AEE So Cal September 24, 2015 Integrating Renewables and The Distribution Grid of the Future 1

Overview I.Industry Trends and Regulatory Drivers II.Distribution Resources Plan III.Vision for the 21 st Electric System IV.Grid Modernization Road Map V.Conclusion 2

Industry Trends and Regulatory Drivers 3 Renewable Portfolio Standard: Requires 33 percent of delivered power to come from renewable sources such as solar, wind and geothermal by the year 2020 Greenhouse Gas (AB32): Requires reduction in GHG emissions to 1990 levels by 2020 Energy Storage (AB2514): Requires 1,325 megawatts of storage by 2020 Distribution Resource Plan (AB 327): Requires utilities to identify optimal locations for distributed resources throughout service territories Prioritizing environmental sustainability Changing customer expectations Accelerating technology advancement facilitating conservation and self-generation Increasing use of distributed energy resources and transportation electrification Flattening demand for electricity Industry TrendsRegulatory Drivers

Distributed Energy Resources 4

Commission Goals for Distribution Resources Plan Supporting California’s 2030 and 2050 GHG reduction targets Beginning the process of moving towards full integration of DERs in distribution system planning, operations, and investments Modernizing the electric distribution system to accommodate two-way flows of energy and energy services throughout the IOUs’ networks Enabling customer choice of new technologies and services that reduce emissions and improve reliability in a cost efficient manner Animating opportunities for DERs to realize benefits through the provision of grid services Creating a “plug-and-play” distribution grid for DERs 5

Distribution Resources Plan Publish Results via Online Maps Perform Planning Analyses Establishing Locational Net Benefits Complete Demonstration Projects Phase 2: Determine impacts on distribution system Deploy sensors and communications infrastructure Identify optimal locations for DER Phase 1: Develop tools and methodologies Share data with third parties Plan and design sensors and communications infrastructure Phase 3: Develop procurement policy Enable distribution system markets The CPUC envisions a phased approach 6

Distributed Energy Resource Interconnection Maps (DERiM) 7 SCE DERIM: on.sce.com/derimon.sce.com/derim

Locational Net Benefits SCE’s objective is to identify optimal locations, likely in form of heat maps, where DERs could provide a high benefit value SCE’s locational net benefits methodology (LNBM) identifies DER benefit components and describes how to quantify them Identification and communication of locational net benefits can drive DERs to locations where they can provide the most benefit with cost effective means 8

9 Location for Demo A - D : a.Orange County area of service territory/ongoing activities to modernize the grid for DER integration b.Demo C & D – leverage existing projects, PRP & IGP Location for Demo E : a.Orange County area of service, or another suitable location Schedule for Demo A & B: a.Commence no later than one month after commission approval b.Submit final report by Q1, 2017 Schedule for Demo C,D & E: a.Commence no later than one year after commission approval b.Submit final report by Q4, Demonstration and Deployment Demonstration and Deployment

Future state based on evolving energy landscape More automation enhances interaction of grid with customer devices & DER. Sophisticated automation schemes now possible Prediction of DER performance facilitates increasing renewables & two- way power flow Software tools for real time state estimation, grid simulation & optimization Bolstered telecommunications supports increased telemetry and faster remote response Communit y Storage Communit y Solar Vision for the 21 st Century Electric System 10

Grid Modernization Road Map – Implement foundational Information Technology, communication systems, and system planning tools Enhance automation and improve interoperability with Distributed Energy Resources Optimize operation of Distributed Energy Resources and distribution market operation Technology Capability Advancement Expected Result GRC Cycle Align work management and develop workforce strategy Ramp up resources and develop talent pipeline Compliance, safety, and reliability Preparation for future grid state Achieve increased value from DERs Full deployment of grid modernization New distribution system platform for distribution market operations SCE developed a plan to implement a phased approach. Transformation is expected to take place over multiple General Rate Case cycles People and Process Grid Reinforcement Phased Investment in targeted Grid Reinforcement needed to enable plug and play grid

Conclusion Industry trends and regulatory changes are driving towards a low- carbon, modern, integrated grid Utilities will need to transform distribution system planning and operations to meet achieve objectives Utilities form partnerships to facilitate DERs and encourage customer value creation, including robust recommendations to overcome barriers to DER deployment A modern grid will facilitate DER integration and provide customer choice while improving safety and reliability 12