Achieving Top Quartile Performance Customer Innovations: Staying Ahead of the Curve to Anticipate Customer Needs Achieving Top Quartile Performance Prepared for: Presented by: Chris Oberle Senior Vice President, Energy Practice Chris.Oberle@marketstrategies.com Highlights and Insights from: Utility Trusted Brand & Customer Engagement Study© March 31, 2017

The Call for Innovation

Natural Gas Utility Customer Engagement is stagnant under business as usual approach Scoring is on 1000-point scale and based upon trailing 4-quarter averages

Maslow defined a customer engagement model - Product adoption is possible after building trusted relationships Actualized Relationship Esteem and Purchases Love and Belonging Safety and Security Basic Needs Engaged Customer Relationships Customers want to do business with you Product Demand and Experience Brand Trust Customer Experience Improvement Safety and Reliability Customers don’t mind doing business with you Billing, Payment and Service

Product Offerings is the best way to increase customer engagement Scoring is on 1000-point scale and based upon trailing 4 quarter averages

Brand Trust Levels Relate to Higher Product Adoption All non-billing enhanced offerings

Laying the Innovation Groundwork

Utility “Digital Dinosaur” Headwinds Brand trust is low for utilities Utilities are NOT viewed by customers as “innovative” but ARE “reliable” and “safe” Customers have very low “expectations” for utility innovation Being perceived as “innovation leader” strengthens customer relationships by 100 points Most utility customers do NOT want digital service interactions, with the exception of Email service and Mobile Access during outages Demand for digital access, DER and consumption management offerings is high, BUT Customers want consumption management offerings from their utility Most customers don’t see their utility as a trusted advisor, nor value their endorsements Most customers don’t see their utility as a “great product provider” Customers don’t think their utility can keep their personal information safe Customers don’t think their utility can keep its grid secure from attacks Few customers prefer utility digital communications Back-office automation is effective at achieving higher scores, but only if it lowers “Customer Effort” - Customer Effort ratings dictate 95% of Satisfaction scores “Industry innovation is bringing new opportunities for our companies to improve services and offer greater value to our customers while preserving a close relationship, which will be key to continued success,” Bob Kump, CEO, Avangrid Networks, on being designated MSI Cogent 2016 Utility Customer Champion

Why the headwinds? Because Technology “Access” Features Keep Moving the Bar And utilities have less time to educate customers

Encouraging use of old technology Innovation desire and performance among customers - Utilities are not viewed as innovation trailblazers Ideal Utility Brand Traits Innovative 20% Customer Focus 52% Operations Quality 75% Global Citizen 24% Financial Benefits 62% Utility Innovation Performance Product information is easily accessible 71% Leverages technology to improve services 69% Encourages use of technology 68% Ability to keep personal information safe 39% Utility is a great product provider 37% Utility is industry leader on innovation 20% Is a trusted advisor on energy topics 12% Keeps its system safe from terrorist or cyber attacks 8% Encouraging use of old technology

Natural Gas utilities are almost ¾ of the way to exceeding customers expectations on innovation

Innovation should make customers lives easier - Customer Effort ratings dictate 95% of Satisfaction scoring Customer Effort Scoring Model Natural Gas Utilities Customer Effort Index Score TECO Peoples Gas 833 Southwest Gas 819 PSNC Energy 812 CenterPoint Energy - South 809 SEMCO Energy Gas Co 805 National Fuel Gas 804 Columbia Gas - South 802 Atmos Energy - Midwest 801 SoCalGas 800 Virginia Natural Gas Cascade Natural Gas 799 Alagasco Texas Gas Service 798 New Jersey Natural Gas 797 Columbia Gas of Ohio 792 Oklahoma Natural Gas 790 Piedmont Natural Gas Intermountain Gas Company 789 Questar Gas Natural Gas Utilities Customer Effort Index Score NW Natural 787 Black Hills Energy 781 Columbia Gas - East 779 CenterPoint Energy - Midwest 777 Peoples Natural Gas 773 Kansas Gas Service 771 Nicor Gas 760 UGI Utilities New Mexico Gas Company 758 Washington Gas Laclede Gas 756 Citizens Energy 755 South Jersey Gas Company 753 Philadelphia Gas Works 749 Dominion East Ohio 747 Elizabethtown Gas 742 Missouri Gas Energy Peoples Gas 720

Driving Product Innovation

Position Features and Benefits of Offerings for Success Natural Gas Utilities

Utilize Customer Shopping Behaviors for messaging Billing and Payment Options Home Energy Contractor/Service Support Online/Mobile Account Services Consumption Management Programs 3rd party endorsements/recommendations are important in purchase decisions 5% 7% 8% Owning the latest product design or technology is important 10% 9% I am usually one of the first to adopt a new product 6% 11% Prefer to use vendors who give back to the community 12% 15% 14% Products offered by well-known brands are most desirable I consider the environmental impact of my purchases 16% 19% 20% It is important to consider the convenience of a product before purchasing 18% Prefer to shop online or mobile versus visiting a store 21% 25% I seek products that increase my comfort at home 28% 26% High quality is more important than low price 29% 31% Prefer to use vendors that have great customer service 30% 27% Getting a good deal on a product I purchase is important 52% 35% 49% 41%

Customer Segments rate utility offerings benefits differently Provides programs/offerings that improve customer service Programs/offerings make it easier to do business with them Programs/offerings can/did help me lower m utility costs Programs/offerings that help the environment Programs/offerings make me a more conscious energy consumer Programs/offerings that fit my needs Consumption Managers 7.80 7.91 7.78 7.73 7.86 7.93 Digital Types 7.64 7.45 7.50 7.55 7.74 Young Urban 7.58 7.67 7.42 7.49 7.51 7.63 Environmentally Focused 7.41 7.27 7.34 7.40 Hispanics 7.44 7.22 7.28 7.30 Black 7.37 7.47 7.23 7.24 7.31 Urbanites 7.36 7.16 7.26 7.43 Traditionalists 7.10 7.09 7.18 Newcomers 7.12 6.87 6.92 6.95 7.19 Low Income 6.89 6.93 6.98 7.21 Established Suburbs 7.25 6.86 6.91 Out of Touch 6.47 6.60 6.28 6.34 6.46 6.52

Target Innovative Products to Customer Segments Key Customer Persona Segment Shopping Behaviors

Target business customer segments for innovative offerings as well Use Interested Bill payment assistance Yet again, Management Controls businesses have statistically-higher adoption rates of consumption management programs than all other unmanaged accounts Notably, 100% of these businesses say they have programmable thermostats, making them prime candidates for TOU or DR rate plans (see also interest in peak reduction incentives this page and rate plans on the next page) This segment is a prime target for innovation and technology adoption EE rebates for equipment Onsite energy audit Online energy audit Solar panel incentive Online tools to manage usage Communication analyzing usage Network to control equipment Smart meter Peak reduction incentive Programmable thermostat Battery storage Solar hot water incentive Equipment recycling incentive Management Controls Customer Segment Usage and Interest – Consumption Management

Product Demand Mapping helps manage Customer Engagement - Targeting Awareness to Demand and Provider Preference matters most Product: Home Area Network Disposition Customer Engagement Immediate Demand Loyalty (Likely to Leave) Use from utility 6% 796 64% Use from 3rd party 1% 783 65% Interested/prefer utility/aware 4% 797 21% 51% Interested/prefer 3rd party/aware 0% 765 14% 62% Interested/prefer utility/unaware 34% 728 53% Interested/prefer 3rd party/unaware 2% 687 61% Not interested/aware 780 44% Not interested/unaware 49% 708 47% Build Product Management Plans for Offerings and Options

Innovation in Action

Southern Company is investing millions on innovation http://www.southerncompany.com/amazing

Southern Company SO Employee Innovation Competition

VA Natural Online Energy Audit impacts scores by +90 points when customers are Interested, Aware and Prefer utility as provider of service

Vectren has an online and “mobile first” approach

NV Energy launched a robust mobile app Customer Engagement Score NV Energy launched a robust mobile app

SDG&E Engages customers with digital experiences Bill Ready Email or Text Alert ECR Have/Use 745 Interested 743 Not Interested 687

SDG&E small/midsize energy solutions program has high demand SDG&E Total Demand Likely % Energy efficiency consulting 50% Onsite energy audit 54% Efficiency rebates 52% Immediate demand – 3 above 20%

PSE&G is perceived as the industry’s most innovative utility (32%) - Service Plan Protection customers have a stronger PSE&G relationship PSE&G Demand ECR Use offering 773 Interested in offering 734 Not interested 726

Brand of the Year – ComEd - Targeting and Empowering customer segments ComEd is a leader in getting customers involved in business decisions ComEd Customer Segments 2015 2016 Difference 18% Black 702 786 84 16% Hispanics 668 732 64 22% Low Income 653 770 117 36% Traditionalists 699 734 35 Digital Types 739 833 94 Environmentally Focused 697 799 102 24% Consumption Managers 716 807 91 Newcomers 654 714 60 15% Young Urban 664 790 126 49% Urbanites 692 761 69 Established Suburbs 657 710 53 4% Out of Touch 649 -8 Overall 673 737 Ranks #2 in Electric Midwest Segment on: Takes customer concerns into account when making business decisions

Questions ?

Utility Trusted Brand & Customer Engagement study approach Market 130 Residential electric, natural gas and combination utility customers Data collection Web-based survey utilizing 7 panels including Spanish-speaking Residential: Almost 60,000 responses collected in 2016 Business: Almost 10,000 responses collected in 2016 Sampling Demographically representative quotas based upon age, income and race at individual utility level (according to census data) Survey length 19 minutes average (approximately 150 questions) Fielding waves Q1 Fielding: January‒February Residential Q2 Fielding: April‒May Residential / Business Q3 Fielding: July‒August Residential Q4 Fielding: October‒November Residential / Business Readouts Reporting Period 1: June (Most Trusted Brands Designations) - Readout: Brand positioning and performance Reporting Period 2: December (Customer Champions Designations) - Readout: Customer engagement benchmarking and performance Benchmark segments 12 standard ranking segments: Four regions (East, Midwest, South, West) by three utility types (electric only, natural gas only and combination) and custom peer setting External communication Year-end Press release published December 7, 2016 / December 14, 2016 External media claim included in subscription fee Most Trusted Brand, Environmental Champions and Customer Champion designations, if earned 31

TECO Peoples Gas has the highest Engaged Customer Relationship score across all gas utilities National: Natural Gas: YE 2016 Engaged Customer Relationship Scores Natural gas national rank Utility Utility region Engaged Customer Relationship score Brand Trust Operational Satisfaction Product Experience YE 2016 Rank Score Tier 1 TECO Peoples Gas South 789 828 776 2 Southwest Gas West 751 823 764 3 CenterPoint Energy – South 5 740 4 808 749 Virginia Natural Gas 744 9 800 PSNC Energy 15 722 809 6 747 Columbia Gas – South 8 731 801 7 742 Piedmont Natural Gas 741 802 14 National Fuel Gas East 10 799 737 Cascade Natural Gas 735 728 SoCalGas 18 717 12 798 750 New Jersey Natural Gas 794 Alagasco 725 16 793 738 13 Questar Gas 733 Columbia Gas of Ohio Midwest 17 718 736 NW Natural 11 726 19 790 Top-five ranking Top tier Second tier Third tier Bottom tier Base: Natural Gas Customers Dark border indicates Engaged Customer Relationship score tier break.

Continued National: Natural Gas: YE 2016 Engaged Customer Relationship Scores (continued) Natural gas national rank Utility Utility region Engaged Customer Relationship score Brand Trust Operational Satisfaction Product Experience YE 2016 Rank Score Tier 16 Atmos Energy – Midwest Midwest 12 725 5 803 20 720 17 Texas Gas Service South 721 789 15 728 18 Oklahoma Natural Gas 19 714 791 727 SEMCO Energy Gas Company 22 709 13 796 723 Columbia Gas – East East 712 23 780 722 21 Intermountain Gas Company West 711 29 697 South Jersey Gas Company 14 32 759 719 Atmos Energy – South 26 699 783 706 CenterPoint Energy – Midwest 28 691 786 25 Washington Gas 774 24 710 Black Hills Energy 777 27 Peoples Natural Gas 700 766 Nicor Gas 693 Citizens Energy 701 35 749 713 30 UGI Utilities 688 769 33 Top tier Second tier Third tier Bottom tier Base: Natural Gas Customers Dark border indicates Engaged Customer Relationship score tier break.

Continued National: Natural Gas: YE 2016 Engaged Customer Relationship Scores (continued) Natural gas national rank Utility Utility region Engaged Customer Relationship score Brand Trust Operational Satisfaction Product Experience YE 2016 Rank Score Tier 31 New Mexico Gas Company West 30 688 26 772 32 690 Kansas Gas Service Midwest 33 680 28 768 691 Laclede Gas 686 762 34 Philadelphia Gas Works East 35 677 36 743 696 Missouri Gas Energy 672 752 Dominion East Ohio 679 37 Elizabethtown Gas 38 665 738 675 Peoples Gas 670 725 687 Top tier Second tier Third tier Bottom tier Base: Natural Gas Customers Dark border indicates Engaged Customer Relationship score tier break.

Vectren and MidAmerican Energy tie for first across all combination utilities National: COMBINATION: YE 2016 Engaged Customer Relationship Scores Combination national rank Utility Utility region Engaged Customer Relationship score Brand Trust Operational Satisfaction Product Experience YE 2016 Rank Score Tier 1 Vectren Midwest 3 720 808 759 MidAmerican Energy 735 2 801 752 NYSEG East 732 794 745 4 NIPSCO 717 786 5 740 DTE Energy 6 712 10 771 741 Louisville Gas & Electric South 701 783 8 731 7 PSE&G 714 15 763 733 RG&E 708 12 724 9 We Energies 11 700 779 Ameren Illinois 703 17 715 SCE&G 13 698 773 727 Xcel Energy – Midwest 14 697 776 16 719 Consumers Energy 696 768 726 SDG&E West 688 Delmarva Power 18 757 722 Top-five ranking Top tier Second tier Third tier Bottom tier Base: Electric and/or Natural Gas Customers Dark border indicates Engaged Customer Relationship score tier break.

Continued National: COMBINATION: YE 2016 Engaged Customer Relationship Scores (continued) Combination national rank Utility Utility region Engaged Customer Relationship score Brand Trust Operational Satisfaction Product Experience YE 2016 Rank Score Tier 14 BGE East 19 683 764 9 729 17 Duke Energy Midwest Midwest 16 691 756 721 Alliant Energy 702 758 20 706 Wisconsin Public Service 21 682 12 769 26 690 National Grid 754 700 CPS Energy South 18 685 25 743 709 22 Xcel Energy – West West 679 748 698 23 Puget Sound Energy 677 747 695 24 Avista 670 746 692 PG&E 665 734 712 PECO Energy 27 730 693 NorthWestern Energy 663 744 28 672 ConEdison 662 29 718 Eversource 638 723 667 30 MLGW 613 701 644 Top tier Second tier Third tier Bottom tier Base: Electric and/or Natural Gas Customers Dark border indicates Engaged Customer Relationship score tier break.

Kentucky Utilities rises from 11th last year to have the highest Engaged Customer Relationship (ECR) score among electric utilities National: electric: YE 2016 Engaged Customer Relationship Scores Electric national rank Utility Utility region Engaged Customer Relationship score Brand Trust Operational Satisfaction Product Experience YE 2016 Rank Score Tier 1 Kentucky Utilities South 751 2 814 776 Portland General Electric West 748 816 768 3 Georgia Power 733 794 761 4 Florida Power & Light 729 5 Nashville Electric Service 721 8 783 6 741 Pacific Power 10 712 788 11 734 7 Salt River Project 717 9 779 737 Entergy 718 785 17 724 OG&E 15 707 771 749 SWEPCO SMUD 713 16 770 738 Central Maine Power East 21 13 Gulf Power 704 773 14 Idaho Power 710 12 774 18 723 PPL Electric Utilities 711 775 22 Base: Electric Customers Dark border indicates Engaged Customer Relationship score tier break. Note: Orlando Utilities Commission added in Q3 2016 Top-five ranking Top tier Second tier Third tier Bottom tier

Continued National: electric: YE 2016 Engaged Customer Relationship Scores (continued) Electric national rank Utility Utility region Engaged Customer Relationship score Brand Trust Operational Satisfaction Product Experience YE 2016 Rank Score Tier 16 ComEd Midwest 20 694 14 772 7 740 17 OUC South 12 711 19 762 15 726 Seattle City Light West 8 713 767 719 Indianapolis Power & Light 18 701 22 759 10 736 TECO Tampa Electric 699 761 721 21 Southern California Edison 688 765 725 Duke Energy Carolinas 27 680 25 757 728 23 Indiana Michigan Power 715 24 PSO 684 708 Penn Power East 681 26 JEA 29 754 709 APS 33 675 28 705 Alabama Power 31 Ohio Edison 35 674 698 Dominion Virginia Power 746 34 OPPD 32 753 Base: Electric Customers Dark border indicates Engaged Customer Relationship score tier break. Note: Orlando Utilities Commission added in Q3 2016 Top tier Second tier Third tier Bottom tier

Continued National: electric: YE 2016 Engaged Customer Relationship Scores (continued) Electric national rank Utility Utility region Engaged Customer Relationship score Brand Trust Operational Satisfaction Product Experience YE 2016 Rank Score Tier 32 Los Angeles Department of Water & Power West 38 673 39 742 24 712 33 Rocky Mountain Power 30 678 29 754 43 689 34 Tucson Electric Power 35 746 37 696 AEP Ohio Midwest 674 698 Dayton Power & Light 747 40 692 West Penn Power East 669 753 42 690 KCP&L 41 739 700 Mississippi Power South 51 645 25 757 694 Duke Energy Florida 44 659 744 Duquesne Light 27 680 46 730 688 Xcel Energy – South 679 735 Penelec 671 45 734 Appalachian Power 657 50 724 703 Duke Energy Progress 54 638 736 The Illuminating Company 660 52 Westar Energy 651 49 682 Base: Electric Customers Dark border indicates Engaged Customer Relationship score tier break. Note: Orlando Utilities Commission added in Q3 2016 Top tier Second tier Third tier Bottom tier

Continued National: electric: YE 2016 Engaged Customer Relationship Scores (continued) Electric national rank Utility Utility region Engaged Customer Relationship score Brand Trust Operational Satisfaction Product Experience YE 2016 Rank Score Tier 48 Atlantic City Electric East 42 662 55 714 47 683 Austin Energy South 46 651 53 719 50 NV Energy West 57 628 730 38 695 51 Ameren Missouri Midwest 645 727 680 52 PNM 684 Toledo Edison 650 49 725 58 660 54 Potomac Edison 649 724 59 657 Jersey Central Power & Light 56 635 721 661 Monongahela Power 627 708 671 Met-Ed 638 704 663 El Paso Electric 647 699 60 652 PSEG Long Island 618 703 668 Pepco 623 692 669 61 AEP Kentucky Power 590 62 636 Hawaiian Electric 571 606 Base: Electric Customers Dark border indicates Engaged Customer Relationship score tier break. Note: Orlando Utilities Commission added in Q3 2016 Top tier Second tier Third tier Bottom tier

Customer Management Corporate Goals Customer Advocacy Brand Franchise Value Trust Scores Net Promoter Score Company Reputation Customer Satisfaction Customer Effort Scores Other Company Measurements Brand Value Propositions Trust Measurements and Trending Communications Effectiveness Environmental Perceptions Product Demand and Market Sizing Safety Metrics Outage Handling Website Effectiveness (Service and Communications) Customer Service Channel Preferences Communications Channels Preferences Business Account Management Comparisons to other local providers / business vendors Also, MSI SMB Customer Segmentation

Key Deliverables Benchmarking against 130 named brand utilities Quarterly custom performance summary and trending report SPSS database of all responses collected to date (every question, every score, every utility, every quarter) mTAB cross-tab query tool Online portal for quick information access Webcast of results (June and December) before press release is published Segmentation for Residential and Business Customers Custom management readouts in July and December Topical readouts directed by subscriber Ad-hoc analysis upon request Simulator to run “what-if” scenarios, upon request On-going best practice discussions and management advice Pricing discounts on best practice reports and report topic guidance and input

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Contact: Chris Oberle Senior Vice President chris.oberle@marketstrategies.com