TEPA's Plugged In | March 2019 by The Energy Professionals Association

MARCH 2019

MASTERS OF THE MAELSTROMS Weather Forecasts are Evolving. Why it Matters.

HISTORY AND DEPTH TEPA ABC of the Year: Priority Power Management BEYOND JUST COMMODITY TEPA Supplier of the Year: Constellation

A MYTHICAL CREATURE, OF SORTS Texas House Representative, Jared Patterson BIG DATA. BETTER PERFORMANCE How Data + Collaboration is Helping Broker Better Contracts

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JOIN

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US IN AUSTIN! Mark your calendars for the 14th Annual TEPA Conference September 24-26th, 2019 | Hotel ZaZa Austin Proudly Sponsored by

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CONTRIBUTORS EDITORIAL CONTRIBUTORS Ken Carrier, Aaron Cook, Pat Ennis, Beau Gjerdingen, Jared Patterson, Hans Rottmann, Fred Schmude, Craig Wilson COPY EDITORS Scott Black, Leslie Brinson, Aaron Cook LAYOUT AND DESIGN, TimePiece Public Relations & Marketing

ETHICS

EDUCATION

ADVOCACY

NATIONAL TEPA BOARD PRESIDENT Huston Able, Exec. Vice President - Choice Energy Services VICE PRESIDENT Javier Barrios, Managing Partner - Good Energy, LLP SECRETARY Perry Ruthven, Managing Director - Priority Power Management TREASURER Marilyn Fox, Partner - Fox, Smolen & Associates TEPA DIRECTOR Shannon McGriff NORTHEAST REGION TEPA BOARD PRESIDENT Craig Wall, Dir. of Supplier & Prod. Mgmt - Patriot Energy VICE PRESIDENT Mike Payne, Managing Partner, APPI Energy SECRETARY Bill Cannon, Dir. Northeast Markets - Legend Energy Advisors NATIONAL AT-LARGE BOARD MEMBER Paul Ward, Director and General Manager - Schneider Electric NATIONAL PAST PRESIDENT Andrew Barth, Partner - CSD Energy Advisors David Roylance, Co-Founder - Prism Energy Solutions NORTHEAST REGION PAST-PRESIDENT Javier Barrios, Managing Partner - Good Energy, LLP NATIONAL COMMITTEE CHAIRS MEMBERSHIP Andrew Barth, Partner - CSD Energy Advisors LEGISLATIVE AND REGULATORY Paul Smolen, Partner - Fox, Smolen & Associates STANDARDS AND COMPLIANCE Jeff Shoaf, Senior Vice President - Amerex Energy Services COMMUNITY OUTREACH Sarah DeVon, Director Structured Solutions - NRG EDUCATION F. Michael Lewis, Vice President of Operations - Entelrgy CONFERENCE Shana Page, Manager of Sales - Freepoint Solutions NORTHEAST REGION COMMITTEE CHAIRS LEGISLATIVE AND REGULATORY Matthew Kinney, Senior Counsel - Patriot Energy Group STANDARDS AND COMPLIANCE Craig Wall (Interim) EDUCATION Ray Perry, Founder and Managing Partner - NJGEC MEMBERSHIP Stephen King - Premiere Energy Auctions ILLINOIS CHAPTER OF TEPA David C. Weirs, President - Satori Energy

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CERTIFIED.

CONGRATULATIONS TO OUR CURRENT EMP MEMBERS Huston Able Carolyn Ackerman Javier Barrios Andrew Barth Scott Besada Thomas Best Michael Billet Crystal Borden Josh Bouher Fran Brixner Chris Brooks Bill Cannon Katie Casse Tom Chamberlin Elliott Chorn John Costello Ryan Corporoon Veronica DeRosa Brennan Dibasilio Scott Ebeling Scott Etheredge Benjamin Etherton Alberto Fajardo Laura Fenstermaker Todd Fenstermaker Paul Fershtand Paul Fiori Marilyn Fox Aharon Gartenberg Nathan Giebel Scott Heath Carl Holley Sarah Horowitz

Matt Hunter Carmen Janecek Jennifer Jimenez Carolyn Johnson Jacqueline E. Johnson Stephen King Matthey Kinney Sean Knefel Chris Landing Andre Lafreniere F. Michael Lewis Cortney Lopez Jeff Mahoney Michelle Mathason William Mazurowski Gerald Mcadoo James McCullough John McFarland Shannon McGriff Michael Mcintyre Patricia McMahon Rob Motto St. Clair Newbern IV Dawnn Nicholson Jill Norris Shana Page Michael Pangborn Ryan Park Jared Patterson Mike Payne Robert Petta Jamie Polend Lucia Power

Ray Perry Crystal Renyer Clarence Robinson Ken Rowen David Roylance Perry Ruthven Jim Saunders Jeff Shoaf Mikhail Skachko Paul Smolen Nicholas Stanziola Noel Temple Brett Thompson Amie Touchstone Aleksandar Urosevic Craig Wall Benjamin Wallack Bucky Walton Paul Ward Barbara Wehn Michael Weizman David C. Wiers Courtney Woodliff

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CONTENTS

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MARCH 2019

MASTERS OF THE MAELSTROMS Weather Forecasts are Evolving. Why it Matters.

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10 - masters of the maelstroms

18 history and depth

20 beyond just commodity

24 representative patterson

30 big data, better performance 7

“ Looking forward over the next two years, I want to build on the efforts of these past presidents and make TEPA a more efficient and influential organization for our members and the customers we serve.

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LETTER FROM THE PRESIDENT

THE VALUE OF A MENTOR I was fortunate to be exposed to some pretty remarkable role models in my youth. Perhaps the most impactful was my mother. Following college, and while building her career, she took one incredible leap of faith after another. Her entrepreneurial spirit led her to Houston, Texas, where she built two successful companies. Her reward? In the late 80s, she was appointed as a member of President Bush 41’s communications staff. That was an exciting time in my childhood and I had the opportunity to live in a world that very few get to experience. From Spain to Washington D.C., I saw my mother’s work ethic and tenacity earn the respect of world leaders, the international media and her peers. While in Spain, she also served as the Director of Public Relations for the World’s Fair. After transitioning out of the political scene, she was trusted by former First Lady, Barbara Bush, to advise on her autobiography. My mother’s example, along with countless other mentors, gave me the strength to take risks while developing my own career. In 2002, I took a leap of faith on an emerging market. The wild frontier of energy deregulation was opening up in Texas and I jumped in with both feet. I took an internship position at Choice! Energy Management and now serve as an Executive Vice President. Along the way, my success has been bolstered by countless other colleagues and mentors – many of whom I connected with through my TEPA membership. Since its inception in 2005, TEPA has helped bring out the very best in the competitive energy retail market. Our focus on harnessing the experience of the brightest leaders with the successes of best practices has become a fertile ground to grow new ideas that shape and nurture this incredible industry – and its players. TEPA has been a huge assist in my career, giving me access to a rich network of energy professionals who’ve helped me build my career. As the newly elected national board president for TEPA, I consider it an honor to follow in the footsteps of past presidents, like Andrew Barth, David Roylance and Michael Harris, who have carved out a voice for TEPA – giving it a platform to encourage change.

Looking forward over the next two years, I want to build on the efforts of these past presidents and make TEPA a more efficient and influential organization for our members and the customers we serve. With the help of our current national board and committee members, we’ll focus on: Technology Thanks to innovation and emerging technology, accessing information and data has never been easier. Over the next two years we’ll embrace and blend more of this technology into TEPA’s operations. From video sharing and data compilation, we’ll harness the best of today’s technology to add greater depth to your TEPA membership. Education TEPA has been a forerunner in the field of education for the competitive energy market. In fact, our roots trace back to the belief that TEPA should be a platform of educational resources for our members to make the most of their careers. Last year, we rolled out our new Energy Management Professional (EMP) Certification. In the coming months, we’ll roll out Phase II of our EMP certification, which will include Continuing Education Units (CEUs) that enable TEPA members to stay abreast of the latest in the energy market. Alliances Working together as cohesive group is paramount to the success of the competitive energy market. Fortunately, we’re led by many of the top thought-leaders of our day. Over the next two years we’re going to build stronger alliances and encourage greater collaboration among our members. We’ll also have a more concerted effort to reach out to policy makers and affiliated groups who champion the benefits and advantages of energy deregulation. I’m grateful to be trusted with the lofty goal of amplifying TEPA’s voice over the next two years. We’re part of an incredible organization and I look forward to helping fine tune our processes and efficiencies. There’s a lot that weighs in the balance for the competitive energy market over the next few years and I’m confident TEPA will be the voice of the industry. Huston Able National TEPA Board President

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MASTER OF THE MAELSTROMS

BY AARON COOK Growing up in the 80s I was – by every definition your typical Dallas suburban kid. I spent my summers exploring the undeveloped fields behind my house, playing pin dodge in the front yard, catching locusts out of trees and riding my BMX bike everywhere my wiry legs would carry me – which was mostly to the arcade to play PacMan and 7-Eleven to buy Slurpees. But some of my best childhood memories were forged in the shadows of Texas thunderstorms. I’d sit on the street curb and wait as the wind shifted from warm to cool and the sunlight was slowly taken hostage by the darkening storm fronts. I counted the seconds as time lapsed between lightning and thunder, then scurry to the living room to watch the local weather on TV. Troy, the weather guy, always wore bowties, which somehow that made him more credible to me. As the storms raged outside, he was our voice of calm inside.

Fast-forward 35 years, the weather is no less intimidating than it was when I was a kid. In fact, it seems to be acting out in a heightened state of ferocity these days. From severe droughts that invite wildfires to hurricanes that give birth to 100-year floods and subzero polar vortexes that grind cities to a halt - it’s clear the weather is no respecter of persons or property. Maybe that’s why it continues to captivate us. 10

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Of course, technology was still in its infancy - these were the days of Pong, AOL dial up, dot matrix printers and VCRs. So, weather forecasts were often… “off”.

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Fortunately, the technology to more accurately predict weather patterns has evolved, giving us a considerable leg up on preparing for Mother Nature’s epic fits of rage. I recently spoke with Fred Schmude and Ken Carrier at StormGeo, a global provider of weather intelligence, to learn how weather forecasting has become better, more accurate – and why it’s so important to those of us in energy. Let me first introduce the protagonists of our story. Fred and Ken are a couple of regular guys who have acquired super powers through emerging tech and gobs of infinite weather data. I like to think of them as masters of the maelstroms. Fred and Ken are both natives of the East Coast - Fred from Maryland and Ken from Massachusetts. Ironically, Fred didn’t see his first snow until after he moved to Houston in the late 1960s. Houston had three significant

snowfalls in 1973, which triggered his fascination (and lifelong pursuit) to understand the weather. He’d eventually earn a degree in Geology from Texas Tech and a Meteorology degree from Texas A&M. He now serves as StormGeo’s Senior Scientist in Long-Range Weather Forecasting. In his prior professional life, Ken was a principal partner at an environmental solutions company in Boston. After moving to Houston and starting a new career with ImpactWeather (now StormGeo), he earned his Weather Forecasting Certification from Penn State. He now traverses the country as Industry Manager creating custom weather solutions for StormGeo clients. Though based in Houston, Fred and Ken are part of a much larger crew of weather scientists, meteorologists and data scientists around the globe. StormGeo’s headquarters is in The Land of the Midnight Sun (Norway). Serendipity, right? Where else would you

StormGeo global headquarters in Norway

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PLUGGEDIN expect a company to be based that’s developing technology that’s turning the weather world upside down and inside out? More Accurate Forecasting In 2016, something mind-blowing happened… something that most of us in the States didn’t even notice. An artificial intelligence system called AlphaGo dethroned the reigning world-champion Go player in Seoul. Go was invented by the Chinese more than 2500 years ago and is believed to be the oldest board game continuously played to the present day. The AI, a form of machine learning developed by Alphabet Inc.’s Google DeepMind in London, beat the champion. The computer used terabytes of data to recognize patterns and make its own strategic choice. This was complex, strategic thinking folks; far beyond the checker and chess games computers had been winning years prior.

The magic of it all of is that machine learning isn’t just being applied to the gaming world. Companies, like StormGeo, are harnessing the power of machine learning to make weather forecasting more accurate. “The concept of modern-day weather forecast was born in the early 1800s,” noted Fred. “That’s when army hospitals and regimental surgeons began recording weather data in their diaries. Those entries included basic observations of atmospheric conditions that connected to specific patterns. The most a forecast would extend back then was 24 hours. That forecasting model continued up until about 30 years ago, when we began incorporating more sophisticated levels of observations (i.e. wind gusts and water temperatures) and combined them with computer modeling. Shortterm weather forecasts became more accurate, and now long-term is following suit.” The difference today is that sophisticated computers are now analyzing historical weather data and observations dating back 30 years to churn out powerful numerical weather prediction models. A critical factor in modern forecasting models began when we started systematically launching weather satellites into earth’s orbit back in the 1950s. Of course, satellites have become more sophisticated over the last few decades, leading to infinitely larger caches of accurate data being captured at mind-blowing depths and resolutions. Meanwhile, back on earth, advancing technology is also making data harvesting much easier and more accurate. Observations from the land, as well as offshore observations from ships and buoys are added to the data collected from space. Between the data collected from the satellites looking down at earth, and the data collected from the scientists looking up from earth, there’s a much more holistic and accurate 360 degree view of what’s driving weather patterns - short and long range (e.g. more than five days) - around the globe. “Computing power over the last decade has become immensely more affordable and powerful. In addition to our team of meteorologists, scientists and PhDs scattered across the globe, StormGeo has created a research sandbox with four Titan 10 servers, which combined have 14,336 cores that process 44 trillion computations per second. That enables StormGeo to identify complex relationships in several petabytes

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PLUGGEDIN of data, ultimately churning out predictive machinelearning algorithms. They not only improve weather forecasting accuracy, but also our understanding of how complex systems like electrical grids will react to the forecasted conditions,” added Ken. These advancements in machine-learning weather forecasting are especially important to power utilities faced with severe thunderstorm events. Florida, for example, experiences 60 to 70 severe thunderstorms a year, while Texas will have somewhere around 34 to 45. “We work closely with electric distribution companies that are constantly faced with the threat of severe weather events,” said Ken. “They’re trying to make the best decision ahead of a storm and that’s a tough situation to be in. If they choose not to act, and a storm causes tremendous amounts of outages, there will be a public backlash. If they overreact and nothing happens, they’re left with stranded operation costs and no way to justify it.” Fortunately, the scientists at StormGeo are making those decisions far easier for the approximately 80 utility companies they work with across the country – especially during extreme weather months. According to Ken, most weather companies are just pushing out weather data streams to utilities - like temperature forecasts for load forecasting and energy trading. Because they’re measuring their accuracy every hour, the rare extreme events (where the big money decisions need to be made) are often buried in the data. That’s even using a root mean square error (RMSE) verification calculation, which helps to slightly amplify extreme events. When you look at wind speeds, for example, most forecast providers will offer up a deterministic view, which actually hides all but one potential outcome in a range of possibilities for a particular day or event. Using these types of generic forecasts, a client is likely to make their decision without any awareness as to whether or not there is a significant chance of major event occurring. This can lead to the very problematic outcome where what occurs is significantly different from what was forecast. Why does this happen? Because the client was using the wrong type of forecast.

Ken Carrier, Industry Manager at StormGeo

A deterministic forecast tells you the singular most likely outcome, while a probabilistic forecast tells you the chances of all of the various possibilities. This is equivalent to being told “you will not be hit by a vehicle if you cross the road at 5:10 PM” (deterministic outlook), versus “you have a 35% chance of being hit by a vehicle if you cross the road at 5:10 PM.” (probabilistic outlook). Which forecast would you like to use to determine the best time to cross the road? If you don’t start with a thorough understanding of the nature of the decision, then it’s likely that the implemented solution will not fully support optimal decision making. “We reverse engineer our weather solutions,” added Ken. “Rather than just issue standard weather reports, we determine what kind of decisions a utility needs to make. We may, for example, develop high precision models for wind gusts in a specific region of West Texas with the probability they’ll actually happen. Then, we’ll go one step further and identify when a weather event has a potential outcome of, let’s say, 60 mph wind gusts with a 35% probability those speeds will be exceeded. We can use that information as the input into a riskresponse decision model to help utilities make objective, consistent, repeatable, and defensible decisions ahead of significant events. Knowing that wind gusts have a 35% chance of exceeding 60 mph - resulting in more outages – is found gold for a utility. That additional information can affect better decision-making.” Severe weather events aren’t the only time accurate weather forecasts are needed. ERCOT, the Independent System Operator for most of Texas, relies heavily on probability forecasting to determine generation

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dispatching requirements to keep the grid stable. Given the significant percentage of variable wind power and the small but growing solar power in the state using probabilistic forecast techniques allows ERCOT to reduce the required spinning reserves, thereby reducing fuel consumption at the power plants. “Utilities also have to predict the availability of solar resources ahead of time,” added Fred. “You can have enormous variations in power generation if a cloud moves over solar panels. So you have to plan 5 minutes, 15 minutes, an hour ahead so you know the level of power you’re going to generate from the solar panels. We’ve developed a sophisticated prediction model for solar forecasting. It’s an algorithm that considers different slices of the atmosphere to track cloud coverage and has proven to be hyperaccurate within a 6-hour window.” Like solar, long-range wind forecasts are also benefiting from machine learning. Like El Niño and La Niña that show up every few years in the US, there are lots of other key weather patterns around the globe that drive weather patterns. When the primary patterns are in a neutral phase, the secondary patterns drive wind power. Machine learning has become instrumental in identifying these patterns

and forecasting wind power generation 6 to 9 months into the future. According to Ken, they also provide guidance to Wall Street for power generation for the next quarter. The Human Factor of Weather Forecasting While AI is giving weather forecasting a digital makeover, it hasn’t supplanted the human touch. Every technological system depends on a whole cadre of tools from software and data processing to the teams of scientists and analysts who curate the output and analyze the results. Charts and white papers can only capture so much. There’s something to be said about a gut feeling. Facts still need feelings – and weathermen with bow ties tend to be more convincing. That’s where Fred’s passion for weather analysis comes in to the equation. He occupies the space where man and machine form the cognitive advantage. It’s a relatively new way of weather forecasting. And, it’s working. With a background in meteorology and geology, Fred and his team study multiple computer models every day. The meshing of all the computer data and human interpretation creates a more accurate depiction of weather patterns – especially long-term predictions.

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Fred Schmude, Senior Scientist in Long-Range Weather Forecasting

“There are several key factors we look at in depicting long-term weather patterns,” he added. “Among the primary ones is the ocean’s temperature. Those are critical because they have higher heat capacity than air and they change at a slower rate. When it becomes colder or warmer it will alter the air pressure, which alters the jet stream, which changes land temperate, which affects precipitation, which changes wind patterns.” The challenge is that water temperature patterns change – a 16

lot. Staying on top of it is literally a daily task. As noted earlier, El Niño and La Niña are weather patterns that overwhelm the system and dominate the weather when they’re in play. But, they’re not always in play. They’re cyclical. So, when the secondary patterns emerge, they’re going to drive weather patterns around the globe. “Think of it like this,” added Fred. “Tom Brady is El Niño. When Brady’s in the game, you pretty much know how the game is going to be played. Take Brady out - and while you still have a good team Return to Table of Contents

now you’re playing the game with a second string quarterback. The game will change. When looking at weather forecasts, it’s important to understand who the players are in long-term weather forecasts.” This is especially true for retail energy providers who look to scientists like Fred for accurate longterm weather forecasts so they can plan their energy supplies ahead of severe weather events. “REPs want to know what kind of power demands to expect in the future. If cold weather is going to extend past the normal months, it’s important

PLUGGEDIN to know for how long. Same for summer heat. If Texas is going to have another record number of 100+ degree temperatures, the grid needs to prepare months in advance.” What about this year’s brutal polar vortex? Did Fred’s team see that coming? You bet. Largely because of the warming ocean temperatures. “Last mid-December we saw the potentiality of a Sudden Stratospheric Warming (SSW) forming with quickly warming water over the Indian Ocean,” Fred noted. “The SSWs take about 30 days to work down from the Stratosphere into the Troposphere where they adversely affect the pressure and flow pattern - shifting the polar vortex farther south than normal into the Lower 48. The result is bitterly cold weather. The SSW event this year, which started in late December, plunged the Midwest and Northern Plains into another polarizing freeze by late January.” Over the last few decades, Fred has seen countless SSWs happen – including the notorious ones of the late 70s that caused extreme cold weather events. While SSWs are still being studied, the good news is that the professionals, like Fred, can let us know when it’s likely to happen –and better prepare us for them. It’s clear that we’ve crossed the threshold of a new era of accurate weather prediction – when weather data is being processed by super computers and analyzed by super smart specialists. The combination of the two has us teed up for much more accurate weather forecasts – short and long term. That’s especially good news for all of the players in the energy market who

lean on future weather events to correctly prepare the grid, energy supplies and customer contracts. The Weather Ahead in 2019 Naturally, my conversation with Fred led to the obvious question: what’s the forecast weather for 2019? Here’s what he had to say: “The remainder of the winter (late February and most of March) we’ll see colder than normal weather over Canada and the U.S. Rockies/ Plains shift eastward into the Deep South and Eastern U.S. Late season winter storms will be more likely over the major metro areas of the Northeast into the Great Lakes, Ohio Valley and possibly as far south as the northern Deep South. For the spring and summer, we’ll likely see a stronger than normal southern storm track bringing higher than normal rainfall over a large part of the Southern and Eastern U.S. Rainfall will likely average higher than normal over a large part of this region with a higher than normal risk of flash flooding and river flooding, even over some of the major rivers like the Ohio, Tennessee and Mississippi River Basins. The summer pattern will be affected by how much rain falls. When the soil is moistened, there’s more evaporation over wetter soils. This increased evaporation leads to cooling aloft which leads to lower than normal pressure and enhanced lift suitable for more precipitation. Since there’s been above normal precipitation east of the Rockies during the winter season and likely into the spring, it’s likely we’ll see higher than normal soil moisture and more thunderstorm activity. The Southwest and parts of the Rockies Return to Table of Contents

will likely experience warmer than normal temperatures this summer. Working closely with Chris Hebert, StormGeo’s TropicsWatch Manager, Fred was also able to weigh in on the long-range Atlantic Hurricane season. “Right now it looks like tropical activity will average near to slightly above average based on the longer range signals. We’ll likely see one or two significant tropical cyclone threats across the Gulf Coast and Atlantic Seaboard for the upcoming season. Finally, over California with enhanced rain and mountain snow this winter and early spring we’ll likely see some drought relief for the upcoming spring and summer. Unfortunately with the enhanced precipitation we’ll also see more vegetation for the upcoming summer and fall, which could become potential fuel for the next fire season.” It’s exciting that StormGeo’s brain trust - equal parts human and computer - is building one of the most accurate decision-making models in weather forecasting. While weather forecasting is more accurate and reliable than it’s ever been, human and machine learning promises to have us peering even deeper into Mother Nature’s deepest secrets. Buckle up. I’m sure we’re going to see things you can’t even imagine.

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HISTORY AND DEPTH Pat Ennis

Few companies can boast the history and depth of expertise in the energy market like Priority Power Management. When deregulation was taking hold in Texas, Pat Ennis, founder of Priority Power Management, was there to see it happen in real time. In 2000, Ennis was approached by a consortium of independent oil and gas businesses and individual energy executives who also saw an opportunity to create a company that would

John Bick

aggregate their power demands and utilize their collective large buying power to negotiate favorable competitive retail electricity supply when deregulation commenced. Today, with the help of his business partner, John Bick, Priority Power Management manages over 1,800 MW of power and roughly 9.8 TWh annually. Priority Power continues to grow by expanding beyond its traditional West Texas roots, into other Texas

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“WE PRIDE OURSELVES ON BEING ETHICAL IN OUR BUSINESS APPROACH AND GIVING THE BEST CUSTOMER SERVICE. ONE BAD APPLE CAN SPOIL THE WHOLE BUNCH, SO THIS AWARD Photo: Baird Lake Substation

VALIDATES THE GREAT WORK WE’RE ACHIEVING AS A TEAM.”

markets and beyond. To complement the successful aggregation business model, Priority deployed a strategy to offer a comprehensive suite of energy services including energy information management, energy supply management and energy demand management. Since 2014 Priority Power has expanded its services to include power infrastructure planning, engineering, construction and project management of substation, transmission and distribution facilities. When asked about his thoughts on being named as TEPA’s 2019-2020 ABC of the Year Ennis noted, “It was truly an unexpected honor. We go all the way back to the founding of TEPA, so it was an incredible honor to be recognized by our supplier members. I came back from

conference and jumped on a group call to tell everyone on our team. We pride ourselves on being ethical in our business approach and giving the best customer service. One bad apple can spoil the whole bunch, so this award validates the great work we’re achieving as a team.” Priority Power Management’s offices are located in Midland, Abilene, Houston and Arlington, Texas. The company primarily works with mid to large C&I customers across 27 states that represent $1 billion in energy spend each year. Priority Power Management’s team offers a wide range of procurement services including Demand Response, as well as manages 2,000 MW of peak demand with 9.8 TWh of energy managed annually.

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BEYOND JUST COMMODITY Today, change is the new narrative in the marketplace â&#x20AC;&#x201C; energy and otherwise. That change is largely driven by how technology and automation can empower every part of our lives. But the human touch will always be an essential cog in the wheel, especially when it comes to helping customers find the best solution for their energy procurement. Embracing that outlook while prioritizing for energy customers is part of the reason why Constellation, an Exelon company, earned TEPAâ&#x20AC;&#x2122;s 2018-19 Supplier of the Year award.

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Craig Wilson, Vice President of Sales at Constellation

“By inviting trust and transparency into the RFP conversation, we avoid the cliff of becoming a market that is heavily commoditized and largely marginalized,” said Craig Wilson, Vice President of Sales at Constellation. “But I’m confident that the energy market is headed in the right direction. We’re doing a lot of good things. The TEPA Supplier of the Year award amplifies the fact that the conversation with our channel partners is customer-driven. We’re breathing a little more humanity into the energy procurement process. I believe we’re making it a positive experience.”

(EME) offering, which gives customers the ability to fund energy conservation measures in support of their respective sustainability goals – without any upfront capital. The costs for retrofitted improvements such as LED lighting or automated building controls are then paid for over time through the customer’s power or gas contract.

Energy professionals like Craig Wilson have worked tirelessly over the years (he’s closing in on 20 years in energy) to be more than just a fixed price, contract negotiation point. “It’s about two-way communication,” he noted. “We’re in this together with the channel partners. When they call us, we want to engage in meaningful conversation; understand what their challenges are and what their customers need. Is it sustainability? Is it volume? Is it generation? When we can deep dive into that realm, we become markedly more effective as a channel partner.”

The company’s venture capital arm, Constellation Technology Ventures (CTV), is another vehicle for forwardthinking solutions that meet the needs of customers and channel partners. CTV invests in venture stage energy technology companies that have the potential to develop new solutions for Exelon and its customers. The big picture? To engage with innovative startups that have the potential to unlock commercial growth opportunities that accelerate the transition to a cleanenergy future.

In 2018, Constellation’s power and gas business served 211 terawatt-hours of electric load and 1,634 billion cubic feet of gas to approximately 2 million retail customers. “While those numbers are impressive, they’re not everything,” Wilson said. “One of the biggest values is how we can engage beyond commodity and seamlessly integrate into our customers’ and channel partners’ business goals.” A prime example of that approach is Constellation’s Efficiency Made Easy®

Last year alone, EME projects implemented by Constellation saved customers more than 80,000 MWh of electricity and prevented more than 36,000 metric tons of carbon dioxide emissions.

“We’re not comfortable with coloring inside the lines when it comes to offering new, sustainable products,” added Wilson. “We understand that our customers and channel partners want options. That means we have to stay on the outside edge of technology and offer solutions they won’t find somewhere else.” Through its CTV business, Constellation is providing solutions that are accessible to, and sought after by, customers. ChargePoint, one of the largest networks of charging stations for electric vehicle (EV) owners, is

PLUGGEDIN one of CTV’s portfolio companies. The company currently has over 50,000 stations across the nation and already serves 70 percent of all new electric vehicle drivers. “This program is disruptive in every sense. It’s the future of energy,” added Wilson. ChargePoint is just one example of the grand migration of change that Constellation is investing in. But it’s also one filled with astounding opportunities for companies (of all sizes and offerings) to attract new and repeat customers, as well as help them achieve their sustainability goals. While investing in upending the energy market with innovation and new business solutions, Constellation is also focused on embracing and supporting the communities where its employees work and live. In a world where tech, algorithms and data reign, it’s also nice to look beyond an account and see the community around it.

Above: Constellation employees help clear out moldy insultation during the company’s relief and restoration efforts in Houston following Hurricane Harvey. Below: A Constellation volunteer teaches a Chicago elementary school student about energy conservation by playing “Green Bingo”. The activity stemmed from Constellation’s partnership with the United Center – the home venue for Chicago’s Bulls and Blackhawks. Constellation has served as the arena’s official energy provider since 2011.

You see, the company’s figured out that when its dedicated team of energy professionals disconnect from the proverbial work grid, fostering relationships with channel partners, customers and communities becomes more impactful. Last year alone, Constellation employees logged over 40,000 hours of volunteer service; service hours which were both inspiring and immersive. From sending “care-kits” to active military through Operation Gratitude to mentoring students with Big Brothers Big Sisters, more than 76 percent of Constellation’s workforce gave back, in some way, to their community. Back in Fall 2017, when Hurricane Harvey submerged Houston in a crippling deluge of wind and rain, Constellation responded almost immediately, sending more than 200 volunteers – including nearly all of its leadership team – to help with relief and restoration efforts. Community has become an engrained and welcomed element of Constellation’s culture. “We figured that if we could unplug and disconnect our team for even a few hours and encourage them to channel some of their time towards volunteering in their local communities, the effect would be far-reaching,” said Wilson. “As TEPA’s Supplier of Year, we want our channel partners and customers to know that our impact in the market goes beyond just commodity.”

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A MYTHICAL CREATURE, OF SORTS BY AARON COOK So, here’s the thing about Jared Patterson: he’s not your typical politician. In fact, I think he’s pretty much a mythical creature of sorts. Don’t believe me? Just invest a few minutes with the newly elected Texas House Representative from District 106 and your take away will be an authentic, unfiltered Texas experience. You know, like Pecan Lodge’s BBQ that’s been smoked to perfection or Twisted Root’s ‘come as you are’ burgers. He’s proof that good politicians (i.e mythical creatures) actually exist. And I believe you’ll find that’s true independent of where your politics fall. That’s especially refreshing at a time when politics seem to infect all aspects of our lives - and when our faith in politicians seems to be, well…faithless. As the first – and currently the only – politician from the energy market to serve at the state level in Texas, Jared is breaking new ground and entering state politics at a pivotal time for energy professionals. Nevada residents recently voted down the state’s Energy Choice Initiative that would have opened up the electricity market for competition. Illinois is facing talk of a re-regulated market. And in the Lone Star State, (for bad or good) there are hints of creating a broker registry. So how did Jared find himself in such a unique political position?

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“I grew up in Grayson County, which is about 60 miles north of Dallas,” Patterson said during a phone interview from his capitol office in Austin. “My dad served on the school board and I think that planted the seed of public service. But when it was time for me to head to college, I decided to pursue an accounting degree at Texas A&M University. But that all changed my freshman year.” That was 2001. Jared, along with the rest of the world, watched as a series of attacks unfolded against the U.S. on September 11. “That day had a lasting impact on me,” reflected Patterson. “Like most Americans, my priorities were suddenly and dramatically realigned. I wanted to do more for my country. Crunching numbers just didn’t seem like the right career path anymore. I considered the military, but was convinced instead to serve my country in other ways. That’s what led me to choose political science as my major field of study.” That day was something of a call-to-arms for Patterson. Everything he did from that point on was intentional. Deliberate. He knew a degree by itself wasn’t a sure anchor for political service. As a senior in college, he was elected as the vice president of his graduating class. It was his first taste of a semi-political environment at a university that’s steeped in tradition. When his college career ended, Patterson was prepared to continue his education by pursuing his masters degree. But first things first a short break from academia. Through a family friend and childhood mentor, Patterson secured a job at Dynegy (later acquired by Vistra) in Houston. It was a real-time power trading job on the ERCOT desk. “Who knows,” he mused at the time. “I might just be able to make this a successful career.” And he did. After a year in Houston, Jared relocated to North Texas where his college sweetheart, Leslie, was teaching elementary school. He bought a house and settled down – near her, of course.

PLUGGEDIN “It was a leap of faith when I moved back to Dallas in 2006,” he recalled. “My career experience until then was based on the wholesale electricity market. I later discovered the energy broker community. As a free market guy, I love the idea of choice. I did a deep dive into how the retail side of energy deregulation worked so well in Texas. That investigation led me to a conversation with JD Dodson, owner at Rapid Power Management. In the summer of 2008, he hired me as an Energy Manager. But his career wasn’t his only focus. No surprise that during this time Jared had also convinced his college love to marry him. The two had settled down in the North Texas bedroom community of Sachse.

the city. I thought, if I’m going to invest in the community, buy a home and raise a family here, then I should know what’s going on, right?” Right. Apparently the city council members also took note of this citizen loiterer. “Folks from the council started approaching me during the meetings and asked if I had anything to add, or talk about,” he chuckled. “Of course, I didn’t. But my attendance at those meetings was clearly an anomaly. It eventually led to an appointment on the city’s Planning and Zoning committee. I guess they thought if I was going to be there anyway, I should have something to do.”

Most of us, when we head home for the day, we pick something “fun” to do. You know, go for a run, watch America’s Got Talent, or enjoy a nice dinner with family or friends. Jared? Yah, he started attending city council meetings after work. You know. Just for fun.

That committee appointment reignited Jared’s passion for politics. At 25, he decided to run for city council, and by the time he turned 26, he had successfully won his campaign. “I was young,” he noted. “People wanted to take me under their wing and help. They loved that someone so young was interested in being an active part of the community. Of course, I didn’t have a lot of government experience. But I did bring a fresh perspective to the table.”

“I wasn’t upset about any issues,” he added. “It wasn’t like my garbage was piling up on the curb. I was just curious about what was going on with

The next few years were filled with success as a public servant. During his time on the Sachse City Council he served as Mayor Pro Tem and was

And this is where we pick Jared’s political story back up.

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appointed to the North Central Texas Council of Governments, which governed 16 counties and 6.6 million people. Patterson’s career as an energy broker was also taking off. At RPM, he had transitioned to Senior Energy Manager on his way to his current role as Director of Energy Services. “I love my career in energy and see my role as one of service to my clients,” he added. “We do more than just broker energy rates. We conduct energy efficiency audits, offer power factor correction and create solutions that meet sustainability needs for our largely C&I client base. I see every dime that I can save them in energy costs as a way they get to reinvest into the economy. That piece is a good fit for me.” He was also getting more involved with TEPA. Most recently he served as the Association’s first Community Outreach Committee Chair and helped plan and manage community service projects in Houston and Dallas. But as Jared’s career was growing, so too was his family. In 2016, Jared, Leslie and their 3 kids moved from Sachse to Frisco, to be closer to RPM’s new office. And as fate would have it, Pat Fallon, the incumbent Texas State Representative in the district had decided to throw his hat in the ring for state senate. Patterson reflected with some level of certainty, “I really felt that my career in politics was behind me when we moved to Frisco. Juggling a career with raising a family was consuming all of my time since the move. But I was approached on several occasions by community leaders who asked me to campaign for the open seat (including Fallon himself). Politics, it seemed, was calling me back.” After some meaningful conversations with Leslie, Jared decided that running for Texas State Representative for District 106 was the right thing to do. Jared also gave credit to JD at RPM for giving him the time and support to campaign and serve. “I have three young kids,” Patterson said with an intentional tone of seriousness. “When am I going to be more motivated to serve than when my kids have a long future still ahead of them? I’m motivated now more than ever to keep Texas a vibrant state. I want my kids to have the same opportunities I’ve had when they grow up. And that means doing something now.” Despite the renewed political zeal however, he knew the campaign trail ahead was going to be a lot of work; especially as a new resident of Frisco. And if you haven’t heard, Frisco continually finds itself at the top of the national rankings when it comes to “best places to live”. Its popularity has made the city one of the fastest growing in the country. Like many other new Frisco residents, Jared didn’t have deep roots in the community. In the Texas summer heat of 2017, Patterson, his campaign volunteers and family started a grassroots door-todoor campaign.

PLUGGEDIN Perhaps the most grueling part of the campaign, however, was the mental game. Just knowing that he could be doing something every minute, every day to further the campaign made it hard to unwind. He was also running on a shoestring budget. Who says politicians can’t be financially conservative?

every one of us here promised to fight on behalf of our constituents. We’re simply the voice for the people back home. But, yah, what’s different at the end of the day, is that we’re not the federal government. My first joint author on a bill is a Democrat. My deskmate is a Democrat.”

Of course, I’m not spoiling the ending when I tell you that all the hard work paid off. On Tuesday, November 6th, Patterson’s constituents showed up at the voting polls to give this new candidate the chance to prove himself. Winning 58.5% of the district’s votes, Patterson became the first energy professional in the state of Texas to win a seat in the House of Representatives.

And how does Representative Patterson’s new role impact the energy industry? With only 40-something days since being sworn into office, he’s already working with the PUC to implement changes to the laws that would decrease their administrative burden. He also filed a bill to eliminate the state’s clunky and outdated Power to Choose website. He’s also actively reaching out to fellow members of the House and Senate to tap his expertise as a resource when legislation affecting the energy market is introduced – or if they just have questions about the market generally.

No small feat. And of no small consequence either. So what’s been the biggest surprise since being sworn into office on January 9th this year? “The biggest surprise?” he repeated back thoughtfully. “It’s that the Texas House is not Congress in D.C. Some of my best friends are folks across the aisle. There’s a sense of togetherness and family here. Of course, some issues are more emotionally charged than others. But

“LISTEN, I’M A FREE MARKET GUY. I BELIEVE IN CAPITALISM. I’M GOING TO FIGHT ANY EFFORT THAT NEGATIVELY AFFECTS CHOICE OR FREE MARKETS OR ANYTHING THAT WOULD MAKE THE ELECTRIC GRID LESS

“I’m carving out my niche and promoting energy deregulation as one of Texas’s greatest success stories. The Lone Star State is the most competitive energy market in the country and Texans have recently enjoyed a 17 year low in energy prices. That’s a direct result of our competitive retail market. Listen, I’m a free market guy. I believe in capitalism. I’m going to fight any effort that negatively affects choice or free markets or anything that would make the electric grid less stable.” And on that high note, Jared had to end our interview. His campaign staffer, Christian, had to reschedule our interview twice that week. The second time I got bumped for a meeting that popped up with Governor Abbott. I’m just fine playing second fiddle to that. But I asked - when we finally did connect - if I should refer to him as “the honorable State Representative Jared Patterson.” “Nah,” he laughed, “I’m still Jared.” And that’s why I’m still convinced he’s a mythical creature of sorts. And the more we talked, I couldn’t help but be reminded of something the political activist Noam Chomsky once said, “…unless you believe that the future can be better, you are unlikely to step up and take responsibility for making it so.” Jared believes the future can be better. And he’s doing something about it. I think that’s going to be a good thing for District 106 - and those of us in the retail energy market.

STABLE.”

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BIG DATA. BETTER PERFORMANCE. BY AARON COOK

I’ve always been a purist when it comes to running. Form, pace, stride, pronation, breathing, heart rate - you name it – my body gives me all the data I need. No tech needed. When people ask, I literally hold up air quotes and explain I run naked. Clothes, yes. Tech, no way. It’s not that I’m a luddite, per se. (Although in full disclosure I am pounding away on a resurrected laptop that’s five years old, operates on Windows 7 and has duct tape over the camera – you know, to keep the hackers out.) But I just don’t feel compelled to embrace the latest tech. I mean, duct tape works. So does running without being tracked by a satellite orbiting the earth at 17,000 mph. I’ve crossed the finish line of 8 Ironman triathlons and countless marathons as proof. At least, that’s was how I felt…until I caved in. It happened in a moment of weakness. A guy at REI who’s probably half my age – and likely still has a bedtime – convinced me to sell my soul to the tech titans. I bought a sport smartwatch. That was October last year. And now it only comes off when it has to recharge – during which time I suffer from intense separation anxiety. I simply can’t believe all the data I was missing – and the added layers of information I can use to improve my training.

I think there’s something of a parallel happening in the energy broker community. The amount and depth of market intelligence that’s being harnessed in the energy market is unequaled in our history. – From blended pricing models to more sophisticated weather forecasts, it’s almost like all of the data is waving hello to us from the future. Of course, all the data can be a lot to wrap our heads around, too. That’s especially true if you’re new to the energy market. But those who take time to understand it can have a considerable ‘leg up’ when it comes to shaping a client’s energy portfolio that yields the best results. Big data can equal better performance – especially when there’s a collaborative approach between brokers and suppliers. At least that’s how Hans Rottmann, Strategic Sales Manager at Direct Energy, sees it. “Our ultimate goal is to build the best energy contract for our channel partners’ customers,” he said. “But in order to build better deals, we have to be more than just a price point on an RFP. The foundation of a good energy procurement strategy is robust, reliable customer information. We need as much data about a customer’s energy usage as we can get. We also need to

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PLUGGEDIN have a frank conversation with the broker about their customer’s risk aversion. That means the broker needs to do some fact-finding on each client. It’s true that one size doesn’t fit all and every client has different energy needs.” Rottmann offered the perfect anecdotal example of why a meaningful collaboration of data between his team and brokers is an ultimate win for customers. “We serve two national restaurant chains that are represented by different brokers,” he said. “They both procure their electricity through us, but each has radically different pricing outcomes as a result of the Polar Vortex.” Restaurant A’s procurement strategy was developed and implemented by the broker and Direct Energy. It was managed through PowerPortfolio™, which included biweekly strategy calls and constant market monitoring. The outcome was a disciplined layering strategy that included goals of year-over-year savings, but also included deadlines for specific hedges to control risk and avoid exposure to extreme price spikes. Between 2008 and 2013, Restaurant A saw average annual price declines of 3% to 5%, or an average of $1,000 in savings per year – per restaurant site. The price for their supply during the Polar Vortex was 80% covered before the winter. While the restaurant saw a 3% increase for the fiscal period (due to the Polar Vortex), the impact was negligible to overall costs. Restaurant B also purchased electricity through Direct Energy using a broker. However, the company went with a Fixed Price contract – basically waiting 2 to 3 months prior to the expiration of the supply contract. While Direct Energy kept the broker informed of market prices, the broker’s strategy was to count on a market dip, fix 100% and deliver year-over-year savings.

Hans Rottmann, Strategic Sales Manager

“We serve two national restaurant chains that are represented by different brokers,” he said. “They both procure their electricity through us, but each had radically different pricing outcomes as a result of the Polar Vortex.”

This strategy worked during the early shale boom as prices had dropped consistently. Unfortunately, their shopping

Forward Electricity Price Trend Analysis - PJM West Hub - ATC - Monthly History for 2020 and 2021

Each bar represents historical range of electric price for each month. Horizontal line represents current price.

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Beau Gjerdingen, Senior Meteorologist

“There’s a lot of automation that goes into weather reports. Our big advantage is that we can look at the entire market and change our weather views on a dime

Photo by Josh Hild on Unsplash

when necessary.”

PLUGGEDIN process did not yield savings prior to the Polar Vortex. So they waited. And waited. Then suddenly the Polar Vortex hit and they were forced to make a decision. At the last moment, the broker ran a RFP and locked in 1-year contract at a price that was a $30/MWh (3.0 cents per KWh) increase over the prior year. That strategy increased energy costs by $12,000 per franchise – a significant, unexpected expense for a small business owner. Detailed information about a client’s energy use and future needs is critical. But so is all the data that factors into an energy contract. And that leads us into a discussion about one of the most impactful influences on the energy market – the weather. Extreme weather events, like the Polar Vortex and 100+ days of 100°+ heat, will have a direct impact on energy prices. Fortunately, the technology to both collect and analyze the weather has advanced significantly over the past two decades. “Weather data is one of the most critical points of market intelligence today,” said Direct Energy’s Senior Meteorologist, Beau Gjerdingen. “I study it daily – often by the hour especially during the volatile seasons like the winter months. It’s becoming a much bigger part of the conversation among energy professionals across the country.” Every morning at 5 a.m. Beau arrives at his Houston office - before any of the company’s traders or analysts have even hit their snooze buttons. “I’m in early so that I can study a handful of reports that I analyze and create our own weather outlook for different markets across the country,” he said. “Markets trade throughout the day as weather reports come in. And since we purchase our energy ahead of time, there’s a significant value in knowing the risk of a weather event, like a Polar Vortex, that would impact pricing.” Once the rest of the team has nestled into their workstations for the day, Beau runs a group chat with the company’s traders and analysts, including Hans, to fill them in on the weather ahead. His report generally follows four weather models that the markets trade on throughout the day. Many of these reports are available via third party vendors, but only serve as a baseline for Beau’s reports. “A lot of the same weather data I see is also available to other market participants,” he added. “The biggest difference is that not every supplier has a meteorologist on their team. The vendors who aggregate and produce weather reports may not be able – or have to take baby steps – to change their forecasts when the weather changes. There’s a lot of automation that goes into

weather reports. Our big advantage is that we can look at the entire market and change our weather views on a dime when necessary.” Beau’s weather data is not only impactful, but necessary when creating energy contracts. And while we all check our smart phone’s weather app when making plans for the weekend, the data that Beau’s piecing together is far more rich and complex. It takes in consideration years of historical data that’s meshed with high resolution, realtime images collected by satellites and weather balloons hovering over the planet. That means Beau can call out potentially significant changes in weather patterns ahead of the market. The good news is that brokers don’t have to have a degree in Atmospheric Science in order to understand the weather’s inevitable impact on a client’s energy portfolio. That data’s available to the company’s channel partners in a variety of ways, including the company’s online energy management tool, EnergyPortfolio™. “EnergyPortfolio isn’t just a website filled with charts, graphs and data,” added Rottmann. “It’s an immersive, interactive experience that includes access to my team of energy professionals. We collaborate with our customers and brokers and study all the variables and factors – including historical and future weather reports - that go into a customer’s energy usage. Then we’ll customize and manage a procurement strategy that can include a blend of fixed-price, block purchases and variable, marketbased purchases.” The online tool is the perfect combination of market intel and customer-specific reports that focus on the customer’s risk, cost projections and strategy, among countless other profile elements. Rottmann also noted, “Direct Energy also utilizes its proprietary Grey Matter tool to analyze risks in customer’s electricity spend due to volatility in index and forward prices as well as usage uncertainty.” I think it’s a given that half of being human today means being connected to technology. We live in a world where computers are becoming artificially intelligent. It’s not man against machine. It’s man with machine. Yes. Running without technology works. So does duct tape. But the data being harnessed by advanced supercomputers (and smartwatches) is fuel that drives better performance. Fuel for beating marathon PRs. And fuel for building the best energy portfolio for your client. All it takes is a little collaboration.

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