1. An Open Platform for Networked Energy Services Metering Americas 2004 Presented by Bob Warden VP Worldwide Business Development Echelon Corporation

2. 2 The Problem – AMR Market is too small! Traditional Utility Systems Are Fragmented –Automatic meter reading for “hard to read meters” –Pre-pay for high turnover populations –Time of use price for commercial and industrial customers – … Each with a marginal business case Each with redundant infrastructure costs Each with redundant maintenance costs

3. 3 The Solution - A New Business Model An Open Platform for Networked Energy Services (NES) Many services amortized over one open infrastructure –Low cost metering services — AMR, load profiling, remote disconnect/reconnect, tamper & theft detection –Real-time & time-of-use pricing, prepaid metering –DSM, load curtailment, demand forecasting –Distribution network optimization –Outage detection & isolation, restoration verification –Add new energy or other value-added services with minimal incremental investment Company-wide operating improvements lead to quick payback

4. 4 A Common Communication Infrastructure enables Networking “From Light Switches To Business Intelligence” Increasing Business Intelligence Transforming Data Into Knowledge Connecting Networks to Networks Enabling Intelligent Devices and Networks

5. 5 Creating an open market for everything from Intelligent Devices to Enterprise Software Flexibility to adapt existing Enterprise Business Applications Empower new applications to transform Data Into Business Value Choice of Communication Suppliers and WAN transmission Networks Choice of Intelligent Meters and Network media Choice of System Integrator and Installation Processes

6. 6 What’s more important the Network or the Meter? The same infrastructure used for remote meter reading, dynamic pricing, revenue protection, outage management... … reduces operating costs, generates recurring revenue, separates regulated services from unregulated... and can support future value-added services such as load control, street lighting management, appliance control, etc. But, both Utilities and Suppliers want to leverage the meter to “own” the communication Network

7. 7 Market wants a Safe Business Proposition Improve return on core business –Improve quality and reliability of service –Decrease operating costs, improve efficiencies Build new business – Generate incremental revenue through services – Decrease customer churn and reduce “switching costs” – Open Platform built on Standards – Choose best of breed products – Respond to regulatory change – Retain return on investment

8. 8 Used New Business Model to create their own system World’s largest smart metering project – > 27 million smart meters in homes & buildings, €2 billion project cost – >15 million meters already installed, ~700K new meters installed per month – Anticipated yearly savings of €400 million starting in 2005 Transforming the Italian power grid into an intelligent services delivery platform will be completed in 2005 Much of this Vision Is A Reality in Italy Enel Contatore Elettronico Project System Software IP Meter Data Concentrator Power Line

9. 9 Enel Contatore Elettronico Project Status Enel Chief Executive Paolo Scaroni said… The Italian power company has invested EUR2 billion to develop AMM. They are being installed at a rate of 700,000 per month and will complete the rollout of the system by 2005. The system already allows the Italian utility to remotely control supply and billing to half of its total 30 million users. The meters create a bidirectional link between users and providers that allows –electricity providers to offer different prices for different times of the day. –users to easily shop around for the best energy provider or change their supply needs. Enel sees EUR400 million a year in savings with the new system through remote billing and scrapping back office work. From Dow Jones Business News, March 18, 2004

10. 10  Two-way automated meter reading  Distribution system asset & load management  Comprehensive revenue protection  Outage management  Dynamic – time-of-use, real-time – pricing  Prepayment without card  Remote physical disconnect & reconnect  Real-time direct load control  Value-added customer services Enel Contatore Elettronico AMM System Benefits begin in the Meter

11. 11 Networked Energy Services b enefit Every Utility Operation Networked Energy Services Demand Forecasting Capacity Planning Capital Investment Generation Work Management Customer Services AMR & Billing Distribution Trends Distribution Automation Reads Queries Installation & Services Quality Roll Out Customer Information

12. 12 Enel Contatore Elettronico Business Model Meter design owned by Enel and manufactured by contract manufacturers Enel granted IBM exclusive license to market its in- house developed Automated Meter Management IBM and Enel estimate that the potential worldwide market for AMM solutions is made up of 700 million clients and worth more than EUR120 billion. 80 utilities from across the world have visited Enel's AMM testing center in Milan or expressed interest in buying the technology A mid-sized utility with 5 million clients will spend around EUR100 per customer to upgrade its network to AMM stantards, Enel Chief Operating Officer Vincenzo Cannatelli said.

13. 13 Echelon Infrastructure powers the Enel AMM System Enel IT IP Network System Platform Software from Echelon PL to GSM Networking based on Echelon Data Concentrator Metering using Echelon powerline communication

14. 14 A complete Networked Energy Services System Billing CIS Reporting Prepay EMS Outage Custom Other Middleware Networked Energy Services NES System Software based on IP WAN

15. 15 Now Echelon products can create the Networked Energy Services infrastructure for Everyone Three infrastructure components –Meters –Data Concentrators –System Software Two tools –Provisioning Tool software –Work Order Tool System Software Data Concentrator Meters PL LAN IP WAN Provisioning Tool Software Work Order Tool Tools

16. 16 EM-1010 Series Meters Unmatched cost to feature ratio –Best value in market Outstanding features include: –Time-of-use pricing Controls usage –Load profiling Understand the customer –Power quality measurements Preventative maintenance –Many more…

17. 17 DC-1000: Functions Supervises power line LAN –Automatically manages meters –Ensures reliable communication –Detects line and device failures Interface between System Software and meters –Meter Data Aggregation Reduces WAN and device costs –Provides pass-through control of meters from System Software Enables on-demand functionality

18. 18 Critical Functions –Maintains network topology –Data collection –Control –Event handling Provides a simple but powerful interface to NES hardware and data Ensures version-to-version compatibility –Protects utility’s IT development investment Scales to handle millions of devices NES System Software: Role Utility Software Web servicesWeb events IP WAN NES System Software

19. 19 Echelon NES System Is Open Infrastructure Built on top of open standards –ANSI/EIA 709.1-A-1999 & 709.2-A-1999 (L ON W ORKS ® ), CENELEC, IEC 61036 (2000), IEC 61107, ANSI C12.19, DIN 43857, TCP/IP, web services Connects to other systems using open standards –Web services and SQL for interoperability with enterprise systems –Provision for L ON W ORKS gateway to interoperate with in-premise C-band devices Is being offered on the market as standard infrastructure for others to build upon

20. 20 Open business model for Networked Energy Services VARs adopting Echelon’s NES system as the basis for their system offerings Establishing the NES system as an open, worldwide standard Opening and serving new markets Program announced Q4 2003 –Telvent: One of Spain's largest applied engineering and process management companies –EDMI: Provider of electronic revenue meters to Australia, Asia, ASEAN, the Middle East, and Europe

21. 21 The NES System is an Open Platform Meter boards –For integration into your custom meter housing Data concentrators –For integration into your custom enclosure and WAN network System software –For integration into your middleware and utility applications Provisioning software –For integration into your field-force automation methodology and tools Web servicesWeb events NES System Software Work Order Tool Provisioning Tool Software

22. 22 Echelon helps others adopt The NES System Will provide technical information, training, and support –For meter board hardware –For data concentrator hardware –For system software Will provide sales information, training, and support –For system-level, business case modeling –For project qualification

23. 23 Anyone can develop applications for Networked Energy Services Billing CIS Reporting Prepay EMS Outage Custom Other Middleware Networked Energy Services IP WAN

24. 24 To extract more Value from Intelligent device data –Two-way automatic meter reads Eliminate estimated bills Download new information into meter remotely –Disconnect switch integral in every meter Connect, disconnect customer service remotely Set customer service level remotely Prepayment without card –Time-of-use pricing Promote energy conservation Offer incentive rates –Detailed quality of service information At individual customer level Comply with regulations

25. 25 Transform Distribution Network Improved energy conservation and forecasting –Lower peak and overall load –Manage supply and demand precisely –Avoid huge investments in new generation Balance phase loads –Size distribution transformers optimally –Improve generation and transmission efficiencies

26. 26 Transform Distribution Network Comprehensive revenue protection –Detect reversal of meter wiring –Detect tampering with meter cover –Record meter power-downs Superior Outage Management –Near real-time outage detection & restoration reporting Ripple control replacement –Replace legacy ripple control systems

27. 27 Provide Headroom for Growth Future Value-Added Services –Dynamic load control Thermostats, water heaters, etc. –Gas and water meter remote reading –Street and traffic light management –Appliances Remote monitoring and control –Medical Emergency Signaling….

28. 28 NES platform business model benefits categories Metering Customer Service Distribution Operations Other

29. 29 Business Model available for NES ROI Analysis Number of utility customers1,000,000 Total Costs$212,108,994 Total Benefits$371,599,897 Payback Period in years4.93 Net Present Value (NPV)$159,490,904 Internal Rate of Return (IRR)15.44%

30. 30 NES System business model achieving momentum Nuon - Leading Dutch utility Pre-deployment trial in 2004 –Full system test from meters to enterprise applications for one city –Installations beginning in January Potential for 2.7 million meter deployment beginning in 2005

31. 31 Q&A Questions?

32. Thank You