Local Government Street Light Discussion Process Overview Version 1 May 2014

Street Light Sale Discussion  The General Rate Case Phase 2 Settlement Agreement was filed with the California Public Utility Commission last year after discussions and participation from local government customers that joined a settlement process either individually or through the Coalition for Affordable Street Lights (CASL), or the California Street Light Association (Cal-SLA). Apart from GRC activities, SCE has moved forward with SCE’s updated policy of readiness to enter into discussions with local governments for the potential sale of LS-1 (SCE-owned) street lights.  Local Governments believe there may be savings associated with local ownership and control of streetlights…SCE is open to exploring the opportunity and responding to community requests to sell LS-1 SCE Street Lights  While process specifics often vary slightly by community, street light and system valuations are conducted under a consistent model across the SCE territory to ensure a unified approach for both customers and SCE.  Any proposed sale must be concluded in line with California Public Utilities Code § 851 2

Street Light Sale Process  Valuation will be conducted under a standard model:  Street lights and required systems will be valued under a Replacement Cost New Less Depreciation (RCNLD) model with an allowance to be included for the initial capital contribution made by developers when the street lights were initially installed.  Because of safety and access concerns, SCE is only open to the sale of stand-alone, loop-fed streetlights, as opposed to any street lights that are mounted on distribution poles shared with electric circuitry  A number of practical and implementation issues will need to be addressed over and above the valuation of street lighting assets  Local government customers requesting a comprehensive valuation of street light systems for the purpose of negotiating or entering into a purchase agreement with SCE, bear the cost of the RCNLD study.  An initial valuation utilizing a sample of street lights from a specific community at a cost of $10,000 will provide each local government customer with a “not to exceed price” and information to provide a foundation for go or no-go decisions  The cost of the initial valuation study or, later in the process, any separation or re- alignment costs will be presented and agreed to between SCE and local government customers prior to commencement of any study related efforts or physical work to enable the sale of the system. 3

Differences in Tariffs 4 LS-1 vs. LS-2 Monthly Cost Comparison- 100W HPSV Energy $2.83 Facilities $8.81 Total $11.64 Feasibility Comparison Energy $2.83 SCE Facilities $0.82 Total $3.65 Generation Non-bypassable Charges kWh-based Delivery Charges Facilities Charges O&M Charges The LS-1 to LS-2 rate differential is facilities related Energy is 40kWh/month charged at $0.07/kWh.

Common Questions  Is there a negotiation process to purchase SCE owned Street Lights?  No – SCE is not under direction to sell LS-1 street lights nor is the “system up for sale.” SCE is being responsive to municipal customer requests to acquire street light systems and all transactions will be performed under the standard RCNLD valuation method with allowance for any initial developer contribution. Customers will be responsible upon agreement for the cost of additional required valuation work, system demarcation and safety requirements.  Does a local government need a third party or the help of any other local government to move through the process?  No – SCE is, however, happy to work with third party providers as you direct us as our customer. There is no requirement to work with any third party or any other local government to facilitate the process.  Is there a time limit on SCE’s willingness to sell LS-1 Street Lights?  After SCE provides an invoice for $10,000 Initial Valuation efforts, SCE expects to initiate work within six months from the date a check is received by SCE. Once the not to exceed price has been provided, SCE will honor that price for one year after which SCE will notify the municipal customer that the price is no longer valid and subject to new pricing should the local government choose to move forward. 5

SCE is happy to explore LS-1 Street Light Acquisition with your community…  After notifying an SCE account representative or LPA region manager, SCE will bring together a working team led by John King and hold an initial meeting or conference call to understand local government questions and desired outcomes.  SCE Team will bring back information as requested and present next steps that could lead to a potential system valuation and/or sale discussion.  SCE will work collaboratively with each local government customer and local government authorized representatives to explore and discuss street light sales.  Talks with local government customers will focus on street light sale issues only. Discussions related to SCE’s General Rate Case or other regulatory filings can only take place within those formal proceedings. 6

CONTACT INFORMATION John King