1. Leading the Way in Electricity SM SOUTHERN CALIFORNIA EDISON ADVANCED TECHNOLOGY California Senate Hearing on PIER March 1, 2011 SCE Assessment of State RD&D Restructuring

2. Leading the Way in Electricity SM SOUTHERN CALIFORNIA EDISON ADVANCED TECHNOLOGY 11 Policy and Grid Advances – Drivers* Most aggressive policies in the United States Once Through Cooling GHG: 1990 levels GHG: 80% Below 1990 levels 500 MW of PV *This list is not comprehensive. Other energy policies or other drivers, e.g. R.A.M.F.I.T. or DG proposals, will also impact utility planning and operations 20% RPS 33% RPS

3. Leading the Way in Electricity SM SOUTHERN CALIFORNIA EDISON ADVANCED TECHNOLOGY 2 Significant and complex RD&D is needed. Time is short *Representative Only

4. Leading the Way in Electricity SM SOUTHERN CALIFORNIA EDISON ADVANCED TECHNOLOGY 3 SCE’s Guiding Principles for State RD&D for 2011-2020 State RD&D funding awards should prioritize projects that directly help to meet or support State climate and energy policies and enhance electric system integration of new technologies and other advances Program planning and administration must be knowledgeable, quick, effective, flexible and responsive to new information, policies, and technologies. Decision-making should be transparent and inclusive of utilities Funding for State RD&D should come from all California customers connected to the grid In SCE’s view, State energy RD&D restructuring efforts must incorporate these principles

5. Leading the Way in Electricity SM SOUTHERN CALIFORNIA EDISON ADVANCED TECHNOLOGY 4 4 Assessment of LAO-Proposed Options Using SCE’s Principles Option 1:Option 2:Option 3: TitleContinue PIER Program under CEC With a Tighter Focus Allow IOU Recovery of Public Interest Research Create a Public-Private Partnership for Electricity Research Key Components More strategic focus based on priorities for next ten years Research public goods charges collected by POUs transferred to the PIER fund Climate change category eliminated No reauthorization of energy RD&D component of public goods charge Allow IOUs to collect funds for RD&D efforts via rates More flexibility for IOUs to make research investments needed to meet energy/climate goals Continue collection of energy RD&D component of public goods charge, but funds remain with the individual utilities IOUs use funds subject to multiyear investment plans sanctioned by new coordinating councils New councils have representation from the CEC, CPUC, CAISO, CPUC’s Division of Ratepayer Advocates, POUs and IOUs SCE Assessment Correct Focus Responsive and Nimble Administration Utility Involvement in Decision-making Fair Funding Support ? - Uncertain outcome - Principle met LEGEND ?-TBD

6. Leading the Way in Electricity SM SOUTHERN CALIFORNIA EDISON ADVANCED TECHNOLOGY 5 Conclusion If properly structured and executed, any of the LAO options could sufficiently restructure State energy RD&D for next ten years Key Provisions Ensure funding for projects that support energy and environmental policy goals 1 Promote transparency and utility- involvement in program direction and project selection 3 Ensure funding for State energy RD&D comes from all energy customers 4 Revamp administrative structures and practices to ensure program responsiveness and timeliness 2

7. Leading the Way in Electricity SM SOUTHERN CALIFORNIA EDISON ADVANCED TECHNOLOGY 6 Appendix

8. Leading the Way in Electricity SM SOUTHERN CALIFORNIA EDISON ADVANCED TECHNOLOGY 7 PIER Disbursements by Recipient, 2007-2009 1,2 1. Sources: CEC Annual PIER reports, 2007 – 2009. Records are for disbursements only, not “awards”! 2. $248 million total for three years. Includes electric funding of $192 million, and natural gas funding of $56 million. 3. Out of State awards likely range between 6 – 21% based on CEC reports from previous years and analysis of project lists. Some “out of State” awards likely go to projects conducted in CA. 3