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Echelon Approved As Next-Generation Meter Supplier to Consortium of Swedish Utilities

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(San Jose, CA - June 29, 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 it has been selected as an approved supplier of "next-generation" electricity meters and associated infrastructure for Svenska Mätsamarbetet (SAMS), a consortium of 33 medium and small sized Swedish utilities that collectively represent approximately 20% of the Swedish residential metering market. The award, made under Swedish public procurement rules, allows each SAMS member to purchase the meters and system components it requires to fulfill its obligations from any of the approved suppliers without the need for individual public tenders, saving the member utilities time and expense. Sweden is in the process of replacing all of its 5 million electricity meters in order to comply with regulations requiring monthly customer billing by July 1, 2009.

"We think the SAMS tender and our approval as a supplier of 'next-generation' metering systems marks another important step forward in the evolution of the electric metering market away from the basic systems of the past to the next generation systems of the future," said Ken Oshman, Echelon's CEO and chairman. "In fact, SAMS explicitly segmented their tender award into 'base' meters, with the limited features typical of legacy metering systems and 'next-generation' meters, with a rich set of features that can provide utilities a host of additional operational and customer service improvements. SAMS is the first organization we have seen to recognize the market shift in this way and, interestingly, the next-generation features they have specified exactly match Echelon's Networked Energy Services (NES) systems which both Vattenfall and E.ON Sverige have recently selected. While the SAMS award is a framework agreement and not an award for a fixed quantity of meters, we believe that the direction set by Vattenfall and E.ON Sverige, two of the largest utilities in Sweden with deep experience in metering systems, and the ability for SAMS members to purchase the same market-proven solution creates a very good opportunity for Echelon to deliver the NES system to a significant portion of the SAMS market."

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. By choosing the NES System, SAMS members can expect to have better control over energy usage and save substantial cost in monthly meter reading and other areas of their operations while providing improved customer service. More information about the NES system can be found at http://www.echelon.com/metering.

PlantPROCORE About Svenska Mätsamarbetet
SAMS (Svenska Mätsamarbetet/The Swedish Meter Cooperation) is a cooperation between 33 independent energy companies whose main purpose is to purchase new metering hardware before legislation demands monthly readings of all electricity meters. The consortia consists of Ale Elförening, Bergs Tingslags Elektriska AB, Bodens Energi Nät AB, Borås Energi Nät AB, Energiverken i Halmstad Elnät AB, Eskilstuna Energi & Miljö AB, Göteborg Energi AB, Götene Elförening, Habo Kraft AB, Härjeåns Nät AB, Härnösand Elnät AB, Härryda Energi AB, Jämtkraft Elnät AB, Jönköping Energi Nät AB, Kungälv Energi AB, Lerum Energi AB, Ljusdal Elnät AB, Luleå Energi Elnät AB, Mariestad Töreboda Energi AB, Mälarenergi AB, Mölndal Energi AB, SEVAB Nät AB, Sundsvall Energi Elnät AB, Söderhamn Elnät AB, Tekniska Verken i Linköping AB, Telge Energi Nät AB, Tidaholms Energi AB, Umeå Energi Elnät AB, Vaggeryds Elverk AB, Varberg Energi AB, Varbergsortens Elkraft, Västerviks Kraft Elnät AB, and Ystad Energi AB.

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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