San Diego Gas & Electric February 24 th, 2016 Energy Matinee Pricing Tariff Proposal

Proposal Overview Pilot Objective: evaluate customers’ abilities to respond to hourly dynamic pricing signals, for the purpose of promoting water-energy nexus – Evaluate the effect of this tariff design to allow for water pumping customers with demand response control technologies to shift their energy use to non-off- peak hours Proposal: optional hourly dynamic commodity rate for agricultural and water pumping customers – Includes (1) prices that vary hourly; (2) a dynamic rate component; and (3) net surplus energy credits

Benefits of Hourly Dynamic Pricing Better reflects “real time” variation in pricing Able to adapt to future system conditions Provides customers with more low-cost hours than traditional TOU pricing Includes both SDG&E and CAISO price signals, to address ramping, overgeneration, and increased frequency response

Applicability Optionally available to existing PA-T-1 customers – Typically agricultural and water pumping customers, maximum monthly demand >500kW 1 – As of December 2015, 233 customers on this rate – Recruitment through SDG&E’s account executives Not available to Direct Access or Community Choice Aggregation customers (Commodity offering only) 1 Schedule PA-T-1 Applicability: Available to agricultural and water pumping customers whose Maximum Monthly Demand is expected to be above 500 kw and who are classified with one or more of the following North American Industry Classification (NAICS) Codes , , , , , , , , , , , , , , , 11212, 11221, , 11239, , 11291, 11299, , , , 22131, or This schedule is also available to those agricultural and water pumping customers whose maximum demand is less than 500 kw who are installing or have installed facilities or procedures to reduce their annual on-peak energy consumption by 1,500 kwhrs and are also classified by the above NAICS Codes. Service under this schedule is subject to meter availability. PA-T-1 Accounts as of 2/20/16 Accounts% Accounts Agriculture*14929% Water**27454% Other8617% Total509

Rate Design Standard Pricing Two-Period Hourly Commodity Base Rate Lower Commodity rate during super off-peak period (excludes generation capacity costs) Higher Commodity rate in all other hours (includes some generation capacity costs) CAISO Hourly Commodity Rate Applied day-ahead (in all hours) Event Day Pricing Dynamic Critical Peak Pricing hourly adder Applied to top 150 system peak hours Recovers most generation capacity costs Day-ahead notification Surplus Energy Credit Applied on days with high renewable supply (“duck belly” days) Day-of (hour-ahead) notification

TOU Periods Time PeriodSchedule – Optional Tariff Super Off-Peak12:00 a.m. – 6:00 a.m. weekdays, excluding weekends 12:00 a.m. – 2:00 p.m. weekends, holidays OtherAll Other Hours Dynamic SignalsIn response to high system load or abundance of renewable energy Time PeriodSchedule – Otherwise Applicable Tariff SummerWinter On-Peak11:00 a.m. – 6:00 p.m. weekdays5:00 p.m. – 8:00 p.m. weekdays Semi-Peak6:00 a.m. – 11:00 a.m. and 6:00 p.m. – 10:00 p.m. weekdays 6:00 a.m. – 5:00 p.m. and 8:00 p.m. – 10:00 p.m. weekdays Off-Peak10:00 p.m. – 6:00 a.m. weekdays, and All Hours weekends and holidays

Rate Application Non-Event Hours Commodity Base Rate + CAISO Hourly Commodity Rate System Peak Event Hours Commodity Base Rate + CAISO Hourly Commodity Rate + Dynamic Commodity Adder Surplus Energy Hours Commodity Base Rate + CAISO Hourly Commodity Rate - Surplus Energy Credit (CAISO Day Ahead – CAISO Day Of)

Implementation and Timeline Price signals sent through open communication protocol to customer owned control systems – Alternative method may be utilized if needed Begin no sooner than Q year pilot length

Pilot Evaluation EM&V Plan based on Demand Response Load Impact Protocols Requires two years of participation data Load Impact Evaluation will require a third party consultant – Consultant to be selected through a Request for Proposal (“RFP”)

Budget and Cost Recovery Total Budget Estimated total costs, $1 million - $1.75 million $250,000 to fund load impact study Remainder for IT system changes Additional budget required for IT changes if implementation is required prior to the completion of other expected billing system changes Cost Recovery SDG&E Requests a memorandum account to track costs Will record verifiable incremental expenses associated with set-up of pilot EM&V studies marketing, education and outreach other reasonable expenditures