1. SELF-GENERATION INCENTIVE PROGRAM (SGIP) Website:www.socalgas.com/business/selfgenwww.socalgas.com/business/selfgen Email:selfgeneration@socalgas.comselfgeneration@socalgas.com January 2006

2. Summary The intention of this presentation is to provide viewers a general understanding of the program, For more specific information, viewers should visit the website and download the SGIP Handbook.

3. Overview SGIP is a statewide program, initiated by Assembly Bill 970, and modified in 2004 by AB1685. Provides incentive funding for distributed generation technologies, including: Micro-turbines Photovoltaic (solar power) IC engine generators Fuel cells Wind turbines

4. Overview SGIP was originally a four year program (2001 - 2004), then was extended thru 2007. Incentives reserved up to 12 months Reservations granted first come, first served No Double-Dipping: Single projects are not allowed to receive incentives from more than one source: SCE, SoCalGas, PG&E, SDREO or CEC.

5. Overview Four administrators: SoCalGas Southern California Edison (SCE) Pacific Gas & Electric (PG&E) San Diego Regional Energy Office (SDREO)

6. Who is Eligible? Customers of SoCalGas, SCE, PG&E, SDG&E (IOUs) ESCO’s, with clients (at host sites above) Customers served by both municipal utility and IOU: LADWP and SoCalGas IID and SoCalGas

7. Incentives Incentives are based technology & Incentive Level: Level 1, Level 2, and Level 3 Levels defined on following pages Each Level has its own funding limits Incentives are based on: $/kw basis Incentive funding from other sources may reduce the SGIP incentive (see Handbook for further details)

8. Incentives – Level 1

9. Incentives – Level 2 (Renewable Fuel & Wind)

10. Incentives – Level 3 (Non-Renewable Fuel)

11. Project Eligibility Eligible Equipment/site connected to the grid Offset a portion, if not all, of site’s electric load Must serve on-site electric load Not Eligible Wheeling electricity Sites with interruptible electric service Over the fence applications

12. Equipment Eligibility Eligible Equipment must be new and permanent Projects < 5,000 kW Customer’s side of the utility meter Not Eligible Demonstration units Backup generation equipment Equipment intended to wheel power Diesel fired equipment Thermal load equipment Absorption chillers Thermal storage Batteries

13. Other Incentive Funding Funding from only 1 SGIP Administrator per project allowed Combined incentive cannot exceed out-of-pocket expenses Funding is allowed from other programs, however the SGIP incentive shall be reduced When other incentives are involved, the SGIP incentive will be reduced by the following percentage: Level 1100% Level 250%

14. Incentive Example Assumptions: Level-1, 80 kW, PV Other funding (from LADWP) - $80,000 (80 kW/ $80,000 = $1.00/W) Incentive by kW: Other funding = $1.00/W Reduction of SGIP Incentive = 50% of $1. 00 = $0.50 Incentive - (SGIP - $2.80/W less $0.50) + $1.00 (other) = $3.30/W

15. The Funding Process Steps by Host/System Owner Steps By SoCalGas (Administrator)

16. Step 1 – Host/System Owner Submitting an Application Complete Reservation Request Form with original signatures System description SoCalGas bill Electric utility bill w/ peak kW Estimated installed cost Sizing calculations Incentive Calculation Worksheet Spec Sheets If applicable – Waste heat calculations Reliability criteria Renewable Fuel Report Waste gas Report Information on other Funding Sources

17. Step 2a - SoCalGas SoCalGas reviews application package for: Completeness No Double-dipping Customer status Sizing Overall eligibility

18. Step 2b - SoCalGas Completed applications receive Conditional Reservation Letter to Applicant stating: Reservation # Funding amount 60-Day Project Advancement Date Project Completion Date Project size & technology Project location

19. Step 2c – SoCalGas Incomplete applications: Request additional / missing documentation 20 Calendar Days to Sumbit or Aplication is Rejected Applications not meeting eligibility requirements receive letter denying access to the program

20. Step 3 – Host/System Owner 60-Day Project Advancement submittals: Proof of: Air quality permit application Utility interconnect application P.O. or contract for major equipment Project Cost Breakdown Standard SGIP Contract with original signatures Certificates of insurance – (Host & System Owner) Renewable Fuel Affidavit (if applicable) Waste Gas Affidavit (if applicable)

21. Step 4 - SoCalGas Review of 60-Day Project Advancement documents Incomplete: documents will be requested by Administrator Complete: Administrator mails letter confirming reservation

22. Step 5 – Host/System Owner Host/System Owner submits Claim Form with: AQ permit to operate (if applicable) Letter from utility authorizing host to parallel Final building inspection report Final Project Cost Breakdown & Affidavit Proof of Payment Proof of Warranty AQ District Determination of net benefit (3-W) Substantiation of Load (future load projects) Planned Maintenance Letter (L-3 > 200kW)

23. Step 6 - SoCalGas SoCalGas reviews Claim Form package for completeness Incomplete: documents will be requested by Administrator Complete: schedule a site inspection for verification Check is sent to Host/System Owner after site verification and Claim Package has been certified

24. More Information? Go to: www.socalgas.com/business/selfgen/ Program Handbook Forms Instructions Spreadsheets Project Cost Breakdown Waste heat analysis E-mail: selfgeneration@socalgas.com

25. Questions? Questions can be emailed to: selfgeneration@socalgas.com