©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY DISPUTES & INVESTIGATIONS ECONOMICS FINANCIAL ADVISORY MANAGEMENT CONSULTING September 28, 2011 Draft Assessment of Residential and Commercial Technical and Economic Potential PG&E Electric

1 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 3Key Structural Characteristics 2Codes and Standards Considerations 1Measure Characterization Agenda 4Residential Draft Results 5Commercial Draft Results 6Comparison to Asset 2008

2 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 3Key Structural Characteristics 2Codes and Standards Considerations 1Measure Characterization Agenda 4Residential Draft Results 5Commercial Draft Results 6Comparison to Asset 2008

3 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Track 1 Issues Measures Included in the Modeling  Categorized into 4 Groups High Impact Measures (HIMs) o Among the top measures, in terms of historical energy saving achievement Measures of Interest (MOIs) o Measures that are not currently HIMs, but are considered candidates to be HIMs in the future Secondary Measures o Measures historically offered by the utilities, but which only provide low levels of energy savings Emerging Technologies o Potentially large impact measures seen as likely entering the market place soon

4 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Track 1 Issues Sourcing Measure Characteristics  Characteristics Documented in the Measure Input Characterization Sheets (MICs) Separate MICS (Measure Input Characterization Sheets) by utility, sector, and fuel type Separate MICs for ETs and all other measures Documentation for the following variables: o Measure impact (energy and coincident demand) – Four baselines defined: 2007 baseline – primarily Asset 2008 and DEER 2005 values 2010 baseline – primarily DEER 2.05 values 2013 ex ante values – primarily DEER v3.02 and Utility Work-Papers 2013 ex post values – 2006 through 2009 evaluation reports o Measure density (the number of technology units per home or per thousand square feet) o Measure cost o Net to Gross Estimates o Decision maker measure awareness and willingness to install

5 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Track 1 Issues Measure Input Characterization Sheets (MICS) Structure  “PG&E Res Elec Inputs Summary”– input sheet for the potential model  “Read Me” tab – explanation of all Measure Inputs in the MICS  “Measure Definitions” tab – high level definition of a measure and savings source  End – Use Tabs show measure specific detail Tabs organized by DEER measure category All values used in the MICS are sourced/ calculated and linked  Sample Sheet - PGE Residential MICS

6 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 3Key Structural Characteristics 2Codes and Standards Considerations 1Measure Characterization 4Residential Draft Results 5Commercial Draft Results 6Comparison to Asset 2008

7 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Track 1 Issues Codes and Standards  Codes and Standards (C&S) impacts on the technologies included in the model by year starting in 2007  Primary Impact is the Huffman Bill  The following is a list of the C&S included in the residential model (commercial still in process) * New refrigerator and freezer standard to reduce energy by 25% - implemented 2014 * Rule issued in 2010 (implemented in 2015) Water Heat Base EF * CAC Rule to be issued in 2011 (implemented in 2015) Base SEER 14 * HP rule to be issued in 2011 (implemented in 2014) Base EER 10.8 * Eisa Lighting Improvement for 100W-150W Incandescent equivalent (2012) * Eisa Lighting Improvement for 75W Incandescent equivalent 2013) * Eisa Lighting Improvement for 40W and 60W Incandescent equivalent (2014) * Window Code * Insulation Code * Room A/C * HVAC Controls * T-8 Lighting

8 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Track 1 Issues Codes and Standards Key Impact Years Codes and Standards Adjustments - As Modeled * New refrigerator and freezer standard to reduce energy by 25% - implemented * Rule issued in 2010 (implemented in 2015) Water Heat Base EF * CAC Rule to be issued in 2011 (implemented in 2015) Base SEER * HP rule to be issued in 2011 (implemented in 2014) Base EER * Eisa Lighting Improvement for 100W-150W Incandescent equivalent (2012) * Eisa Lighting Improvement for 75W Incandescent equivalent 2013) * Eisa Lighting Improvement for 40W and 60W Incandescent equivalent (2014) * Window Code * Insulation Code * Room A/C * HVAC Controls * T-8 Lighting

9 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Track 1 Issues Codes and Standards As Percent of Total Technical Potential – PG&E Residential

10 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Track 1 Issues Codes and Standards by Year – PG&E Residential (GWh)

11 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 3Key Structural Characteristics 2Codes and Standards Considerations 1Measure Characterization 4Residential Draft Results 5Commercial Draft Results 6Comparison to Asset 2008

12 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Analysis Staging PG&E Utility Area - Electricity: Medium Residential Sector Scenario Scenario Inputs/Switches ScenarioMedium(Medium, High, or Low) Use Ex Ante (1) or Ex Post (2) Impacts?2(Ex Ante = 1 Ex Post = 2) Have Net-to-Gross Set to 1.0 (1) or Measure Level Set (2) (see Mea-In Tab) 2(NTG 1.0 = 1, NTG Column "AR" of "Mea-In" sheet = 2) (NTG affects savings but does not affect technology, incentive, or admin costs) Base Incentive (as Percent of incremental cost)50%(this sets calibrated payback response) Scenario Incentive (as Percent of incremental cost)50%(scenario first year is fixed to base incentive) Economic Potential TRC Screen Value0.80 Willingness * Awareness Maximum0.90 Include Emerging Technologies?1(Yes = 1, No = 2) Measure Reparticipation (between )0.85Located in column "D" of sheet "Res-Re-Part" if it is desired to change this variable by measure Decision Curve Beta Value0.50Elasticity indicator Codes and Standards On (1) Off (2)1(On = 1, Off = 2)

13 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Scenario Switches – page 1  Scenario Based on High, Medium, and Low forecasts of housing/floorstock, energy and demand, and rates from the 2011 CEC IEPR  Ex Ante or Ex Post and Net to Gross Ex Post is the primary analysis impact values and evaluation based NTG values the primary NTG but ex ante assessment as well as NTG=1 are available  Base Incentive and Scenario Incentive For market potential, the base incentive value is what EERAM calibrates payback to. It is currently set at 50% as that is similar to the base case assumption used in the 2008 Asset assessment. Scenario incentives can vary from 0% to 100% of incremental cost to assess the impact of changing the incentive levels  Economic Potential TRC screen A variable that is currently set at 80% but can be modified  Willingness and Awareness Maximum Baseline decision maker willingness and awareness (W&A) values are primarily taken from the 2008 Asset assessment. EERAM assumes that W&A improves over time with this value being the maximum for that improvement 13 Approach to Track 1

14 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Scenario Switches – page 2  Include Emerging Technologies A set of emerging technologies is included in EERAM. This is a simple Yes/No switch to include or not include them in the analysis  Measure Re-Participation A certain percentage of program participants, at the end of measure life, are assumed to re-participate in a utility program. This identifies what percentage that is with the remaining population added back to the non-participant population (able to re-participate later)  Base Incentive and Scenario Incentive For market potential, the base incentive value is what EERAM calibrates payback to. It is currently set at 50% as that is similar to the base case assumption used in the 2008 Asset assessment. Scenario incentives can vary from 0% to 100% of incremental cost to assess the impact of changing the incentive levels  Decision Curve Beta Value This determines participation payback elasticity. A smaller number means lower elasticity and a larger number the reverse. It is modeled as a variable with the specific value yet to be determined.  Codes and Standards This is a simple Yes/No switch to include or not include them in the analysis. Turning this switch on/off helps define the impacts from Codes and Standards 14 Approach to Track 1

15 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Other Key Modeling Elements  Technology Costs can change over time  Non Codes and Standards Technology Impacts can change over time  Administrative costs can change over time  Existing measures use an elasticity based decision maker algorithm to estimate yearly program participation. Simple payback is the cost element and impacts are calibrated to 2007 utility program achievements.  Emerging Technologies as well as new technologies that have not been part of a utility’s portfolio in the past use a Bass Diffusion curve to estimate program participation 15 Approach to Track 1

16 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 3Key Structural Characteristics 2Codes and Standards Considerations 1Measure Characterization 4Residential Draft Results 5Commercial Draft Results 6Comparison to Asset 2008

17 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Residential Technical Potential Energy 17 Approach to Track 1 RESIDENTIAL - Technical Potential by DEER Measure Categories Energy Potential (MWh) DEER Measure Categories Indoor Lighting3,710,6033,727,7243,746,095 Outdoor Lighting539,408543,902548,590 Appliance2,314,2192,192,8882,252,214 Water Heating919,0831,047,2151,173,797 Laundry59,21168,35933,697 Building Envelope481,849480,472449,896 HVAC735,636727,503702,359 Plug Loads978,937989,3661,000,196 Process000 Whole building80,22891,984104,099 Other32,40532,76233,132 Low Income58,300 Total9,909,8789,960,47510,102,375 % of Forecast Sales30.06%29.88%29.89%

18 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Residential Technical Potential Demand 18 Approach to Track 1 Demand Potential (kW) DEER Measure Categories Indoor Lighting611,785614,005616,427 Outdoor Lighting15,50715,60715,711 Appliance317,544286,146294,552 Water Heating137,692156,910176,000 Laundry000 Building Envelope000 HVAC908,087837,245833,585 Plug Loads67,37668,09868,848 Process000 Whole building74,61285,54696,812 Other9,0739,1739,277 Low Income16,872 Total2,158,5492,089,6022,128,085 % of Forecast Sales24.91%23.84%23.95%

19 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Residential Technical and Economic Potential as a Percent of Forecast Sales Approach to Track 1

20 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Residential Technical and Economic Potential by DEER Measure Category Energy 20 Approach to Track 1

21 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Top Ten Measures Residential Technical and Economic Potential Energy 21 Approach to Track 1 RankMeasureTechnical PotentialMeasureEconomic Potential 1Recycle refrigerator1,674,642Recycle refrigerator1,674,642 2Heat Pump Water Heaters1,153,322Heat Pump Water Heaters1,153,322 3Specialty CFLs949,863Specialty CFLs949,863 4CFL: 13W Screw-In Indoor906,199CFL: 13W Screw-In Indoor906,199 5Set Top Box768,641Set Top Box768,641 6High Efficiency Pool Pump528,218High Efficiency Pool Pump528,218 7CFL Fixture469,571CFL Fixture469,571 8HVAC Controls335,124CFL: <=7W Screw-In Indoor308,096 9CFL: <=7W Screw-In Indoor308,096CFL: 18W Screw-In Indoor284,279 10Insulation - Ceiling R30, Wall R13306,159CFL: 23W Screw-In Indoor263,274 Other2,702,540Other1,092,845 Total 10,102,375 8,398,951

22 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 3Key Structural Characteristics 2Codes and Standards Considerations 1Measure Characterization 4Residential Draft Results 5Commercial Draft Results 6Comparison to Asset 2008

23 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Commercial Technical Potential – Energy Without Emerging Technologies 23 Approach to Track 1 Energy Potential (MWh) DEER Measure Categories Indoor Lighting6,815,3816,743,5476,672,470 Exterior Lighting867,218852,792838,574 Appliance000 Water Heating000 Laundry31,69335,83939,894 Building Envelope136,877135,435134,007 HVAC2,016,8972,123,2182,226,215 Plug Load584,072576,972569,957 Process361,418370,884380,111 Whole building000 Food Service2,351,5972,656,7632,954,629 Refrigeration798,955851,401902,105 Total13,964,11014,346,85114,717,962 % of Forecast Sales42.60%42.97%43.23%

24 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Commercial Technical Potential – Energy With Emerging Technologies 24 Approach to Track 1 Commercial - Technical Potential by DEER Measure Categories Energy Potential (MWh) DEER Measure Categories Indoor Lighting9,582,0169,481,0219,381,091 Exterior Lighting1,134,3121,117,0701,100,066 Appliance000 Water Heating000 Laundry31,69335,83939,894 Building Envelope136,877135,435134,007 HVAC3,460,2463,551,3533,639,298 Plug Load801,364791,918782,612 Process361,418370,884380,111 Whole building000 Food Service2,351,5972,656,7632,954,629 Refrigeration802,952855,879907,044 Total18,662,47518,996,16219,318,753 % of Forecast Sales56.94%56.90%56.75%

25 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Commercial Technical Potential – Demand Without Emerging Technologies 25 Approach to Track 1 Demand Potential (kW) DEER Measure Categories Indoor Lighting1,254,3441,241,1231,228,041 Exterior Lighting1,050,1671,029,6611,009,470 Appliance000 Water Heating000 Laundry4,3824,9555,516 Building Envelope201,286199,164197,065 HVAC966,7201,026,0051,083,677 Plug Load156,581154,760152,960 Process48,09050,06451,991 Whole building000 Food Service475,030536,698596,896 Refrigeration87,72994,670101,384 Total4,244,3294,337,1004,427,001 % of Forecast Sales69.16%69.42%69.54%

26 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Commercial Technical Potential – Demand With Emerging Technologies 26 Approach to Track 1 Demand Potential (kW) DEER Measure Categories Indoor Lighting1,606,0991,589,1711,572,421 Exterior Lighting1,062,0511,041,4201,021,105 Appliance000 Water Heating000 Laundry4,3824,9555,516 Building Envelope201,286199,164197,065 HVAC1,744,2821,795,3711,844,935 Plug Load181,386179,297177,235 Process48,09050,06451,991 Whole building000 Food Service475,030536,698596,896 Refrigeration87,96594,935101,675 Total5,410,5725,491,0765,568,841 % of Forecast Sales88.17%87.89%87.47%

27 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Commercial Technical and Economic Potential as a Percent of Forecast Sales Without Emerging Technologies 27 Approach to Track 1

28 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Commercial Technical and Economic Potential as a Percent of Forecast Sales With Emerging Technologies 28 Approach to Track 1

29 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Commercial Technical and Economic Potential by DEER Measure Category Energy 29 Approach to Track 1

30 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Top Ten Measures Commercial Technical and Economic Potential 2015 – Energy Without Emerging Technologies 30 Approach to Track 1 RankMeasureTechnical PotentialMeasureEconomic Potential 1PS Interior HID - Incandescent Base <= 150W2,690,780PS Interior HID - Incandescent Base <= 150W2,690,780 2Combination Oven1,938,925Combination Oven1,938,925 3PS Interior HID - Incandescent Base > 150W913,796PS Interior HID - Incandescent Base > 150W913,796 4High bay fluorescent893,365High bay fluorescent893,365 5PS Interior HID - Mercury Vapor Base676,471PS Interior HID - Mercury Vapor Base676,471 6PS Exterior HID - Mercury Vapor Base489,461PS Exterior HID - Mercury Vapor Base489,461 7Packaged A/C (>=65k 12 EER)451,216Packaged A/C (>=65k 12 EER)451,216 8Second Generation T8 - 4ft427,696Second Generation T8 - 4ft427,696 9EMS383,583EMS383,583 10Food Holding Cabinet310,388Food Holding Cabinet310,388 Other5,544,530Other4,355,687 Total 14,720,212 13,531,369

31 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Top Ten Measures Commercial Technical and Economic Potential 2015 – Energy With Emerging Technologies 31 Approach to Track 1 RankMeasureTechnical PotentialMeasureEconomic Potential 1PS Interior HID - Incandescent Base <= 150W2,690,780PS Interior HID - Incandescent Base <= 150W2,690,780 2 Dimmable w/F32T8 & 5W standby CFL lamps 1,974,411Combination Oven1,938,925 3Combination Oven1,938,925PS Interior HID - Incandescent Base > 150W913,796 4PS Interior HID - Incandescent Base > 150W913,796High bay fluorescent893,365 5High bay fluorescent893,365Fault Detection & Diagnostics875,950 6Fault Detection & Diagnostics875,950PS Interior HID - Mercury Vapor Base676,471 7PS Interior HID - Mercury Vapor Base676,471Variable Refrigerant Flow (VRF) Chiller537,133 8Variable Refrigerant Flow (VRF) Chiller537,133PS Exterior HID - Mercury Vapor Base489,461 9PS Exterior HID - Mercury Vapor Base489,461Packaged A/C (>=65k 12 EER)451,216 10Packaged A/C (>=65k 12 EER)451,216Second Generation T8 - 4ft855,392 Other7,879,494Other5,626,345 Total 19,321,003 15,948,835

32 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY 3Key Structural Characteristics 2Codes and Standards Considerations 1Measure Characterization 4Residential Draft Results 5Commercial Draft Results 6Comparison to Asset 2008

33 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Asset and EERAM Comparison – PG&E Residential

34 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Comparison of Asset to EERAM of 2007 Residential Technical and Economic Potentials (GWh) 34 Approach to Track 1 DEER Measure Categories Asset Technical Potential EERAM Technical Potential EERAM/ASSET % Asset Economic Potential EERAM Economic Potential EERAM/ASSET % Indoor Lighting2,817.42, %2,187.12, % Outdoor Lighting % % Appliance3,104.31, %3,067.61, % Water Heating % % Laundry % % Building Envelope199.51, % % HVAC % % Other Low Income Total6, , %5, , %

35 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY DEER Measure Group Level Comparison  Indoor Lighting Very similar levels of technical potential despite updated density values and groupings o EERAM density values based on KEMA 2010 on-site metering study o Initially, density values for CFL screw-ins were thought to be much different. EERAM with ~39/home and Asset with ~ 19 per home. However, it was found that Asset had separate categories for table lamps and torchieres and EERAM included them with screw-ins. Taken that into account, EERAM has a slightly higher density  Outdoor Lighting EERAM estimates about 270 more GWh than Asset. o EERAM includes several wattage categories for outdoor screw-in CFLs. These did not exit in Asset.  Appliances EERAM estimates about 1,163 fewer GWh than Asset. o Nearly all of this is found in recycling freezers. EERAM’s estimate of available freezers for recycling is much lower (EERAM based on RASS) than Asset. Asset considers all freezers as available for recycling whereas EERAM, based on RASS information, identified the portion of the freezer population that are actually second freezers.  Water Heating EERAM estimates about 66 fewer GWh than Asset. o Most of Asset’s water heat savings were from low flow shower heads, and faucet aerators. EERAM only included those measures as part of the Low Income Program, which Asset did not model.  Building Envelope EERAM estimates about 1,411 more GWh than Asset. o The available base density in Asset is very small at less than 5%. The EERAM base density is from RASS at 40%

36 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. ENERGY Asset and EERAM Comparison – PG&E Commercial Not As Yet Performed

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 ©2011 Navigant Consulting, Inc. Confidential and proprietary. Do not distribute or copy. 37 ENERGY Kevin Cooney, Director-in-Charge Managing Director Boulder, CO (303) Floyd Keneipp, Project Manager Director Walnut Creek, CA (925) Gary Cullen Associate Director (Manager of Track 1 Activities) Vancouver, WA (360) Jay Luboff Associate Director (Manager of Track 2 Activities) Los Angeles (213) Kevin Cooney, Director-in-Charge Managing Director Boulder, CO (303) Floyd Keneipp, Project Manager Director Walnut Creek, CA (925) Gary Cullen Associate Director (Manager of Track 1 Activities) Vancouver, WA (360) Jay Luboff Associate Director (Manager of Track 2 Activities) Los Angeles (213)