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In the Spring of 2015, TCAP consultants received indicative fixed -prices around 4.5 cents per kWh. They then developed two supply options to the fixed price full requirements contract that offered attractive savings opportunities. Both Options 2 and 3 have variable components related to the energy spot market. While the average spot price in the past three years has been $32.14 /Mwh (2013), $38.50 /Mwh (2014), $25.53/Mwh (2015), respectively, it is important to note that spot market prices can change every 15 minutes, therefore it is impossible to provide members a precise price for Options 2 and 3. While they provide an opportunity for savings off of the benchmarked prices for Option 1, savings cannot be guaranteed, and thus Option 2 and 3 involve risk to that does not exist with Option 1. A TCAP member that is completely risk adverse should select Option 1. Option 2 fixes a price for the peak usage period and then turns to the spot market for all off -peak usage. When TCAP was developing these products in 2014, there was a large enough gap between fixed price options and spot prices that this option looked very attractive. Now, with market prices at historic recent term lows, both spot prices and fixed prices have fallen and their price differential has shrunk to the point that future savings from the spot market may not be as great as the risk of future price increases. The following graph shows how low current spot market prices have gone. slop $90 $90 $70 g� Sso g � W s3o $20 sm $0 Spot Natural Gas vs. ERCCT North Prices Q1 Q3 Q1 Q3 Q1 Q3 QI Q3 Q1 Q3 Q1 03 Q1 Q3 Q1 Q3 Cu Q3 0072007 20042= 20092W9203020302011201120122012201320132014201420152015 — ERCO7O N'MhUftice — HSCSWPd. $10.00 $9.00 $400 A S7.00 Ss oo � $5.00 $ $e.00 s4m $200 = $L00 saoo Option 2 was developed with the anticipation that spot prices during the off peak period would be in the range of $10 /MWh to $40/MWh ($0.01- $0.04/kWh) over time for spot purchases. Our latest quotes for fully fixed priced products (Option 1) includes off peak pricing fixed at under $20/MWh. These low Option 1 fixed prices for off peak usage may make it harder for future off peak spot prices to create additional savings under Option 2 over time even though the customer will be incurring market price risk. Option 3 begins with the purchase of a block of power to cover the base use of all members who commit to this option. Block power, since it is a firm commitment 24 hours a day, is the cheapest form of energy available in the wholesale market. Daytime peak consumption will be partly covered by a fixed price for solar power with all other consumption supplied by the spot market. In considering Option 2, TCAP consultants would tell you that with current prices about a half cent less than the price that existed when Option 2 was conceptualized last Spring, it will be difficult for Option 2 to generate savings sufficient to justify its selection. Option 3 with its 4