Pedro Pizarro, Executive Vice President Southern California Edison

1. Procuring Our Way to ComplianceThe Independent Energy Producers Association 27th Annual Meeting September 23, 2008 Pedro Pizarro, Executive Vice President Southern California Edison

2. CA Emissions Compared to CARB Proposed Reductions 100% = 596 MMT CO2e 100% = 169 MMT CO2e Recycling & Waste 21% Cap-and-Trade (includes transportation, electricity, industrial and natural gas sectors) High Global Warming Potential Gasses (GWP) Agriculture Natural Gas Com. & Res. • Land Fill Methane* Industrial • High GWP Mitigation • Sustainable Forest • EE Electricity • 33% RPS • EE • CHP • Solar Roofs 79% Command-and-Control Transportation • Vehicle Fuel Economy • Low Carbon Fuel Standard • Other * Also includes Local Government actions

3. Change in SCE’s Emissions from 1990 to 2006 CO2 Emissions – SCE Bundled Customer Perspective(million metric tons)

4. Power Mix Comparison 100% 100% 100% Other Coal Natural Gas Nuclear Low-GHG Resources LargeHydroelectric Renewables Total 42% 39% 27% SCE’s generation portfolio emits lower rates of carbon than California and much lower than the national average 1SCE’s 2007 Annual Power Content Label, computed according to CEC methodology and included in SCE customer bills. 2 CEC’s estimate of net system power for 2007 in “2007 Net System Power Report”, April 2008. 3Energy Information Administration form 906 and 920 database @ http://www.eia.doe.gov/cneaf/electricity/page/eia906_920.html.

5. SCE Leadership to Reduce Greenhouse Gases • Since the 1980s, SCE has been the nation’s leader in renewable procurement • In 2007, SCE purchased 13 billion kWh, (more than any other utility; about 1/8 of the nation’s renewable energy) • SCE buys over 90 percent of the solar energy produced in the U.S. • Since 2002, SCE has signed 42 contracts for renewable energy deliveries up to 20 billion kWh • SCE leads the development of needed transmission • $1.8 billion investment to construct transmission to access 4,500 MW of Tehachapi wind resources • SCE has proposed a rooftop solar program to advance California public policy and help build scale for the photovoltaic solar market • Project comprises 225 MW of thin-film solar photovoltaic (PV) generation on commercial rooftops • SCE will replace two steam generators at its San Onofre Nuclear Generating Station (SONGS) to extend the life and capacity of this 2,150 MW nuclear power plant • SCE plays a leadership role in energy efficiency, demand response, and other clean energy programs • More than 5 billion kWh energy efficiency savings; nearly 2 million metric tons of GHG reduction • Largest demand response program in CA (~1,500 MW) • Edison SmartConnect™: Award-winning smart meter program • Electric Transportation programs: Nation’s largest EV fleet • Clean hydrogen power generation proposal SCE is committed to reducing greenhouse gas emissions

6. SCE Total Energy Requirement CAGR 1 Purchases 7.66% SCE Owned -0.70% SCE relies primarily on purchased power to meet its growing load 1GWh basis

7. SCE Renewable Energy Goals TBD Renewable Resources 2007-2010 (Billion kWh) 2007 Renewable Resources 12.5 Billion kWh 16 12.5 28% Increase Biomass 8% Wind 21% Geothermal 62% Solar 5% Small Hydro 4% 2007 Actual Procurement 2010 Goal 2020 Potential 33% RPS SCE continues its aggressive procurement efforts combined with the use of flexible compliance rules to meet California’s RPS

8. New Generation Commitments 1 SCE relies on IPPs for the majority of its new generation 1By 2013

9. SCE’s Principles to Reform RPS • SCE is committed to meeting the State’s renewable energy goals • The current Renewable Portfolio Standard has limitations that must be addressed if higher goals are to be considered. Major reform principles should include: • Equal rules and enforcement for all buyers in the market • Delivery should be allowed anywhere in the Western States and unrestricted use of Renewable Energy Credits (RECs) should be authorized • Development of an Alternative Compliance Payment system to assure customers are not harmed when supply is unavailable or prices proposed for renewable energy are unreasonably high • A critical requirement is reform of AB 1X, which unfairly allocates all costs of new programs and expenditures, including the RPS, to a small fraction of customers These reforms are needed to achieve California’s ambitious RPS goals

10. SCEs Principles to Achieve AB 32 Objectives • Distribute requirements equally to all Load Serving Entities • Same performance standards and rules with respect to the RPS, energy efficiency, and other regulatory requirements • Establish a process that balances cost-effectiveness and technological feasibility of the recommended measures • Appropriate efficiency standards for all proposed technologies, including CHP • Flexibility to establish a portfolio that meets GHG goals with the most cost-effective and efficient generation • Participate in a regional/national, multi-sector cap-and-trade program with robust cost containment measures • Should include a broad offset policy with no initial geographic or quantity limitations • Allocate allowances for free to entities that face economic harm California should adopt measures that result in real, cost-effective, and permanent GHG reductions and distributes the burden of GHG regulation equitably