The California Experience

December 4, 2009

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CA 2020: Energy Policy Initiatives

Policy Areas RPS Bulk Power Integration 2010 20% Renewable Generation RPS Distributed Power Integration 2012 2014 500 MW of Large Scale Solar Rooftop Generation 2016 1 Million Solar Roofs statewide 2018 Transportation Electrification Energy Efficiency & Demand Resp Wholesale Market Structure ~3500 gWh of EE Savings (2009 – 11) 50% of new homes are 35% more efficient than T24 1 st Full Year of MRTU market operation ~25k PEV’s

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~100k PEV’s SmartConnect DR Goals (~1000 MW) 90% of new homes are 35% more efficient than T24 Creation of alternative resource markets 2020 33% Renewable Generation (Proposed) ~ 400k PEV’s ~7300 gWh of EE Savings (2012 – 2020) Zero Energy Homes 100%

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SCE Strategy for a Smarter, Cleaner Energy Future

Innovation in Energy & Information Technologies will Deliver Environmental Benefits & Customer Value

• SCE is doing its part to reduce greenhouse gas emissions by providing its customers with energy from renewable resources • Smart power delivery is needed to manage greater diversity of supply and to optimize existing capacity • Smart metering enables customers to save energy and reduce peaks while improving customer service and operational efficiency • Plug-in electric vehicles will achieve transportation sustainability and enable distributed energy storage systems SM Page 2

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Renewable & DER Growth

California is pushing beyond limits of current grid capabilities CA Renewable Portfolio Standard

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20% by 2010

• 33% by 2020 (Governor’s Exec Order)

Lg Rooftop Solar PV Program

• • 500 MWs by 2015 250MWs by SCE & 250MWs by IPP • ~ 350 projects at 1-2MWs each

California Solar Initiative (CSI)

• Goal of install 3,000 megawatts (MW) of new, customer-side solar photovoltaic projects by 2017

CA Carbon Reduction Law (AB32)

• Reduce GHG by 25% by 2025 Page 3

16% Renewable Portfolio 2007

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4,500 MWs of New Wind in Tehachapi Expected in 2015 Potential 7x Increase in total wind energy to 15 billion kWh

SM From “Briefing on the CAISO Renewable Integration Study”, October 17,2007 Page 4

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Solar Intermittencies

• Seasonal, Daily, Minute Solar Power Fluctuating • PV Inverter – Grid Interactions • Low Capacity Factor < 20% • Inaccurate forecasting • No storage Page 5

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Synchronized Phasor Measurement System

Phasor technology enables real-time system monitoring and reduces the probability of major disturbances

• The growing complexity of interconnected electric grids increases the threat of blackouts and other operational challenges, facilitating the need for a smarter electric grid equipped with wide-area measurement units to monitor large grids • Phasor measurement units (PMUs) help identify remote system disturbances in advance to prevent wide-scale power outages • Real-time software tools that enables operators and engineers to quickly and affordably analyze system data Page 6

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Tehachapi Wind Energy Storage Demo

Lithium Ion (A123 System) • 32 MWhs of storage from auto derivative batteries • Modular rack based battery design • Housed in 8,000sf Building • Smart inverter technology • Interoperability & security included Page 7

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Advanced Distribution Automation

• Enable distributed energy resources and storage to support customer choice and improve grid stability • Develop new technology for dynamic Volt/VAR and harmonics control to provide quality service and enable voltage conservation • Minimize customer outages due to distribution system failures through expansive automation • Development of superconducting devices such as fault current limiters and transformers Page 8

Avanti - Circuit of the Future

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Edison SmartConnect™: Empowering Customers

© Copyright 2008, Southern California Edison • Choice to Manage Cost & Peak Demand – Rates • Time of Use and Tiered Rates • Critical Peak Pricing (CPP) • Peak Time Rebate (PTR) – Programs • Smart Communicating Thermostats – Outcome • Reduce Peak Load by 1,000 MWs • Energy Information Drives Conservation – Reduce Residential Energy Consumption by 1% (minimum) – Reduce GHG by 365,000 tons/yr • Automated Self-Service – Remote Service Switch – Payment and Billing Options Page 9

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2020 PEV Market Penetration Forecast

SCE Could Achieve up to ~12 MMT of CO2 Savings, Primarily from PEVs Cumulative (000s) 1,200 1,000 800 600 400 200 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 SCE forecast PEV adoption within service territory

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High Mid Low

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Engaging Customers in the Supply Chain

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SCE Smart Grid Development

Building on Smart Foundation Built Over the Past Decade ~$1.5 Billion Capital* SmartGrid Development

2009 2010 2011

PEV Integration Renewable Integration Tech Dev.

Enhanced Outage Management Expanded Distribution Automation Centralized Remedial Action Scheme Phasor Measurement Substation Security Video Surveillance Energy Management System Upgrade Advanced Load Control Smart Metering * Project capital approved by CPUC in SCE’s 2009 GRC & SmartConnect program

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What is needed to realize a smarter grid?

• Intelligent and communicating PEVs that integrate gracefully with the grid • Cost effective energy storage at bulk transmission and distribution • Commercial products based on open, non-proprietary standards that are secure • Seemless and secure telecommunications infrastructure that integrates millions of intelligent devices to produce actionable information that is used to control the electric system • Workforce with the skills and knowledge to engineer, build, operate and maintain an electric grid with pervasive information technology embedded Page 13

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Observations

• Smart Grid is a journey that will be 20+ years in the making – Personal computing was introduced 30 years ago – Portable cell phones were introduced 25 years ago – Public Internet was launched 20 years ago (DARPANet 40yrs ago) • Pace of technology adoption will need to consider policy, customer impact, utility operations and asset obsolesce • A smarter electric grid will become more interactive with our customers’ lives thru the home, transportation and workplace SM Page 14

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