Finding Our Voice with Shareholders © 2011San Diego Gas & Electric Company. All copyright and trademark rights reserved. Caroline Winn VP Customer Services Chief Customer Privacy Officer September 29, 2014 PART 1

SDG&E Business Overview 4,100 square miles in San Diego and southern Orange counties Serving 3.5 million electric and gas consumers 1.4 million electric and 850,000 natural gas meters Over 10,000 Electric Vehicles and 42,000 Solar Rooftops Over 45% paperless billing and 60% self-service payments 4,400 employees © 2012 San Diego Gas & Electric Company. All trademarks belong to their respective owners. All rights reserved. 2 Los Angeles San Diego Los Angeles San Diego San Francisco

Utility Business Model of the Yesterday & Today 3 Utility of |Yesterday| Utility of |Today|

The Changing Utility Business – In the News

Utility Industry Issues Electricity Demand Renewable Energy Mandates Distributed Generation Rising Operating Costs Regulatory Uncertainty Aging Workforce Aging Infrastructure Emerging Competitors

The Problem in California: Current Rate Design 13.7¢ 20.5¢ Residential Class Average New costs are disproportionately borne by customers in tiers 3 & 4 Customers in tiers 1 & 2 are paying rates well below the cost of service New costs are disproportionately borne by customers in tiers 3 & 4 Customers in tiers 1 & 2 are paying rates well below the cost of service Current Rate Design is a Hold-Over from the 2001 Energy Crisis

10 Years of Progress & Evolution Technology Renewables Infrastructure Lower Greenhouse Gas Emissions

Rooftop Solar Begins to Grow Today, annual residential subsidies are shifted to non-solar customers ~$75 million in today’s rates Today, annual residential subsidies are shifted to non-solar customers ~$75 million in today’s rates At 600 MW cap, the cost shift grows ~$200 million in today’s rates At 600 MW cap, the cost shift grows ~$200 million in today’s rates YTD Cost Shift

Self-Serve Generation Solar Doesn’t Address Residential Distribution Peaks 9

Support on Solar and NEM  The goal is to capture more renewable energy in the waning hours of the day, when electricity demands are often highest.  West-facing panels generate about 20 percent less power overall. But can boost energy production by 50 percent or more between the hours of 2 p.m. and 8 p.m. - CEC Commissioner and former Vote Solar spokesperson David Hochshild 10 Because of California's current net metering policy, rooftop solar customers receive a subsidy that is largely paid for by all the other customers who do not have solar. - Jesse Burst, Chairman Smart Cities Council

Disruptive Technologies Credit: Utility Dive, State of the Electric Utility Report, 2014

SDG&E Strategic Priorities Reduce Rates Manage Growth Achieve Efficiencies