
100.0
"Jobless Recoveries"
99.8
99.8
99.6
99.6
99.4
99.4
99.2
99.2
S
(E0028A)
D
M
2008
J
S
D
M
J
2009
S
D
M
2010
J
S
D
M
J
S
2011
Copyright 2010 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved.
See NDR Disclaimer at
www.ndr.com/copyright.html
. For data vendor disclaimers refer to
www.ndr.com/vendorinfo/
.
(percent)
Do Not Look For The US Consumer
To Lead Us Out of Recession
US Personal Savings Rate
(six-month moving average)
US Consumer spending as a share of GDP
72.0%
14
71.0%
12
70.0%
69.0%
10
68.0%
8
67.0%
66.0%
6
65.0%
4
64.0%
63.0%
2
62.0%
0
61.0%
60.0%
-2
60 63 66 69 72 75 78 81 84 87 90 93 96 99 02 05 08
Source: Bureau of Economic Analysis, Merrill Lynch
59 62 65 68 71 74 77 80 83 86 89 92 95 98 01 04 07
Valuations are Not Cheap
Monthly Data 12/31/1924 - 9/30/2010 (Log Scale)
Stock Market Capitalization as a Percentage of Gross Domestic Income
3/31/2000 = 168.8%
168
NDR Estimated value of 4100 U.S. common stocks:
U.S. Gross Domestic Income (latest figure):
Current ratio for 9/30/2010 (solid line):
154
141
168
$13. 34 trillion
$14. 40 trillion
92. 6 %
154
141
GDP used prior to December 1946 (NDR Estimates prior to December 1928)
Gross Domestic Income used after December 1946
129
118
129
118
108
108
98
98
90
8/31/1929 = 86.6%
90
Bubble Territory
82
82
1/31/1973 = 79.8%
11/30/1968 = 76.6%
75
12/31/1965 = 72.4%
11/30/1936 = 71.6%
75
Overvalued
69
69
63
63
58
58
53
53
48
48
44
44
10/31/1990 = 43.8%
40
40
Very Undervalued
37
37
9/30/1974 = 36.4%
34
34
7/31/1982 = 32.3%
31
31
28
28
6/30/1932 = 26.6%
26
26
Calculation uses NDR Estimated Common Stock Market Capitalization of U.S.-based
Dow Jones Total Stock Market Capitalization used from January 1973 through September 1980
NYSE Market Capitalization used prior to January 1973
24
22
20
24
22
20
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
1940
1935
1930
4/30/1942 = 19.4%
1925
(S702A)
Companies
Copyright 2010 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved.
See NDR Disclaimer at
www.ndr.com/copyright.html
. For data vendor disclaimers refer to
www.ndr.com/vendorinfo/
.
Leading Indicator Warns
Consumers Have Lots of Cash
The U.S. Consumer's Free Cash Flow
as a Share of Nominal-GDP
1952 Through Q2 2010E
%
8
6
4
2
0
(2)
(4)
52
54
56
58
60
62
64
66
68
70
72
74
76
78
80
82
84
86
Source: U.S. Department of Commerce, Federal Reserve Board, Empirical Research Partners Analysis.
88
90
92
94
96
98
00
02
04
06
08
Companies Have Lots of Cash
Public Companies 1
Free Cash Flow as a Share of Nominal GDP
1952 Through Q2 2010
%
6
5
4
3
2
1
0
52
54
56
58
60
62
64
66
68
70
72
74
76
78
80
82
84
:Source: U.S. Department of Commerce, Corporate Reports, Empirical Research Partners Analysis.
1 The largest 1,500 stocks; Excludes financials and utilities.
86
88
90
92
94
96
98
00
02
04
06
08
US: We’ve Already Lost A Decade
Source: Strategas, January 2010
CAGR=Compound Annual Growth Rate.
This chart is for illustrative purposes only and is not representative of any specific investment.
Past Performance is no guarantee of future results.
You are Here
Source: Strategas, March 2010
High Dividends Worked During Japan’s Lost Decades
Source: RBC Capital Markets, Kenneth R. French
Past performance is no guarantee of future results. This chart is for illustrative purposes only and is not representative of performance for any specific investment. There are no guarantees that
dividend paying stocks will continue to pay dividends. In addition, dividend paying stocks may not experience the same capital appreciation potential as non-dividend paying stocks.
What to Do?
 Old Normal -- Stay the course
 New Normal - 5 ways to approach new
normal
– Diversify (correlations different)
– Lower equity exposure because of higher risk
– Introduce alternatives
– Emphasize High Quality stocks, high dividends
– Use Prudent Bear Fund (negative correlation)
Disclaimer:
The opinions expressed are those of the presenter and not necessarily the opinion of Fulton Financial
Advisors. Investments and returns mentioned are not reflective of any specific account or fund.
Information is believed to be reliable but is not guaranteed.
Energy Market Update
John Bodine
 Info provided by Direct Energy

NYMEX Natural Gas Prompt Month
44
Energy Market Correlations – 2011 Gas versus Power
$115
$11
$105
$10
$95
$85
$8
$75
$7
$65
$6
$55
$5
PJM PPL Zone On-Peak
$45
May-06
PJM PECO Zone On-Peak
NYMEX Natural Gas
$4
Nov-06
May-07
Nov-07
May-08
45
Nov-08
May-09
Nov-09
May-10
$/MMbtu
$/MWh
$9
PJM Generation Stack
Installed Capacity
Coal
Natural Gas
Nuclear
Oil
Hydroelectric
Other
Total
Increased coal versus gas competition due to:
41.0%
29.0%
18.5%
6.6%
4.4%
0.5%
100.0%
• Low natural gas prices
• Increased regional gas supply
• Cleaner emissions from gas plants
• Gas plants have greater dispatch flexibility
 15-20% of coal plants are more than 40 years old.
46
Energy Market Correlations – Oil versus Gas
47
Current Price Environment
 Natural Gas Correlations
– Strong and consistent correlation with electricity prices all markets
– Weak correlation with oil and related products
 Wholesale energy is the largest component of total energy costs
– Largest and most volatile compared to adders and T&D
 Ongoing low price environment
– Sustained prompt natural gas futures prices below $6.00 for first time
since 2001 – 2003
– Long-term prices also posting new lows despite premium
48
NG: Short-Term Supply & Demand Fundamentals
 Strong domestic production via shale
 Weak Economy
 Weather
– Record summer heat ending
– Active hurricane season has not delivered Gulf of Mexico storms
– Winter approaching – early forecasts predict milder temps
 Natural Gas Storage Deficit
– Summer heat reduced injections
– Repeat of 2009 storage glut is unlikely
 Gas and coal compete as a fuel for generation
– $4.00 – 5.00 price range at Henry Hub is tipping point
 Weak Imports
– US prices at significant discount versus Asia and Europe
– Canadian production declines
49
U.S. Natural Gas Storage Inventories
4,000
Source: E.I.A.
3,500
3,000
2,500
Current inventory through
9/24/10 = 3,340 Bcf
-4.1% below one year ago.
6.7% above 5-year average.
2,000
1,500
1,000
Jan-10
Mar-10
Working Storage This Year (2010)
May-10
Jul-10
Sep-10
Working Gas Stock Last Year (2009)
50
Nov-10
5-Year Average (2005-2009)
Natural Gas Rig Count
1,800
Source: Baker Hughes
1,600
Drilling slowdown due to low prices:
U.S. Gas Rig Count is down slightly since
April 2010 (973 to 962 rigs).
1,400
1,200
1,000
800
600
400
200
Rig count up 35% versus a year ago.
Rig count basics:
Measure of drilling activity for additional supplies.
Depends on viable supply opportunities (geology) and market economics.
Usually lags the market price.
0
Previous Year (08-09)
Currrent Year (09-10)
51
Horizontal Rig Count
1,000
Source: Baker Hughes
900
800
700
Shale Drilling continues to increase
dramatically despite low prices
600
500
400
300
Rig count up 106%
versus a year ago.
200
100
0
Previous Year (08-09)
52
Currrent Year (09-10)
53
54
US Natural Gas Supplies
70.0
Source: EIA Annual Energy Outlook 2010 - Early Release
60.0
Bcf per day
50.0
40.0
Shale increases from 7% of US supply in 2007
to 12% in 2010 to 20% in 2020.
30.0
20.0
Conventional and offshore production are
currently 59% of US Supply and remain above
50% through 2035.
Shale production is increasing, but
conventional supplies will remain
majority of North American supply
for the long-term.
10.0
2007
2012
2017
2022
2027
2032
Crude Associated
Conventional
Shale Gas
Coalbed Methane
Lower 48 Offshore
Alaska
Canada
LNG
55
Industry views on Full Cycle Costs for Selected Basins and Shale Plays
Several key
basins (MidCon,
Rockies, Gulf
Coast) have
cycle costs
above current
spot prices.
Higher prices
may be needed
to incentivize
ongoing drilling
in these plays.
•Analysis of industry data demonstrates that exact full cycle costs are difficult to specify
•Costs vary significantly within basins, and for specific reserves
12
Conventional gas
Shale gas
Mid Continent
*Based on very limited data, compared to size of play
** inclusion of oil revenues reflects economics but not true gas cost
56
Offshore/Gulf Coast
Rockies
$/mmbtu
Woodford
Fayetteville
Marcellus*
Haynesville
Eagle Ford**
West Coast
4
US Associated Gas
6
Barnett
Horn River
8
Current range within
which forward HH
curve is trading
Sources: IHS/CERA, Woodmac, Ross Smith,
ScotiaWaterous, Company reports, DE analysis
Natural Gas Imports
 LNG (Liquified Natural Gas)
– Potential for additional supply due to record growth (+26%) in
international LNG capacity during 2010
– US import capacity 10 - 12 Bcf/day and growing
– Henry Hub at a severe discount vs. National Balancing Point (NBP)
– Summer imports fallen to near 1.0 Bcf/day
 Canadian Pipeline Imports
– Exports to U.S. peaked at 9.76 Bcf/Day in 2003
– 2010 exports averaging 6.5 Bcf/Day
– Declines due to:
• Geology – mostly conventional supply (vertical)
• Resource depletion
• Steep Provincial Royalties
57
Long-Term Price Trends

All periods have recently posted all-time lows
– Strong domestic supply
– Weak economy


Contango Forward Curve
Key risk #1 – Supply
– Reduced drilling incentive due to low prices - despite rapid growth, shale gas is
less than 25% of US supply while the bulk of US supply has higher finding costs.
– Reduced imports
– Shale production is also vulnerable to low prices, accelerated depletion rates,
and environmental & tax regulations

Key risk #2 – Demand
– US market is currently demand challenged due to weak industrial demand
– Growth and “greening” of the US economy could increase US demand for natural
gas

Key risk #3 – Surprises
– Geopolitical events
– Impact of equity and currency market trading and speculation
58
Market Outlook
Bearish
 Bearish supply outlook due to Shale
 Slow recovery by economy
Bullish
 Non-shale production declines
 Disappointing Imports
 Coal versus gas competition
Wildcards
 Storage inventories
 Winter Weather
 Financial market impacts
59
Wholesale Power Price Analysis
Transaction Point:
PJM PPL Zone, ATC
Data Range
From:
9/5/2007
9/5/2007
10/8/2008
To:
10/5/2010
10/5/2010
10/5/2010
2011
2012
2013
$43.89
$46.93
$49.79
1.3%
2.4%
3.0%
Minimum Price
$43.48
$45.68
$48.03
Date of Minimum
9/28/10
9/28/10
9/28/10
Maximum Price
$94.49
$95.33
$74.53
7/2/08
7/2/08
10/8/08
25th Percentile
$53.81
$55.97
$52.69
50th Percentile
$62.46
$65.38
$60.00
75th Percentile
$72.88
$73.92
$67.24
Current Price
Current Percentile
Date of Maximum
All prices in $ per MWh and
represent wholesale
price component only.
The Current Percentile
represents the
percentage of days
during the reference
period in which the
market prices has been
below the current price.
Conclusions


Forward prices remain near all-time lows.
Forward prices for all terms have sustained huge declines since July 2008.
60
2011 Forwards versus Historical Day-Ahead Prices
$110
$100
PPL Zone
$90
$80
$70
$60
$50
$40
$30
Jan
Feb
2011 FWD
Mar
Apr
2010 DA
May
Jun
2009 DA
Jul
Aug
2008 DA
61
Sep
Oct
Nov
5-Yr Avg DA
Dec
Reasons customers are not buying


Energy prices have been trending lower with little volatility for almost
two years.
Reasons not to buy
–
–
–
–
Longer term prices are higher than near-term
Bearish natural gas supply outlook due to shale production
Prevailing trend of price declines since mid-2008
Weak day-ahead prices
But to ignore the risks in the energy markets is a mistake
62
Top 10 Reasons to Buy Energy Now
1. Historically low prices
2. Reduced Long-Term price premium
3. Winter weather risk
4. Domestic supply risks due to low prices
5. Environmental & tax risks to shale drilling
6. Weak imports via LNG and Canada
7. Potential for economic recovery
8. Comparison of Forward versus Index Prices
9. Risk of market volatility
10.Difficulty in timing a market bottom
Balance business considerations with market
considerations to form a strategy
63
15 minute Break
Get your Referral sheet returned
 Visit Sponsor Tables
 Coffee/continental breakfast/mid-morning
snack

REAP Report
446 Members (+180)
 1,561 Electric Meters
 $90 Million of electric bills
 $6 million Shopping Savings year to date
 $65,000 non-shopping Found Savings year
to date
 $1+ million non-shopping Ongoing Savings

Fall 2009 Approach

Layered Blended Pool


500 million KWH
Fixed Price or Block and Index

200 million KWH
Gas Prompt Month, 2000-2010
Market Shift
Fall 2010 Approach
Market has shifted dramatically downward
 7 year lows on futures market
 Fixed price contracts result in 28 month
price stability at historic lows

Current REAP Suppliers
Direct Energy
 PPL Energy Plus
 Liberty Power
 Constellation
 Hess
 First Energy Services
 Dominion
 Duquesne Light Energy

PPL REAP Pool to Date
MONTH
Pool Average
PPL POLR (GS)
January
8.80 cents/kwh
9.97 cents/kwh
February
8.87 cents/kwh
9.97 cents/kwh
March
8.43 cents/kwh
9.97 cents/kwh
April
8.45 cents/kwh
9.97 cents/kwh
May
8.51 cents/kwh
9.97 cents/kwh
June
8.94 cents/kwh
9.97 cents/kwh
July
9.70 cents/kwh
9.97 cents/kwh
August
9.04 cents/kwh
9.97 cents/kwh
September
8.54 cents/kwh
9.97 cents/kwh
October (thru 10/7)
8.28 cents/kwh
9.97 cents/kwh
Pool Performance To Date
Blended YTD average = 8.80 Cents/kwh
 $4,000,000 Dollars saved YTD
 Over 150 Wholesale Purchases made

Fixed Price Performance-PPL
Price range 8.2-9.7
 Most in 9.1-9.6 range
 10.4 PTC

Price to Compare
Becoming Extinct
 Utilities moving to

Quarterly
 Monthly
 or Hourly pricing

Price to Compare - PPL
Rate Class
2010
2011
Jan-May
2011
Jun-Aug
Estimated 10/5/10
RS
GS1
GS3
over 500 kw
LP4
over 500 kw
LP5
10.448
10.402
10.402
n/a
9.59
n/a
9.31
9.426
9.764
9.764
Hourly
9.466
Hourly
Hourly
↑↑↑
↑↑↑
↑↑↑
Hourly
↑↑↑
Hourly
Hourly
Price to Compare Increases (est.)
• Met Ed
• 2010 ~ 7.7 ¢/kwh
• 2011 ~ 8.5 ¢/kwh
• Allegheny
• 2010 ~ 6 to 8 ¢/kwh
• 2011 ~ 7 ¢/kwh
• Penelec
• 2010 ~ 6.2 ¢/kwh
• 2011 ~ 7.5 ¢/kwh
• PECO
• 2010 ~ 6 to 9 ¢/kwh
• 2011 ~ 8.5 to 9 ¢/kwh
PPL RS Shopping

8.69
Shopping Stats 10/1/10
PJM Programs
Demand Side Response (DSR)
 Bypass Utility
 Deal through Customized Energy
Solutions (Curtailment Service Provider)

Capacity
 Energy
 Synchronous Reserve

PJM
Who’s doing PJM DSR this year?
Bailey Farms
Geisinger Health Systems
Melmar Acres Farm
Bally Block
Green Springs Trout Farm
Michael H. Musser Farm
Bleacher Farms
Herr Family Farm
Morrill Curtis Farm
Bridge Valley Farm
High Farms
NEP Cold Storage
Brubaker Farms
Hill Top Acres Farm Mkt
Noah O. Wenger Farm
Chickes Creek Farm
Homewood Retirement
Pendu Manufacturing
Cleason Sensenig Farm
J.L.Moyer & Sons
Pequea Lawn Farms
Cold Spring Rental / Farm
Joe Jurgielewitz & Son
Ridge Valley Farms
Conestoga Wood
Joel Frey Farm
Risser's Poultry Farm
Country Fresh Onions
Joel Rutt Farm
Sight & Sound
Daniel Fellenbaum Farm
John F. Martin & Sons
SKH
Denver Cold Storage
Karl Martin Farm
Wenger Feeds
Donald Newcomer
Keen Transport
WFMZ
Dutch Valley Food Dist.
Kirby Horst Farm
What A View Farm
Eberly Farms
Lamar Moyer Farm
White Oak Mills
Egg Basket
Longeneckers Hatchery
Willow Valley Retirement
Fairmount Homes
Mahoning Valley Home
Zimmerman's Farm
What are these 51 receiving this year?
$669,000!
 Program defined for at least another 3
years

DSR Payout for 1,000kW

2010-11:
 2011-12:
 2012-13:
 2013-14:
$48,700
$32.300
$38,300
$62,000
Total:
Average:
$181,300 or
$3,800/month
What does it take?
Ability to reduce load
 or run backup generation
 25kW minimum
 June 1-Sept 30
 Up to 10 interruptions for 6 hours each
 Monthly payments

Platinum Sponsors

Customized Energy Solutions
Analyze.
Simplify.
Implement.
Customized Energy Solutions
Customized Energy Solutions Ltd.
1528 Walnut Street, 22nd Floor
Philadelphia, PA 19102 USA
Phone: 215-875-9440
Fax: 215-875-9490
[email protected]
Confidential (www.ces-ltd.com)
87
Analyze.
Simplify.
Implement.
Customized Energy Solutions
– What do we do for our clients?
• Provide wholesale market services that enable our clients to
provide value added services for their customers
• Examples
– LSEs
– Aggregators (REAP)
– Munis, Coops
• Provide additional value to REAP Services
– We are independent and provide services to a broad
spectrum of participants in the energy markets
Confidential (www.ces-ltd.com)
88
Analyze.
Simplify.
Implement.
Customized Energy Solutions Service Offerings
Confidential (www.ces-ltd.com)
89
Analyze.
Simplify.
Implement.
PJM Load Response Programs
– Economic Program
• REAP Electrical Agreement provides economic benefits to
Customers who reduce load at high prices
– Emergency Program
•
•
•
•
ISO or Utility calls interruption
Payment based on load reduction capability
Performance test required if no event occurs
Payment will offset portion of fixed charges under REAP
contract for energy
Confidential (www.ces-ltd.com)
90
Analyze.
Simplify.
Implement.
Ancillary Service Programs
– Supplement value of REAP Services
– Synchronous or Spinning Reserves
• Load reduction must be achieved in 10 minutes
• Good Value for participation
• Remote start for back-up generation or automated
notification of event for customer to reduce load
• Value depends on hours of participation
– Regulation Service
• Battery technology or flywheel technology
• Typically a difficult service for loads but value is significant
Confidential (www.ces-ltd.com)
91
Platinum Sponsors

Direct Energy

Jo Anna Kendrick
Tariff Issues and Changes

PPL
REG participating
 Distribution Filing will raise RS rates in 1/11,
GS and LP rates flat
 RTS increase limited…DSR possible?
 CTC will finally be gone
 GS1GS3 gouging by PPL will be mitigated

Tariff Issues and Changes

Met Ed



Rate Filing effective 1/11
PTC 8% increase expected
CTC gone but partially replaced by “NUG”





Rate unchanged or decreased depending on load factor
Seasonal Rate Gone as of 1/11
12 hour or 8 hour TOD window locked
12 hour kW rate same as 8 hour
> 400kW getting interval meter installed
Tariff Issues

Met Ed
GSL 400 kW criteria being challenged
 Return to Default 1 year requirement

Lighting Retrofits

Pete Richards
Act 129

Implementation - PPL
Energy Conservation Plan
 Big Rebate $ from all electric utilities in PA
 2% of total revenue

 Fully
Recovered from _____?
All lights are not created
equal
Peter Richards
Richards Energy Group, Inc.
Original System
Type
Watts
TROFFER 4' - 4F34T12CWES
144
INDUSTRIAL 8' - 2F96T12CWES
125
HID - 360W Metal Halide
415
Currently
Annual Calculated kWh (Based on Above
Readings)
Annual Calculated Cost (Based on Above
Readings)
419,853.20
$
38,339.19
Supplier 1
Watts Measured by
LTL, Inc
Type
% of Origional
Retrofit to TROFFER 4' - 2F32T8841XPHBF Mirro
4
75.56
52%
Retrofit to INDUSTRIAL 8' - 2F32T8841XPHBF
Mirro 4
77.53
62%
New Fixture - HBF - 6F32T8841XPHBF Mirro 4
228.00
55%
Supplier 1 Proposed
Annual Calculated kWh (Based on Above
Readings)
244,881.47
58%
58%
Annual Calculated Cost (Based on Above
Readings)
$
22,424.02
Annual Savings
$
15,915.17
Turnkey Project Cost (Materials, Labor, and
Recycling)
$
69,920.23
Sales Tax
$
4,195.21
Total Project Cost
$
74,115.45
Payback Period (years - current rates)
4.66
Payback Period (years - projected increase)
2.36
Supplier 2
Watts Measured by
LTL, Inc
Type
Replace with Troffer 4' - 3F32T8741 LBF white
% of Origional
Wattage
88.95
62%
Replace with Industrial 8' - 4F32T8741 LBF white
108.67
87%
New Fixture - HBF - 6F54T5HO841 Mirro 4
323.20
78%
Supplier 2 Proposed
Annual Calculated kWh (Based on Above Readings)
329,552.86
78%
80%
Annual Calculated Cost (Based on Above Readings)
$
30,656.96
Annual Savings
$
7,682.23
Turnkey Project Cost (Materials, Labor, and
Recycling)
$
49,000.00
Sales Tax
$
2,940.00
Total Project Cost
$
51,940.00
Payback Period (years - current rates)
Payback Period (years - projected increase)
6.76
4.83
Lighting - Concerns

Mercury




Toxic Metal
Many Lamps Contain
Mercury Lifecycle
Proper Disposal
Required


Local Distributor
Home Depot
White LED Lighting

100,000 Hours!!!!
Driver Life 15-20,000 Hours
 Integrated Drivers


CALiPER program by DOE

“Reliable, unbiased product performance
information”
PA ACT 129





House Bill 2200
Mandatory Reduction Plan for most EDC’s
3% usage reduction over next 4 years
4.5% Peak 100 Hours Demand Reduction
Funded by 2% of Gross 2007 revenues


Fully Recovered from _____?
PPL


Variety of Rebate Options for EE&C
Retroactive to 7/1/2009
PPL ACT 129
1. Efficient Equipment Incentive Program
2. Residential Energy Assessment & Weatherization
3. Compact Fluorescent Lighting Campaign
4. Appliance Recycling Program
5. ENERGY STAR® New Homes Program
6. Renewable Energy Program
7. Direct Load Control Program
8. Time of Use Rates
9. Energy-efficiency Behavior & Education
10. Low-income WRAP
11. Low-income E-Power Wise
12. Commercial and Industrial Custom Incentive Program
13. HVAC Tune-Up Program
14. Load Curtailment Program
Lighting Retrofitswho’s doing them?











Adhesives Research
High Industries
Phillips Group
ECORE (Dodge-Regupol)
GSM Industrial (Gooding)
Amelia’s Grocery Outlet
Willow Valley Retirement
Comm.
Wayside Presbyterian
USA Spares
Homewood Retirement
Community
St. Anne’s











Cooper Tools
Elixir Industries
Good’s Store
Leonhardt Mfg.
Eden Resort
Ken’s Restoration
Electron Energy
IREX Corp.
Shank’s
James V Brown Library
How about YOU?
Referral Awards!
IPad
 $200 Lowes card
 $50 Ticketmaster
 $50 Sheetz Gas card

Prizes
REG’s New Home