Strictly private & confidential

1. Strictly private & confidential CCPUC Annual Meeting Panel: Commission Policy and Wall Street October 5, 2009 Clifford C. Swint, CFA Executive Vice President Blaylock Robert Van (212) 715-3326 Office cswint@brv-llc.com This document is confidential and has been prepared for informational purposes only.  This document is not to be construed as a recommendation, an offer to sell or a solicitation of an offer to buy any securities.  Any dissemination, distribution or reproduction of this document is strictly prohibited without the consent of Blaylock Robert Van, LLC.  The information herein is obtained from sources deemed reliable, but its accuracy and completeness cannot be guaranteed, and is subject to change without notice. 

2. $1.5 billion 5.7% 10Yr 6.55% 30Yr $1.5 billion $1.75bn 2YR 1.50% $5 billion $2.5bn 2YR 1.375% $2.5bn 3YR 2.250% $1.5 billion 6.75% 30-Yr $500 million 30YR NC10.75%FXD - FLT $4 billion $2bn 6% 5-Yr $2bn 7.3% 10-Yr $1 billion Reopening 8.5% 10-Yr $3 billion 6.30% 10-Yr $5.85 billion 2.25bn 3-yr FXD MS+25 3.6bn 3-yr FRN 3ML+25 $2.75 billion $250mm FRB due 2011 $1.25bn 4.85% due 2012 $1.25bn 5.90% due 2015 $6 billion $1.75bn 7.6% due 2014 $3.25bn 8.55% due 2019 $1.0bn 9.4% due 2039 $603 million FRN 3-yr $2.5 billion 3ML+13 $750 million $250mm 4.15% 5-Yr $500mm 6.05% 30-Yr $5 billion $2bn 2.25% 3-Yr $3bn FRN 3-Yr $500 million 6.875% 30-yr $450 million 5.875% 30.5-yr $300 million 6% 30-Yr $600 million 4.375% 6-Yr $2 billion 6.00% 10-Yr $1.5 billion 3.50% 3-Yr $2 billion 5.90% 5-Yr $5 billion 2.5% 5Yr $3.5 billion$1.20bn 2YR FRN 3ML-8 $2.30bn 2YR FXD 1.375% $750 million 8.875% 30-Yr Surplus $6 billion 1.75% 3-Yr $1.25 billion 6.75% 5Yr $2 billion 8.5% 10Yr Comcast Blaylock Robert Van Co-Manager June 2009 Citigroup Blaylock Robert Van Co-Manager July 2009 Citigroup Blaylock Robert Van Co-Manager June 2009 Citigroup Blaylock Robert Van Co-Manager June 2009 Citigroup Blaylock Robert Van Co-Manager June 2009 Time Warner Cable Blaylock Robert Van Co-Manager June 2009 Mass Mutual Blaylock Robert Van Co-Manager May 2009 Freddie Mac Blaylock Robert Van Co-Manager May 2009 San Diego Gas & Electric Blaylock Robert Van Co-Manager May 2009 Morgan Stanley Blaylock Robert Van Co-Manager May 2009 JP Morgan Blaylock Robert Van Co-Manager April 2009 DOW Chemical Blaylock Robert Van Co-Manager May 2009 DOW Chemical Blaylock Robert Van Co-Manager August 2009 JP Morgan Blaylock Robert Van Co-Manager April 2009 JP Morgan Blaylock Robert Van Co-Manager March 2009 So. California Edison Blaylock Robert Van Co-Manager March 2009 Morgan Stanley Blaylock Robert Van Co-Manager March 2009 Boeing Blaylock Robert Van Co-Manager July 2009 Boeing Blaylock Robert Van Co-Manager March 2009 GECC Blaylock Robert Van Co-Manager August 2009 GECC Blaylock Robert Van Co-Manager September 2009 GECC Blaylock Robert Van Co-Manager August 2009 GECC Blaylock Robert Van Co-Manager May 2009 Fannie Mae Blaylock Robert Van Co-Manager May 2009 Citigroup Blaylock Robert Van Co-Manager April 2009 MetLife Blaylock Robert Van Co-Manager May 2009 Citigroup Blaylock Robert Van Co-Manager May 2009 Bank of NY Mellon Blaylock Robert Van Co-Manager March 2009 $8 billion $4bn 1.80% 2-yr $1bn 3ML+ 8 2-yr $1.5bn 2.25% 3-yr $1.5bn 3ML+20 3-yr $550 million 6.25% 30-Yr $500 million 6.70% 10-Yr $5 billion $1.5bn 3.45%3yr +195 $2.0bn 3.95% 5-yr +195 $1.5bn 4.95%10-yr +195 $1.035 billion 7.717% 10-Yr $2 billion 7.50% 10-yr $4 billion 6.875% 30-yr $10 billion $2bn 1.625% 2-yr $4.5bn 2.2% 3.5-yr $2.5bn 1.5-yr 3ML+5 $1bn 3.5-yr 3ML+30 $397 million 3ML+32 3-Yr GECC Blaylock Robert Van Co-Manager March 2009 Pacific Gas & Energy Blaylock Robert Van Co-Manager March 2009 Chevron Corp. Blaylock Robert Van Co-Manager February 2009 MetLife, Inc. Blaylock Robert Van Co-Manager February 2009 Goldman Sachs Blaylock Robert Van Co-Manager January 2009 GECC Blaylock Robert Van Co-Manager January 2009 GECC Blaylock Robert Van Co-Manager January 2009 MetLife, Inc Blaylock Robert Van Co-Manager March 2009 Consumers Energy Blaylock Robert Van Co-Manager March 2009 $6 billion 1.625% 2-Yr $250 million Reopening 18-mnth FRN 3ML+10 $3 billion 1bn 7.50% 5-Yr 2bn 8.25% 10-Yr Freddie Mac Blaylock Robert Van Selling Group March 2009 Citigroup Blaylock Robert Van Co-Manager February 2009 Time Warner Cable Blaylock Robert Van Co-Manager March 2009 BRV – 2009 Fixed Income Transactions $2 billion 3.75% 5-Yr $300 million 5.5% due 2024 Wells Fargo Blaylock Robert Van Co-Manager September 2009 Cleveland Electric Blaylock Robert Van Co-Manager August 2009

3. TradeRate and Commodity Derivatives, Letters of Credit Long Term DebtBonds, Convertibles Price = Risk Free Rate + Credit Spread Credit Spread = Market + Specific Risk Specific Risk driven by: management and capital structure quality as well as local economic and regulatory environment in which utility operates Short Term DebtCommercial Paper, CP Bank Back-Up and Revolvers Pricing components similar to Long Term Debt Capital Structure Three Important Measures: Leverage = LTD / (LTD & Book Equity) Leverage = LTD / (LTD + Market Equity) Interest Coverage = Earnings / Interest Lowest Cost Medium Cost EquityCommon and Preferred Stock, Equity Hybrids Price for common stock not explicit and is estimated through formulas and judgment Highest Cost

4. Investment Banks Distributes Securities from the Issuer to the Investors Insurance Companies, Retirement Plans, Hedge Funds, Individuals Equity Investors Market for Capital Insurance Companies, Retirement Plans, Hedge Funds Debt Investors Money Funds CP Investors Credit Banks InvestorsProvide capital, take risk, seek return Utilities Issues securities from time to time in order to maintain capital structure and fund business Ratings Agencies Assists Investors access risk via “grades” given to securities Revolvers & CP Back-Up Commercial Paper Long Term Bonds Common Stock SecuritiesIssued by Utilities and purchased by Investors provide evidence of funding

5. How CPUC Decisions Impact Wall Street’s View of its Utilities Efficient markets allow no “free lunch” CPUC Ruling that Decreases Return Lower Debt Ratings Greater operating risk and/or weaker capital structure* Higher Cost of Debt Lower ratings leads to investor demand for higher credit spread Less Earnings Lower earnings due to higher cost of debt and/or lower allowed return on equity CPUC Ruling that Increases Risk Weaker Capital Structure Lower equity capitalization and interest coverage weakens the capital structure Lower Stock Price Less earnings lowers stock price valuation (i.e. P/E Ratio) which results in lower stock price and equity capitalization Lower Interest Coverage Less earnings lowers this important ratings measure * Ratio of market value of equity to total liabilities is an important factor in validated models such as Altman’s Z-Score and KMV that are widely used by investors to predict the probability of change in rating and/or bankruptcy