NYPA CUSTOMER ENERGY SOLUTIONS

DEVELOPING THE SERVICES SIDE OF THE BUSINESS

Multiple Intervenors Annual Meeting - October 8, 2014

Michael Huvane – Vice President, Marketing

Kristin Barbato – Vice President, Customer Energy Solutions

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NYPA Background• Largest state public power organization in the U.S. • Public authority of the State of New York• Owns and operates 16 power plants• Operates more than 1,400 circuit-miles of the state’s

transmission system• Does not use any tax revenues or state credits• One of New York State’s valuable partners in economic

development

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NYPA Organizational Structure

Gil Quiniones President & CEO

James Pasquale SVP ED&EE

Michael Lupo

VP MA&A

Michael Huvane

VP Marketing

Kristin Barbato

VP CES

Paul Belnick

VP EE

Energy EfficiencyCustomer Energy

Solutions

Economic DevelopmentAccount Management

Power Contracts

PricingLoad Forecasting

Tariff Administration

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ReCharge New York• Governor Cuomo’s statewide economic

development electric power program• 910 Megawatts (MW)

• 50% NYPA hydro / 50% market power

• Competitive application process: Focus on job creation or retention for existing, expanding or new businesses

• At least 200 MW for attracting new businesses to NYS or the expansion of existing businesses and up to 100 MW for small businesses and not-for-profits

• Long-term contracts up to 7 years

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ReCharge New York

• 656 MW allocated for retention• 81 MW allocated for expansion• 660 customers• 383,000 jobs retained/created • $31.5 billion capital investment

commitments

Update as of

October 2014:

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Western NY (WNY) Hydropower Programs

• Low cost power available to facilities located within a 30-mile radius of NYPA’s Niagara Power Project

• Consists of 445 MW of Replacement Power (RP) and 250 MW of Expansion Power (EP), with 20 MW of EP available to businesses located in Chautauqua County

• Awarded on a competitive basis to businesses creating new jobs, expanding or building new facilities

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Western NY Hydropower Programs

• 651 MW of 695 MW allocated to 126 customers

• Tied to the retention and creation of over 31,500 jobs in Western NY

• Over $2.3 billion in capital investments committed to in Western NY

Update as of

October 2014:

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Western New York Power Proceeds Act

• Signed into law by Governor Cuomo in 2012• Created Western NY Power Proceeds Allocation Board

• Consists of 5 members• Solicits and reviews applications• Makes recommendations for awards to the NYPA Trustees

• Established Western NY Economic Development Fund

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WNY Economic Development Fund

• Net earnings from the sale of unutilized Expansion and Replacement power are accrued and deposited into the WNY Economic Development Fund (WNYEDF)

• A minimum of 15% of the Fund must go towards energy-related projects

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WNY Economic Development Fund

• Total fund deposits of over $37 million to date

• Over $14 million in approved awards have supported the creation/retention of nearly 3,000 jobs

• Total aggregate cost of the 24 projects supported to date through the fund is in excess of $200 million.

Update as of

October 2014:

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Preservation Power• Low cost power from NYPA’s

St. Lawrence-FDR Power Project

• Available to eligible businesses in Franklin, Jefferson and St. Lawrence Counties

• Awarded to businesses that want to expand and to new businesses that would like to locate in the region.

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Preservation Power

• 484 MW of 490 MW allocated to 4 customers

• Tied to the creation and retention of nearly 1,500 jobs in the three counties.

• Over $600 million in capital investments committed to

Update as of

October 2014:

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North Country Economic Development Fund (NCEDF)

• Loan fund created from $10 million deposit by Alcoa under terms of their long-term agreement with NYPA for the sale of hydropower.

• For economic development in the 7 North Country counties as well as Herkimer County and the Akwesasne Mohawk Reservation

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NYPA’s Customer Energy Solutions

• The Challenge• The Opportunity• The Vision• The Approach• Key Next Steps

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The Challenge• General

• Customers are seeking cost savings• Capital projects are their top priority• However, they’re interested in a wide range of services• Customers desire ease of use, responsiveness, and technical capability

• Specific to NYPA• Customers are confused about NYPA’s offerings• Customers view NYPA’s processes as lengthy and bureaucratic• Customers perceive NYPA’s pricing of capital projects as more expensive

than average

“Setting up a new vendor is a complicated process, so if we could buy multiple services from NYPA that would make things easier. We’ve been pleased with NYPA services thus far, so we would expect these other services to be at that high level as well.”

Source: Market Intelligence Report conducted for NYPA, July and August, 2014

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The Opportunity• Customers view NYPA as trustworthy, responsive, and knowledgeable• NYPA’s capital project implementation abilities match the needs of customers• NYPA’s ability to provide easy access to multiple vendors matches customers’

desire for a wide range of services• Customers are open to partnering with NYPA on new energy projects • NYPA can address customers’ concerns by realigning its service functions

and processes, and marketing its offerings more clearly

“This ‘economic potential’ is valued at $100.9 billion in net benefits (in 2012 dollars). The ‘achievable potential’ (in New York State), a subset of the economic potential, is valued at $30 billion in net benefits (in 2012 dollars). ‘Achievable potential’ represents the cost effective energy efficiency potential given current market barriers related to technologies, spending, energy efficiency goals, and policies.”

Source: Market Intelligence Report conducted for NYPA, July and August, 2014

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The Vision• Customer Energy Solutions – Start up!• Goals

• Build the “demand” side of NYPA’s business to be on par with the “supply” side of NYPA’s business

• Become and remain our customers’ trusted energy advisor• Serve as a marketplace for accessing energy services• Internally coordinate and externally present “one NYPA” with fully

integrated service offerings• Proactively address the energy needs of our customers• Recover costs on a net CES basis

• Core Ideology

NYPA will deliver results, value, and satisfaction for customers

The Approach: Customer’s Future View of NYPA

Tariffs

Financing

Fees

Efficiency Distributed Generation

Advanced Infrastructure

Data Analytics Management & Operations

Planning Engineering Environmental & Regulatory

Generation, Transmission, & Supply

Traditional Utility

Capital Investment

Advisory / Operational

Cost RecoveryEnergy Services & Solutions

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The Approach: NYPA’s Internal “Supply Chain” Functions

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Marketing (“Strategy & Programs”)

Development (“Inquiry to

Order”)

Delivery (“Order to

Remittance”)

Support (“Invoicing,

Metrics, Performance”)

Public

SchoolsLocalStateFederal

The Approach: Customer Segmentation

PrivateResidentialNot-for-

ProfitIndustrialCommercial

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The Approach: Priority Service & Customer Matches

Exte

nsiv

e Ex

perie

nce,

Re

sour

ces

No

Reso

urce

s,

Expe

rienc

e

Lim

ited

Reso

urce

s,

Expe

rienc

e

Mod

erat

e Re

sour

ces,

Ex

perie

nce

Not a Current Customer

Supply-Only Customer

Limited Service Customer

Extensive Service Customer

Deepen Relationships

Gai

n Ex

perie

nce

Operations for State &

Local Segments

More Assessments & Projects for State & Local

Segments

Assessments & Projects for Commercial, Industrial, &

NFP Segments

Serv

ice

Read

ines

s

Customer Relationship21

More Assessments & Projects for Public School

Segment

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Key Next Steps

• Business Plan integrates CES functions with current and

future programs / initiatives

• Other Strategic Initiatives

• State Policy – Reforming the Energy Vision (REV)

• Customer Programs (EE INC, K-Solar, BuildSmart NY, NY Energy

Manager)

• Begin CES functional alignment with customer engagement

• Establish the near-term and long-term budget to support services expansion

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Questions?

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Thank you…

Michael Huvane

New York Power Authority

(914) 390-8117

Michael.Huvane@nypa.gov

Kristin Barbato

New York Power Authority

(914) 390-8252

Kristin.Barbato@nypa.gov