Managing Cost Utility White Paper with Mr. Reyes and John Chowdhury Final

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New Normal: Efficiencies for Cities and Cooperatives - great case studies. Co-authored with Mr. Luis Reyes, CEO of Kit Carson Electric.

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20. Copyright @ 2016 NKSoft Consulting Confidential Page|20 OPEN SOURCE TECHNOLOGIES WITH SOFTWARE AS SERVICE

1. MANAGING COST WHEN REVENUE IS FLAT OR DECLINING AUGUST 2016 How to Guide for: MUNICIPAL UTILITIES & ELECTRIC COOPERATIVES Consulting and Research for the Utility Industry By: Luis Reyes, CEO, Kit Carson Electric Cooperatives John Chowdhury, Managing Director, NKSoft Corporation

13. Copyright @ 2016 NKSoft Consulting Confidential Page|13 Use benchmark: Example – System Average Rate Successful cost transformations begin with a clear understanding of a company’s performance relative to its peers. Utility executives often say their industry is difficult to benchmark because their environments and regulatory systems differ from one place to another. But in some ways, utilities are one of the most straightforward industries to benchmark because they perform essentially the same tasks wherever they are. There is also a wide range of public and proprietary data on their performance. At a general level, the Federal Energy Regulatory Commission (FERC) collects and reports data on utilities’ costs and performance in the United States. While we recognize the limits of these benchmarks, they are an obvious (and necessary) place to start (see below “Using FERC data to decompose the system average rate”). USE BENCHMARK: EXAMPLE – SYSTEM AVERAGE RATE

2. TABLE OF CONTENTS Page|0 • Strategic Highlights...................................... ..............Page 3 • Drivers for decline or flat revenue growth .............Page 4 • Example solutions, which can help you................... Page 14 • Technical readiness ................................................. . . Page 16 • About Us......................................................................Page 18 • Case studies..................................................................Page 6 • Benchmarking..............................................................Page 8 • Ways to reduce expenses...............................................Page 10 How to Reduce Cost Consider the Following Steps State of the Industry

15. Copyright @ 2016 NKSoft Consulting Confidential Page|15 As in any industry, superficial efforts to reduce costs are destined to fail; old habits have a way of creeping back into the system. In municipal utilities, the stakes of success may be even higher: Given the public scrutiny of the industry, many of the costs removed will be shared with ratepayers and may be difficult to win approval to restore. In crafting a cost transformation plan, municipal executives need to weigh the pros and cons of each savings area. Productivity improvements are easy to identify, but the savings are hard to monetize. Reducing spending is easy to do but hard to track into the profit and loss statements. Reorganizations are typically the most painful savings to achieve because they involve reducing headcount, but they are also the most sustainable. Portfolio restructuring is more permanent but can be difficult to execute. Obviously, working all four areas together maximizes cost reductions and frees up funds to make new investments. Quick wins can be found in any of these areas. Municipal executives should keep in mind that less than a third of all corporate transformations succeed. A solid plan that carefully evaluates change, rolls it out efficiently and redefines behaviors increases the chances of success. It helps to think about cost transformation in three phases: design, deliver and embed. With all indicators pointing to slower growth in electricity demand, increase demand for water and other city services, tighter capital and heightened competition, the robustness of the Municipal Utility industry is increasingly uncertain. Reducing costs is a “no regrets” move that can only benefit municipal utilities in the years ahead. A sustained cost transformation is the best way to ensure that savings earned in the first year are not lost in the second. LOOKING AHEAD Every expense dollar reduced is another dollar you won’t need from higher revenues or taxes! ALTERNATIVE SERVICE DELIVERY It’s more than simply looking to the private sector to reduce costs. Try to constantly think “outside the box” for ways to improve services and lower costs. ENERGY COSTS Energy is another significant cost area associated with municipal operations, and one that can be contained and/or reduced with careful analysis and evaluation. CONSIDER THE FOLLOWING TO REDUCE COST

21. Copyright @ 2016 NKSoft Consulting Confidential Page|21 Connected Communities and Smart Cities Consulting NKSoft provides consulting services to cities to evaluate the possibility of offering Fiber to the Home (FTTH) services to the community and for the municipal service’s needs. CONNECTED COMMUNITIES CONSULTING NKSoft’s distinct capabilities can deliver a vision and tactical plan for the development of a complete range of competencies required to undertake this initiative including: • Existing Broadband Satisfaction Survey of the Residents and Businesses • Existing City Services Broadband Needs and Current Cost • Identify Possible Funding Sources and Complete Funding Application • Competitive Assessment and Analysis • High - level Cost and Benefit of the FTTH technologies and project • Our Recommendation and Next - Steps for the City

3. STRATEGIC HIGHLIGHTS Municipal and Electric Cooperative executives have long had to balance the growth and investment needs of private companies with the demands of regulated public enterprises. But this challenge is becoming even more difficult as the industry’s economic outlook and relative competitiveness of the industry become less inviting in developed markets like the US and Europe : • Energy consumption is leveling off as customers use electricity and gas more efficiently . • Increasing water usage and demand for improved city services. • Investment requirements are increasing, pushing up costs as utilities replace aging infrastructure and enhance the capabilities of their systems — for example, to handle the two - way flow of electricity. • Competition is on the rise as more consumers generate their own power using ever more affordable alternative technologies, while depending on the grid for the balance of their energy needs and emergencies. According to Accenture study, US Residential and Commercial Demand (excluding prosumer generation), reduction will equal to between $18 and $48B between 2014 and 2025. MANAGING COST IN FLAT REVENUE GROWTH Copyright @ 2016 NKSoft Consulting Confidential Page|3

9. Copyright @ 2016 NKSoft Consulting Confidential Page|10 Ways to Reduce Expenses IT cost reduction can be a long sustaining objectives. Utilities should look into other industries where using the latest technologies (not bleeding edge) help achieve tremendous cost savings. Software As a Service (SaaS) with Cloud computing and utilizing Open Source Technologies shaping the way organizations approach their IT requirements. It is prevalent in businesses that are confronting the reality of dealing with the deluge of data being captured with smart metering and grid optimization projects . Utilities should consider looking into the following technology areas: • Move away from p roprietary software when possible • Reduce Microsoft licenses for Office • Increase cloud usage – decrease use of in - house server cost, support cost, license cost • Use Virtualization • Reduce Help Desk Management cost by utilizing self help technologies • Use of open s ource d ocument Management • Use technology to automate processes such as the purchasing process beginning with the request through to direct deposit payments to vendors WAYS TO REDUCE EXPENSES IT COST Copyright @ 2016 NKSoft Consulting Confidential Page|10 Copyright @ 2016 NKSoft Consulting Confidential Page|9 IMPACT OF OPEN SOURCE TECHNOLOGIES AND CLOUD COMPUTING

10. Copyright @ 2016 NKSoft Consulting Confidential Page|10 Technology Cost - Case Study: City of Irving, Texas The City of Irving is the 13th largest city in the state of Texas, with population around 284,500. Following case study is developed based on a RFP issued in June, 2016 • City’s challenges including: o Can’t easily enable current or changing business processes o City departments enter a great amount of data into the system that is very difficult to get back out o Coded and Gated menus o Users have helper apps and spreadsheets to handle budgeting , benefits and some payroll and human resource data tasks that the system can’t natively handle o IT has to custom build app utilities to get data out or augment functionality o Banner is designed for educational institutions, not local government o Banner code wasn’t able to support integration with water utility billing system InHance o Spend data imported from Works into Banner is not integrated into vendor spending history o The system uses an Oracle database, while most of the City’s database systems are standardized on Microsoft SQL o City departments often enter the same information into multiple systems TECHNOLOGY COST – CASE STUDY : CITY OF IRVING, TEXAS

5. Copyright @ 2016 NKSoft Consulting Confidential Page|5 MUNICIPAL UTILITY & COOPERATIVE’S CHALLENGES UTILITY CHALLENGES Electric • Power generation o New generation to meet new demand or renewable requirements o Aging plants lead to costly repairs or potential unplanned outages o Volatile costs of generation fuel o Regulations require investment in emissions control • Power transmission o Need to connect new resources, like wind and solar farms or meet new demands • Power distribution o Aging infrastructure leading to outages o Disruptive technologies and new competition o Consumer solar integration to the grid • Lack of capital to invest in need infrastructure Gas • Aging infrastructure leading to gas explosions • New infrastructure needed to connect new resources or meet new demand • Lack of capital to invest in need infrastructure Water • Aging infrastructure leading to water leakages • Shrinking water resources in some regions and need to support water conservation • Need to improve water quality • Lack of capital to invest in need infrastructure • Water Systems use large amounts of energy. According to some US based studies *1 , on average 80% of the marginal costs is for electricity. • New treatment process demand higher energy levels, zonation, UV disinfection, desalination • Climate change introduces new issues such as droughts, reducing inflows, and flooding disrupting delivery • While wastewater utilities have tackled energy management via bio - gas fed generators the water utilities have made more limited steps

8. Copyright @ 2016 NKSoft Consulting Confidential Page|10 Reduce energy losses by up to 30% with Smart Sensors or IoT Government mandates, especially those in Europe, have triggered some aggressive deadlines that are forcing utilities to improve energy efficiency by cutting their energy losses. Utilities are also feeling strong pressure to integrate and accommodate the boom of not only alternative sources of energy generation, but also electric vehicles into their grids. To meet these considerable challenges, utilities are now adopting strategies that leverage the Smart Sensors or Internet of Things (IoT) — and the smart tools and connected technologies of which it’s composed. Let’s look at few examples below: NON - TECHNICAL LOSSES IN LV NETWORKS : Estimates indicate that 90% of non - technical losses occur in LV networks. Assessing for improvement means identifying and monitoring these losses, but due to the high number of points, it’s expensive. Some strategies utilities can implement including: Deploying smart meters . Smart energy meters can act as additional sensors to track network energy performance data. Comparing the pattern of the energy measured on an LV feeder to the patterns of energies delivered by the smart meters delivers a precise location of losses and, additionally, faster detection and location of LV network outages for improved reliability. INTEGRATING DISTRIBUTED ENERGY RESOURCES (DERS): Distributed generations ( renewable or backup), controllable loads used for demand response, and energy storage (electrical or thermal), can cause rising and falling voltage at the same time in different parts of the grid. Not to mention that the necessary monitoring of this voltage in older substations is costly and complex. Some strategies utilities can implement including: Fine - tuning voltage control infrastructure . To acquire accurate, real - time voltage data, utilities can install cost effective, self - powered, communicating IoT voltage sensors at the MV/LV substation level or along lines. They can also use “virtual” sensors to estimate the MV voltage based on more easily accessible data. Further, utilities can install actuators with smart transformers along MV lines to increase or decrease the voltage. REDUCE TECHNICAL LOSSES IN MV NETWORKS : Technical losses in medium voltage (MV) networks represent about 3% of the distributed energy . Some strategies utilities can implement including: Advanced Distribution Management System (ADMS). Using algorithms, an ADMS can not only optimize network configuration and relieve overloaded network segments, but also help minimize losses (up to 4% for yearly reconfiguration) and load unbalance in high and medium voltage substation transformers and feeders. Further, it helps utilities achieve an optimal voltage profile and improve voltage quality. WAYS TO REDUCE EXPENSES USE OF SMART SENSORS (IoT) Copyright @ 2016 NKSoft Consulting Confidential Page|8

17. Copyright @ 2016 NKSoft Consulting Confidential Page|17 Which Cities are using Open Source Solutions Many cities across USA and Europe have implemented several aspects of Open Source Solutions to reduce cost and improved process. They include : WHICH CITIES ARE USING OPEN SOURCE SOLUTIONS City Impact & Benefits Total Savings Washington, D.C. Population: 600,000 Using Google Applications $475,000 annually for use by 38,000 municipal employees. Saved D.C. taxpayers about $4 million Los Angeles, California Population: 4 million (15 million in metropolitan area) Using Google Applications The move will save more than $5 million in hard costs and $20 million more through increased productivity. Savings reach nearly $50 million for the city City of Garden Grove, California Population: 170,883 In its first year of using Linux servers and solutions, it saved $380,552; thereafter, it experienced $70,465 in approximate annual savings $380,552 one time savings plus $70,465 in approximate annual savings San Francisco, California Population: 800,000 (4 million in metropolitan area) San Francisco was the first major city to implement an overall open - source solution. Not available Portland, Oregon Population: 580,000 (2.2 million in metropolitan area) Portland, Oregon, has approached the open - source movement in a different way. Beyond using open - source software as a cost - saving measure for its municipal government, Portland has sought to influence its entire governmental procedure with an Open Source mindset. This was codified in a resolution passed by its city council in September 2009 Not available Largo, Florida Population: 75,000 Largo’s IT department estimated in as early as 2002 that using Linux “saves the city at least $1 million a year in hardware, software licensing, maintenance, and staff costs. At least $1 million a year Northglenn, Colorado Population: 34,000 In 2003, the city decided that it would make strong efforts toward open sourcing its software solutions and, toward this end, hired an IT department head, a network administrator, and an open - source software developer. It largely eliminates the costs of acquisition.

18. Copyright @ 2016 NKSoft Consulting Confidential Page|18 NKSoft has been working with the Muni, Cooperatives and IOU’s (Investor Owned Utilities) since 1997. As we have evolved from SAP/Oracle/Banner based ERP and Billing solutions to Open Source based nERP solution that runs on 100% license free Linux and Postgres / MySql servers, we have seen many municipalities and cooperatives embracing the same open technologies. There are currently 863 cooperatives and 163 small and medium sized cities in the US with populations between one hundred thousand and fifteen million people, have similar core backend information technology systems -- either designed and built themselves or purchased from vendors. Although cities consider themselves unique with individual technology needs, the creation of one set of open - source systems by NKSoft, reduces the costs for all cities, make maintenance easier, and allow cities to leverage technology to improve city services. The goals are to radically reduce information technology costs, to transform public sector services through user - and citizen - centered design and technology, and to allow any city to easily use and implement one system or all the systems. REDUCING INFORMATION TECHNOLOGY COSTS: Costs have exploded within state and local governments predicted to spend $65 billion dollars a year on IT by 2017 (see source below). When cities realize they need new IT systems -- sometimes because of a desire for new business processes but equally likely because no one has the requisite outdated skills to maintain the system -- they are often so expensive that the project has to be abandoned or critical resources have to be shifted from direct services to citizens into IT backend systems. Big vendors charge individual cities tens, if not hundreds, of millions of dollars on overly - complex and overly - specified technology projects. Cities often relying on vendors to tell them what they need, to train their staff, and to even to write requests for proposals, ends up with the different version of same vendor software. By creating nERP, a freely available core set of systems -- that is well designed and well executed -- every city will have the option to implement core systems more cheaply (even if they need a vendor to customize and implement the software) when the time comes. TRANSFORMING PUBLIC SECTOR SERVICES THROUGH USER - AND CUSTOMER - CENTERED DESIGN AND TECHNOLOGY: The last twenty years have seen staggering advances in technology, user interfaces, and user - centric design while municipal governments have been left behind. Cities have been saddled with outdated, bespoke, and inefficient software solutions. These older system are used as an excuse to avoid positive change -- “we can’t do that because our systems won’t allow it” -- so services cannot be improved because of an old system that implements an outdated process from many years ago, in an ugly and unconsidered way. OPEN SOURCE TECHNOLOGIES WITH SOFTWARE AS SERVICE

14. Copyright @ 2016 NKSoft Consulting Confidential Page|14 Cutting Cost - Case Study: E*Trade: Linux vs. Windows Operating System WHAT LEVINE DID? He replaced those 60 sun boxes with 80 $4,000 Intel servers (They already owned Linux which was the operating system used. Since Linux was based on Unix support, people easily made the transition). CUTTING COST – CASE STUDY: E*TRADE: LINUX VS. WINDOWS Josh Levine, first started shopping around in 1998 could he recalls having pun pitting Sun against other Unix vendors like IBM and HP . E - Trade decided to go with 60 Sun boxes at $ 240 , 000 a pop and a $ 25 , 000 yearly maintenance fee on each ... ”the fun and Levine leverage was gone”, ... Levine speaking on Unix vendors says .. ” All these strategies are based on proprietary operating systems . Once you buy the hardware, you can’t move . ”) Technology Total Cost Total cost for Sun boxes: $14,400,000 Total yearly maintenance fee: $1,500,000 Open Source Technology Total Cost Total cost of 80 replacement boxes $320,000 Total yearly maintenance fee: $0 Source: HTTP://WWW.CIO.COM/ARTICLE/31768 OPEN SOURCE - YOUR PLAN VIEWED 3/5/2008 Source: http:// www.desktoplinux.com /news/NS9088528047.html , Viewed on March 3, 2008

22. Copyright @ 2016 NKSoft Consulting Confidential Page|23 ABOUT THE AUTHORS About NKSoft: Tel: 575 - 741 - 0213 Luis.reyes@kitcarson.com Chief Executive Officer and General Manager at Kit Carson Electric since 1993.  Chairman and Director of National Rural Telecommunications Cooperative  SEPA Board (Past)  SEDC Board (Past ) Began his career with Kit Carson Electric in 1984 as a System Engineer. Active board member for Kit Carson Museum, the Taos Business Alliance, New Mexico Green Chamber of Commerce, Leadership New Mexico, Taos Chamber of Commerce LUIS REYES CEO, KIT CARSON ELECTRIC JOHN CHOWDHURY MANAGING DIRECTOR, NKSOFT Tel: 214 - 213 - 6226 john@nksoft.com Managing Director at NKSoft. 25 - year career serving the utility industry including KEMA, IBM, Price Waterhouse & Fujitsu.  Recognized as Who’s Who in Energy by Dallas Business Journal 2014 and in 2015  UTC Smart Networks Board Member • Advisor to Tulsa University Masters of Energy Program • Advisor to NRECA TechAdvantage • Utility Innovation Council Board Member NKSoft helps utility companies to easily embrace IoT, pre - paid metering, comply with NERC/CIP Cyber security requirements and adopt Open Source technologies to achieve improved business results . NKSoft open source solution stack built with modular components that provide an integrated 360 degree visibility to the stakeholders . The stack includes services like enterprise social networking, integrated customer surveys, knowledge management, CRM, billing and collection management, NERC CIP Security compliance management, inventory management and IoT enabled service management . More information at http : //www . nksoft . com

11. Copyright @ 2016 NKSoft Consulting Confidential Page|11 City is considering replacing and consolidating old and expensive systems (not all inclusive) TECHNOLOGY COST – CASE STUDY : CITY OF IRVING, TEXAS AREA SYSTEM ANNUAL SUPPORT TOTAL COST Financials ACS (Xerox) Banner for financial management, purchasing, human resources and payroll. 20 years old. Banner and the Oracle database. $100,000 Utility Billing Harris InHance IUS. 12 years old. System $40,200 Document Management OnBase System $86,943 Work Orders/Public Works Management Cityworks System $62,000 Community/Inspections/ Enforcement Services TrakIt System $36,555 AREA SYSTEM GIS ESRI Parks Activity Registrations ActiveNet Municipal Court Software Tyler Incode Police CAD/RMS Tritech Fire CAD Infor Database Microsoft SQL However, there are some Oracle databases within the environment . City’s time card and police time keeping software Kronos and Telestaff online P - card platform Bank of America’s Works dump data into a Banner database temp table by way of a manual process Incode and Banner are fully integrated . NET custom built app that runs a process that uploads daily payment information and dumps it into a Banner table from where Finance staff can run further processes to pull that data into appropriate Banner tables . In addition, the following applications considered with regard to the need for potential consolidation :

4. Given the squeeze between increasing reliability, keeping the same rates and flat - line growth, cutting costs is no longer an option, but a requirement for survival . Unlike conventional businesses, however, where savings drop neatly to the bottom line, cost reduction in cooperatives, municipal or regulated utilities is complex . Where those savings come from — capital, operations and maintenance or pass - through — matters greatly, as does where they get applied (rate relief, reinvestment or stakeholders demands ) . Graph below summarizes the top issues for Water utilities across the US for the last few years . From the slow pace of new customer additions and residential building remains the top issue . Nearly 47 percent of respondents cited slow growth as the leading factor negatively affecting revenue during the past five years — down from nearly 60 percent in 2014 . New customers provide many water utilities with a steady stream of capital . As this revenue stream disappeared during the Great Recession, the full brunt of water utility financial issues became apparent, particularly in flat or declining population zones REASONS FOR DECLINING REVENUE GROWTH: WATER Copyright @ 2016 NKSoft Consulting Confidential Page|4 Source : Black & Veatch 2016

7. Copyright @ 2016 NKSoft Consulting Confidential Page|7 RESTRUCTURE (Continued from previous page) . For example, it streamlined its IT organization and focused capital investments with a prioritized enterprise - wide technology road map . Over two years, executives redesigned the company’s organizational footprint and developed a new administrative and general operating model with a smaller, simpler organization . This program reversed an operations and maintenance budget that had been climbing by about 6 % per year, stopped its growth and took out more than $ 100 million over two years . MANAGE THE PORTFOLIO . Over time, through acquisitions and growth, most utilities accumulate a varied collection of service territories, wires and pipes and generation assets . Periodic reviews of their costs and performance can reveal opportunities to rebalance operations or pare the organization and let utilities take advantage of the shifting commodity prices . For example, as natural gas prices dropped in North America, many utilities idled coal - fired plants while running gas facilities at high loads . Others took measures to lock in a long - term fuel supply by integrating upstream into natural gas supplies . Some utilities have decided to get out of the business of serving widely dispersed rural districts or areas where the costs of complying with regulations outweigh the value . WAYS TO REDUCE COST

16. Copyright @ 2016 NKSoft Consulting Confidential Page|16 COMMUNICATION COSTS It appears that the use of wireless electronic devices (cell phones, smart phones, etc . ) has grown dramatically, and has increased productivity, but so has the cost . A viable way to reduce costs is to conduct an analysis and audit of all telecommunication voice, data, internet and long distance services, and billing . Unlike energy providers, who have it in their financial interest to assist their customers to lower usage in order not to have to build additional, expensive generating capacity, telecommunication companies enjoy greater profits when customers overpay for services . It is for this reason that a self - audit by your service providers is not in your best interest . OPEN SOURCE SOLUTIONS Integrated Open Source Technologies can drastically save money while providing additional functionalities and integrated business process municipalities’ desire . Look to reduce double entry, reduce multiple steps by integrating your technology solutions . Yes, you had to purchase applications which ran in siloes, but today, those silos are costing you productivity . Once you found a way to integrate your technology layer, provide good training to leverage the technology to improve your process . Following are list of saving can be achieved from the integrated Open Source technologies : • Improving decision - making • Providing enhanced customer service to both internal and external customers • Improving access to information • Making them more efficient • Making them more effective • Improving accountability CONSIDER THE FOLLOWING: TO REDUCE COST

12. Copyright @ 2016 NKSoft Consulting Confidential Page|12 Use benchmark: Smart Grid Mid - sized cities with populations of 26 , 000 (Danvers), 108 , 000 (Burbank), and 194 , 000 (Glendale), respectively, implemented grid modernization activities in multiple areas, including advanced metering infrastructure, distribution automation, and customer systems . Project activities provided a number of benefits including improved operating efficiencies, lower costs, shorter outages, and reduced peak demands and electricity consumption . The impacts, benefits, and lessons learned realized by Burbank, Danvers, and Glendale are applicable to other municipal utilities considering or implementing smart grid projects . To realize these benefits the utilities had to overcome several project challenges . These included learning how to operate new technologies and systems optimally ; educating utility personnel on new businesses processes and practices ; reaching out to customers to explain how to use new technologies to reduce electricity consumption and lower bills ; and implementing new systems in a dynamic environment of rapidly evolving standards and technologies . USE BENCHMARK: SMART GRID CITY OF BURBANK, CITY OF DANVERS AND CITY OF GLENDALE Municipal Utility Impact & Benefits Total Cost Burbank: 51,000 + residential, commercial, and industrial customers. 26,000 water customers Operates 14 distribution substations , 5 switching stations, and 138 distribution feeders. Summer peak electricity demand is about 320 MW . Danvers municipal utility (located northeast of Boston) About 13,000 customers, nearly 11,000 of which are residential Operates 10 distribution substations and 34 distribution feeders Summer peak demand is approximately 80 megawatts. Glendale : Almost 84,000 electric and more than 32,000 water customers. Operates 12 distribution substations and 108 distribution feeders. Investments in wide bandwidth communications networks help accommodate future smart grid upgrades , automate other city services (such as water and gas metering), and deliver valuable returns for cities and taxpayers . Glendale’s customer programs include a home energy report and web portal program that helped 46 , 000 users save an estimated 5 , 777 megawatt – hours of electricity . Burbank’s web portal programs for customers saved an estimated 4 , 800 megawatt – hours of electricity . Substation upgrades by Danvers enabled deferral of $ 3 Million of investment in distribution capacity for up to 25 years . Burbank’s distribution automation systems led to improvements in the major reliability indices over a three year period . Glendale’s installation of smart meters reduced truck rolls by 15 , 000 miles, saving approximately 6 . 3 metric tons of CO 2 E . Burbank: Almost $51 million, including DOE funding of $20 million Danvers: About $17 million, which includes DOE’s share of about $8.5 million Glendale: More than $51 million, which includes DOE’s share of $20 million Lessons Learned Early vetting and testing of new technologies, particularly customer systems, before the devices are widely deployed, is helpful for resolving issues before they become major problems . Gaining management buy - in early in the planning phases and maintaining it throughout the project’s duration with frequent updates is a key success factor . Being well organized in applying limited funding and allocating scarce labor resources requires strong internal Coordination and management approaches such as cross - functional teams . Source : https : // www . smartgrid . gov /files/B 4 - revised - 10 - 03 - 2014 - 100614 . pdf

19. Copyright @ 2016 NKSoft Consulting Confidential Page|19 USING NKSOFT OPEN SOURCE STACK : NERP nERP uses modern technologies to improve service delivery through user - and customer - centered design, service design, and ethnographic research on service needs and delivery . Allowing any cooperatives and municipalities to easily use and implement one system or all the NERP systems . Cities tend to have technology systems that sit on two sides of a spectrum : either overly customized on one end or an off - the - shelf closed - source solution that is not customized at all . Either way, interoperability and information sharing can be very expensive or impossible for municipal governments, and cities can get locked in a custom built or a closed - source ecosystem where only the products of [insert vendor name] play well together . With freely available source code, nERP will allow cities to tailor the suite to their needs, either by using or not using all the core systems, adding their own software as needed, or customizing the available software as far as needed . The nERP suite is built with well - exposed and well - documented application programming interfaces (APIs) that will allow developers to load and utilize components as needed . NERP SUITE DESIGNED FROM THE START WITH A CUSTOMER - CENTRIC VIEW : n ERP foster a large systemic change with municipal governments . The suite would change the cost - structure of technology in municipalities, cooperatives and utilities, would bring new service designs to cities, and would allow cities to come along at their own pace . nERP have data analysis and visualization available, facilitate open data and transparency at its core, place - based and geocoded, and have best practices built into it . With nERP modules, cities would be able to have a core set of technology available to them for free of license, while still having the option to implement customized versions at low - cost . By being open - source, nERP would allow any city to share code openly with other cities, and allow for upgrades to be propagated, for free, to cities based on others' work . COMPONENT BASED SOLUTION suggested by NKSoft for each implementation that would help retire billions of dollars from the cost structure of cooperatives and municipal utilities with the following components : 1. CITY WEB PORTAL 2. ENTERPRISE SOCIAL NETWORKING WITH INTEGRATION WITH FACEBOOK, LINKEDIN, ETC . 3. BILLING SYSTEM (WATER, SEWER, ELECTRIC, GAS, BROADBAND, VOICE & VIDEO) 4. WORK MANAGEMENT SYSTEM (USE IT IN DESKTOP, LAPTOP, TABLET, IPHONE OR ANDROID DEVICE) 5. BUDGETING AND FINANCIAL PLANNING 6. FINANCIAL MANAGEMENT AND REPORTING 7. SUPPLIER MANAGEMENT WITH OPEN BIDDING 8. HUMAN RESOURCES MANAGEMENT WITH FULL 360 EVALUATION AND RECRUITING 9. PERSONNEL AND PAYROLL SYSTEM 10. CITIZEN RELATIONSHIP MANAGEMENT -- SERVICE REQUESTS AND FULFILLMENT 11. PAYMENT MANAGEMENT 12. WORK / ASSET / INVENTORY MANAGEMENT 13. LAND USE, CITY PLANNING, AND MAPPING 14. GRANTS MANAGEMENT 15. KNOWLEDGE AND DOCUMENT MANAGEMENT 16. BARCODE READER CAPABILITIES USING IOS OR ANDROID 17. GIS SOLUTION 18. CUSTOMER AND EMPLOYEE SURVEY TOOL OPEN SOURCE TECHNOLOGIES WITH SOFTWARE AS SERVICE

6. Copyright @ 2016 NKSoft Consulting Confidential Page|6 Too often, municipal and cooperative executives approach cost transformation with broad and unspecific programs that deliver minor savings across the board, none of which are sustainable . Cost - saving measures frequently are mere accounting adjustments that shift numbers from one category to another — a move that may satisfy management’s goals for the quarter but that ultimately does not free up cost capacity . Sustained cost transformation requires a long - term focus from the top, with clear communication, continuous assessment and accountability . Four areas offer the highest potential to deliver real and lasting savings . INCREASE PRODUCTIVITY . It can be tough to reduce costs when the workload is growing, but it is still possible to work more effectively . Field services are a good candidate for productivity improvements, with IT cost a close second . One utility in the US began its field - force improvement program with a diagnostic that revealed that less than half of its crew time was spent doing actual work and repairs . Administrative, travel and set - up tasks took up most of the time . Reactive scheduling, undefined roles, weak accountability and limited communication between foremen and planners were the main culprits . Field crews would go out for one job at a time, and then return for their next assignment . Sometimes they would leave the yard without the right tools or materials and have to come back to resupply . By comparing the utility to its best contractors, executives saw an opportunity to improve field - service productivity by at least 30 % . Their solution improved the quality of work orders, time estimates and scheduling . They also found ways for foremen and planners to communicate better and then sharpened accountability by tying behaviors to metrics . REDUCE SPENDING . Over time, companies can build up legacy relationships with vendors and become complacent on price negotiations and service levels . Comprehensive and cross - company purchasing programs can give utilities more bargaining power and steeper volume discounts to reduce their procurement bills . They can also ask suppliers to take on tasks that they might have managed themselves, such as storing inventory or just - in - time delivery . Cooperatives for example, should review the cost of energy with their suppliers . To rein in energy costs , executives diagnosed total contract and negotiate a better price with current low cost of fuel for generation . They developed a sweeping plan to get better deals that included alternative supplier where possible, encouraging community solar, reducing non technical loss and developing stronger relationships with suppliers . They created more transparency in the procurement process across the company and set savings targets . The first year of the program saw price - on - price savings of about 20 % . RESTRUCTURE . Process and organizational improvements, which take time to develop and integrate into a utility, deliver lasting value . One utility launched a two - year program to reduce costs and improve effectiveness at the front line and in back office functions . Identifying “shadow functions,” where remote sites had staff that replicated work done at the company’s functional center, yielded some savings . Standardizing common processes across the enterprise and eliminating custom, one - off initiatives also added value . Third, the utility streamlined the managerial layer and overhead resources throughout the back - office and frontline functions . WAYS TO REDUCE COST

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