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Global Utility White Paper CONFIDENTIAL models/prospects. This can be triggered by improving sector fundamentals, better data points, or conversely by events that instead lower investors’ perception of economic growth prospects (e.g., policy errors, rising European sovereign yields, higher commodity prices, etc.). As noted above (page 5), each time the sector’s underweighting reaches 1 standard deviation below the mean, over the next 24 months global utilities rise by 38% on an absolute basis and outperform the global broad market by 20%, on average (see graph below). Subsequent MSCI World Utility vs MSCI World performance post 1o underweights 40% Cumulative 20.4% “4 outperformance 30% 12.4% 20% , 8.1% 8.0% — 10% + L a -10% 3 mos 6 mos 9 mos 12 mos 18 mos 24 mos #8 MSC! World MSCI World Utility —o= Out/underperformance Source: Bank of America Merrill Lynch, Bloomberg When these outperformance rallies occur, the potential massive alpha opportunity can be substantially greater than the return from a fund’s net position. As examples, we highlight the lessons from the dotcom period (second only to today’s record underperformance) and lessons from Japan (given the deleveraging environment of today). o Post-Dotcom Rallies The last time we saw underperformance anywhere close to today’s magnitude was during the 3- year run-up to the dotcom bust (see graph below) as investors grabbed for growth in the “new economy”. During the run-up (Jan 97-Jan 00), tech and telecom were the best-performing sectors, +322% and +162%, respectively. The global utilities sector was the second-worst-performing global sector, +12% and in line with the +9% worst-performing materials sector. 16 Electron Capital Partners, LLC HOUSE_OVERSIGHT_024217