SmartMeter Program July 2007 NARUC Summer Meeting Tom Bottorff, Sr. VP Regulatory Relations

2 ► PG&E’s SmartMeter program leverages proven technologies ► PG&E’s SmartMeter program is cost effective ► Customers will benefit through improved service and bill savings opportunities ► Rates will rise about 1% during the first five years, but decline thereafter ► Low income customers are exempt from any rate increase Key Messages

3 The SmartMeter Program Leverages Proven Technologies – the Dual Network Architecture WELLINGTON POWER CORPORATION Meter & network installation / supply chain management CONSUMER PUBLIC WIRELESS NETWORK PUBLIC WIRELESS NETWORK CC&B TWACS PLC System Controller Web Server MDMS STAR® RF Network System Controller BEA / EAI Substation Communication Equipment PG&E Substation DCSI Electric powerline carrier network Data Collector Unit Hexagram Fixed Wireless Network System Meter Data Management & Storage IT Systems Integration & Project Management Interval billing upgrade MBC Data Warehouse

4 ISTS O&M $191M Field Deployment $1,299M ISTS Deployment $189M Meter Reading Operations Costs* Meters Networks Installations IT Systems System Integration Project Management O&M Demand Response Benefits* Smartmeter Program Will Pay For Itself 4% net positive 90% of costs * 20 year Present Value of Revenue Requirement

5 ► Access to better pricing information ► Fewer estimated or inaccurate bills ► Faster outage detection and restoration ► Remote turn-on / turn-off ► No inconvenience due to manual meter reads (e.g., no need to unlock gate or tie up dogs) ► Opportunity to lower bills by taking advantage of new tariff options Customer Benefits

6 ► SmartRate is voluntary and will be offered to all customers ► A premium charge ($0.60 per kwh for residential customers) will be added to current rates during peak hours on designated SmartDays ► SmartDays will be called during summer months only (June 1 - September 30), a maximum of 15 times each summer ► A SmartRate credit is given for usage all other hours of the month ► Bill will be capped during the first year at otherwise applicable charges SmartRate:

7 ► Average residential rates will increase by about 1 percent during the first five years ► After five years, cost savings will kick in and result in bill decreases ► Low income customers are exempt from paying the increase Customer Rate Impacts

8 ► Appliance control and monitoring ► Smart thermostat ► Enhanced grid monitoring / switching ► More tariff options ► Pre-paid metering Future Capabilities