Jill M. Lyon VP & General Counsel May 20, 2008

 RELIABILITY  Systems built to withstand disasters  Systems built to work everywhere  New solutions always considered, but vendor and technology must be proven  Maintaining existing spectrum viability  Access to sufficient spectrum (shared or dedicated) to meet significant future needs  Interoperability  Within utility, among systems  Between utility and others (emergencies)  Among utilities at data level (Smart Grids)

 First time Congress thinks of utilities and communications/IT together!  Lays out Congressional thinking about what is necessary for smart grid migration and how Federal government should participate  For specific UTC goals, Title XIII (Smart Grid) discusses utility communications capability in several places

 DOE, FERC, States and stakeholders to carry out program re: digital information technology use. Broad language, but importantly, includes language: “to conduct research to advance the use of... secure and dependable communications in a highly distributed environment” “to test new reliability technologies, including those concerning communications network capabilities in a grid control room environment” “to identify communications network capacity needed to implement advanced technologies.”

 DOE Office of Electricity Delivery and Energy Reliability tasked w/report on status of smart grid deployments: 1 yr, then every 2 years  Report to include utility communications network capabilities  Can include recommendations for State/Federal policies, actions to help transition  Should be regionally based  Title also mandates Smart Grid Advisory Committee (stakeholders), Task Force (internal to FG); funding options; standards; security inquiry.

Existing Spectrum Challenges  MHz Narrowbanding and Next Steps  700 MHz – Access for CI?  800 MHz – Rebanding mostly complete; new decision for Canadian border regions  900 MHz – LMR Decision Coming?  MHz – LMS Changes Must Protect Critical Systems; also Spectrum Etiquette  2 GHz Microwave Relocation – again  6 GHz – support FWCC’s call for 30 MHz paths  14 GHz – Petition for Rulemaking to allow secondary use by CI  TV White Spaces  Migratory birds & tower lighting

 FCC auction of A-E blocks of spectrum nets $19 billion, but no D-Block sale, questions about viability of interoperable network framework  FNPR just released asks questions about how to re-auction (keep PS network? Basic commercial auction?)  Mention of CI as possible users; however, question of eligibility based on Sec. 337 definition  Regardless of outcome, utilities will make good partners for D-block winner: access to towers, infrastructure, fiber, for access to spectrum

 Petition for Rulemaking filed 5/6 seeks CII access to GHz  Secondary status – spectrum shared with satellite  Designed for terrestrial pt-to-pt, pt-to-multipt.  Could support short-distance, broadband data needs  UTC to obtain nationwide license, serve as “CII Coordinator” under proposal  Commercial operator Winchester would have lower-priority access, help to avoid interference with satellite.

 FCC loses challenge by environmental groups in DC Circuit court 2/19  Didn’t apply NEPA, other statutes properly when denying challenge to Gulf towers  Remanded to comply, also provide meaningful notice of pending tower applications - ?  NAB/CTIA/NATE/PCIA petition to include notice as part of ASR process – environmental challenges to be treated as Petitions to Deny  LMCC to file comments noting difficulties created for frequency coordinators, suggesting solutions

 Utilities to spend $100s billions over next yrs as part of revolution in infrastructure – telecom/IT networks are key  BUT – continued focus on reliability, add’l regulation will require balance between new technologies and proven capabilities  Most utilities will build new technologies INTERNALLY or seek partnerships where they control, to meet requirements  UTC providing research, conferences, training, as well as seeking spectrum solutions and protection to help meet needs.

For more information, contact: Jill Lyon,