Communicating Meters Allow Utilities to Expand Smart Metering to Electricity, Gas, Heat and Water Services and Offer More Payment Options to Consumers

(San Jose, CA - January 31, 2006) - Echelon Corporation (NASDAQ: ELON), a global networking company providing technology and solutions for controls, smart metering, and energy and environment management, today announced two new additions to its popular family of second-generation intelligent, communicating electricity meters for use with Echelon's Networked Energy Services (NES) advanced metering system. The new meters expand the reach of the NES system to include the ability to communicate with heat, water, and gas meters over the NES communications infrastructure as well as the ability to offer sophisticated prepaid service plans to customers.

The market for smart meters is estimated at nearly 1.28 billion units worldwide – 1 billion of which are outside the North American market. The new meters include a built-in Meter-Bus (M-Bus) interface (the European standard for connecting various consumption meters), making Echelon's NES System a leading candidate for the entire European and Asian automated meter management (AMM) and advanced metering infrastructure (AMI) market. The 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.

"Many European and Asian utilities provide multiple services to their customers, for example both electricity and heat, or electricity and gas," said Jeff Johnson, Director of NES Product Management. "This means that the utility has multiple meters at the customer site, typically all near one another. With our new single and poly phase meters, we enable utilities to easily connect additional meters to the electricity meter and, through the NES advanced metering infrastructure, remotely monitor and manage these meters. The net result is lower operating cost for the utility and better service to their customers."

The inclusion of the M-Bus interface, a wired interface popular in heat, water, and gas meters, enables the NES meters to act as an "M-Bus master" for up to four attached M-Bus devices, allowing these devices to report alarms and be read over the network on schedule or on demand, and to be profiled over time.

The new meters also include an advanced set of features designed to enable utilities to offer prepaid tariff plans to their customers. Built-in prepayment features include an audible low-credit alarm, time-of-use reporting, and configurable emergency credit levels. Prepayment meters are ideal for consumers looking to manage their energy expenses. Traditionally, prepayment plans have required dedicated prepayment meters and dedicated prepayment infrastructure. With the NES system, any meter can be remotely converted into or out of acting as a prepayment meter, eliminating the need for dedicated infrastructure and meters, and the cost and consumer inconvenience associated with a service visit to change out the meter. This makes prepay features more available to consumers and lower cost and more flexible for utilities.

In addition, as with all NES meters, Echelon's new meters enable a comprehensive set of energy services, including: two-way automated meter reading; multi-tiered billing; time-of-use and real-time pricing; 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. Taken as a whole, this set of features yields significant installation, operational, and life-cycle cost savings—with a typical payback period of two to five years for most utilities.

The new meters will be available in the second quarter of 2006. For more information, please see http://www.echelon.com/metering/components.htm.

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 PyxosTM platform, extending the benefits of networking inside machines to the sensors and actuators that make them function.

Echelon has been a leader in the advanced metering infrastructure market, providing the underlying network technology for the world's largest AMM project in Italy, with over 27 million connected electricity meters and more recently, providing the NES system to up to 700,000 customers for the Swedish utility Vattenfall.

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, and the Echelon logo are registered trademarks of Echelon Corporation registered in the United States and other countries. Networked Energy Services Powered by Echelon, NES Powered by Echelon, and Pyxos are trademarks of Echelon Corporation in the US 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. Such statements may involve risks and uncertainties, including risks associated with uncertainties pertaining to the timing and level of customer orders, demand for products and services, development of markets for Echelon's NES system; risks associated with market acceptance of the NES system, the ability of the NES system and NES meters to perform as designed, potential production or shipment delays for NES meters and other components, 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 Corporation
(408) 938-5357
joshaughnessy@echelon.com
    

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