1. Smart Meters: Global Regulatory TrendsChris King, Chief Regulatory OfficerOctober 2011 Copyright2011eMeterCorp.Allrightsreserved.

2. eMeter brief introduction Company C Business B i Corporate headquarters in Smart meter and smart gridSilicon Valley software - Teams in Europe, India, Asia-d O Operates in utility b klback Pacific (Australia/China) office Executive team average 25 AMI/Meter vendor-neutralyyears experiencep Embrace system integrators - Enterprise software and other business partners - Metering and communicationsSlide 1 Copyright 2011 eMeter Corp. All rights reserved. 3. eMeter seMeters customers: in production,at scale around the worldThe image cannot be display ed. Your computer may not hav e enough memory to open the image, or the image may hav e been corrupted. Restart y our computer, and then open the file again. If the red x still appears, y ou mayhav e to delete the image and then insert it again. The image cannot be display ed. Your computer may not hav e enough memory to open the image, or the image may hav e been corrupted. Restart y our computer, and then open the file again. If the red x still appears, y ou may hav e to delete the image and then insert it again.Slide 2 Copyright 2011 eMeter Corp. All rights reserved. 4. Global utility industryb yy Utilities 2 7 billion electric, gas, and water meters2.7 electric gas 12,000 electric utilities About 6,000 with more than 30k customers , 12% automated with AMR or AMI 140 million smart meters interval data, two-waycommunications Ownership often a mix National governments Municipalities Investors (IOUs) Member cooperatives in U.S.Slide 3 Copyright 2011 eMeter Corp. All rights reserved. 5. Utility Core Drivers yAll politics is local Politics - Utilities -> Regulators -> Politicians -> Consumers - Reliable service at low cost - Reliability = both generation and distribution Managing political and financial risk - Over-build - Own and control - Avoid headlines Ratesetting - For expenses, dollar-for-dollar recovery - For rate base, capital recovery plus ROE (IOUs only) - Higher sales = higher profitsSlide 4Copyright 2011 eMeter Corp. All rights reserved. 6. Current regulatory drivers gy Policy goals - Economic growth/cleantech - Energy security - Utility efficiency and reliability - Global warmingg - Reliable energy at low cost Policies that drive smart grid adoption - Renewable resource targets, including distributed generation - Energy savings targets - State/national deployment mandates - Financial incentives for utilities - Electric vehicles ThThese policies are lli i largely i placel in lSlide 5 Copyright 2011 eMeter Corp. All rights reserved. 7. Smart grid benefits for water utilitiesHow do advanced metering & meter datamanagement improve th system? tithet ? Improve accuracy & immediacy of metering information thereforerevenue & customer service Reduce Non-Revenue Water (NWR about 40% in Brazil)- Detect unauthorized consumption- Detect leaks- Identify failed meters and registers Life extension Lower investment requirements Tracking infrastructure cost PPressure managementt Brazil Water Regions 8. Smart meter market drivers North America- U.S. state initiatives- Renewable resources and energy savings targets- Keeping up with the crowd Europe- EU directives- Renewable resources (e.g. Scandinavia, Spain,Germany)- Energy savings targets (e.g. UK)- G id modernization and efficiency (Eastern Europe)Griddi tid ffi i(E t E ) China and India- Global political positioning- EEnergy th ft i Indiatheft in I di Latin America- Supply adequacy (hydro risk, e.g. 2001 drought)- Di t ib tiDistribution reliability (16 h li bilithours per year) )- Energy theftSlide 7Copyright 2011 eMeter Corp. All rights reserved. 9. Smart grid business case summary societal perspectivei t lti Annualized Savings and Costs for U.S. $80ons of Dollars $70 $60 $50 $ D $40 $30 Billio $20 $10 $0Source: eMeter Strategic ConsultingSlide 8Copyright 2011 eMeter Corp. All rights reserved. 10. International European Union- New draft Energy Efficiency Directive this summer- Provides concrete steps to achieve 2020 and 2022 goals for smart meters U.K.- 100% rollout required by 2019- Central data agency (Data Communications Company)- Retailers moving forward now on foundation solutionsfoundation- Smart meter installation schedule begins second half 2012 Scandinavia- Norway: smart meter rollout by 2016- Finland: by 2013 France- French regulator approved smart meter business case last month- Government endorsed rollout last month; complete by 2018 Germany- New energy legislation in progress; smart meters being discussed Brazil- Regulator planning decision/announcement soonSlide 9Copyright 2011 eMeter Corp. All rights reserved. 11. Smart meter policy map world See U.S.Rollout by 2020 100% 80-100% 50-80% 0-50% 0%Slide 10 Copyright 2011 eMeter Corp. All rights reserved. 12. Smart meter policy map U.S. Rollout by 2020100%80-100%50-80%0-50%0%Slide 11Copyright 2011 eMeter Corp. All rights reserved. 13. Consumers want information andpricing choices100%80%60%40%Favortimebased prices20%Desiremoreenergy D i usagedata 0% Source: PSE, Accenture Power Perceptions, Zpryme, GenesisSlide 12Copyright 2011 eMeter Corp. All rights reserved. 14. Information empowers choicepEnhanced information has been shown to help customers manageenergy with knowledge of the cost implications of their choices. Relation of Value to Cost Control/ Options BenchmarksSlide 13 Copyright 2011 eMeter Corp. All rights reserved. 15. PowerCentsDC smart grid surveyg y HighestInterestisUsage ConsumersWantData byAppliance PushedtoThem 100% 81%73%76% 73% 75%80%71% 14% 56% 14%60% 52%40% 20%20%0%arisons plianceDailyusageHourlyusage Dailycost emails yalertsWeeklye sagebyappCompaEnergy Withbill Mailedreports Utilitywebsite EmailUsSource: Smart Meter Pilot Program, Inc.Slide 14 Copyright 2011 eMeter Corp. All rights reserved. 16. Information feedback resultsbResults from 42 programs of different mechanisms, including in-home displays, websites, bill inserts, and mailed reports.Direct IndirectFeedbackFeedbackPrograms Programs TotalProgramsSavings33 20%20%ofpeak,11 weekdays2 1 3 1519%,MonSat 8614 1014%113145 9% 59%4 3 704% Weightedaveragesavings 9.4% Source: eMeter Strategic ConsultingSlide 15 Copyright 2011 eMeter Corp. All rights reserved. 17. Pricing programs show energyusers reduce peak g 11 1098 Average of 20%7 Frequency654321- 0% to 2%2% to 6% 6% to 10% 10% to 14%14% to 18% 18% to 22%22% to 26% 26% to 30%30% to 34% 34% to 38%38% to 42% 42% to 46%46% to 50% 50% to 54%54% to 58%% %% %% %% %% %% %% Source: Brattle Group Peak Reduction RangeSlide 16Copyright 2011 eMeter Corp. All rights reserved. 18. Smart meter data access Free access to ones own data already beingcollected - Online access to backhauled data within 48 hours of collection - Real time access to meter via home/building area Real-time network (HAN) interface Ability to authorize third parties to receive theypdata - Trusted energy advisor Data privacy and security protectionsSlide 17 Copyright 2011 eMeter Corp. All rights reserved. 19. Data access & privacyStandards for data, price information, and control signalsUtility Data CenterAuthorized Third PartyOpenp MeterUtility Utility Open ADE/ADR Internet Data BillingWebADE/ Energy Energy Mgmt & CISSite ADR Info MgmtApp App Smart Network Application Platform Communication Network HeadEndInternetGoverned by data privacy & security rulesHome Router Laptopp p Wi Fi T-stat AMI Radio Smart Smart MeterRadioPhone CommunicationsHANNetwork HANRadioHAN(Backhaul)RadioDeviceOpenADRHAN RadioSlide 18 Copyright 2011 eMeter Corp. All rights reserved. 20. Synthesis: Consumers Perspective ypAll the pieces are needed to make the smart grid work Segments Savers Sustainers Technophiles I Ignorers Applications ConsumersApplications Energy information Pricing choices Convenience of automation Technologies Technologies Smart meters and communications Smart thermostats, lighting, appliances, equipmentpp , q p SoftwareSlide 19 Copyright 2011 eMeter Corp. All rights reserved. 21. Policy recommendationsPolicymakers should have common vision of Smart Grid benefits: Society Financial savings and higher reliability via improved load factor and system efficiencyggy p yy Faster and wider adoption of renewable energy and electric vehicles Primary policy tool to achieve policy goals of reliable supply, energy savings, renewable portfolio standards, and emission reductions Energy consumers Access to detailed energy information Voluntary time-based pricing options Widespread availability of automated appliances and devicesPolicymakers should establish specific targets Installation e.g., 80% of meters in European Union by 2020, 100% by 2022 Meter functionality two-way communications, interval data, daily reads, HAN yy , , y, interface, disconnect switch, voltage & outage alerts Promote but not mandate standards Note: targets need to reflect country-specific requirementsgy pq