© Copyright 2006, Southern California Edison 1 Settlement Party Briefing February 15, 2006 A dvanced M etering I nfrastructure Phase I Summary & Status

© Copyright 2006, Southern California Edison AMI Program 2 SCE AMI Directional Cost/Benefit (August 2005)  Address fundamental cost drivers for last business case  Telecom network coverage, performance, reliability and system management  Meter failures and life-cycle performance  Interoperability & system security  End-to-end data management  Re-evaluate Aug 1 st added functionality  Interface to A/C load control thru PCT  Remote service turn on/off  Identify additional uses for system based on tangible customer and business value  Develop new conceptual estimate of overall business case

© Copyright 2006, Southern California Edison AMI Program 3 SCE AIM system seeks to leverage a 2-way communications infrastructure with 5 million intelligent devices on our distribution network for our customers directly and our operations. Conceptual AIM System Illustrative Example

© Copyright 2006, Southern California Edison AMI Program 4 AMI Phase I AMI Program will use a multi-phased approach to development and deployment of a next generation advanced metering infrastructure over a 7 ½ year timeframe. Business Process Design & Proof of Concept Beta Development & Pilot Business Deployment Pre Deployment Meter Trade & Feasibility Studies Conceptual Processes & SystemsReqs Business Process AIM Requirements, “Design”& Proof of Concept Beta Product Field Pilot Business Case in Chief Full Activities Meter Trade & Feasibility Studies Cost/Benefit Analyses 12/2005 6/ / /2009 5/2013 Business Process Design & Proof of Concept Beta Development & Pilot Business Application Meter Trade & Feasibility Studies Conceptual Processes & SystemsReqs Business Process AIM Requirements, “Design” & Proof of Concept Beta Product Field Pilot Meter Trade & Feasibility Studies Cost/Benefit Analyses Phase II 18 Mos. Phase I 18 Mos. Phase III B 42 mos. Phase III A 12 Mos. Phase II 18 Mos. Phase I 18 Mos. Phase III B 42 mos. Phase III A 12 Mos. Phase II 18 Mos. Phase I 18 Mos. Phase III B 42 mos. Phase III A 12 Mos. Phase II 18 Mos. Phase I 18 Mos. Phase III B 42 mos. Phase III A 12 Mos. Final Business Case Design & System Dev

© Copyright 2006, Southern California Edison AMI Program 5 Utility Driven Meter Development Challenges Achieve the right balance among Marketability, Functionality and Openness Develop a specification that is supported by multiple meter and communications vendors and is commercially viable in the NA utility market FunctionalityOpenness Engage other utilities & vendors in development process to generate interest and feedback Leverage OpenAMI, Intelligrid, Gridwise, CEC PCT, ANSI & other standards and reference design initiatives Durable open design that will support a solid positive business case that provides customer value Marketability

© Copyright 2006, Southern California Edison AMI Program 6 Phase I Program Scope Business & Functional Requirements Reference Architecture Trade-off Analysis Preliminary Business Case & Regulatory Application Vendor Engagement Technology Evaluation Vendor Product Bench Testing Regulatory Stakeholder Engagement Technology Advisory Board Industry Standards Utility Collaboration Cost/Benefit Analysis External EngagementSystem DesignTechnology Development

© Copyright 2006, Southern California Edison AMI Program 7 AMI Phase I Summary Schedule

© Copyright 2006, Southern California Edison AMI Program 8 AMI Program Status (through Jan ) Accomplishments  Launched AMI Program formally on Nov. 7th  CPUC Approval (5-0) on Dec.1st  Began requirements workshops (75% complete)  Screening RFI for AMI Technology released to vendors worldwide  Results back on Dec. 16 th exceeded SCE’s expectation in terms of vendor interest and activity on next generation development including alignment with SCE  AMI products should be available in 2006 for bench testing  Technology Advisory Board launched, 3rd meeting held Feb.2  Initiated formation of a utility consortium regarding AMI product standards – initial list represents US and international utilities representing over 75 million meters Key MilestonesDateStatus Phase I Kick-offNov 2005 CPUC Phase I ApprovalDec 2005 AMI Technology Vendor ScreenQ Business & Functional RequirementsQ Conceptual System ArchitectureQ AMI Technology EvaluationQ Conceptual FeasibilityQ Phase II Regulatory ApplicationQ Beta Product SelectionQ Preliminary Business CaseQ Has Been Met Expect to Meet Undetermined At Risk Not Met

© Copyright 2006, Southern California Edison AMI Program 9 AMI System Design

© Copyright 2006, Southern California Edison AMI Program 10 SCE Brainstorming SCE Brainstorming System Design: Business Use Cases (Scenarios) --- Distribution operator locates outage using AMI data and restores service Multiple clients use the AMI system to read data from devices at customer site Meter reading for gas & water utilities Utility upgrades AMI system to address future requirements -- Customer provides distributed generation Customer uses pre-payment services Utility detects tampering or theft at customer site Utility maintains the AMI system over its entire life- cycle - Utility procures energy and settles wholesale transactions using data from the AMI system Distribution operators optimize network based on data collected by the AMI system Customer reads recent energy usage and cost at site Utility remotely limits or connects/ disconnects customer Utility installs, provision and configure the AMI system AMI system recovers after power outage, communications or equipment failure Real-time operations curtails (or limits) load for economic dispatch (ES&M) Distribution operator curtails customer load for grid management Customer reduces demand in response to pricing event Multiple clients read demand and energy data automatically from customer premises Installation & Maintenance Field Services / System Recovery Energy Procurement DeliveryCustomer Interface Billing & Customer Service --- Distribution operator locates outage using AMI data and restores service Multiple clients use the AMI system to read data from devices at customer site Utility upgrades AMI system to address future requirements -- Customer provides distributed generation Customer uses pre-payment services Utility detects tampering or theft at customer site Utility maintains the AMI system over its entire life- cycle - Utility procures energy and settles wholesale transactions using data from the AMI system Distribution operators optimize network based on data collected by the AMI system Customer reads recent energy usage and cost at site Utility remotely limits or connects/ disconnects customer Utility installs, provision and configure the AMI system AMI system recovers after power outage, communications or equipment failure Real-time operations curtails (or limits) load for economic dispatch (ES&M) Distribution operator curtails customer load for grid management Customer reduces demand in response to pricing event Multiple clients read demand and energy data automatically from customer premises Installation & Maintenance Field Services / System Recovery Energy Procurement DeliveryCustomer Interface Billing & Customer Service

© Copyright 2006, Southern California Edison AMI Program 11 AMI System Design Overview  Conduct 40 AMI workshops  Develop 18 use cases  Generate functional requirements  Generate non- functional requirements  Use Case analysis  Prioritize requirements  Develop high- level patterns  Develop Component Architecture  Map requirements to components  Iteratively refine component architecture  Develop catalog of standards and technologies  Develop Logical (4+1) Architecture  Develop high- level integration architecture  Test architecture against use cases  Publish Platform Independent Model  Map technologies and standards to components  Develop subsystem cost thresholds  Determine trade-off criteria  Select standards and technologies for estimation  Prepare cost estimates & benefits  Describe subsystem boundaries and performance limits  Refine to level of detail required to communicate with vendor community  Develop Platform Specific Model  Prepare next cost estimates & benefits Business Need  Conducted several innovation sessions to identify potential business value  Studied recent utility experience in creating value from AMI systems  Consultant input on value from AMI systems AMI System scope is the meter and related communications

© Copyright 2006, Southern California Edison AMI Program 12 System Design: Process for Developing Requirements Affirmed/ Appended Cost Tradeoff Candidates Action Items Work Shop Minutes Non- Functional Requirements /Criteria Prior Cost Tradeoff Items OpenAMI Requirements Requirements Teams  Billing and Customer Service  Customer Interface  Energy Delivery  Energy Procurement  Field Services/System Recovery  Meter Installation and Maintenance Intelligrid,Open AMI, Use Case,SCE BRainstorming Narratives merged,Refined Cost Tradeoff Teams  Field Services  Demand Response  Energy Procurement  Call Center   Billing  IT  Job Skill Training  Customer Account Management  Marketing & Communications  Meter Services  Procurement  Megalead, Facillitator tune to SCE Terminology, approach Prior Requirements Work Products Department to Requirement &Cost Tradeoff Coorelation 18Use Cases W o r k s h o p P r e p a r a t i o n Workshop Execution Functional Requirements Workshop Agenda Cost Tradeoff Workshops #TBD Post Workshop Execution Workshops:  1-2scenarios in agenda scope depending on complexity  4hours per workshop T&D Tariffs & Programs

© Copyright 2006, Southern California Edison AMI Program 13 Business NeedFunctional RequirementFunctional AttributeTechnical Requirements Remote Service Turn- on/turn-off Remote Controllable Premise Level Switch Switch adjustable to service (e.g., 200/100A) Remotely Programmable On-board and remotely triggerable Component hardware housed under the meter cover Dimensions Weight Performance rating Temperature rating Latching speed Shielding requirements Feature Benefits Benefit Values Field Services Call Center Credit/Payment Customer $$ $$$ Satisfaction Requirements Determination & Evaluation Costs $ Component $ System $ Ongoing O&M $ Total Trade-off Analysis Labor savings, Reduced UFE & Improved Customer Service

© Copyright 2006, Southern California Edison AMI Program 14 AMI Technology Assessment

© Copyright 2006, Southern California Edison AMI Program 15 Technology Assessment/Procurement Plan Goal: Competitive commercial products available from at least three meter and three communication vendors that meet SCE’s minimum requirements for performance and price by the end of Phase I Objectives:  Proactively engage in a close collaborative process with selected vendors with the most promising products in development  Rationalize the number of vendors that SCE wants to engage on product development  In recognition of long procurement cycle (3-4 years), provide on-ramp for promising products and off ramp for non-performing products  Ensure level playing field for relevant vendor information such as requirements, architecture and future procurements Identify Potential Vendors Worldwide Initial Candidate Vendor Screen Candidate Vendor Due Diligence Beta Product Testing Vendor Development Screen Beta Product Selection Business Requirements Gap Analysis Jan 06

© Copyright 2006, Southern California Edison AMI Program 16 Candidate Vendor Identification Technology Market Structure (representative vendor list) 132 Solicitations Sent 57% North American Firms 43% International 32 Qualified Responses Received Technology Assessment Focus

© Copyright 2006, Southern California Edison AMI Program 17 SCE AMI Technology Assessment Approach Level 1 (Alignment) Level 3 (Lab Testing) Level 2 (Validation) L1 Key Criteria: - Functional Capabilities - Product Timing - Commercial availability - 3 X 3 Interoperability - 2-way - Reliability & Availability - Security - Serviceability - HAN Capabilities - WAN Options - Target price range - MTTF - Other L2 Key Criteria: - Design Development - Production Capabilities - Financial Condition - Processes: Business / Development Manufacturing (NPI) - Supply Chain - Small Requirements Gaps - Other L3 Key Criteria: - Successful Lab Test - Added functionality - Flexibility - Commercial Terms - Other Level 4 (Field Test) Level 5 (Full Deployment) ID “Next Gen” development Due Diligence Reviews Product Availability & Testing Q1-’06 Q2-’06 Q4-’06 Phase II Phase III

© Copyright 2006, Southern California Edison AMI Program 18 Initial RFI Observations – Significant Market Developments  32 Responses received  All are working on “Next Generation” technology  17 indicated an integrated HAN in development  12 indicated development of integrated disconnect  Most communications in development are 2-way and RF peer-to-peer networks  Most are incorporating remote software upgrade capability  Vast majority of vendors expect to commercial product by year-end 2006 for test  17 Responses received  Very little new product development  No Home Area Network capabilities  Very limited load control interface  No integrated disconnects  Not remotely programmable / upgradeable  Predominately 1-way fixed RF communications  Very limited interoperability  California & Ontario are no longer alone in AMI – Texas, New York and others are pursuing it  Several AMI procurements are currently on the street or in evaluation – (e.g., SDG&E, Portland G&E, Nstar, LIPA, TXU)  Market is moving to a more sophisticated AMI product based utility needs and underlying component technology capabilities

© Copyright 2006, Southern California Edison AMI Program 19 External Engagement

© Copyright 2006, Southern California Edison AMI Program 20 External Engagement  Utility Consortium  Organized within the existing international standards body, UCA ® International Users Group. UCA ® is the parent organization to OpenAMI  OpenAMI charter has a role defined for an utility advisory board to provide feedback related to utility needs and application of reference design work products  Focus of group is on expedited review and adoption of existing standards/reference design work from OpenAMI, and various related group (EEI, IEEE, ANSI, Intelligrid, and Gridwise)  Proposed charter jointly developed by UCA ® and SCE (reviewed by Law)  Potential charter members represent over 75 million meters worldwide: SDG&E - AEP - FPL PG&E- ConEd- NationalGrid EdF- TXU- LIPA DTE- HydroOne - Exelon Xcel Energy- PacificCorp- BCHydro Alliant- Hawaiian Electric- Entergy  Technology Advisory Board  Objective is to leverage existing reference design and standards efforts for SCE  Membership: Carnegie Mellon University: Dr. R. TongiaAMI technology & policy & Asia insights CEC PEIR/Lawrence Berkeley Labs: D. WatsonCEC demand response research OpenAMI: R. BellAMI reference design effort Intelligrid/EPRI: J. HughesUtility systems interoperability & security Gridwise Architecture Council: S. WidergrenDOE smart grid reference architecture IEC/EDF: R. SchombergInternational standards & European insights