Presented by Gene Rodrigues Director of Energy Efficiency

1. Demand-Side Management Models & Practices in CaliforniaInnovating for Sustainable Results: Integrated Approaches for Energy, Climate, and the Environment 2008 Symposium on Innovating for Sustainable Results – Chapel Hill, North Carolina Presented by Gene Rodrigues Director of Energy Efficiency Southern California Edison January 8, 2008

2. Introduction: About Southern California Edison • One of the country’s largest investor-owned utilities • 50,000 sq. miles / 13 million customers, including over 5,000 large industrial/commercial customers / 430 cities, including 5 of the 25 fastest growing U.S. cities • Environmental leadership • We partner with our customers to save more electricity through energy efficiency than any U.S. utility for the last 6 years Top U.S. Utility Energy-Efficiency Programs, 92-05Savings shown in megawatt-hours (MWh) or thousands of kWh. • Largest DR portfolio in California • Edison SmartConnect wins industry leadership award • Largest private EV fleet in the country

3. California’s DSM Models & Practices: Establishing California’s Policy Objectives • World’s 6th largest economy • California’s Energy Action Plan first adopted in 2003, specifies energy efficiency and demand response as the first resource in California’s energy “loading order” • Cost-effective EE and DR must be pursued before supply-side options • After EE and DR, renewable resources are California’s first supply-side options • Three-point business model • Recovery of reasonably-incurred program cost • Decoupling = Cuts link between sales and revenues • Reinstatement of a shareholder earnings mechanism for EE

4. California’s DSM Models & Practices: Establishing California’s Policy Objectives • World’s 12th largest source of carbon dioxide • California Global Warming Solutions Act = Reduce California GHG levels to: • 2000 levels by 2010 (11% below business as usual) • 1990 levels by 2020 (25% below “business as usual”)

5. California Per Capita Electricity Consumption* *Source: Arthur H. Rosenfeld, California Energy Commission, April 22, 2005

6. DSM in the Long-Term Resource PlanResource Planning Is The Process of Identifying And Filling The Future Resource Need “ ” • Reduces purchase requirements for base load energy, peak demand, and associated reserve requirements • Price responsive programs are used as load modifiers • Programs which lack sufficient operating experience are not counted at full value. • Reliability programs are treated as a supply resource. • Reduces purchase requirements for capacity and associated reserve requirements.

7. DSM in the Long-Term Resource Plan: Adopting Funding Levels • EE Public Goods Charge • Legislatively-mandated, non-bypassable systems benefits charge • Sets “floor” amount for energy efficiency • Low income EE levels set on “needs” basis • EE Procurement Funding • Goals and amounts established in Long-Term Resource Plan • Utilities apply for funding based on ability of EE to meet resource need • Amount recovered in rates along with other generation-related expense =

8. Leading the Way: Next Generation Programs • Maximize Savings by Integrating DSM Offerings for the Customer • Implement “Next Generation” California EE Programs • “Big & Bold” Long-Term Initiatives • All new residential construction in California will be zero net energy by 2020 • All new commercial construction in California will be zero net energy by 2030 • Heating, Ventilation, and Air Conditioning (HVAC) industry will be reshaped to ensure optimal equipment performance

9. California Results: Energy • Resource Acquisition Benefits of California Investor-OwnedUtilities’ 2006-08 EE Programs • “The utilities project that ratepayer investment in energy efficiency will be capable of avoiding three giant (500 MW) power plants over the next three years.” • Over the 2006-08 timeframe, the California utilities’ energy efficiency programs are expected to save over 7 billion kWh and reduce peak load by over 1,500 MW

10. California Results: Environment • Environmental Benefits of California Investor-Owned Utilities’ 2006-08 EE Programs • “[T]he lifetime electricity savings that result from measures installed during that period will reduce global warming pollution by an estimated 3.4 million tons of carbon dioxide in 2008, equivalent to taking about 650,000 cars off the road.”

11. California Results: Economy Ratepayer Benefits of Investor-Owned Utilities’ EE Programs Facts: • “The total investment in energy efficiency during 2006-08 is projected to produce $2.8 billion in net resource benefits (resource benefits minus costs).” • “Projected total resource savings to ratepayers (avoided utility generation and electric power and natural gas purchases, transmission and distribution costs) are over $5.4 billion over the life of the measures.” • “Total costs estimated at $2.7 billion (including customers’ out-of-pocket expenditures for energy efficiency measures/equipment).”

12. Conclusion

13. Thank You! • For more information, please contact: Gene RodriguesDirector of Energy EfficiencySouthern California Edisongene.rodrigues@sce.com • Additional information about energy efficiency in California available at: Southern California Edison www.sce.com/ California Public Utilities Commission www.cpuc.ca.gov/ California Energy Commission www.energy.ca.gov/ Flex Your Power www.fypower.org/