(San Jose, CA & Sydney, Australia - June 21, 2006) - Echelon Corporation (NASDAQ: ELON), a global networking company providing technology and solutions for controls, smart metering, and energy and environment management, today announced that Echelon's Networked Energy Services (NES) System has been selected for an advanced metering project in the Australian market by Integral Energy, one of the largest utilities in New South Wales. The project, which will initially serve 3,000 residential customers in Sydney with a possible option to extend to 7,000, marks an important step in the Australian marketplace where various governmental agencies at the state and national level are considering regulations mandating some level of advanced electricity metering infrastructure. The project is expected to result in approximately US $300,000 to US $800,000 of revenue to Echelon.

Demand for electricity in Integral Energy's area is expected to grow by 45 percent over the next decade, with Integral Energy's customer base anticipated to increase by 29 percent in the same period. In response to these trends, Integral Energy is taking a leading role within Australia to find ways to apply advanced technologies to its operations. The NES System provides Integral Energy with an advanced metering solution that can allow them to offer their customers better service and the ability to reduce energy consumption - without a negative impact on the quality of services or consumer habits.

Karen Waldman, Integral Energy's General Manager Regulatory and Corporate Affairs, said, "We are taking the initiative to get ahead of increasing energy demands in the Australian market by investing in advanced metering solutions like the NES System. This is the first large scale project in Australia of this technology, which transmits data about customers' energy usage and power quality two ways along existing power lines. This technology provides significant benefits at a much lower cost than traditional means of remote meter reading, lowering the potential costs of a full roll out."

Waldman added, "The meters can assist customers to better manage their energy usage by providing more information on their energy consumption and providing the technology to support more innovative prices. The meters also provide additional functionality designed to allow Integral Energy to improve its service to customers, such as remote reconnection and disconnection, increased information about the quality of the power supplied and real-time notification of outages."

"Integral Energy's project is very significant for us in many ways," said Ken Oshman, Echelon's CEO and chairman. "Not only is it our first NES win outside of Europe, it was a win in a highly competitive tender, in a marketplace that is actively moving towards more advanced metering systems. Integral Energy is making a bold statement about the NES system and the Australian market's need to adopt advanced metering systems that are truly flexible, valuable and long-lived. We believe that the NES business and the move towards ‘next generation' smart metering has reached a tipping point in the last six months with Vattenfall and E.ON in Sweden, Nuon in The Netherlands, and now Integral Energy in Australia all selecting the NES system."

Echelon's NES system provides an open, bidirectional, and extensible infrastructure that enables a comprehensive range of utility applications that can bring benefits to every aspect of a utility's operation, from metering, to customer services, to distribution operations, to value-added services. The system enables a comprehensive set of energy services, including: two-way automated meter reading; multi-tiered billing; time-of-use and real-time pricing; prepaid metering; remote electrical disconnect and reconnect; distribution system asset optimization; electricity outage detection and restoration management; blackout and brownout elimination; comprehensive revenue protection; real-time direct load control; power quality measurement; and extensive tamper detection features.

About Integral Energy
Integral Energy is the second largest state-owned energy corporation (SOC) in New South Wales, Australia, incorporated under the Energy Services Corporations Act 1995. Integral Energy currently holds licenses to retail electricity in the contestable markets covered by the National Electricity Market. Integral Energy also distributes and retails electricity and value added services to 822,000 customers, or 2.1 million people, in households and businesses across a network franchise spanning 24,500 square kilometers in Greater Western Sydney, the Blue Mountains, the Illawarra, and the Southern Highlands. These regional communities form the third largest economy in Australia.

Further information regarding Integral Energy can be found at http://www.integral.com.au.

About Echelon Corporation
Echelon Corporation (NASDAQ: ELON) is a pioneer and world leader in control networking — networks that connect machines and other electronic devices — for the purpose of sensing, monitoring and controlling the world around us. Echelon's LonWorks® platform for control networking was released in 1990 and has become a worldwide standard in the building, industrial, transportation, and home automation markets. Launched in 2003, Echelon's Networked Energy Services system is an open, extensible, advanced metering infrastructure that can bring benefits to every aspect of a utility's operation, from metering and customer services to distribution operations and value-added business. In 2005 Echelon released the world's first embedded control network infrastructure, the Pyxos™ platform. The Pyxos platform extends the benefits of networking inside machines to the sensors and actuators that make them function and expands the reach and power of LonWorks control networks.

Echelon has been a leader in the advanced metering infrastructure market, providing the underlying network technology for the world's largest advanced meter management (AMM) project in Italy, with over 27 million connected electricity meters and more recently, winning tenders to provide the NES system to 700 thousand to 1.1 million customers for utilities in Sweden, The Netherlands and Australia.

Echelon is based in San Jose, California, with international offices in China, France, Germany, Italy, Hong Kong, Japan, Korea, The Netherlands, and the United Kingdom. Further information regarding Echelon can be found at http://www.echelon.com.

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Echelon, LonWorks, NES Powered by Echelon, and the Echelon logo are registered trademarks of Echelon Corporation registered in the United States and other countries. Networked Energy Services Powered by Echelon and Pyxos are trademarks of Echelon Corporation in the U.S. and other countries. Other product or service names mentioned herein are the trademarks of their respective owners.

This press release may contain statements relating to future plans, events or performance, including statements regarding the award of the tender for the Integral Energy trial, the size and timing of installations and acceptance of the system, and the amount and timing of Echelon's revenue under the trial. Such statements may involve risks and uncertainties, including risks associated with the ability of the NES system and NES meters to perform as designed, potential production or shipment delays for NES meters and other components; the risk that the application of U.S. generally accepted accounting principles could significantly affect the method of calculating, and the timing of, NES revenues that Echelon expects to recognize under the trial; risks that the deployment and system integration activities with Echelon and other participants in the trial are not successful, do not meet their target dates, do not expand or gain momentum, cause Echelon to be liable for penalties or cause the utility to terminate the trial; the risk that the trial is challenged by third parties and other risks identified in Echelon's SEC filings. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Echelon undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Contact Information

Press Contact:

Julia O'Shaughnessy
Echelon – EMEA Contact
(408) 938-5357
joshaughnessy@echelon.com
    

Mike Barash
Atomic Public Relations
(415) 402-0230
mike@atomicpr.com
    

Kate McCue
Integral Energy
+612 9835 6141 kate.mccue@integral.com.au