PART 2 GUIDELINES. To be eligible to receive a financial incentive, the following conditions must be met:

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1 PART 2 GUIDELINES 1. Program Objective and Scope The objective of the Business Incentive Program ("BIP") is for Toronto Hydro-Electric System Limited ("Toronto Hydro") to provide financial incentives to its business customers to encourage the implementation of energy efficiency improvement projects ("Projects"). 2. Eligible Applicants To be eligible to receive a financial incentive, the following conditions must be met: (f) The facility for which the Project is proposed must be connected to the Toronto Hydro distribution grid for a minimum of one year prior to enrolment in BIP. The Project must be an energy conservation and demand management ("CDM") project that results in a reduction of at least 3 kilowatts of peak demand. The Applicant cannot receive funding in or from any other Ontario Power Authority or governmental authority sponsored incentive program with respect to the Project. For Project Application 3 kw to 100 kw and Project Applications 101 kw to 350 kw, the Applicant must not commence Project work until Applicant receives prior written approval from Toronto Hydro (the "Project Approval Letter"). Toronto Hydro will not approve Projects retroactively. Toronto Hydro shall notify the Applicant in writing of approval or ineligibility of the Project within five (5) Business Days of receipt of the Project Application along with all of the required supporting documentation (refer to Section 3, below). For Project Applications over 350 kw, Toronto Hydro shall notify the Applicant in writing of approval or ineligibility of the Project, in the form of a Project Approval Letter, within five (5) Business Days of receipt of the Project Application along with all of the required supporting documentation (refer to Section 3 below) at which time the Applicant shall: (i) enter into a non-disclosure agreement with Toronto Hydro (the "Non-Disclosure Agreement") ; and (ii) the Applicant shall enter into a written contractual agreement with Toronto Hydro for the Project work (the "Contract"). The Applicant must not commence Project work until the Applicant and Toronto Hydro enter into a Contract. Toronto Hydro will not approve Projects retroactively. Project work must start within ninety (90) days of receipt of a Project Approval Letter and completed (i.e. in-service, delivering peak demand reduction) and all invoices submitted to Toronto Hydro by no later than December 31, 2010, unless otherwise approved by Toronto Hydro, in its sole discretion. 3. Process and Forms Applicants are invited to complete and submit the Project Application (Part 1) either on-line, by facsimile, or by regular mail to the following address: Conservation Demand Management Business Incentive Program Toronto Hydro Electric System Limited 14 Carlton Street, 1 st floor Toronto, Ontario M5B 1K5 Fax: (416)

2 Applicant may combine Projects from multiple Applicant facilities in a single Application; however, the financial incentive payment is calculated based on each individual Applicant facility and not in the aggregate. Applicant may include multiple Eligible Technologies (as prescribed in Section 5, below) in one Project Application for the same Applicant facility. The Applicant must submit, without limitation, the following information, which may be submitted separately if it cannot be adequately provided in the application form, with the Project Application: A description of the proposed Project with the project material/labour cost estimate; A summary of the baseline loads to be replaced, the replacement loads, and the anticipated demand reductions resulting from the Project; and Detailed information to support the summary (i.e., technical information and specifications related to the baseline loads and replacement loads, results from test runs, studies, operation records, etc.) (f) (g) To assist the Applicant in calculating the peak demand reduction, the Applicant may use and submit Forms A and/or B, as applicable, downloadable from Except for residential and industrial properties, Projects for facilities 25,000 square feet or larger are subject to prior approval by the Ontario Power Authority. Toronto Hydro shall notify the Applicant of approval or ineligibility of such Project within five (5) Business Days of receipt of notice of approval/ineligibility from the Ontario Power Authority. Upon completion of the Project, the Applicant is required to submit the following to Toronto Hydro at the address noted in Section 3, above: Notice of Completion, (downloadable from indicating readiness for final inspection by Toronto Hydro; A summary of actual work completed and actual costs incurred, including those for materials, labour, consulting, etc.; and Invoices, receipts and where applicable, reports to verify performance and the achievement of peak demand reduction, the financial incentive claimed and that the achievement of peak demand reduction (e.g., data from test-runs) and any other relevant documents to support the costs summary. Invoices must be consistent with the costs indicated in the summary. 4. Financial Incentive Subject to subsection, below, the total financial incentive payment for a Project, if any, shall not exceed 50% of the total cost of the Project. The total financial incentive payable, if any, on multi-residential in-suite lighting retrofit Projects shall not exceed the total material cost of the Project. Toronto Hydro will pay the Applicant financial incentive in the form of a lump sum payment after the Project has been completed and the peak demand reduction is measured and validated by Toronto Hydro. Toronto Hydro reserves the right, in its sole discretion, to measure and verify the actual peak demand reduction and/or to obtain a third party's

3 assistance in measuring and verifying the peak demand reduction. Toronto Hydro may reject payout of any financial incentive, adjust the financial incentive, request repayment or withhold payment if results from the inspection indicate that the Project did not achieve the proposed peak demand reduction as indicated in the Project Application. It is the Applicant s responsibility to inform Toronto Hydro of any material changes that may result in lower peak demand savings than indicated in the Project Application. 5. Eligible Technology Peak demand reduction can be achieved by upgrading or implementing any of the following technologies ("Eligible Technology"): Lighting upgrades and controls; Equipment replacement e.g. chillers, fans, pumps; HVAC re-design, e.g., free cooling or ice storage; Variable speed drive motor controls; Building envelope; Building automation systems; Deep lake water cooling; Natural gas-fired generators; Other technologies or products that improve the energy efficiency of a facility load, or shift such load to off peak periods, such as Combined Heat and Power (CHP), solar photo-voltaic (solar PV) and solar water heating. 6. Peak Demand Reduction Periods Peak demand reduction is determined and calculated in accordance with the following criteria: Demand reduction measured in kilowatts, achieved during June 1 to September 30 ("Summer Peak") between the hours of 7:00 and 19:00 will be 100% eligible for financial incentive. Demand reduction measured in kilowatts, achieved during October 1 through May 31 ("Winter Peak") between the hours of 7:00 and 19:00pm will be 70% eligible for financial incentive. Demand reduction measured in kilowatts, achieved during off peak periods, January 1st through December 31st, between the hours of 19:00 and 7:00 of the following day is NOT eligible for financial incentive. The higher of the Summer Peak and the adjusted Winter Peak (as per above) is eligible for incentive. 7. Eligible Projects There are three general types of eligible peak demand reduction Projects: (i) Projects where there is industry-accepted technical information for the electrical equipment or devices to be upgraded or replaced. The technical information may be used to estimate the peak demand reduction. For example: (i) upgrading of fluorescent lighting from T12 with magnetic ballast to T8 with electronic ballast; (ii)

4 upgrading of electrical equipment to a more efficient replacement of the electrical equipment generating the same output. (ii) (iii) Projects having a "behind-the-meter" generator and the generated power is at a constant output level. The peak demand reduction is the output the generator is set to deliver. Projects where there is no established industry-accepted technical information for the baseline measures and/or new measures, and there is no electricity generation having a constant output. For such Projects, Toronto Hydro may accept the peak demand reduction determination based on a calculation of the average peak demand reduction from four different days during either the Summer Peak period or the Winter Peak period following the Project implementation. The Applicant must provide clear evidence to demonstrate the proposed peak demand reduction based on the load information before and after the implementation of the Project. For example, the implementation of software and hardware to reduce an Applicant's HVAC electricity demand during peak demand periods. Notwithstanding the foregoing, the Applicant is invited to submit its proposed methodology for calculating peak demand reduction for consideration by Toronto Hydro. Toronto Hydro shall determine the acceptability of such methodology. Peak demand reduction must not be achieved through the curtailment of business output. For example, shutting down a production line without increasing the efficiency and output of another production line to compensate will not be an acceptable or eligible Project. For lighting retrofit measures (not including lighting retrofit measures for in-suite lighting), the following shall apply: (i) (ii) Peak demand reduction achieved from indoor lighting that is always on during the day, such as indoor parking garage lights, exit signs, in-store lights, building hallway lights, office lights, etc., are eligible as demand reductions for both summer and winter. Peak demand reduction achieved from outdoor lighting, such as for parking lots, store signage, etc., is not eligible for summer, but is eligible for winter. Demand reductions from upgrading multi-residential in-suite lighting is eligible but subject to a peak kw savings period adjustment factor of 50% in consideration of the fact that in-suite lighting is generally not in use during peak periods. Examples of eligible Projects: Example 1 A building owner wants to upgrade his existing chiller to a high efficiency chiller system. The baseline is the current systems peak kw demand used to cool a 25,000 sq ft, single storey office building, primarily during the months of July through September (Summer Peak) with a current peak kw demand of kw. The peak kw demand of the replacement chiller system is kw, a peak reduction of 50 kw from the existing system. The peak demand reduction is 50kW, which is 100% eligible for incentive.

5 Example 2 A multi-residential apartment building proposes to replace existing in-suite incandescent light bulbs to energy efficient compact fluorescent lighting (CFL), and upgrade the underground parking garage lighting, as follows: 1. Replacing 1,000 60W in-suite light bulbs with 15W CFL bulbs. The demand reduction for the in-suite lighting is: 1000x(60-15)x0.5 (in-suite lighting adjusted as per Section 4) = 22.5kW 2. Converting 200 parking garage T12, 2-lamp, 40W fluorescent tubes and ballasts (93W) to T8, 2-lamp, 32W fluorescent tubes with electronic ballasts (63W). The underground parking garage demand reduction is: 200x(93-63)= 6.0kW. The Summer Peak demand reduction is (22.5kW + 6kW) = 28.5kW. The Winter Peak demand reduction is 28.5 kwx0.7 = 19.95kW. The higher of the two is eligible for financial incentive. 8. Project Permanence The Applicant shall ensure that the Project remain in service and delivering the peak demand reduction for a period of at least 36 months following Project completion, failing which the Applicant shall be deemed to be in default of this Agreement and Toronto Hydro may request repayment of the financial incentive. 9. Support For support regarding BIP, contact Toronto Hydro at (416) Due to the anticipated high interest in the BIP, please allow at least 72 hours for a Toronto Hydro representative to respond to your inquiry.