As the premier demand response and smart grid event in the US, the National Town Meeting brings together stakeholders from utilities, technology companies, ISOs, Congress, federal and state agencies, environmental groups, and research and consulting firms, of which EnergyConnect, Inc. is a member.

For more information:  www.demandresponsetownmeeting.com

Focused on implementation technologies, business development and market growth, the fifth annual ConnectivityWeek is held in Silicon Valley in the midst of the cleantech innovation community. It is recognized as a key conference for the application of ICT (Information Communication Technology) for energy management and efficiency.

For more information: http://www.connectivityweek.com/2010/#home

EnergyConnect’s, Product Management and Strategy Vice President Joe Bugica will be speaking.  

Peak Load Management Alliance, the not-for-profit association representing all facets of the Demand Response Industry, is pleased to present the latest in our series of industry-leading conferences in Santa Monica, CA on April 29-30, 2010.  This conference will present practical, usable information presented by experienced industry practitioners.

With the transformation of the electric utility industry being driven by Advanced Metering Infrastructure (AMI) and Smart Grid, demand response is becoming even more essential to the reliability of the electrical grid and is opening up new opportunities for customer involvement in assuring economical, reliable and high quality electrical service for all.

Organized by the leading experts of the demand response industry, this conference will present practical information that can be used immediately by those developing the Smart Grid and the utilities affected by it. We have included presentations from all facets of the industry so you will gain insight into the thinking of utilities, customers, curtailment service providers, technology companies and more.

As the growth of renewable energy resources accelerates, the ability to deal with intermittent supply becomes even more important.  Demand Response is one of the tools that will enable our nation to reduce greenhouse gas emissions while still providing the most efficient, reliable supply of electricity in the world.

For more information: http://www.peaklma.com/spring2010promo2.htm

Come and meet EnergyConnect’s Terry Schuster and learn more about FlexConnect and other EnergyConnect services customized for commercial buildings with BOMA/Chicago.

For more information: http://www2.bomachicago.org/events/calendar/event.asp?EVENT_ID=820&

Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com          http://ceocfointerviews.com/interviews/ECNG-EnergyConnect10.htm

CEOCFO: Mr. Evans, what is the focus at EnergyConnect?

Mr. Evans: We enable our customers to manage their use of electricity in response to market prices or regional power shortages. The concept of what we do is widely known as demand response.

CEOCFO: Would you explain how demand response works?

Mr. Evans: Demand response involves encouraging customers to cut back or shift their electrical use or demand in response to grid emergencies or high market prices for electricity. Today there are three different types of demand response services. The first is where customers receive compensation for electing to standby to reduce a portion of their electric demand in a grid emergency. These are called “capacity resources” and are typically activated a few times a year for up to 6 hours at a time. The second type involves sending customers price signals to encourage them to reduce demand during peak hours. The higher the hourly prices, the greater financial incentive a customer has for reducing their electric load. Customers can participate at their discretion for as little as one hour at a time. These are called “energy markets.” The last involves very short grid-initiated curtailment events with very short notification. These are typically 10 to 30 minute reductions with 10 minutes notice. These are called “ancillary services” and help the grid operator smooth out short-term imbalances of electrical supply. At EnergyConnect we provide all three types of products with an emphasis on energy markets.

CEOCFO: Who are your customers?

Mr. Evans: We are focused on the commercial, institutional, and industrial base with a primary focus in PJM Interconnect, the largest managed grid area in the country. PJM stands for Pennsylvania, Jersey and Maryland but also includes nine other states in the Midwest and mid-Atlantic, as well as Washington, DC. We also have an expanding focus in New England, New York, Texas, and California.

CEOCFO: Would you give us a case study of somebody you work with; how does it actually work on a day-to-day, need-to-need basis?

Mr. Evans: We work with a number of different industries, but let us use a steel mill as an example. Production activities are scheduled based upon its book of business. Some steel making processes have a high degree of flexibility in their timing while others cannot be moved at all. We work with the customer to determine the degree of flexibility in certain operations and help them with scenarios that will not negatively affect their business operations if loads are shifted for a couple of hours at a time. We then automatically monitor hourly wholesale electricity prices and notify them when there is an opportunity to earn money by shifting load from peak hours. We make it easy for customers to evaluate different curtailment scenarios and decide which, if any, are appropriate for the next day. If they decide to engage, we initiate a transaction with the grid operator to obtain a payment for returning the unused electricity to the marketplace.

CEOCFO: How long have you been doing this?

Mr. Evans: We became a public company in 1998, and focused primarily on demand response since 2004.

CEOCFO: How do you reach your potential customers?

Mr. Evans: Today we predominantly use a direct sales model, calling on large commercial, industrial and institutional customers. Increasingly, however, we are beginning to work through channel partners who could include energy resellers, energy suppliers, as well as utilities.

CEOCFO: Would you tell us about your FlexConnect product?

Mr. Evans: FlexConnect is our price responsive demand product discussed in the steel mill example. In effect, what we do is make it easy for a customer to engage in a wholesale market. Electricity prices change every five minutes and it is very difficult for a customer to monitor the market and understand what it means in context with their energy use. We are an authorized clearing agent, which enables our customer–utilizing their unused energy–to participate in wholesale energy markets just as if they were a generator adding electricity to the grid. We facilitate and administer this for customers, enabling them to focus on their businesses, while we handle the rest. Once they engage, we broker the transaction with the grid operator, monitor the reduction, and provide an automated back office to settle the transaction.

CEOCFO: What is the differentiator?

Mr. Evans: Our differentiator is our software platform developed for and dedicated to these types of markets. We have automated it in a way that makes it quick and easy for customers to decide if the time and price is right to engage in demand response. In addition to wholesale energy markets in deregulated areas, the emergence of smart meters will give rise to real time energy prices in more areas. Customers will need to understand the impact of changing hourly electricity rates on their energy use behavior. We are fortunate in that we have built our reputation and market lead in this area. For price responsive demand, PJM has been the most forward-looking area, and EnergyConnect has over 50% of the market share in their energy market.
 

CEOCFO: What is the competitive landscape?

Mr. Evans: For now, most of our competitors are focused on capacity programs, primarily because they are easy to implement and customers do not have to perform very often. The capacity business is rapidly becoming commoditized. Rather than divert our resources to building a large capacity business that may or may not be viable in a few years, we have focused more on price responsive energy management. This has put us in a leadership position in this area. While our focus has traditionally been selling directly to large energy users, we are seeing increasing interest in our platform by third parties that wish to distribute our software or offer it to their customer base.

CEOCFO: Do you see more companies looking for solutions?

Mr. Evans: What we see is that price based demand response is a new and emerging counterbalance to the escalating price of electricity. If you are able to respond to high electricity price signals then you can avoid those higher costs by engaging in demand response. With the latest recession, the wholesale prices of electricity are at historically low levels. As we slowly emerge from the recession, electricity prices will resume their rise. When you combine this with the expected exponential adoption in smart metering, demand response will become more mainstream whether it is in response to high wholesale prices or dynamic pricing structures.

CEOCFO: What is the financial picture like at EnergyConnect today?

Mr. Evans: We are very encouraged. Over the last several years, the business has continued to focus on developing this market. 2009 was a tough year for everybody, but we were fortunate in that we were able to build our capacity business while focusing on further development of our software for price responsive demand. In this regard, we are nicely positioned to take advantage and expand our customer base as electricity prices rise in 2010 and beyond.

CEOCFO: Will you be moving into other geographic areas?

Mr. Evans: We will continue to place heavy emphasis on PJM. As the largest regional transmission operator (RTO), PJM has been around the longest, and has the most mature price responsive demand market. That said, New England, New York, Texas, and California RTOs are active in new market development for price responsive demand. We are monitoring these markets and will expand our footprint when we can provide a valuable product for our customers. We are also closely watching the roll out of smart metering with dynamic price structures.

CEOCFO: How does it work?

Mr. Evans: Fixed rate customers in PJM pay an average of $75 per megawatt hour for electricity. Depending on local demand, the wholesale price of electricity can be as low as perhaps $25 but as much as $500 per megawatt hour. When a customer is paying only $75 for something that costs $500 to provide them, the market is upside down. Most customers have no idea this is happening behind the scenes. When wholesale prices exceed retail prices, the grid operator is willing to pay customers to reduce energy rather than add more supply to the grid. If a customer typically uses 10 units of electricity per hour and can cut back to 8 units, it can get paid the wholesale market rate for the 2 units they did not use. Understanding this and taking advantage of it is not easy for the typical customer. At EnergyConnect, we monitor these markets, notify customers of opportunities, and make it easy for them to participate. All they do is reduce demand when prices are high, and we do the rest.

CEOCFO: Where does this take place?

Mr. Evans: The largest market for this right now is in the PJM area. PJM has market mechanisms in place that allow the substitution of generation with demand reduction. In effect, reducing demand for electricity eliminates the need for PJM to buy additional power on the open market, enabling them to pass along the savings to the customer in return for reducing grid congestion and avoiding a shortage in overall power.

CEOCFO: Why should potential investors pay attention to EnergyConnect?

Mr. Evans: There are several reasons, but one in particular: demand response is largely seen as a “killer app” for the smart grid and EnergyConnect is providing a simple software tool to bring it to the masses. By everybody’s estimate on Wall Street as well as Main Street, the focus on more efficient use of energy is a very interesting space. In particular, for EnergyConnect, we are fortunate to be on the cutting-edge of this new emerging market with an early market lead. We have an established base of over 300 customers today, with plans for significant growth in the future. I think we have a leading edge technology, likely to result in acceleration in adoption as electricity prices rise in 2010 and beyond. That will have a very positive effect on our business.

CEOCFO: Final thoughts, what should readers remember most when they read about EnergyConnect?

Mr. Evans: EnergyConnect is the leader in price based demand response technology. We have the tools to bring a complex market to our customers’ desktops, making it easy for them to understand and receive financial rewards for smart energy management.

DRSG is the trade association for companies that provide products and services in the areas of demand response and smart grid technologies and practices. Through their membership in the group, Ambient, Johnson Controls, Lockheed Martin, Boeing, EnergyConnect, CALMAC, and EnOcean Alliance will help further DRSG’s educational effort to highlight the benefits of modernizing the grid and of enabling customers to become empowered consumers of electricity. DRSG engages key players from across the broad spectrum of smart grid stakeholders, including utilities, state and federal policymakers, the media, and stakeholder groups.

“Smart grid and demand response have been receiving increasing attention lately as Congress and state lawmakers recognize the absolute importance of meeting energy and climate challenges by making the grid intelligent and interactive,” said Dan Delurey, President of DRSG. “And as the visibility of smart grid increases, so has DRSG’s engagement in Washington. In just the last two months, DRSG members have been invited several times by House Leadership to educate House Members and staff about the importance of such issues as reducing peak demand and providing electricity usage information to consumers. DRSG companies were able to tell Congress why the smart grid is necessary to achieve national goals for job creation, climate-change, international competitiveness, and energy reliability and independence.”

Ambient Corporation designs, develops and markets Ambient Smart Grid communications technologies and equipment. Utilizing Internet protocol-based open standards technologies along with in-depth industry experience, Ambient provides utilities with solutions for creating smart grid communication platforms and technologies. Headquartered in Newton, MA, Ambient is a publicly traded company (OTCBB: ABTG). For more information, visit: http://www.ambientcorp.com/.

Johnson Controls is the global leader that brings ingenuity to the places where people live, work and travel. By integrating technologies, products and services, it creates smart environments that redefine the relationships between people and their surroundings. The company’s team of 130,000 employees creates a more comfortable, safe and sustainable world through its products and services for more than 200 million vehicles, 12 million homes and one million commercial buildings. For additional information, visit: http://www.johnsoncontrols.com/.

Lockheed Martin is a global security company that employs about 140,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The Corporation reported 2009 sales of $45.2 billion. It is headquartered in Bethesda, MD. For more information, visit: http://www.lockheedmartin.com/energysolutions.

A unit of The Boeing Company, Boeing Defense, Space & Security is one of the world’s largest defense, space and security businesses specializing in innovative and capabilities-driven customer solutions, and the world’s largest and most versatile manufacturer of military aircraft. Headquartered in St. Louis, Boeing Defense, Space & Security is a $34 billion business with 68,000 employees worldwide. In 2009, Boeing received Department of Energy (DOE) Smart Grid grants to partner with Consolidated Edison of New York and Southern California Edison on projects to increase grid reliability, reduce system demands and costs and increase energy efficiencies. For more information visit: http://boeing.mediaroom.com/index.php?s=43&item=976

EnergyConnect delivers industry-leading demand response technologies and services to commercial, industrial and institutional energy users enabling them to manage their use of electricity in response to market prices or regional power shortages. The EnergyConnect technology platform provides a scalable, cost-effective, clean technology to enhance the grid’s efficiency and reliability. For more information, visit: http://www.energyconnectinc.com/.

CALMAC Corporation specializes in Cool Energy Technologies. The company’s patented products are represented by key partners in over 35 countries. CALMAC’s core product is smart grid ready and provides a flexible, responsive solution for fluctuating power demands and intermittent energy resources. By storing ice at night to cool buildings during the day, CALMAC has shifted over 2 Gigawatts from on- to off-peak. Based in Englewood, NJ, the company’s manufacturing facility produces over 2,000 Energy Storage tanks annually, and over 3,500 customers have come to rely on CALMAC energy storage systems. For more information, visit: www.Calmac.com.

EnOcean Alliance, a consortium of currently 130 international corporations, shares the common goal of standardizing wireless control systems for sustainable building applications. The core technology of the Alliance centers around EnOcean’s patented energy harvesting and radio-frequency technology offering self-powered wireless operation in the form of flexibly positioned, maintenance-free sensor solutions. The goal of the EnOcean Alliance is to standardize and internationalize EnOcean wireless technology through the creation of true interoperability. For more information, visit: www.enocean-alliance.org.

About DRSG
The Demand Response and Smart Grid Coalition (DRSG) is the trade association for companies that provide products and services in the areas of demand response and smart grid. DRSG works to educate and provide information to policymakers, utilities, the media, the financial community and stakeholders on how demand response and smart grid technologies can help modernize our electricity system and provide customers with new information and options for managing their electricity use.
Members of the DRSG Coalition include: Aclara, Advanced Telemetry, Ambient, Amplex, Boeing, Bridge Energy Group, CABA, CalAmp, CALMAC, Comverge, Conservation Services Group, Control4, Corporate Systems Engineering, CPower, Echelon, Eka Systems, Electrolux, eMeter, Energy Capital Partners, EnergyConnect, Energy Curtailment Specialists, EnergySolve, EnerNOC, Enfora, EnOcean Alliance, Enspiria Solutions, GE, Google, HomeGrid Forum, Honeywell, Ice Energy, Itron, Johnson Controls, KMC Controls, Landis+Gyr, LG Electronics, Lockheed Martin, Lutron Electronics, Midas Medici Group Holdings, Oracle, PCN Technology, Sensus, Silver Spring Networks, SmartSynch, Space-Time Insight, Steffes, Tendril, Trilliant Networks, Universal Powerline Association, Whirlpool, ZigBee Alliance, Ziphany. More information is available at www.drsgcoalition.org.

For more information, contact:

Joe Bugica
EnergyConnect
408.750.6335
jbugica@energyconnectinc.com

Dan Delurey
President
Demand Response and Smart Grid Coalition (DRSG)
202.441.1420

To listen to the live call, please dial 866-289-3380, at least 10 minutes before the start of the conference. The call will be webcast and can be accessed from the “Investors” section of the company’s website at http://www.energyconnectinc.com/. Instructions for international callers and details of the audio recording of the call will be available on the Investors section of the EnergyConnect website. The webcast will also be available on this site for 90 days after the conference.

EnergyConnect will also use an online, real-time slide presentation that will run concurrently with the conference call. To participate in viewing these slides during the presentation, a link will be provided through the Investors section of the EnergyConnect website: http://www.energyconnectinc.com/investors/financials/.

About EnergyConnect

EnergyConnect delivers industry leading Demand Response technologies and services to commercial, educational and industrial consumers enabling them to manage their use of electricity in response to market prices or regional power shortages. The EnergyConnect technology platform provides a scalable, cost-effective, clean technology to enhance the grid’s efficiency and reliability. For more information about this leading edge technology or about investor relations, visit:  http://www.energyconnectinc.com/.

Forward Looking Statements

This press release includes statements that may constitute “forward-looking” statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause or contribute to such differences that include, but are not limited to, competitive factors, the success of new products in the marketplace, dependence upon third-party vendors, and the ability to obtain financing. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.

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For More Information:

Company Contact:
Andrew Warner, CFO
EnergyConnect, Inc.
(408) 898-4592
AWarner@energyconnectinc.com

Investor Relations:
Timothy Dien
Lippert / Heilshorn & Associates, Inc.
(415) 433-3777
tdien@lhai.com

In the mid-west ISO (MISO), barriers to demand response are being torn down, allowing companies such as EnergyConnect to bring demand response services to MISO without having to contract through the local utility or the customer’s energy supplier. MISO is also implementing reliability-driven markets for capacity with much more transparent pricing, allowing policy makers and stakeholders alike to see the value that demand response can bring to electricity consumers.

In the Southwest Power Pool (SPP), standardization of market products will enable demand response services to compete with generation-based services to reduce costs for all consumers

In a show of interest and support, the Federal Department of Energy has awarded $4.5B in grants for Smart Grid development. This will lead to reduced metering and data collection costs thereby addressing a major expense for demand response participation in wholesale markets.

Additionally, the North American Energy Standards Board (NAESB) and North American Electric Reliability Council (NERC) are developing complementary standards for demand response participation in wholesale markets. NAESB is working on standard measurement and verification protocols that will standardize approaches to measuring the impact of demand response activities. These standards will reduce the cost of participation at many levels. For example, a nationally accepted standard will enable Regional Transmission Organizations (RTOs) to simply appropriate the standard for use, rather than engage in a tedious stakeholder process for each region. Similarly, standards will allow aggregators of demand response customers to standardize their processes across RTOs, and result in lower costs in participation. Lower costs mean more participation from smaller retail customers and greater value for all customers.

NERC is developing standards for assessing the impact of demand response activity on the electric system. This will help grid operators maintain and improve the reliability of our electric grid as demand response becomes a more robust component of operations.

And finally, the issue over the leveraging of renewable sources is dovetailing with the benefits of demand response. Increasing reliance on less controllable renewable resources such as wind and solar will increase opportunities for demand response. These resources will challenge grid operators to be prepared to manage the system when large quantities of these resources become unavailable on short notice. Demand response can provide the enhanced flexibility critical to grid operations.  

Q:  In the mid-Atlantic PJM region, what difference will the incentive proposal make in the Economic Load Relief program?

A:  In the PJM market, there is a proposal before FERC that will re-institute full incentives for the Economic Load Relief program (ELR) to revitalize participation levels in the program. This means the incentives paid to our FlexConnect customers for voluntarily reducing or shifting load will be at much higher levels than in 2009. Participation will grow again to the historically higher levels we were seeing back in 2008. FlexConnect provides PJM-based customers with the market’s only technology platform to participate in the Economic Load Relief (ELR) program and reduce their energy bill by up to 30%.

Q:  How are EnergyConnect customers impacted now that EnergyConnect is the nation’s first demand response provider to receive Market Based Rate Authorization?

A:  EnergyConnect has been granted Market Based Rate Authorization (MBRA) by the Federal Energy Regulatory Commission (FERC) effective August 17, 2009. MBRA allows EnergyConnect to engage in a variety of wholesale market transactions that complement our demand response offerings and expand the range of services we can provide to grid operators, utilities, and commercial, industrial and institutional customers. 

Our objectives in seeking MBRA were to obtain clarity regarding the obligations of demand response providers and ensure that we can provide an expanded range of energy services for the benefit of our customers, including the purchase and sale of ancillary services, energy and capacity. We see demand response as more than just load drop; our goal is to provide energy consumers with innovative Smart Grid technologies which enable them to benefit from access to wholesale electricity markets.

Q:  What is the EnergyConnect Customer Advisory Council?

A:  Our community of customers is of all sizes, representing diverse segments in the commercial and industrial industries.  We believe there is great benefit in the sharing of ideas across the community as it relates to demand response. To that end, we have created an EnergyConnect Customer Advisory Council (CAC). The CAC is open to all of our customers and will provide the forum to receive updates on the latest industry trends, share best practices, and provide a collective voice to help shape our offerings, technology, and regulatory priorities.

Our ultimate goal is to deliver technologies and service that enable our customers to benefit from access to wholesale electricity markets in a way that is simple, intuitive, and economically compelling for their business.

Q:  What is the latest on Pennsylvania’s Act 129 and its impact on demand response?

A:  Beginning this year, millions of Pennsylvanians confront the effects of expiring electric rate caps. In 2008, the statewide energy legislation, Act 129, was enacted to help electric consumers mitigate the initial financial effects of this rate deregulation. According to the plan, all Electric Distribution Companies (EDC) in Pennsylvania with 100,000 or more customers must reduce peak demand during the highest 100 hours of use by 4.5% by May 31, 2013. The State Commission may set additional reductions targets after 2013, if the programs have proven to be cost effective. In addition, Pennsylvania’s consumers will be given incentives to employ conservation techniques to reduce electric consumption 1% by 2011 and 3% by 2013.

Act 129 creates the exciting prospect of additional financial incentives for reducing consumption when electricity demand is at its highest. At EnergyConnect, we are partnering in the effort to meet EDC commitments, and delivering to our Pennsylvania customers the additional value in utilizing demand response.

Q:  Will you be offering demand response programs directly through the California ISO?

A:  In California thus far, all 3rd party demand response programs have been through bi-lateral contracts with the Investor Owned Utilities (IOU’s). In this regard, EnergyConnect has been offering programs directly with Pacific Gas and Electric and Southern California Edison for the last few years.  In an effort to meet the guidance set forth by FERC Order 719, the independent system operator in California (CAISO) is putting software and systems in place to enable demand response providers to bid directly into the energy and ancillary services markets starting this year. While there are still participation details to be worked out between the CAISO, CPUC and other California stakeholders, we are excited about bringing new products to our California customers in the near future.