Introduction 2016 Transmission & Distribution Benchmarking Community Insights Conference Introduction August 22-25, 2016 Park City, UT

Agenda for the Introductory Discussion Introductions Purpose of the Meeting Schedule for the Week Who’s in the Community Expectations for the Week

Purpose of the Meeting The primary purpose of the meeting is to discuss the findings from this year’s benchmarking study, including the core subjects and the discussion topic Highlight performance trends Identify emerging practices Share practices with peer companies A secondary purpose is to begin preparations for next steps On-site presentations for leaders Uses of the results at home Topics of interest for next year Growing the community in 2017

Agenda

2016 Benchmarking Community Arizona Public Service Austin Energy B.C. Hydro CenterPoint Energy CPS Energy East KY Power Coop Exelon BGE PECO ComEd PEPCO Atlantic City Electric Delmarva Power FirstEnergy Ohio Edison The Illuminating Company Toledo Edison Met-Ed Penelec Penn Power West Penn Power Jersey Central Power & Light Potomac Edison Monongahela Power Hydro-Québec Kansas City Power & Light Oncor Pepco Holdings (PHI) PSE&G PSEG Long Island Southern California Edison Tucson Electric Power UES Electric Westar Energy Transmission-Only Participants Teco Energy Southern Company Alabama Power Georgia Power Gulf Power Tennessee Valley Authority

Expectations for the Week

What to Expect this Week For the core areas of the study, we will present results, and engage some discussion within the group, with a focus on covering a few areas: Results and trends in performance Best long-term practices, and what is emerging How various processes flow through the different functional organizations How benchmarking can help in improvement efforts Discussion Topic Transmission Reliability Metrics and Scorecards

A Process Model for Managing the T&D Business We’ll present much of the information in the context of the process model shown below, with a number of the major process blocks broken into “modules” for analysis and discussion. Indicates separate D, S, T components Add New Customers Respond to Emergencies Expand System Operate System Sustain System Project/Portfolio Management Develop and Approve Asset Plans Develop System Strategy

What You Should Do this Week Ask questions Share your ideas Meet the representatives from the other companies Ask other companies how they use the results Ask other companies about the on-site presentations and how they’re set up and used. Consider what themes would you like covered at your on-site. Think about particular areas of focus that apply to your company, how information can be shared, how your teams can benefit from these results

Available Outputs and Uses Questionnaire Results Statistical report Charts, graphs, tables All sections, plus a “profiles” section Performance Profiles Specific to each member company Trend charts Insights Conference Presentations Summaries of each major section Discussion Topic Results Webinar Recordings Click to listen PowerPoint Summary Files Insights Conference Presentation Summary of Findings On-Site Presentations Tailored to your request Covering both questionnaire and discussion topic results Can be presentation or discussion Latest version of the report will come out after the meeting. We have received a few data updates, so will be providing an updated statistical report later.

Attendee List Company Name Email Austin Energy Mora Asadi Mora.Asadi@austinenergy.com CenterPoint Energy Martin Ramirez Martin.Ramirez@centerpointenergy.com CPS Energy Larrissa Benavides LDBenavides@cpsenergy.com Exelon - BGE Jeannine Beran jeannine.marie.beran@bge.com Exelon - ComEd Garfield Mullings garfield.mullings@comed.com Exelon – PECO Vince Guinan Vincent.Guinan@exeloncorp.com Exelon – Pepco Holdings Belinda Reid BReid@pepcoholdings.com Exelon Sharon Lownes sharon.lownes@exeloncorp.com KCP&L Jill Normile jill.normile@kcpl.com Oncor Eileen Brannon Eileen.brannon@oncor.com Jesse Medlock jesse.medlock@oncor.com Gloria Salazar gsalazar@oncor.com PSE&G Dean Fazio Dean.fazio@pseg.com PSEG Long Island Sunita Kumar sunita.kumar2@pseg.com SCE Stephanie Pane stephanie.pane@sce.com Randy Smith randy.r.smith@sce.com Westar Jim Gurney jim.gurney@westarenergy.com

Distribution Statistics and Financials 2016 Transmission & Distribution Benchmarking Community Insights Conference Distribution Statistics and Financials August 22-25, 2016 Park City, UT

Insights Overview - Distribution Demographics Distributed Generation is having a significant impact in a few jurisdictions, creating cost and operational challenges Different service territory circumstances and very different choices in terms of how much of the system to place underground have left companies with different outcomes in terms of costs and reliability. At a time of much discussion of system automation, most companies have a high % of remotely operated switches at substation breakers, while relatively have remote operated switches outside the stations. Costs Distribution O&M spending decreased significantly for the 2nd year in a row, bringing the spending levels back to 2010 levels. Distribution Capital spending has been increasing steadily over the past 4 years. The increase is driven by replacement capital spending more than new business, which continues to be slow.

Profiles & Trends

Demographics - % Underground Distribution % UG has impacts on costs and reliability. Companies vary widely across the group. % of Customers Served % of Distribution Circuits UG. Mean 28 % Quartile 1 16 % Quartile 2: 26 % Quartile 3: 35 % Source – Page 9, Statistics, Question ST35 Source – Page 14, Statistics, Question ST45

Remote Switching Capabilities Companies have made different choices regarding remote switching investments, which affects response capabilities % Customers on Primary Circuits with Remote Switching at Substation Breaker % Customers on Primary Circuits with Remote Switching Outside the Substation Mean 85 Quartile 1 100 Quartile 2: 98 Quartile 3: 79 Mean 25 Quartile 1 39 Quartile 2: 27 Quartile 3: 4 Source – Page 25, Statistics, Question ST100 Source – Page 26, Statistics, Question ST100

Demographics – Distributed Generation Distributed Generation has had a significant impact in a few jurisdictions. Distributed Generators per 100 Distribution Circuit Miles Distributed Generators added last year per 100 Distribution Circuit Miles Mean 37 Mean 9 Source – Page 12, Statistics, Questions ST30, ST45 Source – Page 8, System Activity, Questions ST45, SA12

Plant Investment Per Customer Investment per customer for some companies is more than double that of others. Differences are caused by age, system demographics, and design choices. T&D Plant in Service per Customer Distribution Plant in Service per Customer Mean $4,594 Quartile 1 $3,593 Quartile 2: $4,297 Quartile 3: $5,680 Mean $3,136 Quartile 1 $2,751 Quartile 2: $3,122 Quartile 3: $3,355 Source – Page 37, Statistics, Questions ST5, DF70, TF65 Source – Page 38, Statistics, Questions ST5, DF70

Distribution Lines Spending Profile Continuing a trend, O&M spending is down from last year, while capital investment increased. 2015YE 2014YE   Mean Q1 Q2 Q3 Bars O&M Distribution O&M Expense per Customer $80.40 $60.98 $75.08 $97.49 28 $85.00 $63.68 $82.30 $105.20 16 Distribution O&M less Veg Mgmt per Customer [Activity-based] $51.69 $36.06 $44.49 $61.87 $68.65 $52.63 $66.31 $79.31 17 Distribution O&M per circuit miles $3,899 $1,313 $3,017 $5,337 $4,353 $3,188 $4,392 $5,776 14 Distribution O&M per MWh $3.23 $2.18 $3.24 $3.95 $3.47 $2.81 $3.28 $4.41 15 Distribution O&M Expense per Distribution Assets 2.61% 1.96% 2.38% 3.13% 2.88% 2.20% 2.85% 3.58% Distribution O&M less Veg Mgmt per Total Dist. Assets [Activity-based] 1.67% 1.30% 1.52% 1.79% 2.08% 1.58% 1.89% Capital Distribution Line Capital Additions per Asset [FERC] 5.36% 6.00% 4.97% 4.19% 4.96% 5.73% 4.90% 3.87% Distribution Line Capital Spending less Serve New, Expand per Asset [Activity Based] 4.62% 3.98% 3.47% 4.35% 4.76% 3.82% 3.52% Distribution Line New Service Spending per New Service Location $8,202 $2,848 $4,983 $10,003 11 $5,700 $2,164 $2,810 $9,871 18 Sustainment Spending Distribution Line Sustaining O&M and Capital Spending per Asset [Activity Based] 5.80% 6.57% 5.16% 4.79% 5.40% 6.56% 4.99% 4.32% Profile values and counts may differ from report values and counts due to the exclusion of companies that did not provide complete data sets.

Total Distribution Capital Spending and O&M Spending (FERC) Most companies spend more capital than O&M. With CAPEX increasing and O&M decreasing, the gap is widening. Spending per Customer Spending per Asset Mean $247.37 Quartile 1 $201.88 Quartile 2: $222.25 Quartile 3: $281.36 Mean 7.98 % Quartile 1 6.22 % Quartile 2: 7.97 % Quartile 3: 9.40 % DF page 3 – Questions DF5, DF20, ST5 DF page 5 – Questions DF5, DF20, DF70

O&M Expenses (FERC) Per Customer O&M spending at the high end is over double that of the lowest spenders O&M Expenses per Customer Mean $80.40 Quartile 1 $60.98 Quartile 2: $75.08 Quartile 3: $97.49 The community reduced average O&M expenses per customer by 6% from 2014 to 2015. DF Page 12 –Questions DF20, ST5

O&M Expenses (FERC) Per Asset There is a wide range in spending levels across the community. Percentage of Expenses per Asset Mean 2.61 % Quartile 1 1.96 % Quartile 2: 2.38 % Quartile 3: 3.13 % Average O&M expenses per asset went down 6 % from 2014 to 2015, following a similar decline the previous year. DF 14 – Questions DF20, DF70

Distribution Line O&M Spending (Activity-Based) Planned maintenance activities of Equipment Inspection & Maintenance and Vegetation Management were the largest categories of O&M, each exceeding Service Restoration this year. Source: DF60, ST5

O&M Expenses (Activity-Based) Half or more of the O&M budgets at most companies are devoted to Equipment Inspection and Maintenance, Vegetation Management and Service Restoration. Expenses per Asset Expenses per Asset, Excl. Vegetation Mean 2.62 % Quartile 1 1.96 % Quartile 2: 2.38 % Quartile 3: 3.00 % Mean 1.99 % Quartile 1 1.41 % Quartile 2: 1.87 % Quartile 3: 2.27 % DF Page 37 – Question DF60, DF70 DF Page 38 – Question DF60, DF70

Vegetation Management Expenses The relative impact of Vegetation Management expenses varies widely across the community Veg. Mgmt O&M per OH Circuit Mile Veg. Mgmt O&M as % of Total O&M Mean $1,352 Quartile 1 $450 Quartile 2: $895 Quartile 3: $1,504 Mean 23.35 % Quartile 1 15.06 % Quartile 2: 19.89 % Quartile 3: 29.24 % DF Page 69 – Question DF60, ST35 DF Page 68 – Question DF60

Capital Spending (FERC) Per Customer Most companies invested $100 to $175 on capital projects per customer, with a few even higher. Spending per Customer Capital spending per customer has been increasing steadily since 2011. The average increased 14% last year Mean $166.97 Quartile 1 $179.80 Quartile 2: $144.49 Quartile 3: $127.94 DF Page 7 – Question DF5, ST5

Capital Spending (FERC) per Asset Most companies invested between 3-7% per asset, with a few above 8%. Spending per Asset Mean 5.36 % Quartile 1 6.00 % Quartile 2: 4.97 % Quartile 3: 4.19 % Average Capital spending per asset increased 8% over last year DF Page 9 – Question DF5, DF70

Distribution Line Capital Spending (Activity-Based) Our T&D community’s capital spending to sustain and improve the distribution system significantly exceeded capital investments related to new customers and increased loads. Source: DF50, DF70

Sustain Capital Spending Sustaining capital investments have continued to increase steadily since 2011 Capital Spending Per Asset   Spending Category 2011YE Q2 2012YE 2013YE Q2 2014YE 2015YE Pages Total Capital Spending (ABC) 4.82% 4.33% 5.18% 6.02% 6.01% 20 Less Serve New 1.34% 0.81% 1.84% 1.52% 1.53% Subtotal Cap Add & Sustain 3.48% 3.52% 3.84% 4.50% 4.48% 22 Less Capacity Adds 0.97 0.51% 0.68% 0.50% Subtotal: Sustain 2.51% 3.01% 3.14% 3.82% 3.98% 23 Source: DF50, DF70

All quartiles dropped in the past year. New Business Capital New business investment rates vary substantially between companies – from 0.3% to 2.25% per asset All quartiles dropped in the past year. Mean 1.00% Quartile 1 1.20% Quartile 2: 0.93% Quartile 3: 0.60% Source – Questions DF50, D70

Sustaining versus Growth Capital Investment New Business remains a small % of the total capital investment. Sustaining Capital investment is significantly larger than all forms of growth capital investment. Mean $195.60 Quartile 1 $222.66 Quartile 2: $174.92 Quartile 3: $137.47 Mean 6.17 % Quartile 1 7.11 % Quartile 2: 6.01 % Quartile 3: 4.63 % Source – Page 21, Distribution Financial, Questions DF50, DF70 Source – Page 18, Distribution Financial, Questions DF50, ST5

Staffing And Outsourcing – Distribution 2016 Transmission & Distribution Benchmarking Community Insights Conference Staffing And Outsourcing – Distribution August 22-25, 2016 Park City, UT

Wages rates & Headcounts Average wage rates decreased last year. FTE counts are steady Staffing SO10, Pg 5 Staffing SO15, Pg 9

Dist Line Staffing per $100M Assets Internally, utilities average 27 FTEs per $100M Assets. When outsourcing is included 6 more people are utilized. The relative position of most companies is unchanged. Internal FTEs only Outsourcing FTEs estimated Mean* 27.26 Quartile 1 21.97 Quartile 2: 26.21 Quartile 3: 31.38 Mean 34.51 Quartile 1 25.79 Quartile 2: 34.28 Quartile 3: 39.78 Staffing pg 9, SO15 Means adjusted Includes an estimate for outsource FTEs except for vegetation mgmt. Companies where we couldn’t reasonably estimate outsourcing FTEs were excluded.

Distribution Staffing Per Asset Field C&M Engineering & Design Mean 4.56 Quartile 1 3.79 Quartile 2: 4.49 Quartile 3: 5.94 Mean 18.77 Quartile 1 10.98 Quartile 2: 17.60 Quartile 3: 21.82 Includes an estimate for outsource FTEs except for trans line construction and vegetation mgmt.

Distribution Staffing Per Asset Trouble / Operations Misc Mean 6.58 Quartile 1 3.75 Quartile 2: 5.84 Quartile 3: 8.10 Mean 4.60 Quartile 1 3.04 Quartile 2: 4.13 Quartile 3: 6.17 Includes an estimate for outsource FTEs except for trans line construction and vegetation mgmt.

Distribution FTEs per Distribution Circuit Miles Internal FTEs only Outsourcing FTEs estimated Mean 4.11 Quartile 1: 1.31 Quartile 2: 2.97 Quartile 3: 3.90 Mean 8.87 Quartile 1 4.27 Quartile 2: 5.07 Quartile 3: 7.13 Includes an estimate for outsource FTEs except for vegetation mgmt. Companies where we couldn’t reasonably estimate outsourcing FTEs were excluded.

Distribution Staffing Findings Regression analysis was performed to determine the correlation between various system demographics and staffing. Among the key predictors were distribution circuit miles, MWh sold, and customers. Includes an estimate for outsource FTEs

Outsourcing Levels – Field C&M Legends 21 23 27 28 30 31 38 39 47 Field Construction (Total) 60 % 37 % 20 % 68 % 7 % 23 % 35.88 Overhead line construction and relocations 30 % 65 % 25 % 40.6 URD underground line construction and relocations 75 % 0 % 45 % 15 % 36.67 New service installations 1 % 50 % 34 % 95 % 10 % 31.67 Concrete manhole or conduit system construction 100 % 90 % 40 % 90 Field Maintenance (Total) 5 % 26 % 57 % 37.67 Pole inspection 80 Pole treatment or reinforcement 71.57 Pole replacements 41.6 Street Light Installation 43.33 Street light maintenance 80 % 36.83 Soft surface or yard restoration 85 % 87.14 Hard surface or paving restoration 89.29 Staffing & Outsourcing Pg 60; Source: SO115 39

Outsourcing Levels – Engineering & Design Legends 21 23 27 28 30 31 47 Protection Metering and Controls 0 % 5 % 0.83 Engineering Standards 25 % 4.21 Asset & System Health & Reliability 2 % 0.26 OH or UG service design 7 % 6.3 OH or UG line design 20 % 45 % 50 % 22.98 Smart Grid 8 Distribution Planning 1 Large Capital Project Engineering 53 % 17.17 Engineering & Design Breakdown Unavailable Staffing & Outsourcing Pg 62; Source: SO115 40

Outsourcing Levels – Other Legends 21 23 25 27 28 30 31 38 47 Trouble or Operations 0 % 21 % 8 % 30 % 8.4 Operations Center(s) 3 % 0.36 Work Management ROW and Vegetation Management 100 % 50 % 98 % 85 % 92.51 Capital Project Management 5 % 26 % 10 % 5.86 Distribution Shops 15 % 16.43 Meter Shop 6 % 0.8 Meter Field Operations 25 % 4.17 Safety 1 % 0.17 Training 6 Mapping 93 % 19.65 Damage Prevention or Facility Locating 90 % 38 % 85.5 Joint use organization Information Technology 40 % 8 Other 33.33 Staffing & Outsourcing Pg 63; Source: SO115 41

LABOR UTILIZATION RATES BY JOB CLASSIFICATION Line Worker Troubleshooter Mean 73% Quartile 1 81% Quartile 2: 79% Quartile 3: 72% Mean 73% Quartile 1 82% Quartile 2: 81% Quartile 3: 79% Staffing & Outsourcing Pg 49, 50; Source: SO90

AVERAGE Hours OF Overtime* PER FIELD C & M EMPLOYEE Distribution Line Worker Distribution Troubleshooter Mean 391 Quartile 1 237 Quartile 2: 322 Quartile 3: 544 Mean 490 Quartile 1 323 Quartile 2: 561 Quartile 3: 697 Mean 458 Quartile 1 287 Quartile 2: 332 Quartile 3: 622 Staffing & Outsourcing Pg 30; Source: SO65 Staffing & Outsourcing Pg 31; Source: SO65 *(Excluding Major Events)

Thank you for your Input and Participation! Your Presenters Ken Buckstaff Ken.Buckstaff@1QConsulting.com 310-922-0783 Debi Cook Debi.Cook@1QConsulting.com 760-272-7277 Gene Dimitrov Gene.Dimitrov@1QConsulting.com 301-535-0590 Rob Earle Rob.Earle@1QConsulting.com 315-944-7610 Dave Canon Dave Carter Dave Weiler Dave.Canon@1QConsulting.com Dave.Carter@1QConsulting.com Dave.Weiler@1QConsulting.com 817-980-7909 414-881-8641 607-761-6778 About 1QC First Quartile Consulting is a utility-focused consultancy providing a full range of consulting services including continuous process improvement, change management, benchmarking and more. You can count on a proven process that assesses and optimizes your resources, processes, leadership management and technology to align your business needs with your customer’s needs. Visit us at www.1stquartileconsulting.com