The Changing Utility

Business Model

June 4, 2015

Today’s Presenters

Rob CaielloVice President, Marketing

Allconnect

Gary HighSenior Vice President of Smart

Grid Solutions

Landis+Gyr

Joe BarraSenior Consultant – Business

Model Development

Portland General

Electric

Snapshot: Who We Are

3

501(c)(3) nonprofit formed in March 2010

Membership organization comprised of utilities, technology companies, and nonprofit affiliates

Driven by the mission to advance a consumer-friendly, consumer-safe smart grid

We work by listening, educating, and collaborating

SGCC 2015 Research

The Changing Utility Business Model

How utilities are thriving in the new order of business?

How other stakeholders are empowering consumers?

Who benefits and who loses?

Speaker #1

Name Background

Gary High Senior Vice President of Smart Grid Solutions at Landis+Gyr

• Sets strategy and leads the team responsible for business development, product development and market presence for smart grid related solutions including: analytics, battery energy storage, load management, data management and more

• More than 20 years’ experience marketing to electric, gas and water utilities

• Previously worked for LogicaCMG, a global provider of IT and business services where he focused on work and asset management systems and system integration

• Held various positions with Schlumberger over a 14-year span with company’s metering and utilities segments

• Graduate of Texas A&M

© Landis+Gyr | June 4, 2015 |

Industry Trends: Adapting to a Changing Model

Gary HighSenior Vice President, Smart Grid Solutions

© Landis+Gyr | June 4, 2015 |

Global leader in smart grid

About Landis+Gyr

AMI market share leader

Grid, load and data management solutions

5,500 employees serving 3500 utilities

Managed services for more than 10 percent of U.S. meter population.

© Landis+Gyr | June 4, 2015 |

Flat demand is driving change

“Business models designed around steady and predictable growth will need to be revised to deal with slower and less quantifiable electricity usage patterns.” – Fitch Ratings

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Contributing factors:• Improved efficiency• Conservation• Demand response• Distributed generation

-5.00%

-3.00%

-1.00%

1.00%

3.00%

5.00%

7.00%

9.00%

11.00%

13.00%

15.00%

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60

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63

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66

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72

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75

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78

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81

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84

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87

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90

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93

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99

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02

20

05

20

08

20

11

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14

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17

20

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US Energy Demand Growth

US Poly. (US)

© Landis+Gyr | June 4, 2015 |

Three trends that impact utilities and consumers

The way we pay for and use electric energy is evolving

Circuit-level management of distribution systems increasing

Distributed generation on the rise

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© Landis+Gyr | June 4, 2015 |

Changes in how energy is purchased and used

Transactive Energy

Prepayment

Variable Rates

Net Metering

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EV Charging

Storage

Smart Appliances

PCT/HVAC

Consumer side Load side

© Landis+Gyr | June 4, 2015 |

Circuit-level demand management

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Demand response for infrastructure management

Predictive analytics for outage prevention

© Landis+Gyr | June 4, 2015 |

Distributed Generation: rooftops to microgrids

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Energy ManagementStoragePV Installation

© Landis+Gyr | June 4, 2015 |

Conclusion

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Trending down: Distributed generation

Value-added consumer services

Fixed rates for cost recovery

Grid analytics to plan and manage operations

Trending up:

Large-scale, centralized generation

Cost recovery from kilowatt sales

Model-based utility planning

Speaker #2

Name Background

Joe Barra Senior Consultant – Business Model Development at Portland General Electric

• Develops business opportunities in the areas of Smart Grid, electric vehicles, demand response, energy efficiency, renewable energy integration, energy storage and distributed resources

• Joined PGE in 1994 as Manager of New Products & Services

• Previously Director of Energy Services at PacifiCorp where he directed the development of the Energy FinAnswer

• Bachelors degree from William Paterson University and has completed post-graduate courses in management, strategic planning, finance and statistics

• Serves on the Oregon Museum of Science and Industry board of directors

© 2015 Portland General Electric. All rights reserved.

The Changing Utility

Business Model

SGCC Peer Connect Webinar

Joe Barra

June 4, 2015

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Portland General Electric

844,000 customers

2,603 employees

Service territory population 1.7 million, 45% of state’s population

52 cities served

4,000-square-mile service area

3,414 MW of generation

Summer peak load of 3,950 MW (2009)

Winter peak load of 4,073 MW (1998)

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Full deployment of AMI

Interval data collection on all meters

~ 850,000 meters

Watt-hour resolution for C&I customers (residential moving that direction)

Salem Smart Power Demonstration Project

Centerpiece of NW Smart Grid Project

Battelle (PNNL), BPA, 10 other utilities

Laying the Foundation for a Smarter Grid

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PGE uses the AMI system every day, to read meters and communicate with distribution sensors. The system is also supports:

Demand-side management Customer segmentation

Dynamic pricing

Energy Tracker

Distribution asset utilization Avoided service (e.g. transformer failures)

Proper transformer sizing

Feeder conductor work

Outage management Avoided trouble calls

Faster on-premise outage response

Improved storm management

Faster fault location identification

Leveraging AMI

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Using AMI Data for Customer Segmentation

Developed load-based segmentation

Disaggregated customers based on summer and winter peak usage

Coupled with attitudinal segmentation to target residential demand response

programs

Useful findings

Summer peaking customers often distinct from winter peaking customers

High degree of correlation between socioeconomic factors and usage

patterns

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Summer Usage Winter Usage

Using AMI Data for Customer Segmentation (cont.)

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Using AMI Data for Asset Optimization

Developing plans to couple AMI and strategic asset management data to

deploy targeted DSM/DER to defer system upgrades

Map customer-specific peak contribution to overloaded assets

Strategically deploy DSM and/or incentives for DER

Multiple value propositions:

Improved reliability/power quality

Reduced cost to all customers through more efficient asset utilization

Lower bill for customers hosting DSM/DER

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AMI as an Enabler of Dynamic Pricing

Make participation easy by offering

customers programs that match their lifestyle

Critical peak pricing (CPP) pilot

(completed)

Peak time rebate pilot (under development)

o Targeted at critical load segments

Direct load control thermostat program

using programmable connected

thermostats (PCT)

0

0.5

1

1.5

2

2.5

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1 3 5 7 9 11 13 15 17 19 21 23

KW

h

1

2

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4

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5 Summer Load Segments

2 segments are 59 % of summer peaks

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Available on PortlandGeneral.com

Provides customers access to:

o Daily/hourly energy usage charts

o Ways to save

• Energy Trust incentives

o Bill comparisons

o Alerts

Energy Tracker

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Daily/Hourly Usage Charts Bill Comparison

How Customers Use Energy Tracker

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Text Alert Email Alert

Alert – Weekly Usage

Customers can enroll online for text or email alerts.

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State-of-the-art smart grid demonstration highlights:

5 MW battery storage (firming and shaping)

High-reliability zone whencoupled with PGE’s Dispatchable Standby Generation system

Demand response

Detection & automated switching for advanced protection

Transactive control – automated economic dispatch via locational pricing

Solar/wind integration

Salem Smart Power Project

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Completed use cases Respond to transactive node/transactive signal

5 MW load response to under-voltage load shedding event

Distribution automation using advanced, intelligent relays

Up/Down frequency regulation

Real-time solar integration utilizing solar output signal

Use cases in progress 400 kW of demand response benefit

1.3 MWh of energy shift from on-peak to off-peak

2 to 4 MW of real-time voltage & frequency for system OPS

kVAr support and control on the distribution feeder

1.3 MWh of off-peak ability to absorb excess wind power

Adaptive Conservation Voltage Reduction (ACVR)

2014 – 2015 Valuation / Use Tests

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Net Effects Integrates real PV output through the feeder load

Feeder load is “conformed” to a desired load shape

Reduces fluctuation the feeder load

Benefits and Outlook Should be able to do same with a wind signal

Addresses the “duck curve”

Battery “firming” uses less energy than from a load-following plant

Less feeder load variability yields fewer load tap changes

o Less wear and tear on load tap changer

o Likely increase in transformer life (durability)

o Improved transformer reliability = greater customer system reliability

Solar & Wind Integration Use Case

Speaker #3

Name Background

Rob Caiello Vice President, Marketing at Allconnect

• Responsible for designing, developing and executing Allconnect’smarketing and communication strategies to expand brand presence and to increase consumer interactions from partner channels

• Previously focused on direct-to-consumer marketing through various senior-level marketing roles with DIRECTV and Home Shopping Network

• Began career in marketing in the utility industry with Niagara Mohawk Energy (now National Grid) for 8 years

• Master of Business Administration in Marketing and Quantitative Methods from Syracuse University

• Bachelor of Science in Industrial Engineering from the Rochester Institute of Technology

PROPRIETARY & CONFIDENTIAL INFORMATION OF ALLCONNECT, INC.

Going from Point B to Point A –

Connecting with customers in the new utility world

June 4, 2015

SGCC Webinar - Changing Utility Business Model

PROPRIETARY & CONFIDENTIAL INFORMATION OF ALLCONNECT, INC. 32

Our vision is to

shape the future

of connections,

one experience

at a time.

• Dedicated to energy industry

since 1998

• Engage with energy customers

regarding product and service

choices

• Trusted by energy companies

representing >50M homes

• Over 20M interactions annually

via phone, web, mobile

PROPRIETARY & CONFIDENTIAL INFORMATION OF ALLCONNECT, INC. 33

Your customer's journey is more complex than ever.

Multichannel

World

+

Multiple Devices

=

MULTIPLE PATHS

of

ENGAGEMENT

VS

PROPRIETARY & CONFIDENTIAL INFORMATION OF ALLCONNECT, INC. 34

Even technology does not always make for a smooth

journey from point A to point B

Google Inrix Nokia Apple

“The first peculiarity of driving with so much high-tech assistance came up right away. My

phone is telling me to ‘turn right’ but my car here is telling me to ‘turn left’. After almost 30

years of turning left out of my road, I followed the three apps that told me to ‘turn right’.”

Robert Siegel, NPR

Source: NPR, By NPR Staff – “The Tech Behind Traffic Apps: How (Well) Do They Work?” 5/18/2015

PROPRIETARY & CONFIDENTIAL INFORMATION OF ALLCONNECT, INC. 35

Gaps and Opportunities in the Energy Industry Today

Awareness Interest Motivation Action

Over 50% of

consumers never

heard of the term

“Smart Grid”

and fewer are

knowledgeable

about connected

home products 1,2

80+% of

consumers

believe benefits

of Smart Grid

technology highly

important 1

Over 80%

evaluate

energy

programs at

least annually 3

BUT,

Over 40%

don’t believe

utility acts in

their best

interest 1

Product and

service

penetrations

[mostly] in the

single digits 1

1 – Smart Grid Consumer Collaborative Consumer Pulse and Market Segmentation Wave 5, 2015

2 – Accenture – The New Energy Consumer, Architecting for the Future 2014

3 – Allconnect Proprietary Market Research Study 2014

PROPRIETARY & CONFIDENTIAL INFORMATION OF ALLCONNECT, INC. 36

Start with understanding the customer first through

segmentation…

▸ Current behavior data

▸ Demographic and

geographic overlays

▸ Historical behavior data

Connect consumers with the right products, at the right time

Typical Data Elements

▸ Customer-specific data

unique to customer/location

PROPRIETARY & CONFIDENTIAL INFORMATION OF ALLCONNECT, INC. 37

Educate, consult, and enroll in their channel(s) of choice

Target Movers and

shoppers

Highly targeted -

Homeowners

Single Family

Homes

Green- Minded

Untapped Market

Renters and

Homeowners

Income Qualified

Value

Proposition

Understand

complex choices

and save money

Save Money

/Environment

Reduce energy bill Easy/low cost way for

customer to

“contribute”

Convenience and

assurance

How to apply for

reduced energy

rates

Take Rates Ranges

…then, connect and engage with customers to achieve

desired outcomes

0%

10%

20%

30%

40%

50%

60%

70%

80%

EnergyChoice

DemandResponse

EnergyEfficiency

GreenProducts

Protection(e.g. Surge)

EnergyAssistance

Energy

Choice

Demand

Response

Energy

Efficiency

Green Protection

Energy

Assistance

PROPRIETARY & CONFIDENTIAL INFORMATION OF ALLCONNECT, INC. 38

Point B to Point A thinking to keep in mind

Point A to B Point B to A

Sell most profitable product Offer choices, build lifetime value

Get customer off phone as quick

as possibleEngage, educate, personalize

One way engagement – company

to customer

Build brand ambassadors

among customers

Communicate in multiple

channels

Communicate

across channels and devices

#areallysmartmove

Use data to make decisionsLeverage data to inform and

develop new solutions

ENGAGEMENT AND

CONNECTIONS

TECHNOLOGY

AND

ANALYTICS

ENGINE

ENERGY

SOLUTIONS

DIGITAL

SOLUTIONS

39

END TO END

EXPERIENCE

Allconnect is the gateway

to the connected world.

For our consumers, we

make complex choices

simple and ordering easy.

And with our partners,

we create incremental

value through solutions

that are innovative and

customer-centric.

Thank you! You will receive a copy of the slides to the email

address you used to register.

Rob CaielloVice President, Marketing

Allconnect

Joe BarraSenior Consultant – Business

Model Development

Portland General

Electric

Gary HighSenior Vice President of Smart

Grid Solutions

Landis+Gyr