PPL Electric Utilities Act 129 Phase 3 Non-Residential Programs April 20, 2016

2 Background All PA Electric Distribution Companies must provide energy efficiency programs to customers (per Act 129 of 2008) Energy efficiency programs help customers manage their electric consumption and reduce their electricity costs Programs are available to default supply and shopping customers on a voluntary basis Program costs are recovered from customers –Budget is ~$62 million per year –“Pass through” (rider); PPL EU makes no profit –Approximately $24 per year for a residential customer –Reconciliation of actual costs incurred to revenue collected for each customer class (annually for Phase 3)

3 Phases of Energy Efficiency Programs Phase 1: November May 2013 Phase 2: June May 2016 Phase 3: June May 2021 –Energy Efficiency Plan filed on November 30, 2015 –PaPUC approval is expected by March 30, 2016 –Programs launch June 1, 2016

4 Overall Energy Reduction Target 1,443,035 MWh/yr Equivalent to a 3.8% reduction in overall consumption –Phase 1 (~3.5 years) was 1,146,431 MWh/yr; 3% reduction –Phase 2 (3 years) was 821,072 MWh/yr; 2.1% reduction Compliance targets for Phase 2 and Phase 3 were set by the PaPUC Compliance targets for Phase 1 were set in the legislation

5 Other Savings Targets Low-Income –5.5% of the total energy savings target –79,367 MWh/yr –Entirely from income-qualified programs Government, non-profit, education (GNE) –3.5% of the total energy savings target –50,507 MWh/yr Peak Load Reduction –92 MW

6 Other Requirements Portfolio of energy efficiency programs must be cost-effective Demand reduction must be cost-effective Cost-effectiveness is determined by the Total Resource Cost Test Equitable distribution of programs across customer sectors EDCs must hire Conservation Service Providers (CSPs) to deliver programs –EDCs must competitively bid all CSP contracts –Cannot reuse Phase 2 CSPs without competitive bids –PaPUC must approve all CSP contracts

7 Process for Designing Programs Market potential study and other research Results from previous phases A lot of input from stakeholders June - October 2015: OCA, OSBA, SEF, CAUSE/PULP, PPLICA, KEEA, CEO, and others Establish savings and cost budgets for each customer sector (residential, low-income, small C&I, large C&I, GNE) Many iterations File EE&C Plan November 30, 2015 Comments, testimony, reply testimony, reply comments, and a hearing before an Administrative Law Judge PaPUC approval on 3/17/16

8 Non-Residential Programs Efficient Equipment Program – Lighting, including a new mid-stream delivery model – Refrigeration, HVAC, motors, variable frequency drives – Incentives based on $/annual kWh saved Custom Program – Complex energy efficiency measures requiring measurement and verification – Compressed air, motors/VSDs, industrial process improvements, building management systems, combined heat and power (CHP), other technologies – Must be cost effective (pass TRC) – Incentives based on $/annual kWh saved

9 Non-Residential (cont’d) Program Highlights Mid-Stream lighting rebates for distributors –Program rebates given at Point-of-Sale –Encourages trade allies to purchase more-efficient lighting products –Lower administrative costs –Easier program participation Direct Discount rebates for qualified trade allies Rebates for Behavioral measures (targeting G/N/E sector)

10 Demand Response Program Non-residential load curtailment type program 92 MW reduction. Average of the MW reductions obtained for each event called over the last four years of the five year phase Event must be called when the peak hour of PJM’s day-ahead forecast for the PJM RTO is greater than 96% of the PJM RTO summer peak demand forecast If the day-ahead forecast does not reach the 96% trigger in a program year, that EDC will have no compliance requirement for that year Each event is four hours, maximum of 6 events per program year Must obtain at least 85% of the target in every event Events are June - September only Customers enrolled in PJM emergency load control program are eligible to participate in Act 129 DR

11 John D. Kucher CONTACT INFORMATION