Commissioner Norman J. Kennard September 26, 2018 State of Consumer Affairs at the Pennsylvania Public Utility Commission Commissioner Norman J. Kennard September 26, 2018

“A Guide to Utility Ratemaking” “This rewritten version replaces the 35-year-old original. Everything is different – the economy, technology, the state of utility infrastructure and the art of regulation. What is unchanged is the inventiveness and dedication of the employees of this Commission who rise to the challenge every day.”

Tax Cuts and Jobs Act Total Estimated Tax Savings - $421 Million Annually Industry Total Credit to Customers Per Year (Est.) Average Monthly Bill Distribution Charge Reduction (Est.) Electric $277 Million 5.11% Natural Gas $106 Million 4.92% Water/Wastewater $40 Million 2.21%

PWSA Jurisdiction Compliance Plan must address: Future implementation of a stormwater tariff Plan to address lead levels in the water supply and the replacement of lead service lines Metering plan identifying unmetered accounts and plans to meter all customers Plans to convert to the Uniform Standards of Accounts A Self-Certification Form for Security Planning and Readiness Plans to fully comply with Chapter 14 and Chapter 56 BCS access to PWSA customer service management information system Filing due Sept. 28th

Alternative Ratemaking Tentative Implementation Order (Aug. 23, 2018) Mechanism approval through 66 Pa. C.S. § 1308(d) (voluntary changes in rates) Notice requirements to customers Proposed Policy Statement Comments due October 22, 2018 Reply Comments due November 20, 2018

Methodologies Decoupling Performance incentive mechanisms (PIMs) Ensure recovery of fixed costs Embraces demand-side management initiatives Performance incentive mechanisms (PIMs) Offer utilities an earnings opportunity tied to success in delivering cost-effective energy savings Formula rates Reduces utility financial risk by ensuring a reasonable ROE Multi-year rate plans Fewer rate cases http://connect.xcelenergy.com/wp-content/uploads/2016/06/Capture.jpg

Energy Affordability Study Utilities assume that CAP bills that fall anywhere in the Commission’s energy burden ranges are affordable Example: PECO’s CAP targets the maximum energy burden levels

Methodology & Next Steps PUC, in collaboration with Penn State, is currently: Collecting new data from utilities to determine current energy burden levels Surveying other state public utility commissions to determine affordability levels Reviewing other studies that examined energy burden levels, LIHEAP, collections activities, CAPs, utility service termination rates, customer payment behavior, and customer arrearages Next Steps: PUC expects to issue an Order with its findings this Fall

Universal Service Study Universal Service Workgroup will meet on: Thursday, September 27th 8:30 to 10:30 a.m. Sheraton Harrisburg-Hershey in Harrisburg   Meeting topic: proposal to change the review of Universal Service and Energy Conservation Plans (USECPs) to a five-year schedule (currently, utility USECPs are reviewed once every three years)    PUC expects to see an Order with recommendations in 1st Quarter 2019

Failure to Appear Matters Strydio, Anderson, and Marable Joint Motion of Commissioners Kennard and Sweet (July 12, 2018) Facts: Complainants failed to appear at scheduled hearing Complainants provided no reason why they failed to contact the OALJ to explain their absence or to seek a continuance Excuse raised for the first time in Exceptions Analysis: Once the record is closed, complainants must provide a compelling explanation why he/she failed to raise her excuses in a timely fashion with the ALJ Determination: Complaints dismissed

DSIC Investment

Natural Gas Pipeline Investment

Leveraging Smart Meter Investment Currently, 2/3 of existing analog meters have been replaced by smart meters Over $1 billion in investment Completion goal of 2021 Benefits of smart meter technology: Power restoration System resiliency Grid modernization DER

Broadband Pennsylvania Broadband Investment Incentive Program Broadband mapping and speed test initiative: http://broadbandtest.us/

Pole Attachments Rulemaking to assert Commission jurisdiction over pole attachments and create a forum for dispute resolution Adopts the Federal Communications Commission’s (FCC) regulations over pole attachments in totality http://www.hged.com/customers/services/electric-service/utility-pole.aspx

Thank You Questions?