1. ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY DISPUTES & INVESTIGATIONS ECONOMICS FINANCIAL ADVISORY MANAGEMENT CONSULTING December 16, 2013 Local Government Quantified Savings Component of Strategic Plan Update Navigant Reference: 150283 Stakeholder Update #3

2. 1 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Content of Report This presentation was prepared by Navigant Consulting, Inc. exclusively for the benefit and internal use of the California Public Utilities Commission and/or its affiliates or subsidiaries. No part of it may be circulated, quoted, or reproduced for distribution outside these organization(s) without prior written approval from Navigant Consulting, Inc. The work presented in this report represents our best efforts and judgments based on the information available at the time this report was prepared. Navigant Consulting, Inc. is not responsible for the reader’s use of, or reliance upon, the report, nor any decisions based on the report. NAVIGANT CONSULTING, INC. MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED. Readers of the report are advised that they assume all liabilities incurred by them, or third parties, as a result of their reliance on the report, or the data, information, findings and opinions contained in the report. December 16, 2013 ©2013 Navigant Consulting, Inc. All rights reserved. Navigant Consulting is not a certified public accounting firm and does not provide audit, attest, or public accounting services. See www.navigantconsulting.com/licensing for a complete listing of private investigator licenses. Investment banking, private placement, merger, acquisition and divestiture services offered through Navigant Capital Advisors, LLC., Member FINRA/SIPC.www.navigantconsulting.com/licensing

3. 2 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 1:30Introductions and Meeting Goals 1:40Synopsis of Previous Meetings 1:50Revisit Goal #3 Metrics 2:20Wording for Metrics for Goals #1 and #4 Agenda 2:40Next Steps

4. 3 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 1:30Introductions and Meeting Goals 1:40Synopsis of Previous Meetings 1:50Revisit Goal #3 Metrics 2:20Wording for Metrics for Goals #1 and #4 Agenda 2:40Next Steps

5. 4 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Introductions and Meeting Goals » Meeting Goals We will address each of these goals during the course of today’s meeting. Gain alignment on metrics for Goals #1, #3, and #4 Outcomes for Today’s Meeting Feel free to raise questions and comments as we go through the presentation. Review fit of the metrics effort with LG SP update Review the key points made during previous meetings Discuss revised approach and results for metrics for Goal #3 Review wording for metrics for Goals #1 and #4 Goals for Today’s Meeting

6. 5 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 1:30Introductions and Meeting Goals 1:40Synopsis of Previous Meetings 1:50Revisit Goal #3 Metrics 2:20Wording for Metrics for Goals #1 and #4 Agenda 2:40Next Steps

7. 6 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Synopsis of Previous Meeting The first two stakeholder meetings included attendance (by phone and in person) by a wide range of participants. The manner in which the metrics discussion is framed is important. Be clear that the metrics won’t quantify all of the activities of the LGs. Savings from LG buildings are only part of the equation. Real opportunity resides with the constituents’ buildings. Savings that LGs can achieve may be different than those for which IOUs can claim credit. LGs are interested in representing the full range of savings, not just those for which IOUs can claim credit. Reach codes are still on the table in some jurisdictions. Enhancing compliance and enhancing enforcement require different mechanisms and have different effects. Key Points Made by Stakeholders during Meetings #1 and #2 Stakeholder input has shaped our approach to presenting and framing the metrics component of the LG Strategic Plan chapter.

8. 7 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Synopsis of Previous Meeting The project team would like to refresh several points of context discussed during the first two stakeholder meetings. Developing metrics helps create legitimacy for the Strategic Plan and efforts of local governments. The metrics developed during this effort are not anticipated to serve as goals for the LGP programs. This effort leverages an existing, vetted tool to develop the quantifiable metrics. – The tool (the Potential, Goals, and Targets Model) can create metrics for some but not all components of the goals. – For those metrics that are developed, the results are intended to indicate scale and represent trends, not to provide precise calculations of savings potential. – Future studies or pilots may help quantify specific elements of the goals, and the forthcoming action plan can capture those priorities for planning purposes. Relevant Context Discussed by the Project Team

9. 8 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 1:30Introductions and Meeting Goals 1:40Synopsis of Previous Meetings 1:50Revisit Goal #3 Metrics 2:20Wording for Metrics for Goals #1 and #4 Agenda 2:40Next Steps

10. 9 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Code- Related Issues Type of Construction (Vintage) Sector Opportunities for LG Energy Efficiency ResidentialExisting Buildings Compliance with Code when Triggered Improving Efficiency in Existing Buildings New ConstructionCode ComplianceReach Codes Non-Residential (Including LG and Constituents) Existing Buildings Compliance with Code when Triggered Improving Efficiency in Existing Buildings New ConstructionCode ComplianceReach Codes Revisit Goal #3 Metrics The proposed metrics for Goal #3 quantify two types of effects that could be achieved by leveraging LG regulatory authority. Dimensions of the LG Energy Savings Opportunity The proposed metrics capture the effects of enhanced code compliance (blue) and improved efficiency in existing buildings (green).

11. 10 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Revisit Goal #3 Metrics The project team developed two metrics for Goal #3 based on the discussion during the first stakeholder meeting. Metric #1Metric #2 GoalGoal #3: Local governments accelerate the implementation of energy efficiency, zero net energy and greenhouse gas reduction goals through the use of their regulatory authority. MetricEnergy savings from an increase of 10 percentage points in compliance with existing codes for new construction. Energy savings from bringing the existing building stock up to code from its current state. Relevant StrategyStrategy 3-2: Dramatically improve compliance with and enforcement of Title 24, including HVAC permitting and inspection requirements (including peak-load reduction solutions in inland areas). Strategy 3-3: Develop, adopt and implement model policies and programs focusing on improving the energy efficiency of existing buildings. NotesRequires collection of baseline compliance data for 2013 Title 24. Requires more comprehensive understanding of current energy performance of existing building stock, perhaps by LG jurisdiction Modeling ApproachAssume baseline code compliance rate increases by 10 percentage points Increase baseline energy consumption (against which savings are calculated) by 25%

12. 11 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Revisit Goal #3 Metrics We are lacking current data to provide precise estimates of the potential energy savings from updating existing buildings to current code. The revised approach includes a range of potential savings for the to-code compliance metric: – High end: Based on anecdotal input from LGs, increased the baseline energy consumption by 25% – Low end: Based on an assessment of additional savings from HVAC to-code compliance Actual savings potential may be more than the high end of this range or lower than the low end of this range. This metric could significantly benefit from more comprehensive data, some of which may become available through the upcoming CSS or CLASS studies. Update on Approach to the To-Code Compliance Metric

13. 12 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Revisit Goal #3 Metrics » Analysis of To-Code Compliance (Existing Buildings) Increasing overall baseline energy consumption by 25% yields improved savings. HVAC-to-Code compliance alone also yields significant savings. SectorFuel Type Increase in Incremental Savings in 2020 Increase in Baseline Energy Performance by 25%* HVAC-to-Code Compliance Program Residential Electric26%3% Gas20%12% Commercial Electric26%7% Gas-2%26% * The increase in baseline energy performance is being used as a proxy for a high-end range for energy savings that may be realized from a to-code compliance program. Positive savings are indicative of to-code-compliance improvements. Negative savings are indicative of to-code-compliance increased interactive effects. Source: Navigant analysis of PG Model release on 5/22/2013.

14. 13 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Revisit Goal #3 Metrics » Analysis of To-Code Compliance (Existing Buildings) Measure-level analysis of HVAC-to-Code Compliance savings yields substantial savings for existing buildings that are below code. Sector Fuel Type HVAC-to-Code Compliance Savings* MinMaxAverage Residential Electric46%154%95% Gas-50%-3%-26% Commercial Electric1%972%180% Gas0% *Positive savings indicates Base-to-Measure UES > Code-to-Measure UES. This is indicative of a mixed market baseline lower than code. Negative savings indicates Code-to-Measure UES > Base-to-Measure UES. This is indicative of a mixed market baseline higher than code. Source: Navigant analysis of PG Model release on 5/22/2013. The values reported in this table represent average UES between DEER and IOU workpaper measures for which there is a reported difference between base and code impacts. There are a number of measures from these datasets where the UES impact of base was reported as equal to the UES impact of code. This would indicate that base is equal to code. Additional savings from a lower mixed market baseline than code may be possible if conclusive evidence supporting the overall disposition of market baseline equipment is provided.

15. 14 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Revisit Goal #3 Metrics » Analysis of To-Code Compliance (Existing Buildings) Aggregate IOU Annual Incremental Market Potential (Residential Sector) 2014 – 2024 (GWh) Source: Navigant analysis of PG Model release on 5/22/2013.

16. 15 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Revisit Goal #3 Metrics » Analysis of To-Code Compliance (Existing Buildings) Aggregate IOU Annual Incremental Market Potential (Residential Sector) 2014 – 2024 (MM Therms) Source: Navigant analysis of PG Model release on 5/22/2013. Note: Negative values due to interactive effects.

17. 16 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Revisit Goal #3 Metrics » Analysis of To-Code Compliance (Existing Buildings) Aggregate IOU Annual Incremental Market Potential (Commercial Sector) 2014 – 2024 (GWh) Source: Navigant analysis of PG Model release on 5/22/2013.

18. 17 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Revisit Goal #3 Metrics » Analysis of To-Code Compliance (Existing Buildings) Aggregate IOU Annual Incremental Market Potential (Commercial Sector) 2014 – 2024 (MM Therms) Source: Navigant analysis of PG Model release on 5/22/2013. Note: Negative values due to interactive effects.

19. 18 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Revisit Goal #3 Metrics » Analysis of Enhanced Code Compliance (New Construction) Increasing new buildings’ compliance with code by 10 percentage points yields marginal additional electric savings. Aggregate IOU Annual Incremental Market Potential (Residential and Commercial) 2014 – 2024 (GWh) Source: Navigant analysis of PG Model release on 5/22/2013.

20. 19 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Revisit Goal #3 Metrics » Analysis of Enhanced Code Compliance (New Construction) Increasing new buildings’ compliance with code by 10 percentage points yields marginal additional electric savings. Savings from C&S in IOU Service Territories (Residential and Commercial) 2014-2024 (GWh) Source: Navigant analysis of PG Model release on 5/22/2013.

21. 20 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Revisit Goal #3 Metrics » Analysis of Enhanced Code Compliance (New Construction) Increasing new buildings’ compliance with code by 10 percentage points yields marginal additional gas savings. Aggregate IOU Annual Incremental Market Potential (Residential and Commercial) 2014 – 2024 (MM Therms) Source: Navigant analysis of PG Model release on 5/22/2013.

22. 21 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Revisit Goal #3 Metrics » Analysis of Enhanced Code Compliance (New Construction) Increasing new buildings’ compliance with code by 10 percentage points yields marginal additional gas savings. Savings from C&S in IOU Service Territories (Residential and Commercial) 2014-2024 (MM Therms) Source: Navigant analysis of PG Model release on 5/22/2013.

23. 22 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 1:30Introductions and Meeting Goals 1:40Synopsis of Previous Meetings 1:50Revisit Goal #3 Metrics 2:20Wording for Metrics for Goals #1 and #4 Agenda 2:40Next Steps

24. 23 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Framing for Quantitative Metrics for Goals #1 and #4 As previously discussed, the metrics assigned to Goals #1 and #4 represent savings that can be achieved within LG facilities. These metrics capture only one component of each of the goals. GoalDefinition of the Metric Goal #1: Local governments lead by example by designing and implementing programs that reduce their agencies’ energy use and greenhouse gas (GHG) emissions. Achieve 34 GWh and 0.5 MM Therms of energy savings from implementation of standard efficiency measures/ (i.e., measures eligible for IOU rebates) captured in facilities owned and/or occupied by LGs. Goal #4: Local government and community energy efficiency expertise becomes widespread and prevalent. Achieve 8 GWh and 0.1 MM Therms of energy savings from implementation of enhanced energy management practices captured in facilities owned and/or occupied by LGs.

25. 24 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 1:30Introductions and Meeting Goals 1:40Synopsis of Previous Meetings 1:50Revisit Goal #3 Metrics 2:20Wording for Metrics for Goals #1 and #4 Agenda 2:40Next Steps

26. 25 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Next Steps This is our last planned stakeholder meeting of the three-phase stakeholder engagement process for these metrics. Meeting Date and Time AgendaLocation 21-Nov 2:00 p.m. – 4:30p.m. Describe methodology for estimating baselines and potential; Share preliminary results. Webex and Pacific Energy Center (San Francisco) 5-Dec 1:30 p.m. – 3:00 p.m. Comments on preliminary results of Goals 1 and 2; Preliminary results of Goal 3. Webex only 16-Dec 1:30 p.m. – 3:00 p.m. Share draft-final results; Solicit additional comments. Webex and SCG site in Downey Planned Engagement Timeline

27. Key C O N T A C T S ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. Key C O N T A C T S ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. 26 ENERGY Floyd Keneipp Managing Director Walnut Creek, CA (925) 930-2716 Floyd.Keneipp@navigant.com Jane Pater Salmon Director Boulder, CO (303) 728-2522 Jane.Salmon@navigant.com Eric Shum Senior Consultant Walnut Creek, CA (925) 930-2704 Eric.Shum@navigant.com Floyd Keneipp Managing Director Walnut Creek, CA (925) 930-2716 Floyd.Keneipp@navigant.com Jane Pater Salmon Director Boulder, CO (303) 728-2522 Jane.Salmon@navigant.com Eric Shum Senior Consultant Walnut Creek, CA (925) 930-2704 Eric.Shum@navigant.com

28. 27 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Framing for Quantitative Metrics for Goals #1 and #4 The metrics presented during the last meeting for Goals #1 and #2 will be separated and assigned to Goals #1 and #4. These metrics capture only one component of each of the goals. GoalDefinition of the Metric Goal #1: Local governments lead by example by designing and implementing programs that reduce their agencies’ energy use and greenhouse gas (GHG) emissions. Energy savings captured in facilities occupied by LGs from implementation of standard efficiency measures/ (i.e., measures eligible for IOU rebates) Goal #4: Local government and community energy efficiency expertise becomes widespread and prevalent. Energy savings captured in facilities occupied by LGs from implementation of enhanced energy management practices.

29. 28 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Commercial Results: Aggregate IOU» Commercial Sector › Electric Aggregate IOU Annual Incremental LG Market Potential 2014 – 2024 (GWh) 2013 Preliminary LG Results - Do Not Cite Source: Navigant analysis of PG Model release on 5/22/2013. 4

30. 29 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Commercial Results: Aggregate IOU» Commercial Sector › Electric Aggregate IOU Cumulative LG Market Potential 2014 – 2024 (GWh) 2013 Preliminary LG Results - Do Not Cite Source: Navigant analysis of PG Model release on 5/22/2013. 4

31. 30 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Commercial Results: Aggregate IOU» Commercial Sector › Gas Aggregate IOU Annual Incremental LG Market Potential 2014 – 2024 (MM Therms) 2013 Preliminary LG Results - Do Not Cite Source: Navigant analysis of PG Model release on 5/22/2013. 4

32. 31 ©2013 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Commercial Results: Aggregate IOU» Commercial Sector › Gas Aggregate IOU Cumulative LG Market Potential 2014 – 2024 (MM Therms) 2013 Preliminary LG Results - Do Not Cite Source: Navigant analysis of PG Model release on 5/22/2013. 4