1. EDISON INTERNATIONAL® SM Demand Side Management The Natural Purview of Utilities Presented to Marketing Executive Council Presented by Lynda Ziegler Southern California Edison October 2008 10-3-08

2. EDISON INTERNATIONAL® SM 2 Fossil-Fired Generation Fossil-Fired Generation Distributed Generation Renewable Energy Resources Why Demand Side Management? Policy Drivers… California’s Energy Action Plan makes Energy Efficiency and Demand Response the first resources in our “loading order” California Global Warming Solutions Act requires GHG emissions reduction to 1990 levels by 2020 75% of Americans favor imposing mandatory controls on carbon dioxide emissions & other greenhouse gases Regulators want Energy Efficiency earnings comparable to supply-side earnings Energy Efficiency & Demand Response Energy Action Plan Loading Order

3. EDISON INTERNATIONAL® SM 3 Why Demand Side Management? SCE Business Drivers… Improve utility load factor Reduce GHG emissions Aging Infrastructure Help alleviate local site-specific congestion Fuel diversity Help customers manage bills under high rates Challenges in siting and licensing transmission Challenges in building new generation

4. EDISON INTERNATIONAL® SM 4 SCE service territory will continue to grow – 2012 estimated population growth to 14 Million (+7%) Energy Efficiency and Demand Response help Improve System Load Factor 51% 53% 55% 57% 59% 61% Load Factor 16,000 18,000 20,000 22,000 24,000 20002001 200220032004 20052006 MW Demand MW 2007

5. EDISON INTERNATIONAL® SM 5 Roles of DSM Stakeholders Utilities DSM Service Industry Customer s Critical Roles in Demand Side Management Delivery channel bringing DSM programs to Customers Design and manage DSM portfolio to meet business and policy objectives Customers demand excellent service and DSM solutions that fit their needs  Customer engagement is key to achieving results.

6. EDISON INTERNATIONAL® SM 6 SCE’s DSM Portfolio is Designed to Meet Our Customer’s Needs SegmentDemand ResponseEnergy Efficiency ResidentialSummer Discount PlanResidential Rebates (Direct Load Control – A/C)Appliance Recycling New Construction Home EE Surveys Small CommercialSummer Discount PlanBusiness Incentive Program (Direct Load Control – A/C)Small Business Direct Install Comprehensive HVAC Large Power (>200 KW)Demand Bidding (Energy)Business Incentive Program Capacity Bidding (Capacity)Industrial Process Interruptible ProgramsNew Construction Critical Peak PricingAgricultural Programs Technical Incentives Today… Our 2008 Demand Response Portfolio is 1,574 MW, Dispatchable, (as of Aug ’08) Our 2006-08 Energy Efficiency Portfolio is 3,167 GWh and 556 MW, Permanent, (as of Jul ’08) Tomorrow… Our 2009-11 Demand Response portfolio is $71 million/year Annual load impact forecasts are 1,886, 2,090 and 2,284 MW Our 2009-11 Energy Efficiency portfolio is $448 million/year Three-year CPUC goals are 3,529 GWh and 741 MW

7. EDISON INTERNATIONAL® SM 7 DSM Service Industry is a key deliverable channel SCE can achieve DSM objectives through DSM Service Industry partnerships Energy Efficiency – DSM Service industry is critical in helping us deliver programs to all our customer segments Demand Response - We encourage third-party curtailment providers to participate in our programs as aggregators of load reductions as well as provide bulk demand response to us under bilateral contracts Demand Response 4 contracts with Independent Curtailment Providers (ICPs) 14 Aggregators participating in DR programs 3 Contractors providing permanent load shifting projects 16 engineering and other contractors providing technical audits and delivering enabling technologies to customers Energy Efficiency 25 contracts with Innovative Designs for Energy Efficiency Applications (IDEEA) program implementers, creating 4 pilot EE-DR integrated customer programs; 58 contracts with third party program implementation firms to deliver comprehensive energy efficiency programs; and Approximately 30 contracts with third party professional service provider firms to support energy efficiency program and Local Government and Institutional Partnerships SCE DSM Service Industry Partnership

8. EDISON INTERNATIONAL® SM 8 Direct Installation Engineering Services Turn-Key Providers A/C Contractors CBOs Energy Service Companies Managing a Large DSM Portfolio SCE DSM Organization Program Design Marketin g Portfolio Mgmt DSM Service Providers An effective Utility/Service Provider partnership is necessary to successfully implement a large, complex DSM Portfolio Service Provider Partnership Program Evaluation Monitorin g & Control

9. EDISON INTERNATIONAL® SM 9 Ensuring DSM Service Provider Compliance & Accountability Competitive solicitation process with CPUC peer review group oversight Pay-for-performance contract terms Customer eligibility verifications Work status and results monitoring Independent field inspections of completed work Customer satisfaction follow-up surveys Selected audits Ongoing measurement and evaluation studies

10. EDISON INTERNATIONAL® SM 10 Elevating DSM through Customer Engagement Through programs, services, and advanced communications (SmartConnect), SCE will engage our customers to become key contributors to the energy solution Home Area Network