1. 2012 Competitive Market Assessment Business consumers located in competitive areas of Texas are enjoying some of the lowest electricity rates in the country A 30+% drop in natural gas prices has translated into much lower energy costs Texas continues to increase its peak demand, with 2011 setting an all time record New Peak Demand Levels and environmental regulations create considerable threat to generation inventory levels Generation capacity utilization is poor at portfolio average below 45% Volatility in energy markets, increased competitive pressure and lack of knowledge combine to drive a $80+ million annual intermediary market Regulated charges as a percentage of total energy spend is approaching 40%