Audit Comm Charter- May 2006

®Document #: ENTY-008 /ECHELON Revision: C Date: 7 AUG 2006 Title: CHARTER FOR THE AUDIT Level 3 COMMITTEE Approvals Name / Title Signature / Date Created by: Board of Directors Signature on File Approved by: Board of Directors Signature on File ECHELON CORPORATION CHARTER FOR THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS Purpose: The purpose of the Audit Committee of Echelon Corporation (including its subsidiaries) (“Echelon” or the “Company”) shall be to: 1. Oversee the accounting and financial reporting processes of the Company and the internal and external audits of the financial statements; 2. Assist the Board of Directors (the “Board”) in the oversight and monitoring of (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the independent auditor’s qualifications, independence and performance, and (iv) the Company’s internal accounting and financial controls; 3. Outline to the Board the results of its monitoring and recommendations derived therefrom and improvements made, or to be made, in internal accounting controls; 4. Prepare the report that the rules of the Securities and Exchange Commission (the “SEC”) require to be included in the Company’s annual proxy statement; 5. Appoint independent auditors; and 6. Provide to the Board such additional information and materials as it may deem necessary to make the Board aware of significant financial ...