Mass Market Demand Solutions in PJM Raab Associates PJM Roundtable Matt McCaffree – Sr. Director, Government & Regulatory Affairs, Itron Select from 2 cover templates. This one offers an option to customize with an appropriate image of your choice. The first is white with red headline and supporting text. So, what we’ll focus on today is how this impacts the electricity, gas, and water industries. ©2017  ITRON CONFIDENTIAL PROPRIETARY Sept. 27, 2017

Itron capabilities OUTCOMES Outcomes as a Service Managed Services Software as a Service Consulting Efficiency & Demand Response Program Evaluation System & Solution Integration MEASUREMENT Sensors Meters Controls Communications Modules MANAGEMENT Distributed Energy Management (formerly Comverge) Enterprise Meter Data Management Fixed, Mobile & Hybrid Networks Multi-protocol Deployment (RF, Cellular, PLC) ANALYSIS Forecasting Analytics Distributed Intelligence Centralized Itron has the tools and the expertise to simplify the complex process of measuring, managing and analyzing data. Our solutions are designed to help utilities measure, manage and analyze data to deliver results. We have a full suite of services to help utilities be successful throughout this process. Our people are our most valuable asset. We consult with our customers every step of the way to ensure that all project goals are achieved efficiently. Itron Overview |

Itron in the Pjm footprint > 600 MW of mass-market demand response 1.6 million advanced meters deployed with another 1.2 million pending 100+ technicians in the field to recruit, deploy and maintain solutions Continuously running our largest DEM programs in PJM for nearly a decade Itron Overview |

Mass market successes & challenges Utility #1 55% Utility #2 50% % of Central A/C households enrolled Through direct marketing and recruitment, Itron DEM has achieved unprecedented market penetration for an opt-in program. Residential and small commercial demand exhibits high seasonality across PJM, which limits our options for targeting resources with greatest coincident peak. Annual solutions create significant headwinds for residential DR (Capacity Performance & Price Responsive Demand) 84% of Itron’s mass market DR is reliant on HVAC load 16% Water Heating, Pool Pumps, SMB Lighting 84% Central A/C

Runtime savings – foundational for PRD Standard Setback Approach Weather Data + Thermal Model Approach

Requirements for PRD Dynamic Rate Structures Must be based on wholesale prices (real-time LMPs) Includes Critical Peak Pricing (CPP), Critical Peak Rebate (CPR), or Real-Time Pricing based on LMP Supervisory Control Ability to curtail load as a PRD Provider Advanced Metering End-use customer loads may not: Be registered as Economic or Emergency Load Response Be used in DR or EE resource sell offers in any auction

AMI across PJM 8.42 million advanced meters deployed (Q4 2016) across PJM Additional 7.88 million in planning = 16.30 million in total Significant discrepancies for AMI deployment across PJM Maryland, Pennsylvania, Illinois (ComEd), and Ohio are either at or are planning to reach full deployment New Jersey and West Virginia significantly lagging

Challenges to implementing PRD A mass-market PRD deployment is significantly more difficult than other demand-side solutions: Regulatory approval AMI installation & deployment; adjusting depreciation to properly account for AMI Rate changes, particularly when based on more dynamic wholesale rates Communication with customers on new investments and rate changes; considerations of affordability and parity Significant education and engagement is needed at the jurisdictional level, particularly for states lagging in AMI deployment. Changing M&V for PRD creates more confusion and uncertainty for those implementing mass-market programs. Switching away from FSL ignores the seasonal asymmetry of mass market demand, particularly in population dense LDAs Uncertainty in how PRD will be measured has a cooling effect on investment and deters competition, innovation Itron Overview |