Renewable & Alternative Power Senate Energy, Utilities & Communications Committee Stuart R. Hemphill Director, Renewable and Alternative Power Southern California Edison The Hon. Christine Kehoe, Chair February 26, 2008

Page: 1 Renewable & Alternative Power Overview SCE still leads the nation in renewable deliveries 16 percent of customers’ needs are met with renewable energy Contracted-for renewable energy is sufficient to meet 20% target Based on current law, however, it is clear that load serving entities will not achieve energy deliveries of 20% by 2010 Contracts are sufficient, but on-line timing is problematic Transmission and a clogged interconnection queue have impeded near term deliveries Increasing customer demand creates a moving target With modest changes to existing law, 2010 deliveries may still be possible Expand supply options by looking out of state Authorize the use of unbundled renewable energy credits Expand eligibility for California Solar Initiative

Page: 2 Renewable & Alternative Power SCE’s Resource Mix 2007 (Estimated) Natural Gas Renewables NuclearCoal Large Hydro All Resources 100% = 79 Billion kWh Geothermal Biomass Wind Small Hydr o Renewable Resources 100% = 12.5 Billion kWh Solar

Page: 3 Renewable & Alternative Power Eligible Renewable Procurement Activity 2002 To Present Alta Wind Power (4.9) Calpine (2.0) Coso (1.8) Stirling (1.8) 35 Contracts17 Billion kWh  Completed five solicitations to date; 2008 solicitation pending release  Contracts are primarily year agreements Number of Contracts Maximum Energy Under Contract

Page: 4 Renewable & Alternative Power The Interconnection Queue Has Become Backlogged Until 2005, there were few renewable projects in queue Renewable projects begin to enter queue Massive amount of projects in queue leads to breakdown of queue process Cumulative of Renewable Generators Only in Interconnection Queue, in MW (Summer Maximum) Source: SCE Generation Interconnection Database Note: Full generation in queue = 41,400 MW

Page: 5 Renewable & Alternative Power Increasing Customer Demand Creates Higher Goals GWh Source: SCE’s Demand Forecasting Group Mar ‘03 Apr ‘04 Dec ‘04 Oct ‘05 Much greater level of new construction Higher use, due to homes in inland regions Historically low interest rates, including mortgage rates Primary Causes for Higher than Expected Growth

Page: 6 Renewable & Alternative Power Direct Access Customers Returned, Creating Even Higher Goals Returning Direct Access Customers 10.4 (15.2% Increase) Change in Annual Energy Consumption (Billion kWh) 2.1 (15.2% Increase)

Page: 7 Renewable & Alternative Power Steps California Can Take To Increase Renewable Deliveries Before 2010  Broaden and deepen the renewables market Relax the in-state delivery requirement Neighboring states have abundant, high quality resources Increasing supply will increase competition and reduce overall program costs Authorize the use of Renewable Energy Credits (RECs) Use of RECs is widespread in other states with Renewables Portfolio Standards  Increase the eligibility for the California Solar Initiative Eliminate the “on site” requirement in the Million Solar Roofs statute to increase penetration of solar installations Expand eligibility for CSI funds to all entities installing distribution level solar systems

Page: 8 Renewable & Alternative Power Estimates of Potential Energy Deliveries By 2010 Billions of kWh, SCE’s Portfolio Percent of 2010 Energy Needs 0.25%1.0%10.0%

Page: 9 Renewable & Alternative Power Steps California Can Take To Increase Renewable Deliveries Beyond 2010  Accelerate California’s Renewable Energy Transmission Initiative New transmission will likely take 7-10 years after new lines are identified  Encourage the federal government to extend and lengthen incentives Production Tax Credits for wind Investment Tax Credits for solar  Support CPUC’s environmental reviews for new transmission lines  Work with federal government agencies to gain Concurrence on State renewable policy Land access to support transmission needed for renewables  With CAISO’s lead, continue to champion interconnection queue reform