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Sempra Energy Solutions’ Presentation to SCAP Energy Management Committee

Sempra Energy Solutions’ Presentation to SCAP Energy Management Committee. Opening of Retail Choice in California Power Markets. October 22, 2009. ND. WA. MT. MN. ME. WI. SD. ID. V. OR. OR. N. T. H. MI. MI. NY. NY. WY. MA. IA. NE. PA. PA. RI. OH. CT. IN. NV. NV.

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Sempra Energy Solutions’ Presentation to SCAP Energy Management Committee

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  1. Sempra Energy Solutions’ Presentation to SCAP Energy Management Committee Opening of Retail Choice in California Power Markets October 22, 2009

  2. ND WA MT MN ME WI SD ID V OR OR N T H MI MI NY NY WY MA IA NE PA PA RI OH CT IN NV NV IL IL UT NJ CO DE KS WV MO MD KY KY VA VA VA DC CA CA TN OK NC AR AZ AZ NM Power Gas SC GA MS AL TX TX Active Markets Potential Markets Active Market LA FL California Connecticut Delaware Illinois Maine Maryland Massachusetts Michigan New Jersey New York Oregon Texas Pennsylvania Rhode Island Ohio Washington Arizona California

  3. History of Retail Choice in California • Power markets opened to retail choice in April of 1998 • Markets worked to bring lower prices until the summer of 2000, ~ 16% of all customers elected a electricity service provider • Energy Crisis – Summer and Fall 2000 • Wholesale prices escalated on the back of spiraling natural gas prices, demand exceeded supply and alleged market manipulations • IOUs were forced by regulatory rules to buy power at wholesale market prices and sell at regulated prices • PG&E went bankrupt, SCE “negotiated” an agreement with the CPUC

  4. History of Retail Choice in California Cont. • Energy Crisis – Summer and Fall 2000 • With the IOUs at or on the edge of insolvency, the State entered into a series of long-term power contracts to supply power to California • In order to protect the State power contracts from ratepayer flight, retail choice (direct access) was suspended • Retail Choice was suspended from September 2001 until the 2nd quarter of 2010, nearly nine years • Customers who were direct access in 2001 could remain direct access, any new customers or sites would have to take service from the IOUs and take power under the State’s power contracts

  5. SB 695 Signed into Law On October 12, 2009 • The commission shall allow individual retail nonresidential end-use customers to acquire electric service from other providers in each electrical corporation’s distribution service territory, up to a maximum allowable total kilowatthours annual limit…Within six months of the effective date of this section, or by July 1, 2010, whichever is sooner, the commission shall adopt and implement a reopening schedule that commences immediately and will phase in the allowable amount of increased kilowatthours over a period of not less than three years, and not more than five years…

  6. SB 695 Signed into Law On October 12, 2009 • Maximum allowable total kilowatt-hours annual limit: ~ 7 million MWhrs per year • ~3 million MWHrs for SCE and PG&E each, ~1 million MWHrs with SDG&E • The commission shall adopt and implement a reopening schedule…and will phase in: • Phase-in: An as yet to be determined time period and quantity of MWH allowed to elect DA per year, the phase-in can be no longer than 5-years nor shorter than 3-years

  7. SB 695 Signed into Law On October 12, 2009 • So What Does Re-Opening Mean? • All commercial and industrial customers are free to shop • Customer participation will be limited by the phase-in schedule and the legislative cap • Start talking to ESPs now in order to have a 2010 opportunity, market will open in April and it could be fully subscribed • Service from an ESP means you can avoid the mandatory Critical Peak Pricing punitive pricing as well as manage price risk (fixed, index and tiered pricing structures). • IOU exit fees are likely only to go higher in future years, electing direct access in 2010 will help to minimize these types of costs

  8. Sempra Energy Solutions • Retail power marketing arm of RBS Sempra Commodities • One of the largest retail energy suppliers nationwide • Target audience of commercial, industrial and national accounts (no residential or small commercial) • 60,000 MMBTU/day natural gas service in California • 4,000+ MW peak power demand nationwide • > 13,000 meters nationwide • Only ISO:9001-Certified Energy Services Provider nationwide

  9. Sempra Energy Solutions • Contact Information: • Mike Lee – Sales Director – (714) 846-6286 mlee@semprasolutions.com • Greg Bass – Regulatory Director – (619) 684-8199 gbass@semprasolutions.com

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