1. SOUTHERN CALIFORNIA EDISON® SM Transmission Expansion Cost Drivers NARUC Portland, Oregon David Mead Vice President, Engineering Southern California Edison

2. SOUTHERN CALIFORNIA EDISON® SM Contains Non-Public Transmission Information: Distribution limited pursuant to FERC Standards of Conduct 2 SCE has one of the nation’s largest and oldest electrical systems. Operating for 121 years* Covering 50,000 square miles of central, coastal and Southern California Serving a population of more than 13 million via 4.8 million customer accounts in 428 cities Added 386,000 new meters over the last five years (77.2k/year) $17.6 Billion – T & D Assets (2006) *First Predecessor Company to SCE Established in 1886; Consolidated Edison (NY) was founded in 1823.

3. SOUTHERN CALIFORNIA EDISON® SM Contains Non-Public Transmission Information: Distribution limited pursuant to FERC Standards of Conduct 3 What Is Driving The Need For Transmission Replacement of aging infrastructure presents a growing challenge New records are continuing to be set for peak demand throughout the state In addition to load growth, we are obligated to comply with increasing regulatory requirements on renewable energy –California Renewable Portfolio Standard  20% by 2010  Possibly 33% by 2020 (statute under consideration) –California Greenhouse Gas (GHG) regulation

4. SOUTHERN CALIFORNIA EDISON® SM Contains Non-Public Transmission Information: Distribution limited pursuant to FERC Standards of Conduct 4 What Are The Cost Escalators To New Transmission State Regulatory processes are lengthy, costly and require significant resources –Duplicative environmental reviews Federal agencies are difficult to navigate and slow to approve –BLM –US Fish and Wildlife –US Forest Service Interstate projects must have sufficient “benefits” to avoid state opposition as “intrusive” Public more engaged and mobilize opposition quickly Land availability and changes to California Eminent Domain laws Escalating project construction costs

5. SOUTHERN CALIFORNIA EDISON® SM Contains Non-Public Transmission Information: Distribution limited pursuant to FERC Standards of Conduct 5 Permits And System Constraints Complicate The Issue Permitting and licensing decisions from regulatory/jurisdictional agencies contain significant changes impacting project scope and schedule –Multiple and significant mitigation measures –Limits construction methods and hours –Routes permitted are often different than proposed  New routes outside of existing right-of-way Fully utilized electrical systems make construction outages even more challenging  Outage availability due to peak demand  Construction window narrow

6. SOUTHERN CALIFORNIA EDISON® SM Contains Non-Public Transmission Information: Distribution limited pursuant to FERC Standards of Conduct 6 Execution Has Its Own Set of Challenges Competition for resources –Materials  International trade/demand  Extraordinary inflation –Equipment  Long lead times and price increases –Labor  Numerous large expansion projects  Replacement of aging utility infrastructure –Fuel

7. SOUTHERN CALIFORNIA EDISON® SM Contains Non-Public Transmission Information: Distribution limited pursuant to FERC Standards of Conduct 7 Public Opposition The public is more engaged and opposition mobilizes quickly Creating an “unassailable need statement” is critical to managing public opposition Regulatory/permitting jurisdictions view undergrounding as the answer to public concerns on visual impacts –Costly and only benefits a small percentage of ratepayers –Communities benefiting should carry the cost Changes to Eminent Domain is example

8. SOUTHERN CALIFORNIA EDISON® SM Contains Non-Public Transmission Information: Distribution limited pursuant to FERC Standards of Conduct 8 Public Opposition Acronyms – A Quiz! NIMBY – NOPE – BANANA – NIMET – CAVE – NIABY – LULU – NEIUROW – BNMHYMWBS – Not In My Back Yard Not On Planet Earth Build Absolutely Nothing Anywhere Near Anyone Not In My Elected Term Citizens Against Virtually Everything Not In Anyone’s Back Yard Locally Unwanted Land Use Not Even In Utility Right-Of-Way Build Near My House Your Mama Will Be Sorry

9. SOUTHERN CALIFORNIA EDISON® SM Contains Non-Public Transmission Information: Distribution limited pursuant to FERC Standards of Conduct 9 Transmission Planned and Under Construction for Renewable Generation Delivery SCE pursuing numerous renewable transmission projects –Tehachapi Renewable Transmission Project delivers 4500 MW of primarily wind generation. –Acceleration of SCE’s construction of the California phase of Devers-Palo Verde #2 500 kV project to deliver renewable generation from Colorado River area to Southern California. –Eldorado – Ivanpah 230 kV project to deliver 1400 MW of primarily solar generation. –Developing comprehensive transmission plans for solar and wind generation integration in several other areas of San Bernardino and Riverside counties. Above projects in various stages of project development with the capability of delivering over 7,000 MW of renewable generation.

10. SOUTHERN CALIFORNIA EDISON® SM Contains Non-Public Transmission Information: Distribution limited pursuant to FERC Standards of Conduct 10 Tehachapi Renewable Transmission Project Delivers 4500 MW of renewable generation $2.7 Billion Tehachapi Wind Resource Area CA Legend: Segments 1-3 Under Construction Segments 4-11 In Permitting Legend: Segments 1-3 Under Construction Segments 4-11 In Permitting NOT TO SCALE N

11. SOUTHERN CALIFORNIA EDISON® SM Contains Non-Public Transmission Information: Distribution limited pursuant to FERC Standards of Conduct 11 Tehachapi Renewable Transmission Project Segment 1 The Certificate of Public Convenience and Necessity issued by California Public Utilities Commission –Contained 179 mitigations measures, the predominant issues  46 are visual  33 are biology  22 are cultural –Contained two major route changes US Forest Service –Record of Decision  Requires helicopter construction  Requires narrow window on construction

12. SOUTHERN CALIFORNIA EDISON® SM Contains Non-Public Transmission Information: Distribution limited pursuant to FERC Standards of Conduct 12 Tehachapi Renewable Transmission Project Segments 4-11 – Certificate of Public Convenience and Necessity currently in Regulatory review –Segment 8 regulatory evaluation is currently reviewing the proposed route and 4 alternative routes plus an undergrounding option  Any of 4 alternates or undergrounding the preferred route will add significant costs to the project –Segment 6 and 11 – Double circuit proposal for Angeles National Forest  Elevation and icing issues

13. SOUTHERN CALIFORNIA EDISON® SM Contains Non-Public Transmission Information: Distribution limited pursuant to FERC Standards of Conduct 13 If We Build it They Will Come The market will produce the Generators The utilities will provide the Transmission access Will it be done in the current proposed timetables? Without more creative solutions, it will be difficult If we are able to meet the current schedule demands… –Costs are rising and may be higher than necessary –Grid quality and reliability is at risk if we don’t pay attention –The process can end up more contentious than it should be

14. SOUTHERN CALIFORNIA EDISON® SM Contains Non-Public Transmission Information: Distribution limited pursuant to FERC Standards of Conduct 14 Conclusions Transmission investment opportunities are exciting and unprecedented –Southern California Edison – $5.5 billion in 5 years Investments needed to access renewable energy, serve growing loads, and replace aging infrastructure Obtaining project approvals is a daunting challenge – we’ve learned much over the last few years Managing the escalating costs will be key for utilities and our customers