Electric Program Investment Charge

Joint Investor Owned Utilities’ EPIC Administrators Webcast

September 28, 2012

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• Background Doug Kim

• Program Format and Initiatives Kevin Dasso

• PG&E Illustrative Programs Kevin Dasso

• SDGE Preliminary Programs Frank Goodman

• SCE Illustrative programs Doug Kim

• Wrap Up Doug Kim

• Questions and Answers

Agenda

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• The California PUC established EPIC in May, 2012 through D.12-05-037 to:– “provide public interest investments in applied research and

development, technology demonstration and deployment, market support, and market facilitation, of clean energy technologies and approaches for the benefit of electric ratepayers of Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E) and Southern California Edison (SCE), the three large investor-owned utilities (IOUs).”

Electric Program Investment Charge (“EPIC”)

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Summary of EPIC Decision

Investment Areas

Applied Research: $55M/annually (CEC only) Technology Demonstration & Deployment

− CEC $45M, PG&E $15M, SCE $12M, SDG&E $3M (/annually)

Market Facilitation: $15M/annually (CEC only)

Funding &Admin.

$162M/annually in ratepayer funding (2012-2020)

CEC administers 80% of the authorized budget; IOUs administer 20%

Electricity SystemValue Chain

Grid Ops / Mkt. Design Generation Transmission

Distribution Demand-Side Mgmt

IOUs are Limited to Funding Only Technology Demonstration & Distribution Programs

Technology Demonstration and Deployment - The installation and operation of pre-commercial technologies or strategies at a scale sufficiently large and in conditions sufficiently reflective of anticipated actual operating environments to enable appraisal of the operational and performance characteristics and the financial risks

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Collaborative Development of IOUs’ EPIC Plans

• Starting June 2012, the IOU program administrators have met semiweekly to develop the Working IOU EPIC Framework to guide the individual IOU EPIC plans

• The Working IOU EPIC Framework was presented to stakeholders at public workshops in August, as well as to the CEC, CPUC Staff, internal IOU subject matter experts, and industry experts (including EPRI), and has been refined with their input

• These groups have validated that the Working IOU EPIC Framework correctly identifies current technology gaps and aligns with driving California policies and goals

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Administration of IOUs’ EPIC Programs• Coordination Efforts Will Continue

– Next Steps: IOUs and the CEC will work together to assess duplication and identify if any co-funding or IOU-CEC collaboration opportunities exists

– After EPIC Applications are Approved:

• IOUs and the CEC will continue to coordinate regularly to avoid unnecessary duplication, identify co-funding opportunities , and leverage completed research

• Semi-annual stakeholder meetings will be held to obtain input and present interim results

• Existing collaborative forums will be consulted, to avoid duplication and identify industry gaps

• IOUs will file Annual EPIC Reports with the CPUC

• Some EPIC programs will be executed by IOUs in-house using best practices while others will be pay-for-performance contracts

– Pay-for-Performance contracts will generally be competitive

IOU Working EPIC Program Framework

EPIC Technology Demonstration and Deployment Priority Utility Objectives

Demonstrate System and Public SafetyHealth/Environmental Impact, Hazard Mitigation, System Integrity

Demonstrate ReliabilityReliability Improvement, Maintaining Reliability in the face of Grid changes

Affordable Environmental & Energy Policy Attainment AB32, RPS, Energy Efficiency, Distr. Gen/Renewables & Integration (Distributed & Large Scale)

Key “Megatrend” Drivers & Policy Objectives

• 33% RPS• CSI• Gov’s 12,000 MW

DG Plan • OTC retirements• AB32• Energy Storage OIR

• SB17• Aging

Infrastructure• Workforce

Development• California

Economic Resiliency

• ZNE• CSI• Net Energy

Metering• Peak Reduction• EE Strategic Plan

Renewables and Distributed Energy Resources Integration• Integrate Distributed Energy Resources, Generation and Storage Safely and Reliably• Demonstrate Adaptive Protection Strategies• Generation Transparency and Flexibility

Customer Focused Products and Services Enablement• Leverage the SmartMeter Platform to drive Customer Service Excellence • Integrate Demand Side Management to Optimize the Grid• Respond to Emerging Grid Integration Issues

Grid Modernization and Optimization • Demonstrate Strategies and Technologies to Optimize Existing Assets• Prepare for Emerging Technologies• Design and Demonstrate Grid Operations of the Future

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IOU CONSIDERED INITIATIVES • Integration of Distributed Energy Resources (DER), Generation and Storage

– Pilot test multiple uses of distributed energy resources and assess costs and benefits.

– Pilot Energy Storage End Uses to test capabilities of emerging storage technologies that lack widespread commercial operating experience

– Demonstrate DER aggregation and control as a fleet to provide substantial reliability improvement at the circuit level whether circuits have high or low penetration

• Adaptive Protection Strategies– Safely provide for two-way power flows on the distribution system– Reliably integrate and safely operate with increasing levels of variable

energy resources on the transmission system– Closed loop control for special protection schemes

• Generation Transparency and Flexibility – Pilot test data aggregation and signals from DER to determine and inform

IOU and CAISO operations of aggregate output– Pilot new forecast methods (Micro-climates & automated load and

distributed resources) to better predict aggregate output– Pilot modifications and systems for more flexible use of existing generation

to reduce power system operating costs and environmental impacts

Renewables and Distributed Energy Resources Integration• Integrate Distributed Energy Resources, Generation and Storage Safely and Reliably• Demonstrate Adaptive Protection Strategies• Generation Transparency and Flexibility

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IOU CONSIDERED INITIATIVES • Demonstrate Strategies and Technologies to Optimize Existing Assets

– Improve Distribution System Safety & Reliability through New Data Analytics Techniques (data capture, analytics, visualization & correlation technology to improve maintenance, detect outages, proactively identify potential safety hazards

• Preparing for Emerging Technologies– Demonstrate promising new transmission and distribution technologies to address

aging infrastructure needs & existing equipment/facility limitations:– Smart Distribution Circuits: improve outage restoration and regulation on

circuits through intelligent and coordinated switching of strategically placed equipment

– Demonstrate Substation Automation, including monitoring, interoperability and intelligent alarming to increased reliability, efficiency, and safety of bulk power and distribution substations

• Designing Grid Operations of the Future– Demonstrate new technologies, integration and human situational awareness

considerations to support the operator and integrated operations of the future– Assess the potential for future “state measurement” v. state estimation in grid

operations– Distributed Control for Smart Grids: Pilot control system infrastructure that can meet

the needs of the current and future ever-evolving complex power system

Grid Modernization and Optimization• Demonstrate Strategies and Technologies to Optimize Existing Assets• Prepare for Emerging Technologies• Design and Demonstrate Grid Operations of the Future

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IOU CONSIDERED INITIATIVES*

• Leverage the SmartMeter Platform to drive Customer Service Excellence – Pilot energy usage data services for customers & approved third parties– Pilot Subtractive Billing with Submetering for Evs– Demonstrate data analytics capabilities of the SmartMeter platform to enable

customers

• Integrate Demand Side Management to Optimize the Grid – Demonstrate integration and automation strategies/technologies for various customer

energy resources (storage, DER, PEV, PV, DR)– Demonstrate DSM resources that can be integrated and delivered in a targeted manner

to provide reliable & sustained demand reductions to postpone distribution and transmission capacity expansions

• Respond to Emerging Grid Integration Issues– Pilot and evaluate Zero Net Energy (ZNE) in specific building classes to test business

models that support IOU customers– Pilot PEV Smart Charging and Vehicle to Grid technologies that encourage customer

adoption of behaviors that further state goals– Evaluate costs, benefits and technical issues associated with vehicle to grid power

supply

Customer Focused Products and Services Enablement• Leverage the SmartMeter Platform to drive Customer Service Excellence • Integrate Demand Side Management Programs to Optimize the Grid• Respond to Emerging Grid Integration Issues

Note: Initiatives in this category will leverage existing RD&D initiatives in Energy Efficiency and Demand Response Programs

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IOU CONSIDERED INITIATIVES • System Architecture

– Pilots distributed or hierarchical control systems infrastructure for T&D systems – Communicate & coordinate new & existing field devices (goal: no stranded assets)– Smart Grid architecture :Pilot IOU demonstrations of electrical and communication

system architecture configurations, protocols and standards – Deep Grid Coordination: Demonstrate system architectures with the potential to

incorporate new and existing assets, including customer DER into a coordinated smart system

• Cybersecurity– Pilot new strategies and technologies to make the entire electrical system more secure

• Data Analytics – Demonstrate best practices for filtering increasing data to make strategic use of data in

evolving distributed control systems– Field test strategies and technologies that promote safe, reliable and affordable

distributed control and automation• Telecommunications & Standards

– Pilot new communications architecture, standards, technologies, and strategies for addressing current and future needs

• Technical Workforce – Identify skills gaps to aid in developing workforce that can operate and maintain the

power systems & technologies of the future

Cross Cutting/ Foundational Strategies & Technologies

Smart Grid Architecture, CyberSecurity, Telecommunications & Standards

PG&E Illustrative Programs

• Energy Storage End Uses

Renewables and Distributed Energy Resources Integration- Integrate Distributed Energy Resources, Generation and Storage Safely and Reliably- Adaptive Protection Strategies; - Generation Transparency & Flexibility

• Improve Distribution System Safety & Reliability through New Data Analytics Techniques

Grid Modernization and Optimization - Demonstrate Strategies and Technologies for Optimizing Assets- Prepare for Emerging Technologies- Design and Demonstrate Grid Operations of the Future

• Pilot Subtractive Billing with Submetering for EVs

Customer Focused Products and Services Enablement- Leverage the SmartMeter Platform to drive Customer Service Excellence - Provide Greater Billing Flexibility & Visibility- Integrate Demand Side Management for Grid Optimization

• Technology or Strategy to be Demonstrated -The CPUC energy storage proceeding (Order Instituting Rulemaking 10-12-007) identified 20 Energy Storage Systems (ESS) end uses in four categories. This illustrative program would leverage PG&E’s installed ESS to test more of these capabilities by expanding into additional end uses beyond the original funding commitments (e.g., new end uses could include bidding into the upcoming Non Generator Resources (NGR) CAISO market, testing against Resource Adequacy requirements, etc.).

• Concern, Problem, or Gap to be Addressed - ESS have the potential to contribute to solving many challenges on the grid, however, their full capabilities have not been widely demonstrated and lack of commercial operating experience has been identified as one of the barriers to ESS deployment.

• Pre-Commercial Technology or Strategy Aspect – Few, if any, ESS have been tested in multiple end-use scenarios

• How the Program Avoids Duplication from Other Initiatives – PG&E is currently building 2 MW and 4 MW battery installations at two distribution system locations. The installations and ESS technology is different than other CA Utilities and leverages existing PG&E assets

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PG&E Illustrative Program: Energy Storage End Uses

• Prioritization: High Priority ProgramLow incremental cost as EPIC funds are not required for installation of the ESS programsLeverages existing PG&E-funded and CEC grant-assisted programsQuick hit – ESS installations are underway; high probability of success in determining feasibility of multiple usesNecessary to meet future clean energy goals and address critical policy uncertainty

• EPIC Primary or Secondary Principles Met Increased ReliabilityLower CostsGreenhouse Gas ReductionsEfficient Use of Ratepayer Monies

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PG&E Illustrative Program : Energy Storage End Uses

PG&E Illustrative Program : Improve Distribution System Safety & Reliability through New Data Analytics Techniques

• Technology or Strategy to be Demonstrated – Utilize data analytics advances to improve grid safety and reliability. Demonstrate that the ever increasing amounts of data can be mined and combined efficiently and cost-effectively in targeted, high–impact areas such as risk-based asset management, enhanced safety hazard mitigation and proactive outage prediction.

• Concern, Problem, or Gap to be Addressed – Current processes are time-consuming, manually-intensive data collection efforts that result in large data extracts that preclude timely or meaningful analysis. Existing siloed IT infrastructure is another limitation; Legacy hardware and traditional software is not sufficiently scalable and would require costly integration to meet future analytics and reporting needs.

• Pre-Commercial Technology or Strategy Aspect – “Big Data” is an emerging opportunity area for utilities. Common Internet Technologies (Data “mash-ups”, visual recognition, instant ad-hoc search) have significant utility use-cases. For example:

A customer photographs a fallen tree on an electric line and uploads the picture. the utility tags it, automatically accesses records, identifies the line and sends a response crew with directions while auto-notifying impacted customers of the outage and potential safety hazard. Utility operators combine data such as weather forecasts, high fire danger areas, historical asset performance data, and vegetation management to significantly improve fire prediction, prevention and response capabilities, and share this information real time with first responders.Engineers and crews utilizing millions of SCADA measurements, protective relay data, maintenance history, equipment test records, and other sources optimize maintenance and replacement of costly equipment such as substation transformers and circuit breakers.

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PG&E Illustrative Program: Improve Distribution System Safety & Reliability through New Data Analytics Techniques

• How the Program Avoids Duplication from Other Initiatives – Some utilities are pursuing limited data analytics pilots, however data solution providers require access to utility specific data, systems and business processes to test and prove the technology. While data is unique to each utility, the individual pilot cases need to be aggregated to provide “network effect” benefits that can be leveraged by multiple utilities and commercial vendors.

• Prioritization: High Priority ProgramHigh probability of success; short “prototyping” time required to prove improvements in targeted areasSignificant potential to proactively address safety and reliability before incidents occurProvide multiple vendors with valuable input required to render technology commercially viable

• EPIC Primary or Secondary Principles MetIncreased ReliabilityIncreased SafetySocietal BenefitsEfficient Use of Ratepayer MoniesEconomic DevelopmentJob CreationPotential Energy and Cost Savings

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PG&E Illustrative Program:Pilot Subtractive Billing with Submetering for EVs

• Technology or Strategy to be Demonstrated –Subtractive billing with submetering for EVs is a potentially low-cost method to offer customers increased flexibility in choosing beneficial rates for their EV usage. This includes:

Avoiding the need to install a separate meter and service panel when choosing the PG&E separate meter EV-specific rate schedule; andPotentially provide a reasonable way to track the number of miles driven using electricity – as opposed to traditional fossil fuel – for transportation

• Concern, Problem, or Gap to be Addressed – A pilot, with EV customers in the different submetering scenarios, would inform implementation for the wider PG&E customer group.

• Pre-Commercial Technology or Strategy Aspect – This pilot would help develop the submetering protocol, national standards, and demonstrate the level of demand for subtractive billing with submetering for EVs. If there appears to be sufficient demand from customers, it would help provide a rationale for the cost-effectiveness of implementing a full-scale solution.

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• How the Program Avoids Duplication from Other Initiatives – IOUs were ordered to implement subtractive billing with submetering for EVs in the Phase 2 decision of R.09-08-009. The IOUs with other stakeholders filed an extension letter with the Executive Director of the Commission, notifying the CPUC that the IOUs were not provided sufficient time or any funding to implement such a solution. This letter was approved by the CPUC. The IOUs have been working on developing required components to allow subtractive billing with submetering for EVs - such as a tariff and technical metering document - but nothing has been implemented or finalized at this time.

• EPIC Primary or Secondary Principles Met Lower CostsSocietal benefitsGreenhouse gas reductionsEfficient use of ratepayer monies

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PG&E Illustrative Program:Pilot Subtractive Billing with Submetering for EVs

Proposed SDG&E Programs

• Non-Traditional Uses of Distributed Energy Resources

Renewables and Distributed Energy Resources Integration- Integrate Distributed Energy Resources, Generation and Storage Safely and Reliably- Adaptive Protection Strategies; - Generation Transparency & Flexibility

• Smart Distribution Circuit• Distributed Control for Smart Grids

• Pilot for Visualization and Situational Awareness System

Grid Modernization and Optimization - Demonstrate Strategies and Technologies for Optimizing Assets- Prepare for Emerging Technologies- Design and Demonstrate Grid Operations of the Future

• Smart Grid Architecture Pilots

Cross-Cutting/ Foundational Strategies & Technologies- Smart Grid Architecture - Cybersecurity- Telecommunications Standards

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SDG&E Plan: Five Interrelated Pilot Demonstration Programs on Key Pinnacles of Smart Grid Development

Smart Grid Architecture Pilots

Smart Grid Distributed Control

Pilot

Pilot for Visualization and

Situational Awareness System

Pilots to Determine Business Case for

New DER Functions

Smart Distribution Circuit Pilot

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SDG&E Proposed Program 1: Smart Grid Architecture Pilots

• Technology or Strategy to be Demonstrated – Pilot demonstrations of electrical and communication system architecture components, configurations, and standards to evaluate their suitability for inclusion in the SDG&E smart grid architecture. The communication architecture, which will need to be compatible with the electrical architecture, must have standardized device information models (object models) and protocols for the information transfer needed to operate a power system that is becoming increasingly complex.

• Concern, Problem, or Gap to be Addressed – SDG&E’s smart grid deployment has reached the point at which it is necessary to network the actively controllable (“smart”) devices with a monitoring and control system to govern the system operation. To do so, cannot be a random process and requires commitment to an architecture for both the electric system and the communication and control system that will be overlaid on it.

• Pre-Commercial Technology or Strategy Aspect – Utilities have been developing smart grids comprised of autonomous smart devices. An architecture is needed to network the increasingly complex system and deliver the full benefits of coordinated operation of these devices and the electrical circuits in which they are placed, per the overall vision of smart grids.

• How the Program Avoids Duplication from Other Initiatives – Each utility will require its own architecture, because the choice of smart grid features (components and system configurations) will differ from one utility to the next.

• Prioritization: High Priority Program– Autonomous smart devices are proliferating rapidly on the power system. A robust architecture is needed

for device networking to support operation of this dynamically changing power system.– Provides a structure for continuing power system modernization– Provides an architecture for overlaying information systems on the electrical system

• EPIC Primary or Secondary Principles Met Increased reliabilityImproved power system performance and lower operating costsIncreased safetySocietal benefits

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SDG&E Proposed Program 2: Distributed Control for Smart Grids

• Technology or Strategy to be Demonstrated – Pilot demonstration of distributed control unit to determine its suitability for inclusion in a hierarchical control infrastructure. The unit would process data coming from smart devices in an individual feeder or larger distributed circuit region and manage the smart devices and the emerging reconfiguring actions of the region in a coordinate manner.

• Concern, Problem, or Gap to be Addressed – SDG&E does not yet have a control system infrastructure that is robust enough for the expected increases in power system complexity stemming from grid modernization. This program will pilot a distributed control unit that achieves the needed capabilities to support further advancement of SDG&E’s smart grid.

• Pre-Commercial Technology or Strategy Aspect – The distributed control system must be capable of processing a much larger amount of data coming from the various new devices and from widely deployed sensors and monitoring nodes that provide intelligence on system status.

• How the Program Avoids Duplication from Other Initiatives – Each utility will require its own control system approach, because the choice of smart grid features (components and system configurations) will differ from one utility to the next. The SDG&E control system pilot program will be synchronized to SDG&E’s smart grid architecture development, which is a parallel program.

• Prioritization: High Priority Program– Need a robust and adaptive control systems to manage an increasingly complex smart grid– Distributed control unit would be integrated into a hierarchical control system for SDG&E grid

modernization– Control system algorithms must be able to coordinate and dispatch devices and circuit reconfiguring to

respond to contingencies in a fast coordinated manner• EPIC Primary or Secondary Principles Met

Increased reliability and improved management of distributed resourcesImproved power system performance and lower operating costsIncreased safetySocietal benefits

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SDG&E Proposed Program 3: Smart Distribution Circuit

• Technology or Strategy to be Demonstrated – This program seeks to improve outage restoration and regulation on circuits through intelligent and coordinated switching of strategically placed equipment.

• Concern, Problem, or Gap to be Addressed – The traditional and typical distribution circuit is managed by distribution operators, field personnel and scheduled or voltage-triggered switching of Load Tap Changers (LTCs), capacitor banks and regulators. While this traditional management scheme has sufficed for operations in the past, a more reliable and efficient distribution circuit is feasible by taking advantage of new communication and control technologies.

• Pre-Commercial Technology or Strategy Aspect – With the low resolution circuit load data and static circuit simulations available today, advanced control cannot be developed properly. This program would aim to upgrade distribution circuit power quality sensing and distribution circuit simulation to implement control algorithms that manage new and existing distribution equipment.

• How the Program Avoids Duplication from Other Initiatives – Each utility has a unique current situation. SDG&E is currently working on a few isolated programs to improve distribution circuits, moving from manual operation of devices to remote control. While the aforementioned programs make up the components required for a smart distribution circuit, SDG&E has not yet attempted to optimize the operation and coordination of the various smart components together.

• Prioritization: High Priority Program– This program focuses on optimizing the choices made for new components in smart grid circuits– This program provides a basis for circuit optimization to complement the other planned programs on

architecture development and distributed control for the SDG&E smart grid• EPIC Primary or Secondary Principles Met

Increased reliability and more rapid restoration processesImproved power system performance and lower operating costsIncreased safetySocietal benefits

SCE Illustrative Programs

• Distributed Energy Storage (DES)

Renewables and Distributed Energy Resources Integration- Integrate Distributed Energy Resources, Generation and Storage Safely and Reliably- Adaptive Protection Strategies; - Generation Transparency and Flexibility

• Substation Automation

Grid Modernization and Optimization - Demonstrate Strategies and Technologies for Optimizing Assets- Prepare for Emerging Technologies- Design and Demonstrate Grid Operations of the Future

• Deep Grid Coordination

Cross-Cutting/ Foundational Strategies & Technologies- Smart Grid Architecture - Cybersecurity- Telecommunications Standards

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SCE Illustrative Program: Substation Automation• Concern, Problem, or Gap to be Addressed – SCE’s “Substation Automation-3 (SA-3) Phase III” program would

demonstrate the interoperability, automated configuration, configuration management, and security benefits of the SA-3 Phase II program on the bulk power substation and legacy automated distribution substations, as well as demonstrate an intelligent alarming system for substation operators. The goal is to enhance automation capabilities to allow remote control and monitoring and full integration of SCE’s substation and distribution automation programs, drive competition and innovation in the automation technology marketplace, ensure compliance with NERC/CIP standards, and enhance the ability of substation operators to make critical operation decisions.

• Technology or Strategy to be Demonstrated – The SA-3 Phase III program is a high priority for SCE due to NERC/CIP compliance requirements, potential obsolescence of up to 7,000 intelligent electronic devices (IEDs) in 350 substations over the coming decade, and the difficulty of making critical operating decisions while being overwhelmed by an avalanche of unfiltered alarms. This program will leverage successful strategies from SCE’s SA-3 Phase II capital deployment and Common Cybersecurity Services (CCS) to demonstrate increased reliability, efficiency, and safety of bulk power and distribution substations.

• Pre-Commercial Technology or Strategy Aspect – This proposed demonstration program would help optimize existing automation investments by augmenting SCE’s ability to communicate with distribution automation programs and upgraded substations from Phase II of the SA-3 program. SCE’s substations will also be better prepared to integrate emerging technologies due to the IEC 61850 standard utilized for SA-3, and grid operators will benefit from improved situational awareness created by intelligent alarming.

• How the Program Avoids Duplication from Other Initiatives – Applying lessons learned from SCE’s Distribution Substation Automation program to bulk power Substation Automation.

• EPIC Primary or Secondary Principles Met

Increased reliabilityLower costsIncreased safetyEfficient use of ratepayer monies

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SCE Illustrative Program: Deep Grid Coordination• Concern, Problem, or Gap to be Addressed – SCE’s objective for its “Deep Grid Coordination” program is to

provide and demonstrate mechanisms for reliable integration of customer owned distributed energy resources(DER) into the distribution network. The goal is to explore distribution system market designs that increase the value of customers’ DER investments and ensure, safe and reliable electricity supply is available to all customers at reasonable cost.

• Technology or Strategy to be Demonstrated – Building on the Irvine Smart Grid Demonstration program’s findings on how DER and ZNE impact the distribution network. The Deep Grid Coordination program would focus on how to manage customer owned DER to ensure distribution network reliability is maintained and both DER customers and IOUs are incented to work together to maintain the integrity of our electric grid. Given the pace of DER adoption and projected timelines for DER rate parity with tiered tariff rates, this is a high priority program. There are opportunities to leverage EPIC investment with DOE cost share.

• Pre-Commercial Technology or Strategy Aspect – This proposed research program would provide valuable and demonstrable methods that benefit the customers, the health of the electric grid and would serve as a guide to evolve the IOU towards participating in a DER future. This program would demonstrate additional value to customer’s investments in DER by using these assets to support grid operations, reliability and safety in and across areas of high DER penetration.

• How the Program Avoids Duplication from Other Initiatives – Applying lessons learned from SCE’s ISGD Demonstration program to DER and ZNE impacts on the distribution network.

• EPIC Primary or Secondary Principles Met

Increased reliabilityImproved management of distributed resourcesImproved power system performance and lower operating costsIncreased safetySocietal benefitsEfficient use of ratepayer monies

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SCE Illustrative Program: Distribution Energy Storage (DES)• Concern, Problem, or Gap to be Addressed – This program will validate reliability improvements that can be

provided with higher penetration of DES when distributed strategically on a particular circuit, especially in instances where reliability of lower voltage circuits (e.g., 4kV circuit) are acute and often have limited solutions requiring full circuit revamps in most instances. It's expected when DES are aggregated and controlled as a fleet, the aggregated solution will provide substantial reliability improvements at the circuit level whether such circuits have high or low DER penetration. Areas of reliability improvements include VAR support, feeder relief, DER smoothing (with higher levels of DER penetration), and voltage regulation at multiple points along the circuit. SCE Planning and Engineering, Generation, ES&M, TP&S and TSD have all been consulted and are impacted by energy storage as it arrives on SCE’s grid (through PEVs) or is deployed (through grid-connected storage devices).

• Technology or Strategy to be Demonstrated – The utility industry has long been governed by the need to instantaneously match supply with demand; now with the integration of variable energy resources on the grid and the many regulatory drivers, including the CA Energy Storage OIR, it faces the challenges of utilizing new technologies, such as energy storage systems, and ensuring reliable, affordable, and safe electricity during periods of low, intermittent, or disrupted generation.

• Pre-Commercial Technology or Strategy Aspect – Not approving this program will impair SCE’s ability to understand the value of distributed energy storage systems such as CES, which was identified as one of the most promising storages option by SCE's strategic planning work. As large-format battery production scales up due to increasing numbers of PEVs and technology improvements, costs of energy storage systems should decrease dramatically. Thus, a larger number of applications could become economically viable within the next 5 to 10 years. This program leverages best practices and knowledge gained from the interconnection and operation of the CES unit under the CES & Controls Evaluation program and the ARRA-funded, ISGD Subproject 1.

• How the Program Avoids Duplication from Other Initiatives – When DES are aggregated and controlled as a fleet, the aggregated solution will provide substantial reliability improvements at the circuit level whether such circuits have high or low DER penetration.

• EPIC Primary or Secondary Principles Met Increased ReliabilityLower Costs

Societal benefits Efficient use of ratepayer monies

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Next Steps & Written Comment Feedback

• Additional Information Regarding Each IOU Plan Will Be Provided to Interested Parties. If you would like a copy of the Presentation, please send requests to:– SCE: advancedtechonology@sce.com– PG&E: Eileen.Cotroneo@pge.com– SDG&E: http://

sdge.com/regulatory-filing/3749/electric-program-investment-charge-epic

• Written Comments Due by October 4, 2012– SCE: advancedtechonology@sce.com– PG&E: Eileen.Cotroneo@pge.com– SDG&E: Frank Goodman at FGoodman@semprautilities.com