SELF-GENERATION INCENTIVE PROGRAM (SGIP)

1. SELF-GENERATION INCENTIVE PROGRAM(SGIP) Website: www.socalgas.com/business/selfgen Email: selfgeneration@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. 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 Equipment Eligibility

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 1 100% Level 2 50%

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