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ENERGY STRATEGY
EXECUTIVE SUMMARY
(APRIL 27TH VERSION)
THE CHALLENGE
IT & SERVICES
PORTFOLIO
OUR CURRENT
ENERGY PRACTICE
THE SALES &
SERVICE PIPELINE
THE ENERGY
MARKETPLACE
A PROPENSITY FOR
CHANGE YIELDS
OPPORTUNITIES
OUR FOCUS
A MARKET ENTRY
STRATEGY
THE VALUE
PROPOSITION
OUR ISSUES &
OUR RESPONSES
SUMMARY
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What are we trying to accomplish and, over what time frame?
The Challenge...
[CHART]
<Table>
<Caption>
1995 1996 1997 1998 1999 2000 2001 2002
Annual Revenue ($M): 54 63 98 98 118 141 169 203
Base Revenue ($M): 38 43 40 50 60 101 116 146
-------- -------- -------- -------- -------- -------- -------- --------
Backlog ($M) 332 291 280 260 420 390 550 460
-------- -------- -------- -------- -------- -------- -------- --------
Rev Growth Rate (%): 25 17 55 0 20 20 20 20
Base Growth Rate (%): 25 13 (16) 25 20 68 15 26
Operating Margin (%): 23 24 24 25 22 23 24 25
</Table>
THE CHALLENGE
IT & SERVICES
PORTFOLIO
OUR CURRENT
ENERGY PRACTICE
THE SALES &
SERVICE PIPELINE
THE ENERGY
MARKETPLACE
A PROPENSITY FOR
CHANGE YIELDS
OPPORTUNITIES
OUR FOCUS
A MARKET ENTRY
STRATEGY
THE VALUE
PROPOSITION
OUR ISSUES &
OUR RESPONSES
SUMMARY
2
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What are we trying to accomplish and, over what time frame?
IT and Services Portfolio...
<Table>
HIGH ACCELERATING OUR CLIENTS' TO MARKET CAPABILITIES PROCESS DESIGN & ENTERPRISE DEVELOPMENT
PROGRAM MANAGEMENT, DEVELOPING NEW MARKETS,
APPLICATION DEVELOPMENT, SOLUTIONS ARCHITECTS, &
& SYSTEMS INTEGRATION PROCESS OUTSOURCING
[CHART] [CHART]
+
BUSINESS
IMPACT
+
[CHART] [CHART]
REDUCING IT COSTS MANAGING COMPLEXITY & INTRODUCING NEW
ENABLING TECHNOLOGY
DATA CENTER MANAGEMENT DESK TOP, NT
LOW LEGACY MAINTENANCE LAN/WAN
TRADITIONAL + TECHNOLOGY + TRANSFORMATION
</Table>
THE CHALLENGE
IT & SERVICES
PORTFOLIO
OUR CURRENT
ENERGY PRACTICE
THE SALES &
SERVICE PIPELINE
THE ENERGY
MARKETPLACE
A PROPENSITY FOR
CHANGE YIELDS
OPPORTUNITIES
OUR FOCUS
A MARKET ENTRY
STRATEGY
THE VALUE
PROPOSITION
OUR ISSUES &
OUR RESPONSES
SUMMARY
3
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How Is This Different From What We Are Doing Today?
PSC's Current Energy Practice...
o Formulated 1992
o Accounts 5 (EME, SCE, C&SW, ISO, PX)
o People 750
o Growth CAGR 27%
o 1997 Highlights
- Growth 55%
- Revenue > 10% PSC
- Account of Reference
o Significance
- First Outsource in U.K.
- At the "pit face" of U.K. deregulation
- Built USA's first retail ISO in California
- Heavily involved in forefront of Calif
deregulation - leading US market
- Highly visible industry subject matter experts
THE CHALLENGE
IT & SERVICES
PORTFOLIO
OUR CURRENT
ENERGY PRACTICE
THE SALES &
SERVICE PIPELINE
THE ENERGY
MARKETPLACE
A PROPENSITY FOR
CHANGE YIELDS
OPPORTUNITIES
OUR FOCUS
A MARKET ENTRY
STRATEGY
THE VALUE
PROPOSITION
OUR ISSUES &
OUR RESPONSES
SUMMARY
4
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How Is This Different From What We Are Doing Today?
Developing Our Sales and Services Pipeline...
<Table>
HONE & CREATE IT PROCESSES DEVELOP NEW OFFERINGS
[2] [3]
+
BUSINESS
IMPACT
[1] [4]
OPTIMIZE TRADITIONAL IT [ILLEGIBLE]
TECHNOLOGY +
OUR PIPELINE
[1] [2] [3] [4]
LG&E EME LG&E Retail Systems [ILLEGIBLE]
Shell Calif PX Shell, LG&E - ISCM
National Gas Clearing ISO work Clearing & Settlements
Sempra - ServCo
EnerACT/OnSight
</Table>
THE CHALLENGE
IT & SERVICES
PORTFOLIO
OUR CURRENT
ENERGY PRACTICE
THE SALES &
SERVICE PIPELINE
THE ENERGY
MARKETPLACE
A PROPENSITY FOR
CHANGE YIELDS
OPPORTUNITIES
OUR FOCUS
A MARKET ENTRY
STRATEGY
THE VALUE
PROPOSITION
OUR ISSUES &
OUR RESPONSES
SUMMARY
5
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What is Our Vision of the World?
The Energy Market Place...
o COST DRIVEN
o COMMODITY MKT
[CHART]
ANNUAL IT SPEND (RATE)
o Chemicals 3.5 (7%)
o Oil 4.5 (8%)
o Mining 1.5 (2%)
o Utility 6.0 (20%)*
o Capital Intensive
o Financially Solid
o Global Change
o From Monopolistic to Open Markets
o Consolidation
o New Entrants Emerging
o Processes Unbundling
* "COMPLIANCE", OR MARKET RESTRUCTURING EFFORTS, CAN BE EXPECTED TO
SIGNIFICANTLY INCREASE THE UTILITIES' IT SPENDING PATTERNS
THE CHALLENGE
IT & SERVICES
PORTFOLIO
OUR CURRENT
ENERGY PRACTICE
THE SALES &
SERVICE PIPELINE
THE ENERGY
MARKETPLACE
A PROPENSITY FOR
CHANGE YIELDS
OPPORTUNITIES
OUR FOCUS
A MARKET ENTRY
STRATEGY
THE VALUE
PROPOSITION
OUR ISSUES &
OUR RESPONSES
SUMMARY
6
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What is Our Vision of the World?
A Propensity for Change which will yield Opportunities...
$ The future shape of things to come:
Utilities will be forced to spend significant IT moneys to meet statutory
market restructuring "compliance" requirements- e.g. "Rule of Thumb": $100
for @ customer. These expenditures are over and beyond normal annual IT
spends.
[CHART]
<Table>
<Caption>
1995 2000 2005 2010
USA 4000+ Companies
80 Million Customers
($8 Bn over 10 years)
Europe
3800 Companies
51 Million Customers
($5 Bn over 15 years)
UK 15 Companies
23.5 Million Customers
</Table>
Markets are deregulating on a global basis...
THE CHALLENGE
IT & SERVICES
PORTFOLIO
OUR CURRENT
ENERGY PRACTICE
THE SALES &
SERVICE PIPELINE
THE ENERGY
MARKETPLACE
A PROPENSITY FOR
CHANGE YIELDS
OPPORTUNITIES
OUR FOCUS
A MARKET ENTRY
STRATEGY
THE VALUE
PROPOSITION
OUR ISSUES &
OUR RESPONSES
SUMMARY
7
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Our New Approach & Why We Feel it Will Succeed
Our Focus...
o Exploit our knowledge of the deregulatory markets in U.K. and
California to design & roll-out (4) integrated service offerings
focused on developing significant replicable transaction-based
services & annuity enterprises
o Design and develop multi-industry strategic service offerings e.g.
Integrated Supply Chain Management, Settlements & Clearing, etc.,
building upon PSC's strategic competencies
o Create Incubators for developing PSC's competencies in strategic
delivery capabilities e.g. Software factory and off-shore application
development production
o Find and close a long-term anchor contract creating backlog to balance
our service portfolio and providing a commercial platform from which
we can build and develop our teams
o Leverage our present relationships winning more of the business and
technology services from our existing clients
o Build information systems & infrastructures enabling our clients to
adapt rapidly to market changes increasing their competitiveness and
securing high return on IT investments
o Select and develop 5 leaders to be delivered as Corporate leadership
resources
THE CHALLENGE
IT & SERVICES
PORTFOLIO
OUR CURRENT
ENERGY PRACTICE
THE SALES &
SERVICE PIPELINE
THE ENERGY
MARKETPLACE
A PROPENSITY FOR
CHANGE YIELDS
OPPORTUNITIES
OUR FOCUS
A MARKET ENTRY
STRATEGY
THE VALUE
PROPOSITION
OUR ISSUES &
OUR RESPONSES
SUMMARY
8
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Our New Approach & Why We Feel it Will Succeed
A Market Entry Strategy...
CHANNELS TO MARKET
<Table>
<Caption>
SERVICE OFFERINGS EXISTING NEW
- ----------------- --------------------------------------- ---------------------------------
EME C&SW PX ISO SCE SHELL LG&E ENRN SEMPRA
--------------------------------------- ---------------------------------
SERVICE INFRASTRUCTURE
SETTLEMENTS &
CLEARING [X] [X] [X] [X] [X] [X]
RETAIL [X] [X]
ISCM [X] [X]
MARKET RESTRUCTURING
COMPLIANCE
ENGINE [X]
TRADING [X]
OPTIMIZATION &
MODELING [X]
PRODUCTS & SERVICES
INNOVATION
ENERSHOP(ENERACT) [X]
ENERSHOP(ONSIGHT) [X]
RETAIL [X] [X]
</Table>
THE CHALLENGE
IT & SERVICES
PORTFOLIO
OUR CURRENT
ENERGY PRACTICE
THE SALES &
SERVICE PIPELINE
THE ENERGY
MARKETPLACE
A PROPENSITY FOR
CHANGE YIELDS
OPPORTUNITIES
OUR FOCUS
A MARKET ENTRY
STRATEGY
THE VALUE
PROPOSITION
OUR ISSUES &
OUR RESPONSES
SUMMARY
9
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What Effect Will This Have On Our Clients?
The Value Proposition Or "What's In It For Me?"
<Table>
<Caption>
CEO PSC
--- ---
1. SERVICE o REDUCED "TIME TO MARKET" o CREATION OF DIGITAL COMMERCE
INFRASTRUCTURE: I/P. TRANSACTION ENGINE
o LARGE SCALE COST
REDUCTIONS o LONG TERM SERVICE CONTRACTS
& BACKLOG
o CASHFLOW IMPROVEMENTS
o FOUNDATIONS FOR INFO
CLEARINGHOUSE & OTHER
VALUE-BASED ENTERPRISES
2. MARKET o STATUTORY LEGAL o CREATION OF BLUEPRINT FOR
RESTRUCTURING COMPLIANCE REPEATABLE PROCESSES - HIGH
REVENUE OPPORTUNITIES
o LEVERAGING ASSETS
o POSITIONING FOR FUTURE TECH O/S
o BUILDING "GROWTH"
ACQUISITION ENGINES o HIGH MARGIN & PERFORMANCE
SHARING SERVICE OFFERINGS
ENERGY TRADING o SIGNIFICANT
& RISK MANAGEMENT COMPETITIVE ADVANTAGE o BASIS OF ALLIANCES WITH MARKET
IN "HIGH STAKES" GAME MAKERS
o RISK MITIGATION
3. PROD & SVC o NEW REVENUE SOURCES o CREATE & OPERATE ANNUITY SERVICES
INNOVATION
o NEW MARKET ENTERPRISES o NEW SERVICE ENTERPRISES - ORGANIC
GROWTH ENGINES
</Table>
THE CHALLENGE
IT & SERVICES
PORTFOLIO
OUR CURRENT
ENERGY PRACTICE
THE SALES &
SERVICE PIPELINE
THE ENERGY
MARKETPLACE
A PROPENSITY FOR
CHANGE YIELDS
OPPORTUNITIES
OUR FOCUS
A MARKET ENTRY
STRATEGY
THE VALUE
PROPOSITION
OUR ISSUES &
OUR RESPONSES
SUMMARY
10
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What Are The Risks and Our Plans for Dealing With Them?
Our Issues and Our Responses...
<Table>
<Caption>
ISSUES RESPONSES
* Create Predictable Future * Develop (4) Strategic service offerings focused on market change &
Revenue & Growth multi-industry applications
- Compliance Engine: ServCo
- Integrated Supply Chain Management
- Settlements & Clearing
- Retail Systems & Infastructure
* Jointly develop "Enterprises" with our clients creating leveraged
Intellectual Property & serving as future organic growth engines e.g.
EnerACT, OnSight
* Develop Processes to Produce * Create at EME "incubators" for developing PSC's delivery capabilities
Predictable Delivery Results e.g. Software factory & off-shore application development
Leveraged Across PSC
* Leverage the replicable & repeatable processes formed around the
strategic service offerings
* "Source" the Resources & Talent * Develop a leadership pipeline for the industry group & the Corporation
Required to Build and Lead the Business
* Develop "solution" provider alliances
* Create recruitment strategies & competency development plans focused
around our strategic service offerings
* Address our Financial Exposure in * Sign new "long-term" European business e.g. Remu, Eastern Group
Having one client Comprising such
a Large % of our Business * Sign an anchor account in USA with long-term revenue (5-10 years)
* Establish a balanced portfolio of businesses across geographic and IT
continuums
</Table>
THE CHALLENGE
IT & SERVICES
PORTFOLIO
OUR CURRENT
ENERGY PRACTICE
THE SALES &
SERVICE PIPELINE
THE ENERGY
MARKETPLACE
A PROPENSITY FOR
CHANGE YIELDS
OPPORTUNITIES
OUR FOCUS
A MARKET ENTRY
STRATEGY
THE VALUE
PROPOSITION
OUR ISSUES &
OUR RESPONSES
SUMMARY
11
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How Long Will It Take, & What Will It Cost?
Summary...
<Table>
<Caption>
WHAT ARE THE CHANNELS RESKILL &
INVESTMENTS? TO MARKET REALIGN
------------ --------- ---------
o Create Strategic Service Offerings:
1. Compliance Engine o Develop ServCo with o Incorporate ECOS & Web NT
Sempra, SAP or Oracle
2. Integrated Supply Chain o Develop with Shell o Establish a Supply Chain Competency
Management
3. Settlements & Clearing o Target Calif Industry Mkt o Leverage Benton's payments &
clearing expertise
4. Retail Systems & Infrastructure o LG&E (RAS); NGC, Shell o ECOS structures & services
o Develop "Enterprises" & supporting
service infrastructures for:
1. EnerACT with EnerShop o Joint Venture o Real-time SCADA talents
2. "OnSight" with EnerShop o Consortium/Perot Group o Doblin, web-technology; ECOS
3. "Home" Retail Services Advisor o Consortium Shell, NGC, o Doblin, web-technology; ECOS
LG&E, MCN, etc.
o Develop an "Anchor" Account in o LG&E, Sempra, NGC o Technology infrastructure & delivery
the US
o Investigate Development of o LG&E, LD, NGC o Trading Infrastructure
Trading Back Office Service
Offering
</Table>
THE CHALLENGE
IT & SERVICES
PORTFOLIO
OUR CURRENT
ENERGY PRACTICE
THE SALES &
SERVICE PIPELINE
THE ENERGY
MARKETPLACE
A PROPENSITY FOR
CHANGE YIELDS
OPPORTUNITIES
OUR FOCUS
A MARKET ENTRY
STRATEGY
THE VALUE
PROPOSITION
OUR ISSUES &
OUR RESPONSES
SUMMARY
12
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