1. PECO Advance Payments Plan
October 19, 2016

2. PECO will file a petition to enable an Advance Payments pilot2
Overview
PECO will file a petition to enable an Advance Payments pilot
With Commission approval, the pilot would commence 1Q 2018
Pilot would be conducted for up to 1,000 customers
PECO would provide to the Commission a process evaluation after the first six months of the pilot
PECO would provide to the Commission an impact evaluation at the end of the first year of the pilot
Confidential and Proprietary: for restricted use only

3. Advance Payments - The Basics3
Advance Payments - The Basics
Confidential and Proprietary: for restricted use only
Each OpCo will identify prospective pilot participants from existing customers & send them a letter re: why they may want to be in the pilot
Customer calls in , refers to marketing letter & asks for more info.
Eligibility: AMI meter, small arrearage, deposit, payment split, exclusions (elderly or serious health issues), you must have either smart phone or to receive alerts, which would you prefer? Once we enroll you, there is an initial minimum payment of $40,
Customer says they would like to enroll, so get Carolina’s cell phone#

4. Advance Payments - The Basics4
Advance Payments - The Basics
Advance Payments provides an alternative payment option in which you purchase service credits prior to usage. When your balance gets low, you “recharge” the prepaid account
You receive frequent alerts of “days remaining”, usage and payments
You choose how to receive updates - either text messages or s
You are notified 5, 3, and 1 day before your account balance reaches zero
All payment channels remain available
With an arrearage, payments are split 75/25 with 25% to the arrearage
Program is voluntary and customers can revert back to standard service
Program is available for supplier choice customers
Confidential and Proprietary: for restricted use only
Each OpCo will identify prospective pilot participants from existing customers & send them a letter re: why they may want to be in the pilot
Customer calls in , refers to marketing letter & asks for more info.
Eligibility: AMI meter, small arrearage, deposit, payment split, exclusions (elderly or serious health issues), you must have either smart phone or to receive alerts, which would you prefer? Once we enroll you, there is an initial minimum payment of $40,
Customer says they would like to enroll, so get Carolina’s cell phone#

5. Greater awareness and control of costs No new utility debt 5
Benefits to Customers – from Benchmarking
Greater awareness and control of costs
Typically, prepaid customers consume 10% less energy
No new utility debt
No deposits, late fees, reconnect fees
Predictability for turnoffs and connections
Align payments with cash flow
Empowerment and dignity
Confidential and Proprietary: for restricted use only
More on this in the Road to a Regulatory Filing section.

6. Recent Activity with Investor-Owned Utilities6
Recent Activity with Investor-Owned Utilities
Utility
Location
Program Status
Customers Enrolled
Georgia Power
Atlanta, GA
Full program
22,000
APS
Phoenix, AZ
Pilot
1,500
Westar Energy
Topeka, KS
500
Duke Energy
Carolinas
250
Consumers Energy
All Michigan counties
Pilot approved March 2016 -
NV Energy
Las Vegas, NV
Pilot approved May 2016
Confidential and Proprietary: for restricted use only

7. Yes! You Qualify! Eligibility 7 Customer: Is Residential
Has a remote-capable smart meter
Agrees to receive program alerts and eStatements by text or
Has arrearage of less than $1,500
Yes! You Qualify!
Confidential and Proprietary: for restricted use only

8. 8
Enrollment
Customers make an initial “bank” payment of $40 to start program
Welcome Packet will be sent as part of enrollment
Confidential and Proprietary: for restricted use only

9. Days remaining alert 9 Customer Experience Once in the Program…
Mobile App
Customer can initiate payment from days remaining alerts
All payment channels are available
Auto replenishment feature is available
Preferred payment method is eChecks: fastest processing and no transaction fees
Days remaining alert
Confidential and Proprietary: for restricted use only

10. Your eStatement is available!10
Customer eStatement
Your eStatement is available!
eStatements show daily usage, billing details, payments made
Customers are provided required billing messages
Existing rates remain in place and are allocated on a daily basis
Confidential and Proprietary: for restricted use only

11. Service disconnect schedule11
Disconnect/Connect
Service disconnect schedule
Customers receive five days of emergency credit once balance reaches zero
Disconnects occur the next business day between 10AM and 4PM
Disconnects will occur year-round. They will not occur on weekends, holidays, or extreme weather days
Service will be connected once sufficient payment is posted (no connect fee)
Confidential and Proprietary: for restricted use only

12. Customer Experience 12 User-Friendly Technology
Consumption Awareness & Conservation
Transforms the Customer Experience
Confidential and Proprietary: for restricted use only

13. 13
Waivers Requested
Customers to participate whether or not they have a delinquency
Applicants to participate
Customer/applicants with a delinquency to participate without committing to remain in the advance payments program until their delinquency is retired
Existing customer deposits will be applied to the account balance, first to any arrearages and then to future service
Waiver of occupancy verification when service is discontinued
Not a Waiver Request - Low-income customers (< 150FPL) will not be included in pilot
RICHARD
Confidential and Proprietary: for restricted use only

14. Customer Activity Illustration14
Customer Activity Illustration $$
75%
Advance Payments
$30
$30 in
Prepaid Bank
25%
ARREARAGE
$40 payment
$10 $$
ESTIMATED DAILY ENERGY COST
Available Days
6 Days Available
$30 in
Prepaid Bank
$5/day
One Day’s Use
Daily Usage
6 Days Available
5 Days Available $$ $$
Actual kWh x kWh Rate
$30 in Prepaid Bank
$25
Confidential and Proprietary: for restricted use only

15. 15
Pilot Evaluation
The evaluation of the pilot will include both process and impact components
Customer program participation – PECO will track the number of enrollments, dis-enrollments, and length of time in program
Customer satisfaction – Customers enrolled in the program will be surveyed to measure ease of use and overall program effectiveness. Customers who leave the program will be asked to complete an exit survey
Customer usage behavior – PECO will track before and after consumption patterns for enrolled customers. PECO will also track consumption patterns for participating compared to non-participating customers
Disconnects and Connects – PECO will track the number of disconnects and connects and duration of disconnects, per customer segment for Advance Payments and standard service customers
Payment trends – PECO will track the frequency, total, and average amount of payments made, segregated by customers with and without arrearage. PECO will track the payment methods used by enrolled customers. PECO will track the arrearage pay down that occurs while customers are enrolled
Confidential and Proprietary: for restricted use only

16. Recommended Payment Allocation16
Assumptions:
Payment allocation 75/25
Customer with $500 arrearage enters program
Monthly service of $150, purchased in $40 increments
Payment Allocation example:
$40 payment: $10 goes to arrearage, $30 to future usage
Customer makes 5 purchases each month for $150 of prepay credits
$50 of arrearage is satisfied
As customer continues to purchase future usage, they cure $500 debt in 10 months, or $1,500 in 30 months
Month
Payment Rcvd
Current Usage
Arrears
Arrears Balance
500
Jan-17
200
150 50
450
Feb-17
400
Mar-17
350
Apr-17
300
May-17
250
Jun-17
Jul-17
Aug-17
100
Sep-17
Oct-17
Confidential and Proprietary: for restricted use only
JUDE

17. PA Chapter 56.17 Advance Payments
 Payments may be required in advance of furnishing any of the following services:
   (3)  Gas and electric rendered through prepayment meters provided:
     (i)   The customer is nonlow income. For purposes of this section, ‘‘nonlow income’’ is defined as an individual who has an annual household gross income greater than 150% of the Federal poverty income guidelines and has a delinquency for which the individual is requesting a payment agreement but offering terms that the public utility, after consideration of the factors in §  56.97(b) (relating to procedures upon customer or occupant contact prior to termination), finds unacceptable.
     (ii)   The service is being rendered to an individually-metered residential dwelling, and the customer and occupants are the only individuals affected by the installation of a prepayment meter.
     (iii)   The customer and public utility enter into a payment agreement which includes, but is not limited to, the following terms:
       (A)   The customer voluntarily agrees to the installation of a prepayment meter.
       (B)   The customer agrees to purchase prepayment credits to maintain service until the total balance is retired and the public utility agrees to make new credits available to the customer within 5 days of receipt of prepayment.
       (C)   The public utility agrees to furnish the customer with emergency backup credits for additional usage of at least 5 days.
       (D)   The customer agrees that failure to renew the credits by making prepayment for additional service constitutes a request for discontinuance under §  56.72(1) (relating to discontinuance of service), except during a medical emergency, and that discontinuance will occur when the additional usage on the emergency backup credits runs out.
     (iv)   The public utility develops a written plan for a prepayment meter program, consistent with the criteria established in this section, and submits the plan to the Commission at least 30 days in advance of the effective date of the program.
     (v)   During the first 2 years of use of prepayment meters, the public utility thoroughly and objectively evaluates the use of prepayment meters in accordance with the following:
       (A)   Content. The evaluation should include both process and impact components. Process evaluation should focus on whether the use of prepayment meters conforms to the program design and should assess the degree to which the program operates efficiently. The impact evaluation should focus on the degree to which the program achieves the continuation of utility service to participants at reasonable cost levels. The evaluation should include an analysis of the costs and benefits of traditional collections or alternative collections versus the costs and benefits of handling nonlow income positive ability to pay customers through prepayment metering. This analysis should include comparisons of customer payment behavior, energy consumption, administrative costs and actual collection costs.
       (B)   Time frame. The process evaluation should be undertaken during the middle of the first year; the impact evaluation at least by the end of the second year.
RICHARD
Confidential and Proprietary: for restricted use only