1. ETRM 360 ° A successful ETRM systems infrastructure to achieve business excellence

6. Common ETRM myths ETRM 360° A number of common myths and misunderstandings undermine the success of ETRM system implementation, leading to increased cost, project delays, reduced system quality and mismatch in business expectations One system will meet most requirements, solve all business & technology issues Recognizing the potential need for a multi-system / application risk environment Having a holistic view of the entire “Risk System”, and required data interfaces Close involvement from commercial experts in all ETRM decision-making processes Taking a long-term view of any ETRM system investment that considers commercial strategies Evaluating analytics & reporting needs in parallel to transaction capture functionality User acceptance & parallel testing are critical for successful implementation Myth Systems offer straight-through processing & interface capabilities This is an IT project. The system vendor or developer can take care of it Vendor systems are modular and can be enabled in the future with a click of a button Vendor systems provide sufficient analytics & reporting tools for my business need Consequences Employing manual processes and one-off spreadsheets that result in time consuming data reconciliation Investing in large custom data interfaces that are critical to business processes Systems do not meet the business need; do not align with commercial strategy Separate implementation plan configurations & data interface chaos Licensing expensive analytics & reporting platforms to address reporting issues User acceptance & parallel testing are too time consuming for business users An unstable environment resulting in business user frustrations & distrust Reality

8. Defining requirements in Energy Trading and Risk Management operations ETRM 360° Define the Strategic Vision Develop ETRM business requirements Specify Commercial, Asset & Risk requirements Evaluate the risk infrastructure and business processes Develop and implement core business processes Evaluate vendor systems through specific scorecard metrics Lead the ETRM system implementation Explicitly considering the commercial and risk management objectives is a critical first step… Specify and develop risk & performance management tools From Concept… To Design… To Implementation From Phase I, business requirements and supporting business processes can be clearly specified… Successful implementation is achieved through disciplined project management – and alignment of the entire process to the business & risk objectives Phase I Phase II Phase III The ETRM system requirements do not start from identifying trade types and instruments. In order for an effective implementation of 360° view, the Energy trading and risk management operations require solutions that align with commercial and risk management strategies, and are “fit for purpose”.

26. Business, risk, and IT credentials ETRM 360° Conducted a system selection process and assessed information system resource requirements as part of a project to design and implement a viable supply, trading retail aggregation function. Conducted a comprehensive assessment of the organization’s ETRM and broader risk and logistics systems; led efforts to “rehabilitate” the ETRM system, retrain users, and resolve on-going issues with application problems including interfaces to other key systems. Led an ETRM system selection, implementation, and testing effort on behalf of a merchant generating company in bankruptcy; led development and implementation of risk and performance dashboard reports. Led all phases of a rapid system evaluation, selection, implementation and testing program (including project and vendor management, among others); also amended business processes to meet new requirements. Selected qualifications Developed and implemented a proprietary market, credit, and cash flow measurement and reporting system, which was integrated with existing ETRM system applications to yield up-to-date on-line reports. Implemented a crude oil forward risk reporting system for commercial personnel and key stakeholders to manage marketing and trading activities; assisted in the organization of the Risk Management group to ensure transactional control. Trading & Risk Management & IT Led vendor selection, “build versus buy” assessments, system implementation, and solution consulting to assist clients to identify ETRM business requirements, functional specifications and process optimization. Developed several proprietary database tools in support of “to-be” business processes, as an aspect of a comprehensive Business Transformation initiative; led specification of a large data warehouse required for a complex revenue requirements / rate development activities. Determined the appropriate end-state and trading / risk management organization and IT blueprint; developed a gap analysis against which the desired end-state was compared; helped refine current risk policies, processes, and IT infrastructure to meet the revised business focus. Client Confidential Multiple-Clients

27. Business, risk, and IT credentials ETRM 360° Members of PA’s current staff advised OMV on the development of a set of policies and procedures, governing trading and risk management activities, to underpin the establishment of its new joint venture vehicle, ECONGAS. The joint venture was set up in response calls from the regulator to unbundle its activities, as part of a European drive to liberalise the Austrian and neighbouring gas markets. Members of PA’s current staff were seconded to InterGen to assist in the establishment of a new trading function for its gas and electricity trading activities in the UK. This work encompassed all aspects of the new operation, including basis for evaluation of market and credit risk, performance measurement and control, specification of trading and authority limits, transfer pricing arrangements, development of internal policies and procedures, and specification of systems requirements. Selected qualifications PA Track Record… Risk Management & Trading Client Confidential Review of trade controls across BE’s Power and Energy Trading division (BEPET). Focus was on the role of risk controlling activities within the organisation and development of capabilities across market, credit and collateral management. This review forms part of PA’s ongoing role to provide external advice to the Trading Risk Sub-Committee over the next three years on industry ‘best-practice’ and ‘state of the art’ control Regimes. PA were engaged to review a client’s risk governance arrangements and make recommendations with regard to improved governance arrangements. In particular, the review addressed the relationship between existing risk control frameworks and other business control frameworks such as the financial control framework. PA r eviewed current risk management processes and technological infrastructure in conjunction with business strategy and benchmarked current status against industry leaders. Identified gaps in risk management capabilities and provided prioritised recommendations for strategic growth (including included geography, commodity and instrument) and increased risk management sophistication. Conducted a diagnostic of clients current capabilities by reviewing documents and interviewing staff to benchmark against industry leaders. Worked with executives to determine end-state trading / risk management organization blueprint, including development of implementation plan. Client Confidential

28. Business, risk, and IT credentials ETRM 360° Reviewed the company’s considerable trading portfolio and advised lenders as to the current viability of company operations; worked to develop a new set of risk management policies and procedures, based on a comprehensive assessment of the middle office. Reviewed the risk management and trading capabilities of business units to identify areas of overlap and gaps; designed and led the implementation of a new organizational structure and functional business processes. Designed the organizational structure, business processes and corporate governance infrastructure as part of the implementation of an integrated, multi-commodity wholesale to retail commodity organization. Developed functional business processes to ensure tasks across the Front, Middle and Back Office areas are completed, including the timely and accurate identification and mitigation of risk, transaction valuation and monitoring, and daily settlement of supply portfolios. Selected qualifications Developed policies and procedures to establish a fully functional Corporate Risk Management function; designed and developed necessary infrastructure at the Business Unit-level to enable proactive identification, measurement, and management of commodity risk. Implemented the risk management infrastructure for a large merchant generator in bankruptcy, including policies and protocols, business processes, risk and business management strategies, and tools, reports and analytics. PA Track Record… Risk Management & Trading Client Confidential Acted as independent representative to the Risk Management Committee (RMC), on behalf of a 30 bank ownership interest of two of the largest gas-fired generation facilities in North America; sole author the company’s Risk Policy and procedures and Energy Management Plan. Developed and documented best practice risk management policies and operational procedures for power trading operations; integrated and improved risk management practices and contract/credit review and oversight functions. Assessed current risk policies, and evaluated process segregation within the trading business unit (EPME); reviewed and improved the middle office risk analysis and communication capabilities between the trading business unit and the corporate office.

29. Business, risk, and IT credentials ETRM 360° Developed potential growth opportunities based upon the company’s corporate objectives. Investigated and prioritized the list of growth opportunities based on estimates of financial and business impacts. Developed and applied a real options-based methodology to identify the optimal mix of long-term gas sales agreements and supply commitments for a proposed combined-cycle merchant power plant, with a focus on retaining operational flexibility. Developed and implemented a proprietary asset/portfolio optimization model that enables the dynamic valuation of gas and power assets in the context of the organization’s geographic asset network; serves as the organizations sole asset strategy tool. Created a tool to provide insight into production, sales and purchase, and logistic management decision-making, focusing on the dynamics of production and logistic costs, market supply and demand, and geographical diversification. Selected qualifications Modeled embedded value and economic capital for a representative portfolio of financial assets, physical commodity contracts and real assets; evaluated alternative management strategies for this portfolio, identifying the optimum combination of risk and reward. . Developed and applied expertise in operations modeling for hydro-owning utilities and potential acquirers of hydro plants, with a particular concentration on portfolio optimization and methods of capturing asset-flexibility. PA Track Record… Strategy, Asset Management & Portfolio Optimization Evaluated potential growth paths and recommended the creation of a multi-utility strategy. The objective was to build a portfolio of investments to enable the Company to achieve it’s medium and long term earnings and growth targets. Redirected OPC's gas acquisition activities from a bundled individual plant supply approach to a portfolio management approach; developed a fuel supply and logistics acquisition and management strategy for gas-fired generation assets. Developed a template to disaggregate the risks in supply agreements, and identify embedded optionality in contract language; developed an interim pricing engine geared to generate a risk-adjusted commodity cost for a set of target load profiles. Client Confidential Client Confidential

30. ETRM 360° Bala Narasimhan Managing Consultant PA Consulting Group Houston , TX 832-661-3360