Global Utility White Paper CONFIDENTIAL e =Utility Value Chain The electricity value chain for a modern day fully integrated utility consists of Generation + Transmission + Distribution + Customers (see diagram below). Each segment of the value chain is a different business, with distinct risks and economic drivers. Competition has surfaced in each part of the value chain other than transmission and distribution (which are fully-regulated assets as they are deemed to be natural monopolies). Still, regulators have learned to bring indirect competition even to monopoly-regulated businesses by encouraging returns based on efficiency improvements or benchmarking to comparable companies. Basic Structure of the Electric System | . —a Transmission Lines ’ Subtransmission 500, 245, 230, and 138 kV g | Customer —————EE 26kV and 69kV 22 SE ES ‘ 2 ee eee Substation ; 8 Step-Down , +, 2 Transformer /— A Vas i— — gZ he a 5 Z X\ X\ . oo Customer lo | | a -_ 13kV and 4 kV i yy) YY | tle = ; . — Generator Step Transmission 4 = = Generating Station Cp Trenehanret sa ‘i | m= * Secondary Customer 120V and 240V Source: US Department of Energy 26 Electron Capital Partners, LLC HOUSE_OVERSIGHT_024227