Building an Integrated Energy Company Will it Lead to Retail Success

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Building an Integrated Energy CompanyWill it
Lead to Retail Success?

• Steve Wilson
• Dynegy Wholesale Energy Network
• Senior Vice President, Marketing Origination
• April 3, 2002

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OVERVIEW

• Integrated Merchant Play
• The Key to Retail Success
• Opportunities for Retail Customers

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INTEGRATED MERCHANT PLAY
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DYNEGY INC.
TRANSMISSION DISTRIBUTION
WHOLESALE ENERGY NETWORK
COMMUNICATIONS
GAS, POWER, COAL
MIDSTREAM

• 42 Billion Revenues
• 26 Billion Assets
• 9 Billion Market Value
• 340 Million Shares
• 6,700 Employees

• 19,100 MW Generation Control
• 12.6 Bcf/d Natural Gas Sales
• 317.1 MM MWh Total Power Sales
• 43.0 MM Tons Coal Sales
• 557.4 MBbls/d Liquids Sales

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DYNEGY ENERGY DELIVERY NETWORK
Natural Gas Term Supply 5 Bcf/dNatural Gas Firm
Transportation 6 Bcf/dNatural Gas Storage 112
Bcf NNG PipelinePipe 16,000 milesStorage 58
BcfFirm transport 4.3 Bcf/d Coal Supply 12.3
MMT/yrCoal Transportation 17 MMT/yr
capacityRail CapacityDockBarge / Import
Power Generation 19,100 MWPower Firm
Transmission 5,050 MW Liquids Supply
AssetsNatural Gas Processing 99
MBbls/dFractionation 224 MBbls/dStorage 64
MMBblsLNG (in construction) 750 MMcf/dLiquids
Pipeline 480 MBbls/d Fuel Oil Storage 5 MMBbls
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KEY TO RETAIL SUCCESS
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INTEGRATED VALUE CHAIN
Asset Management Asset Valuation
Own, Control and Manage Generation
Execute and Fully Hedge Customers Energy
Commitment
Trading Transmission Risk Management
Forecast, Schedule and Settle Customer Full
Requirement Loads
Scheduling Technology
Customer Relationship Management including
Accurate Billing
Commercial Services
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FACTORS CONTRIBUTING TO RETAIL PRACTICE CLOSURES

• Failure to Develop a Comprehensive Retail Market
  Plan
• Inability to Determine Associated Cost of
  Service Upfront
• Inability to Develop a Retail Infrastructure
• Failure to Provide Quality Account Administration
• Inability to Quickly Adapt to Market Changes
• Failure to Provide Accurate Customer Billing

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THE KEY TO A SUCCESSFUL RETAIL PRACTICE

• Develop an Effective Relationship with
  State/Federal Regulators
• Develop an Understanding of Utility Distribution
  Company or ISO for Regions Serviced
• Own/Control/Manage Generating Assets in the
  Regions Serviced
• Develop Planning and Execution Expertise-
  Forecast, Schedule and Settle Full Requirement
  Load
• Manage Complexity and Volatility of Markets
• Fulfill Customer Needs with Unique Capabilities
  including Accurate Billing

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SAMPLE UTILITY BILL
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THE KEY TO A SUCCESSFUL RETAIL PRACTICE

• Develop an Effective Relationship with
  State/Federal Regulators
• Develop an Understanding of Utility Distribution
  Company or ISO for Regions Serviced
• Own/Control/Manage Generating Assets in the
  Regions Serviced
• Develop Planning and Execution Expertise-
  Forecast, Schedule and Settle Full Requirement
  Load
• Manage Complexity and Volatility of Markets
• Fulfill Customer Needs with Unique Capabilities
  including Accurate Billing

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SAMPLE RETAIL LOAD SHAPE
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SAMPLE RETAIL LOAD SHAPE
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WHOLESALES/RETAIL LOAD IMBALANCE
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THE KEY TO A SUCCESSFUL RETAIL PRACTICE

• Develop an Effective Relationship with
  State/Federal Regulators
• Develop an Understanding of Utility Distribution
  Company or ISO for Regions Serviced
• Own/Control/Manage Generating Assets in the
  Regions Serviced
• Develop Planning and Execution Expertise-
  Forecast, Schedule and Settle Full Requirement
  Load
• Manage Complexity and Volatility of Markets
• Fulfill Customer Needs with Unique Capabilities
  including Accurate Billing

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OPPORTUNITIES FOR RETAIL CUSTOMERS
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STATE RESTRUCTURING STATUS
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U.S. AVERAGE MONTHLY BILL BY SECTOR- RESIDENTIAL
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U.S. AVERAGE MONTHLY BILL BY SECTOR- COMMERCIAL
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DEREGULATION RETAIL OPPORTUNITIES

• Customer Choice of Service Provider
• Expanded Products to Uniquely Meet Customer
  Requirements
• Competition for Retail Accounts
• Optimization of Energy Delivery
• Energy Cost Savings

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