1 California Public Utilities Commission August 22, 2011

2 Presentation Overview ABOUT THE CPUC THE ENERGY INDUSTRY  Smart Grid  Electric Vehicles  Electric Procurement

3 CPUC’s Role and Responsibilities Key Role: Ensuring private utility customers have safe, reliable service at reasonable rates. Energy  Regulate investor-owned electric and gas utilities (such as PG&E, SCE, SDG&E and SCG), which serve over two-thirds of electricity demand and over three-quarters of natural gas demand in the state. Communications  Administer universal telephone service programs, issue video franchises, enforce customer service standards for telephone services, and regulate rates for basic phone service and rural carriers. Consumer Protection and Safety  Enforce consumer protection laws and service standards, investigate fraud and illegal activity, and prosecute violators of the Public Utilities Code, CPUC orders, and utility tariffs. Inspect and audit power plant operation, utility infrastructure, passenger carriers, household goods movers, freight railroads, and rail transit systems. Passenger Transportation  License limousines and buses, and enforce statutes and regulations that apply to these carriers’ operations. Rail Safety  Inspect freight railroad tracks, equipment, and facilities; evaluate and approve railroad crossings for safety; and verify the safety and security plans of rail transit agencies. Water  Regulate investor-owned water and sewer utilities, which serve about 20% of the state’s residents.

4 The Energy Industry The CPUC regulates investor-owned electric and gas utilities (such as PG&E, SCE, SDG&E and SCG), which serve over two-thirds of electricity demand and over three-quarters of natural gas demand in the state.

5 CA Smart Grid Vision Digital Advanced Communications Predictive & Self-Healing Sensors & Automation Clean Generation & Renewables Transmission Distribution Customer Advanced Metering (AMI), Demand Response, and Distributed Resources Substation Automation Distribution Automation Distribution Circuit of the Future Integrated ( Distrib. Gen, Storage, PHEV ) Smart Meters Interactive, Real-time info Standardized & Evolving Transmission Data Collection and Automation Figure Source: Southern California Edison Company

6 Why Smart Grid? Policy Drivers Aging Infrastructure  Significant investment in T&D system likely in coming years Help Achieve / Integrate policy goals  Renewable Portfolio Standards  Greenhouse Gas Reductions  CA Loading Order ENERGY EFFICIENCY & DEMAND RESPONSE RENEWABLES GENERATION TRANS- MISSION Business Drivers Exceptional customer service. Maturing workforce. Utilities need to create a power grid that meets the growing and changing needs of customers. Advance State policy initiatives by incorporating green renewable resources. Advancements in IT and communication systems are accelerating and provide opportunities to achieve operational efficiencies, streamline processes, and incorporate new technologies. Utilities are already planning to incorporate modern grid technologies and building blocks when available and cost effective.

California Committed to Implement Smart Grid Statewide advanced metering deployment launched in 2006 California regulatory agencies are launching key Smart Grid initiatives  California Public Utilities Commission (CPUC)  California Energy Commission (CEC) Three large Investor-Owned Utilities have significant Smart Grid initiatives in progress Smart Grid legislation (SB17 – Padilla) adopted in

What has the CPUC done so far? December 2008: Issued Order Instituting Rulemaking (R ) October 11, 2009: Governor signs SB 17 (Padilla) directing CPUC to set requirements for IOU Smart Grid Deployment Plans by July 1, 2010; IOUs to file Deployment Plans by July 1,  Directs PUC to work with CEC and CAISO to develop policies to implement Smart Grid December 2009: Issued Decision addressing Energy Independence and Security Act requirements and identified customer access issues for next phase of OIR (D )  Declines to adopt PURPA standards as directed by EISA  Sets schedule for providing customers with retail and wholesale price information by end of 2010, access to usage data through an agreement with a third party by end of 2010, and provide access to usage information on a near real-time basis for customers with AMI by end of June 24, 2010: Final Decision on utilities’ Smart Grid deployment plan requirements issued, as required by SB 17. (D ) July 29, 2011: Final Decision adopting privacy rules and policies on customer access to data. (D ) 8

Privacy Rules Summary Based on Fair Information Practice Principles Rules apply to utilities, utility third party contractors and third parties accessing customer information directly from the utility. Rules do not apply to third parties accessing information from customer (e.g., from the meter). Customer consent not required for “primary purposes” such as utility operations, energy efficiency, demand response or energy management programs. All other purposes are considered “secondary purposes” and require customer authorization. Utilities given 90 days to file an Advice Letter with CPUC with whatever changes are necessary to implement this decision. 9

Home Area Network Roll-Out Directs utilities to file an Advice Letter with a HAN implementation plan within 4 months of decision (Nov/Dec 2011). Phased roll-out to enable up to 5,000 HAN-enabled devices, per service territory, to connect with a customers’ meter. Plans must include-  Estimated roll-out implementation strategy  A timetable for HAN functionality in a manner consistent across the three utilities  Envision a start date of March 1, 2012 Other issues  Costs  Access to other data collected by meter  Use of standards and best practices  Security concerns and risks (incl. testing and certification)  Interoperability  Full roll-out and implementation issues 10

11 Alternative-Fueled Vehicle Rulemaking Status Context: State support for efficient vehicles, alternative fuels, and land use strategies Fall 2009: Issued Order Instituting Rulemaking (OIR). Comments from 20+ parties signals broad engagement by stakeholders. SB 626 (Kehoe) enacted. July 2010: CPUC Decision that 3 rd party electric vehicle service providers will not be regulated as public utilities. Fall 2010: Two staff issue papers released for public workshops on Phase II issues (metering, rates, utility notification, and utility consumer education). Summer 2011: CPUC issues Phase II Decision in compliance with SB 626. Existing TOU residential PEV tariffs affirmed PEV notification clearinghouse solution ordered PEV Load and cost tracking ordered Customer-owned PEV submeter protocol process ordered

12 Electric Procurement Planning, Policy and Implementation Every 2 years the CPUC reviews the investor-owned utilities’ 10-year Procurement Plans through the “Long-Term Procurement Planning” process  To ensure consistency of energy policy across policy areas (demand-side management, renewable procurement, combined heat and power, distributed generation, etc).  To develop or refine energy procurement rules, For example: How to evaluate bids from a competitive solicitation? How to implementation California’s greenhouse gas policy as part of the procurement process? How to manage utilities’ risk exposure due to changing marketplace?  To develop long-term renewable procurement policy and assess the operational need to integrate renewable generation into the grid. Utilities’ power procurement processes must follow guidelines established in the Long-Term Procurement Planning process..

13 California Electrical Energy Generation by Resource Type (GWh)

14 Implementation of Renewable Portfolio Standard (RPS) 2010 RPS aggregate number for large IOUs was 17.9%  Increase from 15% in 2009  PG&E % ( %)  SCE % ( %)  SDG&E % ( %) CPUC continues to push hard to reach the 20% and 33% goals  Number of contracts in last RFP and number on contracts CPUC has approved/submitted for Approval. On-going debates  How to value capacity contribution from renewable facilities?  How to attribute renewable integration cost?  How much renewable energy to buy in-state versus out-of-state?.

15 What does it all mean for customers?