IDSM Foundational Issues Integrated Demand Side Management Workshop March 7, 2008

1. IDSM Foundational IssuesIntegrated Demand Side Management WorkshopMarch 7, 2008

2. What are the accounting rules for mixing funds from different programs? • Issue: current rules restrict IOUs’ ability to combine funds across DSM program types • Mixing balancing account funds and O&M funds is not permitted • Auditing requirements make cost tracking difficult across programs • Significance: funding restrictions make it difficult to implement IDSM programs • Recommendations: • As a placeholder, use ALJ Hecht’s 2/27/08 Ruling Providing Guidance On Content And Format Of 2009-2011 Demand Response Activity Applications (R.07-01-041) to guide funding decisions regarding IDSM pilots: • “The Applications should describe programs, activities, and funding requests for combined or coordinated DR/EE activities, and should enumerate them separately from non-EE-related projects to ensure the total funding amount for these programs is clear and can be separated from DR-only activities.” (pp. 7 - 8) • Conduct an additional workshop to fine-tune this approach.

3. When integration occurs across different types of DSM how is success measured? • Issue: the metrics defining success can be different among DSM programs. What should be counted and should all metrics be assigned equal importance? • Possible metrics include kWh, kW, $ savings, GHG reductions, number of participants (or installations), lost opportunities avoided, sustainability, etc. • Significance: unless metrics determining success are defined ex ante, the effectiveness of pilots cannot be objectively and rigorously evaluated. • Recommendations: • Energy Div. has expressed an preference that kWh, kW, and lost opportunities avoided be used as the metrics for evaluating IDSM programs. • Develop IDSM measurement & evaluation protocols in conjunction the IDSM pilot projects. The protocols should include the identification of appropriate metrics. • Each IDSM pilot should include a M&E plan identifying how results of the pilot will be measured. • Until IDSM protocols are developed, parties should use the demand response draft load impact protocols (the Joint Utilities’ Revised Straw Proposal as modified by the Energy Division staff report dated October 12, 2007) as a model. • This approach is consistent with guidance provided by ALJ Hecht in R.07-01-041.

4. If multiple DSM programs are integrated, in what order are results attributed to the individual programs? • Issue: if multiple DSM programs are implemented concurrently, should the results be attributed to individual DSM programs, and if so, what are the rules for attribution to avoid double-counting? • Example: if a customer installs a high efficiency air conditioner, signs up for air conditioner cycling, and installs PVs, which program impacts are counted first? • Significance: individual program impacts and IDSM impacts could be over or understated if attribution is not handled appropriately. • Recommendations: • Include attribution as part of future IDSM M&E protocols. • Until IDSM M&E protocols are developed, address this issue via future IDSM workshops.

5. How should cost-effectiveness be determined? • Issue: no Commission-approved methodology currently exists for evaluating the cost-effectiveness of IDSM programs. • The California Standard Practice Manual has some shortcomings when applied to demand response and customer generation programs. • Significance: without a methodology for determining IDSM cost-effectiveness, these programs cannot be compared on a consistent and rigorous basis to supply-side resources and/or other demand-side resources. • How should procurement related factors affect the valuation of IDSM, e.g., baseload versus peaking resource need, reliability, etc.? • Recommendations: • Develop an IDSM cost-effectiveness framework in conjunction the IDSM pilot projects. • Until an IDSM cost-effectiveness framework is developed, parties should use the 11/19/07 “Consensus” Demand Response Cost Effectiveness Evaluation Framework Proposal as a placeholder.

6. Q&A

7. Integrating Demand Side Management Marketing, Education, and OutreachIntegrated Demand Side Management WorkshopMarch 7, 2008

8. Attitudes Intent Action Long Term Behavior Awareness Current Marketing Approach: Moving Customers Through A Continuum

9. Bundled Marketing • Rebates & Recycling • Summer Discount Plan • CSI • Energy Surveys “Umbrella” Efforts • Cross sell opportunities • Provides customers w/ choices & options • Provides cost efficiencies Vertical Program Marketing Individual Program Efforts • Targeted to likely respondents • Test new messages & media mix • Partner with retailers/third parties • Summer Discount Plan • HEER • Refrigerator Recycling • CARE • Online Energy Survey • CSI Integrated Marketing Approach Mass Media • Increase awareness of energy savings benefits & solutions • Leverage FYP & Energy Star

10. Integrated Marketing Approach - Examples 2007 Summer Campaign • Mass Media • Direct Mail • Online

11. Integrated Marketing Approach - Examples Direct Mail • 800,000 residential customers with high-energy usage

12. Integrated Marketing Approach - Examples Residential Welcome Kit provides information about DSM programs like Summer Discount Plan, Home Energy Efficiency Surveys, and the California Solar Initiative.

13. Plans for 2009 to 2011 • Continue to leverage DSM programs to provide customers with solutions that will help them change their long term behavior • Leverage partnerships to extend reach • Make it easy for customers to participate • Conduct pilots to test innovative programs and outreach tactics • Leverage SmartConnect technology to further educate and inform customers on the benefits (ie., lower bills) associated with the demand side management programs

14. New Programs & Services Offerings Pre-Meter Deployment Communications OngoingEngagement Leveraging SmartConnect SmartConnect provides numerous opportunities to offer an integrated demand side management solution to our customers’ energy management needs.

15. Strategic Approach to CustomerParticipation and Engagement Maximize Energy Savings and Customer Benefits by: • Providing simple & intuitive solutions to customers • Leveraging SCE’s customer segmentation by “Personas” • Integrating DSM programs to provide holistic solutions • Creating interactive tools to enable informed choices by customers • Proactively communicating personalized recommendations • Communicating with customers at the right time and channel throughout their individual deployment lifecycle

16. SmartConnect Pre-MeterDeployment Communications Customer Awareness • Communicating Upcoming Meter Changes • Introduce Concept of Energy Usage and Cost Awareness Channels • Customer Letter • Local Events / Townhalls • Local City Official Communications • Media Outreach

17. Deliver New SmartConnectTariffs and Programs Customer Education, Awareness And Enrollment • Expand Energy Usage and Cost Awareness • Increase Awareness of Demand Side Management Programs • Build Energy Conservation Awareness • Build Enrollment Via Intelligently Designed Plans Tactical Marketing Channels • SmartConnect Customer Welcome Kits (multi-lingual) • Targeted direct marketing based on customer personas • SCE.com online information and tools • SCE bill inserts / messages • Personalized customer service through Call Center / Account Representatives • Community events

18. Ongoing SmartConnectCustomer Engagement On-going Customer Engagement Activities • Provide personalized usage information • Provide personalized rate and program information • Increase customer program enrollment and participation in demand response program events • Retain program participation through continued customer education and performance feedback • Launch refined and enhanced program offerings • Leverage and integrate DSM portfolio/outreach Channels • SCE Bills • Personal Energy Reports • On-line Energy Management Tools • Targeted and Mass Media

19. Barriers • Restrictions related to funding information that is not directly related to a DSM program, such as providing conservation tips and using appliances during off-peak hours • Restrictions related to the California Solar Initiative marketing and outreach budget and activities

20. Q&A

21. Overview of Proposed IDSM PilotsIntegrated Demand Side Management WorkshopMarch 7, 2008

22. Food Processing Pilot • Scope: Demonstrate value of integration and continuous improvement approach • Objectives: • Increase penetration of resource efficiency across energy emissions, waste disposal and water • Establish Food Industry Resource Alliance • Establish continuous improvement process • Status: initial planning • Pilot Criteria: • Recommended in PCEESP • Vulnerable group with GHG compliance concerns

23. Food Processing Pilot (continued) • Information goals: • Quantify benefits of integration • Document implementation challenges • Cost/benefits • Challenges: • Technical expertise/experience • Lack of materials • Long lead time effort • Scalability: high • Marketing: account representatives with support materials • Policy Issues: • funding rules • CARB rules

24. Residential New Construction Pilot (1 of 3) Location • Territory wide Scope • Phase 1: One-year pilot to test integrating DR and EE, and T&D acceleration in new construction • Phase 2: Testing in-home displays and impact on DR/energy conservation • Phase 3: Integrating solar thermal collectors into DHW and Heating applications Objectives • Phase 1: Install A/C cycling lock-out boxes and programmable thermostats at time of construction; acceleration projects with EE features through service planning process • Phase 2: Reduce kW/kWh through price signals and behavior modification • Phase 3: Reduce on-site therm use and total on-site BTUs through solar thermal generation Current Stage of Development • All three pilots are new for 2008 Criteria for selection • The T&D acceleration is anticipated in only the busiest new construction area, i.e. the Inland Empire region. • Otherwise, open throughout territory • Much of the SCE territory is considered a transmission constrained area.

25. Residential New Construction Pilot (2 of 3) Information sought • Phase 1: EE/DR/TDBU; Can delivery channels successfully integrate DR and EE and TDBU service planning?: • Phase 2: What is the conservation potential of in-home displays in SCE territory? • Phase 3: Solar Thermal: What is the energy efficiency potential for reducing site BTUs toward the ZENH goal of 2020? Success criteria • Phase 1: Success is greater market acceptance of EE and DR features at reduced program cost. • Phase 2: In-home displays produce a conservation effect of X% over Y period of time. • Phase 3: Evaluate “State of the Shelf” technologies for reducing on-site BTUs Results/Data Collection • Data yielded will include monitored results from phase 2 and 3, increased market penetration from integrated EE/DR/TDBU effort • Benchmarking data for lack of intervention is clear: status quo is zero uptake of technologies in production-built new construction • Control group is non-participants: easily done in new construction programs • EM&V will need to be involved in program design itself, particularly in phase 2: in home display evaluation.

26. Residential New Construction Pilot (3 of 3) Challenges • Phase 1: overcoming internal barriers to delivery EE through T&D channels; industry accusations of favoritism if EE projects receive special treatment • Phase 2: Documenting sustainable energy savings from technologies before final AMI-compatible products are available. • Phase 3: Some technologies not available in US, utility may not be able to cover entire marginal costs Scalable • Phase 1 and 2 are scalable to 100% of market; tapping into existing program infrastructure • Phase 3: As technologies are piloted, winners can be incorporated into ET/IDEEA or core programs Publicity • Phase 1 and 2: Marketing elements will follow core program delivery • Phase 3: Successful pilots will be used as case studies, public tours, whitepapers, etc. Policy • See foundational issues for details: • Phase 1: regulatory issues in using EE-approved funding to promote DR and vice versa • Phase 2: taking credit for conservation effects assuming it is not “dispatchable” • Phase 3: Meeting fuel switching tests, particularly if ZENH strategies involve site-BTU equivalents Technologies (selected): Hybrid Solar PV/Thermal panel: http://www.pvtforum.org/pvtroadmap_leaflet.pdf Flush-mounted tracking PV panels: http://www.energyinnovations.com/ Integrated heating/hot water/heat exchangers: http://www.passivhaus.org.uk/index.jsp?id=738

27. EE/DR Competitive Solicitations • Objective: • Implement competitive solicitation that invites EE/DR technologies. This pilot will encourage the business community to develop new and current technologies that offer EE and DR to customers. • Very similar to the current EE solicitation and will build upon the current SCE IDEEA solicitation process and its successes and lessons learned. • New idea implemented and open during all 3 years of the cycle. EM&V plans will be identified as project develops, to include testing technology to ensure its utility and adoption by consumer. • Policy Issues: Items identified in Foundational Issues, i.e., cost effectiveness, accounting rules, etc.

28. Five IDSM pilot programs proposed from TP&S • Dispatchable Lighting (SCE SmartLight) • Integrating EE savings and DR load shed with dimmable lighting ballasts for non-residential small and medium businesses • Thermal Energy Storage (SCE PeakSaver) • Quantifying the energy efficiency and peak demand reduction benefits of thermal end use load shifting for large facilities • Commercial/Retail & Institutional IDSM (SCE PowerEdge) • Capturing retrofit opportunities of EE and DR savings benefits through facility EMS upgrades and Cx improvements • Residential Distributed Energy Resources (SCE NetGreen) • New home/community integration of advanced energy efficiency, enabling DR technologies, and distributed generation • Summer Discount Plan/Living Wise (SCE SmarterLiving) • Integrating DR program delivery with a proven institutional outreach and educational delivery channel for schools

29. SCE SmartLight • Overhead lighting systems for commercial and retail buildings now include both high efficiency lamps & dimming ballasts (EE & DR) • This pilot will examine the opportunity to dispatch radio controlled ballasts with DR events and determine: • the amount of light reductions and load impacts • Customer acceptance and affects of light changes • Integration with DR programs and tariffs • This is a “quick win” pilot program as dimmable ballasts are included in IDEAA but lack DR program integration • Current non res market is diverse so pilot will focus on constrained areas and will be stratified to major building sectors to maximize scalability

30. SCE PeakSaver • Thermal energy storage (TES) is a significant proven technology for reducing on-peak energy demand • Air conditioning systems store energy at night to cool buildings with reductions of energy usage and demand during the day • Current EE and DR programs do not offer direct incentives • Time of use electricity rates offer limited incentives but TES is in a “no man’s land” between EE and DR • This pilot will develop an coordinated IDSM program • will encourage the design and installation of TES systems that reduce on-peak demand as well as reduce energy annually • The pilot will identify systems that can reduce energy through efficiency and dispatch storage for DR events • Current TES pilot program at SCE will be expanded to include EE energy and peak demand reduction incentives

31. SCE PowerEdge • Commercial and retail buildings are ongoing rapid upgrades to compete in challenging markets • REIT holding companies trim energy costs to improve bottom line and enhance tenant space with upgrades during sales • This pilot program develops a comprehensive IDSM delivery channel for this retrofit market sector • This “hard to reach” sector needs specific focus to capture EE and DR integrated solutions that may be lost during retrofits • Pilot will take advantage of ongoing activity in the commercial buildings managers in Orange County • Quick wins already identified through third parties • Integration of BEMS and AutoDR to this sector will enable long term efficiency savings and opportunities for DR program involvement • Enabling technologies can also address self generation

32. SCE NetGreen • California’s energy future is linked to the growth, timing, and location of its demand side energy resources • Residential new construction represents the most C-E opportunity for mass market improvements in constrained areas • This pilot will examine emerging home technologies for the new construction market that will facilitate: • Advanced peak demand reduction and shaping • Sustainable energy efficiency, DR, DER • Renewable energy management, storage, and dispatch • Key points of research for behavior and technology: • Upstream market effects and customer understanding • Ease of integration with market actors and vendors • Examples of tech include GridPoint, Control4, Ice Energy • Pilot will integrate solar, wind, hybrid vehicles, & AMI

33. SCE SmarterLiving • SCE currently delivers energy education for water and energy through its school-to-home LivingWise program for elementary schools • Proven acceptable program with measurable results from a national non-profit organization • This pilot will integrate a demand response component to the program delivery • initially the Summer Discount Program (load control for AC units) • Additional features may include dynamic pricing education and incentives for enabling technologies • Participants will receive a comprehensive package of IDSM messages: • Save Energy, Save Water (conservation) • Get Wise (energy efficiency) • Get Smart (demand response)

34. SaverView • SCE believes that immediate and understandable “feedback” to customers on the consequences of their energy behavior can increase efficiency, conservation, and price responsiveness • European studies have shown reductions in energy usage ranging from 5 to 15% as a result of timely feedback • SCE proposes to examine the effects of easy-to-read in-home devices that will indicate to residential customers: • Energy usage, immediate and cumulative • Costs associated with the energy usage • Limits when energy usage is exceeded in certain pricing periods • Pilot program will quantify the customer preferences, energy reductions achieved, and persistence of savings • Stratified sample across varied customer demographics including hot climates, low income and usage tiers

35. LIEE Refrigerator Recycling Pilot Goal • Leverage SCE’s EE Appliance Recycling Program with LIEE’s Refrigerator Replacement Program Objectives • Establish partnership between EE’s recycling vendor and LIEE contractors for establishing recycling agreements • Develop implementation plan • Recycle up to 15,000 refrigerators replaced with energy efficient refrigerators through LIEE Evaluation • Complete a cost-benefit analysis comparing current LIEE costs with pilot costs • Evaluate service delivery changes and impact on LIEE operations Pilot Period • 1st Quarter 2009.

36. LIEE Second Refrigerator Recycling Pilot Goal • To reduce low-income customer electric bills and reduce electric load Objectives • To encourage low-income customers to recycle their second refrigerators • Reduce customer electric bills • Reduce electric load • Integrate LIEE second refrigerator recycling component into EE Recycling program • Consolidate recycling of LIEE refrigerators through ARCA thereby sustaining green jobs • It is estimated that XXXX low-income SCE customers have second refrigerators Evaluation • Utilizing historical billing data, conduct a billing analysis of pre and post energy usage Pilot Period • Launch pilot second quarter 2009.

37. LIEE/AMI Energy Management Pilot Goal • Develop education plan to assist low-income customers in using AMI to manage their energy use Objectives • Increase low-income customer awareness of their EE through the use of AMI • Develop ongoing communication plan to maintain awareness • Consider the use of in-home area networks in conserving energy Evaluation • Evaluate the impact of AMI on energy savings to determine attributable KWh savings Pilot Period • Second quarter 2011

38. LIEE/EE Integration Pilots Goal • Integrate LIEE with apposite Energy Efficiency and Demand Response Programs and Leverage EE and LIEE Resources Objectives • Communicate and inform potentially eligible EE customers of LIEE program • Integrate LIEE message in appropriate EE and DR program literature and marketing campaigns • Develop direct referral mechanism for EE customers eligible for LIEE • Evaluate EE and Demand Response programs outside of LIEE for possible offering to LIEE customers Evaluation • Track the number of enrollments in LIEE Pilot Period • Phased in approach beginning the third quarter of 2009

39. Summer Discount Plan Aggregation of Public Housing (IDEEA) Comprehensive Mobile Home Program CA Solar Initiative (CSI) Comprehensive Packaged A/C Systems Local Government Energy Action Resources Pay In Person APA -(Authorized Payment Agency Mobile Education Unit Community Energy Partnerships Home Energy Efficiency Survey- HEES LIEE/EE Integration Pilot ListingEnergy Efficiency and Demand Response Programs

40. Q&A

41. Integrating Account Services for Larger CustomersIntegrated Demand Side Management WorkshopMarch 7, 2008

42. Integrated Audits • Scope: Offer combined EE/DR audits and recommendations to businesses • Objectives: • Increase penetration of EE and DR • Leverage both funding sources • Increase customer satisfaction and participation • Status: In field in 2008 • Pilot Criteria: • Consumer demand • Prevent lost opportunities

43. Integrated Audits (continued) • Information goals: • Quantify benefits of integration • Consumer response • Cost/benefits • Challenges: • Technical expertise/experience • Integrated measures • Scalability: high • Marketing: account representatives with support materials • Policy Issues: funding rules

44. Q&A