Tri-State Member Services Conference

1. Tri-State Member Services Conference October 10, 2001

2. Tricon Overview U.S. Sites:CorporateFranchisedLicensedTotal KFC 1,277 4,107 5,384 Pizza Hut 1,805 5,420 1,821 9,046 Taco Bell 1,2664,3301,9087,504 total 4,348 13,857 3,729 21,934 • Over 30,000 restaurants internationally (13% share of $160 bil. Mkt) • Headquartered in Louisville, Ky • Tricon Energy Team manages energy for all corporate sites in U.S. • We coordinate energy procurement for franchisees in deregulated states by aggregating corporate/franchisee loads • We direct demand side programs relative to asset/energy awareness opportunities to reduce usage and share these programs w/franchisees

3. Energy Tricon Strategy • Mission: Best in class Energy Costs for Quick Service Restaurants • How do we execute? (Two areas) 1) Manage electric and natural gas procurement unit costs (supply) • Deregulated states; contract with 3rd Party Suppliers to fix prices • We bid on aggregated store basis to achieve value (FZ & Corporate) • Goal: control energy price volatility (risk management) • In regulated states exposed to spot tariff prices; work within rate structure 2) Lead development of programs to reduce energy use (demand) • Lead the identification and deployment of energy efficient equipment • Create tools, lead execution of energy awareness training

4. Brand Energy Use -2001 Energy = 3.5% of operating costs

5. Franchisee/Corp. Total Energy Spend $548 mil. $526 mil. $490 mil.

6. Deregulated Market Strategy • Natural gas prices - in deregulated states • If we can beat the utility rate: • We initially sign contracts with guaranteed % reduction to tariff or; • Fixed price contracts with terms of 1-2 years or; • NYMEX index contracts (1-2 years) • When prices are at historic highs (as they were over last year), we enter into index contracts that allow spot pricing with trigger rights to fixed prices as prices come down • We are now entering fixed price contracts. • Our performance measure is costs avoidance to tariff • Electric prices - in deregulated states • We initially sign contracts with guaranteed % reduction to tariff or; • Fixed price contracts with terms of 1- 5 years • Key is to fix prices competitive at historic price levels • Our performance measure is costs avoidance to tariff • There are no NYMEX indices equivalents for electric, very regional pricing dynamics

7. Demand Side - Ability to Manage Load • Largest usage is kitchen and AC during summer • No one area w/large usage where we can cut; must have small cuts in multiple areas, must serve customer • Focusing on Tstat control, lighting, kitchen equip. staging • Little opportunity for real time pricing, load shifting

8. Demand Side Programs • Equipment oriented • Lighting; T12 to T8 retrofits • Energy Management System for HVAC, lighting control • Energy efficiency for kitchen equipment • Designing greater energy efficiency into the 400 new stores we build each year • Energy awareness • Changing behavior relative to energy use • Very difficult in our industry, 300% turnover makes it hard to train • Simple tools including posters, notes in bulletins etc. • Estimate up to 10% usage reduction available ($50 mil)

9. Expectations of UtilitiesWhat are our challenges?

10. Tricon Service by Utilities • Tricon • Mostly urban IOU’s • Primary focus on dereg/ controlling price volatility • Extensive staff resources for DSM/ energy audits, etc. • Franchisees • Mostly suburban & rural, high # public/cooperatives • Primary focus on reducing/controlling energy use • Low staff resources, relies on energy support from regional vendors, welcomes utility support (audits, financing, Econ. Development)

11. Franchisee (FZ) Needs 1) Energy Audits • Chart reflects Taco Bell use, little opportunity to help in kitchen, but significant opportunityfor: • lighting (T12’s) • HVAC/water • Refrigeration • financing options 2)Summary Billing • Especially when load averaging allowed (next pg.) 3) Billing Services • Many FZ going to outsourced services • 4) Monitoring Services • Many FZ are also using 3rd party monitoring services for Energy Mgmt. Systems (EMS) • 5) Performance Contracting • Cooperatives would appear to have financing advantage offering asset financing to FZ

12. Summary Billing/Load Sharing - JEA • Jacksonville Electric Authority in Florida • Offered coincidental peak load reduction program • Began in 1998; continues through 2002 • Allowed us to combine all of our corporate Pizza Huts into one load • System picks overall combined peak load as the total kw for a month instead of individual site peak kw • Has allowed for approximately a 10% reduction in peak kw on a site by site basis • Have realized over a $1,000 PRA reduction in annual costs (9%) • We pay only metering fees and a special facilities charge to participate in the program • One bill a month that covers all 20 locations • We would have even lower costs if we had other brands in the area, higher load diversity

13. What Would Tricon Like from Cooperative Utilities • No shut off policies for Tricon and Franchisee locations • handling billing issues before they result in shutoff; more of a natural gas than electric issue • Single point of contact for all issues • Customer advocate • Rate analysis as tariffs change • Participation in deregulation programs • Accurate and timely billing • Eventual EDI capabilities • Demand side opportunities • Website development

14. What is Cooperative View of Deregulation? • Will you participate? • We view cooperatives as very competitive suppliers in most areas • Especially in KY, IN, OH • Not necessarily concerned whether an area is deregulated or not • We want deregulation when retail rates do not reflect wholesale costs plus reasonable delivery charges • California, NY, Upper Midwest are areas with this issue • We’re curious why more cooperatives are not involved as nonregulated marketers on a regional basis • You have extensive knowledge, G&T generation assets • We bid all markets on regional basis on dereg. side • We thought we would see more Cooperative gas marketers in deregulated gas markets (Ohio) • Will Touchstone organize more national services directed through area distribution cooperatives? • Demand side services • Financing • Dereg. marketing