Smart Meters & Customer Benefits Erik Krause, Director Customer Retail Strategy September 14, 2015

Overview About SMUD SMUD’s AMI Solution Keeping costs and bills low Offering new customer programs Giving customers rate choices Providing tools and information

About SMUD Sacramento Municipal Utility District 6th largest customer and community-owned electric utility 900 square mile service territory Serving a population of 1.4 million 605,000 customers and 620,000+ meters The Sacramento Municipal Utility District is the 6th larges customer and community-owned electric utility. We serve residents and businesses across Sacramento County and a sliver of Placer County Our service territory is approximately 900 square miles, we serve a population of just over 1.4million; with 605,000 customers and 620,000 meters.

SMUD’s AMI Solution Before I go into the benefits that SMUD’s AMI or smart meters provide our customers and communities, I thought I’d give you an overview of our solution. As step 1 shows, SMUD’s smart meter system is comprised of more than 620,000 Landis+Gyr meters with Silverspring Networks network cards, approximately 200 access points and 200 relays. This solution is a mesh network that uses 900mhz unlicensed RF to communicate between meters, relays and access points at low wattages and creates a very robust and scalable network. The relays act to boost the signals from the meters – especially in rural areas and/or highly dense urban areas – so that the signals reach our access points. The access points quickly transmit the data via AT&T cellular data back to our servers which are hosted in two locations to provide disaster recovery if necessary. We have programmed our meters to capture hourly interval data for all residential customers and 15 minute interval data for all commercial customers. We also have remote service switches in all of our single-phase meters; and ZigBee radio chips in all meters. The data is transmitted 6 times a day or every four hours.

Keeping costs and bills low 99.97% vs. 85% read rate ↓$14M in annual costs ↑300% theft billings ↓650k+ truck rolls ↓$1M+ write offs $10M TOU costs One of the key drivers for moving forward with smart meters at SMUD was to reduce our ongoing operational costs. We didn't’ move forward until we were confident that the system could pay for itself well within the likely lifespan of the meters. We have been very please with the results, even if the specific assumptions of our business case weren’t always spot on. As a community-owned electric utility, we are always focused on our customers, so we made certain that these savings translated into keeping our customers bills low. We are proud to say that our rates and our customers bills are still some of the lowest in California. As a mesh network, the network is extremely reliable, fast and provides excellent read rates. We built our network out to use only 15% of the bandwidth under regular operations. Because of this, our read rates have been consistently above 99.97% on a daily basis…this is compared to the 85% that we were hopeful to obtain via monthly manual meter reads. Because of this success, we’ve significantly reduced ongoing operational costs. Our business case estimated that we’d save ~$14M in annual operating costs and it has proven to be quite accurate. Most of the savings come from reduction in labor associated with meter reading, field services, billing and meter shop, but there are additional savings that add up to millions of dollars as well. Soon after installing our system, we moved forward and implemented a system that leverages our interval meter data, publicly available information such as weather, building size and energy usage data to implement a more sophisticated revenue assurance program. As we were moving forward with the smart meter project, many were concerned that we were losing our “eyes in the field” and would see tremendous increases in theft. This solution was a way to help us alleviate those fears. As you can see, in the first 6 months after implementing this solution that leverages the meter data, we increased theft billings and recovery by 300%. This wasn’t due to higher theft or increased staffing, but because we now had the data to identify more sophisticated theft that wouldn’t have been noticed by “eyes in the field.” Commercial accounts are some of the most sophisticated, and are much better at hiding theft. They don’t simply put a kitchen knife between the clips, or install jumpers in their panel. This system helps us to find more sophisticated theft. Our decision to pay extra to have switches placed in all of our single phase meters has also paid significant dividends. Since we started using our service switches in 2011, we have eliminated more than 650,000 truck rolls. Not only does this reduce costs, but it also reduces the amount of carbon those trucks emit and means that customers don’t have field reps sneaking into their back yard to turn off electricity. When we started using the service switches, we also improved the process for our customers which led to improved satisfaction. It may be hard to believe the implementing a switch that makes it easier for us turn off their electricity would increase satisfaction. However, we’ve increased the hours during which they can make last-minute payments to avoid disconnection until midnight the day ahead (it was 3pm), and now allow them to pay until 7pm and receive same day reconnection. Our first disconnect-pay-reconnect process took only 17 minutes. Combining the new revenue assurance solution and leveraging the service switches, we’ve been able to reduce annual write-offs by over $1m while also helping customers avoid getting so behind in payments that they can’t get out of the hole. One unexpected benefit that saved us $10M in just over a year was the savings related to implementing TOU for all of our commercial customers. We were the first utility to ever mass-reprogram more than 70,000 meters to enable TOU pricing and display and saved not only money, but avoiding having to have our whole meter team in the field for more than two years to reprogram the meters manually. Once we had set up the systems and automation processes, it took us less than 6 months to transition all 70,000 customers to TOU.

Offering new customer programs In-home display check out We realized that simply reducing operational costs and keeping bills low wouldn’t necessarily resonate with our customers, so we began developing and offering several different pilots and programs that leveraged the smart meters and interval data while offering customers the information and tools they need to have control over their bills. I wont talk about all of the programs we offer, but will hit on a few of the more popular and successful programs. PowerStat is a program that started as an offer for just residential customers, but is now also available to small commercial customers. The program has several “flavors” with rate options for customers to select including Critical Peak Pricing, tiered pricing and a flat fee incentive. Customers receive a free thermostat that connects to the smart meters via ZigBee and are asked to participate in up to 12 “events” each summer to help us shave peak load between 4-7pm on weekdays. Under the in-home display check out program, customers can check out in home display at local libraries or through SMUD directly. The in home displays connect also connect with the ZigBee in the meters to provide real time energy usage data. Customers check out the devices for two weeks, which we’ve found provides plenty of time for their families to learn how much energy the various appliances use in their home, and how to better control their bills. The PowerDirect solution is meant for our large commercial customers and combines automated controls, and the data from smart meters to help businesses to save energy and money by controlling key systems in their businesses such as lighting and chillers. PowerDirect® auto demand response PowerStat® demand response

Giving customers rate choices Residential TOU – coming soon! Because our meters are programmed to capture hourly and 15 minute interval data for all of our customers, we are able to design better rates that meet our customers needs, while also addressing challenges we face as a summer-peaking utility. With our hot summers and heavy HVAC and pool pump loads, we need about 400MW for only 40 hours each summer. Those 40 hours are typically spread across just 13 days! Since we completed our smart meter rollout in 2012, we have designed and developed four new rate structures to offer to our customers. The commercial TOU transition that I mentioned earlier transitioned 70,000 customers to TOU over a period of several months. We couldn’t have offered that new rate to our customers without the 15 minute interval data that is used for the TOU, but also to track and charge for demand. Soon after transitioning our commercial customers, we began offering our customers both TOU and CPP rates through our SmartPricing Options Pilot program. This program included several treatment groups for customers with and without technology. This pilot has won several awards, but most importantly, it showed us that customers could understand time variant pricing and continued to respond to the pricing for years after the initial launch. We also found that customers who were placed on the rate versus joining the rate still reduced their usage during the peak, and maintained a satisfaction of 85% Due, in part, to the success of SPO, we are now moving toward TOU as the standard rate for residential customers. We learned from the SPO pilot that customers preferred simpler rate designs that made it easier to understand and respond to price signals. It may be hard to see on this slide, but we only have three difference prices for energy: off-peak, peak and summer super peak. Prices don’t differ between summer and winter, and we only have two seasons – summer and winter. We believe, and initial customer focus groups and surveys validate, that this model is easily understood by our customers and should provide good results. As it stands today, we will move about 350 current TOU customers and EV owners to this new rate in January, and will begin recruiting additional solar and EV customers throughout 2016. We have limited the rate to a subset of customers in 2016 to allow us time to test out the new rate, systems and processes before offering it to all residential customers in 2017. Should the Board decide to make TOU the standard residential rate during the upcoming 2017 rate case, we will transition all of our residential customers to TOU by the end of Q1 2018. Customers will still have a choice to move to a non TOU rate…most likely a single-tier rate with one price in summer and another in winter. SmartPricing® Options Pilot

Providing tools and information Residential Web Portal Rate Comparison Neighbor Comparison & Tips Usage Charts A web portal will provide smart meter customers with usage and cost charts, rate options, and practical tips aimed at reducing electricity consumption. Home Electricity Reports will provide a comparison to neighbors, usage overview and savings tips. Opt-In High Bill Alerts - an email communication letting our customers know when they are on track for a high bill

SMUD Marketing module here Providing tools and information Customer Communications Home Electricity Report SMUD Marketing module here High Bill Alert