CEC Public Workshop Order Instituting Informational and Rulemaking Proceeding (08-DR-01) March 3, 2008

1 About Pacific Gas and Electric Company Energy Services to about 15 M People: –5.0 M Electric Customer Accounts –4.1 M Natural Gas Customer Accts 70,000 square miles with diverse topography ~20,000 Employees Regulated by the California Public Utilities Commission (CPUC) and California Energy Commission (CEC) CA regulatory structure de-couples profits from energy sales revenue and provides incentives for peak demand reduction / energy efficiency

2 Scoping Workshop Topic Areas –The functional capabilities of the advanced meters being installed and/or proposed by the utilities –Electricity rate design –The development of information, education and implementation strategies that will inform voluntary customer participation –The functional design, communication capabilities and dispatch logistics of technologies that allow customers to automate their voluntary response to price and reliability signals –Opportunities for capturing the peak load reduction and conservation potential of energy storage and permanent load- shifting technologies.

3 PG&E’s 2006/2007 Enrolled MWs by Demand Response Program

4 New Demand Response Programs for 2008 Cafeteria Style Menu Program –Allows customer to customize their demand response program by selecting from a menu of options to fit their operational needs Expanded Smart AC Program –D (February 14, 2008) approved PG&E's Air Conditioning (AC) Direct Load Control Program through 2011 –Additional 300 MWs of demand response benefits SmartRate –Residential Critical Peak Pricing Program linked to PG&E’s SmartMeter

5 How to Achieve More Demand Response Simple, stable program rules Enhance customer program choices Educate customers about economic and environmental benefits of DR Develop segment-based marketing tools to promote Energy Efficiency, Demand Response & Solar programs Encourage installation of enabling technology

6 The PG&E SmartMeter Program Automated meter reading 10 Million meter upgrades A network to collect meter reads remotely Frequent meter reads - daily for gas, hourly or 15 minute interval for electric Enables demand response rates and customer home/premise automation Enhanced capabilities over time

7  Customers Receive usage information to better understand and manage their bills, and be able to participate in future energy efficiency and demand response programs Experience less inconvenience and intrusion by no longer needing to unlock gates and tie up dogs for monthly meter reads Reduction in the causes of delayed, inaccurate and estimated bills Experience faster outage detection and restoration times Opportunity to turn service on and off remotely SmartMeter Program Benefits Reduced operating costs Reduced peak loads when customers shift to non-peak energy use and when they conserve (demand response) Lower procurement costs resulting from reduced peak load and enhanced load modeling Improved customer satisfaction stemming from enhanced customer service capability Improved billing efficiency Improved outage management Reduced energy theft  PG&E Supports the CPUC’s price-responsive tariff requirements  CPUC/State

8 SmartMeter Upgrade Technology

9 DR, the CEC, and AMI PG&E believes Demand Response is a cost effective way to manage peak load growth in California PG&E supports the CEC requiring PCT's in all new construction and permitted retrofits –Underwrites incremental growth of voluntary enrollment in SmartAC program by eliminating utility or customer installation of PCT Home Area Network communication will allow utilities to provide numerous voluntary demand response, energy efficiency, and conservation programs