Introduction Executive Summary Vision & alignment High-level design Operational improvement CS Transformation KPIs People & culture

KPIs People & culture Next Steps Appendix

US Southeast: Low cost gas and nuclear generation means retail

prices are some of the lowest in the US

Birth of the new energy Electricity and mobility

The digital energy market place Illustrators1
system industry convergence

Southeast Tipping Points Analysis

$800
Tipping point 1 is 24 years
Period of EV & ICE parity
(cost + performance)
Grid cost parity of non away in US Southeast
utility solar plus storage
$700 systems

$600
Tipping point 2 is 7 years
$500
away in US Southeast
2
$/MWh

$400
Fully delivered
cost of
$300 1 electricity
Tipping point 3 in the US
$200 Non utility solar Southeast is after 2050
+ battery LCOE
$100 Cost of transmission
and distribution
$0 1
Analysis is based on average profiles. In each geography,
1 6 11 16 21 26 31 36 there will be segments of the customer base for whom the
economics improve much sooner

Source: Utility impact model Central scenario US Southeast — EY Analysis

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 Introduction
NextEra to add wind
capacity of 2,400 to 4,100
MW during 2017-18
Expects to add solar
capacity of 400 to 1,300
MW during 2017 to 2018
In Dec 2017, NextEra
Energy Resources has been
selected by Tucson Electric
Power to develop, build
and operate a 100-MW
solar array and 30-MW
energy storage system
Executive Summary Vision & alignment
Southern Company
entered into a joint
development agreement
with Renewable Energy
Systems Americas, Inc.
(RES) to develop and
construct ~3,000 MWs
across 10 wind projects
expected to be placed in
service between 2018 and
2020
In January 2018, Southern
Power announced
acquisition of its 20 MW
Gaskell West 1 Solar
Facility
High-level design
Utilities are responding in different ways across the U.S.
ConEdison plans to invest
US$1.25 billion in
renewable energy
production facilities over
the three year period
(2017-2020)
Operational improvement CS Transformation
AEP plan to invest US$1.8
billion in new renewable
energy projects during the
2018-2020 timeframe
The company has in
pipeline US$4.5 billion, 2
GW Wind Catcher complex
in Oklahoma — its largest
clean energy investment in
2018
KPIs People & culture Next Steps Appendix
PG&E plans to expand NJR Clean Energy Ventures
energy efficiency, its use of owns and develops
renewable energy, and onshore wind and
energy storage that would commercial / residential
exceed current state solar projects
mandates
5%–10% of 2018F EPS
PG&E Central California
has asked state regulators
US$137 million of planned
for permission to build an capex in 2018
estimated 25,000 electric
vehicle (EV) chargers at
sites in Northern and
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 Introduction Executive Summary Vision & alignment High-level design Operational improvement CS Transformation KPIs People & culture Next Steps Appendix

Discussion: Alphabet's diverse portfolio will set the bar for

future customer service standards
2018 2021 2023 2025 Beyond

Purchase of Smart city powered Complete

Packaged electricity Completely self-sustainable energy and connected by integration
Access & Energy

renewable plus network service worldwide Integration of

contracts plus internet offering Alphabet
smart city
from NextEra and home
Integration Adoption of Increased data
P2P energy
with P2P autonomous improves maps to
Integration exchange
energy EVs guidie manual and
with DERMs services autonomous traffic
services Completion
Nest join Automated of first smart Use of autonomous
Nest/ Google Home

Google Duplex- service city build drones for delivery

hardware requests and Mass services in smart cities
enabled AI-driven
resolutions adoption of
smart home customer
ridesharing
devices calls Analyze health information alongside energy
Commercial and network use to optimize lifestyle
Partnership autonomous
AI Call Center with vehicle adoption
Adoption of
community
smart
Toronto solar
wearables Development of new energy
smart city
Deepmind

storage methods at grid-scale

Release of design
duplex Google Voice made Auronomous drones Development of
Successful testing and available to deliver packages in Wifi balloons personal health
early rider use enterprise users southeastern Australia provide internet to trackers
of autonomous vehicle Puerto Rico
Sidewalk Labs Waymo Google GoogleX Google Capital

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 Introduction Executive Summary Vision & alignment High-level design Operational improvement CS Transformation KPIs People & culture Next Steps Appendix

Scenario 1: possible energy retail deregulation in California

Retail Deregulation Change in Customer Share between Competitive and non

Timeline Considered 10-20 years Competitive REPs in Texas post deregulation
100.00%
Risk of happening Medium
90.00%
Scenario H M L
80.00%
Customer Loss 100% 50% 20%
70.00%

Organizational impact 60.00%

Profit impact 50.00%

Rate Impact 40.00%

30.00%
T&D impact
20.00%

Do we compete for end customers in

10.00%
this market?
Are channels / products / brand going 0.00%
TOM consideration
1
6

101
106
111
116
121
126
131
136
141
146
151
156
161
166
171
176
181
186
191
11
16
21
26
31
36
41
46
51
56
61
66
71
76
81
86
91
96
to be important to our business?
Does cost leadership become more Series1 Series2 Series3 Series4 Series5 Series6
important than service or innovation?

Source: Electric Choice, Texas PUC Report on Retail Competition and Summary of market share

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 Introduction Executive Summary Vision & alignment High-level design Operational improvement CS Transformation KPIs People & culture Next Steps Appendix

If regulations changed and consumers had retail choice in California,

how might ENTITY respond?
If consumers in California were at some point in the future able to choose their retail electricity supplier from a market of qualified, experienced and even
familiar organizations, how would we respond and how would that change the decisions we make for ENTITY and the Customer Services business?

Response Immediacy Potential Responses and Consequences

0-5 years Lobby for weaker Aggressively expand utility-scale renewables
policy and Emergence of customer-friendly
5-10 years regulatory Raise barriers to entry for integrating rooftop solar and large scale low-cost centralized
Fight support for storage technologies energy supply model with low
10+ years rooftop solar incentives to go off-grid
and storage Aggressive price war to abate rooftop solar uptake

0-5 years
Invest today in competitive capabilities e.g. analytics, innovation,
5-10 years digital, product & services, brand, marketing Use ENTITY as a ‘once in a lifetime’ opportunity to anticipate and gain
Embrace
1 10+ years Reconfigure business towards DER and ancillary services
competitive advantage

Greater retail
choice in ENTITY
0-5 years
Navigate customer Higher rates Lose significant market share due to non competitiveness e.g. Texas
Ignore 5-10 years sentiment and over shrinking
attrition customer base
10+ years Traditional retailers become increasingly marginalized

0-5 years Reduce Customer Services expenses aggressively Design for cost saving and lean operations

Exit 5-10 years Reduce expense, deliver against medium term regulatory priorities Build capabilities around regulatory mandates (e.g.
EE) but don’t differentially invest in ‘additional’
10+ years Balance investment vs performance over mid term features

195