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Southern California Edison Company, as well as the other California investor owned utilities are mandated to increase their Renewable Portfolio Standard to 20 percent by 2010 and by the Governor's Executive Order to 33 percent by 2020. When achieved, these types of energy resource assets potentially represent a significant means to meet State energy and environmental objectives. Edison is also embarking on the deployment of a robust smart grid for the future to enable the integration of renewable and distributed energy resources to support customer choices, improve grid stability and to improve power supply options. Edison believes that this goal will require the use of innovative energy technologies such as energy storage to achieve. The integration of energy storage assets poses a number of challenges and opportunities that must be addressed prior to full implementation. They must be integrated and operated in a safe and reliable manner while also adhering to principles incorporated in documents such as tariffs governing the California Independent System Operator (CAISO). SCE also realizes that if energy storage is implemented incorrectly, it may, in fact, negatively impact ratepayers by unnecessarily increasing costs and decreasing grid reliability. This paper reviews the benefits that energy storage can provide as well as the issues that must be addressed.