Global Utility White Paper CONFIDENTIAL
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e Investors Not Positioned for Structural Change PICKUP ..........cccccccccceccesceteeececcesecneeeeeeeceeeeeeeeesessceseeneeeeeeses 5
© Long-Only Investors Substantially Underweight but Hedge Funds Turning ...........cccccccsccccessestteeeeseesees 5
3. Regional Structural Changes Driving Alpha Opportunity ........cccccccccccccecestceeeeeecsceeeeeneeeeeecceseeneeeeceeceeneeeeeeesseeee 7 © US ULINGES cocasnercecmnammnnernanmenaneerenenemenecoanmeennaneurmen me necm mermneenr emcees 7
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4. Global Structural Changes Driving Alpha Opportunity .........ccccccccccccccsecceeeccececnceeeeescesseeeeeeeeesceseeeeeeeesceseeeneaeeeesens 12 « Power Prices are Skewed tothe U pside@ ca: acess een me ene 12
@ Capex (ex-US) is Rebounding Post-RECESSION .......ccccccccccesssscececsneecseeeeeceneeeceesaeeeceeeeeeeseeeeceeaaeeeseseaeeeseeeeeens 14
5. Substantial Alpha Opportunities Follow Periods of Underperformance........cccccccccccccccstcereecsescsteeeeeessesseseeeeeenes 14 e Record Duration and Depth of Underperformance......cccccccccscccccccceescneeeeeesceeseeneeeeeeceeeeeeeeesescceseeneeneeesees 14
@ Reasons for Underperformance ..cccccccccccccccccsrcecececsseeeeeeeeeseeeeeeeeeeeceeeeseeeeeeeceseeeeeeeeeesseseeseeaeeesceeseeeaeeeescesees 15
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6. Interest Rate Risk —A COMMON MiSPErcePtiOn..... cece ce ee ee EEE E EEE EE EEE EE CECE EEE EE EE ceeee a aEE ee sesee 19 Appendix 1: The Team and Our Process ........ccccccccccececeeeeeee eee ee eee ce nee cece cee cn nnd EEE CEE CEE EE EE EE EE ELEC EEEE EEE EE CEC CEEE EHEC EE SESE EE EERE EERE 20 @ EL@CtrON FOCUS... ceeccccceeeeeee enna eee eecne cence cn te ceeded AEE U COLE E EEE E COLE CCEA EE COLE E CREE ECOE CECE ECO LU CCE EE COU CC ea cE ceed eee ae nee eea arenes 20
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o Why We Take a Global Approach - The “Greatest Gift” oo... icccccccccececeecestreeeeeceeeeenereeesceeeeenereersnesees 21
© Capitalizing on Structural Change Timing .......ccccccccccccccsesetceecceceeeeeeeeeceeeeeeeeeeeeeceeeeneeeeeeeceeeeneeaeeensenses 22
S: POFIGIIGCOASIRUCHONY cen cmocerener eure ammmomnener emerugrenneumrren ener ume crenren amen nemunruencuonmnememennrs 22
e Shorting Global Utuities wnuvaremeocmenunmacennmanrnnenenanenmnena nena mene 23
o Experience with Dividends and Investor Behavior .......ccccccccccccccstsccecececcctteeeeeeceeceeneeeeesceeteeeesesseenees 23
o Key to Electron’s Process to Identify Dividend Change Candidates .........ccccccccccccssseeeceeeseenteeeeeeeesees 23
Appendix 2: Global Utility Sector Background... cece eee e ee eee nee eee Een LEE EEE EEE EEE EE EE EEE EEE EEE E ene EEE E EE cere 25 2 Electron Capital Partners, LLC
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