SDG&E Electric Reliability Reporting CPUC Workshops May 26-27, 2015

Overview Current Reliability Programs Distribution System Maintenance Reliability Overview Performance Based Ratemaking (PBR) Circuit Modeling Reliability Challenges

Current Reliability Programs SDG&E has many reliability initiatives in place – Reliability Assessment Team Oversees company electric reliability Analyzes issues pro-actively and re-actively Approves pro-active improvements – Transmission and Substation – District Engineering – Vegetation Management – Fire Risk Mitigation (FiRM), Reliability Improvements in Rural Areas Team (RIRAT) – High SAIDI outage review – Reliability Director’s Council Internal reliability reporting on weekly basis – Executive briefing, and Executive Operations Performing Center screen

Current Reliability Programs Through the RAT, two primary methods of improving reliability – Targeted improvements at a circuit/segment level – Equipment replacements, prioritized by effectiveness Top circuits that lead to high SAIDI and SAIFI are determined Top circuits based on average duration and frequency (circuit SAIDI and circuit SAIFI) are determined Poor performing circuits are scrutinized by district engineering and reliability analysts to determine most effective solutions – Solutions are presented to RAT for peer review SDG&E operates under Performance Based Ratemaking (explained in detail later), and uses it for cost-effectiveness studies

Current Reliability Programs Common solutions to improving reliability: – SCADA Substation Line Recloser Distribution Switches – Switches / reclosers SCADA or manual Allows for partial restoration of power – Cable Replacement Underground cable installed prior to approximately 1983 was unjacketed, and has high failure rate. – Fault indication Help troubleshoot location of outage, speeds up switching steps and repair Wireless version implemented in over 1,000 locations. – Fusing Isolates outage to fewer customers

Current Reliability Programs Common solutions to improving reliability (cont.) – Vegetation Management – Corrective Maintenance Program – FiRM – Capacity studies Includes capacity of substation, circuit, branch, etc. Philosophy of Reliability Improvement: – Prevent Outage – Limit impact of outage – Partially restore customers during repairs – Repair safely and quickly.

Maintenance SDG&E’s maintenance program conforms to the California Public Utilities Commission's (CPUC) General Order 165 (GO 165). Since 1998, GO 165 has been in place to establish inspection and corrective maintenance schedules. During these regular inspections, equipment may be identified that needs to be maintained or improved. SDG&E has committed to correcting all such equipment within one year of discovery. SDG&E performs inspections in high fire areas that exceed the requirements of GO 165. The inspections in those areas are more detailed and occur at a more frequent rate than what is described in GO 165. These detailed inspections, having been put in place years ago, meet the State directives regarding enhanced inspections during drought conditions.

Reliability Overview Heightened Fire Safety

SAIDI by Cause Category

SAIDI – Equipment Only

Performance Based Ratemaking SAIDI (minutes) SAIFI (outages) Ten Worst Circuit SAIDI (minutes)* Ten Worst Circuit SAIFI (outages)* SAIDET (minutes) 2015 Benchmark Report Only Dead Band+ / - 2+ / / / Increment Annual Improvement1% n/a Reward/Penalty Increment$375,000 $125,000 Maximum$3,000,000 $1,000,000

Circuit Modeling SDG&E uses a benefit:cost ratio known as RTR. RTR = (Annualized PBR Improvement) / (Annualized Project Cost) “Annualized PBR Improvement” is based on expected decrease in SAIDI and SAIFI, monetized to a PBR impact.

Reliability Challenges Fire Safety – Due to heightened fire safety concerns, SDG&E has stricter operating procedures in place during fire season in fire prone areas Turning reclosing off Ceasing work Protection settings more sensitive Patrolling circuits before re-energization – SAIDI and SAIFI have slightly risen due to these efforts Randomness/Variability in Outage – Although failure rates can be calculated for equipment, knowing the location of the next outage is extremely difficult – Pockets of failures appear to show trend, but are random occurrences due to probabilities – Over 1,000,000 assets constantly exposed to weather; and subject to human or animal interference.