UNDERSTANDING YOUR UTILITY BILL A GUIDE FOR BUSINESSES IN INDIANA

TABLE OF CONTENTS Introduction... 5 Basic Billing Concepts... 6 Electric Energy and Demand... 6 Electric Consumption and Charges... 7 Metering Electric Energy and Demand... 7 Understanding Electric Demand... 8 How to Read Your Bill Statement... 10 Pricing Options... 14 Glossary of Terms... 15 3

INTRODUCTION Understanding your utility bill is an important first step in lowering your energy costs. This guide provides you with simple and direct explanations of the components of your utility bill and how it is calculated. Many businesses have found they can lower their utility bills without impacting their operations. You may be able to reduce your energy costs by revising operating schedules, replacing inefficient equipment or selecting a different rate schedule. You can also take advantage of our energy efficiency and demand response programs: Smart $aver Incentives help you lower the initial costs of purchasing energy efficient equipment to help control your operating costs and improve your bottom line. These programs are currently available for customers whose demand for energy is less than 500 kilowatts (kw). For customers with higher demand, regulatory approval of Smart $aver Incentives is pending. Our PowerShare demand response program rewards your business for curtailing your energy usage during periods of peak demand. Please contact your Account Manager, or go to www.duke-energy.com for more information. See the Glossary on Page 15 for definitions of terms appearing in bold. 5

BASIC BILLING CONCEPTS ELECTRIC ENERGY AND DEMAND Example: Two main types of charges appear on your electric bill. The energy component of your bill measures the quantity of electricity supplied in kilowatt-hours (kwh). The demand component of your bill measures the power supplied, in kilowatts (kw). When you turn on an electric appliance, you create demand for power. This instantaneous amount of electricity demanded is measured in watts. A 100-watt light bulb, for example, demands 100 watts of electricity when it is energized. Ten 100-watt light bulbs would demand 1,000 watts (10 x 100 = 1,000) or 1 kilowatt (kw). So kilowatts measure the rate at which electricity is used. Electric utilities invest in generating and distribution equipment to supply the power you need, when you need it. Because electricity is not easily stored, it is generated as needed. So we must have adequate capacity on hand to meet customers maximum requirements, both for quantity (kwh) and power level, or demand (kw). Electric rates are set to cover the total cost of providing both. It may help to use the analogy of the odometer and speedometer in a car. The amount of energy used (kilowatt-hours) can be compared to miles driven, as shown on the odometer. Energy demand (kilowatts) is more like the speed or the rate at which the miles are driven, as shown on the speedometer. Odometer (kilowatt-hours) 100 watts 1,000 watts or 1 kilowatt If this same 1-kilowatt load is operated for one hour, 1 kilowatt-hour (kwh) of electricity is used (1 kilowatt x 1 hour = 1 kilowatt-hour). The kilowatt-hour is the most common unit for measuring electrical energy usage. Kilowatts measure the demand, or rate of energy usage, at any point in time. Kilowatt-hours measure the total amount of energy used. Speedometer (kilowatts) 6 Why does Duke Energy measure demand? We need to plan for the maximum electrical demand that could be expected from your business during the year. How we plan to meet your energy needs is similar to your decision process when you purchase a car. For example, if you want a car that can go up to 90 miles per hour, it needs to have a large enough engine. See the Glossary on Page 15 for definitions of terms appearing in bold.

Even if you never actually get the chance to drive that fast, you plan for that possibility by buying a car with capacity to do so. Similarly, Duke Energy installs facilities to satisfy your highest energy demands, even though your operations may reach that level only a few times a year. We do this to reserve capacity for you on the Duke Energy system (generating plants, and transmission and distribution lines) and to ensure we properly size the equipment necessary to serve your business. By measuring demand, Duke Energy can better ensure that facilities are properly sized and that customers are charged appropriately for their capacity needs. This helps us to meet the energy needs of all our customers. Electric consumption and charges If demand readings are shown on your billing statement, you may notice two separate entries. One is actual demand (measured by the meter) and the other is billing demand. Your utility bill is based on billing demand, which may not be the same as actual demand for the billing period. Billing demand is based on metered voltage versus delivered voltage. This can account for adjustments (plus or minus) to the metered kilowatthours (kwh), kilowatts (kw) and kilovolt-amperes (kvar). Power Factor, Reactive Power and kvar Motors (as well as magnetic lighting ballasts, transformers and other inductive equipment) draw two kinds of current. Electrical current is converted by the motor to useful power. Magnetizing current carries no energy, but is needed to make the motor operate and the transformer hum. Power factor, a measure of how effectively the current delivered to the motor is converted into useful energy, is normally shown as a percentage. Many electric utilities charge extra for poor (low) power factor, because it costs the utility more to build and operate the additional equipment that carries this extra current. Utilities may call this charge a power factor charge, a reactive power charge or a kvar charge. For Duke Energy Indiana, you will see a kvar charge on your bill. Metering electric energy and demand The meters used at residences and some small businesses register only electrical energy usage in kilowatt-hours (kwh). The meter continuously measures the number of kwh used. At the end of each billing period (typically one month), a kwh reading is obtained from the meter. The previous month s reading is then subtracted from the new reading to determine kwh consumption. In some cases, the meter registers a known portion of the kwh used, and a multiplier is used to determine the final actual usage. The multiplier, if applicable, is shown on your billing statement. Meters at businesses that have three-phase electric service measure both kilowatt-hours (energy) and kilowatts (demand). Kilowatts measure the average rate at which kilowatt-hours are used during a certain time interval. The time interval used by Duke Energy Indiana is 30 minutes. Example: If a 10-kW electrical load (like a commercial oven) is operated for 30 minutes, the demand register on the meter will record 10 kw. During this same 30 minutes, the kwh register on the meter will record the use of 5 kilowatt-hours (10 kw x ½ hour = 5 kwh). The demand register will retain this 10-kW demand unless higher demand occurs during any subsequent 30-minute interval during the billing month. See the Glossary on Page 15 for definitions of terms appearing in bold. 7

Understanding ELECTRIC demand INTEGRATED DEMAND A demand meter measures the average maximum 30-minute kilowatt demand during the applicable billing period. Since the demand measurement is integrated, or averaged over each 30-minute period during the billing month, short periods of intense use, such as the start-up of a motor, will have minimal impact on the registered demand. At the end of the billing period, Duke Energy records both the kilowatt-hour and the maximum 30-minute integrated kilowatt demand readings from the meter. The demand register is then reset so it can measure maximum demand for the following month. Example: 30 Minute Integrated Demand Profile This example illustrates how demand is calculated for an office with about 4,500 square feet of space, during the summer. For the first five minutes, the lights are on and the cooling system is running. During the next 10 minutes, the air conditioning system cycles off, but several pieces of office equipment (computers, printers and a copy machine) are in use. During the last 15 minutes, all the equipment is in use and the air conditioning system cycles on. The resulting integrated demand for this 30-minute period is illustrated below. 40 35 30 Demand (kw) 25 20 15 10 5 0 5 10 15 20 25 30 Time (Minutes) Demand (kw): Lights & Cooling Lights & Equipment Lights, Equipment & Cooling 30 kw x 5 minutes + 18 kw x 10 minutes + 36 kw x 15 minutes = 30 minutes 30 minutes 30 minutes 5 kw + 6 kw + 18 kw = 29 kw Even though the maximum demand was 36 kw, the integrated demand is only 29 kw for this 30-minute interval. 8

Example: 24-Hour Integrated Demand Profile Continuing with our small-office example, demand is low in the early morning hours, since most of the equipment is off. Maybe only a few exterior lights and the security system are on. As the business day begins, all the lights and equipment are turned on and workers begin to arrive, producing a small peak in the early hours. Then, as the outside temperature warms, the need for cooling inside the office increases, and the cooling system has to respond. Note the highlighted area between 1 p.m. (13:00) and 1:30 p.m. (13:30). This represents the 30-minute interval discussed in the previous example. Demand finally reaches a peak at about 3 p.m. (15:00). Then, as business winds down, the outside temperature cools and the cooling system begins to cycle on and off for longer intervals, demand begins to drop. After the business closes down for the evening, demand returns to its minimal level. Demand (kw) 35 30 25 20 15 Demand During Each Interval Quantity of Energy Consumed Highest Demand of the Day 30-Minute Demand Interval For this example, the maximum 30-minute demand for the day was 34 kw. 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 a.m. p.m. 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 24:00 Time (Hours) 9

How to read your bill statement : page 1 The first page of your bill contains remittance information, general account information, and a summary of your energy consumption and charges. Duke Energy Indiana has several different rate codes, based on the actual service delivered. Your electric bill may look a little different than this example, but it will contain the same basic billing information as noted below. If you have questions about your specific bill, please contact your account manager. 1. Remittance Document This section of the bill is your remittance document. Please return it to Duke Energy with your payment, indicating the amount enclosed so that we can properly apply your payment to your account. 2. name and Address This is the name on the account and the address where service is provided. 3. Customer Service Call us 24 hours a day, seven days a week for information about your account or any of our programs or services. 4. account Number This is the Duke Energy account number for the meter billed on this statement. 5. Payment and Billing Information This tells you where to send your payment, as well as information regarding the timing of payments, meter readings and bill preparation. 6. Energy Consumption Summary This is a summary of your energy consumption for the billing period covered by this statement. Meter numbers are provided for electric service, along with the dates your meters were read and the number of days between meter readings. Previous and present meter readings are provided so that you can verify your energy consumption. In some cases, the meter registers only a portion of the kilowatt-hours used, and a multiplier is used to determine actual usage. The multiplier, if applicable, is shown here on your billing statement. Your energy usage, or consumption, is the difference between your present and previous meter readings. Electric consumption is measured in kilowatt-hours (kwh). 7. Summary of Electric Charges This section provides a summary of the charges relating to your electric consumption, including the rate code used to compute your electric charges. 8. Taxes Indiana state tax of 7 percent of the total current bill will appear here, if applicable. (If the account is tax-exempt, this box will not appear on the bill.) 9. Current Billing This section summarizes your current billing and payment information. The amount due to Duke Energy from your previous bill is listed first, followed by the amounts you have paid since your last billing statement, any returnedcheck charges, late-payment fees or other adjustments this results in the Balance Forward. Added to the Balance Forward are your Current Electric Charges and Taxes, resulting in the Current Amount Due to Duke Energy. 10. due Date, Amount Due and Late Charge Average cost per kwh, due date, amount due, and amount due after due date. 10

1 Due Date Amount Due Account Number 0000-1234-05-6 MA 18 Aug 19, 2011 $4,572.87 For less detailed billing information on your monthly bill, check box on right $ $ HelpingHand Contribution Amount Enclosed (for Customer Assistance) Acme Enterprises Attn: Accounting Dept 123 Main St Hanover IN 47243-8955 P.O. Box 1326 Charlotte NC 28201-1326 400 00001234567 00123456789 123456789 00001234567 Page 1 of 2 2 3 4 Name /Service Address For Inquiries Call Account Number Acme Enterprises Attn: Accounting Dept 123 Main St Hanover IN 47243 Duke Energy 1-800-555-5555 For Account Services, please contact Betty Smith 0000-1234-05-6 5 Mail Payments To Account Information PO Box 1326 Charlotte NC 28201-1326 Payments after Jul 28 not included Last payment received Jul 11 Bill prepared on Jul 28, 2011 Next meter reading Aug 25, 2011 6 Meter Number Reading Date Meter Reading From To Days Previous Present Multi Usage Actual kw Elec 012345600 Jun 28 Jul 27 29 14441 15860 40 56,760 120.00 Electric - Commercial Current Billing Usage - 56,760 kwh 120.00 kw 7 Amt Due - Previous Bill $ 9 41.60 kvar Payment(s) Received 4,446.47cr Duke Energy Rate - Rate HSN0 $ 4,273.71 Balance Forward 0.00 Current Electric Charges $ 4,273.71 Current Electric Charges 4,273.71 Taxes 299.16 8 Current Amount Due $ 4,572.87 Taxes Taxes $ 299.16 Due Date Amount Due After Aug 19, 2011 10 Average Cost: $ 0.0753 per kwh Aug 19, 2011 $4,572.87 $4,701.08 11

How to read your bill statement : page 2 Page 2 and subsequent pages of your bill contain the details of your electric charges. Here, Duke Energy provides a breakdown of your consumption and the various charges relating to your specific rate code, which appears on Page 1. Your account manager can answer any questions you may have about your bill. 11. electric Consumption and Demand Here you will find information on your electric usage, including your electric meter number, electricity consumption (in kilowatt-hours), 30-minute peak monthly demand (in kilowatts), reactive power (in kvar) and the billing period. If applicable, meter-specific multipliers used to compute your energy consumption and peak demand also appear here. If your rate code includes a metering adjustment, that adjustment will appear here as well. 12. details of Electric Charges This section presents the information we use in computing your electric charges. The rate code is provided, along with an itemized list of its components. Most rate codes include a fixed Connection Charge, which is independent of your electric consumption or peak demand. This charge is intended to cover Duke Energy s fixed costs of rendering electric service, billing and customer care. Demand Charge This is based on your 30-minute peak demand for the current billing period. (This demand (kw) may be a stand-alone charge, or it could be used to determine the monthly load factor and the energy usage (kwh) for the Rate Code LSN0 billing calculation.) Energy Charge This is the basic charge for your energy consumption. kvar Charge This is your reactive energy (power factor) charge. Rider 60 (Fuel Adjustment) This covers the cost of coal, natural gas and related fuel costs for running our power plants. This charge also covers our cost to purchase power when that is more economic than generating power. Rider 61 (Coal Gasification Adjustment) This tracker currently allows the company to recover financing costs for construction and related expenses associated with the IGCC coal gasification plant in Knox County, Ind. Once the plant is operational, it will allow for recovery of the costs of operating and maintaining the facility, as well as the cost of the plant. Rider 62 (Pollution Control Adjustment) This charge reflects the financing cost for pollution control equipment installed at Duke Energy Indiana plants. Rider 63 (Emission Allowances) This tracker allows the company to recover the cost of purchasing emission allowances in order to meet pollution control requirements, or to return revenue to customers for the sale of unused emission allowances. Rider 66 (Demand Side Management) This tracker reflects the costs of Duke Energy s program to help customers conserve and use less electricity. (This rider does not apply to commercial and industrial customers with peak demand greater than 500 kw.) Rider 67 (Cinergy Merger Credit) This tracker allows Duke Energy Indiana to pass on to its customers any savings benefits due to the Cinergy merger. Rider 68 (Midwest Independent System Operator Adjustment) This tracker allows the company to recover costs related to its participation in a regional transmission operating system, in order to safely and efficiently move power among utilities as needed. Rider 70 (Reliability Adjustment) This tracker allows the company to recover costs for power purchased to meet reserve requirements established by the regional transmission operator, or to return revenues to customers from the sale of surplus capacity and/or energy to other utilities. Rider 71 (Clean Coal Adjustment) This tracker recovers the cost of operating and maintaining pollution control equipment. Other Charges If applicable, excess facility or backup capacity. 13. total Current Electric Charges This will match the Current Electric Charges on Page 1 of your bill. 14. explanation of Taxes This will match the Taxes shown on Page 1 of your bill. 15. electric Usage Graph For your convenience, Duke Energy provides a graph of your electric consumption for the past year, showing your monthly kwh usage. You can use this information to analyze your energy consumption and look for ways to use energy more efficiently in your business, and reduce your energy bill. 12 See the Glossary on Page 15 for definitions of terms appearing in bold.

of 2 Name Service Address Account Number Acme Enterprises Attn: Accounting Dept 123 Main St Hanover IN 47243 0000-1234-05-6 11 Electric Meter - 012345678 Duke Energy Rate HSN0 - High Load Factor Sec Srv 12 Multipliers - 40 kwh Usage - 56,760 Demand Read - 03.00 Actual kw - 120.00 Billed Kvar - 41.60 Power Factor - 94.4% Jun 28 - Jul 27 29 Days Connection Charge $ 15.00 Demand Charge 120.00 kw @ $ 14.06000000 1,687.20 Energy Charge 56,760 kwh @ $ 0.01583000 955.27 KVAR Charge 41.60 Kvar @ $ 0.24000000 9.98 Rider 60 - Fuel Adjustment 56,760 kwh @ $ 0.01420700 806.39 Rider 61 - Coal Gasification Adj 120.00 kw @ $ 1.91436100 299.72 Rider 62 - Pollution Control Adj 120.00 kw @ $ 2.04057600 244.87 Rider 63 - Emission Allowance 56,760 kwh @ $ 0.00032300 18.33 Rider 66 - DSM Ongoing 56,760 kwh @ $ 0.00021600 12.26 Rider 67 - Cinergy Merger Credit 56,760 kwh @ $ 0.00029700cr 16.86 cr Rider 68 - Midwest Ind Sys Oper Adj 56,760 kwh @ $ 0.00072500 41.15 Rider 70 - Reliability Adjustment 56,760 kwh @ $ 0.00035700 20.26 Rider 71 - Clean Coal Adjustment 120.00 kw @ $ 2.08452600 250.14 4,273.71 Total Current Electric Charges $ 4,273.71 13 Explanation of Taxes Taxes 14 Indiana State Tax $ 299.16 $ 299.16 Total Taxes $ 299.16 kwh 100,000 80,000 60,000 40,000 20,000 0 Electric Usage J A S O N D J F M A M J J Calculations based on most recent 12-month history Total Usage 598,680 Average Usage 49,990 15 Electric JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL 33,090 55,680 53,920 50,080 41,960 50,980 45,528 45,120 45,880 47,640 47,580 59,800 56,760 13

Pricing options A number of rate schedules are available for business and institutional customers. Other pricing options may be available based on your specific circumstances please check with your account manager for more information. Principal electric pricing options Rate Description Demand Charge? Energy Charge? kvar charge? Rate riders? Rate CS Commercial Service Secondary Distribution Service Applicable to all single-phase voltage, 120/240 volts or 120/208 volts, three-wire, as designated by Duke Energy Indiana. No Yes No Yes Maximum Provision Rate limited to a maximum load requirement of 75 kw per metered account Minimum Provision Connection Charge Rate LLF Low Load Factor Service Secondary, Primary or Transmission Service Applicable to all single-phase or poly-phase voltage supplied by Duke Energy Indiana. Yes Yes Yes Yes Minimum Provision Connection Charge based on delivered voltage Load Factor Provision for Secondary Service delivery Interval data meters installed for accounts with demand over 500 kw Metering Adjustment Metered voltage versus delivered voltage Rate HLF High Load Factor Service Secondary, Primary or Transmission Service Applicable to all single-phase or poly-phase voltage supplied by Duke Energy Indiana. Minimum load requirement of 25 kw. Yes Yes Yes Yes Minimum Provision Connection Charge based on delivered voltage Demand and Energy Provision Charges based on delivered voltage Metering Adjustment Metered voltage versus delivered voltage Interval data meters installed for accounts with demand over 500 kw Annual prorated 14-day maintenance periods for customers at Primary delivery or higher 14 See the Glossary on Page 15 for definitions of terms appearing in bold.

Glossary of terms BILLING demand (kw) or BILLING MAXIMUM LOAD Customer s maximum load expressed in kilowatts (as adjusted per the applicable rate), used to calculate the bill. BILLING PERIOD OR MONTH The interval between two consecutive meter readings for billing purposes, taken every 30 days to the extent practicable. DELIVERed VOLTAGE The voltage of the utility s facilities at the delivery point. DEMAND The rate at which energy is used, measured in kilowatts (1,000 watts) and peak-averaged over 30-minute intervals. ENERGY The active component of the quantity of supply, measured in kilowatt-hours. kilovolt-ampere (kvar) 1,000 reactive volt-amperes (Var). kilowatt (kw) 1,000 Watts. kilowatt-hour (kwh) The use of the active component of power where 1 kwh is equal to 1 kw used for 1 hour. load FACTOR (LF) kwh divided by the product of the average hours per month (730 hours), times the kw maximum load in the month. Expressed as a percentage. MAXIMUM LOAD The maximum integrated rate of use of power during a specified time interval as provided in the rate schedule, expressed in kw. METEring ADJUSTMENT If metered voltages exceed delivered voltages, before computing the charges, the actual measurement of energy, kvar and Billing Maximum Load is decreased by 1 percent. If delivered voltages exceed metered voltages, before computing the charges, the actual measurement of energy, kvar and Billing Maximum Load is increased by 1 percent. METERed VOLTAGE The voltage at which service is metered, irrespective of the delivery voltage. MULTIPLIER Factor used with certain meter types to determine actual usage. POWER FACTOR (PF) In rate schedules providing for power factor adjustment, PF is calculated from the relation between the reactive (RkVah) and the active (kwh) components of energy used, expressed as a percentage. RATE SCHEDULE A part of the tariff which sets forth the availability and charges for service supplied to a particular class of customers. RIDER A part of the tariff setting forth supplemental provisions applicable to specific rate schedules. RkVah The metered use of the reactive component of power. Var Reactive component of power. Watt (W) Active component of power. The electrical unit of real power. 15

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