February, 2003

Engineering Society

Power and EnergyManagement Services

Jim BarkerProject Manager, Power and Energy Management Services(403) 233-1613

AgendaWho is BP?Alberta Electricity MarketFundamentalsPrice Pressures in 2003Customer Choice?Potential Power Strategies?Conclusions

Sales revenues, market value, and oil and gas reserves make BP one of the three largest integrated energy companies in the world, operating in 100 countries on six continents

Worldwide reserves of 19 billion BOE

Largest natural gas producer and reserves holder in North America

Top 5 natural gas marketer/trader in North America

Top 15 power marketer/trader in North America

Worldwide trader of: crude oil, refined products, chemicals, and LNG

World’s largest solar company providing leading edge development of photovoltaic technology

Who is BP?

Sources: BP 2001 Annual Report & Annual Accounts

BP has created a global gas and power stream

Opportunities created by several trends:

solid demand growth for gas and power

increasing demand for clean fuels

further deregulation and liberalization of markets

customer demand for new products and services

We are a commodity and service provider to over 700 customers

Who is BP Gas & Power?

Exploration/ Production

Refining & Marketing

Chemicals

bpbp

Gas & Power &

Renewables

What services does BP Gas & Power Offer?

Asset Management- Transportation- Storage- Multi-fuels- Producer Services- Power/Steam/Chilling

Energy Solutions- Natural Gas - Lubes- Power- Solar- Oil

Physical- Natural Gas- Power- NGL’s

Risk Management- Index- Fixed Price- Caps/Floors- Collars

Environmental- Energy Savings- Green Products

bp

Full Customer Choice Jan.1, 2001 (energy and admin fees)

Price increases for all customer groups

Meters > 250 MWh/year (50 hp motor) pay Pool Price

Meters < 250 MWh/year - Regulated Rate Option (RRO)

$110/MWh (11 cents) for energy in 2001 $70/MWh (7 cents) for energy in 2002

Default Supply versus Full Retail versus Self-Retail

Electricity in Alberta

Pre-Deregulation – Prior to 2001

Electricity = “Bundled Product”

Post Deregulation – After Jan. 1, 2001

Electricity Retailer & Commodity De-regulated

* Power PoolStill Regulated * EUB

* Marketers/ Generators

Generation Supply Capability

2002 YTD Supply Capacity

Utility Generation (Pre 1996)Coal Gas Hydro Total

ATCO 1563 111 1674EPCOR 762 837 - 1599Medicine Hat - 205 - 205TransAlta 3290 - 796 4086

5615 1153 796 7564

Interconnections B.C. 800 800Saskatchewan 150 150

950

Non Utility Generation (pre 1996)On-Site Industrial 780 780Small Power 35 wind(21) 52 109

889

New Generation (1996-2001) 2003

Net power to grid 9,856 MW

2002 DemandPeak Demand = 8100 MWAverage Load = 6900 MW

Saskatchewan- Max 150 MW

Imports from BC = 800 MW

Current Generation - 54% Coal- 36% Natural Gas- 8% Hydro- 2% Wind

Alberta Supply Source

Wind – 2.06%

Natural Gas – 39.90%

Coal – 50.37%

Water – 7.67%

Alberta Dispatch Curve

75

70 2002

65 2003

60 2005

55

50

45

40

35

30

25

20

15

10

5

0

$/M

Wh

CD

N

7500 90001500 3000 4500 6000

Cogen & Hydro

Coal

Gas

Average Demand - 2001

(6217 MW)

Peak Demand - 2001

(7934 MW)

Average Demand - 2002

(6689 MW)

Peak Demand - 2002

(8217 MW)

Alberta Market

EPCOR

Enmax

Enron

BP Canada Energy Company

Constellation Energy

Coral

TransCanada

Cognerra

IQ2

ValeoPower Corporation

Nexen

Energy Advantage

Alberta Power Pool

Historical / Forward Pricing ($/MWh)

$-

$100

$200

$300

$400

$500

$600

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$/M

Wh

Daily Average($/MWh)

30 Day Rolling Avg. Power

Jan. '01$141.39

Jan. '02$27.56

2003 2004

Cal '04$46.50

Cal '0358.00

Alberta Power Pool - Volatility

0%

500%

1000%

1500%

2000%

2500%

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9

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Pe

rce

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Vo

lati

lity

20 - Day RollingVolatility

Heat Rate

0.00

20.00

40.00

60.00

80.00

100.00

120.00

01-J

an-00

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GJ/

MW

h

Heat Rate Heat Rate - 30 Day Rolling Avg.

Cal '038.30

Average Heat Rate (GJ/MWh)

Q1 2001 - 13.49Q2 2001 - 15.11Q3 2001 - 14.25Q4 2001 - 12.00Q1 2002 - 10.20Q2 2002 - 12.25Q3 2002 - 11.70Q4 2002 - 11.32Q1 2003 - 11.69

Gas Prices

Imports and Exports

Kyoto (emissions trading)

Wires (congestion management)

Generation Supply and Demand

Rebates are now Rate Riders (Balancing Pool)

Government ? Definition of Success?

Counter-party Risk

Price Pressures in 2003

Sources: BP 2001 Annual Report & Annual Accounts

Function of size, back-office support and credit

capability

Select a retailer (Full Retail) or Self Retail

Energy Portion (float versus fixed, other)

Meter Data / EMS

Customer Choice?

Alberta market is workably competitive for energy. You can differentiate yourself by aggressively managing this piece (commodity, proper meters and demand side management).

Fixed Price Offers (sub $60/MWh energy is available)

Retail-admin ($1/MWh to $14/MWh)

Example: Industrial – 5 MW LoadEvery $1/MWh = $43,000/year !!!

* Significant savings can be achieved by managing your costs on Electricity price / retail fees

Can You Save Money on Your Power Bill?

Factors for consideration on developing your strategy:

Energy

Structured Products RRO’s ($70/MWh default versus August 2002 at $27/MWh) New Generation? Kyoto?

Wires

Understand your tariffs Rate Riders through 2003 Congestion Management?

Power Strategy – Customize Yours?

Factors for consideration on developing your strategy:

Admin & Retail Fees Get off Default Supply BP & Others Interests aligned with yours?

Other Industry Interpretation Budget Development

Ontario / Saskatchewan / British Columbia

Power Strategy – Customize Yours?

Why BP & Electricity?

Spent $65 million on electricity in 2001

One of the largest loads in the province

Have developed the required skill sets to support our business units

Logical outgrowth to 3rd party customers. Have added customers in the 250 kW to 40 MW size range.

Deregulation has happened!!

No more status quo - Big Winners and Big Losers

Focus on Energy and Administration Cost

Components

Understand consumption and profile

Contact us with your power bills and we’ll see if we

can help!!

Visit us at ‘www.bpcanadapower.com’

Conclusions

Alberta Year On DemandAdjusted

5000

5500

6000

6500

7000

7500

Janu

ary

Febru

ary

Mar

chApr

ilM

ayJu

ne July

Augus

t

Septe

mbe

r

Octobe

r

Novem

ber

Decem

ber

MW

1999 2000 2001 2002 2003

Full Billing and load settlement (BP is registered as an electricity self-retailer and retailer)

Synergy with BP Gas and Power trading Develop procurement and hedging strategies – Structured

Products Prudential Cover for Customers (AA+) Monitor and analyze critical industry developments Regulatory representation and advocacy Assess opportunities for load shifting/shedding Perform billing analysis and rate optimization Compare time of use metering to residual load profiling Build a site-specific database of energy expenditures Evaluate on-site or off-site 3rd party generation supply

opportunities Daily and Weekly Customer Publications

What services does BP Power & EMS offer?

BP Power Team

President

Brian Frank

VP, Power & Energy Management

Steve Dowhanik

Engineering / Gas&Power Trading / Government &

Public Affairs

Project Mgr. Power Origination& EMS

Jim BarkerLouise Dormaar

Engineering / Procurement / Retail Electricity / Sales in AB

(20 months) / Business Development (Cogeneration

Development-250 MW)

Project Mgr. Retail & EMSPeter Burgess

Engineering / RetailElectricity / Billing &

Settlement Systems Expert

RegulatoryNorm Mills

Gas&Power RegulatoryIntervention

Power AnalystTarek Jayoussi

Load Analysis / CustomerInterface / Data Analysis

Power AnalystJennifer Weatherill

Load Analysis / CustomerInterface / Data Analysis

Analysis & Admin.Karen Milne

Billing & PayablesVikki Kuntz

Billing & SettlementSystems Expert / Issues

Bills to Internal & 3rd Party Customers

Power TraderJohn Speights