Southwest Renewable Energy Conference Smart Metering 101 Salt River Project Smart Meter Implementation September 13,

Economic Considerations LandLaborCapital 2 Information

SRP Pilot Project Assessed smart meter technical viability and benefits –Smart meter performance and metrics –Self healing and network capabilities –Business impacts, benefits and opportunities Partnered with Elster and self-implemented pilot effort using trained SRP employees Scope –Elster Energy Axis system with ~500 REX meters –Contained service area of single family, patio and apartment residences 3

SRP Pilot Project Evaluation and Testing activities: –Billing read accuracy – standard, TOU and demand metering –Meter read performance – cumulative ‘received’ energy / voltage –Remote handling of service requests –Tamper, error and outage features and reliability –Self healing and multi-level repeating functionality –Remote programming –Network performance with different gatekeeper configurations –Network time synchronization Verified data gathering and system features at 99.9% 4

Benefits – Business Case Labor Savings – Field activities –Reduced manual meter reading –Substantially reduced field visits with back office support Reduced maintenance Safety Billing Efficiencies – provided flexibility –Flexible reads / billing dates with reduced estimation or support –Rate changes without meter exchanges –Ease for bill adjustments and validation –Summary billing opportunities Revenue assurance –improved detection/monitoring Potential for distribution management and operations –Outage restoration –Load forecasting and distribution loading/loss studies 5

Implementation Moderate and sustained smart meter installation –Implemented by meter route for smooth transition –Targeted distant or hard to reach territories first –Safety considerations –Considered capital constraints and existing meter life Meter quality / testing program Established Customer notification program Concurrent integration with customer relationship system for billing and orders – recognized operating efficiencies Customer focus – empowered the Customer to better manage usage –Provided Customers with information and benefits via SRP web portal - MyAccount –Expanded TOU rate offerings with ‘Smart data’ enabled rate design targeted at summer critical peak (EZ-3) 6

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8 SRP e-Notification Dear Christoffer, Your SRP electric meter has reported an outage at your Main Street residence. Please visit for more information. Scott Trout Manager, SRP Residential Customer Services SRP e-Notification Dear Christoffer, Your SRP electric usage has reached your preset threshold of $200. Please login to to view your daily usage totals. Scott Trout Manager, SRP Residential Customer Services

ADAM – Advanced Data Acquisition and Management Federal Stimulus Program ADAM 9

ADAM – Advanced Data Acquisition and Management DOE SGIG Grants Federal Recovery Act funded $3.4 billion in Smart Grid Investment Grants (SGIG) –SGIG managed and implemented by U.S. Dept. of Energy –SRP received $56.9 million grant Purpose: –Accelerate the modernization of the nation’s electric grid –Promote investment in smart grid technologies Recipients selected through a competitive merit- based review process –100 awards out of approximately 400 applications –SRP received 1 of only 19 awards > $50 million 10

ADAM – Advanced Data Acquisition and Management 11 Topic Area Number of Applications Selected/ Conforming Federal Funding Applicant Funding Equipment Manufacturing 2 /1425,786,50125,807,502 Customer Systems 5 /2732,402,21034,933,413 Advanced Metering Infrastructure 31 /138818,245,7491,194,272,137 Electric Distribution 13 /39254,260,753254,738,977 Electric Transmission 10 /28147,990,985150,454,793 Integrated and Crosscutting 39 /1432,150,505,3233,082,366,420 Total100/ 389 3,429,191,5214,742,573,246

ADAM – Advanced Data Acquisition and Management Term of 5 years –Performance period of 3 years –Additional reporting period of 2 years DOE to reimburse SRP up to 50% of eligible project costs on a monthly basis Key focus areas: –Compliance with DOE and Audit requirements –Analysis & reporting of Energy Efficiencies –Meter Data Management System (MDMS) –Meter Asset Management System (MAMS) –Meter roll-out and management of the business requirements, needs and impact 12

ADAM – Advanced Data Acquisition and Management 13 Program Management Program Management, Compliance & Reporting Execution, Metrics & Benefits & Cyber Security Planning Program, Project and Risk Management Compliance management and ARRA and DOE reporting (earned value) Analysis and Reporting of reporting Program Management, Compliance & Reporting Execution, Metrics & Benefits & Cyber Security Planning Program, Project and Risk Management Compliance management and ARRA and DOE reporting (earned value) Analysis and Reporting of reporting Deploy sparse networkDeploy sparse network Deploy 74K smart metersDeploy 74K smart meters Deploy sparse networkDeploy sparse network Deploy 74K smart metersDeploy 74K smart meters Smart Meter Deployment Deployment Meter Data & Asset Management Smart Grid Utilization Analysis Planning DOE Plan creation Compliance readiness ARRA reporting Planning DOE Plan creation Compliance readiness ARRA reporting Deploy 163K smart metersDeploy 163K smart meters Monitor Mesh NetworkMonitor Mesh Network Elster UpgradesElster Upgrades Manage InventoryManage Inventory Deploy 163K smart metersDeploy 163K smart meters Monitor Mesh NetworkMonitor Mesh Network Elster UpgradesElster Upgrades Manage InventoryManage Inventory Deploy 170K smart metersDeploy 170K smart meters Upgrade smart metersUpgrade smart meters Monitor Mesh NetworkMonitor Mesh Network Upgrade ElsterUpgrade Elster Manage InventoryManage Inventory Deploy 170K smart metersDeploy 170K smart meters Upgrade smart metersUpgrade smart meters Monitor Mesh NetworkMonitor Mesh Network Upgrade ElsterUpgrade Elster Manage InventoryManage Inventory Deploy 145K smart metersDeploy 145K smart meters Upgrade smart metersUpgrade smart meters Monitor Mesh NetworkMonitor Mesh Network Upgrade ElsterUpgrade Elster Manage InventoryManage Inventory Deploy 145K smart metersDeploy 145K smart meters Upgrade smart metersUpgrade smart meters Monitor Mesh NetworkMonitor Mesh Network Upgrade ElsterUpgrade Elster Manage InventoryManage Inventory Source selectionsSource selections Vendor negotiationVendor negotiation Source selectionsSource selections Vendor negotiationVendor negotiation Enterprise data requirements & modelingEnterprise data requirements & modeling Implement MDMSImplement MDMS Elster meter dataElster meter data MAMS product requirementsMAMS product requirements Enterprise data requirements & modelingEnterprise data requirements & modeling Implement MDMSImplement MDMS Elster meter dataElster meter data MAMS product requirementsMAMS product requirements MDMS CIS InterfaceMDMS CIS Interface MDMS complex bill & process requirementsMDMS complex bill & process requirements MDMS Weather dataMDMS Weather data MV90 / Other meter dataMV90 / Other meter data Web presentment - interval dataWeb presentment - interval data MAMS RFI/negotiationMAMS RFI/negotiation MDMS CIS InterfaceMDMS CIS Interface MDMS complex bill & process requirementsMDMS complex bill & process requirements MDMS Weather dataMDMS Weather data MV90 / Other meter dataMV90 / Other meter data Web presentment - interval dataWeb presentment - interval data MAMS RFI/negotiationMAMS RFI/negotiation Implement MDMS complex billing & process servicesImplement MDMS complex billing & process services Implement MAMSImplement MAMS MAMS interfaces to SRP financial systemsMAMS interfaces to SRP financial systems Implement MDMS complex billing & process servicesImplement MDMS complex billing & process services Implement MAMSImplement MAMS MAMS interfaces to SRP financial systemsMAMS interfaces to SRP financial systems Load StudyLoad Study Transformer Metering PilotTransformer Metering Pilot EV Pilot reporting beginsEV Pilot reporting begins Load StudyLoad Study Transformer Metering PilotTransformer Metering Pilot EV Pilot reporting beginsEV Pilot reporting begins Load StudyLoad Study Transformer Metering PilotTransformer Metering Pilot EV Pilot reportingEV Pilot reporting Load StudyLoad Study Transformer Metering PilotTransformer Metering Pilot EV Pilot reportingEV Pilot reporting Share additional findings if warrantedShare additional findings if warranted

ADAM – Advanced Data Acquisition and Management Smart Grid Utilization Transformer Metering Pilot Electric Vehicle Submetering Pilot Load Study and comparison for new Time of Use rate ‘EZ-3’ 14

ADAM – Advanced Data Acquisition and Management Integration and Standards ProtectionSCADA Data Management NetworkManagement Network Management Security Security Outage ManagementOperations EMS DFA OutageManagement AssetManagement Substation Automation Customer AMI Protection Synchrophasors SCADA CIM NERC/CIP NOC MDM 15

ADAM – Advanced Data Acquisition and Management 16 EV sub Meter Billing Meter

ADAM – Advanced Data Acquisition and Management West Complete April 2011; 684,000 REX Meters 17

ADAM – Advanced Data Acquisition and Management Central Complete November 2011; 783,000 REX Meters 18

ADAM – Advanced Data Acquisition and Management East Valley Complete June 2012; 886,000 REX Meters 19

ADAM – Advanced Data Acquisition and Management MDMS – What is it? Fundamentally a data repository to centrally store and effectively manage the vast amount of metered data for the orders and billing processes - And more - Provides a mechanism to validate, edit and estimate data and provide timely, reliable, and consistent information to multiple enterprise systems and operational areas. 20

ADAM – Advanced Data Acquisition and Management MDMS – Enterprise Meter Data Outage Management Transformer Load Management Distribution Planning and Operations System Losses / Voltage Control Load Forecasting Asset Management 21

ADAM – Advanced Data Acquisition and Management Provide for vertical for end-to-end Smart Grid offering Proven meter data management system Innovative communication Experience with end customer systems Tight coupling with Elster systems Direct communication protocols to metering devices Flexible architecture for system integration –Minimize deployment costs –New applications can added without core development Allows for future business needs 22 MDMS Selection Considerations

ADAM – Advanced Data Acquisition and Management The Results 23

ADAM – Advanced Data Acquisition and Management Customer Access to daily TOU and via the web e- notification alerts allow customers to manage their usage E-notification alerts available 20% increase in TOU rate participation with smart meters – helping to shift from on-peak to off-peak and reduce load demands Customers leverage smart meters for additional savings via new TOU price plan (EZ-3) 24

ADAM – Advanced Data Acquisition and Management

Avoided Field Visits FY0629,589 FY0791,195 FY08169,664 FY09245,504 FY10212,232 Remote Orders Completed Over 748,000 orders completed and field visits avoided 26

ADAM – Advanced Data Acquisition and Management Labor Hours Saved Over 249,000 labor hours saved Labor Hour Savings FY069,853 FY0730,368 FY0856,498 FY0981,753 FY1070,673 27

ADAM – Advanced Data Acquisition and Management Miles Saved Over 1.3 million miles saved Miles Saved FY0649,118 FY07151,384 FY08342,908 FY09443,111 FY10383,059 28

ADAM – Advanced Data Acquisition and Management Fuel Saving - Gallons Over 135,000 gallons in fuel savings Fuel Saving (Gallons) FY064,863 FY0714,988 FY0833,951 FY0943,872 FY1037,927 29

ADAM – Advanced Data Acquisition and Management Safety –39% decrease in personal injuries –10% reduction in vehicular accidents Improved revenue recovery from operations 30 Disconnect typeAverage amount Average days to reconnect Smart meter$2471 Field$3504

ADAM – Advanced Data Acquisition and Management Other Learnings Assume and allow for advances in technology –Phased approaches –Investment considerations (e.g. meter life, infrastructure) Strong supplier partnerships are key Consider the enterprise in establishing new rules Plan for knowledge transfer and intellectual property retention 31

ADAM – Advanced Data Acquisition and Management Economic Considerations LandLaborCapital 32 Information

ADAM – Advanced Data Acquisition and Management Questions 33