TARGET CUSTOMERS The targeted customers are residential and small commercial.

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1 EB Exhibit G Tab Schedule Filed: 00 Aug Page of CDM PLAN DEMAND RESPONSE PORTFOLIO The objective of the Demand Response program in this Application is to properly maintain and effectively control the already acquired demand response capacities to activate load reductions in response to system emergency needs, or other conditions deemed appropriate by THESL system control, the IESO or the OPA. 0 TARGET CUSTOMERS The targeted customers are residential and small commercial. OVERVIEW Significant peak demand reduction is achieved by remotely reducing the load cycle of a large number of home and small business central air-conditioners, and turning off the electric water heaters and other non-critical loads during critical peak demand periods. This program is very effective, and is environmentally beneficial since it allows existing generation, transmission and distribution resources to be used more efficiently without requiring any additional investment in generation, transmission or distribution facilities. 0 Establishing demand response capacity and dispatching demand reductions when needed is a very cost effective way of reducing Ontario summer peak demand, which helps to avoid the import of costly power and thus lower electricity costs in the long run.. With the demand response capacity established, demand reductions can be delivered for durations of typically two to four hours at a time when needed. These reductions can help to prevent the overloading of the distribution system, and allow participating customers who reduce their peak-period demand to benefit from the eventual implementation of Time-of-Use rates.

2 EB Exhibit G Tab Schedule Filed: 00 Aug Page of The capability to reduce electricity demand as necessary makes demand response very effective for addressing peak demand problem. The deterministic nature of the demand reductions through direct control, as verified by Measurement and Verification ( M&V ), also distinguishes demand response from most of the other CDM programs, both in the electricity and gas industries. 0 It should be noted that the programs in this Application are only for maintaining the demand response capacities already established and for supporting the demand response operation to activate demand reductions. Programs to further expand the demand response capacities are not included in this Application. These programs include the OPA residential load control standard program, which will be implemented when THESL s OPA Application is approved. BUDGET AND PROGRAM DESCRIPTION Table shows the Demand Response CDM budget to be funded by EDR.

3 EB Exhibit G Tab Schedule Filed: 00 Aug Page of Table : Demand Response Portfolio Budget ($000s) 00 Test 00 Test 00 Test CAPEX OPEX Total CAPEX OPEX Total CAPEX OPEX Total Demand Response 0 0, 0 Operation Control Devices 0 0 Maintenance Measurement & Verification Residential Load Control,,,,,,0 Demand Response,,,,,,0 The CDM program activities to be supported by the budget dollars are explained in the following sections. 0 Residential Load Control The THESL direct load control program for residential and small customers, called peaksaver ac, has been very successful. The initial target was,00 installations by June, 00. By the end of 00 more than,000 installations had been completed. The program was also selected by the Government for roll out throughout Ontario. Significant demand response capacity has already been installed from the rd Tranche funding, and, contingent upon OPA funding, additional capacity will continue to be installed. Demand response operation facilities and supporting processes are vital for dispatching, or activating, the demand reductions as and when needed. In addition, there are other program activities necessary to maintain the demand response capacity already

4 EB Exhibit G Tab Schedule Filed: 00 Aug Page of established and to ensure the continued viability of the Residential Load Control program. Demand Response Operation Table shows the Demand Response Operation work items and the budget. Table : Demand Response Operation Costs ($000s) 00 Test 00 Test 00 Test ) IT software and IT support for systems, network, and load control communications ) Demand Response center facility and Call Center support 0 ) Demand Response operation and program management ) Demand Response systems efficiency enhancements Total, 0 Demand Response Operation for the Residential Load Control program consists of the following: 0 ) Software and Systems Support The Demand Response System, to remotely activate the load control devices, is at the heart of the Residential Load Control program. This load control computer system is made up of the load control software, the database, the network on which the software is operated, the pager-network for communicating with the load control devices, as well as the supporting systems used to compute the demand reductions achieved. The Demand Response System is also used for the interactions with the various bodies relevant to demand response, and for monitoring the Ontario electricity supply and demand. The IT systems making up the Demand Response System needs to be maintained, supported and enhanced as requirements arise.

5 EB Exhibit G Tab Schedule Filed: 00 Aug Page of This IT systems infrastructure is necessary to enable the demand response operation to respond expeditiously to demand reduction requirements of the IESO, the OPA, and THESL system control. ) Demand Response Facility and Call Center Support The facility is needed to house the demand response operation, and the call center function is necessary to respond to participant issues related to the Residential Load Control program. 0 0 ) Operation and Program Management The most important aspect of the Demand Response Operation is the actual operation and management of demand response activities based on established processes. The work processes are necessary to properly interact with the IESO with respect to the ELRP, the other internal and external parties relevant to the demand response program, as well as the Residential Load Control program participants. The internal parties include the THESL system control operation and customer service. The relevant external parties include the OPA and the media. Interactions with the participants are an important part of the operation, with respect to control device problems and troubleshooting. It should be pointed out that the demand response dispatching operation is also responsible for dispatching demand reductions for the CII Load Control program. ) System Enhancements Implementation It is anticipated that the computer systems for Residential Load Control demand response operation will be enhanced with additional functionalities to make the operation more effective and efficient. As an example, it would be very helpful to

6 EB Exhibit G Tab Schedule Filed: 00 Aug Page of have a computer function that could gather weather forecast information and use it in conjunction with the temperature-time-of-day average load reduction matrices to compute the load reductions for the various load groups for offering to the IESO when there is an emergency demand response notification. Enhancements will also be needed to allow interface to other THESL systems to facilitate the use of demand response for system planning, as demand response capacities attributed to the distribution system feeders and transformers become a resource to support capacity planning. 0 Control Devices Maintenance It is anticipated that two to three percent of the devices in the field could fail each year. Maintenance program processes are currently being reviewed and the preferred option will be selected for roll out in 00 to identify the failed devices and replace them. This is a vital component of the Residential Load Control program. The failed devices need to be replaced in order to retain the level of demand reduction capacity already established. 0 Measurement &Verification An integral part of the demand response program is the M&V to determine the demand reduction attained. This M&V is based on a rigorous statistical methodology that requires interval metering be installed at randomly selected sites to measure the result of load control activation. The resulting information is analyzed statistically to determine the average load reduction under different conditions for extrapolation to the population of peaksaver participants. The sample size needed to achieve the 0 percent accuracy at 0 percent confidence level, and the sample selection method (using the Dahlenius-Hodges, or D-H analysis to determine the strata boundaries) are explained in the M&V Plan submitted to the IESO to support THESL s registration for the ELRP. A coefficient of variation of 0., which is

7 EB Exhibit G Tab Schedule Filed: 00 Aug Page of more stringent than the 0. suggested by the IESO, has been used to arrive at the sample size of 0. 0 The kw reduction resulting from the air-conditioner load control has a strong correlation with the maximum temperature of the day. This is distinct from the correlation between the kwh energy savings and the Degree-Day measure. By analyzing the participants interval meter data between those who are activated and those who are not, for different maximum daily temperatures and different times of day, a matrix is generated with average per participant load reduction under the various conditions. This load reduction matrix is used to determine the demand reduction when all the load control devices are activated, by extrapolation from the statistically significant sample to the population. Given that new participants are added and some existing participants drop out each year, it is important that random samples be selected to replace the existing samples, and the analysis be performed to update the load reduction information. 0 CDM BENEFITS Ontario s summer electricity supply problems typically occur as demand approaches system peak. According to the Provincial system load profile, the top 0 percent of the electricity demand only occurs over approximately 0 hours, or two percent, of the year. Demand response, which allows for a reduction in demand when it is needed, is the most cost-effective way to address this peak demand problem. By reducing sufficient demand during the peak period, tangible benefits are accrued from the avoided generation, transmission and distribution costs from the deferment or even elimination of certain capital expenditures.

8 EB Exhibit G Tab Schedule Filed: 00 Aug Page of After a demand response capacity has been established, and properly maintained, the demand reductions can be activated to derive the benefits year after year. This is the basic purpose of the demand response program at THESL. Table shows the projection of demand response capacities that will be controlled and the net TRC benefits. Table : Demand Response Portfolio Benefits 00 Test 00 Test 00 Test Net Net Net kw Cum. TRC Cum. TRC Cum. TRC kw kw kw Benefit kw Benefit kw Benefit ($000s) ($000s) ($000s) Residential Load Control 0 0,000, 0 0, , The Residential Load Control demand response capacity for the 00 season represents the cumulative capacity established from the rd Tranche funding as well as the 00 OPA funding for the program. The Residential Load Control demand response capacity of 0,000kW represents approximately 0,000 residential and small commercial participants. This demand response capacity, along with the demand response operation, is included in the TRC Test, which incorporates all the Residential Load Control program EDR-funded costs in as well as the costs incurred to install the 0MW capacity. The TRC Test net benefit reflects the value of the Residential Load Control program, including the EDR-funded work plan for infrastructure, operation, and program maintenance. The Net TRC benefits, calculated based on the OEB TRC Guide, take into consideration the benefits from the avoided costs of generation, transmission and distribution and all the costs of deployment, including future recurring operational costs, projected for the

9 EB Exhibit G Tab Schedule Filed: 00 Aug Page of life of the load control equipment. An equipment life of years has been used. The Net TRC Test Benefit amount is shown to justify the budget amounts included in this Application.