May 25, 2021 Board Workshop Follow-up

The time spent, Tuesday May 25th, with Rusty and myself was super appreciated. I hope that we answered many of your questions and created a dialogue for our future interactions.

The purpose of this document is to highlight a few of the areas we discussed which may have been of concern or need further reinforcement.

It is important to ascertain that the NCOPA is a framework which spells out the terms and conditions for the way forward and governs the relationship. Further, it is especially important to understand that there are no payments scheduled or that would ever come due by virtue of executing the NCOPA. As such, to date, Minimise has at its own risk:

Analyzed previous 2 years electric bills.
Installed real-time energy monitoring equipment to validate consumption baselines.
COMPLETED A PRELIMINARY NEEDS ASSESSMENT.

Once the NCOPA is executed, Minimise will continue to work at its own risk to:

COMPLETE INVESTMENT GRADE AUDITS (IGAs)
Produce a set of documents called: Proposed Measurement and Verification Report; aka Proposed M&V Report, which outlines:
- Historical analysis,
- Current consumption by asset (lighting, HVAC, Refrigeration … etc.),
- Current consumption baselines,
- Proposed Facilities Improvement Measures (FIMs) to capture waste,
- Proposed/included Operations and Maintenance carve-out from captured waste/savings,
- Proposed prepayment of future savings to HDSB,
- Proposed GMP.

Once the Proposed M&V Report is approved Minimise continues to work at its own risk and begins to install the FIMs as approved in the Proposed M&V Report. Once the work is completed, a new M&V report is created which is called the As-Built M&V Report. In this report, new baselines are presented validating the representation made in the Proposed M&V Report. Once the As-Built M&V Report is accepted, the agreed to proposed Guaranteed Monthly Payment (GMP) commences and continues for the duration of the NCOPA. Additionally, at this same time, the proposed prepaid savings payment is made and the proposed carve-out for the O&M budget is set aside.

It is totally understood that the “Length of Contract” raised some concerns. While the notion of lengthy contracts, the NCOPA is usually 20-25 years in length, is often not favored by boards and administrators, the NCOPA is not such a contract for no less than the following reasons:

Best in Class Technology
- Minimise and its Engineering, Procurement and Construction (EPC) partner, Johnson Controls Performance Infrastructure (JCI) are both technology neutral. The Minimise/JCI team literally works with what is best for the project and Client preference (when applicable).
- Since the NCOPA is solely driven by Energy and Operational Savings (EOS), emphasis is paid to performance and longevity (Life Cycle) rather than lowest cost products/solutions.
O&M
- A portion of the quantified operational and energy savings will be carved out to maintain all installed technology for the duration of the NCOPA. For HDSB that sum is estimated at 2.1 million dollars.
- Guaranteed Performance
  - All FIMs installed by way of the NCOPA will be in as operationally sound at the end of the NCOPA as they were in the start of the NCOPA.
  - FIMs performance are guaranteed by Johnson Controls.
GMP (Guaranteed Monthly Payment)
- The GMP is fixed for the term of the agreement. This is good on all levels:
  - HDSB has an exact figure associated with each payment to Minimise. For example, if the quantified EOS for a set of approved FIMs was $200/month, that same $200 will be the GMP for the duration of the agreement. Keep in mind that the performance of approved FIMs is provided by JCI for the duration of the agreement.
  - This is also good for HDSB because in the event of utility rate increases, HDSB receives the total benefit from having employed the FIMs.
  - The right financial instrument is created as a result allowing Minimise to provide all the FIMs at zero capital outlay by HDSB.
  - Risk is mitigated for Minimise’ funding partners which in turn allow for maximum leverage as to cost of capital.
- No Additional Appropriation are required. The NCOPA is not a loan, or a lease and it is also off-balance sheet. Current levels of appropriations for utility expenses and operations are all that would have to be maintained.
- GMP is treated as a utility payment.
Return on Investment (ROI) Blend – Holistic Approach
- The length of the contract allows Minimise the ability to blend ROI to deliver more comprehensive FIMs at zero investment by the HDSB. Simply put, by capturing savings from rapid ROI FIMs for a longer period, Minimise, can include much needed capital improvements which would, otherwise, remain unimproved.
  - An example is often given of FIMs such as lighting as, generally, being a low hanging fruit with a rather rapid ROI. The example is also given of Heating Ventilation, Air Conditioning and Refrigeration (HVAC-R) having extremely long/bad ROI.
  - Minimise is the only company in the Energy Management and Conservation Services space which will blend returns to deliver, not just “low hanging fruit” FIMs, but also the not so financially appealing FIMs.

There are other considerations, in addition the NCOPA being a framework and the explanation of why the length of contract is good for HDSB such as:

ESSER/CARES2 Blend – A Continuation of the Holistic Approach:
- Minimise understands it is not just about spending HDSB’s ESSER/CARES2 money, it’s about assisting HDSB to develop and maintain the truly holistic strategy under the NCOPA.
- A well thought out/combined financial strategy can leverage ESSER/CARES2 funding to ensure every dollar spent helps people, optimizes systems, increases $, evangelizes success, and mitigates downside.

Minimise is the only PAEC partner who can ideate, develop, implement, AND fund these strategies in combination with:

- - Comprehensive strategic planning
  - In-depth Engineering expertise
  - State-of-the-art EEaaS technology
  - JCI’s vast construction experience
  - Innovative funding mechanisms
  - Creative Marketing/PR programming

Minimise identifies which of the work under the scope of the NCOPA qualifies under CARES2 and ESSER and presents your district with an invoice and other documentation for this work. Minimise, along with its implementation partner Johnson Controls, then assist your District in applying for the grants.

Minimise goes ahead and implements work regardless of application. This is done using Minimise’ NCOPA as the framework. Simply put, this means work can start immediately without fear of your application being denied; Minimise has it covered.

Once the grants are confirmed and paid, your District simply settle the invoice with EMSC which triggers further upfront savings payments and work credits equivalent to the grant received and paid under the CARES2 / ESSER invoice.

This way the NCOPA enables the CARES2 and ESSER application to be completed and allowing the work to be done straightaway and your District gets to maximize every dollar but without any delay to the work.

Florida First
- Minimise is a Florida borne company domiciled in Tampa, FL.
- Minimise is the Panhandle Area Educational Consortium’s (PAEC) awarded company for Energy Efficiency as a Service (EEaaS).
- JCI has a substantial Florida presence multiple offices and service centres within proximity of Holmes County.
PAEC First
- HDSB is on the leading edge in utilizing the PAEC award and contract. As such HDSB stands to earn up to 1% of project cost from Tri-Consortia (PAEC, NEFEC and HEC) who will follow HDSB’s lead.
- In addition to the $900,000 in prepaid savings estimated to be paid by Minimise to HDSB, the PAEC First lead will position HDSB to earn an additional $450,000 – $500,000.
HOLMES FIRST
- For implementation purposes, Minimise, through its Supplier Diversity Program, will give priority to qualified area contractors.

Reduce before you Produce – it is vital to note that by reducing consumption, Minimise is able to right-size the alternative power generation system(s), such as solar, to top off the project.

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