SM Smart Grid Value Proposition October 4 2010

SM Smart Grid Value Proposition October 4, 2010 Lynda Ziegler EDISON INTERNATIONAL®

SM SCE Smart Grid Vision SCE’s vision of a smart grid is to develop and deploy a more reliable, secure, economic, efficient, safe and environmentally-friendly electric system covering all facets of electricity from production through transmission, distribution, and its smart use in homes, businesses and vehicles. 2 EDISON INTERNATIONAL®

SM Engaging Customers in the Supply Chain By 2020, there may be as many as 10 million intelligent devices 1 in SCE’s service area linked to the grid providing sensing information and automatically responding to prices/event signals Zero Net Energy Home 1. Includes smart meters, energy smart appliances and customer devices, electric vehicles, DR, inverters and storage technologies 3 EDISON INTERNATIONAL®

SM Smart Grid Efficiencies will help the Power Industry Improve its Capacity Utilization 93% 89% 84% Capacity utilization (1997 -2006 average) 77% 72% 67% 44% Power Hotels Airlines Chemicals No/limited product storage Product storage 4 Pulp & Paper Iron & Steel Refining Source: Reliant Energy EDISON INTERNATIONAL®

SM Smart Grid Value will be Enhanced by Understanding Customers’ Needs, which is Key to Engaging Our Customers • Engagement – Cannot be a “third job” – Means understanding rates and the link between what is used and what is paid • Demographics, attitudes and communication styles drive preferences • The “green wave” matters • Our experience is the “one size fits all” approach does not work Our challenge: offer relevant choices, make them easy, worthwhile, and fitted to diverse customer goals 5 EDISON INTERNATIONAL®

SM The New Customer Journey 6 EDISON INTERNATIONAL®

SM SCE Engagement Strategy: Integrate Rates & Programs • Edison Smart. Connect™ is the gateway to enhanced customer engagement • Engagement is shaped through plans for distinctive customer types, which integrate – Energy Management Rates & Programs – Energy Information Tools – Emerging Services • HAN • PEV 7 EDISON INTERNATIONAL®

SM Example of the Smart Grid Value Proposition: Rate and Technology Combinations Yield Reliability Benefits Residential Critical Peak Pricing Impacts By Rate Treatment Average Critical Peak Day – Year 1 47. 4% Peak Load Reduction 50% 40% 34. 5% 30% Critical Peak Variable With Automated Controls 20% 12. 5% 10% Hottest Critical Peak Day 4. 1% Critical Peak Variable With Automated Controls Critical Peak Fixed 0% Time of Use TOU CPP-F CPP-V Source: Statewide Pricing Pilot Summer 2003 Impact Analysis, Charles Rivers Associates, August 9, 2004, Table 1 -3, 1 -4, . 8 EDISON INTERNATIONAL®

SM Critical Peak Pricing Events: Comparison of Legacy vs. Default MW • • • In 2009 SCE had an average enrolled CPP population of 480 service accounts (80% industrial and 20% commercial) On October 2009, SCE defaulted 5, 500 accounts > 200 k. W to CPP SCE’s current CPP population consists of 50% commercial, 30% industrial and 20% government & institutional accounts As of September 2010, SCE has retained 59% of defaulted accounts A benefit of being on CPP is bill protection during the first year on the program Load reductions shown are net of load increases CPP events were 6 hours long in 2009, whereas in 2010, CPP events are 4 hours long 9 EDISON INTERNATIONAL®

SM Web Presentment Hourly Usage Data Daily Usage & Cost Data 10 EDISON INTERNATIONAL®

SM Budget Assistant Web Stage 1 Web Stage 2 Single Spending Goal Seasonal Spending Goals 11 EDISON INTERNATIONAL®

SM HAN Readiness Device Marketing Device Acquisition • Customer may receive solicitation materials from SCE. • SCE may distribute devices directly - and • Customer may purchase devices directly from retailer or website. • Customer may learn about devices from retailers or web sites. PCT Installation if applicable • Customer performs self installation - or • Installation Contractor may install devices Device Usage • Customer calls SCE regarding how to use device Troubleshooting • Tiered support model involving SCE resources • In some cases, customers will be referred to device manufacturer or • Customer calls SCE third party service regarding information provider displayed on device - and - 12 Device Registration & Program enrollment • SCE provides device registration, pairing and program enrollment services Un-Enrollment and De-Commissioning • Customer calls for un-enrollment or decommissioning support - or • Customer leverages self service options to de-commission devices (SCE. com, IVR). EDISON INTERNATIONAL®

SM New Wave of Plug-in Electric Vehicles Cumulative Plug-in Vehicles in SCE Service Area (in thousands) Over next three years, 10 – 14 models being introduced by major automakers and 5 – 8 models by start-ups Southern California will be an early target market Residential consumers will want a streamlined installation process Businesses will want workplace and public-access chargeports Governments will want chargeports for their fleets, employees, and citizens Note: Chart includes both plug-in hybrid and battery electric vehicles. 13 EDISON INTERNATIONAL®

SM SCE’s Smart Grid Vision A cleaner, more diverse generation supply flowing through a smarter and more reliable electricity grid to serve customers who are using electricity more wisely, and in more ways, than ever before. © Copyright 2008, Southern California Edison 14 EDISON INTERNATIONAL®

SM The Smart Grid / Customer Journey will be 20 + Years in the Making • SCE’s Smart Grid development strategy is the pursuit of technologies that provide significant customer value that exceeds the cost of implementation • Edison Smart. Connect™ is a foundational technology that provides a platform that can be utilized to leverage future customer technology • Changes in customer behavior are critical to Smart Grid success • Cultural change is dependant upon: – Public Policy – Infrastructure – People “Meters don’t save energy, people do. ” 15 EDISON INTERNATIONAL®